Exhibit 10.38


 


Partners for Growth


 


Loan
and Security Agreement


 


	
  Borrower:

  	
   

  	
  INTERWAVE
  COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  2495 Leghorn,
  Mountain View, California  94043

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  June 4, 2004

  



 


THIS
LOAN AND SECURITY AGREEMENT is entered into on the above date
between PARTNERS FOR GROWTH, L.P. (“PFG”), whose address is 560 Mission Street,
3rd floor, San Francisco, CA 94105 and the borrower named above (the
“Borrower”), whose chief executive office is located at the above address
(“Borrower’s Address”). The Schedule to this Agreement (the “Schedule”)
shall for all purposes be deemed to be a part of this Agreement, and the same
is an integral part of this Agreement. 
(Definitions of certain terms used in this Agreement are set forth in
Section 8 below.)


 


1.              LOANS.


 


1.1 
Loans.  PFG
will make loans to Borrower (the “Loans”) up to the amounts (the “Credit
Limit”) shown on the Schedule, provided no Default or Event of Default has
occurred and is continuing, and subject to deduction of Reserves for accrued
interest and such other Reserves as PFG deems proper from time to time in its
good faith business judgment.


 


1.2 
Interest. 
All Loans and all other monetary Obligations shall bear interest at the
rate shown on the Schedule, except where expressly set forth to the contrary in
this Agreement.  Interest shall be
payable monthly, on the last day of the month. 
Interest may, in PFG’s discretion, be charged to Borrower’s loan
account, and the same shall thereafter bear interest at the same rate as the
other Loans.


 


1.3 
Overadvances.  If at any time or for any reason the total of all outstanding
Loans exceeds the Credit Limit (an “Overadvance”), Borrower shall immediately
pay the amount of the excess to PFG, without notice or demand.  Without limiting Borrower’s obligation to
repay to PFG the amount of any Overadvance, Borrower agrees to pay PFG interest
on the outstanding amount of any Overadvance, on demand, at the Default Rate.


 


1.4 
Fees. 
Borrower shall pay PFG the fees shown on the Schedule, which are in
addition to all interest and other sums payable to PFG and are not refundable.


 


1.5 Loan Requests. To
obtain a Loan, Borrower shall make a request to PFG by facsimile or telephone.
Loan requests received after 12:00 Noon Pacific Time will not be considered by
PFG until the next Business Day. PFG may rely on any telephone request for a
Loan given by a person whom PFG believes in good faith is an authorized
representative of Borrower, and Borrower will indemnify PFG for any loss PFG
suffers as a result of that reliance.


 


2.  SECURITY INTEREST. To secure the
payment and performance of all of the Obligations when due, Borrower hereby
grants to PFG a security interest in all of the following (collectively, the
“Collateral”):  all right, title and
interest of Borrower in and to all of the following, whether now owned or
hereafter arising or acquired and wherever located: all Accounts; all
Inventory; all Equipment; all Deposit Accounts; all General Intangibles
(including without limitation all Intellectual Property); all Investment
Property; all Other Property; and any and all claims, rights and interests in
any of the above, and all guaranties and security for any of the above, and all
substitutions and replacements for, additions, accessions, attachments,
accessories, and improvements to, and proceeds 
(including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties) of, any and all of the above, and all Borrower’s
books relating to any and all of the above. Notwithstanding anything herein to
the contrary, in no event shall the security interest granted under this
Section 2 attach to any of the following 
(“Specified Contracts”):  any
lease, license, contract, property rights or agreement to which Borrower is a
party or any of its rights (including property rights with respect to
equipment) or interests thereunder if and for so long as the grant of such
security interest shall constitute or result in (i) the abandonment,
invalidation or unenforceability of any


 


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right,
title or interest of Borrower therein or (ii) in a breach or termination
pursuant to the terms of, or a default under, any such lease, license, contract
property rights or agreement (other than to the extent that any such term would
be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of
the Code (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable law or principles of equity); provided
however that such security interest shall attach immediately at such time as
the condition causing such abandonment, invalidation or unenforceability shall
be remedied and to the extent severable, shall attach immediately to any
portion of such lease, license, contract, property rights or agreement that
does not result in any of the consequences specified in (i) or (ii) above.
Except as disclosed on Exhibit A hereto, Borrower represents and warrants to
PFG that there are no Specified Contracts which are material to Borrower’s business.  Borrower shall not, hereafter, without PFG’s
prior written consent, enter into any Specified Contract which is material to
Borrower’s business. In addition, notwithstanding
anything herein to the contrary, in no event shall the security interest granted
under this Section 2 attach to any of the outstanding capital stock of a controlled foreign corporation
(as such term is defined in the Internal Revenue Code of 1986, as amended)  in excess of 65% of the voting power of all
classes of capital stock of such controlled foreign corporation entitled to
vote.


 


3.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF
BORROWER.


 


In order to induce PFG to enter into this Agreement and to make Loans,
subject to the exceptions set forth on the Disclosure Schedule attached
hereto as Exhibit B, Borrower represents and warrants to PFG as follows, and
Borrower covenants that the following representations will continue to be true,
and that Borrower will at all times comply with all of the following covenants,
throughout the term of this Agreement and until all Obligations have been paid
and performed in full:


 


3.1 
Corporate Existence and Authority.  Borrower is and will continue to be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. 
Borrower is and will continue to be qualified and licensed to do
business in all jurisdictions in which any failure to do so would result in a
Material Adverse Change.  The execution,
delivery and performance by Borrower of this Agreement, and all other documents
contemplated hereby (i) have been duly and validly authorized, (ii) are
enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors’
rights generally), and (iii) do not violate Borrower’s articles or certificate
of incorporation, or Borrower’s by-laws, or any law or any material agreement
or instrument which is binding upon Borrower or its property, and (iv) do not
constitute grounds for acceleration of any material indebtedness or obligation
under any agreement or instrument which is binding upon Borrower or its
property.


 


3.2 
Name; Trade Names and Styles.  As of the date hereof, the name of Borrower
set forth in the heading to this Agreement is its name as presently set forth
in its certificate of incorporation. 
Listed in the Representations are, as of the date hereof, all prior names
of Borrower and all of Borrower’s present and prior trade names.  Borrower shall give PFG 30 days’ prior
written notice before changing its name or doing business under any other
name.  Borrower has complied, and will
in the future comply, in all material respects, with all laws relating to the
conduct of business under a fictitious business name, if applicable to
Borrower.


 


3.3 
Place of Business; Location of Collateral. As of
the date hereof, the address set forth in the heading to this Agreement is
Borrower’s chief executive office.  In
addition, as of the date hereof, Borrower has places of business and Collateral
is located only at the locations set forth in the Representations.  Borrower will give PFG at least 30 days
prior written notice before opening any additional place of business, changing
its chief executive office, or moving any of the Collateral to a location other
than Borrower’s Address or one of the locations set forth in the
Representations, except that Borrower may maintain sales offices in the
ordinary course of business at which not more than a total of $10,000 fair
market value of Equipment is located.


 


3.4 
Title to Collateral; Perfection; Permitted Liens.


 


(a)  Borrower
is now, and will at all times in the future be, the sole owner of all the
Collateral, except for items of Equipment which are leased to Borrower and
except for Permitted Liens.  The
Collateral now is and will remain free and clear of any and all liens, charges,
security interests, encumbrances and adverse claims, except for Permitted
Liens.  PFG now has, and will continue
to have, an enforceable security interest in all of the Collateral, subject
only to the Permitted Liens, and Borrower will at all times defend PFG and the
Collateral against all claims of others.


 


(b)         Borrower
has set forth in the Representations all of Borrower’s Deposit Accounts, as of
the date hereof, and Borrower will give PFG five Business Days advance written
notice before establishing any new Deposit Accounts and will cause the
institution where any such new Deposit Account is maintained to execute and
deliver to PFG a control agreement in form sufficient to perfect PFG’s security
interest in the Deposit Account and otherwise satisfactory to PFG in its good
faith business judgment.  Nothing herein
limits any requirements which may be set forth in the Schedule as to where
Deposit Accounts will be maintained.


 


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(c) In the event that Borrower shall at any time after
the date hereof have any commercial tort claims against others, which it is asserting
or gives written notice of its intention to assert, and in which the potential
recovery exceeds $100,000, Borrower shall promptly notify PFG thereof in
writing and provide PFG with such information regarding the same as PFG shall
request (unless providing such information would waive the Borrower’s
attorney-client privilege).  Such
notification to PFG shall constitute a grant of a security interest in the
commercial tort claim and all proceeds thereof to PFG, and Borrower shall
execute and deliver all such documents and take all such actions as PFG shall
request in connection therewith.


 


(d)         None
of the Collateral now is or will be affixed to any real property in such a
manner, or with such intent, as to become a fixture.  Borrower is not and will not become a lessee under any real
property lease pursuant to which the lessor may obtain any rights in any of the
Collateral and no such lease now prohibits, restrains, impairs or will
prohibit, restrain or impair Borrower’s right to remove any Collateral from the
leased premises.  Whenever any
Collateral is located upon premises in which any third party has an interest,
Borrower shall, whenever requested by PFG, use commercially reasonable efforts
to cause such third party to execute and deliver to PFG, in form acceptable to
PFG, such waivers and subordinations as PFG shall specify in its good faith
business judgment.  Borrower will keep
in full force and effect, and will comply with all material terms of, any lease
of real property where any of the Collateral now or in the future may be
located.


 


3.5 
Maintenance of Collateral.  Borrower will maintain the Collateral in good
working condition (ordinary wear and tear excepted), and Borrower will not use
the Collateral for any unlawful purpose. 
Borrower will immediately advise PFG in writing of any material loss or
damage to the Collateral.


 


3.6 
Books and Records.  Borrower has maintained and will maintain at Borrower’s Address
complete and accurate books and records, comprising an accounting system such
that its financial statements can be prepared in accordance with GAAP.


 


3.7 
Financial Condition, Statements and Reports.  All financial statements now or in the
future delivered to PFG have been, and will be, prepared in conformity with
GAAP and now and in the future will fairly present, in all material respects,
the results of operations and financial condition of Borrower, in accordance
with GAAP, at the times and for the periods therein stated.  Between the last date covered by any such
statement provided to PFG and the date hereof, there has been no Material
Adverse Change.


 


3.8 
Tax Returns and Payments; Pension Contributions.  Borrower has timely filed, and will timely
file, all material required tax returns and reports, and Borrower has timely
paid, and will timely pay, all federal and state, and all material foreign and
local taxes, assessments, deposits and contributions now or in the future owed
by Borrower.  Borrower may, however,
defer payment of any contested taxes, assessments, deposits and contributions,
provided that Borrower (i) in good faith contests Borrower’s obligation to pay
the same by appropriate proceedings promptly and diligently instituted and
conducted, (ii) notifies PFG in writing of the commencement of, and any
material development in, the proceedings, and (iii) posts bonds or takes any
other steps required to keep the contested taxes from becoming a lien upon any
of the Collateral.  Borrower is unaware
of any claims or adjustments proposed for any of Borrower’s prior tax years
which could result in additional taxes becoming due and payable by
Borrower.  Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms,
and Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any such plan which could reasonably be expected to result in
any liability of Borrower, including any material liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental
agency.


 


3.9 
Compliance with Law.  Borrower has, to the best of its knowledge, complied, and will
comply, in all material respects, with all provisions of all foreign, federal,
state and local laws and regulations applicable to Borrower, including, but not
limited to, those relating to Borrower’s ownership of real or personal
property, the conduct and licensing of Borrower’s business, and all
environmental matters.


 


3.10 
Litigation. 
There is no claim, suit, litigation, proceeding or investigation pending
or (to best of Borrower’s knowledge) threatened against Borrower in any court
or before any governmental agency (or any basis therefor known to Borrower)
which could reasonably be expected to result, either separately or in the
aggregate, in any Material Adverse Change. 
Borrower will promptly inform PFG in writing of any claim, proceeding, litigation
or investigation in the future threatened or instituted against Borrower
involving any single claim of $50,000 or more, or involving $100,000  or more in the aggregate.


 


3.11 
Use of Proceeds. 
All proceeds of all Loans shall be used solely for lawful business
purposes.  Borrower is not purchasing or
carrying any “margin stock” (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) and no part of the proceeds of any
Loan will be used to purchase or carry any “margin stock” or to extend credit
to others for the purpose of purchasing or carrying any “margin stock.”


 


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4.  ACCOUNTS.


 


4.1 
Representations Relating to Accounts and Purchase Orders.  Borrower represents and warrants to PFG
that each Account with respect to which Loans are requested by Borrower shall,
on the date each Loan is requested and made, (i) represent an undisputed bona
fide existing unconditional obligation of the Account Debtor created by the
sale, delivery, and acceptance of goods or the rendition of services, or the
non-exclusive licensing of Intellectual Property, in the ordinary course of
Borrower’s business, and (ii) meet the applicable Minimum Eligibility
Requirements set forth in Section 8 below. Borrower further represents and
warrants to PFG that each purchase order with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made, (i)
represent an undisputed bona fide existing unconditional agreement for the
purchase of goods or the rendition of services, or the non-exclusive licensing
of Intellectual Property, in the ordinary course of Borrower’s business, and
(ii) meet the Minimum Eligibility Requirements—Purchase Orders set forth in
Section 8 below.


 


4.2 
Representations Relating to Documents and Legal Compliance.  Borrower represents
and warrants to PFG as follows:  All
statements made and all unpaid balances appearing in all invoices, instruments
and other documents evidencing the Accounts are and shall be true and correct in
all material respects, and all such invoices, instruments and other documents
and all of Borrower’s books and records are and shall be genuine and in all
respects what they purport to be.  All
sales and other transactions underlying or giving rise to each Account shall comply
in all material respects with all applicable laws and governmental rules and
regulations.  To the best of Borrower’s
knowledge, all signatures and endorsements on all documents, instruments, and
agreements relating to all Accounts are and shall be genuine, and all such
documents, instruments and agreements are and shall be legally enforceable in
accordance with their terms  (except as enforcement may be limited by
equitable principles and by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to creditors’ rights generally).


 


4.3 Documents relating to Accounts. If
requested by PFG, Borrower shall furnish PFG with copies (or, at PFG’s request,
originals) of all contracts, orders, invoices, and other similar documents, and
all shipping instructions, delivery receipts, bills of lading, and other
evidence of delivery, for any goods the sale or disposition of which gave rise
to such Accounts, and Borrower warrants the genuineness of all of the
foregoing.  Borrower shall also furnish
to PFG an aged accounts receivable trial balance as provided in the
Schedule.  In addition, subject to the
rights of the Senior Lender, Borrower shall deliver to PFG, on its request, the
originals of all instruments, chattel paper, security agreements, guarantees
and other documents and property evidencing or securing any Accounts, in the
same form as received, with all necessary indorsements, and copies of all
credit memos.


 


4.4 
Collection of Accounts.  Borrower shall have the right to collect all Accounts, unless and
until a Default or an Event of Default has occurred and is continuing. Subject
to the rights of the Senior Lender, PFG may, in its good faith business
judgment, require that all proceeds of Collateral be deposited by Borrower into
a lockbox account, or such other “blocked account” as PFG may specify, pursuant
to a blocked account agreement in such form as PFG may specify in its good
faith business judgment.


 


4.5. 
Remittance of Proceeds. Subject to the rights of
the Senior Lender, all proceeds arising from the disposition of any Collateral
shall be delivered, in kind, by Borrower to PFG in the original form in which
received by Borrower not later than the following Business Day after receipt by
Borrower, to be applied to the Obligations in such order as PFG shall
determine; provided that, if no Default or Event of Default has occurred and is
continuing, Borrower shall not be obligated to remit to PFG (i) the proceeds of
Accounts arising in the ordinary course of business, or (ii) the proceeds of the
sale of worn out or obsolete Equipment disposed of by Borrower in good faith in
an arm’s length transaction for an aggregate purchase price of $25,000 or less
(for all such transactions in any fiscal year), and (iii) the proceeds of
insurance if promptly used to replace or repair the property with respect to
which the proceeds were paid.  Except as
permitted above, Borrower agrees that it will not commingle proceeds of
Collateral with any of Borrower’s other funds or property, but will hold such
proceeds separate and apart from such other funds and property and in an
express trust for PFG, except as set forth above, and subject to the rights of
the Senior Lender.  Nothing in this
Section limits the restrictions on disposition of Collateral set forth
elsewhere in this Agreement.


 


4.6 
Disputes.  Borrower shall notify PFG promptly of all disputes or claims
relating to Accounts.  Borrower shall
not forgive (completely or partially), compromise or settle any Account for less
than payment in full, or agree to do any of the foregoing, except that Borrower
may do so, provided that: (i) Borrower does so in good faith, in a commercially
reasonable manner, in the ordinary course of business, and in arm’s length
transactions, which are reported to PFG on the regular reports provided to PFG;
(ii) no Default or Event of Default has occurred and is continuing; and (iii)
taking into account all such discounts, settlements and forgiveness, the total
outstanding Loans will not exceed the Credit Limit.


 


4.7 
Returns. 
Provided no Event of Default has occurred and is continuing, if any
Account Debtor returns any Inventory to Borrower, Borrower shall promptly
determine the reason for such return and promptly issue a credit memorandum to
the Account Debtor in the appropriate amount. 
In the event any attempted return occurs after the occurrence and during
the


 


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continuance of any Event of Default, Borrower shall
hold the returned Inventory in trust for PFG, and immediately notify PFG
of the return of the Inventory.


 


4.8 
Verification. 
PFG may, from time to time, verify directly with the respective Account
Debtors the validity, amount and other matters relating to the Accounts, by
means of mail, telephone or otherwise, either in the name of Borrower or PFG or
such other name as PFG may choose.


 


4.9 
No Liability.  PFG
shall not be responsible or liable for any shortage or discrepancy in, damage
to, or loss or destruction of, any goods, the sale or other disposition of
which gives rise to an Account, or for any error, act, omission, or delay of
any kind occurring in the settlement, failure to settle, collection or failure
to collect any Account, or for settling any Account in good faith for less than
the full amount thereof, nor shall PFG be deemed to be responsible for any of
Borrower’s obligations under any contract or agreement giving rise to an
Account.  Nothing herein shall, however,
relieve PFG from liability for its own gross negligence or willful misconduct.


 


5.  ADDITIONAL DUTIES OF BORROWER.


 


5.1 
Financial and Other Covenants.  Borrower shall at all times comply with the
financial and other covenants set forth in the Schedule.


 


5.2 
Insurance. 
Borrower shall, at all times insure all of the tangible personal
property Collateral and carry such other business insurance, with insurers
reasonably acceptable to PFG, in such form and amounts as PFG may reasonably
require and that are customary and in accordance with standard practices for
Borrower’s industry and locations, and Borrower shall provide evidence of such
insurance to PFG.  All such insurance
policies shall name PFG as an additional loss payee, and shall contain a
lenders loss payee endorsement in form reasonably acceptable to PFG.  Upon receipt of the proceeds of any such
insurance, subject to the rights of the Senior Lender, provided no Default or
Event of Default has occurred and is continuing, PFG shall release to Borrower
insurance proceeds with respect to Collateral, which shall be utilized by
Borrower for the prompt repair or replacement of the Collateral with respect to
which the insurance proceeds were paid. 
PFG may require reasonable assurance that the insurance proceeds so
released will be so used.  If Borrower
fails to provide or pay for any insurance, PFG may, but is not obligated to,
obtain the same at Borrower’s expense. 
Borrower shall promptly deliver to PFG copies of all material reports
made to insurance companies.


 


5.3 
Reports. 
Borrower, at its expense, shall provide PFG with the written reports set
forth in the Schedule, and such other written reports with respect to Borrower
(including budgets, projections, operating plans and other financial
documentation), as PFG shall from time to time specify in its good faith
business judgment, it being
recognized by PFG that any projections and forecasts provided by Borrower in
good faith and based upon reasonably assumptions are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections or forecasts may differ from the projected or forecast results.


 


5.4 
Access to Collateral, Books and Records.  At reasonable times, and on one Business
Day’s notice, PFG, or its agents, shall have the right to inspect the
Collateral, and the right to audit and copy Borrower’s books and records.  All information obtained in any such
inspection or audit shall be subject to the confidentiality agreement in
Section 9.16 below.  The foregoing
inspections and audits shall be at Borrower’s expense and the charge therefor
shall be $750 per person per day (or such higher amount as shall represent
PFG’s then current standard charge for the same), plus reasonable out-of-pocket
expenses. Notwithstanding
the foregoing, if no Event of Default has occurred and is continuing, Borrower
shall not be required to disclose, permit the inspection, examination or making
of extracts, or discussion of, any document, information or other matter (i) in
respect of which disclosure is prohibited by law or any agreement binding on
Borrower or any of its Subsidiaries, or (ii) is subject to attorney-client or
similar privilege or constitutes attorney work product.  If Borrower is withholding any information
requested by Lender pursuant to the preceding sentence, it shall so advise PFG
in writing, giving PFG a general description of the nature of the information
withheld.


 


5.5 
Negative Covenants.  Except as may be permitted in the Schedule, Borrower shall not,
without PFG’s prior written consent (which shall be a matter of its good faith
business judgment), do any of the following: 
(i) merge or consolidate with another corporation or entity, except that any wholly-owned
Subsidiary of Borrower may be merged with Borrower so long as Borrower is the
surviving corporation; (ii) acquire any assets, except in
the ordinary course of business, or make any Investments other than Permitted
Investments; (iii) consummate any other transaction outside the ordinary course
of business; (iv) sell or transfer any Collateral, except for (A) the sale of
finished Inventory in the ordinary course of Borrower’s business, (B) the sale
of obsolete or unneeded Equipment in the ordinary course of business, (C) the
making of Permitted Investments, (D) the granting of Permitted Liens, and (E)
the non-exclusive licensing of Intellectual Property in the ordinary course of
business ; (v) store any Inventory or other Collateral with any warehouseman or
other third party, unless there is in place a bailee agreement in such form as
PFG shall specify in its good faith business judgment; (vi) sell any Inventory
on a sale-or-return, guaranteed sale, consignment, or other contingent basis;
(vii) make any loans of any money or other assets, other than Permitted
Investments; (viii) incur any Indebtedness, other than Permitted Indebtedness;
(ix) guarantee or otherwise become


 


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liable with respect to the obligations of another
party or entity; (x) pay or declare any dividends on Borrower’s stock (except
for dividends payable solely in stock of Borrower); (xi) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of Borrower’s stock;
(xii) engage, directly or indirectly, in any business other than the businesses
currently engaged in by Borrower or reasonably related thereto; or (xiii)
dissolve or elect to dissolve. 
Transactions permitted by the foregoing provisions of this
Section are only permitted if no Default or Event of Default would occur
as a result of such transaction.


 


5.6 
Litigation Cooperation.  Should any third-party suit or proceeding be instituted by or
against PFG with respect to any Collateral or relating to Borrower, Borrower
shall, without expense to PFG, make available Borrower and its officers,
employees and agents and Borrower’s books and records, to the extent that PFG may
deem them reasonably necessary in order to prosecute or defend any such suit or
proceeding.


 


5.7 
Further Assurances.  Borrower agrees, at its expense, on request by PFG, to execute
all documents and take all actions, as PFG, may, in its good faith business
judgment, deem necessary or useful in order to perfect and maintain PFG’s
perfected security interest in the Collateral (subject only to Permitted
Liens), and in order to fully consummate the transactions contemplated by this
Agreement.


 


6.   TERM.


 


6.1 
Maturity Date. 
This Agreement shall continue in effect until the maturity date set
forth on the Schedule (the “Maturity Date”), subject to Section 6.3
below.


 


6.2 
Early Termination.  This Agreement may be terminated prior to the Maturity Date as
follows:  (i) by Borrower, effective
three Business Days after written notice of termination is given to PFG; or
(ii) by PFG at any time after the occurrence and during the continuance of an
Event of Default, without notice, effective immediately.  If this Agreement is terminated by Borrower
or by PFG under this Section 6.2, Borrower shall pay to PFG a termination
fee in an amount equal to the Unused Line Fee provided in Section 3 of the
Schedule, computed as though the outstanding Loan was zero, for the period from
the effective date of termination to the Maturity Date.  The termination fee shall be due and payable
on the effective date of termination and thereafter shall bear interest at a
rate equal to the highest rate applicable to any of the Obligations.


 


6.3 
Payment of Obligations.  On the Maturity Date or on any earlier effective date of
termination, Borrower shall pay and perform in full all Obligations, whether
evidenced by installment notes or otherwise, and whether or not all or any part
of such Obligations are otherwise then due and payable. Notwithstanding any
termination of this Agreement, all of PFG’s security interests in all of the
Collateral and all of the terms and provisions of this Agreement shall continue
in full force and effect until all Obligations have been paid and performed in
full; provided that PFG may, in its sole discretion, refuse to make any further
Loans after termination.  No termination
shall in any way affect or impair any right or remedy of PFG, nor shall any
such termination relieve Borrower of any Obligation to PFG, until all of the
Obligations have been paid and performed in full.  Upon payment and performance in full of all the Obligations and
termination of this Agreement, PFG shall promptly terminate its financing
statements with respect to the Borrower and deliver to Borrower such other
documents as may be required to fully terminate PFG’s security interests.


 


7.  EVENTS OF DEFAULT AND REMEDIES.


 


7.1 
Events of Default.  The occurrence of any of the following events shall constitute an
“Event of Default” under this Agreement, and Borrower shall give PFG immediate
written notice thereof:


 


(a) Any warranty, representation, statement, report or certificate made
or delivered to PFG by Borrower or any of Borrower’s officers, employees or
agents, now or in the future, shall be untrue or misleading in a material
respect when made or deemed to be made; or


 


(b) Borrower shall fail to pay when due any Loan or any interest
thereon or any other monetary Obligation within three Business Days after the
date due; or


 


(c) the total Loans outstanding at any time shall exceed the Credit
Limit and the same shall not be cured within three Business Days thereafter; or


 


(d) Borrower shall fail to comply with any of the financial covenants
set forth in the Schedule, or shall breach any of the provisions of
Section 5.5 hereof, or shall fail to perform any other non-monetary
Obligation which by its nature cannot be cured, or shall fail to permit PFG to
conduct an inspection or audit as provided in Section 5.4 hereof, or shall
fail to provide PFG with a borrowing base report under Section 6(a) of the
Schedule within one Business Day after the date due; or


 


(e) Borrower shall fail to perform any other non-monetary Obligation,
which failure is not cured within ten Business Days after the date due; or


 


(f) any levy, assessment, attachment, seizure, lien or encumbrance
(other than a Permitted Lien) is made on the Collateral with a value of $25,000
or more, which is not cured within 10 days after the occurrence of the same; or


 


6

















 


(g) any default or event of default occurs under any obligation in an
amount in excess of $25,000, secured by a Permitted Lien, which is not cured
within any applicable cure period or waived in writing by the holder of the
Permitted Lien; or


 


(h) Borrower breaches any material contract or obligation, which has
resulted or may reasonably be expected to result in a Material Adverse Change;
or


 


(i) Dissolution, termination of existence, insolvency or business
failure of Borrower; or appointment of a receiver, trustee or custodian, for
all or any part of the property of, assignment for the benefit of creditors by,
or the commencement of any proceeding by Borrower under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, now or in the future in effect; or


 


(j) the commencement of any proceeding against Borrower or any
guarantor of any of the Obligations under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, now or in the future in effect, which is not
cured by the dismissal thereof within 45 days after the date commenced; or


 


(k) revocation or termination of, or limitation or denial of liability
upon, any guaranty of the Obligations or any attempt to do any of the
foregoing, or commencement of proceedings by any guarantor of any of the
Obligations under any bankruptcy or insolvency law; or


 


(l) revocation or termination of, or limitation or denial of liability
upon, any pledge of any certificate of deposit, securities or other property or
asset of any kind pledged by any third party to secure any or all of the Obligations,
or any attempt to do any of the foregoing, or commencement of proceedings by or
against any such third party under any bankruptcy or insolvency law; or


 


(m) Borrower makes any payment on account of any indebtedness or
obligation which has been subordinated to the Obligations other than as
permitted in the applicable subordination agreement, or if any Person who has
subordinated such indebtedness or obligations terminates or in any way limits
his subordination agreement; or


 


(n) any person (as defined in Section 13(d)(3) or
Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), (i) becomes the beneficial owner (as determined in accordance
with Rule 13d-3 under the Exchange Act, as in effect on the date hereof) of 50%
or more of the capital stock of Parent having the power to vote in the election
of directors of Parent under any circumstances, or (ii) obtains the practical
ability, directly or indirectly, to elect or control the election of a majority
of the board of directors of Parent; or


 


(o) Erwin Leichtle shall cease to serve as the chief executive officer
of Parent, and Cal Hoagland shall cease to serve as the chief financial officer
of Parent; or


 


(p) Parent shall cease to own 100% of the outstanding stock of Borrower;
or


 


(q) Borrower shall generally not pay its debts as they become due, or
Borrower shall conceal, remove or transfer any part of its property, with
intent to hinder, delay or defraud its creditors, or make or suffer any
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or


 


(r) a Material Adverse Change shall occur.


 


PFG may cease making any Loans hereunder during any of
the cure periods provided above, and thereafter if an Event of Default has
occurred and is continuing.


 


7.2 
Remedies. 
Upon the occurrence and during the continuance of any Event of Default,
PFG, at its option, and without notice or demand of any kind (all of which are
hereby expressly waived by Borrower), may do any one or more of the following:
(a) Cease making Loans or otherwise extending credit to Borrower under this
Agreement or any other Loan Document; (b) Accelerate and declare all or any
part of the Obligations to be immediately due, payable, and performable, notwithstanding
any deferred or installment payments allowed by any instrument evidencing or
relating to any Obligation; (c) Take possession of any or all of the Collateral
wherever it may be found, and for that purpose Borrower hereby authorizes PFG
without judicial process to enter onto any of Borrower’s premises without
interference to search for, take possession of, keep, store, or remove any of
the Collateral, and remain on the premises or cause a custodian to remain on
the premises in exclusive control thereof, without charge for so long as PFG
deems it necessary, in its good faith business judgment, in order to complete
the enforcement of its rights under this Agreement or any other agreement;
provided, however, that should PFG seek to take possession of any of the
Collateral by court process, Borrower hereby irrevocably waives: (i) any bond
and any surety or security relating thereto required by any statute, court rule
or otherwise as an incident to such possession; (ii) any demand for possession
prior to the commencement of any suit or action to recover possession thereof;
and (iii) any requirement that PFG retain possession of, and not dispose of,
any such Collateral until after trial or final judgment; (d) Require Borrower
to assemble any or all of the Collateral and make it available to PFG at places
designated by PFG which are reasonably convenient to PFG and Borrower, and to
remove the Collateral to such locations as PFG may deem advisable; (e) Complete
the processing, manufacturing or repair of any Collateral prior to a
disposition thereof and, for such purpose and


 


7

















 


for the purpose of removal, PFG shall have the right
to use Borrower’s premises, vehicles, hoists, lifts, cranes, and other
Equipment and all other property without charge; (f) Sell, lease or otherwise
dispose of any of the Collateral, in its condition at the time PFG obtains
possession of it or after further manufacturing, processing or repair, at one
or more public and/or private sales, in lots or in bulk, for cash, exchange or
other property, or on credit, and to adjourn any such sale from time to time
without notice other than oral announcement at the time scheduled for
sale.  PFG shall have the right to
conduct such disposition on Borrower’s premises without charge, for such time
or times as PFG deems reasonable, or on PFG’s premises, or elsewhere and the
Collateral need not be located at the place of disposition.  PFG may directly or through any affiliated
company purchase or lease any Collateral at any such public disposition, and if
permissible under applicable law, at any private disposition.  Any sale or other disposition of Collateral
shall not relieve Borrower of any liability Borrower may have if any Collateral
is defective as to title or physical condition or otherwise at the time of
sale; (g) Demand payment of, and collect any Accounts and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes PFG to endorse or sign Borrower’s name on all collections, receipts,
instruments and other documents, to take possession of and open mail addressed
to Borrower and remove therefrom payments made with respect to any item of the
Collateral or proceeds thereof, and, in PFG’s good faith business judgment, to
grant extensions of time to pay, compromise claims and settle Accounts and the
like for less than face value; (h) Exercise any and all rights under any
present or future control agreements relating to Deposit Accounts or Investment
Property; and (i) Demand and receive possession of any of Borrower’s federal
and state income tax returns and the books and records utilized in the
preparation thereof or referring thereto. 
All reasonable attorneys’ fees, expenses, costs, liabilities and
obligations incurred by PFG with respect to the foregoing shall be added to and
become part of the Obligations, shall be due on demand, and shall bear interest
at a rate equal to the highest interest rate applicable to any of the
Obligations.  Without limiting any of
PFG’s rights and remedies, from and after the occurrence and during the
continuance of any Event of Default, the interest rate applicable to the
Obligations shall be increased by an additional four percent per annum (the
“Default Rate”).


 


7.3 
Standards for Determining Commercial Reasonableness.  Borrower and PFG agree that a sale or other
disposition (collectively, “sale”) of any Collateral which complies with the
following standards will conclusively be deemed to be commercially reasonable:  (i) Notice of the sale is given to Borrower
at least ten days prior to the sale, and, in the case of a public sale, notice
of the sale is published at least five days before the sale in a newspaper of
general circulation in the county where the sale is to be conducted; (ii)
Notice of the sale describes the collateral in general, non-specific terms;
(iii) The sale is conducted at a place designated by PFG, with or without the
Collateral being present; (iv) The sale commences at any time between 8:00 a.m.
and 6:00 p.m;  (v) Payment of the
purchase price in cash or by cashier’s check or wire transfer is required; (vi)
With respect to any sale of any of the Collateral, PFG may (but is not
obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the same.  PFG shall be free to employ other methods of noticing and selling
the Collateral, in its discretion, if they are commercially reasonable.


 


7.4 
Power of Attorney.  Upon the occurrence and during the continuance of any Event of
Default, without limiting PFG’s other rights and remedies, Borrower grants to
PFG an irrevocable power of attorney coupled with an interest, authorizing and
permitting PFG (acting through any of its employees, attorneys or agents) at
any time, at its option, but without obligation, with or without notice to
Borrower, and at Borrower’s expense, to do any or all of the following, in
Borrower’s name or otherwise, but PFG agrees that if it exercises any right
hereunder, it will do so in good faith and in a commercially reasonable
manner:  (a) Execute on behalf of
Borrower any documents that PFG may, in its good faith business judgment, deem
advisable in order to perfect and maintain PFG’s security interest in the
Collateral, or in order to exercise a right of Borrower or PFG, or in order to
fully consummate all the transactions contemplated under this Agreement, and
all other Loan Documents; (b) Execute on behalf of Borrower, any invoices
relating to any Account, any draft against any Account Debtor and any notice to
any Account Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim
of mechanic’s, materialman’s or other lien, or assignment or satisfaction of
mechanic’s, materialman’s or other lien; (c) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name
of Borrower upon any instruments, or documents, evidence of payment or
Collateral that may come into PFG’s possession; (d) Endorse all checks and
other forms of remittances received by PFG; (e) Pay, contest or settle any
lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (f) Grant extensions of time to pay,
compromise claims and settle Accounts and General Intangibles for less than
face value and execute all releases and other documents in connection
therewith; (g) Pay any sums required on account of Borrower’s taxes or to
secure the release of any liens therefor, or both; (h) Settle and adjust, and
give releases of, any insurance claim that relates to any of the Collateral and
obtain payment therefor; (i) Instruct any third party having custody or control
of any books or records belonging to, or relating to, Borrower to give PFG the
same rights of access and other rights with respect thereto as PFG has under
this Agreement; and (j) Take any action or pay any sum required of Borrower
pursuant to this Agreement and any other Loan Documents.  Any and all reasonable sums paid and any and
all reasonable costs, expenses, liabilities, obligations and attorneys’ fees
incurred by PFG with respect to the foregoing shall be added to and become part
of the Obligations, shall be payable on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of


 


8

















 


the Obligations. 
In no event shall PFG’s rights under the foregoing power of attorney or
any of PFG’s other rights under this Agreement be deemed to indicate that PFG
is in control of the business, management or properties of Borrower.


 


7.5 
Application of Proceeds.  All proceeds realized as the result of any sale of the Collateral
shall be applied by PFG first to the reasonable costs, expenses, liabilities,
obligations and attorneys’ fees incurred by PFG in the exercise of its rights
under this Agreement, second to the interest due upon any of the Obligations,
and third to the principal of the Obligations, in such order as PFG shall
determine in its sole discretion.  Any
surplus shall be paid to Borrower or other persons legally entitled thereto;
Borrower shall remain liable to PFG for any deficiency.  If, PFG, in its good faith business
judgment, directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale of Collateral, PFG shall have the
option, exercisable at any time, in its good faith business judgment, of either
reducing the Obligations by the principal amount of purchase price or deferring
the reduction of the Obligations until the actual receipt by PFG of the cash
therefor.


 


7.6 
Remedies Cumulative.  In addition to the rights and remedies set forth in this
Agreement, PFG shall have all the other rights and remedies accorded a secured
party under the Code and under all other applicable laws, and under any other
instrument or agreement now or in the future entered into between PFG and
Borrower, and all of such rights and remedies are cumulative and none is
exclusive.  Exercise or partial exercise
by PFG of one or more of its rights or remedies shall not be deemed an
election, nor bar PFG from subsequent exercise or partial exercise of any other
rights or remedies.  The failure or delay
of PFG to exercise any rights or remedies shall not operate as a waiver
thereof, but all rights and remedies shall continue in full force and effect
until all of the Obligations have been fully paid and performed.


 


8.  DEFINITIONS.  As used in this Agreement, the following
terms have the following meanings:


 


“Account Debtor” means the obligor on an Account.


 


“Accounts” means all present and future “accounts” as defined in
the California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all accounts receivable and other sums owing to Borrower.


 


“Advanced” means INTERWAVE Advanced Communications, Inc., a
Delaware corporation.


 


 “Affiliate” means, with
respect to any Person, a relative, partner, shareholder, director, officer, or
employee of such Person, or any parent or subsidiary of such Person, or any
Person controlling, controlled by or under common control with such Person.


 


“Business Day” means a day on which PFG is open for business.


 


“Code” means the Uniform Commercial Code as adopted and in
effect in the State of California from time to time.


 


“Collateral” has the meaning set forth in Section 2 above.


 


“continuing” and “during the continuance of” when used
with reference to a Default or Event of Default means that the Default or Event
of Default has occurred and has not been either waived in writing by PFG or
cured within any applicable cure period.


 


“Default” means any event which with notice or passage of time
or both, would constitute an Event of Default.


 


“Default Rate” has the meaning set forth in Section 7.2
above.


 


“Deposit Accounts” means all present and future “deposit
accounts” as defined in the California Uniform Commercial Code in effect on the
date hereof with such additions to such term as may hereafter be made, and
includes without limitation all general and special bank accounts, demand
accounts, checking accounts, savings accounts and certificates of deposit.


 


“Eligible Accounts” means collectively, Eligible
Accounts-Domestic, Eligible Accounts-Foreign and Eligible Accounts-LC
Supported. Eligible Accounts-Domestic and Eligible Accounts-Foreign owing from
one Account Debtor will not be deemed Eligible Accounts to the extent they
exceed 25% of the total Eligible Accounts-Domestic and Eligible
Accounts-Foreign outstanding.  In
addition, if more than 50% of the Accounts owing from an Account Debtor are
outstanding for a period longer than their Eligibility Period (without regard
to unapplied credits) or are otherwise not eligible Accounts, then all Accounts
owing from that Account Debtor will be deemed ineligible for borrowing.


 


“Eligible Accounts-Domestic” means Accounts and General
Intangibles arising in the ordinary course of Borrower’s business from the sale
of goods or the rendition of services, or the non-exclusive licensing of
Intellectual Property, owing from Account Debtors in the United States or
Canada, which PFG, in its good faith business judgment, shall deem eligible for
borrowing.  Without limiting the fact
that the determination of which Accounts are eligible for borrowing is a matter
of PFG’s good faith business judgment, the following (the “Minimum
Eligibility Requirements—Domestic”) are the minimum requirements for a
Account to be an Eligible Account-Domestic: 
(i) the Account must not be outstanding for more than 90


 


9

















 


days from its invoice date (the “Eligibility Period”),
(ii) the Account must not represent progress billings, or be due under a
fulfillment or requirements contract with the Account Debtor, (iii) the Account
must not be subject to any contingencies (including Accounts arising from sales
on consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional), (iv) the Account must not be owing from an
Account Debtor with whom Borrower has any dispute (whether or not relating to
the particular Account), in which case the Account shall be ineligible to the
extent of the dispute, (v) the Account must not be owing from an Affiliate of
Borrower, (vi) the Account must not be owing from an Account Debtor which is
subject to any insolvency or bankruptcy proceeding, or whose financial
condition is not acceptable to PFG in its good faith business judgment, or
which, fails or goes out of a material portion of its business, (vii) the
Account must not be owing from the United States or any department, agency or
instrumentality thereof (unless there has been compliance, to PFG’s
satisfaction, with the United States Assignment of Claims Act), (viii) the
Account must not be owing from an Account Debtor to whom Borrower is or may be
liable for goods purchased from such Account Debtor or otherwise (but, in such
case, the Account will be deemed not eligible only to the extent of any amounts
owed by Borrower to such Account Debtor), and (ix) Senior Lender shall not have
any outstanding loans or other extensions of credit with respect to the Account.
PFG may, from time to time, in its good faith business judgment, revise the
Minimum Eligibility Requirements—Domestic, upon written notice to Borrower.


 


“Eligible Accounts-Foreign” means Accounts and General
Intangibles arising in the ordinary course of Borrower’s business from the sale
of goods or the rendition of services, or the non-exclusive licensing of
Intellectual Property, owing by Account Debtors outside the United States and
Canada, which PFG, in its good faith business judgment, shall deem eligible for
borrowing.  Without limiting the fact
that the determination of which Accounts are eligible for borrowing is a matter
of PFG’s good faith business judgment, the following (the “Minimum
Eligibility Requirements—Foreign”) are the minimum requirements for a
Account to be an Eligible Account-Foreign: 
(i) the Account must not be outstanding for more than 90 days from its
invoice date (the “Eligibility Period”), (ii) the Account must not
represent progress billings, or be due under a fulfillment or requirements
contract with the Account Debtor, (iii) the Account must not be subject to any
contingencies (including Accounts arising from sales on consignment, guaranteed
sale or other terms pursuant to which payment by the Account Debtor may be
conditional), (iv) the Account must not be owing from an Account Debtor with
whom Borrower has any dispute (whether or not relating to the particular
Account), in which case the Account shall be ineligible to the extent of the
dispute, (v) the Account must not be owing from an Affiliate of Borrower, (vi)
the Account must not be owing from an Account Debtor which is subject to any
insolvency or bankruptcy proceeding, or whose financial condition is not
acceptable to PFG in its good faith business judgment, or which, fails or goes
out of a material portion of its business, (vii) the Account must not be owing
from the United States or any department, agency or instrumentality thereof
(unless there has been compliance, to PFG’s satisfaction, with the United
States Assignment of Claims Act), (viii) the Account must be owing from an
Account Debtor located outside the United States or Canada,  (ix) the Account must not be owing from an
Account Debtor to whom Borrower is or may be liable for goods purchased from
such Account Debtor or otherwise (but, in such case, the Account will be deemed
not eligible only to the extent of any amounts owed by Borrower to such Account
Debtor), and (x) Senior Lender shall not have any outstanding loans or other
extensions of credit with respect to the Account. PFG may, from time to time,
in its good faith business judgment, revise the Minimum Eligibility
Requirements—Foreign, upon written notice to Borrower.


 


“Eligible Accounts-LC Supported” means Accounts and General
Intangibles arising in the ordinary course of Borrower’s business from the sale
of goods or the rendition of services, or the non-exclusive licensing of
Intellectual Property, which are backed by a letter of credit satisfactory to
PFG, and which PFG, in its good faith business judgment, shall deem eligible
for borrowing.  Without limiting the
fact that the determination of which Accounts are eligible for borrowing is a
matter of PFG’s good faith business judgment, the following (the “Minimum
Eligibility Requirements—LC Supported”) are the minimum requirements for a
Account to be an Eligible Account-LC Supported:  (i) the Account must not be outstanding for more than 90 days
from its invoice date (the “Eligibility Period”), (ii) the Account must
not represent progress billings, or be due under a fulfillment or requirements
contract with the Account Debtor, (iii) the Account must not be subject to any
contingencies (including Accounts arising from sales on consignment, guaranteed
sale or other terms pursuant to which payment by the Account Debtor may be
conditional), (iv) the Account must not be owing from an Account Debtor with
whom Borrower has any dispute (whether or not relating to the particular
Account), in which case the Account shall be ineligible to the extent of the
dispute, (v) the Account must not be owing from an Affiliate of Borrower, (vi)
the Account must not be owing from an Account Debtor which is subject to any
insolvency or bankruptcy proceeding, or whose financial condition is not
acceptable to PFG in its good faith business judgment, or which, fails or goes
out of a material portion of its business, (vii) the Account must not be owing
from the United States or any department, agency or instrumentality thereof
(unless there has been compliance, to PFG’s satisfaction, with the United
States Assignment of Claims Act), (viii) the Account must not be owing from an
Account Debtor to whom Borrower is or may be liable for goods purchased from
such Account Debtor or otherwise (but, in such case, the Account will be deemed
not eligible only to the extent of any amounts owed by Borrower to such Account
Debtor), and (ix) Senior Lender shall not have any outstanding loans or other
extensions of credit with respect to the


 


10

















 


Account. PFG may, from time to time, in its good faith
business judgment, revise the Minimum Eligibility Requirements—LC Supported,
upon written notice to Borrower.


 


 “Eligible Inventory”
means Inventory which PFG, in its good faith business judgment, deems eligible
for borrowing.  Without limiting the
fact that the determination of which Inventory is eligible for borrowing is a
matter of PFG’s good faith business judgment, the following are the minimum
requirements for Inventory to be Eligible Inventory:  the Inventory must (i) consist of raw materials or finished
goods, in good, new and salable condition, not be perishable, not be obsolete
or unmerchantable, and not be comprised of work in process, packaging materials
or supplies; (ii) meet all applicable governmental standards; (iii) have
been manufactured in compliance with the Fair Labor Standards Act in all material
respects; (iv) conform in all material respects to the warranties and
representations set forth in this Agreement; (v) be at all times subject
to PFG’s duly perfected, security interest (subject only to the security
interest of the Senior Lender); (vi) be situated at Borrower’s Address or at
one of the locations set forth in the Representations, and (vii) Senior Lender
shall not have any outstanding loans or other extensions of credit with respect
to the Inventory.


 


 “Eligible Purchase Orders”
means purchase orders to Borrower from its customers received in the ordinary
course of Borrower’s business, which will give rise to Accounts and General
Intangibles from the sale of goods or the rendition of services, or the
non-exclusive licensing of Intellectual Property, which are backed by a letter
of credit satisfactory to PFG in its good faith business judgment, and which
PFG, in its good faith business judgment, shall deem eligible for
borrowing.  Without limiting the fact
that the determination of which purchase orders are eligible for borrowing is a
matter of PFG’s good faith business judgment, the following (the “Minimum
Eligibility Requirements—Purchase Orders”) are the minimum requirements for
a Account to be an Eligible Purchase Order: 
upon the sale of goods or the rendition of services, or the
non-exclusive licensing of Intellectual Property which are the subject of the
purchase order, the resulting Account will be an Eligible Account, and Senior
Lender shall not have any outstanding loans or other extensions of credit with
respect to the purchase order.  PFG may,
from time to time, in its good faith business judgment, revise the Minimum
Eligibility Requirements—Purchase Orders, upon written notice to Borrower.


 


 “Equipment” means all
present and future “equipment” as defined in the California Uniform Commercial
Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures,
goods, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing.


 


“Event of Default” means any of the events set forth in
Section 7.1 of this Agreement.


 


“GAAP” means generally accepted accounting principles
consistently applied.


 


“General Intangibles” means all present and future “general
intangibles” as defined in the California Uniform Commercial Code in effect on
the date hereof with such additions to such term as may hereafter be made, and
includes without limitation all Intellectual Property, payment intangibles,
royalties, contract rights, goodwill, franchise agreements, purchase orders,
customer lists, route lists, telephone numbers, domain names, claims, income
tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.


 


“good faith business judgment” means honesty in fact and good
faith (as defined in Section 1201 of the Code) in the exercise of PFG’s
business judgment.


 


“including” means including (but not limited to).


 


“Indebtedness” means as to any Person, (a) indebtedness for
borrowed money or the deferred purchase price of property or services (other
than trade payables arising in the ordinary course of business), (b)
obligations evidenced by bonds, notes, debentures or other similar instruments,
(c) reimbursement obligations with respect to letters of credit and (d) capital
lease obligations.


 


 “Intellectual Property”
means all present and future (a) copyrights, copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work thereof, whether published or unpublished, (b)
trade secret rights, including all rights to unpatented inventions and
know-how, and confidential information; (c) mask work or similar rights
available for the protection of semiconductor chips; (d) patents, patent
applications and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same; (e) trademarks, servicemarks, trade styles,
and trade names, whether or not any of the foregoing are registered, and all
applications to register and registrations of the same and like protections,
and the entire goodwill of the business of Borrower connected with and
symbolized by any such trademarks; (f) computer software and computer software
products; (g) designs and design rights; (h) technology; (i) all claims for
damages by way of past, present and future infringement of any of the rights
included above; (j) all licenses or other rights to use any property or rights
of a type described above.


 


11

















 


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


 


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


 


“Investment Property” means all present and future investment
property, securities, stocks, bonds, debentures, debt securities, partnership
interests, limited liability company interests, options, security entitlements,
securities accounts, commodity contracts, commodity accounts, and all financial
assets held in any securities account or otherwise, and all options and
warrants to purchase any of the foregoing, wherever located, and all other
securities of every kind, whether certificated or uncertificated.


 


“Loan Documents” means, collectively, this Agreement, the
Representations, and all other present and future documents, instruments and
agreements between PFG and Borrower, including, but not limited to those
relating to this Agreement, and all amendments and modifications thereto and
replacements therefor.


 


“Material Adverse Change” means any of the following: (i) a
material adverse change in the business, operations, or financial or other
condition of the Borrower, or (ii) a material impairment of the prospect of
repayment of any portion of the Obligations; or (iii) a material impairment of
the value or priority (subject to Permitted Liens) of PFG’s security interests
in the Collateral.


 


“Obligations” means all present and future Loans, advances,
debts, liabilities, obligations, guaranties, covenants, duties and indebtedness
at any time owing by Borrower to PFG, whether evidenced by this Agreement or
any note or other instrument or document, or otherwise, whether arising from an
extension of credit, opening of a letter of credit, banker’s acceptance, loan,
guaranty, indemnification or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment and any participation by PFG
in Borrower’s debts owing to others), absolute or contingent, due or to become
due, including, without limitation, all interest, charges, expenses, fees,
attorney’s fees, expert witness fees, audit fees, collateral monitoring fees,
closing fees, facility fees, termination fees, minimum interest charges and any
other sums chargeable to Borrower under this Agreement or under any other Loan
Documents.


 


“Other Property” means the following as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and all rights relating
thereto: all present and future “commercial tort claims” (including without
limitation any commercial tort claims identified in the Representations),
“documents”, “instruments”, “promissory notes”, “chattel paper”, “letters of
credit”, “letter-of-credit rights”, “fixtures”, “farm products” and “money”;
and all other goods and personal property of every kind, tangible and
intangible, whether or not governed by the California Uniform Commercial Code.


 


“Parent” means Interwave Communications International Ltd., a
Bermuda corporation.


 


“Payment” means all checks, wire transfers and other items of
payment received by PFG (including proceeds of Accounts and payment of the
Obligations in full) for credit to Borrower’s outstanding Loans or, if the
balance of the Loans have been reduced to zero, for credit to its Deposit
Accounts.


 


“Permitted Indebtedness” means (a) the Loans and other
Obligations; and (b)        Indebtedness
existing on the date hereof and shown on Exhibit C hereto; (c) Subordinated
Debt; (d) Indebtedness owing to Senior Lender not to exceed the Senior Debt
Limit specified in the Schedule; (d) other Indebtedness secured by Permitted
Liens; and (e) reimbursement obligations in respect of letters of credit in an
aggregate face amount outstanding not to exceed $1,000,000 at any time
outstanding, which has been reported to PFG, and, in the case of reimbursement
obligations to the Senior Lender in respect of letters of credit not exceeding
the Senior Debt Limit (taking into account all Indebtedness to the Senior
Lender).


 


“Permitted Investments” are: (a)          Investments (if any) shown on Exhibit C hereto
and existing on the date hereof; (b) marketable direct obligations issued or
unconditionally guaranteed by the United States or its agency or any State
maturing within 1 year from its acquisition; (c) 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; (d) bank’s certificates of deposit issued maturing no more than 1
year after issue; (e) 
Investments consisting of deposit accounts and investment accounts; (f)
Investments consisting of extensions of credit to Borrower’s customers in the
ordinary course of business, in the nature of accounts receivable, prepaid
royalties or notes receivable arising from the sale or lease of goods, provision
of services or licensing activities of Borrower; (g) Investments received in
satisfaction or partial satisfaction of obligations owed by financially
troubled obligors or acquired as a result of a foreclosure with respect to any
secured Investment; (h) Investments acquired in exchange for any other
Investments in connection with or as a result of any bankruptcy, workout,
reorganization


 


12

















 


or recapitalization; (i) deposits,
prepayments and other credits to suppliers made in the ordinary course of
business; (j) other Investments in an aggregate amount at any time not to
exceed $250,000 combined for all such Investments of Borrower, Parent and
Advanced; (k) Indebtedness of any wholly-owned Subsidiary of Borrower, or any
wholly-owned Subsidiary of Parent, which is now or hereafter owing to Borrower,
and which is incurred to fund such Subsidiary’s operating expenses, prepayments
and purchases, all in the ordinary course of business; and (l) Indebtedness of
Parent to Borrower which is incurred by Parent to fund operating expenses,
prepayments and purchases, all in the ordinary course of business, of a
wholly-owned Subsidiary of Parent.


 


“Permitted Liens” means the following:  (i) purchase money security interests in specific items of
Equipment (including accessions, additions, parts, replacements, fixtures,
improvements and attachments thereto and the proceeds thereof); (ii) leases of
specific items of Equipment (including accessions, additions, parts, replacements,
fixtures, improvements and attachments thereto and the proceeds thereof); (iii)
liens for taxes, fees, assessments or other governmental charges or levies not
yet payable or being contested in good faith by appropriate proceedings, for
which Borrower has maintained reserves in accordance with GAAP, and which do
not result in a lien on any Collateral; (iv) additional security interests and
liens consented to in writing by PFG, which consent may be withheld in its good
faith business judgment; (v) security interests being terminated substantially
concurrently with this Agreement; (vi) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course
of business and securing obligations which are not delinquent; (vii) liens
incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by liens of the type described above in clauses (i) or
(ii) above, provided that any extension, renewal or replacement lien is limited
to the property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods; and (ix) Liens in
favor of Senior Lender securing an amount not in excess of the Senior Debt
Limit; (x) Liens listed on Exhibit C hereto; (xi) non-exclusive licenses and
non-exclusive sublicenses granted in the ordinary course of business; (xii)
leases and subleases granted in the ordinary course of business consisting of
(A) short-term rental of Inventory, or (B) leases or subleases of Equipment
with an aggregate value for all such leases and subleases not in excess of
$10,000; (xiii) pledges or deposits in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and social
security legislation, in an aggregate amount not to exceed $25,000 or as
otherwise required by law; (xiv) cash deposits to secure the performance of
bids, trade contracts (other than for borrowed money), contracts for the
purchase of property, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case, incurred
in the ordinary course of business and not representing an obligation for
borrowed money; (xv) statutory, common law or contractual liens of depository
institutions or institutions holding securities accounts (including rights of
set-off), securing only customary charges and fees in connection with such
accounts; and (xvi) Liens on insurance proceeds securing the payment of
financed insurance premiums, and (xvii) pledges of cash to secure letters of
credit permitted by clause (e) of the definition of Permitted
Indebtedness.  PFG will have the right
to require, as a condition to its consent under subparagraph (iv) above, that
the holder of the additional security interest or lien sign an intercreditor
agreement on PFG’s then standard form, acknowledge that the security interest
is subordinate to the security interest in favor of PFG, and agree not to take
any action to enforce its subordinate security interest so long as any
Obligations remain outstanding, and that Borrower agree that any uncured
default in any obligation secured by the subordinate security interest shall
also constitute an Event of Default under this Agreement.


 


“Person” means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.


 


 “Representations” means
the written Representations and Warranties provided by Borrower to PFG referred
to in the Schedule.


 


“Reserves” means, as of any date of determination, such amounts
as PFG may from time to time establish and revise in its good faith business
judgment, reducing the amount of Loans, and other financial accommodations
which would otherwise be available to Borrower under the lending formula(s) provided
in the Schedule:  (a) to reflect events,
conditions, contingencies or risks which, as determined by PFG in its good
faith business judgment, do or may adversely affect (i) the Collateral or any
other property which is security for the Obligations or its value (including
without limitation any increase in delinquencies of Accounts), (ii) the assets,
business or prospects of Borrower or any Guarantor, or (iii) the security
interests and other rights of PFG in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect PFG’s good
faith belief that any collateral report or financial information furnished by
or on behalf of Borrower or any Guarantor to PFG is or may have been
incomplete, inaccurate or misleading in any material respect; or (c) in respect
of any state of facts which PFG determines in good faith constitutes an Event
of Default or may, with notice or passage of time or both, constitute an Event
of Default.


 


“Senior Lender”, “Senior Debt” and “Senior Debt Limit”
have the meanings set forth in Section 8 of the Schedule.


 


13

















 


“Subsidiary” means (a) any corporation of which more
than 50% of the issued and outstanding equity securities having ordinary
voting power to elect a majority of the Board of Directors of such corporation
is at the time directly or indirectly owned or controlled by Borrower,
(b) any partnership, joint venture, or other association of which more
than 50% of the equity interest having the power to vote, direct or
control the management of such partnership, joint venture or other association
is at the time directly or indirectly owned and controlled by Borrower,
(c) any other entity included in the financial statements of Borrower on a
consolidated basis.


 


Other Terms. 
All accounting terms used in this Agreement, unless otherwise indicated,
shall have the meanings given to such terms in accordance with GAAP,
consistently applied.  All other terms
contained in this Agreement, unless otherwise indicated, shall have the
meanings provided by the Code, to the extent such terms are defined therein.


 


9.              GENERAL PROVISIONS.


 


9.1 
Interest Computation; Float Charge.  In computing interest on the Obligations,
all Payments received after 12:00 Noon Pacific Time on any day shall be deemed
received on the next Business Day.


 


9.2 
Application of Payments.  All
payments with respect to the Obligations may be applied, and in PFG’s good
faith business judgment reversed and re-applied, to the Obligations, in such
order and manner as PFG shall determine in its good faith business judgment.


 


9.3 
Charges to Accounts.  PFG
may, in its discretion, require that Borrower pay monetary Obligations in cash
to PFG, or charge them to Borrower’s Loan account, in which event they will
bear interest at the same rate applicable to the Loans.


 


9.4 
Monthly Accountings.  PFG shall provide Borrower monthly with an account of advances,
charges, expenses and payments made pursuant to this Agreement.  Such account shall be deemed correct, accurate
and binding on Borrower and an account stated (except for reverses and
reapplications of payments made and corrections of errors discovered by PFG),
unless Borrower notifies PFG in writing to the contrary within one year after
such account is rendered, describing the nature of any alleged errors or
omissions.


 


9.5 
Notices. 
All notices to be given under this Agreement shall be in writing and
shall be given either personally or by reputable private delivery service or by
regular first-class mail, or certified mail return receipt requested, addressed
to PFG or Borrower at the addresses shown in the heading to this Agreement, or
at any other address designated in writing by one party to the other party. All
notices shall be deemed to have been given upon delivery in the case of notices
personally delivered, or at the expiration of one Business Day following
delivery to the private delivery service, or two Business Days following the
deposit thereof in the United States mail, with postage prepaid.


 


9.6 
Severability. 
Should any provision of this Agreement be held by any court of competent
jurisdiction to be void or unenforceable, such defect shall not affect the
remainder of this Agreement, which shall continue in full force and effect.


 


9.7 
Integration. 
This Agreement and such other written agreements, documents and
instruments as may be executed in connection herewith are the final, entire and
complete agreement between Borrower and PFG and supersede all prior and
contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement.  There are no oral understandings, representations or agreements
between the parties which are not set forth in this Agreement or in other
written agreements signed by the parties in connection herewith.


 


9.8 
Waivers; Indemnity.  The failure of PFG at any time or times to require Borrower to
strictly comply with any of the provisions of this Agreement or any other Loan
Document shall not waive or diminish any right of PFG later to demand and
receive strict compliance therewith. 
Any waiver of any default shall not waive or affect any other default,
whether prior or subsequent, and whether or not similar.  None of the provisions of this Agreement or
any other Loan Document shall be deemed to have been waived by any act or
knowledge of PFG or its agents or employees, but only by a specific written
waiver signed by an authorized officer of PFG and delivered to Borrower.  To the extent permitted by law, Borrower
waives the benefit of all statutes of limitations relating to any of the
Obligations or this Agreement or any other Loan Document, and Borrower waives
demand, protest, notice of protest and notice of default or dishonor, notice of
payment and nonpayment, release, compromise, settlement, extension or renewal
of any commercial paper, instrument, account, General Intangible, document or
guaranty at any time held by PFG on which Borrower is or may in any way be
liable, and notice of any action taken by PFG, unless expressly required by
this Agreement. Borrower hereby agrees to indemnify PFG and its affiliates,
subsidiaries, parent, directors, officers, employees, agents, and attorneys,
and to hold them harmless from and against any and all claims, debts,
liabilities, demands, obligations, actions, causes of action, penalties, costs
and expenses (including reasonable attorneys’ fees), of every kind, which they
may sustain or incur based upon or arising out of any of the Obligations, or
any relationship or agreement between PFG and Borrower, or any other matter,
relating to Borrower or the Obligations; provided that this indemnity shall not
extend to damages proximately caused by the indemnitee’s own gross negligence
or willful misconduct.  Notwithstanding
any provision in this Agreement to the contrary, the indemnity agreement set
forth in this Section shall survive any termination of this Agreement and
shall for all purposes continue in full force and effect.


 


14

















 


9.9 [intentionally omitted]


 


9.10 
Amendment. 
The terms and provisions of this Agreement may not be waived or amended,
except in a writing executed by Borrower and a duly authorized officer of PFG.


 


9.11 
Time of Essence. 
Time is of the essence in the performance by Borrower of each and every
obligation under this Agreement.


 


9.12 
Attorneys Fees and Costs.  Borrower shall reimburse PFG for all
reasonable attorneys’ fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by PFG, pursuant to, or
in connection with, or relating to this Agreement (whether or not a lawsuit is
filed), including, but not limited to, any reasonable attorneys’ fees and costs
PFG incurs in order to do the following: prepare and negotiate this Agreement
and all present and future documents relating to this Agreement; obtain legal
advice in connection with this Agreement or Borrower; enforce, or seek to
enforce, any of its rights; prosecute actions against, or defend actions by,
Account Debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Borrower’s books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce PFG’s security interest in, the Collateral; and otherwise
represent PFG in any litigation relating to Borrower. If either PFG or Borrower
files any lawsuit against the other predicated on a breach of this Agreement,
the prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys’ fees, including (but not limited to) reasonable attorneys’
fees and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment.  All
attorneys’ fees and costs to which PFG may be entitled pursuant to this
Paragraph shall immediately become part of Borrower’s Obligations, shall be due
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.


 


9.13 
Benefit of Agreement.  The provisions of this Agreement shall be binding upon and inure
to the benefit of the respective successors, assigns, heirs, beneficiaries and
representatives of Borrower and PFG; provided, however, that Borrower may not
assign or transfer any of its rights under this Agreement without the prior
written consent of PFG, and any prohibited assignment shall be void.  No consent by PFG to any assignment shall
release Borrower from its liability for the Obligations.


 


9.14 
[intentionally omitted]


 


9.15 [intentionally omitted]


 


9.16 
Confidentiality.  In handling any confidential information, PFG and all employees
and agents of PFG shall exercise the same degree of care that PFG exercises
with respect to its own proprietary information of the same types to maintain
the confidentiality of any non-public information thereby received or received
pursuant to this Agreement, except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of PFG in connection with their
present or prospective business relations with Borrower or PFG provided that
they have entered into a comparable confidentiality agreement in favor of
Borrower, (ii) to prospective transferees or purchasers of any interest in the
Loans, provided that they have entered into a comparable confidentiality
agreement in favor of Borrower, (iii) as required by law, regulations, rule or
order, subpoena, judicial order or similar order, or (iv) as may be required in
connection with the examination, audit or similar investigation of PFG, (iv) as
may be necessary in PFG’s good faith business judgment in connection with the enforcement
of its rights or remedies after an Event of Default.  Confidential information hereunder shall not include information
that either:  (a) is in the public
domain or in the knowledge or possession of PFG when disclosed to PFG, or
becomes part of the public domain after disclosure to PFG through no fault of
PFG; or (b) is disclosed to PFG by a third party, provided PFG does not have
actual knowledge that such third party is prohibited from disclosing such
information.


 


9.17 
Paragraph Headings; Construction.  Paragraph headings are only used in this
Agreement for convenience.  Borrower and
PFG acknowledge that the headings may not describe completely the subject
matter of the applicable paragraph, and the headings shall not be used in any
manner to construe, limit, define or interpret any term or provision of this
Agreement. This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against PFG or Borrower under any rule of
construction or otherwise.


 


9.18 
Governing Law; Jurisdiction; Venue.  This Agreement and all acts and transactions
hereunder and all rights and obligations of PFG and Borrower shall be governed
by the laws of the State of California. 
As a material part of the consideration to PFG to enter into this
Agreement, Borrower (i) agrees that all actions and proceedings relating
directly or indirectly to this Agreement shall, at PFG’s option, be litigated
in courts located within California, and that the exclusive venue therefor
shall be San Francisco County; (ii) consents to the jurisdiction and venue of
any such court and consents to service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and (iii)
waives any and all rights Borrower may have to object to the jurisdiction of
any such court, or to transfer or change the venue of any such action or
proceeding.


 


15

















 


9.19 
Mutual Waiver of Jury Trial.  BORROWER AND PFG EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO,
THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
PFG AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF PFG OR BORROWER OR ANY
OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH PFG OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.


 


	
  Borrower:

  	
  PFG:

  
	
   

  	
   

  
	
   

  	
  INTERWAVE
  COMMUNICATIONS, INC. 
  

  	
  PARTNERS
  FOR GROWTH, L.P. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Cal R. Hoagland

  	
   

  	
  By

  	
  /s/ Andrew Kahn

  	
   

  
	
   

  	
   

  	
  President
  or Vice President

  	
   

  	
  Title

  	
  Manager, Partners for
  Growth, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its General Partner

  	
   

  
								



 


16

















 


PARTNERS FOR GROWTH


 


Schedule to


 


Loan
and Security Agreement


 


	
  Borrower:

  	
   

  	
  INTERWAVE
  COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
  Address: 

  	
   

  	
  2495 Leghorn,
  Mountain View, California  94043

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  June 4, 2004

  



 


This Schedule forms an integral part of the Loan and Security
Agreement between PARTNERS FOR GROWTH, L.P. and the above-borrower of even
date.


 


1.  CREDIT LIMIT


(Section 1.1):


An amount not to exceed the lesser of (a) $1,500,000 (the “Dollar
Credit Limit”) at any one time outstanding, or (b) an amount equal to the sum
of the following:


 


(1)           up to 80% (an “Advance Rate”) of the amount of
Borrower’s Eligible Accounts-Domestic (as defined in Section 8 above);
plus


 


(2)           up to 80% (an “Advance Rate”) of the amount of
Borrower’s Eligible Accounts-Foreign (as defined in Section 8 above); plus


 


(3)           up to 100% (an “Advance Rate”) of the amount of
Borrower’s Eligible Accounts-LC Supported (as defined in Section 8 above);
plus


 


(4)           up to 75% (an “Advance Rate”) of the amount of
Borrower’s Eligible Purchase Orders (as defined in Section 8 above); plus


 


(5)           up to 50% (an “Advance Rate”) of the value of
Borrower’s Eligible Inventory (as defined in Section 8 above),  calculated at the lower of cost or market
value and determined on a first-in, first-out basis.


 


PFG may, from time to time, modify the Advance Rates, in its good faith
business judgment, upon notice to the Borrower, based on changes in collection
experience with respect to Accounts, its evaluation of the Inventory or other
issues or factors relating to the Accounts, Inventory or other Collateral.


 


1

















 


	
   

  	
   

  	
  Borrower shall have the right to repay and reborrow Loans hereunder,
  subject to all of the terms and conditions of this Agreement.

  
	
   

  	
   

  	
   

  
	
  2.  INTEREST.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Interest Rate (Section 1.2):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A rate equal to 1.5% per month. Interest shall be calculated on the
  basis of a 360-day year and a year of twelve months of 30 days each for the
  actual number of days elapsed.

  
	
   

  	
   

  	
   

  
	
  3.  FEES (Section 1.4):

  	
   

  	
   

  
	
   

  	
   

  	
  Loan Fee:                                            $15,000,
  payable concurrently herewith. PFG acknowledges that it has already received
  from Borrower $5,000 of the Loan Fee.

   

  
	
   

  	
   

  	
   

  
	
  Unused Line Fee:

  	
   

  	
  In the event, in any calendar month (or portion thereof at the
  beginning and end of the term hereof), the average daily principal balance of
  the Loans outstanding during the month is less than the amount of the Dollar
  Credit Limit, Borrower shall pay PFG an unused line fee in an amount equal to
  0.25% of the difference between the amount of the Dollar Credit Limit and the
  average daily principal balance of the Loans outstanding during the month,
  computed on the basis of a 360-day year, which unused line fee shall be
  computed and paid monthly, in arrears, on the first day of the following
  month.

  
	
   

  	
   

  	
   

  
	
  4.  MATURITY DATE

  	
   

  	
   

  
	
  (Section 6.1):

  	
   

  	
  364 days from the date of this Agreement.

  
	
   

  	
   

  	
   

  
	
  5.  FINANCIAL COVENANTS

  	
   

  	
   

  
	
  (Section 5.1):

  	
   

  	
  Borrower shall cause Parent to comply with each of the following
  covenants.  Compliance shall be
  determined as of the end of each month:

  
	
   

  	
   

  	
   

  
	
  Minimum Tangible

  	
   

  	
   

  
	
  Net Worth:

  	
   

  	
  Parent shall maintain a Tangible Net Worth of not less than an amount
  equal to $750,000.

  
	
   

  	
   

  	
   

  
	
  Definitions.

  	
   

  	
  For purposes of the foregoing financial covenants, the following term
  shall have the following meaning:

  



 


2

















 


	
   

  	
   

  	
  “Tangible Net Worth” shall mean, on a consolidated basis, the excess
  of total assets less total liabilities, determined in accordance with GAAP,
  with the following adjustments:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (A) there shall be excluded from assets:  (i) notes, accounts receivable and other obligations owing to
  Borrower from its officers or other Affiliates, and (ii) all assets which
  would be classified as intangible assets under GAAP, including without
  limitation goodwill, licenses, patents, trademarks, trade names, copyrights,
  capitalized software and organizational costs, licenses and franchises, and
  (iii) minority Investments in other Persons.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (B) there shall be excluded from liabilities:  all indebtedness which is subordinated to
  the Obligations under a subordination agreement in form specified by PFG or
  by language in the instrument evidencing the indebtedness which PFG agrees in
  writing is acceptable to PFG in its good faith business judgment.

  
	
   

  	
   

  	
   

  
	
  6.  REPORTING.

  	
   

  	
   

  
	
  (Section 5.3):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower shall provide PFG with the following:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)          Monthly borrowing base report, in such form
  as PFG shall specify, within five Business Days after the end of each month,
  and borrowing base reports at such other times as PFG shall from time to time
  request in its good faith business judgment. 
  Said borrowing base shall not include any Accounts or other Collateral
  with respect to which Senior Lender has any outstanding loans or other
  extensions of credit.  Borrower shall
  also provide PFG with a listing of Accounts and other Collateral submitted to
  Senior Lender for financing, at the time so submitted, and Borrower shall not
  finance with Senior Lender any Accounts or other Collateral previously
  included in any borrowing base report provided to PFG, if the same would
  result in an Overadvance under Section 1.3 hereof.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)         Monthly accounts receivable agings, aged by
  invoice date, within five Business Days after the end of each month.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)          Monthly accounts payable agings, aged by
  invoice date, and outstanding or held check registers, if any, within five
  Business Days after the end of each month.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)         Monthly reconciliations of accounts
  receivable agings (aged by invoice date), and general ledger, within ten
  Business Days after the end of each month.

  



 


3

















 


	
   

  	
   

  	
  (e)          Monthly perpetual inventory reports for the
  Inventory valued on a first-in, first-out basis at the lower of cost or
  market (in accordance with GAAP) or such other inventory reports as are
  requested by PFG in its good faith business judgment, all within five
  Business Days after the end of each month.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (f)            If requested by PFG, monthly unaudited
  financial statements of Parent, as soon as available, and in any event within
  thirty days after the end of each month.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (g)         Monthly Compliance Certificates, within
  thirty days after the end of each month, in such form as PFG shall reasonably
  specify, signed by the Chief Financial Officer of Borrower, certifying that
  as of the end of such month Borrower was in full compliance with all of the
  terms and conditions of this Agreement, and setting forth calculations
  showing compliance with the financial covenants set forth in this Agreement
  and such other information as PFG shall reasonably request, including,
  without limitation, a statement that at the end of such month there were no
  held checks.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (h)         Quarterly unaudited financial statements of
  Parent, as soon as available, and in any event within forty-five days after
  the end of each fiscal quarter of Parent. If Parent files a form 10-Q with
  the Securities and Exchange Commission and the same is available within said
  period through EDGAR, that will satisfy this requirement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)             If requested by PFG, annual operating
  budgets (including income statements, balance sheets and cash flow
  statements, by month) for the upcoming fiscal year of Parent within thirty
  days prior to the end of each fiscal year of Parent, and commensurate with
  those provided to Parent’s Board of Directors and utilized by Parent’s
  executive management.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (j)             Annual financial statements of Parent,
  as soon as available, and in any event within 90 days following the end of
  Parent’s fiscal year (or such shorter time as may be required by the
  Securities and Exchange Commission for the filing by Parent of a form 10-K),
  certified by, and with an unqualified opinion of, independent certified
  public accountants acceptable to PFG. Burr, Pilger & Mayer LLP, Parent’s
  present accounting firm, is acceptable to PFG.  If Parent files a form 10-K with the Securities and Exchange
  Commission and the same is available within said period through EDGAR, that
  will satisfy this requirement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (k)          Copies of all reports and statements
  provided by Borrower and Parent to the Senior Lender at the same time the
  same are provided to the Senior Lender, and a listing with such 

  



 


4

















 


	
   

  	
   

  	
  frequency as PFG shall request, showing all Accounts financed by the
  Senior Lender.

  
	
  7.  BORROWER INFORMATION:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Borrower represents and warrants that the information set forth in
  the Representations and Warranties of the Borrower dated
                             ,
  previously submitted to PFG (the “Representations”) is true and correct as of
  the date hereof.

  
	
   

  	
   

  
	
  8.  ADDITIONAL PROVISIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)          Senior Lender.  As used herein, “Senior Lender” means Silicon Valley Bank.  Borrower shall not permit the total Senior
  Debt (as defined below) to exceed $2,500,000 at any time outstanding (the
  “Senior Debt Limit”), including, but not limited to, monies borrowed by
  Borrower, interest on loans due from Borrower, fees and expenses for which
  Borrower is obligated, sums due from Borrower in connection with issuance of
  commercial letters of credit, issuance of forward contracts for foreign
  exchange reserve, and any other direct or indirect financial accommodation
  Senior Lender may provide to Borrower. As used herein, “Senior Debt”
  means total combined Indebtedness of Borrower, Parent and Advanced to Senior
  Lender.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)         Deposit Accounts.  Concurrently, Borrower shall cause the
  banks and other institutions where its Deposit Accounts are maintained to
  enter into control agreements with PFG, in form and substance satisfactory to
  PFG in its good faith business judgment and sufficient to perfect PFG’s
  security interest in said Deposit Accounts; provided that Borrower may have
  up to 45 days after the date hereof to cause Wells Fargo Bank to enter into
  such a control agreement.  Said control
  agreements shall permit PFG, in its discretion (but subject to the rights of
  the Senior Lender), to withdraw from said Deposit Accounts accrued interest
  and any other Obligations due from Borrower to PFG.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)          Subordination of Inside Debt.  All present and future indebtedness of
  Borrower to its officers, directors and shareholders (“Inside Debt”) shall,
  at all times, be subordinated to the Obligations pursuant to a subordination
  agreement on PFG’s standard form. 
  Borrower represents and warrants that there is no Inside Debt
  presently outstanding.  Prior to 

  
				



 


5

















 


	
   

  	
   

  	
  incurring any Inside Debt in the future, Borrower shall cause the
  person to whom such Inside Debt will be owed to execute and deliver to PFG a
  subordination agreement on PFG’s standard form.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)         Other Debt Financing—Right of First Refusal.  Borrower hereby grants PFG a
  right of first refusal to provide any future debt financing which Borrower
  desires.  Prior to entering into any
  agreement with any other Person to provide Borrower with debt financing,
  Borrower shall advise PFG in writing of the proposed terms of the same and
  provide PFG with copies of all proposal letters, commitment letters, proposed
  loan documents and other documents relating to the other financing, and PFG
  shall have 10 days after receipt of all of the foregoing to agree in writing
  to provide debt financing to Borrower on the same terms and conditions. If
  PFG does not do so, Borrower may proceed to obtain the debt financing from
  the other Person on the terms and conditions advised to PFG, but in the event
  of a change in the proposed terms, Borrower shall again give PFG the right of
  first refusal to provide the debt financing on such changed terms as provided
  above.  The foregoing right of first
  refusal shall terminate 90 days after termination of this Agreement and
  payment in full of all of the monetary Obligations.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)          Guaranty—Affiliate. 
  Concurrently, Borrower shall cause Advanced to execute and
  deliver to PFG a Continuing Guaranty with respect to all of the Obligations,
  and a Security Agreement granting PFG a security interest in all of its
  assets (subject to “Permitted Liens” as therein defined), and certified
  resolutions or other evidence of authority with respect to the execution and
  delivery of such Guaranty and Security Agreement, all pursuant to
  documentation acceptable to PFG in its good faith business judgment.  Throughout the term of this Agreement
  Borrower shall cause such Guaranty and Security Agreement to continue in full
  force and effect.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (f)            Guaranty—Parent. 
  Within 30 days after the date hereof, Borrower shall cause
  Parent to execute and deliver to PFG a Continuing Guaranty with respect to
  all of the Obligations, and a Security Agreement granting PFG a security
  interest in all of its assets (subject to “Permitted Liens” as therein
  defined), and certified resolutions or other evidence of authority with
  respect to the execution and delivery of such Guaranty and Security
  Agreement, all pursuant to documentation acceptable to PFG in its good faith
  business judgment.  Throughout the
  term of this Agreement Borrower shall cause such Guaranty and Security
  Agreement to continue in full force and effect.

  



 


6

















 


	
   

  	
   

  	
  (g)         Other Affiliates.  Borrower represents and warrants that,
  except for Advanced and Borrower, Parent does not have any other direct or
  indirect Subsidiaries, except for Subsidiaries which do not have assets with
  a net book value in excess of $250,000, in the aggregate for all such
  Subsidiaries. Except for Advanced and Borrower, Borrower shall not permit
  Parent in the future to have any other direct or indirect Subsidiaries,
  except for (i) Subsidiaries which do not have assets with a net book value in
  excess of $250,000, in the aggregate for all such Subsidiaries, (ii)
  Subsidiaries organized under the laws of jurisdictions outside the United
  States, and (iii) Subsidiaries which have executed and delivered to PFG a
  Continuing Guaranty with respect to all of the Obligations, and a Security
  Agreement granting PFG a security interest in all of their assets, and
  certified resolutions or other evidence of authority with respect to the
  execution and delivery of such Guaranty and Security Agreement, all pursuant
  to documentation acceptable to PFG in its good faith business judgment, all
  of which continues in full force and effect.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (h)         Intellectual Property Security Agreements.  Borrower, Advanced and Parent
  are concurrently executing and delivering to PFG Intellectual Property
  Security Agreements.  Borrower shall
  provide PFG with the Exhibits to all such Security Agreements of Borrower,
  Advanced and Parent which list their respective trademarks and patents, within
  15 days after the date hereof.  None of Borrower, Advanced or Parent
  have any copyrights registered with the United States Copyright Office.

  



 


	
  Borrower:

  	
  PFG:

  
	
   

  	
   

  
	
   

  	
  INTERWAVE
  COMMUNICATIONS, INC. 
  

  	
  PARTNERS
  FOR GROWTH, L.P. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Cal R. Hoagland

  	
   

  	
  By

  	
  /s/ Andrew Kahn

  	
   

  
	
   

  	
   

  	
  President
  or Vice President

  	
   

  	
  Title

  	
  Manager, Partners for
  Growth, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its General Partner

  	
   

  
								



 


7






















WARRANT
PURCHASE AGREEMENT


 


Interwave Communications International Ltd.


2495 Leghorn Street


Mountain View, California 94043, USA 


 


Ladies & Gentlemen: 


 


This Warrant Purchase Agreement (the “Agreement”) is made as of June 4,
2004 (the “Closing Date”) by and between Interwave Communications International
Ltd. (NASDAQ: IWAV), a Bermuda company (the “Company”), and Partners For
Growth, L.P., a Delaware limited partnership (“Purchaser”). 


 


In consideration of the payment of $570 and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto covenant and agree as follows: 


 


1.               Authorization and
Purchase of the Warrant. 


 


(A)  Authorization of the
Warrant.  As of the Closing Date,  the Company’s Board of Directors has
authorized the issuance by the Company and the sale to the Purchaser of a
warrant (the “Warrant”) to purchase 57,000 fully paid and nonassessable common
shares, par value $0.01 per share (the “Common Shares”), of the Company, all as
more fully described, and subject to the conditions set forth below and in the
form of Warrant annexed hereto as Exhibit 1. 
The Common Shares issuable upon exercise of the Warrant are herein
referred to as the “Warrant Shares;” and the Warrant and the Warrant Shares are
sometimes herein together referred to as the “Securities.” 


 


(B)  Purchase of Warrant.  Subject to the terms and conditions set
forth below and in the Warrant, the Company shall issue to Purchaser the
Warrant in consideration of the payment of $570 and for other good and valuable
consideration.   


 


2.   The Closing.  The closing of the purchase and sale of the
Warrant to Purchaser (the “Closing”) shall be held at the offices of Partners
for Growth, L.P., 560 Mission Street, Third Floor, San Francisco, CA 94105, or
at such other location as may be mutually agreed upon by the parties
hereto.  On the Closing Date the Company
shall deliver to Purchaser the Warrant registered in the name of Purchaser. 


 


3.   Representations, Warranties
and Covenants of the Company.  Except as
set forth in the Schedule of Exceptions attached hereto, the Company represents
and warrants to, and covenants with, the Purchaser as follows: 


 


(A)   Corporate Power;
Authorization.  The Company has all
requisite corporate power and has taken all requisite corporate action to
execute and deliver each of this Agreement and the Warrant, to sell and issue
the Securities and to carry out and perform all of its obligations hereunder
and thereunder.  Each of this Agreement
and the Warrant 


 

















 


has been duly authorized, executed and
delivered on behalf of the Company and constitutes the valid and binding
agreement of the Company, enforceable in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors’ rights generally and
(ii) as limited by equitable principles generally.  The person executing this Agreement and the Warrant is a duly authorized
officer of the Company with all necessary legal authority to bind the Company
generally and with the specific legal authority to cause the Company to enter
into this Agreement and to execute and deliver the Warrant.  


 


(B)  Validity of
Securities.  The Warrant, when sold
against the consideration therefor as provided herein, will be validly
authorized and issued, fully paid and nonassessable.  The issuance and delivery of the Warrant is not subject to
preemptive or any similar rights of the shareholders of the Company or any
liens or encumbrances arising through the Company; and when the Warrant Shares
are issued upon exercise and in accordance with the terms of the Warrant, they
will be validly issued and outstanding, fully paid and nonassessable and free
of any liens or encumbrances arising through the Company. 


 


(C)  Capitalization. The
authorized capital of the Company consists of 10,000,000 Preferred Shares of
par value $0.001 each and 20,000,000 Common Shares of par value $0.01, of which
as of June 1, 2004, no Preferred Shares and 9,022,744 Common Shares were issued
and outstanding. All such issued and outstanding shares have been duly
authorized and validly issued and are fully paid and nonassessable. As of June
1, 2004, the Company has 119,670 Common Shares reserved for issuance upon
exercise of outstanding options under its 1994 Stock Plan, 1,039,307 Common
Shares reserved for issuance upon exercise of outstanding options under its
1999 Option Plan, and 385,536 Common Shares reserved for issuance upon exercise
of outstanding options under its 2001 Supplemental Stock Option Plan. As of
June 1, 2004, the Company has reserved a total of 454,203 Common Shares for
issuance upon exercise of outstanding warrants (excluding the shares
exercisable pursuant to the Warrant). 
As of June 1, 2004, the Company has reserved a total of 56,335 Common
Shares available for issuance under its 1999 Employee Stock Purchase Plan. In
addition, effective upon the Closing, the Company has reserved such number of
Common Shares as shall be necessary to provide for the exercise of the Warrant.
Except as specified above, as of the date of this Warrant there are no other
options, warrants, conversion privileges or other contractual rights
outstanding to purchase or otherwise acquire any authorized but unissued shares
of the Company’s capital stock or other securities, and the Company has not,
since June 1, 2004, authorized or issued any shares of its capital stock or
other securities. 


 


(D)  SEC Documents; Financial
Statements.  The Company’s Annual Report
on Form 10-K for the fiscal year ended June 30, 2003 (as filed on September 29,
2003),  the Company’s Quarterly Report
on Form 10-Q for the three months ended September 30, 2003 (as filed on
November 14, 2003), the Company’s Quarterly Report on Form 10-Q for the three
months ended December 31, 2003 (as originally filed on February 17, 2004; as
amended and filed on March 2, 2004; and as further amended and filed on March
25, 2004), the Company’s Current Report on Form 8-K filed on March 9, 2004, the



 


2

















 


Company’s Current Report on Form 8-K filed on
March 25, 2004, the Company’s Current Report on Form 8-K filed on March 31,
2004, the Company’s Current Report on Form 8-K filed on April 22, 2004, the
Company’s Quarterly Report on Form 10-Q for the period ending March 31, 2004
(as filed on May 14, 2004), all as filed by the Company with the Securities and
Exchange Commission (the “SEC”) are incorporated herein by reference (the “SEC
Documents”).  Each of the SEC Documents
conforms in all material respects to the requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as applicable, and the
rules, regulations and instructions of the Commission thereunder.  Each of the SEC Documents did not as of its
respective date contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances in which they were
made, not misleading.  The financial
statements of the Company included in the SEC Documents (the “Financial
Statements”) comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
Commission with respect thereto.  Except
as may be indicated in the notes to the Financial Statements, the Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied and fairly present the consolidated financial position
of the Company and its subsidiaries at the dates thereof.   


 


(E)  No Conflict.  The execution and delivery of this Agreement
and the Warrant do not, and the consummation of the transactions contemplated
hereby and thereby will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any obligation or to a
loss of a material benefit, under, any provision of the Memorandum of
Association, Bye-Laws or other constitutional documents of the Company, as
amended, or any mortgage, indenture, lease or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, its properties or
assets, the effect of which would have a material adverse effect on the Company
or materially impair or restrict its power to perform its obligations as
contemplated hereby or thereby. 


 


(F)  Governmental Consent, etc.
Other than approval from the Bermuda Monetary Authority, no consent, approval
or authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement, or the offer, sale or issuance of the
Warrant or the Warrant Shares upon exercise of the Warrants, or the
consummation of any other transaction contemplated hereby. 


 


(G)  Authorized and Unissued
Common Shares.  During the period within
which the Warrant may be exercised, the Company will at all times have
authorized and reserved, for the purpose of issue or transfer upon exercise of
the Warrant, a sufficient number of authorized but unissued Common Shares, when
and as required to provide for the exercise of the rights represented by this
Warrant. 


 


3

















 


(H)  Duty to Promptly Enter
Holder’s Name in Register of Members.   
The Company shall, immediately upon due exercise of the Warrant in full
or in part, and provided that all necessary approvals of the Bermuda Monetary
Authority have been obtained, enter the name of the Purchaser or other
exercising Holder (as defined in the Warrant), as the case may be, in the
Register of Members of the Company for the appropriate number of shares issued
upon such exercise.  


 


(I)  Company Reports Filed Under
the Exchange Act.  With a view to making
available to the Purchaser the benefits of Rule 144 and other rules or
regulations of the SEC that may permit the Purchaser to sell Warrant Shares to
the public without registration, the Company shall for a period of two years
following the date of this Agreement use commercially reasonable efforts to:
(a) make and keep public information available, as those terms are understood
and defined in Rule 144, at all times after the Closing; (b) file with the SEC
in a timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and (c) furnish to the Purchaser,
so long as the Purchaser owns any Securities within a reasonable period of
time: (i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act,
and (ii) such other information as may be reasonably requested in order to
avail the Purchaser of any rule or regulation of the SEC that permits the
selling of any such Securities without registration. 


 


4.  
Representations and Warranties of Purchaser.  Purchaser hereby represents and warrants to the Company as of the
Closing Date as follows: 


 


(A)  Investment Experience.  Purchaser is an “accredited investor” within
the meaning of Rule 501 under the Securities Act of 1933, as amended (the
“Securities Act”), and was not organized for the specific purpose of acquiring
the Securities.  Purchaser is aware of
the Company’s business affairs and financial condition and has acquired
sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the Securities. 
Purchaser has such business and financial experience as is required to
give it the capacity to protect its own interests in connection with the
purchase of the Securities.   


 


(B)  Investment Intent.  Purchaser is purchasing the Securities for
investment for its own account only and not with a view to, or for resale in
connection with, any “distribution” thereof within the meaning of the
Securities Act.  Purchaser understands
that the Warrant has not been registered under the Securities Act or registered
or qualified under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of Purchaser’s investment intent as expressed herein. 


 


(C)  Authorization.  Purchaser has all requisite power and has
taken all requisite action to execute and deliver each of this Agreement and to
carry out and perform all of its obligations hereunder.  This Agreement has been duly authorized,
executed and delivered on behalf of Purchaser and constitutes the valid and
binding agreement of Purchaser, enforceable in accordance with its terms,
except (i) as limited by applicable 


 


4

















 


bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the enforcement of creditors’ rights
generally and (ii) as limited by equitable principles generally.  The consummation of the transactions
contemplated herein and the fulfillment of the terms herein will not result in
a breach of any of the terms or provisions of Purchaser’s partnership agreement
or other similar organizational documents. The execution and delivery of this
Agreement and the purchase of the Warrant do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit, under, any provision of the
Limited Partnership Agreement or other constitutional documents of the
Purchaser, as amended, or any mortgage, indenture, lease or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule of regulation applicable to the Purchaser, its
properties or assets, the effect of which would have a material adverse effect
on the Purchaser or materially impair or restrict its power to perform its
obligations as contemplated hereby or thereby. 


 


(D)  No Legal, Tax or Investment
Advice.  Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Securities constitutes legal, tax
or investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Warrant. 


 


5.  
Restrictions on Transfer of Securities; Registrable Securities.  The restrictions on transfer of the
Securities and the registration rights granted to the Purchaser in connection
with the Securities are as set forth in the Warrant. 


 


6.               Miscellaneous. 


 


(A)  Waivers and
Amendments.  This Agreement and any term
hereof may be changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such change,
waiver, discharge or termination is sought. 


 


(B)  Governing Law; Venue.  This Agreement and the Warrant shall each be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of California without regard to conflict
of laws.  The parties each irrevocably
submit to the exclusive jurisdiction of the U.S. state and federal courts
located in San Francisco, California in connection with any dispute arising
under this Agreement or the Warrant. 


 


(C)  Survival.  The representations, warranties, covenants
and agreements made herein shall survive any investigation made by the Company
or Purchaser and the Closing. 


 


5

















 


(D)  Successors and
Assigns.  The provisions hereof shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto (specifically including any
person that becomes a holder of the Warrant through transfer thereof from the
Purchaser, and any other successors in interest to the Securities).  In the event of any merger, amalgamation,
consolidation or acquisition involving the Company in which the Company is not
the surviving entity, the Company’s obligations hereunder and under the Warrant
shall be expressly or by operation of law assumed by the surviving entity.  


 


(E)  Entire Agreement;
Construction.  This Agreement and the
Warrant constitute the full and entire understanding and agreement between the
parties with regard to the subject hereof. 
In the event of any conflict between the terms of this Agreement and the
terms of the Warrant (including any Schedule attached thereto), the terms of
the Warrant shall prevail.  The term “$”
or “dollars” means United States dollars; the term “including” means “including
without limitation”; “days” means business days in the United States, unless
otherwise indicated. 


 


(F)  Notices, etc.  Any notice or other communication given
under this Agreement shall be sufficient if in writing and sent by personal
service, facsimile, courier service promising overnight delivery or registered
or certified mail, return receipt requested, postage prepaid, to a party at its
address set forth below (or at such other address as shall be designated for
such purpose by such party in a written notice to the other party hereto): 


 


if to
Purchaser, at 


 


Partners for Growth, L.P.


560 Mission Street, Third Floor


San Francisco, California 94105


Attention:  Lorraine Nield                


Fax:  (415) 315-7959 


 


with a copy to 


 


Benjamin Greenspan, Esq.


620 Laguna Road 


Mill Valley, CA 94941


(415) 358-4780 


 


or 


 


if to the Company, at 


 


Interwave Communications International, Ltd. 


2495 Leghorn Street 


Mountain View, California 94043, USA 


 


6

















 


Attention: Chief Financial Officer


Fax:  (650) 967-1029 


 


with a copy
to: 


 


Wilson Sonsini Goodrich & Rosati 


650 Page Mill Road 


Palo Alto, CA 94304 


Attention: Christopher D. Mitchell, Esq. 


Telephone (650) 493-9300 


 


or in any case at such other address as
Purchaser or the Company shall have furnished to the other in writing. The term
“notify” means to give notice in writing as specified above. 


 


(G)  Severability of this
Agreement.  If any provision of this
Agreement shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. 


 


(H)  Titles and Subtitles.  The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference and shall not,
by themselves, determine the construction of this Agreement. 


 


(I)  Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. 


 


[Signature
page follows]


 


7

















 


Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose. 


 


	
   

  	
  PARTNERS FOR GROWTH, L.P.

  
	
   

  	
   

  
	
   

  	
  /s/ Andrew Kahn

  	
   

  
	
   

  	
  By:

  	
  Andrew W. Kahn

  	
  , Manager of 

  
	
   

  	
  Partners for Growth, LLC, its General

  Partner

  
	
   

  	
   

  
	
   

  
	
  AGREED AND ACCEPTED,

  as of the date first above written:

  
	
   

  
	
   

  
	
  Interwave Communications International Ltd.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Cal R. Hoagland

  	
   

  
	
  Its:

  	
  SVP and CFO

  	
   

  
								



 


8

















 


WARRANT


 


THIS WARRANT (THE “WARRANT”) IS ISSUED PURSUANT TO THE TERMS OF THE
PROVISIONS OF A WARRANT PURCHASE AGREEMENT (THE “AGREEMENT”) BETWEEN INTERWAVE
COMMUNICATIONS INTERNATIONAL LTD. (THE “COMPANY”) AND THE INITIAL WARRANT
HOLDER.  A COPY OF SUCH AGREEMENT IS ON
FILE AT THE OFFICE OF THE  CORPORATE
SECRETARY OF THE COMPANY.  THIS SECURITY
WAS SOLD IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY BE  OFFERED OR SOLD ONLY IF REGISTERED UNDER THE
SECURITIES ACT OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE.


 


	
  Company:

  	
  Interwave Communications International Ltd., a Bermuda company

  
	
  Number of Shares:

  	
  57,000

  
	
  Class of Shares:

  	
  Common, par value US$0.01 each

  
	
  Exercise Price:

  	
  $3.60 (subject to adjustment to FMV at closing, if less)

  
	
  Issue Date:

  	
  June 4, 2004

  
	
  Expiration Date:

  	
  June 4, 2011

  



 


The term “Holder” shall initially refer to Partners for Growth, L.P., a
Delaware limited partnership, which is the initial holder of this Warrant and
shall further refer to any subsequent permitted holder of this Warrant from
time to time.


 


The Holder is subject to certain restrictions as set forth in the
Agreement.


 


The Company does hereby certify and agree that, for the agreed sum of
$570 and for other good and valuable consideration, the Holder, or its
permitted successors and assigns, hereby is entitled to purchase from Interwave
Communications International, Ltd. (the “Company”) Fifty-Seven Thousand
(57,000) duly authorized, validly issued, fully paid and non-assessable common
shares, par value US$0.01 each (“Shares”) of the Company upon the terms and
subject to the provisions of this Warrant.


 


Section 1.                                          Term,
Price and Exercise of Warrant.


 


1.1                                 Term
of Warrant. This Warrant shall be exercisable for a period of seven (7)
years after the date hereof (hereinafter referred to as the “Expiration Date”).


 


1.2                                 Exercise
Price.  The price per share at which
the Shares are issuable upon exercise of this Warrant (the “Warrant Shares”)
shall be $3.60, subject to adjustment from time to time as set forth herein
(the “Exercise Price”).


 

















 


1.3                                 Exercise
of Warrant.


 


(a)                                  This
Warrant may be exercised or converted, in whole or in part, upon surrender to
the Company at its then principal offices in the United States of this Warrant
to be exercised, together with the form of election to exercise attached hereto
as Exhibit A duly completed and executed, and upon payment to the Company of
the Exercise Price for the number of Warrant Shares in respect of which this
Warrant is then being exercised.


 


(b)                                 Payment
of the aggregate Exercise Price may be made (i) in cash or by cashier’s or bank
check or (ii) by converting this Warrant through a Cashless Exercise (as
defined herein).  Upon a “Cashless
Exercise” the Holder shall receive Shares on a net basis such that, without the
payment of any funds, the Holder shall surrender this Warrant in exchange for
the number of Shares equal to “X” (as defined below), computed using the
following formula:


 


	
   

  	
   

  
	
  X  =

  	
  Y * (A-B)

  	
   

  
	
   

  	
  A

  	
   

  
	
   

  	
   

  



 


Where


 


	
  X

  	
  =

  	
  the number
  of Shares to be issued to Holder.

  
	 
	 
	 

	
  Y

  	
  =

  	
  the number
  of Shares to be exercised under this Warrant

  
	 
	 
	 

	
  A

  	
  =

  	
  the fair
  market value of one Common Share.

  
	 
	 
	 

	
  B

  	
  =

  	
  the Exercise
  Price (as adjusted to the date of such calculations).

  



 


(c)                                  For
purposes of this Warrant, the fair market value of one Common Share of the
Company shall be, if the Common Shares are listed on a stock exchange or
over-the-counter market, the highest closing sale price reported on such
exchange or over-the-counter market for the thirty (30) day period prior to the
date of deterimation of fair market value. If the Common Shares are not traded
over-the-counter or on an exchange, the fair market value of the Company’s
Common Shares shall be the price per share which the Company could obtain from
a willing buyer for shares sold by the Company from authorized but unissued
shares, as such price shall be agreed by the Company and the Holder.


 


(d)                                 Subject
to Section 2 hereof, upon surrender of this Warrant, and the duly
completed and executed form of election to exercise, and payment of the
Exercise Price or conversion of this Warrant through Cashless Exercise, the
Company shall endeavor to


 


2

















 


issue and deliver within three (3) business days, but shall in all
cases issue and deliver or cause to be issued and delivered within ten (10)
calendar days to the Holder or such other person as the Holder may designate in
writing a certificate or certificates for the number of Warrant Shares so
purchased upon the exercise or conversion of this Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of record of such
Shares as of the date of the surrender of this Warrant, and the duly completed
and executed form of election to exercise, and payment of the Exercise Price or
conversion of this Warrant through Cashless Exercise; provided, that if the
date of surrender of this Warrant and payment of the Exercise Price is not a
business day, the certificates for the Shares shall be issued as of the next
business day (whether before or after the Expiration Date), and, until such
date, the Company shall be under no duty to cause to be delivered any
certificate for such Shares or for shares of such other class of shares.  If this Warrant is exercised or converted in
part, a new warrant of the same tenor and for the number of Warrant Shares not
exercised or converted shall be executed by the Company.


 


1.4                                 Fractional
Interests. The Company shall not be required to issue fractions of Shares
upon the exercise of this Warrant.  If
any fraction of a Common Share would be issuable upon the exercise of this
Warrant (or any portion thereof), the Company shall purchase such fraction for
an amount in cash equal to the same fraction of the last  reported sale price of the Common Shares on
the NASDAQ National Market System or any other national securities exchange or
market on which the Common Shares are then listed or traded.


 


1.5                                 Automatic
Conversion upon Expiration.  In the
event that, upon the Expiration Date, the fair market value of one Share (or
other security issuable upon the exercise hereof) as determined in accordance
with Section 1.3 above is greater than the Exercise Price in effect on
such date, then this Warrant shall automatically be deemed on and as of such
date to be converted pursuant to Section 1.2 above as to all Shares (or
such other securities) for which it shall not previously have been exercised or
converted, and the Company shall promptly deliver a certificate representing
the Shares ( or such other securities) issued upon such conversion to the
Holder.


 


Section 2.                                          Exchange
and Transfer of Warrant.


 


(a)                                  This
Warrant may be transferred, in whole or in part, without restriction, subject
to (i) the Holder’s delivery of an opinion of counsel in customary form that
such transfer is in compliance with applicable securities laws and (ii) the
transferee holder of the new Warrant assumes in writing the obligations of the
Holder set forth in the Agreement.  A
transfer may be registered with the Company by submission to it of this
Warrant, together with the annexed Assignment Form attached hereto as Exhibit B
duly completed and executed. After the Company’s receipt of this Warrant and
the Assignment Form so completed and executed, the Company will issue and
deliver to the transferee a new warrant (representing the portion of this
Warrant so transferred) at the same Exercise Price per share and otherwise
having the same terms and provisions as this Warrant, which the Company will
register in the new holder’s name.  In
the event of a partial


 


3

















 


transfer of this Warrant, the Company shall concurrently issue and
deliver to the transferring holder a new warrant that entitles the transferring
holder to purchase the balance of this Warrant not so transferred and that
otherwise is upon the same terms and conditions as this Warrant.  Upon the due delivery of this Warrant for
transfer, the transferee holder shall be deemed for all purposes to have become
the holder of the new warrant issued for the portion of this Warrant so
transferred, effective immediately prior to the close of business on the date
of such delivery, irrespective of the date of actual delivery of the new
warrant representing the portion of this Warrant so transferred.


 


(b)                                 In
the event of the loss, theft or destruction of this Warrant, the Company shall
execute and deliver an identical new warrant to the Holder in substitution
therefor upon the Company’s receipt of (i) evidence reasonably satisfactory to
the Company of such event and (ii) if requested by the Company, an indemnity
agreement reasonably satisfactory in form and substance to the Company.  In the event of the mutilation of or other
damage to the Warrant, the Company shall execute and deliver an identical new
warrant to the Holder in substitution therefor upon the Company’s receipt of
the mutilated or damaged warrant.


 


(c)                                  The
Company shall pay all costs and expenses incurred in connection with the
exercise, exchange, transfer or replacement of this Warrant, including, without
limitation, the costs of preparation, execution and delivery of a new warrant
and of share certificates representing all Warrant Shares; provided, that the
Holder shall pay all stamp and other transfer taxes payable in connection with
the transfer or replacement of this Warrant.


 


Section 3.                                          Certain
Covenants.


 


(a)                                  The
Company shall at all times reserve for issuance and keep available out of its
authorized and unissued Shares, solely for the purpose of providing for the
exercise of this Warrant, such number of Shares as shall from time to time be
sufficient therefor.


 


(b)                                 The
Company will not, by amendment of its Memorandum of Association or Bye-Laws or
through reorganization, consolidation, merger, amalgamation, sale of assets or
otherwise, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant.  Without limiting
the foregoing, the Company (i) will not increase the par value of any shares
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise and (ii) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares upon the exercise of this Warrant.


 


Section 4.                                          Adjustments
to Exercise Price and Number of Warrant Shares.


 


4.1                                 Adjustments.
In order to prevent dilution of the rights granted hereunder, the Exercise
Price shall be subject to adjustment from time to time in accordance with this
Section 4. Except as specifically excluded in Section 4.5, upon each
adjustment of the Exercise Price pursuant to this Section 4, the Holder
shall thereafter be entitled to acquire upon exercise, at the Exercise Price
resulting from such adjustment, the number


 


4

















 


of Common Shares of the Company
obtainable by multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of Common Shares acquirable immediately prior to
such adjustment and dividing the product thereof by the new Exercise Price
resulting from such adjustment (e.g., the price at which Additional Common
Shares is issued in the case of a Dilutive Issue).


 


4.2                                 Subdivisions,
Combinations and Share Dividends. If the Company shall at any time
subdivide by split-up or otherwise, its outstanding Common Shares into a
greater number of shares, or issue additional Common Shares as a dividend,
bonus issue or otherwise with respect to any Common Shares, the Exercise Price
in effect immediately prior to such subdivision or share dividend or bonus
issue shall be proportionately reduced. Conversely, in case the outstanding
Common Shares of the Company shall be combined into a smaller number of shares,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased.


 


4.3.                              Reorganization,
Reclassification, Consolidation, Merger or Sale of Assets. If any capital
reorganization or reclassification of the Common Shares of the Company, or
consolidation, amalgamation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Shares shall be entitled
to receive shares, securities, cash or other property with respect to or in
exchange for Common Shares, then, as a condition of such reorganization,
reclassification, consolidation, amalgamation, merger or sale, lawful and
adequate provision shall be made whereby the Holder shall have the right to
acquire and receive upon exercise of this Warrant (or at the option of the
Holder, shall have the right to receive a new and equivalent Warrant for) such
shares, securities, cash or other property issuable or payable (as part of the
reorganization, reclassification, consolidation, amalgamation, merger or sale)
with respect to or in exchange for such number of outstanding Common Shares as
would have been received upon exercise of this Warrant at the Exercise Price
then in effect. The Company will not effect any such consolidation,
amalgamation, merger or sale unless, prior to the consummation thereof, the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument mailed or delivered to the Holder, the obligation to
deliver such shares, securities or assets that the Holder may be entitled to
purchase in accordance with the foregoing provisions. If a purchase, tender or
exchange offer is made to and accepted by the holders of more than 50% of the
outstanding Common Shares of the Company, the Company shall not effect any
consolidation, amalgamation, merger or sale with the person having made such
offer or with any Affiliate of such person, unless prior to the consummation of
such connsolidation, merger or sale the Holder shall have been given a
reasonable opportunity to then elect to receive upon the exercise of this Warrant
either the shares, securities or assets then issuable with respect to the
Common Shares of the Company or the shares, securities or assets, or the
equivalent, issued to previous holders of the Common Shares in accordance with
such offer. For purposes hereof the term “Affiliate” with respect to any given
person shall mean any person controlling, controlled by or under common control
with the given person. Notwithstanding the foregoing Section 4.3, a new
Warrant issuable to the Holder in connection with a consolidation,
amalgamation,


 


5

















 


merger (other than a merger for
reorganizational purposes) or sale of assets transaction shall not include the
price-based antidilution protection set forth in Section 4.5.


 


4.4.                              Notices
of Record Date, Etc.  In the event
that:


 


(1)                                  the
Company shall declare any dividend or bonus issue upon its Common Shares
payable in Company shares to the holders of its Common Shares, or


 


(2)                                  there
shall be any capital reorganization or reclassification of the securities of
the Company, including any subdivision or combination of its outstanding Common
Shares, or consolidation, amalgamation, or merger of the Company with, or sale
of all or substantially all of its assets to, another corporation,


 


then, in connection with such
event, the Company shall give to the Holder:


 


(i)             at least ten (10)
days prior written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend or bonus issue or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger or sale; and


 


(ii)          in the case of any such
reorganization, reclassification, 
consolidation, amalgamation, merger or sale at least ten (10) days prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause (i) shall also specify, in the case of any
such dividend or bonus issue, the date on which the holders of Common Shares
shall be entitled thereto and the terms of such dividend or bonus issue, and
such notice in accordance with this clause (ii) shall also specify the date on
which the holders of Common Shares shall be entitled to exchange their Common
Shares for securities or other property deliverable upon such reorganization,
reclassification, consolidation, amalgamation, merger or sale, as the case may
be, and the terms of such exchange. Each such written notice shall be given by
first class mail, postage prepaid, addressed to the holder of this Warrant at
the address of the Holder.


 


4.5.                              Exercise
Price Adjustment for Dilutive Issuances. 
If the Company at any time (and at each such time) issues Additional
Common Shares after the date of this Warrant for consideration per share less
than the Exercise Price in effect immediately before such issue (a “Dilutive
Issue”), the Exercise Price shall be reduced, concurrently with such Dilutive
Issue, to the price per share paid or payable for such Additional Common
Shares.  In the case of Dilutive Issues
authorized or effected by the Company after 364 calendar days from the Closing
Date, the second sentence of Section 4.1 shall not apply.  The term “Additional Common Shares” means
all Common Shares (including reissued shares) issued or, in the case of convertible
or derivative securities or Common Share equivalents, deemed issued, after the
date of this Warrant, but excluding convertible and derivative securities and
Common Share equivalents outstanding prior to the date of this Warrant.  For example only, if the Exercise Price is
$2.00, the number of shares issuable under the Warrant is 50,000, and the
Company issues Common Shares at $1.75 on the 90th day after the date
of this Warrant, the new Exercise Price pursuant to


 


6

















 


this Section 4.5 is deemed
to be $1.75 and the new number of shares issuable under Section 4.1 upon
exercise of the Warrant is 57,143 
(($2.00 * 50,000) / $1.75).  If
the issuance of Additional Common Shares were to occur 390 calendar days after
the date of this Warrant, the Exercise Price would be adjusted to $1.75 but the
number of shares subject to the Warrant would remain at 50,000. As a further
example, if the Company engaged in a merger transaction after the date of this
Warrant and a new Warrant is issued for the appropriately adjusted number of
shares and adjusted Exercise Price as determined in this Section 4, the
new Warrant issuable to the Holder would not include price-based antidilution
protection set forth in this Section 4.5 in respect of future dilutive
issues.


 


4.6.                              Adjustment
by Board of Directors. If any event occurs as to which, in the opinion of
the Board of Directors of the Company, the provisions of this Section 4
are not strictly applicable or if strictly applicable would not fairly protect
the rights of the Holder in accordance with the essential intent and principles
of such provisions, then the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent and
principles, so as to protect such rights, but in no event shall any adjustment
have the effect of increasing the Exercise Price as otherwise determined
pursuant to any of the provisions of this Section 4, except in the case of
a combination of shares of a type contemplated in Section 4.2 and then in
no event to an amount larger than the Exercise Price as adjusted pursuant to
Section 4.2.


 


4.7.                              Officers’
Statement as to Adjustments. Whenever the Exercise Price and/or number of
Shares subject to the Warrant is required to be adjusted as provided in
Section 4, the Company shall forthwith file at each office designated for
the exercise of this Warrant a statement, signed by the Chief Executive
Officer, Chief Financial Officer or any Managing Director of the Company,
showing in reasonable detail the facts requiring such adjustment, the Exercise
Price and number of issuable shares that will be effective after such
adjustment; provided, however, such statement shall not be required to the
extent the information requested in this Section 4.7 is available through
the Company’s reports filed with the Securities and Exchange Commission. If the
information described in this Section 4.7 is readily available through the
Company’s reports filed with the Securities and Exchange Commission, the
Company shall not be required to provide a separate notice of adjustment to the
Holder; provided, however, if such information is not readily available through
the Company’s reports filed with the Securities Exchange Commission and made
public, the Company shall cause a notice setting forth any such adjustments to
be sent by mail, first class, postage prepaid, to the record Holder of this
Warrant at its address appearing herein or otherwise in the Company’s Register
of Members.  If such notice relates to
an adjustment resulting from an event referred to in Section 4.3, such
notice shall be included as part of the notice required to be mailed and
published under the provisions of Section 4.3.


 


4.8                                 Issue
of Securities other than Common Shares. 
In the event that at any time, as a result of any adjustment made
pursuant to Section 4, the Holder thereafter shall become entitled to
receive any shares of the Company, other than Common Shares, 


 


7

















 


thereafter the number of such other shares so receivable upon exercise
of this Warrant shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the Common Shares contained in Section 4.


 


Section 5.                                          Rights
and Obligations of the Warrant Holder.


 


This Warrant shall not entitle the Holder to any rights of a
shareholder in the Company.  The Holder
shall have the specific “piggyback” registration rights set forth in Exhibit C
attached hereto and made a part hereof. 
Capitalized terms not otherwise defined in Exhibit C shall have the
meanings set forth herein.


 


Section 6.                                          Restrictive
Share Legend.


 


This Warrant and the Warrant Shares have not been registered under any
securities laws.  Accordingly, any share
certificates issued pursuant to the exercise of this Warrant shall (until
receipt of an opinion of counsel in customary form that such legend is no
longer necessary) bear the following legend:


 


THIS WARRANT AND THE WARRANT SHARES ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”), AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OF DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN
CUSTOMARY FORM THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT.


 


Section 7.                                          Notices.


 


Any notice or other communication required or permitted to be given
here shall be in writing and shall be effective (a) upon hand delivery or
delivery by e-mail or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is
to be received) or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received), or (b) on the third business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communication shall be:


 


If to the Company:


 


Interwave
Communications International, Ltd.


 


8

















 


2495
Leghorn Street


Mountain
View, California 94043, USA


Telephone: (650) 314-2533


Facsimile: (650) 967-1029


E-Mail: choagland@iwv.com


Attention: Cal R. Hoagland, Senior Vice President and Chief Financial
Officer


 


With a copy to:


Wilson Sonsini Goodrich & Rosati


650 Page Mill Road


Palo Alto, CA 94304


Attention: Christopher D. Mitchell, Esq.


Telephone (650) 493-9300


 


If to the Holder:


 


Partners for Growth, L.P.


560 Mission Street, Third Floor


San Francisco, CA 94105


Telephone:  (415) 315-7944


Telecopier: (415) 315-7959


E-Mail: lorraine@pfgrowth.com


Attention: Lorraine Nield


 


with a copy to


 


Benjamin Greenspan, Esq.


620 Laguna Road


Mill Valley, CA 94941


(415) 358-4780


 


Each party hereto may from time to time change its address for notices
under this Section 7 by giving at least 10 calendar days’ notice of such
changes address to the other party hereto.


 


Section 8.                                          Amendments
and Waivers.


 


This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.


 


Section 9.                                          Applicable
Law; Severability.


 


This Warrant shall be governed by and construed and enforced in
accordance with the laws of the State of California.  If any one or more of the provisions contained in this


 


9

















 


Warrant, or any application of any provision thereof, shall be invalid,
illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and all other
applications of any provision thereof shall not in any way be affected or
impaired thereby.


 


Section 10.                                   Construction.


 


The terms of the Warrant Purchase Agreement to which this Warrant is
attached as Exhibit 1 are incorporated by reference herein. Terms used but not
defined herein have the meaning set forth in the Warrant Purchase Agreement.


 


IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed on the day and year first above written.


 


COMPANY:


 


	
  Interwave Communications International Ltd.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Cal R. Hoagland

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Cal R. Hoagland

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  SVP and CFO

  	
   

  
					



 


 


ACKNOWLEDGED AND AGREED:


 


HOLDER:


 


Partners for Growth, L.P.


 


 


	
  By:

  	
  /s/ Andrew Kahn

  	
   

  
	
   

  	
  Andrew Kahn, Manager of

  
	
   

  	
  Partners for Growth, LLC,

  
	
   

  	
  Its General Partner

  



 


10

















 


Exhibit A


 


To:                              Interwave Communications International Ltd.


 


ELECTION TO EXERCISE


 


1.                                       The
undersigned hereby exercises its right to subscribe for and purchase
______________ fully paid, validly issued and nonassessable Shares covered by
the attached Warrant and tenders payment herewith in the amount of $___________
in accordance with the terms thereof.


 


1.                                       The
undersigned hereby elects to convert the attached Warrant into fully paid,
validly issued and nonassessable Shares by Cashless Exercise in the manner
specified in Section 1.3 of the attached Warrant. This conversion is
exercised with respect to __________ of shares.


 


[Strike the
paragraph above that does not apply.]


 


 


, and requests that
certificates for such shares be issued in the name of, and delivered to:


 


	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date: 

  	
   

  	
  [Holder]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
							



 

















 


Exhibit B


 


ASSIGNMENT FORM


 


	
  To:

  	
  Interwave Communications International Ltd.

  	
   

  	
   

  
	
   

  	
   

  
	
  The undersigned hereby
  assigns and transfers this Warrant to

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Insert assignee’s social security or tax identification number)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Print or type assignee’s name, address and postal code)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  and irrevocably appoints ______________________________________ to
  transfer this Warrant on the books of the Company.

  



 


	
  Date:

  	
   

  	
      Partners For Growth, L.P.

  
	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
  , Manager of

  
	
   

  	
  Partners for Growth, LLC, Its General Partner

  
								



 

















 


EXHIBIT C


 


PIGGYBACK REGISTRATION RIGHTS


 


1. PIGGYBACK REGISTRATION RIGHTS.


 


1.1                                 Piggyback
Rights. If (but without any obligation to do so) the Company proposes to
register any of its equity securities under the United States Securities Act of
1933 (the “Act”) in connection with the public offering of such shares (other
than (i) a registration relating solely to the sale of securities to
participants in a Company equity option or share rights or share purchase plan,
(ii) a registration relating to a corporate reorganization or other transaction
under Rule 145 of the Act, or (iii) a registration relating to the offer and
sale of debt securities, (iv) a registration on any registration form that does
not permit secondary sales, or (v) a registration on any form that does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Warrant Shares, the
Company shall, at such time, promptly give the Holder written notice of such
registration. Upon the written request of the Holder given within ten (10)
business days after mailing of such notice by the Company, the Company shall,
subject to the provisions of Section 1.4 of this Exhibit C, use all
commercially reasonable efforts to cause a registration statement to become
effective, which includes all of the Warrant Shares that the Holder requests to
be registered by such notice and for which the Holder (or its individual
members) is then the shareholder of record (or would be the shareholder of record
upon the exercise of its Warrant). 
Notwithstanding the foregoing, unless the consent of the requisite
Holders under the Sixth Amended and Restated Investor Rights Agreement among
the Company and the undersigned Investors therein) has been obtained pursuant
to the amendment or waiver provisions therein, the inclusion of the Warrant
Shares in any registration pursuant to this Section 1.1 shall not reduce
the number of Registrable Securities (as defined in the Sixth Amended and
Restated Investor Rights Agreement) also to be included in the same
registration, and shall be limited in its entirety prior to any limitation on
the number of Registrable Securities included in such registration.


 


1.2                                 Right
to Terminate Registration. The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 1 prior to
the effectiveness of such registration whether or not the Holder has elected to
include securities in such registration.


 


1.3                                 Expenses
of Registration. All expenses other than underwriting discounts and
commissions incurred in connection with registrations, filings or
qualifications pursuant to this Section, including without limitation all
registration, filing and qualification fees (including Blue Sky fees), printers’
and accounting fees, and fees and disbursements of counsel for the Company and
the reasonable fees and disbursements for one counsel for the Holder shall be
borne by the Company. Any fees or disbursements of counsel for the Holder
(other than the single counsel referenced above) shall be borne by the Holder.


 

















 


1.4                                 Underwriting
Requirements. In connection with any offering involving an underwriting of
Common Shares of the Company, the Company shall not be required under this
Section to include any of the Warrant Shares in such underwriting unless
the Holder accepts the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it (or by other persons entitled to
select the underwriters) and enters into an underwriting agreement in customary
form with an underwriter or underwriters selected by the Company. If the total
amount of securities, including Warrant Shares, requested by shareholders or
other securities holders to be included in such offering exceeds the amount of
securities sold other than by the Company that the underwriters determine in
their sole discretion is compatible with the success of the offering, then the
Company shall be required to include in the offering only that number of such
securities, including Warrant Shares, that the underwriters determine in their
sole discretion will not  jeopardize the
success of the offering (the securities so included to be apportioned pro rata
among the selling shareholders, including Holder, according to the total amount
of securities entitled to be included therein owned by each selling shareholder
or in such other proportions as may be mutually agreed to by such selling
shareholders).


 


1.5                                 Information
from the Holder. It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 1 with respect to
the Warrant Shares that the Holder shall furnish to the Company such
information regarding itself and its individual members, the Warrant Shares
held by Holder or its members, and the intended method of disposition of such
securities as shall be reasonably required to effect the registration of the
Warrant Shares.


 


1.6                                 No
Delay of Registration. The Holder shall not have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.


 


2.                                       INDEMNIFICATION


 


In the event any shares of Warrant Shares are included in a
registration statement under Section 1 of this Exhibit C:


 


2.1                                 The
Company Indemnity. To the extent permitted by law, the Company will
indemnify, defend and hold harmless the Holder, its partners or officers,
directors, shareholders, legal counsel and accountants for the Holder, any
underwriter (as defined in the Act) for the Holder and each person, if any, who
controls the Holder or underwriter, within the meaning of the Securities Act or
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (each an
“Indemnified Person”), against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or any state securities laws, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a “Violation”): (i) any untrue statement or alleged untrue
statement of a material fact contained in such


 

















 


registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities laws or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state securities
laws in connection with such registration; and the Company will reimburse
each  Indemnified Person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided however that the indemnity agreement contained in this
Section 2.1 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based
upon a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any Indemnified Person; provided further, however, that the  foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Indemnified
Person from whom the person asserting any such losses, claims, damages or
liabilities purchased Warrant Shares in the offering, if a copy of the
prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Indemnified Person to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the shares to
such person, and if the prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage or liability.


 


2.2                                 Holder
Indemnity. To the extent permitted by law, the Holder and each of them will
jointly and severally indemnify, defend and hold harmless the Company, each of
its directors, each of its officers, each of its partners, each person, if any,
who controls the Company within the meaning of the Securities Act, legal
counsel and accountants for the Company, any underwriter, any other shareholder
selling securities in such registration statement and any controlling person of
any such  underwriter or other
shareholder, against any losses, claims, damages or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Securities Act, the Exchange Act or any state securities laws, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation (but excluding clause (iii) of the
definition thereof), in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by the Holder expressly for use in connection with such
registration; and the Holder will reimburse any person intended to be
indemnified pursuant to this Section 2.2 for any legal or other expenses
reasonably incurred by such person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however
that the indemnity agreement contained in this Section 2.2 shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such


 

















 


settlement is effected without the consent of the Holder (which consent
shall not be unreasonably withheld).


 


2.3                                 Prompt
Notice Required. Promptly after receipt by an indemnified party under this
Section 2 of actual knowledge of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 2,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, 
jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided
however that an indemnified party (together with all other indemnified parties
that may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 2 to the extent
of such prejudice, but the omission to so deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.3.


 


2.4                                 Alternative
Relief. If the indemnification provided for in this Section 2 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of and the
relative benefits received by the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage or expense, as well as any
other relevant equitable considerations, provided that no person guilty of
fraud shall be entitled to contribution. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.  The
relative benefits received by the indemnifying party and the indemnified party
shall be determined by reference to the net proceeds and underwriting discounts
and commissions from the offering received by each such party.


 


2.5                                 Underwriting
Agreement. Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting


 

















 


agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions of this Section 2,
the provisions in the underwriting agreement shall control.


 


2.6                                 Survival.
The obligations of the Company and the Holder under this Section 2 shall
survive the completion of any offering of the Warrant Shares in a registration
statement under Section 1 of this Exhibit C.


 


3.                                       ASSIGNMENT


 


The rights to cause the Company to register Warrant Shares pursuant to
Section 1 of this  Exhibit C may be
assigned (but only with all related obligations) by Holder to  a transferee or assignee of such securities
provided; (a) the Company is, within a reasonable time after such transfer,
furnished with written notice of  the
name and address of such transferee or assignee and the securities with  respect to which such registration rights
are being assigned and (b) such 
transferee or assignee agrees in writing to be bound by and subject to
the  terms and conditions of the
Agreement.


 


4.                                       TERMINATION
OF REGISTRATION RIGHTS


 


The Holder shall not be entitled to exercise any right provided for in
Section  1 of this Exhibit C after such time at which all Warrant Shares
of the relevant holder can be sold in any 
three (3) month period without registration in compliance  with Rule 144 of the Act.


 

















 


Partners
for Growth 


 


Security Agreement


 


	
  Debtor:

  	
   

  	
  INTERWAVE COMMUNICATIONS INTERNATIONAL
  LTD.,

  
	
   

  	
   

  	
  a Bermuda corporation

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Clarendon House

  
	
   

  	
   

  	
  2 Church Street

  
	
   

  	
   

  	
  P.O. Box HM 1022

  
	
   

  	
   

  	
  Hamilton, HM DX, Bermuda

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  June 4, 2004

  



 


THIS SECURITY AGREEMENT
is entered into on the above date between PARTNERS FOR GROWTH, L.P. (“PFG”),
whose address is 560 Mission Street, 3rd floor, San Francisco, CA 94105 and the
Debtor named above (the “Debtor”), whose chief executive office is located at
the above address (“Debtor’s Address”). 


 


1

















 


1. 
[INTENTIONALLY OMITTED] 


 


2.  SECURITY INTEREST. To secure the payment and
performance of all of the Obligations when due, Debtor hereby grants to PFG a
security interest in all of the following (collectively, the
“Collateral”):  all right, title and
interest of Debtor in and to all of the following, whether now owned or
hereafter arising or acquired and wherever located: all Accounts; all
Inventory; all Equipment; all Deposit Accounts; all General Intangibles
(including without limitation all Intellectual Property); all Investment
Property; all Other Property; and any and all claims, rights and interests in
any of the above, and all guaranties and security for any of the above, and all
substitutions and replacements for, additions, accessions, attachments,
accessories, and improvements to, and proceeds 
(including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties) of, any and all of the above, and all Debtor’s
books relating to any and all of the above. Notwithstanding anything herein to
the contrary, in no event shall the security interest granted under this
Section 2 attach to any  (“Specified
Contracts”):  any lease, license,
contract, property rights or agreement to which Debtor is a party or any of its
rights (including property rights with respect to equipment) or interests
thereunder if and for so long as the grant of such security interest shall
constitute or result in (i) the abandonment, invalidation or unenforceability
of any right, title or interest of Debtor therein or (ii) in a breach or
termination pursuant to the terms of, or a default under, any such lease,
license, contract property rights or agreement (other than to the extent that
any such term would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the Code (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable law or principles of equity);
provided however that such security interest shall attach immediately at such
time as the condition causing such abandonment, invalidation or
unenforceability shall be remedied and to the extent severable, shall attach
immediately to any portion of such lease, license, contract, property rights or
agreement that does not result in any of the consequences specified in (i) or
(ii) above. Except as disclosed on Exhibit A hereto, Debtor represents and
warrants to PFG that there are no Specified Contracts which are material to
Debtor’s business.  Debtor shall not,
hereafter, without PFG’s prior written consent, enter into any Specified
Contract which is material to Debtor’s business. In addition, notwithstanding
anything herein to the contrary, in no event shall the security interest
granted under this Section 2 attach to any of the outstanding capital stock of a controlled foreign corporation
(as such term is defined in the Internal Revenue Code of 1986, as amended) in
excess of 65% of the voting power of all classes of capital stock of such
controlled foreign corporation entitled to vote.


 


3.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.


 


In order to induce
PFG to enter into a loan agreement with the Borrower and make loans to the
Borrower, subject to the exceptions set forth on the Disclosure Schedule
attached hereto as Exhibit B, Debtor represents and warrants to PFG as follows,
and Debtor covenants that the following representations will continue to be
true, and that Debtor will at all times comply with all of the following
covenants, throughout the term of this Agreement and until all Obligations have
been paid and performed in full:


 


3.1  Corporate
Existence and Authority. 
Debtor is and will continue to be, duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation.  Debtor is and will continue to be qualified
and licensed to do business in all jurisdictions in which any failure to do so
would result in a Material Adverse Change. 
The execution, delivery and performance by Debtor of this Agreement, and
all other documents contemplated hereby (i) have been duly and validly
authorized, (ii) are enforceable against Debtor in accordance with their terms
(except as enforcement may be limited by equitable principles and by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
creditors’ rights generally), and (iii) do not violate Debtor’s articles or
certificate of incorporation, or Debtor’s by-laws, or any law or any material
agreement or instrument which is binding upon Debtor or its property, and (iv)
do not constitute grounds for acceleration of any material indebtedness or
obligation under any agreement or instrument which is binding upon Debtor or
its property.


 


3.2  Name; Trade
Names and Styles. 
As of the date hereof, the name of Debtor set forth in the heading to
this Agreement is its name as presently set forth in its certificate of
incorporation.  Listed on Exhibit A
hereto are, as of the date hereof, all prior names of Debtor and all of
Debtor’s present and prior trade names. 
Debtor shall give PFG 30 days’ prior written notice before changing its
name or doing business under any other name. 
Debtor has complied, and will in the future comply, in all material
respects, with all laws relating to the conduct of business under a fictitious
business name, if applicable to Debtor.


 


3.3  Place of
Business; Location of Collateral. As of the date hereof,
the address set forth in the heading to this Agreement is Debtor’s chief
executive office.  In addition, as of
the date hereof, Debtor has places of business and Collateral is located only
at the locations set forth on Exhibit A hereto.  Debtor will give PFG at least 30 days prior written notice before
opening any additional place of business, changing its chief executive office,
or moving any of the Collateral to a location other than Debtor’s Address or
one of the locations set forth on Exhibit A hereto, except that Debtor may
maintain sales offices in the ordinary course of business at which not more
than a total of $10,000 fair market value of Equipment is located.


 


2

















 


3.4  Title to
Collateral; Perfection; Permitted Liens.  


 


(a)  Debtor is now, and will at
all times in the future be, the sole owner of all the Collateral, except for
items of Equipment which are leased to Debtor and except for Permitted
Liens.  The Collateral now is and will
remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens.  PFG now has, and will continue to have, an
enforceable security interest in all of the Collateral, subject only to the
Permitted Liens, and Debtor will at all times defend PFG and the Collateral
against all claims of others.  


 


(b)   Debtor has set forth on
Exhibit A hereto all of Debtor’s Deposit Accounts, as of the date hereof, and
Debtor will give PFG five Business Days advance written notice before
establishing any new Deposit Accounts and will cause the institution where any
such new Deposit Account is maintained to execute and deliver to PFG a control
agreement in form sufficient to perfect PFG’s security interest in the Deposit
Account and otherwise satisfactory to PFG in its good faith business judgment. 


 


(c) In the event that Debtor shall at any time after the date hereof
have any commercial tort claims against others, which it is asserting or gives
written notice of its intention to assert, and in which the potential recovery
exceeds $100,000, Debtor shall promptly notify PFG thereof in writing and
provide PFG with such information regarding the same as PFG shall request
(unless providing such information would waive the Debtor’s attorney-client
privilege).  Such notification to PFG
shall constitute a grant of a security interest in the commercial tort claim
and all proceeds thereof to PFG, and Debtor shall execute and deliver all such
documents and take all such actions as PFG shall request in connection
therewith.


 


(d)   None of the Collateral now
is or will be affixed to any real property in such a manner, or with such
intent, as to become a fixture.  Debtor
is not and will not become a lessee under any real property lease pursuant to
which the lessor may obtain any rights in any of the Collateral and no such
lease now prohibits, restrains, impairs or will prohibit, restrain or impair
Debtor’s right to remove any Collateral from the leased premises.  Whenever any Collateral is located upon
premises in which any third party has an interest, Debtor shall, whenever
requested by PFG, use commercially reasonable efforts to cause such third party
to execute and deliver to PFG, in form acceptable to PFG, such waivers and
subordinations as PFG shall specify in its good faith business judgment.  Debtor will keep in full force and effect,
and will comply with all material terms of, any lease of real property where
any of the Collateral now or in the future may be located.


 


3.5  Maintenance of
Collateral.  Debtor will maintain the Collateral in good working condition
(ordinary wear and tear excepted), and Debtor will not use the Collateral for
any unlawful purpose.  Debtor will
immediately advise PFG in writing of any material loss or damage to the
Collateral.


 


3.6  Books and
Records.  Debtor
has maintained and will maintain at Debtor’s Address complete and accurate
books and records, comprising an accounting system such that its financial
statements can be prepared in accordance with GAAP.


 


3.7  Financial
Condition, Statements and Reports.  All financial statements now or in the
future delivered to PFG have been, and will be, prepared in conformity with
GAAP and now and in the future will fairly present, in all material respects,
the results of operations and financial condition of Debtor, in accordance with
GAAP, at the times and for the periods therein stated.  Between the last date covered by any such
statement provided to PFG and the date hereof, there has been no Material
Adverse Change.


 


3.8  Tax Returns and
Payments; Pension Contributions.  Debtor has timely filed, and will timely
file, all material required tax returns and reports, and Debtor has timely
paid, and will timely pay, all federal and state, and all material foreign and
local taxes, assessments, deposits and contributions now or in the future owed
by Debtor.  Debtor may, however, defer
payment of any contested taxes, assessments, deposits and contributions,
provided that Debtor (i) in good faith contests Debtor’s obligation to pay the
same by appropriate proceedings promptly and diligently instituted and
conducted, (ii) notifies PFG in writing of the commencement of, and any
material development in, the proceedings, and (iii) posts bonds or takes any
other steps required to keep the contested taxes from becoming a lien upon any
of the Collateral.  Debtor is unaware of
any claims or adjustments proposed for any of Debtor’s prior tax years which
could result in additional taxes becoming due and payable by Debtor.  Debtor has paid, and shall continue to pay
all amounts necessary to fund all present and future pension, profit sharing
and deferred compensation plans in accordance with their terms, and Debtor has
not and will not withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to,
any such plan which could reasonably be expected to result in any liability of
Debtor, including any material liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency. 


 


3.9  Compliance with
Law.  Debtor has,
to the best of its knowledge, complied, and will comply, in all material
respects, with all provisions of all foreign, federal, state and local laws and
regulations applicable to Debtor, including, but not limited to, those relating
to Debtor’s ownership of real or personal property, the conduct and licensing
of Debtor’s business, and all environmental matters.


 


3.10  Litigation.  There is no claim, suit, litigation,
proceeding or investigation pending or (to best of Debtor’s knowledge)
threatened against Debtor in any court or before any governmental agency (or
any basis therefor known to Debtor) which


 


3

















 


could reasonably be expected to result, either
separately or in the aggregate, in any Material Adverse Change.  Debtor will promptly inform PFG in writing
of any claim, proceeding, litigation or investigation in the future threatened
or instituted against Debtor involving any single claim of $50,000 or more, or
involving $100,000  or more in the
aggregate.


 


4. REMITTANCE OF PROCEEDS. Subject to
the rights of the Senior Lender (if any), all proceeds arising from the
disposition of any Collateral shall be delivered, in kind, by Debtor to PFG in
the original form in which received by Debtor not later than the following
Business Day after receipt by Debtor, to be applied to the Obligations in such
order as PFG shall determine; provided that, if no Default or Event of Default
has occurred and is continuing, Debtor shall not be obligated to remit to PFG
(i) the proceeds of Accounts arising in the ordinary course of business, or
(ii) the proceeds of the sale of worn out or obsolete Equipment disposed of by
Debtor in good faith in an arm’s length transaction for an aggregate purchase
price of $25,000 or less (for all such transactions in any fiscal year), and
(iii) the proceeds of insurance if promptly used to replace or repair the
property with respect to which the proceeds were paid.  Except as permitted above, Debtor agrees
that it will not commingle proceeds of Collateral with any of Debtor’s other
funds or property, but will hold such proceeds separate and apart from such
other funds and property and in an express trust for PFG, except as set forth
above, and subject to the rights of the Senior Lender.  Nothing in this Section limits the
restrictions on disposition of Collateral set forth elsewhere in this
Agreement. 


 


5.  ADDITIONAL DUTIES OF DEBTOR.


 


5.1 [intentionally omitted] 


 


5.2  Insurance.  Debtor shall, at all times insure all of the
tangible personal property Collateral and carry such other business insurance,
with insurers reasonably acceptable to PFG, in such form and amounts as PFG may
reasonably require and that are customary and in accordance with standard
practices for Debtor’s industry and locations, and Debtor shall provide
evidence of such insurance to PFG.  All
such insurance policies shall name PFG as an additional loss payee, and shall
contain a lenders loss payee endorsement in form reasonably acceptable to
PFG.  Upon receipt of the proceeds of
any such insurance, subject to the rights of the Senior Lender, provided no
Default or Event of Default has occurred and is continuing, PFG shall release
to Debtor insurance proceeds with respect to Collateral, which shall be
utilized by Debtor for the prompt repair or replacement of the Collateral with
respect to which the insurance proceeds were paid.  PFG may require reasonable assurance that the insurance proceeds
so released will be so used.  If Debtor
fails to provide or pay for any insurance, PFG may, but is not obligated to,
obtain the same at Debtor’s expense. 
Debtor shall promptly deliver to PFG copies of all material reports made
to insurance companies.


 


5.3  Reports.  Debtor, at its expense, shall provide PFG
with such written reports with respect to Debtor, as PFG shall from time to
time specify in its good faith business judgment, it being recognized by PFG that any
projections and forecasts provided by Debtor in good faith and based upon
reasonable assumptions are not to be viewed as facts and that actual results
during the period or periods covered by any such projections or forecasts may
differ from the projected or forecast results.


 


5.4  Access to
Collateral, Books and Records.  At reasonable times, and on one Business Day’s notice, PFG, or
its agents, shall have the right to inspect the Collateral, and the right to
audit and copy Debtor’s books and records. 
All information obtained in any such inspection or audit shall be
subject to the confidentiality agreement in Section 9.16 below.  The foregoing inspections and audits shall
be at Debtor’s expense and the charge therefor shall be $750 per person per day
(or such higher amount as shall represent PFG’s then current standard charge
for the same), plus reasonable out-of-pocket expenses. Notwithstanding the foregoing, if no
Event of Default has occurred and is continuing, Debtor shall not be required
to disclose, permit the inspection, examination or making of extracts, or
discussion of, any document, information or other matter (i) in respect of
which disclosure is prohibited by law or any agreement binding on Debtor or any
of its Subsidiaries, or (ii) is subject to attorney-client or similar privilege
or constitutes attorney work product. 
If Debtor is withholding any information requested by Lender pursuant to
the preceding sentence, it shall so advise PFG in writing, giving PFG a general
description of the nature of the information withheld.


 


5.5  Negative
Covenants. Debtor shall not, without PFG’s prior written
consent (which shall be a matter of its good faith business judgment), do any
of the following:  (i) merge or
consolidate with another corporation or entity, except that any wholly-owned Subsidiary of Debtor may be merged with
Debtor so long as Debtor is the surviving corporation;
(ii) acquire any assets, except in the ordinary course of business, or make any
Investments other than Permitted Investments; (iii) consummate any other
transaction outside the ordinary course of business; (iv) sell or transfer any
Collateral, except for (A) the sale of finished Inventory in the ordinary
course of Debtor’s business, (B) the sale of obsolete or unneeded Equipment in
the ordinary course of business, (C) the making of Permitted Investments, (D)
the granting of Permitted Liens, and (E) the non-exclusive licensing of
Intellectual Property in the ordinary course of business ; (v) store any
Inventory or other Collateral with any warehouseman or other third party,
unless there is in place a bailee agreement in such form as PFG shall specify
in its good faith business judgment; (vi) sell any Inventory on a sale-or-return,
guaranteed sale, consignment, or other contingent basis; (vii) make any loans
of any money or other assets, other than Permitted Investments; (viii) incur
any Indebtedness, other than Permitted Indebtedness; (ix) guarantee or
otherwise become liable with respect to the obligations of another party


 


4

















 


or entity; (x) pay or declare any dividends on
Debtor’s stock (except for dividends payable solely in stock of Debtor); (xi)
redeem, retire, purchase or otherwise acquire, directly or indirectly, any of
Debtor’s stock; (xii) engage, directly or indirectly, in any business other
than the businesses currently engaged in by Debtor or reasonably related
thereto; or (xiii) dissolve or elect to dissolve.  Transactions permitted by the foregoing provisions of this
Section are only permitted if no Default or Event of Default would occur as a
result of such transaction.  


 


5.6  Litigation
Cooperation. 
Should any third-party suit or proceeding be instituted by or against
PFG with respect to any Collateral or relating to Debtor, Debtor shall, without
expense to PFG, make available Debtor and its officers, employees and agents
and Debtor’s books and records, to the extent that PFG may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.


 


5.7  Deposit
Accounts.  Concurrently,
Debtor shall cause the banks and other institutions where its Deposit Accounts
are maintained to enter into control agreements with PFG, in form and substance
satisfactory to PFG in its good faith business judgment and sufficient to
perfect PFG’ security interest in said Deposit Accounts.  Said control agreements shall permit PFG, in
its discretion (but subject to the rights of the Senior Lender), to withdraw
from said Deposit Accounts accrued interest and any other Obligations due from
Debtor to PFG.


 


5.8  Further
Assurances. 
Debtor agrees, at its expense, on request by PFG, to execute all
documents and take all actions, as PFG, may, in its good faith business
judgment, deem necessary or useful in order to perfect and maintain PFG’s
perfected security interest in the Collateral (subject only to Permitted
Liens), and in order to fully consummate the transactions contemplated by this
Agreement.


 


6.  TERM. This Agreement shall continue in effect
until all Obligations have been paid and performed in full.


 


7.  EVENTS OF DEFAULT AND REMEDIES.


 


7.1  Events of
Default.  The
occurrence of any of the following events shall constitute an “Event of
Default” under this Agreement, and Debtor shall give PFG immediate written
notice thereof: 


 


(a) Any warranty, representation, statement, report or certificate made
or delivered to PFG by Debtor or any of Debtor’s officers, employees or agents,
now or in the future, shall be untrue or misleading in a material respect when
made or deemed to be made; or 


 


(b) Debtor shall fail to pay any monetary Obligation within three
Business Days after the date due; or 


 


(c) any event of default shall occur under any present or future document,
instrument or agreement between Borrower and PFG; or 


 


(d) Debtor shall breach any of the provisions of Section 5.5 hereof, or
shall fail to perform any other non-monetary Obligation which by its nature
cannot be cured, or shall fail to permit PFG to conduct an inspection or audit
as provided in Section 5.4 hereof; or 


 


(e) Debtor shall fail to perform any other non-monetary Obligation,
which failure is not cured within ten Business Days after the date due; or 


 


(f) any levy, assessment, attachment, seizure, lien or encumbrance
(other than a Permitted Lien) is made on the Collateral with a value of $25,000
or more, which is not cured within 10 days after the occurrence of the same; or



 


(g) any default or event of default occurs under any obligation in an
amount in excess of $25,000, secured by a Permitted Lien, which is not cured
within any applicable cure period or waived in writing by the holder of the
Permitted Lien; or 


 


(h) Debtor breaches any material contract or obligation, which has
resulted or may reasonably be expected to result in a Material Adverse Change;
or 


 


(i) Dissolution, termination of existence, insolvency or business
failure of Debtor; or appointment of a receiver, trustee or custodian, for all
or any part of the property of, assignment for the benefit of creditors by, or
the commencement of any proceeding by Debtor under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect;
or 


 


(j) the commencement of any proceeding against Debtor or any guarantor
of any of the Obligations under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 45 days after the date commenced; or 


 


5

















 


(k) revocation or termination of, or limitation or denial of liability
upon, any guaranty executed by Debtor in favor of PFG; or 


 


(l) Debtor makes any payment on account of any indebtedness or
obligation which has been subordinated to the Obligations other than as
permitted in the applicable subordination agreement, or if any Person who has
subordinated such indebtedness or obligations terminates or in any way limits
his subordination agreement; or 


 


(m) Debtor shall cease to own 100% of the outstanding stock of
Borrower; or


 


(n) Debtor shall generally not pay its debts as they become due, or
Debtor shall conceal, remove or transfer any part of its property, with intent
to hinder, delay or defraud its creditors, or make or suffer any transfer of
any of its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or 


 


(o) a Material Adverse Change shall occur.  


 


7.2  Remedies.  Upon the occurrence and during the
continuance of any Event of Default, PFG, at its option, and without notice or
demand of any kind (all of which are hereby expressly waived by Debtor), may do
any one or more of the following: (a) [intentionally omitted]; (b) Accelerate
and declare all or any part of the Obligations to be immediately due, payable,
and performable, notwithstanding any deferred or installment payments allowed
by any instrument evidencing or relating to any Obligation; (c) Take possession
of any or all of the Collateral wherever it may be found, and for that purpose
Debtor hereby authorizes PFG without judicial process to enter onto any of
Debtor’s premises without interference to search for, take possession of, keep,
store, or remove any of the Collateral, and remain on the premises or cause a
custodian to remain on the premises in exclusive control thereof, without
charge for so long as PFG deems it necessary, in its good faith business
judgment, in order to complete the enforcement of its rights under this
Agreement or any other agreement; provided, however, that should PFG seek to
take possession of any of the Collateral by court process, Debtor hereby irrevocably
waives: (i) any bond and any surety or security relating thereto required by
any statute, court rule or otherwise as an incident to such possession; (ii)
any demand for possession prior to the commencement of any suit or action to
recover possession thereof; and (iii) any requirement that PFG retain
possession of, and not dispose of, any such Collateral until after trial or
final judgment; (d) Require Debtor to assemble any or all of the Collateral and
make it available to PFG at places designated by PFG which are reasonably
convenient to PFG and Debtor, and to remove the Collateral to such locations as
PFG may deem advisable; (e) Complete the processing, manufacturing or repair of
any Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, PFG shall have the right to use Debtor’s premises,
vehicles, hoists, lifts, cranes, and other Equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time PFG obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private
sales, in lots or in bulk, for cash, exchange or other property, or on credit,
and to adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. 
PFG shall have the right to conduct such disposition on Debtor’s
premises without charge, for such time or times as PFG deems reasonable, or on
PFG’s premises, or elsewhere and the Collateral need not be located at the
place of disposition.  PFG may directly
or through any affiliated company purchase or lease any Collateral at any such
public disposition, and if permissible under applicable law, at any private
disposition.  Any sale or other
disposition of Collateral shall not relieve Debtor of any liability Debtor may
have if any Collateral is defective as to title or physical condition or
otherwise at the time of sale; (g) Demand payment of, and collect any Accounts
and General Intangibles comprising Collateral and, in connection therewith,
Debtor irrevocably authorizes PFG to endorse or sign Debtor’s name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to Debtor and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in PFG’s good
faith business judgment, to grant extensions of time to pay, compromise claims
and settle Accounts and the like for less than face value; (h) Exercise any and
all rights under any present or future control agreements relating to Deposit
Accounts or Investment Property; and (i) Demand and receive possession of any
of Debtor’s federal and state income tax returns and the books and records
utilized in the preparation thereof or referring thereto.  All reasonable attorneys’ fees, expenses,
costs, liabilities and obligations incurred by PFG with respect to the
foregoing shall be added to and become part of the Obligations, shall be due on
demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations. 
Without limiting any of PFG’s rights and remedies, from and after the
occurrence and during the continuance of any Event of Default, the interest
rate applicable to the Obligations shall be the same interest rate applicable
to loans to the Borrower after an Event of Default.


 


7.2A.  Bermuda Receiver Provisions. 



 


(a)  At any time after the
security hereby constituted shall have become enforceable or if requested by
the Debtor, PFG may from time to time or appoint by writing under the hand of a
duly authorised officer of PFG any person to be a receiver and/or manager
(hereinafter called a “Receiver”) of the Collateral or any part thereof and may
from time to time in writing under the hand of a duly authorised officer of PFG
remove any Receiver so appointed and appoint another or others in his or their
stead;


 


6

















 


(b)  PFG shall have power from
time to time to fix the remuneration of any Receiver appointed by PFG and to
direct payment thereof out of the Collateral or any part thereof, but the
Debtor shall alone be liable for the payment of such remuneration; 


 


(c)  a Receiver so appointed
shall be the agent of the Debtor and the Debtor shall be responsible for his
acts, defaults and remuneration;


 


(d)  a Receiver so appointed
shall be entitled to exercise all of the powers in respect of the Collateral
which are exercisable by PFG under or pursuant to this Agreement and shall have
all the powers of a receiver under Bermuda law;


 


(e)  PFG shall not nor shall any
Receiver appointed hereunder be liable to account as mortgagee or mortgagees in
possession in respect of the Collateral or any part thereof or be liable for
any loss upon realisation or for any neglect or default of any nature
whatsoever in connection with the said property and assets or any part thereof
for which a mortgagee in possession might as such be liable and all costs,
charges and expenses incurred by PFG or any Receiver appointed hereunder
(including the cost of any proceedings to enforce security hereby given) shall
be paid by the Debtor on an indemnity basis and charged on the Collateral;


 


(f)  PFG shall not be liable
for: (i) any loss arising out of a sale or other disposal of any of the
Collateral or the exercise of or failure to exercise any of PFG’s powers under
this Agreement, however caused and whether or not a better price could or might
have been obtained by deferring or advancing the date of such sale or other
disposal; or (ii) any neglect or default to pay any call or instalment or to
accept any offer or to notify the Debtor of any matter or for any other loss of
any nature whatsoever in connection with any of the Collateral; and


 


(g)               all the foregoing
provisions shall take effect as and by way of variation and extension of the
provisions of Section 35 of the Bermuda Conveyancing Act 1983, which provisions
so varied and extended shall be regarded as incorporated herein.  No purchaser or other person shall be bound
or concerned to see or enquire whether the right of PFG or any Receiver
appointed to exercise any of its powers has arisen or not or be concerned with
notice to the contrary.


 


7.3  Standards for
Determining Commercial Reasonableness.  Debtor and PFG agree that a sale or other
disposition (collectively, “sale”) of any Collateral which complies with the
following standards will conclusively be deemed to be commercially
reasonable:  (i) Notice of the sale is
given to Debtor at least ten days prior to the sale, and, in the case of a
public sale, notice of the sale is published at least five days before the sale
in a newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by PFG,
with or without the Collateral being present; (iv) The sale commences at any
time between 8:00 a.m. and 6:00 p.m; 
(v) Payment of the purchase price in cash or by cashier’s check or wire
transfer is required; (vi) With respect to any sale of any of the Collateral,
PFG may (but is not obligated to) direct any prospective purchaser to ascertain
directly from Debtor any and all information concerning the same.  PFG shall be free to employ other methods of
noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.


 


7.4  Power of
Attorney.  Upon
the occurrence and during the continuance of any Event of Default, without
limiting PFG’s other rights and remedies, Debtor grants to PFG an irrevocable
power of attorney coupled with an interest, authorizing and permitting PFG
(acting through any of its employees, attorneys or agents) at any time, at its
option, but without obligation, with or without notice to Debtor, and at
Debtor’s expense, to do any or all of the following, in Debtor’s name or
otherwise, but PFG agrees that if it exercises any right hereunder, it will do
so in good faith and in a commercially reasonable manner:  (a) Execute on behalf of Debtor any
documents that PFG may, in its good faith business judgment, deem advisable in
order to perfect and maintain PFG’s security interest in the Collateral, or in
order to exercise a right of Debtor or PFG, or in order to fully consummate all
the transactions contemplated under this Agreement, and all other Debtor
Documents; (b) Execute on behalf of Debtor, any invoices relating to any
Account, any draft against any Account Debtor and any notice to any Account
Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of
mechanic’s, materialman’s or other lien, or assignment or satisfaction of
mechanic’s, materialman’s or other lien; (c) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name
of Debtor upon any instruments, or documents, evidence of payment or Collateral
that may come into PFG’s possession; (d) Endorse all checks and other forms of
remittances received by PFG; (e) Pay, contest or settle any lien, charge,
encumbrance, security interest and adverse claim in or to any of the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (f) Grant extensions of time to pay,
compromise claims and settle Accounts and General Intangibles for less than
face value and execute all releases and other documents in connection
therewith; (g) Pay any sums required on account of Debtor’s taxes or to secure
the release of any liens therefor, or both; (h) Settle and adjust, and give
releases of, any insurance claim that relates to any of the Collateral and
obtain payment therefor; (i) Instruct any third party having custody or control
of any books or records belonging to, or relating to, Debtor to give PFG the
same rights of access and other rights with respect thereto as PFG has under
this Agreement; and (j) Take any action or pay any sum required of Debtor
pursuant to this Agreement and any other Debtor Documents.  Any and all reasonable sums paid and any and
all reasonable costs, expenses, liabilities, obligations and attorneys’ fees
incurred by PFG with respect to the foregoing shall be


 


7

















 


added to and become part of the
Obligations, shall be payable on demand, and shall bear interest at a rate
equal to the highest interest rate applicable to any of the Obligations.  In no event shall PFG’s rights under the
foregoing power of attorney or any of PFG’s other rights under this Agreement
be deemed to indicate that PFG is in control of the business, management or
properties of Debtor.


 


7.5  Application of
Proceeds.  All
proceeds realized as the result of any sale of the Collateral shall be applied
by PFG first to the reasonable costs, expenses, liabilities, obligations and
attorneys’ fees incurred by PFG in the exercise of its rights under this
Agreement, second to the interest due upon any of the Obligations, and third to
the principal of the Obligations, in such order as PFG shall determine in its
sole discretion.  Any surplus shall be
paid to Debtor or other persons legally entitled thereto; Debtor shall remain
liable to PFG for any deficiency.  If,
PFG, in its good faith business judgment, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale of
Collateral, PFG shall have the option, exercisable at any time, in its good
faith business judgment, of either reducing the Obligations by the principal
amount of purchase price or deferring the reduction of the Obligations until
the actual receipt by PFG of the cash therefor.


 


7.6  Remedies
Cumulative.  In
addition to the rights and remedies set forth in this Agreement, PFG shall have
all the other rights and remedies accorded a secured party under the Code and
under all other applicable laws, and under any other instrument or agreement
now or in the future entered into between PFG and Debtor, and all of such
rights and remedies are cumulative and none is exclusive.  Exercise or partial exercise by PFG of one
or more of its rights or remedies shall not be deemed an election, nor bar PFG
from subsequent exercise or partial exercise of any other rights or
remedies.  The failure or delay of PFG
to exercise any rights or remedies shall not operate as a waiver thereof, but
all rights and remedies shall continue in full force and effect until all of
the Obligations have been fully paid and performed.


 


8.     DEFINITIONS.  As used in
this Agreement, the following terms have the following meanings:


 


“Account Debtor”
means the obligor on an Account.


 


“Accounts”
means all present and future “accounts” as defined in the California Uniform
Commercial Code in effect on the date hereof with such additions to such term
as may hereafter be made, and includes without limitation all accounts
receivable and other sums owing to Debtor.


 


“Advanced”
means INTERWAVE ADVANCED COMMUNICATIONS, INC., a Delaware corporation, a
wholly-owned subsidiary of Debtor.


 


“Borrower”
means INTERWAVE COMMUNICATIONS, INC., a Delaware corporation and its
successors.


 


“Business Day”
means a day on which PFG is open for business.


 


“Code”
means the Uniform Commercial Code as adopted and in effect in the State of
California from time to time. 


 


“Collateral”
has the meaning set forth in Section 2 above.


 


“continuing”
and “during the continuance of” when used with reference to a Default or
Event of Default means that the Default or Event of Default has occurred and
has not been either waived in writing by PFG or cured within any applicable
cure period.


 


“Debtor
Documents” means, collectively, this Agreement, and all other present and
future documents, instruments and agreements between PFG and Debtor, including,
but not limited to those relating to this Agreement, the Continuing Guaranty of
substantially even date executed and delivered by Debtor in favor of PFG with
respect to Borrower  (with all
extensions and renewal thereof, the “Guaranty”), and all amendments and
modifications thereto and replacements therefor.


 


 “Default” means any event which with
notice or passage of time or both, would constitute an Event of Default.


 


 “Deposit Accounts” means all present
and future “deposit accounts” as defined in the California Uniform Commercial
Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all general and special bank
accounts, demand accounts, checking accounts, savings accounts and certificates
of deposit.


 


“Equipment”
means all present and future “equipment” as defined in the California Uniform
Commercial Code in effect on the date hereof with such additions to such term
as may hereafter be made, and includes without limitation all machinery,
fixtures, goods, vehicles (including motor vehicles and trailers), and any
interest in any of the foregoing.


 


“Event of
Default” means any of the events set forth in Section 7.1 of this
Agreement.


 


“GAAP”
means generally accepted accounting principles consistently applied.


 


“General
Intangibles” means all present and future “general intangibles” as defined
in the California Uniform Commercial Code in effect on the date hereof with
such additions to such term as may hereafter be made, and includes without
limitation all Intellectual Property, payment intangibles, royalties, contract
rights, goodwill, franchise agreements, purchase orders,


 


8

















 


customer lists, route lists, telephone numbers, domain
names, claims, income tax refunds, security and other deposits, options to
purchase or sell real or personal property, rights in all litigation presently
or hereafter pending (whether in contract, tort or otherwise), insurance
policies (including without limitation key man, property damage, and business
interruption insurance), payments of insurance and rights to payment of any
kind.


 


“good faith
business judgment” means honesty in fact and good faith (as defined in
Section 1201 of the Code) in the exercise of PFG’s business judgment.


 


“including”
means including (but not limited to).


 


“Indebtedness”
means as to any Person, (a) indebtedness for borrowed money or the deferred
purchase price of property or services, (b) obligations evidenced by bonds,
notes, debentures or other similar instruments, (c) reimbursement obligations
with respect to letters of credit and (d) capital lease obligations.


 


 “Intellectual Property” means all
present and future (a) copyrights, copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work thereof, whether published or unpublished, (b) trade secret
rights, including all rights to unpatented inventions and know-how, and
confidential information; (c) mask work or similar rights available for the
protection of semiconductor chips; (d) patents, patent applications and like
protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the
same; (e) trademarks, servicemarks, trade styles, and trade names, whether or
not any of the foregoing are registered, and all applications to register and
registrations of the same and like protections, and the entire goodwill of the
business of Debtor connected with and symbolized by any such trademarks; (f)
computer software and computer software products; (g) designs and design
rights; (h) technology; (i) all claims for damages by way of past, present and
future infringement of any of the rights included above; (j) all licenses or
other rights to use any property or rights of a type described above.


 


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


 


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


 


“Investment
Property” means all present and future investment property, securities,
stocks, bonds, debentures, debt securities, partnership interests, limited
liability company interests, options, security entitlements, securities
accounts, commodity contracts, commodity accounts, and all financial assets
held in any securities account or otherwise, and all options and warrants to
purchase any of the foregoing, wherever located, and all other securities of
every kind, whether certificated or uncertificated.


 


“Material
Adverse Change” means any of the following: (i) a material adverse change
in the business, operations, or financial or other condition of the Debtor, or
(ii) a material impairment of the prospect of repayment of any portion of the
Obligations; or (iii) a material impairment of the value or priority (subject
to Permitted Liens) of PFG’s security interests in the Collateral.


 


“Obligations”
means all present and future advances, debts, liabilities, obligations,
guaranties, covenants, duties and indebtedness at any time owing by Debtor to
PFG, whether evidenced by this Agreement or any note or other instrument or
document, or otherwise, whether arising from an extension of credit, opening of
a letter of credit, banker’s acceptance, loan, guaranty, indemnification or
otherwise, whether direct or indirect (including, without limitation, those
acquired by assignment and any participation by PFG in Debtor’s debts owing to
others), absolute or contingent, due or to become due, including, without
limitation, all indebtedness, liabilities and obligations of Debtor under the
Continuing Guaranty of substantially even date executed and delivered by Debtor
in favor of PFG with respect to Borrower.


 


“Other Property”
means the following as defined in the California Uniform Commercial Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and all rights relating thereto: all present and future “commercial tort
claims” (including without limitation any commercial tort claims), “documents”,
“instruments”, “promissory notes”, “chattel paper”, “letters of credit”,
“letter-of-credit rights”, “fixtures”, “farm products” and “money”; and all
other goods and personal property of every kind, tangible and intangible,
whether or not governed by the California Uniform Commercial Code.


 


“Permitted
Indebtedness” means (a) a guaranty in favor of Senior Lender with respect
to Borrower, provided Senior Debt does not exceed the Senior Debt Limit; and
(b) Indebtedness existing on the date hereof and shown on Exhibit C hereto; (c)
indebtedness secured by Permitted Liens; and (d) Indebtedness owing to Borrower
or to Advanced.


 


9

















 


 “Permitted Investments” are: (a)  Investments (if any) shown on Exhibit C and
existing on the date hereof; (b) marketable direct obligations issued or
unconditionally guaranteed by the United States or its agency or any State
maturing within 1 year from its acquisition; (c) 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; (d) bank’s certificates of deposit issued maturing no more than 1
year after issue; (e) 
Investments consisting of deposit accounts and investment accounts; (f)
Investments consisting of extensions of credit to Debtor’s customers in the
ordinary course of business, in the nature of accounts receivable, prepaid
royalties or notes receivable arising from the sale or lease of goods,
provision of services or licensing activities of Debtor; (g) Investments
received in satisfaction or partial satisfaction of obligations owed by
financially troubled obligors or acquired as a result of a foreclosure with
respect to any secured Investment; (h) Investments acquired in exchange for any
other Investments in connection with or as a result of any bankruptcy, workout,
reorganization or recapitalization; (i) deposits, prepayments and other credits
to suppliers made in the ordinary course of business; (j) Indebtedness of any
wholly-owned Subsidiary of Debtor, which is now or hereafter owing to Debtor,
and which is incurred to fund such Subsidiary’s operating expenses, prepayments
and purchases, all in the ordinary course of business; and (k) other
Investments in an aggregate amount at any time not to exceed $250,000 combined
for all such Investments of Debtor, Advanced and Borrower.


 


“Permitted
Liens” means the following:  (i)
purchase money security interests in specific items of Equipment (including
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto and the proceeds thereof); (ii) leases of specific items of
Equipment (including accessions, additions, parts, replacements, fixtures,
improvements and attachments thereto and the proceeds thereof); (iii) liens for
taxes, fees, assessments or other governmental charges or levies not yet
payable or being contested in good faith by appropriate proceedings, for which
Debtor has maintained reserves in accordance with GAAP, and which do not result
in a lien on any Collateral; (iv) additional security interests and liens
consented to in writing by PFG, which consent may be withheld in its good faith
business judgment; (v) security interests being terminated substantially
concurrently with this Agreement; (vi) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course
of business and securing obligations which are not delinquent; (vii) liens
incurred in connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods; and (ix) Liens in
favor of Senior Lender securing an amount not in excess of the Senior Debt
Limit; (x) Liens listed on Exhibit C hereto; (xi) non-exclusive licenses and
non-exclusive sublicenses granted in the ordinary course of business; (xii)
leases and subleases granted in the ordinary course of business consisting of
(A) short-term rental of Inventory, or (B) leases or subleases of Equipment
with an aggregate value for all such leases and subleases not in excess of
$10,000; (xiii) pledges or deposits in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and social
security legislation, in an aggregate amount not to exceed $25,000 or as
otherwise required by law; (xiv) cash deposits to secure the performance of
bids, trade contracts (other than for borrowed money), contracts for the purchase
of property, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case,
incurred in the ordinary course of business and not representing an obligation
for borrowed money; (xv) statutory, common law or contractual liens of
depository institutions or institutions holding securities accounts (including
rights of set-off), securing only customary charges and fees in connection with
such accounts; and (xvi) Liens on insurance proceeds securing the payment of
financed insurance premiums.  PFG will
have the right to require, as a condition to its consent under subparagraph
(iv) above, that the holder of the additional security interest or lien sign an
intercreditor agreement on PFG’s then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of PFG, and
agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Debtor agree that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.  


 


“Person”
means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, government, or any
agency or political division thereof, or any other entity. .


 


“Senior Lender”
means
Silicon Valley Bank.


 


“Senior Debt”
means total combined Indebtedness of Debtor, Borrower and Advanced to Senior
Lender, including, but not limited to, monies borrowed, interest on loans, fees
and expenses, sums due in connection with issuance of commercial letters of
credit, issuance of forward contracts for foreign exchange reserve, and any
other direct or indirect financial accommodation Senior Lender may provide to
Debtor, Borrower or Advanced.


 


 “Senior Debt Limit” means $2,500,000
at any time outstanding.


 


 “Subsidiary” means (a) any
corporation of which more than 50% of the issued and outstanding equity
securities having ordinary voting power to elect a majority of the Board of
Directors of such corporation is at the time directly or indirectly owned or
controlled by Debtor, (b) any partnership, joint venture, or other
association of which more than 50% of the equity


 


10

















 


interest having the power to vote, direct or control
the management of such partnership, joint venture or other association is at
the time directly or indirectly owned and controlled by Debtor, (c) any
other entity included in the financial statements of Debtor on a consolidated
basis.


 


Other Terms.  All accounting terms used in this Agreement,
unless otherwise indicated, shall have the meanings given to such terms in
accordance with GAAP, consistently applied. 
All other terms contained in this Agreement, unless otherwise indicated,
shall have the meanings provided by the Code, to the extent such terms are
defined therein. 


 


9.     GENERAL PROVISIONS.


 


9.1  [intentionally
omitted]  


 


9.2  Application of
Payments.  All
payments with respect to the Obligations may be applied, and in PFG’s good
faith business judgment reversed and re-applied, to the Obligations, in such
order and manner as PFG shall determine in its good faith business judgment.


 


9.3  [intentionally
omitted]  


 


9.4  [intentionally
omitted] 


 


9.5  Notices.  All notices to be given under this Agreement
shall be in writing and shall be given either personally or by reputable
private delivery service or by regular first-class mail, or certified mail
return receipt requested, addressed to PFG or Debtor at the addresses shown in
the heading to this Agreement, or at any other address designated in writing by
one party to the other party. All notices shall be deemed to have been given
upon delivery in the case of notices personally delivered, or at the expiration
of one Business Day following delivery to the private delivery service, or two
Business Days following the deposit thereof in the United States mail, with
postage prepaid.  


 


9.6  Severability.  Should any provision of this Agreement be
held by any court of competent jurisdiction to be void or unenforceable, such
defect shall not affect the remainder of this Agreement, which shall continue
in full force and effect.


 


9.7  Integration.  This Agreement and such other written
agreements, documents and instruments as may be executed in connection herewith
are the final, entire and complete agreement between Debtor and PFG and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement.  There are no oral understandings,
representations or agreements between the parties which are not set forth in
this Agreement or in other written agreements signed by the parties in
connection herewith.


 


9.8  Waivers;
Indemnity.  The
failure of PFG at any time or times to require Debtor to strictly comply with
any of the provisions of this Agreement or any other Debtor Document shall not
waive or diminish any right of PFG later to demand and receive strict
compliance therewith.  Any waiver of any
default shall not waive or affect any other default, whether prior or
subsequent, and whether or not similar. 
None of the provisions of this Agreement or any other Debtor Document shall
be deemed to have been waived by any act or knowledge of PFG or its agents or
employees, but only by a specific written waiver signed by an authorized
officer of PFG and delivered to Debtor. 
To the extent permitted by law, Debtor waives the benefit of all
statutes of limitations relating to any of the Obligations or this Agreement or
any other Debtor Document, and Debtor waives demand, protest, notice of protest
and notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
instrument, account, General Intangible, document or guaranty at any time held
by PFG on which Debtor is or may in any way be liable, and notice of any action
taken by PFG, unless expressly required by this Agreement. Debtor hereby agrees
to indemnify PFG and its affiliates, subsidiaries, parent, directors, officers,
employees, agents, and attorneys, and to hold them harmless from and against
any and all claims, debts, liabilities, demands, obligations, actions, causes
of action, penalties, costs and expenses (including reasonable attorneys’
fees), of every kind, which they may sustain or incur based upon or arising out
of any of the Obligations, or any relationship or agreement between PFG and
Debtor, or any other matter, relating to Debtor or the Obligations; provided
that this indemnity shall not extend to damages proximately caused by the
indemnitee’s own gross negligence or willful misconduct.  Notwithstanding any provision in this
Agreement to the contrary, the indemnity agreement set forth in this Section
shall survive any termination of this Agreement and shall for all purposes
continue in full force and effect.


 


9.9 [intentionally omitted] 


 


9.10  Amendment.  The terms and provisions of this Agreement
may not be waived or amended, except in a writing executed by Debtor and a duly
authorized officer of PFG.


 


9.11  Time of
Essence.  Time is
of the essence in the performance by Debtor of each and every obligation under
this Agreement.


 


9.12  Attorneys Fees
and Costs.  Debtor
shall reimburse PFG for all reasonable attorneys’ fees and all filing,
recording, search, title insurance, appraisal, audit, and other reasonable
costs incurred by PFG, pursuant to, or in connection with, or


 


11

















 


relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys’ fees and
costs PFG incurs in order to do the following: prepare and negotiate this
Agreement and all present and future documents relating to this Agreement;
obtain legal advice in connection with this Agreement or Debtor; enforce, or
seek to enforce, any of its rights; prosecute actions against, or defend
actions by, Account Debtors; commence, intervene in, or defend any action or
proceeding; initiate any complaint to be relieved of the automatic stay in
bankruptcy; file or prosecute any probate claim, bankruptcy claim, third-party
claim, or other claim; examine, audit, copy, and inspect any of the Collateral
or any of Debtor’s books and records; protect, obtain possession of, lease,
dispose of, or otherwise enforce PFG’s security interest in, the Collateral;
and otherwise represent PFG in any litigation relating to Debtor. If either PFG
or Debtor files any lawsuit against the other predicated on a breach of this
Agreement, the prevailing party in such action shall be entitled to recover its
reasonable costs and attorneys’ fees, including (but not limited to) reasonable
attorneys’ fees and costs incurred in the enforcement of, execution upon or
defense of any order, decree, award or judgment.  All attorneys’ fees and costs to which PFG may be entitled
pursuant to this Paragraph shall immediately become part of Debtor’s
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.


 


9.13  Benefit of
Agreement.  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the respective successors, assigns, heirs, beneficiaries and representatives of
Debtor and PFG; provided, however, that Debtor may not assign or transfer any
of its rights under this Agreement without the prior written consent of PFG,
and any prohibited assignment shall be void. 
No consent by PFG to any assignment shall release Debtor from its
liability for the Obligations.


 


9.14  [intentionally
omitted] 


 


9.15 [intentionally omitted] 


 


9.16 
Confidentiality.  In handling any confidential information (including without
limitation confidential information provided pursuant to this Agreement or
pursuant to the Guaranty), PFG and all employees and agents of PFG shall
exercise the same degree of care that PFG exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of
any non-public information thereby received or received pursuant to this
Agreement, except that disclosure of such information may be made (i) to the
subsidiaries or affiliates of PFG in connection with their present or
prospective business relations with Debtor or PFG provided that they have
entered into a comparable confidentiality agreement in favor of Debtor, (ii) to
prospective transferees or purchasers of any interest in the Obligations,
provided that they have entered into a comparable confidentiality agreement in
favor of Debtor, (iii) as required by law, regulations, rule or order,
subpoena, judicial order or similar order, or (iv) as may be required in
connection with the examination, audit or similar investigation of PFG, (iv) as
may be necessary in PFG’s good faith business judgment in connection with the
enforcement of its rights or remedies after an Event of Default..  Confidential information hereunder shall not
include information that either:  (a) is
in the public domain or in the knowledge or possession of PFG when disclosed to
PFG, or becomes part of the public domain after disclosure to PFG through no
fault of PFG; or (b) is disclosed to PFG by a third party, provided PFG does
not have actual knowledge that such third party is prohibited from disclosing
such information.


 


9.17  Paragraph
Headings; Construction. 
Paragraph headings are only used in this Agreement for convenience.  Debtor and PFG acknowledge that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. This Agreement has been
fully reviewed and negotiated between the parties and no uncertainty or ambiguity
in any term or provision of this Agreement shall be construed strictly against
PFG or Debtor under any rule of construction or otherwise.


 


9.18  Governing Law;
Jurisdiction; Venue. 
This Agreement and all acts and transactions hereunder and all rights
and obligations of PFG and Debtor shall be governed by the laws of the State of
California.  As a material part of the
consideration to PFG to enter into this Agreement, Debtor (i) agrees that all
actions and proceedings relating directly or indirectly to this Agreement
shall, at PFG’s option, be litigated in courts located within California, and
that the exclusive venue therefor shall be San Francisco County; (ii) consents
to the jurisdiction and venue of any such court and consents to service of process
in any such action or proceeding by personal delivery or any other method
permitted by law; and (iii) waives any and all rights Debtor may have to object
to the jurisdiction of any such court, or to transfer or change the venue of
any such action or proceeding.


 


9.19  Mutual Waiver
of Jury Trial.  DEBTOR
AND PFG EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS
AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN PFG
AND DEBTOR, OR ANY CONDUCT, ACTS OR OMISSIONS OF PFG OR DEBTOR OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH PFG OR DEBTOR, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING
IN CONTRACT OR TORT OR OTHERWISE.


 


12

















 


IN WITNESS
WHEREOF, the undersigned have caused this Security Agreement to be duty
executed and delivered as of the date first above written.


 


 


	
    Debtor:  

  	
  PFG:  

  
	
   

  	
  PARTNERS FOR GROWTH, L.P.

  
	
  The common seal of INTERWAVE

  COMMUNICATIONS INTERNATIONAL LTD. 

  	
   

  
	
   

  	
  By

  	
  /s/ Andrew Kahn

  	
   

  
	
  was hereunto affixed in the presence of:  

  	
  Title

  	
  Manager, Partners for Growth, LLC

  	
   

  
	
   

  	
   

  	
  Its General Partner

  	
   

  
	
   

  	
   

  
	
  /s/ Erwin Leichtle

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Director  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Cal R. Hoagland

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Director/Secretary

  	
   

  	
   

  
						



 


13






















Partners for Growth 


 


Security
Agreement


 


	
  Debtor:

  	
   

  	
  INTERWAVE ADVANCED
  COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  2495 Leghorn,
  Mountain View, California  94043

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  June 4, 2004

  



 


THIS
SECURITY AGREEMENT is entered into on the above date between
PARTNERS FOR GROWTH, L.P. (“PFG”), whose address is 560 Mission Street, 3rd
floor, San Francisco, CA 94105 and the Debtor named above (the “Debtor”), whose
chief executive office is located at the above address (“Debtor’s Address”). 


 


1.  [INTENTIONALLY OMITTED] 


 


2.  SECURITY INTEREST. To secure the
payment and performance of all of the Obligations when due, Debtor hereby
grants to PFG a security interest in all of the following (collectively, the
“Collateral”):  all right, title and
interest of Debtor in and to all of the following, whether now owned or
hereafter arising or acquired and wherever located: all Accounts; all
Inventory; all Equipment; all Deposit Accounts; all General Intangibles
(including without limitation all Intellectual Property); all Investment Property;
all Other Property; and any and all claims, rights and interests in any of the
above, and all guaranties and security for any of the above, and all
substitutions and replacements for, additions, accessions, attachments,
accessories, and improvements to, and proceeds 
(including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties) of, any and all of the above, and all Debtor’s
books relating to any and all of the above. Notwithstanding anything herein to
the contrary, in no event shall the security interest granted under this
Section 2 attach to any 
(“Specified Contracts”):  any
lease, license, contract, property rights or agreement to which Debtor is a
party or any of its rights (including property rights with respect to
equipment) or interests thereunder if and for so long as the grant of such
security interest shall constitute or result in (i) the abandonment,
invalidation or unenforceability of any right, title or interest of Debtor
therein, or (ii) in a breach or termination pursuant to the terms of, or a
default under, any such lease, license, contract property rights or agreement
(other than to the extent that any such term would be rendered ineffective
pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Code (or any successor
provision or provisions) of any relevant jurisdiction or any other applicable
law or principles of equity); provided however that such security interest
shall attach immediately at such time as the condition causing such abandonment,
invalidation or unenforceability shall be remedied and to the extent severable,
shall attach immediately to any portion of such lease, license, contract,
property rights or agreement that does not result in any of the consequences
specified in (i) or (ii) above. Except as disclosed on Exhibit A hereto, Debtor
represents and warrants to PFG that there are no Specified Contracts which are
material to Debtor’s business.  Debtor
shall not, hereafter, without PFG’s prior written consent, enter into any Specified
Contract which is material to Debtor’s business. In addition, notwithstanding
anything herein to the contrary, in no event shall the security interest
granted under this Section 2 attach to any of the outstanding capital stock of a controlled foreign corporation
(as such term is defined in the Internal Revenue Code of 1986, as amended)  in excess of 65% of the voting power of all
classes of capital stock of such controlled foreign corporation entitled to
vote.


 


3.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF
DEBTOR.


 


In order to induce PFG to enter into a loan agreement with the Borrower
and make loans to the Borrower, subject to the exceptions set forth on the
Disclosure Schedule attached hereto as Exhibit B, Debtor represents and
warrants to PFG as follows, and Debtor covenants that the following
representations will continue to be true, and that Debtor will at all times
comply with all of the following covenants, throughout the term of this
Agreement and until all Obligations have been paid and performed in full:


 


1

















 


3.1 
Corporate Existence and Authority.  Debtor is and will continue to be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.  Debtor
is and will continue to be qualified and licensed to do business in all
jurisdictions in which any failure to do so would result in a Material Adverse
Change.  The execution, delivery and
performance by Debtor of this Agreement, and all other documents contemplated
hereby (i) have been duly and validly authorized, (ii) are enforceable against
Debtor in accordance with their terms (except as enforcement may be limited by
equitable principles and by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to creditors’ rights generally), and (iii) do not
violate Debtor’s articles or certificate of incorporation, or Debtor’s by-laws,
or any law or any material agreement or instrument which is binding upon Debtor
or its property, and (iv) do not constitute grounds for acceleration of any
material indebtedness or obligation under any agreement or instrument which is
binding upon Debtor or its property.


 


3.2 
Name; Trade Names and Styles.  As of the date hereof, the name of Debtor
set forth in the heading to this Agreement is its name as presently set forth
in its certificate of incorporation. 
Listed on Exhibit A hereto are, as of the date hereof, all prior names
of Debtor and all of Debtor’s present and prior trade names.  Debtor shall give PFG 30 days’ prior written
notice before changing its name or doing business under any other name.  Debtor has complied, and will in the future
comply, in all material respects, with all laws relating to the conduct of
business under a fictitious business name, if applicable to Debtor.


 


3.3 
Place of Business; Location of Collateral. As of
the date hereof, the address set forth in the heading to this Agreement is
Debtor’s chief executive office.  In
addition, as of the date hereof, Debtor has places of business and Collateral
is located only at the locations set forth on Exhibit A hereto.  Debtor will give PFG at least 30 days prior
written notice before opening any additional place of business, changing its
chief executive office, or moving any of the Collateral to a location other
than Debtor’s Address or one of the locations set forth on Exhibit A hereto,
except that Debtor may maintain sales offices in the ordinary course of
business at which not more than a total of $10,000 fair market value of Equipment
is located.


 


3.4 
Title to Collateral; Perfection; Permitted Liens.  


 


(a)  Debtor is
now, and will at all times in the future be, the sole owner of all the
Collateral, except for items of Equipment which are leased to Debtor and except
for Permitted Liens.  The Collateral now
is and will remain free and clear of any and all liens, charges, security
interests, encumbrances and adverse claims, except for Permitted Liens.  PFG now has, and will continue to have, an
enforceable security interest in all of the Collateral, subject only to the
Permitted Liens, and Debtor will at all times defend PFG and the Collateral
against all claims of others.  


 


(b)         Set
forth on Exhibit A hereto are all of Debtor’s Deposit Accounts, as of the date
hereof, and Debtor will give PFG five Business Days advance written notice
before establishing any new Deposit Accounts and will cause the institution
where any such new Deposit Account is maintained to execute and deliver to PFG
a control agreement in form sufficient to perfect PFG’s security interest in
the Deposit Account and otherwise satisfactory to PFG in its good faith
business judgment. 


 


(c) In the event that Debtor shall at any time after
the date hereof have any commercial tort claims against others, which it is
asserting or gives written notice of its intention to assert, and in which the
potential recovery exceeds $100,000, Debtor shall promptly notify PFG thereof
in writing and provide PFG with such information regarding the same as PFG
shall request (unless providing such information would waive the Debtor’s
attorney-client privilege).  Such
notification to PFG shall constitute a grant of a security interest in the
commercial tort claim and all proceeds thereof to PFG, and Debtor shall execute
and deliver all such documents and take all such actions as PFG shall request
in connection therewith.


 


(d)         None
of the Collateral now is or will be affixed to any real property in such a
manner, or with such intent, as to become a fixture.  Debtor is not and will not become a lessee under any real
property lease pursuant to which the lessor may obtain any rights in any of the
Collateral and no such lease now prohibits, restrains, impairs or will
prohibit, restrain or impair Debtor’s right to remove any Collateral from the
leased premises.  Whenever any
Collateral is located upon premises in which any third party has an interest,
Debtor shall, whenever requested by PFG, use commercially reasonable efforts to
cause such third party to execute and deliver to PFG, in form acceptable to
PFG, such waivers and subordinations as PFG shall specify in its good faith
business judgment.  Debtor will keep in
full force and effect, and will comply with all material terms of, any lease of
real property where any of the Collateral now or in the future may be located.


 


3.5 
Maintenance of Collateral.  Debtor will maintain the Collateral in good
working condition (ordinary wear and tear excepted), and Debtor will not use
the Collateral for any unlawful purpose. 
Debtor will immediately advise PFG in writing of any material loss or
damage to the Collateral.


 


3.6 
Books and Records.  Debtor has maintained and will maintain at Debtor’s Address
complete and accurate books and records, comprising an accounting system such
that its financial statements can be prepared in accordance with GAAP.


 


3.7 
Financial Condition, Statements and Reports.  All financial statements now or in the
future delivered to PFG have been, and will be, prepared in conformity with
GAAP and now and in the future will fairly present, in all material respects,
the results of operations and financial condition of Debtor, in accordance with
GAAP, at the times and for the periods therein


 


2

















 


stated.  Between the last date
covered by any such statement provided to PFG and the date hereof, there has
been no Material Adverse Change.


 


3.8 
Tax Returns and Payments; Pension Contributions.  Debtor has timely filed, and will timely
file, all material required tax returns and reports, and Debtor has timely
paid, and will timely pay, all federal and state, and all material foreign and
local taxes, assessments, deposits and contributions now or in the future owed
by Debtor.  Debtor may, however, defer
payment of any contested taxes, assessments, deposits and contributions,
provided that Debtor (i) in good faith contests Debtor’s obligation to pay the
same by appropriate proceedings promptly and diligently instituted and
conducted, (ii) notifies PFG in writing of the commencement of, and any
material development in, the proceedings, and (iii) posts bonds or takes any
other steps required to keep the contested taxes from becoming a lien upon any
of the Collateral.  Debtor is unaware of
any claims or adjustments proposed for any of Debtor’s prior tax years which
could result in additional taxes becoming due and payable by Debtor.  Debtor has paid, and shall continue to pay
all amounts necessary to fund all present and future pension, profit sharing
and deferred compensation plans in accordance with their terms, and Debtor has
not and will not withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to,
any such plan which could reasonably be expected to result in any liability of
Debtor, including any material liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency. 


 


3.9 
Compliance with Law.  Debtor has, to the best of its knowledge, complied, and will
comply, in all material respects, with all provisions of all foreign, federal,
state and local laws and regulations applicable to Debtor, including, but not
limited to, those relating to Debtor’s ownership of real or personal property,
the conduct and licensing of Debtor’s business, and all environmental matters.


 


3.10 
Litigation. 
There is no claim, suit, litigation, proceeding or investigation pending
or (to best of Debtor’s knowledge) threatened against Debtor in any court or
before any governmental agency (or any basis therefor known to Debtor) which
could reasonably be expected to result, either separately or in the aggregate,
in any Material Adverse Change.  Debtor
will promptly inform PFG in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted against Debtor involving
any single claim of $50,000 or more, or involving $100,000  or more in the aggregate.


 


4.
REMITTANCE OF PROCEEDS. Subject to the rights of the Senior
Lender (if any), all proceeds arising from the disposition of any Collateral
shall be delivered, in kind, by Debtor to PFG in the original form in which
received by Debtor not later than the following Business Day after receipt by
Debtor, to be applied to the Obligations in such order as PFG shall determine;
provided that, if no Default or Event of Default has occurred and is
continuing, Debtor shall not be obligated to remit to PFG (i) the proceeds of
Accounts arising in the ordinary course of business, or (ii) the proceeds of
the sale of worn out or obsolete Equipment disposed of by Debtor in good faith
in an arm’s length transaction for an aggregate purchase price of $25,000 or
less (for all such transactions in any fiscal year), and (iii) the proceeds of
insurance if promptly used to replace or repair the property with respect to
which the proceeds were paid.  Except as
permitted above, Debtor agrees that it will not commingle proceeds of
Collateral with any of Debtor’s other funds or property, but will hold such
proceeds separate and apart from such other funds and property and in an
express trust for PFG, except as set forth above, and subject to the rights of
the Senior Lender.  Nothing in this
Section limits the restrictions on disposition of Collateral set forth
elsewhere in this Agreement.  


 


5.  ADDITIONAL DUTIES OF DEBTOR.


 


5.1 [intentionally omitted] 


 


5.2 
Insurance. 
Debtor shall, at all times insure all of the tangible personal property
Collateral and carry such other business insurance, with insurers reasonably
acceptable to PFG, in such form and amounts as PFG may reasonably require and
that are customary and in accordance with standard practices for Debtor’s
industry and locations, and Debtor shall provide evidence of such insurance to
PFG.  All such insurance policies shall
name PFG as an additional loss payee, and shall contain a lenders loss payee
endorsement in form reasonably acceptable to PFG.  Upon receipt of the proceeds of any such insurance, subject to
the rights of the Senior Lender, provided no Default or Event of Default has
occurred and is continuing, PFG shall release to Debtor insurance proceeds with
respect to Collateral, which shall be utilized by Debtor for the prompt repair
or replacement of the Collateral with respect to which the insurance proceeds
were paid.  PFG may require reasonable
assurance that the insurance proceeds so released will be so used.  If Debtor fails to provide or pay for any
insurance, PFG may, but is not obligated to, obtain the same at Debtor’s
expense.  Debtor shall promptly deliver
to PFG copies of all material reports made to insurance companies.


 


5.3 
Reports. 
Debtor, at its expense, shall provide PFG with such written reports with
respect to Debtor, as PFG shall from time to time specify in its good faith
business judgment, it being
recognized by PFG that any projections and forecasts provided by Debtor in good
faith and based upon reasonable assumptions are not to be viewed as facts and
that actual results during the period or periods covered by any such
projections or forecasts may differ from the projected or forecast results.


 


3

















 


5.4 
Access to Collateral, Books and Records.  At reasonable times, and on one Business
Day’s notice, PFG, or its agents, shall have the right to inspect the
Collateral, and the right to audit and copy Debtor’s books and records.  All information obtained in any such
inspection or audit shall be subject to the confidentiality agreement in
Section 9.16 below.  The foregoing
inspections and audits shall be at Debtor’s expense and the charge therefor shall
be $750 per person per day (or such higher amount as shall represent PFG’s then
current standard charge for the same), plus reasonable out-of-pocket expenses. Notwithstanding the foregoing, if no
Event of Default has occurred and is continuing, Debtor shall not be required
to disclose, permit the inspection, examination or making of extracts, or
discussion of, any document, information or other matter (i) in respect of
which disclosure is prohibited by law or any agreement binding on Debtor or any
of its Subsidiaries, or (ii) is subject to attorney-client or similar privilege
or constitutes attorney work product. 
If Debtor is withholding any information requested by Lender pursuant to
the preceding sentence, it shall so advise PFG in writing, giving PFG a general
description of the nature of the information withheld.


 


5.5 
Negative Covenants. Debtor shall not, without
PFG’s prior written consent (which shall be a matter of its good faith business
judgment), do any of the following:  (i)
merge or consolidate with another corporation or entity, except that any wholly-owned
Subsidiary of Debtor may be merged with Debtor so long as Debtor is the
surviving corporation; (ii) acquire any assets, except in
the ordinary course of business, or make any Investments other than Permitted
Investments; (iii) consummate any other transaction outside the ordinary course
of business; (iv) sell or transfer any Collateral, except for (A) the sale of
finished Inventory in the ordinary course of Debtor’s business, (B) the sale of
obsolete or unneeded Equipment in the ordinary course of business, (C) the
making of Permitted Investments, (D) the granting of Permitted Liens, and (E)
the non-exclusive licensing of Intellectual Property in the ordinary course of
business; (v) store any Inventory or other Collateral with any warehouseman or
other third party, unless there is in place a bailee agreement in such form as
PFG shall specify in its good faith business judgment; (vi) sell any Inventory
on a sale-or-return, guaranteed sale, consignment, or other contingent basis;
(vii) make any loans of any money or other assets, other than Permitted
Investments; (viii) incur any Indebtedness, other than Permitted Indebtedness;
(ix) guarantee or otherwise become liable with respect to the obligations of
another party or entity; (x) pay or declare any dividends on Debtor’s stock
(except for dividends payable solely in stock of Debtor); (xi) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of Debtor’s stock;
(xii) engage, directly or indirectly, in any business other than the businesses
currently engaged in by Debtor or reasonably related thereto; or (xiii)
dissolve or elect to dissolve. 
Transactions permitted by the foregoing provisions of this
Section are only permitted if no Default or Event of Default would occur
as a result of such transaction.  


 


5.6 
Litigation Cooperation.  Should any third-party suit or proceeding be instituted by or
against PFG with respect to any Collateral or relating to Debtor, Debtor shall,
without expense to PFG, make available Debtor and its officers, employees and
agents and Debtor’s books and records, to the extent that PFG may deem them
reasonably necessary in order to prosecute or defend any such suit or
proceeding.


 


5.7 
Deposit Accounts.  Concurrently,
Debtor shall cause the banks and other institutions where its Deposit Accounts
are maintained to enter into control agreements with PFG, in form and substance
satisfactory to PFG in its good faith business judgment and sufficient to perfect
PFG’ security interest in said Deposit Accounts.  Said control agreements shall permit PFG, in its discretion (but
subject to the rights of the Senior Lender), to withdraw from said Deposit
Accounts accrued interest and any other Obligations due from Debtor to PFG.


 


5.8 
Further Assurances.  Debtor agrees, at its expense, on request by PFG, to execute all
documents and take all actions, as PFG, may, in its good faith business
judgment, deem necessary or useful in order to perfect and maintain PFG’s perfected
security interest in the Collateral (subject only to Permitted Liens), and in
order to fully consummate the transactions contemplated by this Agreement.


 


6.   TERM. This
Agreement shall continue in effect until all Obligations have been paid and performed
in full.


 


7.  EVENTS OF DEFAULT AND REMEDIES.


 


7.1 
Events of Default.  The occurrence of any of the following events shall constitute an
“Event of Default” under this Agreement, and Debtor shall give PFG immediate
written notice thereof: 


 


(a) Any warranty, representation, statement, report or
certificate made or delivered to PFG by Debtor or any of Debtor’s officers,
employees or agents, now or in the future, shall be untrue or misleading in a
material respect when made or deemed to be made; or 


 


(b) Debtor shall fail to pay any monetary Obligation
within three Business Days after the date due; or 


 


(c) any event of default shall occur under any present
or future document, instrument or agreement between Borrower and PFG; or 


 


4

















 


(d) Debtor shall breach any of the provisions of
Section 5.5 hereof, or shall fail to perform any other non-monetary
Obligation which by its nature cannot be cured, or shall fail to permit PFG to
conduct an inspection or audit as provided in Section 5.4 hereof; or 


 


(e) Debtor shall fail to perform any other
non-monetary Obligation, which failure is not cured within ten Business Days
after the date due; or 


 


(f) any levy, assessment, attachment, seizure, lien or
encumbrance (other than a Permitted Lien) is made on the Collateral with a
value of $25,000 or more, which is not cured within 10 days after the
occurrence of the same; or 


 


(g) any default or event of default occurs under any
obligation in an amount in excess of $25,000, secured by a Permitted Lien,
which is not cured within any applicable cure period or waived in writing by
the holder of the Permitted Lien; or 


 


(h) Debtor breaches any material contract or
obligation, which has resulted or may reasonably be expected to result in a
Material Adverse Change; or 


 


(i) Dissolution, termination of existence, insolvency
or business failure of Debtor; or appointment of a receiver, trustee or
custodian, for all or any part of the property of, assignment for the benefit
of creditors by, or the commencement of any proceeding by Debtor under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or 


 


(j) the commencement of any proceeding against Debtor
or any guarantor of any of the Obligations under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect,
which is not cured by the dismissal thereof within 45 days after the date
commenced; or 


 


(k) revocation or termination of, or limitation or
denial of liability upon, any guaranty executed by Debtor in favor of PFG; or 


 


(l) Debtor makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement, or if any Person
who has subordinated such indebtedness or obligations terminates or in any way limits
his subordination agreement; or 


 


(m) Parent shall cease to own 100% of the outstanding
stock of Debtor; or


 


(n) Debtor shall generally not pay its debts as they
become due, or Debtor shall conceal, remove or transfer any part of its
property, with intent to hinder, delay or defraud its creditors, or make or
suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or 


 


(o) a Material Adverse Change shall occur.  


 


7.2 
Remedies. 
Upon the occurrence and during the continuance of any Event of Default,
PFG, at its option, and without notice or demand of any kind (all of which are
hereby expressly waived by Debtor), may do any one or more of the following:
(a) [intentionally omitted]; (b) Accelerate and declare all or any part of the
Obligations to be immediately due, payable, and performable, notwithstanding
any deferred or installment payments allowed by any instrument evidencing or
relating to any Obligation; (c) Take possession of any or all of the Collateral
wherever it may be found, and for that purpose Debtor hereby authorizes PFG
without judicial process to enter onto any of Debtor’s premises without
interference to search for, take possession of, keep, store, or remove any of
the Collateral, and remain on the premises or cause a custodian to remain on
the premises in exclusive control thereof, without charge for so long as PFG
deems it necessary, in its good faith business judgment, in order to complete
the enforcement of its rights under this Agreement or any other agreement;
provided, however, that should PFG seek to take possession of any of the
Collateral by court process, Debtor hereby irrevocably waives: (i) any bond and
any surety or security relating thereto required by any statute, court rule or
otherwise as an incident to such possession; (ii) any demand for possession
prior to the commencement of any suit or action to recover possession thereof;
and (iii) any requirement that PFG retain possession of, and not dispose of, any
such Collateral until after trial or final judgment; (d) Require Debtor to
assemble any or all of the Collateral and make it available to PFG at places
designated by PFG which are reasonably convenient to PFG and Debtor, and to
remove the Collateral to such locations as PFG may deem advisable; (e) Complete
the processing, manufacturing or repair of any Collateral prior to a
disposition thereof and, for such purpose and for the purpose of removal, PFG
shall have the right to use Debtor’s premises, vehicles, hoists, lifts, cranes,
and other Equipment and all other property without charge; (f) Sell, lease or
otherwise dispose of any of the Collateral, in its condition at the time PFG
obtains possession of it or after further manufacturing, processing or repair,
at one or more public and/or private sales, in lots or in bulk, for cash,
exchange or other property, or on credit, and to adjourn any such sale from
time to time without notice other than oral announcement at the time scheduled
for sale.  PFG shall have the right to
conduct such disposition on Debtor’s premises without charge, for such time or
times as PFG deems reasonable, or on PFG’s premises, or elsewhere and


 


5

















 


the Collateral need not be located at the place of
disposition.  PFG may directly or
through any affiliated company purchase or lease any Collateral at any such
public disposition, and if permissible under applicable law, at any private
disposition.  Any sale or other
disposition of Collateral shall not relieve Debtor of any liability Debtor may
have if any Collateral is defective as to title or physical condition or
otherwise at the time of sale; (g) Demand payment of, and collect any Accounts
and General Intangibles comprising Collateral and, in connection therewith,
Debtor irrevocably authorizes PFG to endorse or sign Debtor’s name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to Debtor and remove therefrom payments made with respect
to any item of the Collateral or proceeds thereof, and, in PFG’s good faith
business judgment, to grant extensions of time to pay, compromise claims and
settle Accounts and the like for less than face value; (h) Exercise any and all
rights under any present or future control agreements relating to Deposit
Accounts or Investment Property; and (i) Demand and receive possession of any
of Debtor’s federal and state income tax returns and the books and records
utilized in the preparation thereof or referring thereto.  All reasonable attorneys’ fees, expenses,
costs, liabilities and obligations incurred by PFG with respect to the
foregoing shall be added to and become part of the Obligations, shall be due on
demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations. 
Without limiting any of PFG’s rights and remedies, from and after the
occurrence and during the continuance of any Event of Default, the interest
rate applicable to the Obligations shall be the same interest rate applicable
to loans to the Borrower after an Event of Default.


 


7.3 
Standards for Determining Commercial Reasonableness.  Debtor and PFG agree that a sale or other
disposition (collectively, “sale”) of any Collateral which complies with the
following standards will conclusively be deemed to be commercially
reasonable:  (i) Notice of the sale is
given to Debtor at least ten days prior to the sale, and, in the case of a
public sale, notice of the sale is published at least five days before the sale
in a newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by PFG,
with or without the Collateral being present; (iv) The sale commences at any
time between 8:00 a.m. and 6:00 p.m; 
(v) Payment of the purchase price in cash or by cashier’s check or wire
transfer is required; (vi) With respect to any sale of any of the Collateral,
PFG may (but is not obligated to) direct any prospective purchaser to ascertain
directly from Debtor any and all information concerning the same.  PFG shall be free to employ other methods of
noticing and selling the Collateral, in its discretion, if they are commercially
reasonable.


 


7.4 
Power of Attorney.  Upon the occurrence and during the continuance of any Event of
Default, without limiting PFG’s other rights and remedies, Debtor grants to PFG
an irrevocable power of attorney coupled with an interest, authorizing and
permitting PFG (acting through any of its employees, attorneys or agents) at
any time, at its option, but without obligation, with or without notice to
Debtor, and at Debtor’s expense, to do any or all of the following, in Debtor’s
name or otherwise, but PFG agrees that if it exercises any right hereunder, it
will do so in good faith and in a commercially reasonable manner:  (a) Execute on behalf of Debtor any
documents that PFG may, in its good faith business judgment, deem advisable in
order to perfect and maintain PFG’s security interest in the Collateral, or in
order to exercise a right of Debtor or PFG, or in order to fully consummate all
the transactions contemplated under this Agreement, and all other Debtor
Documents; (b) Execute on behalf of Debtor, any invoices relating to any
Account, any draft against any Account Debtor and any notice to any Account
Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of
mechanic’s, materialman’s or other lien, or assignment or satisfaction of
mechanic’s, materialman’s or other lien; (c) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name
of Debtor upon any instruments, or documents, evidence of payment or Collateral
that may come into PFG’s possession; (d) Endorse all checks and other forms of
remittances received by PFG; (e) Pay, contest or settle any lien, charge,
encumbrance, security interest and adverse claim in or to any of the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (f) Grant extensions of time to pay,
compromise claims and settle Accounts and General Intangibles for less than
face value and execute all releases and other documents in connection
therewith; (g) Pay any sums required on account of Debtor’s taxes or to secure
the release of any liens therefor, or both; (h) Settle and adjust, and give
releases of, any insurance claim that relates to any of the Collateral and
obtain payment therefor; (i) Instruct any third party having custody or control
of any books or records belonging to, or relating to, Debtor to give PFG the
same rights of access and other rights with respect thereto as PFG has under
this Agreement; and (j) Take any action or pay any sum required of Debtor
pursuant to this Agreement and any other Debtor Documents.  Any and all reasonable sums paid and any and
all reasonable costs, expenses, liabilities, obligations and attorneys’ fees
incurred by PFG with respect to the foregoing shall be added to and become part
of the Obligations, shall be payable on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the
Obligations.  In no event shall PFG’s
rights under the foregoing power of attorney or any of PFG’s other rights under
this Agreement be deemed to indicate that PFG is in control of the business,
management or properties of Debtor.


 


7.5 
Application of Proceeds.  All proceeds realized as the result of any sale of the Collateral
shall be applied by PFG first to the reasonable costs, expenses, liabilities,
obligations and attorneys’ fees incurred by PFG in the exercise of its rights
under this Agreement, second to the interest due upon any of the Obligations,
and third to the principal of the Obligations, in such order as PFG shall
determine in its sole discretion.  Any
surplus shall be paid to Debtor or other persons legally entitled thereto;
Debtor shall remain liable to PFG for any deficiency.  If, PFG, in its good faith business judgment, directly or


 


6

















 


indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, PFG shall have
the option, exercisable at any time, in its good faith business judgment, of
either reducing the Obligations by the principal amount of purchase price or
deferring the reduction of the Obligations until the actual receipt by PFG of
the cash therefor.


 


7.6 
Remedies Cumulative.  In addition to the rights and remedies set forth in this
Agreement, PFG shall have all the other rights and remedies accorded a secured
party under the Code and under all other applicable laws, and under any other
instrument or agreement now or in the future entered into between PFG and
Debtor, and all of such rights and remedies are cumulative and none is
exclusive.  Exercise or partial exercise
by PFG of one or more of its rights or remedies shall not be deemed an
election, nor bar PFG from subsequent exercise or partial exercise of any other
rights or remedies.  The failure or
delay of PFG to exercise any rights or remedies shall not operate as a waiver
thereof, but all rights and remedies shall continue in full force and effect
until all of the Obligations have been fully paid and performed.


 


8.              DEFINITIONS. 
As used in this Agreement, the following terms have the following
meanings:


 


“Account Debtor” means the obligor on an Account.


 


“Accounts” means all present and future “accounts” as defined in
the California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all accounts receivable and other sums owing to Debtor.


 


“Borrower” means INTERWAVE COMMUNICATIONS, INC., a Delaware
corporation and its successors.


 


“Business Day” means a day on which PFG is open for business.


 


“Code” means the Uniform Commercial Code as adopted and in
effect in the State of California from time to time. 


 


“Collateral” has the meaning set forth in Section 2 above.


 


“continuing” and “during the continuance of” when used
with reference to a Default or Event of Default means that the Default or Event
of Default has occurred and has not been either waived in writing by PFG or
cured within any applicable cure period.


 


“Debtor Documents” means, collectively, this Agreement, and all
other present and future documents, instruments and agreements between PFG and
Debtor, including, but not limited to those relating to this Agreement, the
Continuing Guaranty of substantially even date executed and delivered by Debtor
in favor of PFG with respect to Borrower (with all extensions and renewal
thereof, the “Guaranty”), and all amendments and modifications thereto and
replacements therefor.


 


 “Default” means any
event which with notice or passage of time or both, would constitute an Event
of Default.


 


 “Deposit Accounts” means
all present and future “deposit accounts” as defined in the California Uniform
Commercial Code in effect on the date hereof with such additions to such term
as may hereafter be made, and includes without limitation all general and
special bank accounts, demand accounts, checking accounts, savings accounts and
certificates of deposit.


 


“Equipment” means all present and future “equipment” as defined
in the California Uniform Commercial Code in effect on the date hereof with
such additions to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing.


 


“Event of Default” means any of the events set forth in
Section 7.1 of this Agreement.


 


“GAAP” means generally accepted accounting principles
consistently applied.


 


“General Intangibles” means all present and future “general
intangibles” as defined in the California Uniform Commercial Code in effect on
the date hereof with such additions to such term as may hereafter be made, and
includes without limitation all Intellectual Property, payment intangibles,
royalties, contract rights, goodwill, franchise agreements, purchase orders,
customer lists, route lists, telephone numbers, domain names, claims, income
tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.


 


“good faith business judgment” means honesty in fact and good
faith (as defined in Section 1201 of the Code) in the exercise of PFG’s
business judgment.


 


“including” means including (but not limited to).


 


7

















 


“Indebtedness” means as to any Person, (a) indebtedness for
borrowed money or the deferred purchase price of property or services, (b)
obligations evidenced by bonds, notes, debentures or other similar instruments,
(c) reimbursement obligations with respect to letters of credit and (d) capital
lease obligations.


 


“Intellectual Property” means all present and future (a)
copyrights, copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished, (b) trade secret rights, including all rights
to unpatented inventions and know-how, and confidential information; (c) mask
work or similar rights available for the protection of semiconductor chips; (d)
patents, patent applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same; (e) trademarks, servicemarks, trade styles,
and trade names, whether or not any of the foregoing are registered, and all applications
to register and registrations of the same and like protections, and the entire
goodwill of the business of Debtor connected with and symbolized by any such
trademarks; (f) computer software and computer software products; (g) designs
and design rights; (h) technology; (i) all claims for damages by way of past,
present and future infringement of any of the rights included above; (j) all
licenses or other rights to use any property or rights of a type described
above.


 


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


 


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


 


“Investment Property” means all present and future investment
property, securities, stocks, bonds, debentures, debt securities, partnership
interests, limited liability company interests, options, security entitlements,
securities accounts, commodity contracts, commodity accounts, and all financial
assets held in any securities account or otherwise, and all options and
warrants to purchase any of the foregoing, wherever located, and all other
securities of every kind, whether certificated or uncertificated.


 


“Material Adverse Change” means any of the following: (i) a
material adverse change in the business, operations, or financial or other
condition of the Debtor, or (ii) a material impairment of the prospect of
repayment of any portion of the Obligations; or (iii) a material impairment of
the value or priority (subject to Permitted Liens) of PFG’s security interests
in the Collateral.


 


“Obligations” means all present and future advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Debtor to PFG, whether evidenced by this Agreement or any note or
other instrument or document, or otherwise, whether arising from an extension
of credit, opening of a letter of credit, banker’s acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by PFG in
Debtor’s debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all indebtedness, liabilities and obligations of
Debtor under the Continuing Guaranty of substantially even date executed and
delivered by Debtor in favor of PFG with respect to Borrower.


 


“Other Property” means the following as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and all rights relating
thereto: all present and future “commercial tort claims” (including without
limitation any commercial tort claims), “documents”, “instruments”, “promissory
notes”, “chattel paper”, “letters of credit”, “letter-of-credit rights”,
“fixtures”, “farm products” and “money”; and all other goods and personal
property of every kind, tangible and intangible, whether or not governed by the
California Uniform Commercial Code.


 


“Parent” means INTERWAVE COMMUNICATIONS INTERNATIONAL LTD., a
Bermuda corporation.


 


 “Permitted Indebtedness”
means (a) a guaranty in favor of Senior Lender with respect to Borrower,
provided Senior Debt does not exceed the Senior Debt Limit; (b) Indebtedness
existing on the date hereof and shown on Exhibit B hereto; (c) indebtedness
secured by Permitted Liens; and (d) Indebtedness owing to Borrower or to
Parent.


 


“Permitted Investments” are: (a)          Investments (if any) shown on Exhibit B and
existing on the date hereof; (b) marketable direct obligations issued or
unconditionally guaranteed by the United States or its agency or any State
maturing within 1 year from its acquisition; (c) 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; (d) bank’s certificates of deposit issued maturing no more than 1
year after issue; (e) 
Investments consisting of deposit accounts and investment accounts; (f)
Investments consisting of extensions of credit to Debtor’s customers in the
ordinary course of business, in the nature of accounts receivable, prepaid
royalties or notes receivable arising from the sale or lease of goods, provision
of services or licensing


 


8

















 


activities of Debtor; (g) Investments
received in satisfaction or partial satisfaction of obligations owed by
financially troubled obligors or acquired as a result of a foreclosure with
respect to any secured Investment; (h) Investments acquired in exchange for any
other Investments in connection with or as a result of any bankruptcy, workout,
reorganization or recapitalization; (i) deposits, prepayments and other credits
to suppliers made in the ordinary course of business; (j) Indebtedness of any
wholly-owned Subsidiary of Debtor or any wholly-owned Subsidiary of Parent,
which is now or hereafter owing to Debtor, and which is incurred to fund such
Subsidiary’s operating expenses, prepayments and purchases, all in the ordinary
course of business, and (j) other Investments in an aggregate amount at any
time not to exceed $250,000 combined for all such Investments of Debtor, Parent
and Borrower.


 


“Permitted Liens” means the following:  (i) purchase money security interests in specific items of
Equipment (including accessions, additions, parts, replacements, fixtures,
improvements and attachments thereto and the proceeds thereof); (ii) leases of
specific items of Equipment (including accessions, additions, parts,
replacements, fixtures, improvements and attachments thereto and the proceeds
thereof); (iii) liens for taxes, fees, assessments or other governmental
charges or levies not yet payable or being contested in good faith by
appropriate proceedings, for which Debtor has maintained reserves in accordance
with GAAP, and which do not result in a lien on any Collateral; (iv) additional
security interests and liens consented to in writing by PFG, which consent may
be withheld in its good faith business judgment; (v) security interests being
terminated substantially concurrently with this Agreement; (vi) liens of
materialmen, mechanics, warehousemen, carriers, or other similar liens arising
in the ordinary course of business and securing obligations which are not
delinquent; (vii) liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by liens of the type described above
in clauses (i) or (ii) above, provided that any extension, renewal or
replacement lien is limited to the property encumbered by the existing lien and
the principal amount of the indebtedness being extended, renewed or refinanced
does not increase; (viii) Liens in favor of customs and revenue authorities
which secure payment of customs duties in connection with the importation of
goods; and (ix) Liens in favor of Senior Lender securing an amount not in
excess of the Senior Debt Limit; (x) Liens listed on Exhibit B hereto; (xi)
non-exclusive licenses and non-exclusive sublicenses granted in the ordinary
course of business; (xii) leases and subleases granted in the ordinary course
of business consisting of (A) short-term rental of Inventory, or (B) leases or
subleases of Equipment with an aggregate value for all such leases and
subleases not in excess of $10,000; (xiii) pledges or deposits in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance and social security legislation, in an aggregate amount not to exceed
$25,000 or as otherwise required by law; (xiv) cash deposits to secure the
performance of bids, trade contracts (other than for borrowed money), contracts
for the purchase of property, leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature, in each case,
incurred in the ordinary course of business and not representing an obligation
for borrowed money; (xv) statutory, common law or contractual liens of
depository institutions or institutions holding securities accounts (including
rights of set-off), securing only customary charges and fees in connection with
such accounts; and (xvi) Liens on insurance proceeds securing the payment of
financed insurance premiums.  PFG will
have the right to require, as a condition to its consent under subparagraph
(iv) above, that the holder of the additional security interest or lien sign an
intercreditor agreement on PFG’s then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of PFG, and
agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Debtor agree that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.  


 


“Person” means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity. 


 


“Senior Lender” means Silicon Valley Bank.


 


“Senior Debt” means total combined Indebtedness of Debtor,
Borrower and Parent to Senior Lender, including, but not limited to, monies
borrowed, interest on loans, fees and expenses, sums due in connection with
issuance of commercial letters of credit, issuance of forward contracts for
foreign exchange reserve, and any other direct or indirect financial
accommodation Senior Lender may provide to Debtor, Borrower or Parent.


 


 “Senior Debt Limit”
means $2,500,000
at any time outstanding.


 


 “Subsidiary” means
(a) any corporation of which more than 50% of the issued and
outstanding equity securities having ordinary voting power to elect a majority
of the Board of Directors of such corporation is at the time directly or
indirectly owned or controlled by Debtor, (b) any partnership, joint
venture, or other association of which more than 50% of the equity
interest having the power to vote, direct or control the management of such
partnership, joint venture or other association is at the time directly or
indirectly owned and controlled by Debtor, (c) any other entity included
in the financial statements of Debtor on a consolidated basis.


 


Other Terms. 
All accounting terms used in this Agreement, unless otherwise indicated,
shall have the meanings given to such terms in accordance with GAAP,
consistently applied.  All other terms
contained in this Agreement, unless otherwise indicated, shall have the
meanings provided by the Code, to the extent such terms are defined therein. 


 


9

















 


9.              GENERAL PROVISIONS.


 


9.1 
[intentionally omitted]  


 


9.2 
Application of Payments.  All
payments with respect to the Obligations may be applied, and in PFG’s good
faith business judgment reversed and re-applied, to the Obligations, in such
order and manner as PFG shall determine in its good faith business judgment.


 


9.3 
[intentionally omitted]  


 


9.4 
[intentionally omitted] 


 


9.5 
Notices. 
All notices to be given under this Agreement shall be in writing and
shall be given either personally or by reputable private delivery service or by
regular first-class mail, or certified mail return receipt requested, addressed
to PFG or Debtor at the addresses shown in the heading to this Agreement, or at
any other address designated in writing by one party to the other party. All
notices shall be deemed to have been given upon delivery in the case of notices
personally delivered, or at the expiration of one Business Day following
delivery to the private delivery service, or two Business Days following the
deposit thereof in the United States mail, with postage prepaid.  


 


9.6 
Severability. 
Should any provision of this Agreement be held by any court of competent
jurisdiction to be void or unenforceable, such defect shall not affect the
remainder of this Agreement, which shall continue in full force and effect.


 


9.7 
Integration. 
This Agreement and such other written agreements, documents and
instruments as may be executed in connection herewith are the final, entire and
complete agreement between Debtor and PFG and supersede all prior and
contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement.  There are no oral understandings, representations or agreements
between the parties which are not set forth in this Agreement or in other
written agreements signed by the parties in connection herewith.


 


9.8 
Waivers; Indemnity.  The failure of PFG at any time or times to require Debtor to strictly
comply with any of the provisions of this Agreement or any other Debtor
Document shall not waive or diminish any right of PFG later to demand and
receive strict compliance therewith. 
Any waiver of any default shall not waive or affect any other default,
whether prior or subsequent, and whether or not similar.  None of the provisions of this Agreement or
any other Debtor Document shall be deemed to have been waived by any act or
knowledge of PFG or its agents or employees, but only by a specific written
waiver signed by an authorized officer of PFG and delivered to Debtor.  To the extent permitted by law, Debtor
waives the benefit of all statutes of limitations relating to any of the
Obligations or this Agreement or any other Debtor Document, and Debtor waives
demand, protest, notice of protest and notice of default or dishonor, notice of
payment and nonpayment, release, compromise, settlement, extension or renewal
of any commercial paper, instrument, account, General Intangible, document or
guaranty at any time held by PFG on which Debtor is or may in any way be
liable, and notice of any action taken by PFG, unless expressly required by
this Agreement. Debtor hereby agrees to indemnify PFG and its affiliates,
subsidiaries, parent, directors, officers, employees, agents, and attorneys,
and to hold them harmless from and against any and all claims, debts,
liabilities, demands, obligations, actions, causes of action, penalties, costs
and expenses (including reasonable attorneys’ fees), of every kind, which they
may sustain or incur based upon or arising out of any of the Obligations, or
any relationship or agreement between PFG and Debtor, or any other matter,
relating to Debtor or the Obligations; provided that this indemnity shall not
extend to damages proximately caused by the indemnitee’s own gross negligence
or willful misconduct.  Notwithstanding
any provision in this Agreement to the contrary, the indemnity agreement set
forth in this Section shall survive any termination of this Agreement and
shall for all purposes continue in full force and effect.


 


9.9 [intentionally omitted] 


 


9.10 
Amendment. 
The terms and provisions of this Agreement may not be waived or amended,
except in a writing executed by Debtor and a duly authorized officer of PFG.


 


9.11  Time of Essence.  Time is of the essence in the performance by Debtor of each and
every obligation under this Agreement.


 


9.12 
Attorneys Fees and Costs.  Debtor shall reimburse PFG for all
reasonable attorneys’ fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by PFG, pursuant to, or
in connection with, or relating to this Agreement (whether or not a lawsuit is
filed), including, but not limited to, any reasonable attorneys’ fees and costs
PFG incurs in order to do the following: prepare and negotiate this Agreement
and all present and future documents relating to this Agreement; obtain legal
advice in connection with this Agreement or Debtor; enforce, or seek to
enforce, any of its rights; prosecute actions against, or defend actions by,
Account Debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Debtor’s books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce PFG’s security interest in, the


 


10

















 


Collateral; and otherwise represent PFG in any
litigation relating to Debtor. If either PFG or Debtor files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing
party in such action shall be entitled to recover its reasonable costs and
attorneys’ fees, including (but not limited to) reasonable attorneys’ fees and
costs incurred in the enforcement of, execution upon or defense of any order,
decree, award or judgment.  All
attorneys’ fees and costs to which PFG may be entitled pursuant to this
Paragraph shall immediately become part of Debtor’s Obligations, shall be due
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.


 


9.13 
Benefit of Agreement.  The provisions of this Agreement shall be binding upon and inure
to the benefit of the respective successors, assigns, heirs, beneficiaries and
representatives of Debtor and PFG; provided, however, that Debtor may not
assign or transfer any of its rights under this Agreement without the prior
written consent of PFG, and any prohibited assignment shall be void.  No consent by PFG to any assignment shall
release Debtor from its liability for the Obligations.


 


9.14 
[intentionally omitted] 


 


9.15 [intentionally omitted] 


 


9.16 
Confidentiality.  In handling any confidential information (including without
limitation confidential information provided pursuant to this Agreement or
pursuant to the Guaranty), PFG and all employees and agents of PFG shall
exercise the same degree of care that PFG exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of
any non-public information thereby received or received pursuant to this
Agreement, except that disclosure of such information may be made (i) to the
subsidiaries or affiliates of PFG in connection with their present or
prospective business relations with Debtor or PFG provided that they have
entered into a comparable confidentiality agreement in favor of Debtor, (ii) to
prospective transferees or purchasers of any interest in the Obligations,
provided that they have entered into a comparable confidentiality agreement in
favor of Debtor, (iii) as required by law, regulations, rule or order,
subpoena, judicial order or similar order, or (iv) as may be required in
connection with the examination, audit or similar investigation of PFG, (iv) as
may be necessary in PFG’s good faith business judgment in connection with the
enforcement of its rights or remedies after an Event of Default.  Confidential information hereunder shall not
include information that either:  (a) is
in the public domain or in the knowledge or possession of PFG when disclosed to
PFG, or becomes part of the public domain after disclosure to PFG through no
fault of PFG; or (b) is disclosed to PFG by a third party, provided PFG does
not have actual knowledge that such third party is prohibited from disclosing
such information.


 


9.17 
Paragraph Headings; Construction.  Paragraph headings are only used in this
Agreement for convenience.  Debtor and
PFG acknowledge that the headings may not describe completely the subject
matter of the applicable paragraph, and the headings shall not be used in any
manner to construe, limit, define or interpret any term or provision of this
Agreement. This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against PFG or Debtor under any rule of construction
or otherwise.


 


9.18 
Governing Law; Jurisdiction; Venue.  This Agreement and all acts and transactions
hereunder and all rights and obligations of PFG and Debtor shall be governed by
the laws of the State of California.  As
a material part of the consideration to PFG to enter into this Agreement,
Debtor (i) agrees that all actions and proceedings relating directly or
indirectly to this Agreement shall, at PFG’s option, be litigated in courts
located within California, and that the exclusive venue therefor shall be San
Francisco County; (ii) consents to the jurisdiction and venue of any such court
and consents to service of process in any such action or proceeding by personal
delivery or any other method permitted by law; and (iii) waives any and all
rights Debtor may have to object to the jurisdiction of any such court, or to
transfer or change the venue of any such action or proceeding.


 


11

















 


9.19 
Mutual Waiver of Jury Trial.  DEBTOR AND PFG EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO,
THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
PFG AND DEBTOR, OR ANY CONDUCT, ACTS OR OMISSIONS OF PFG OR DEBTOR OR ANY OF
THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH PFG OR DEBTOR, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING
IN CONTRACT OR TORT OR OTHERWISE.


 


	
  Debtor:

  	
  PFG:

  
	
   

  	
   

  
	
     INTERWAVE
  ADVANCED COMMUNICATIONS,

     INC.  

  	
  PARTNERS
  FOR GROWTH, L.P.  

  
	
   

  	
   

  
	
     By

  	
  /s/ Cal R. Hoagland

  	
   

  	
  By

  	
  /s/ Andrew Kahn

  	
   

  
	
   

  	
  President
  or Vice President

  	
   

  	
  Title

  	
  Manager, Partners for Growth, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its General Partner

  	
   

  
							



 


12

















 


Partners for Growth


 


Continuing Guaranty


 


	
  Borrower:

  	
   

  	
  INTERWAVE
  COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
  Guarantor:

  	
   

  	
  INTERWAVE
  COMMUNICATIONS INTERNATIONAL LTD.,

  
	
   

  	
   

  	
  a Bermuda
  corporation

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  June 4, 2004

  



 


This
Continuing Guaranty is executed by the above-named guarantor(s)
(jointly and severally, the “Guarantor”), as of the above date, in favor of
PARTNERS FOR GROWTH, L.P. (“PFG”), whose address is 560 Mission Street, 3rd
floor, San Francisco, CA 94105, with respect to the Indebtedness of the
above-named borrower (“Borrower”)


 


1.              Continuing Guaranty.  Guarantor hereby unconditionally guarantees
and promises to pay on demand to PFG, in lawful money of the United States, all
Indebtedness of Borrower now or hereafter owing to PFG.  As used herein, the term “Indebtedness” is
used in its most comprehensive sense and shall mean and include without
limitation:  (a) any and all debts,
duties, obligations, liabilities, representations, warranties and guaranties of
Borrower or any one or more of them, heretofore, now, or hereafter made,
incurred, or created  (including,
without limitation, any interest, charges, and other sums accruing after the
filing of a petition by or against Borrower under the Bankruptcy Code), whether
voluntary or involuntary, due or not due, absolute or contingent, liquidated or
unliquidated, certain or uncertain, determined or undetermined, monetary or
nonmonetary, written or oral, and whether Borrower may be liable individually
or jointly with others, and regardless of whether recovery thereon may be or hereafter
become barred by any statute of limitations, discharged or uncollectible in any
bankruptcy, insolvency or other proceeding, or otherwise unenforceable; and
(b) any and all amendments, modifications, renewals and extensions of any
or all of the foregoing, including without limitation amendments,
modifications, renewals and extensions which are evidenced by any new or
additional instrument, document or agreement; and (c) any and all
reasonable attorneys’ fees, court costs, and collection charges incurred in
endeavoring to collect or enforce any of the foregoing against Borrower,
Guarantor, or any other person liable thereon (whether or not suit be brought)
and any other reasonable expenses of, for or incidental to collection thereof.
This Guaranty is given in consideration for credit and other financial
accommodations which may, from time to time, be given by PFG to Borrower in
PFG’s sole discretion, but Guarantor acknowledges and agrees that acceptance by
PFG of this Guaranty shall not constitute a commitment of any kind by PFG to
extend such credit or other financial accommodation to Borrower or to permit
Borrower to incur Indebtedness to PFG. 
All sums due under this Guaranty shall bear interest from the date  due
until the date paid at the highest rate charged with respect to any of the
Indebtedness.


 


2.              Waivers. 
Guarantor hereby waives: 
(a) presentment for payment, notice of dishonor, demand, protest,
and notice thereof as to any instrument, and all other notices and demands to
which Guarantor might be entitled, including without limitation notice of all
of the following:  the acceptance
hereof; the creation, existence, or acquisition of any Indebtedness; the amount
of the Indebtedness from time to time outstanding; any foreclosure sale or
other disposition of any property which secures any or all of the Indebtedness
or which secures the obligations of any other guarantor of any or all of the
Indebtedness; any adverse change in Borrower’s financial position; any other
fact which might increase Guarantor’s risk; any default, partial payment or
non-payment of all or any part of the Indebtedness; the occurrence of any other
Event of Default (as hereinafter defined); any and all agreements and
arrangements between PFG and Borrower and any changes, modifications, or
extensions thereof, and any revocation, modification or release of any guaranty
of any or all of the Indebtedness by any person (including without limitation
any other person signing this Guaranty); (b) any right to require PFG to
institute suit against, or to exhaust its rights and remedies against, Borrower
or any other person, or to proceed against any property of any kind which
secures all or any part of the Indebtedness, or to exercise any right of offset
or other right with respect to any reserves, credits or deposit accounts held
by or maintained with PFG or any indebtedness of PFG to Borrower, or to
exercise any other right or power, or pursue any other remedy PFG may have;
(c) other than payment of the


 


1

















 


Indebtedness, any defense arising by reason of any disability or other
defense of Borrower or any other guarantor or any endorser, co-maker or other
person, or by reason of the cessation from any cause whatsoever of any
liability of Borrower or any other guarantor or any endorser, co-maker or other
person, with respect to all or any part of the Indebtedness, or by reason of
any act or omission of PFG or others which directly or indirectly results in
the discharge or release of Borrower or any other guarantor or any other person
or any Indebtedness or any security therefor, whether by operation of law or
otherwise; (d) any defense arising by reason of any failure of PFG to
obtain, perfect, maintain or keep in force any security interest in, or lien or
encumbrance upon, any property of Borrower or any other person; (e) any
defense based upon any failure of PFG to give Guarantor notice of any sale or
other disposition of any property securing any or all of the Indebtedness, or
any defects in any such notice that may be given, or any failure of PFG to
comply with any provision of applicable law in enforcing any security interest
in or lien upon any property securing any or all of the Indebtedness including,
but not limited to, any failure by PFG to dispose of any property securing any
or all of the Indebtedness in a commercially reasonable manner; (f) any
defense based upon or arising out of any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or dissolution
proceeding commenced by or against Borrower or any other guarantor or any
endorser, co-maker or other person, including without limitation any discharge
of, or bar against collecting, any of the Indebtedness (including without
limitation any interest thereon), in or as a result of any such proceeding; and
(g) the benefit of any and all statutes of limitation with respect to any
action based upon, arising out of or related to this Guaranty.  Until all of the Indebtedness has been paid,
performed, and discharged in full, nothing shall discharge or satisfy the
liability of Guarantor hereunder except the full performance and payment of all
of the Indebtedness.  If any claim is
ever made upon PFG for repayment or recovery of any amount or amounts received
by PFG in payment of or on account of any of the Indebtedness, because of any
claim that any such payment constituted a preferential transfer or fraudulent
conveyance, or for any other reason whatsoever, and PFG repays all or part of
said amount by reason of any judgment, decree or order of any court or
administrative body having jurisdiction over PFG or any of its property, or by
reason of any settlement or compromise of any such claim effected by PFG with
any such claimant (including without limitation the Borrower), then and in any
such event, Guarantor agrees that any such judgment, decree, order, settlement
and compromise shall be binding upon Guarantor, notwithstanding any revocation
or release of this Guaranty or the cancellation of any note or other instrument
evidencing any of the Indebtedness, or any release of any of the Indebtedness,
and the Guarantor shall be and remain liable to PFG under this Guaranty for the
amount so repaid or recovered, to the same extent as if such amount had never
originally been received by PFG, and the provisions of this sentence shall
survive, and continue in effect, notwithstanding any revocation or release of
this Guaranty.  Until all of the
Indebtedness has been irrevocably paid and performed in full, Guarantor hereby
expressly and unconditionally waives all rights of subrogation, reimbursement
and indemnity of every kind against Borrower, and all rights of recourse to any
assets or property of Borrower, and all rights to any collateral or security
held for the payment and performance of any Indebtedness, including (but not
limited to) any of the foregoing rights which Guarantor may have under any
present or future document or agreement with any Borrower or other person, and
including (but not limited to) any of the foregoing rights which Guarantor may
have under any equitable doctrine of subrogation, implied contract, or unjust
enrichment, or any other equitable or legal doctrine.


 


3.              Consents. 
Guarantor hereby consents and agrees that, without notice to or by
Guarantor and without affecting or impairing in any way the obligations or
liability of Guarantor hereunder, PFG may, from time to time before or after
revocation of this Guaranty, do any one or more of the following in PFG’s sole
and absolute discretion: 
(a) accelerate, accept partial payments of, compromise or settle,
renew, extend the time for the payment, discharge, or performance of, refuse to
enforce, and release all or any parties to, any or all of the Indebtedness;
(b) grant any other indulgence to Borrower or any other person in respect
of any or all of the Indebtedness or any other matter; (c) accept,
release, waive, surrender, enforce, exchange, modify, impair, or extend the
time for the performance, discharge, or payment of, any and all property of any
kind securing any or all of the Indebtedness or any guaranty of any or all of
the Indebtedness, or on which PFG at any time may have a lien, or refuse to
enforce its rights or make any compromise or settlement or agreement therefor
in respect of any or all of such property; (d) substitute or add, or take
any action or omit to take any action which results in the release of, any one
or more endorsers or guarantors of all or any part of the Indebtedness,
including, without limitation one or more parties to this Guaranty, regardless
of any destruction or impairment of any right of contribution or other right of
Guarantor; (e) amend, alter or change in any respect whatsoever any term
or provision relating to any or all of the Indebtedness, including the rate of
interest thereon; (f) apply any sums received from Borrower, any other
guarantor, endorser, or co-signer, or from the disposition of any collateral or
security, to any indebtedness whatsoever owing from such person or secured by
such collateral or security, in such manner and order as PFG determines in its
sole discretion, and regardless of whether such indebtedness is part of the
Indebtedness, is secured, or is due and payable; (g) apply any sums
received from Guarantor or from the disposition of any collateral or security
securing the obligations of Guarantor, to any of the


 


2

















 


Indebtedness in such manner and order as PFG determines in its sole
discretion, regardless of whether or not such Indebtedness is secured or is due
and payable.  Guarantor consents and
agrees that PFG shall be under no obligation to marshal any assets in favor of
Guarantor, or against or in payment of any or all of the Indebtedness.  Guarantor further consents and agrees that
PFG shall have no duties or responsibilities whatsoever with respect to any
property securing any or all of the Indebtedness.  Without limiting the generality of the foregoing, PFG shall have
no obligation to monitor, verify, audit, examine, or obtain or maintain any
insurance with respect to, any property securing any or all of the
Indebtedness.


 


4.              Exercise of Rights and Remedies; Foreclosure of Trust
Deeds.    Guarantor hereby
waives all rights of subrogation, reimbursement, indemnification, and
contribution and any other rights and defenses that are or may become available
to the Guarantor or other surety by reason of California Civil Code Sections
2787 to 2855, inclusive.  The Guarantor
waives all rights and defenses that the Guarantor may have because the
Borrower’s Indebtedness is secured by real property.  This means, among other things: 
(1) PFG may collect from the Guarantor without first foreclosing on any
real or personal property collateral pledged by the Borrower.  (2) If PFG forecloses on any real property
collateral pledged by the Borrower:  (A)
The amount of the Indebtedness may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price.  (B) PFG may
collect from the Guarantor even if PFG, by foreclosing on the real property
collateral, has destroyed any right the Guarantor may have to collect from the
Borrower.  This is an unconditional and
irrevocable waiver of any rights and defenses the Guarantor may have because
the Borrower’s Indebtedness is secured by real property.  These rights and defenses include, but are
not limited to, any rights or defenses based upon Section 580a, 580b,
580d, or 726 of the Code of Civil Procedure. 
The Guarantor waives all rights and defenses arising out of an election
of remedies by PFG, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed the Guarantor’s rights of subrogation and reimbursement against
the principal by the operation of Section 580d of the Code of Civil
Procedure or otherwise.


 


5.              Acceleration.  Notwithstanding the terms of all or any part of the Indebtedness,
the obligations of the Guarantor hereunder to pay and perform all of the
Indebtedness shall, at the option of PFG, immediately become due and payable,
without notice, and without regard to the expressed maturity of any of the
Indebtedness, in the event: Borrower shall fail to pay or perform when due
(after giving effect to any applicable grace period) all or any part of the
Indebtedness, or any “event of default” (as defined in any present or future
agreement between Borrower and PFG or between Guarantor and PFG) shall
occur.  All of the foregoing are hereinafter
referred to as “Events of Default”.


 


6.              Revocation.  This is a Continuing Guaranty relating to all of the
Indebtedness, including Indebtedness arising under successive transactions
which from time to time continue the Indebtedness or renew it after it has been
satisfied.  Guarantor waives all
benefits of California Civil Code Section 2815, and agrees that the
obligations of Guarantor hereunder may not be terminated or revoked in any
manner except by giving 90 days’ advance written notice of revocation to
PFG at its address above by registered first-class U.S. mail, postage prepaid,
return receipt requested, and only as to new loans made by PFG to Borrower more
than 90 days after actual receipt of such written notice by PFG.  No termination or revocation of this
Guaranty shall be effective until 90 days following the date of actual
receipt of said written notice of revocation by PFG.  Notwithstanding such written notice of revocation or any other
act of Guarantor or any other event or circumstance, Guarantor agrees that this
Guaranty and all consents, waivers and other provisions hereof shall continue
in full force and effect as to any and all Indebtedness which is outstanding on
or before the 90th day following actual receipt of said written notice of
revocation by PFG, and all extensions, renewals and modifications of said
Indebtedness (including without limitation amendments, extensions, renewals and
modifications which are evidenced by new or additional instruments, documents
or agreements executed before or after expiration of said 90-day period), and
all interest thereon, accruing before or after expiration of said 90-day
period, and all attorneys’ fees, court costs and collection charges, incurred
before or after expiration of said 90-day period, in endeavoring to collect or
enforce any of the foregoing against Borrower, Guarantor or any other person
liable thereon (whether or not suit be brought) and any other expenses of, for
or incidental to collection thereof.


 


7.              Independent Liability.  Guarantor hereby agrees that one or more
successive or concurrent actions may be brought hereon against Guarantor, in
the same action in which Borrower may be sued or in separate actions, as often
as deemed advisable by PFG.  The
liability of Guarantor hereunder is exclusive and independent of any other
guaranty of any or all of the Indebtedness whether executed by Guarantor or by
any other guarantor (including without limitation any other persons signing
this Guaranty).  The liability of
Guarantor hereunder shall not be affected, revoked, impaired, or reduced by any
one or more of the following: 
(a) the fact that the Indebtedness exceeds the maximum amount of
Guarantor’s liability, if any, specified herein or elsewhere (and no agreement
specifying a maximum amount of Guarantor’s liability shall be enforceable
unless set forth in a writing signed by PFG or set forth in this Guaranty); or
(b) any direction as to the application of payment by Borrower or by any
other party; or (c) any other continuing or restrictive guaranty or


 


3

















 


undertaking or any limitation on the liability of any other guarantor
(whether under this Guaranty or under any other agreement); or (d) any
reduction of any such other guaranty or undertaking; or (e) any
revocation, amendment, modification or release of any such other guaranty or
undertaking.  Guarantor hereby expressly
represents that it was not induced to give this Guaranty by the fact that there
are or may be other guarantors either under this Guaranty or otherwise, and
Guarantor agrees that any release of any one or more of such other guarantors
shall not release Guarantor from its obligations hereunder either in full or to
any lesser extent.


 


8.              Financial Condition of Borrower.  Guarantor is fully aware of the financial
condition of Borrower and is executing and delivering this Guaranty at
Borrower’s request and based solely upon its own independent investigation of
all matters pertinent hereto, and Guarantor is not relying in any manner upon
any representation or statement of PFG with respect thereto.  Guarantor represents and warrants that it is
in a position to obtain, and Guarantor hereby assumes full responsibility for
obtaining, any additional information concerning Borrower’s financial condition
and any other matter pertinent hereto as Guarantor may desire, and Guarantor is
not relying upon or expecting PFG to furnish to it any information now or
hereafter in PFG’s possession concerning the same or any other matter.  By executing this Guaranty, Guarantor
knowingly accepts the full range of risks encompassed within a contract of
continuing guaranty, which risks Guarantor acknowledges include without
limitation the possibility that Borrower will incur additional Indebtedness for
which Guarantor will be liable hereunder after Borrower’s financial condition
or ability to pay such Indebtedness has deteriorated and/or after bankruptcy or
insolvency proceedings have been commenced by or against Borrower.  Guarantor shall have no right to require PFG
to obtain or disclose any information with respect to the Indebtedness, the
financial condition or character of Borrower, the existence of any collateral
or security for any or all of the Indebtedness, the filing by or against
Borrower of any bankruptcy or insolvency proceeding, the existence of any other
guaranties of all or any part of the Indebtedness, any action or non-action on
the part of PFG, Borrower, or any other person, or any other matter, fact, or
occurrence.


 


9.              Reports and Financial Statements of Guarantor.  Guarantor shall, at its sole cost and
expense, from time to time, prepare or cause to be prepared, and provide to PFG
upon PFG’s request (i) such financial statements and reports concerning
Guarantor for such periods of time as PFG may designate in its good faith business
judgment, (ii) such other information concerning Guarantor’s business,
financial condition or affairs as PFG may request in its good faith business
judgment. Guarantor further agrees to give prompt written notice to PFG of any
material adverse change in Guarantor’s financial condition and of any condition
or event which constitutes an Event of Default under this Guaranty.  All reports and information furnished to PFG
hereunder shall be accurate and correct in all material respects and will not
omit information needed to make the same not misleading. The condentiality
agreement in Section 9.16 of the Security Agreement of even date between
Guarantor and PDF shall be applicable to all confidential information provided
by Guarantor pursuant to this Guaranty.


 


10.       Representations and Warranties.  Guarantor hereby represents and warrants
that (i) it is in Guarantor’s direct interest to assist Borrower in
procuring credit, because Borrower is an affiliate of Guarantor, furnishes
goods or services to Guarantor, purchases or acquires goods or services from
Guarantor, and/or otherwise has a direct or indirect corporate or business
relationship with Guarantor, (ii) this Guaranty has been duly and validly
authorized, executed and delivered and constitutes the valid and binding
obligation of Guarantor, enforceable in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency and other similar laws
affecting creditors generally and by equitable principles (regardless of
whether enforcement is sought in equity or at law), and (iii) the
execution and delivery of this Guaranty does not violate or constitute a
default under (with or without the giving of notice, the passage of time, or
both) any order, judgment, decree, or any material instrument or agreement to
which Guarantor is a party or by which it or its assets are affected or bound.


 


11.       Costs. 
Whether or not suit be instituted, Guarantor agrees to reimburse PFG on
demand for all reasonable attorneys’ fees and all other reasonable costs and
expenses incurred by PFG in enforcing this Guaranty, or arising out of or
relating in any way to this Guaranty. In the event either PFG or Guarantor
files any lawsuit against the other predicated on a breach of this Guaranty,
the prevailing party in such action shall be entitled to recover its attorneys’
fees and costs of suit from the non-prevailing party.


 


12.       Notices. 
Any notice which a party shall be required or shall desire to give to
the other hereunder (except for notice of revocation, which shall be governed
by Section 6 of this Guaranty) shall be given by personal delivery,
reputable overnight courier service, or by telecopier or by depositing the same
in the United States mail, first class postage pre-paid, addressed to PFG at
its address set forth in the heading of this Guaranty and to Guarantor at its
address set forth under its signature hereon, and such notices shall be deemed
duly given on the date of personal delivery, or one business day after sent by
reputable overnight courier service, or one day after the date telecopied or 3
business days after the date of mailing as aforesaid.  PFG and Guarantor may change their address for purposes of
receiving notices hereunder by giving written notice thereof to the other party
in accordance


 


4

















 


herewith.  Guarantor shall give
PFG immediate written notice of any change in its address.


 


13.       Construction; Severability. As used in
this Guaranty, the term “property” is used in its most comprehensive sense and
shall mean all property of every kind and nature whatsoever, including without
limitation real property, personal property, mixed property, tangible property
and intangible property.  Words used
herein in the masculine gender shall include the neuter and feminine gender,
words used herein in the neuter gender shall include the masculine and
feminine, words used herein in the singular shall include the plural and words
used in the plural shall include the singular, wherever the context so
reasonably requires.  If any provision
of this Guaranty or the application thereof to any party or circumstance is
held invalid, void, inoperative or unenforceable, the remainder of this
Guaranty and the application of such provision to other parties or
circumstances shall not be affected thereby, the provisions of this Guaranty
being severable in any such instance.


 


14.       General Provisions. 
 PFG shall have the
right to seek recourse against Guarantor to the full extent provided for herein
and in any other instrument or agreement evidencing obligations of Guarantor to
PFG, and against Borrower to the full extent of the Indebtedness.  No election in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of PFG’s right to proceed in any other form of action or proceeding or
against any other party.  The failure of
PFG to enforce any of the provisions of this Guaranty at any time or for any
period of time shall not be construed to be a waiver of any such provision or
the right thereafter to enforce the same. 
All remedies hereunder shall be cumulative and shall be in addition to
all rights, powers and remedies given to PFG by law or under any other
instrument or agreement.   Time is of
the essence in the performance by Guarantor of each and every obligation under
this Guaranty.  If Borrower is a
corporation, partnership or other entity, Guarantor hereby agrees that PFG
shall have no obligation to inquire into the power or authority of Borrower or
any of its officers, directors, partners, or agents acting or purporting to act
on its behalf, and any Indebtedness made or created in reliance upon the
professed exercise of any such power or authority shall be included in the
Indebtedness guaranteed hereby.  This
Guaranty is the entire and only agreement between Guarantor and PFG with
respect to the guaranty of the Indebtedness of Borrower by Guarantor, and all
representations, warranties, agreements, or undertakings heretofore or
contemporaneously made, which are not set forth herein, are superseded
hereby.  No course of dealings between
the parties, no usage of the trade, and no parol or extrinsic evidence of any
nature shall be used or be relevant to supplement or explain or modify any term
or provision of this Guaranty.  There
are no conditions to the full effectiveness of this Guaranty.  The terms and provisions hereof may not be
waived, altered, modified, or amended except in a writing executed by Guarantor
and a duly authorized officer of PFG. 
All rights, benefits and privileges hereunder shall inure to the benefit
of and be enforceable by PFG and its successors and assigns and shall be
binding upon Guarantor and its successors and assigns. Section headings
are used herein for convenience only. 
Guarantor acknowledges that the same may not describe completely the
subject matter of the applicable Section, and the same shall not be used in any
manner to construe, limit, define or interpret any term or provision hereof.


 


15.                   Governing Law; Venue and Jurisdiction.  This instrument and all acts and
transactions pursuant or relating hereto and all rights and obligations of the
parties hereto shall be governed, construed, and interpreted in accordance with
the internal laws of the State of California. 
In order to induce PFG to accept this Guaranty, and as a material part
of the consideration therefor, Guarantor (i) agrees that all actions or
proceedings relating directly or indirectly hereto shall, at the option of PFG,
be litigated in courts located within Santa Clara County, California, (ii) consents
to the jurisdiction of any such court and consents to the service of process in
any such action or proceeding by personal delivery or any other method
permitted by law; and (iii) waives any and all rights Guarantor may have
to transfer or change the venue of any such action or proceeding.


 


16.       Mutual Waiver of Right to Jury Trial.  PFG AND GUARANTOR HEREBY WAIVE THE RIGHT TO TRIAL BY
JURY IN ANY ACTION, CLAIM, LAWSUIT OR PROCEEDING BASED UPON, ARISING OUT OF, OR
IN ANY WAY RELATING TO: (i) THIS GUARANTY OR ANY SUPPLEMENT OR AMENDMENT
THERETO; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
PFG AND GUARANTOR; OR (iii) ANY BREACH, CONDUCT, ACTS OR OMISSIONS OF PFG OR
GUARANTOR OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR ANY OTHER PERSON AFFILIATED WITH OR REPRESENTING PFG OR GUARANTOR;
IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.


 


17.       Receipt of Copy.  Guarantor acknowledges receipt of a copy of this Guaranty.


 


5

















 


Guarantor
Signature:


 


	
   

  	
  INTERWAVE COMMUNICATIONS

  INTERNATIONAL LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Cal R. Hoagland

  	
   

  
	
   

  	
  Title

  	
  SVP and CFO

  	
   

  
						



 


Address:


 


Clarendon
House


2 Church Street


P.O. Box HM 1022


Hamilton, HM DX, Bermuda


 


6






















Partners for Growth


 


Continuing
Guaranty


 


Borrower:     Interwave
Communications, Inc.


 


Guarantor:   Interwave
Advanced Communications, Inc.


 


Date:                                      June 4,
2004


 


This
Continuing Guaranty is executed by the above-named
guarantor(s) (jointly and severally, the “Guarantor”), as of the above date, in
favor of PARTNERS FOR GROWTH, L.P. (“PFG”), whose address is 560 Mission
Street, 3rd floor, San Francisco, CA 94105, with respect to the Indebtedness of
the above-named borrower (“Borrower”)


 


1.              Continuing Guaranty.  Guarantor hereby unconditionally guarantees
and promises to pay on demand to PFG, in lawful money of the United States, all
Indebtedness of Borrower now or hereafter owing to PFG.  As used herein, the term “Indebtedness” is
used in its most comprehensive sense and shall mean and include without
limitation:  (a) any and all debts,
duties, obligations, liabilities, representations, warranties and guaranties of
Borrower or any one or more of them, heretofore, now, or hereafter made,
incurred, or created (including, without limitation, any interest, charges, and
other sums accruing after the filing of a petition by or against Borrower under
the Bankruptcy Code), whether voluntary or involuntary, due or not due,
absolute or contingent, liquidated or unliquidated, certain or uncertain,
determined or undetermined, monetary or nonmonetary, written or oral, and
whether Borrower may be liable individually or jointly with others, and
regardless of whether recovery thereon may be or hereafter become barred by any
statute of limitations, discharged or uncollectible in any bankruptcy,
insolvency or other proceeding, or otherwise unenforceable; and (b) any
and all amendments, modifications, renewals and extensions of any or all of the
foregoing, including without limitation amendments, modifications, renewals and
extensions which are evidenced by any new or additional instrument, document or
agreement; and (c) any and all reasonable attorneys’ fees, court costs,
and collection charges incurred in endeavoring to collect or enforce any of the
foregoing against Borrower, Guarantor, or any other person liable thereon
(whether or not suit be brought) and any other reasonable expenses of, for or
incidental to collection thereof. This Guaranty is given in consideration for
credit and other financial accommodations which may, from time to time, be
given by PFG to Borrower in PFG’s sole discretion, but Guarantor acknowledges
and agrees that acceptance by PFG of this Guaranty shall not constitute a
commitment of any kind by PFG to extend such credit or other financial
accommodation to Borrower or to permit Borrower to incur Indebtedness to
PFG.  All sums due under this Guaranty
shall bear interest from the date  due until the date paid at the highest
rate charged with respect to any of the Indebtedness.


 


2.              Waivers.  Guarantor hereby waives:  (a) presentment for payment, notice of
dishonor, demand, protest, and notice thereof as to any instrument, and all
other notices and demands to which Guarantor might be entitled, including
without limitation notice of all of the following:  the acceptance hereof; the creation, existence, or acquisition of
any Indebtedness; the amount of the Indebtedness from time to time outstanding;
any foreclosure sale or other disposition of any property which secures any or
all of the Indebtedness or which secures the obligations of any other guarantor
of any or all of the Indebtedness; any adverse change in Borrower’s financial
position; any other fact which might increase Guarantor’s risk; any default,
partial payment or non-payment of all or any part of the Indebtedness; the
occurrence of any other Event of Default (as hereinafter defined); any and all
agreements and arrangements between PFG and Borrower and any changes,
modifications, or extensions thereof, and any revocation, modification or
release of any guaranty of any or all of the Indebtedness by any person
(including without limitation any other person signing this Guaranty);
(b) any right to require PFG to institute suit against, or to exhaust its
rights and remedies against, Borrower or any other person, or to proceed
against any property of any kind which secures all or any part of the
Indebtedness, or to exercise any right of offset or other right with respect to
any reserves, credits or deposit accounts held by or maintained with PFG or any
indebtedness of PFG to Borrower, or to exercise any other right or power, or
pursue any other remedy PFG may have; (c) other than payment of the
Indebtedness, any defense arising by reason of any disability or other defense
of Borrower or any other guarantor or any endorser, co-maker or other person,
or by


 


1

















 


reason of the cessation from any cause whatsoever of any liability of
Borrower or any other guarantor or any endorser, co-maker or other person, with
respect to all or any part of the Indebtedness, or by reason of any act or
omission of PFG or others which directly or indirectly results in the discharge
or release of Borrower or any other guarantor or any other person or any
Indebtedness or any security therefor, whether by operation of law or
otherwise; (d) any defense arising by reason of any failure of PFG to
obtain, perfect, maintain or keep in force any security interest in, or lien or
encumbrance upon, any property of Borrower or any other person; (e) any
defense based upon any failure of PFG to give Guarantor notice of any sale or
other disposition of any property securing any or all of the Indebtedness, or
any defects in any such notice that may be given, or any failure of PFG to
comply with any provision of applicable law in enforcing any security interest
in or lien upon any property securing any or all of the Indebtedness including,
but not limited to, any failure by PFG to dispose of any property securing any
or all of the Indebtedness in a commercially reasonable manner; (f) any
defense based upon or arising out of any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or dissolution
proceeding commenced by or against Borrower or any other guarantor or any
endorser, co-maker or other person, including without limitation any discharge
of, or bar against collecting, any of the Indebtedness (including without
limitation any interest thereon), in or as a result of any such proceeding; and
(g) the benefit of any and all statutes of limitation with respect to any
action based upon, arising out of or related to this Guaranty.  Until all of the Indebtedness has been paid,
performed, and discharged in full, nothing shall discharge or satisfy the
liability of Guarantor hereunder except the full performance and payment of all
of the Indebtedness.  If any claim is
ever made upon PFG for repayment or recovery of any amount or amounts received
by PFG in payment of or on account of any of the Indebtedness, because of any
claim that any such payment constituted a preferential transfer or fraudulent
conveyance, or for any other reason whatsoever, and PFG repays all or part of
said amount by reason of any judgment, decree or order of any court or
administrative body having jurisdiction over PFG or any of its property, or by
reason of any settlement or compromise of any such claim effected by PFG with
any such claimant (including without limitation the Borrower), then and in any
such event, Guarantor agrees that any such judgment, decree, order, settlement
and compromise shall be binding upon Guarantor, notwithstanding any revocation
or release of this Guaranty or the cancellation of any note or other instrument
evidencing any of the Indebtedness, or any release of any of the Indebtedness,
and the Guarantor shall be and remain liable to PFG under this Guaranty for the
amount so repaid or recovered, to the same extent as if such amount had never
originally been received by PFG, and the provisions of this sentence shall
survive, and continue in effect, notwithstanding any revocation or release of
this Guaranty.  Until all of the
Indebtedness has been irrevocably paid and performed in full, Guarantor hereby
expressly and unconditionally waives all rights of subrogation, reimbursement
and indemnity of every kind against Borrower, and all rights of recourse to any
assets or property of Borrower, and all rights to any collateral or security
held for the payment and performance of any Indebtedness, including (but not
limited to) any of the foregoing rights which Guarantor may have under any
present or future document or agreement with any Borrower or other person, and
including (but not limited to) any of the foregoing rights which Guarantor may
have under any equitable doctrine of subrogation, implied contract, or unjust
enrichment, or any other equitable or legal doctrine.


 


3.              Consents.  Guarantor hereby consents and agrees that,
without notice to or by Guarantor and without affecting or impairing in any way
the obligations or liability of Guarantor hereunder, PFG may, from time to time
before or after revocation of this Guaranty, do any one or more of the
following in PFG’s sole and absolute discretion:  (a) accelerate, accept partial payments of, compromise or
settle, renew, extend the time for the payment, discharge, or performance of,
refuse to enforce, and release all or any parties to, any or all of the
Indebtedness; (b) grant any other indulgence to Borrower or any other
person in respect of any or all of the Indebtedness or any other matter;
(c) accept, release, waive, surrender, enforce, exchange, modify, impair,
or extend the time for the performance, discharge, or payment of, any and all
property of any kind securing any or all of the Indebtedness or any guaranty of
any or all of the Indebtedness, or on which PFG at any time may have a lien, or
refuse to enforce its rights or make any compromise or settlement or agreement
therefor in respect of any or all of such property; (d) substitute or add,
or take any action or omit to take any action which results in the release of,
any one or more endorsers or guarantors of all or any part of the Indebtedness,
including, without limitation one or more parties to this Guaranty, regardless
of any destruction or impairment of any right of contribution or other right of
Guarantor; (e) amend, alter or change in any respect whatsoever any term
or provision relating to any or all of the Indebtedness, including the rate of
interest thereon; (f) apply any sums received from Borrower, any other
guarantor, endorser, or co-signer, or from the disposition of any collateral or
security, to any indebtedness whatsoever owing from such person or secured by
such collateral or security, in such manner and order as PFG determines in its
sole discretion, and regardless of whether such indebtedness is part of the
Indebtedness, is secured, or is due and payable; (g) apply any sums
received from Guarantor or from the disposition of any collateral or security
securing the obligations of Guarantor, to any of the Indebtedness in such
manner and order as PFG determines in its sole discretion, regardless of
whether or not such Indebtedness is secured or is due and payable.  Guarantor


 


2

















 


consents and agrees that PFG shall be under no obligation to marshal
any assets in favor of Guarantor, or against or in payment of any or all of the
Indebtedness.  Guarantor further
consents and agrees that PFG shall have no duties or responsibilities whatsoever
with respect to any property securing any or all of the Indebtedness.  Without limiting the generality of the
foregoing, PFG shall have no obligation to monitor, verify, audit, examine, or
obtain or maintain any insurance with respect to, any property securing any or
all of the Indebtedness.


 


4.              Exercise
of Rights and Remedies; Foreclosure of Trust Deeds.  Guarantor hereby waives all rights of
subrogation, reimbursement, indemnification, and contribution and any other
rights and defenses that are or may become available to the Guarantor or other
surety by reason of California Civil Code Sections 2787 to 2855,
inclusive.  The Guarantor waives all
rights and defenses that the Guarantor may have because the Borrower’s
Indebtedness is secured by real property. 
This means, among other things: 
(1) PFG may collect from the Guarantor without first foreclosing on any
real or personal property collateral pledged by the Borrower.  (2) If PFG forecloses on any real property
collateral pledged by the Borrower:  (A)
The amount of the Indebtedness may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price.  (B) PFG may
collect from the Guarantor even if PFG, by foreclosing on the real property
collateral, has destroyed any right the Guarantor may have to collect from the
Borrower.  This is an unconditional and
irrevocable waiver of any rights and defenses the Guarantor may have because
the Borrower’s Indebtedness is secured by real property.  These rights and defenses include, but are
not limited to, any rights or defenses based upon Section 580a, 580b,
580d, or 726 of the Code of Civil Procedure. 
The Guarantor waives all rights and defenses arising out of an election
of remedies by PFG, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed the Guarantor’s rights of subrogation and reimbursement against
the principal by the operation of Section 580d of the Code of Civil
Procedure or otherwise.


 


5.              Acceleration.  Notwithstanding the terms of all or any part
of the Indebtedness, the obligations of the Guarantor hereunder to pay and
perform all of the Indebtedness shall, at the option of PFG, immediately become
due and payable, without notice, and without regard to the expressed maturity
of any of the Indebtedness, in the event: Borrower shall fail to pay or perform
when due (after giving effect to any applicable grace period) all or any part
of the Indebtedness, or any “event of default” (as defined in any present or
future agreement between Borrower and PFG or between Guarantor and PFG) shall
occur.  All of the foregoing are
hereinafter referred to as “Events of Default”.


 


6.              Revocation.  This is a Continuing Guaranty relating to
all of the Indebtedness, including Indebtedness arising under successive
transactions which from time to time continue the Indebtedness or renew it
after it has been satisfied.  Guarantor
waives all benefits of California Civil Code Section 2815, and agrees that
the obligations of Guarantor hereunder may not be terminated or revoked in any
manner except by giving 90 days’ advance written notice of revocation to
PFG at its address above by registered first-class U.S. mail, postage prepaid,
return receipt requested, and only as to new loans made by PFG to Borrower more
than 90 days after actual receipt of such written notice by PFG.  No termination or revocation of this
Guaranty shall be effective until 90 days following the date of actual
receipt of said written notice of revocation by PFG.  Notwithstanding such written notice of revocation or any other
act of Guarantor or any other event or circumstance, Guarantor agrees that this
Guaranty and all consents, waivers and other provisions hereof shall continue
in full force and effect as to any and all Indebtedness which is outstanding on
or before the 90th day following actual receipt of said written notice of
revocation by PFG, and all extensions, renewals and modifications of said
Indebtedness (including without limitation amendments, extensions, renewals and
modifications which are evidenced by new or additional instruments, documents
or agreements executed before or after expiration of said 90-day period), and
all interest thereon, accruing before or after expiration of said 90-day
period, and all attorneys’ fees, court costs and collection charges, incurred
before or after expiration of said 90-day period, in endeavoring to collect or
enforce any of the foregoing against Borrower, Guarantor or any other person
liable thereon (whether or not suit be brought) and any other expenses of, for
or incidental to collection thereof.


 


7.              Independent Liability.  Guarantor hereby agrees that one or more
successive or concurrent actions may be brought hereon against Guarantor, in
the same action in which Borrower may be sued or in separate actions, as often
as deemed advisable by PFG.  The
liability of Guarantor hereunder is exclusive and independent of any other
guaranty of any or all of the Indebtedness whether executed by Guarantor or by
any other guarantor (including without limitation any other persons signing
this Guaranty).  The liability of
Guarantor hereunder shall not be affected, revoked, impaired, or reduced by any
one or more of the following: 
(a) the fact that the Indebtedness exceeds the maximum amount of
Guarantor’s liability, if any, specified herein or elsewhere (and no agreement
specifying a maximum amount of Guarantor’s liability shall be enforceable
unless set forth in a writing signed by PFG or set forth in this Guaranty); or
(b) any direction as to the application of payment by Borrower or by any
other party; or (c) any other continuing or restrictive guaranty or
undertaking or any limitation on the liability of any other guarantor (whether
under this Guaranty or under any other


 


3

















 


agreement); or (d) any reduction of any such other guaranty or
undertaking; or (e) any revocation, amendment, modification or release of
any such other guaranty or undertaking. 
Guarantor hereby expressly represents that it was not induced to give
this Guaranty by the fact that there are or may be other guarantors either
under this Guaranty or otherwise, and Guarantor agrees that any release of any one
or more of such other guarantors shall not release Guarantor from its
obligations hereunder either in full or to any lesser extent.


 


8.              Financial Condition of Borrower.  Guarantor is fully aware of the financial
condition of Borrower and is executing and delivering this Guaranty at
Borrower’s request and based solely upon its own independent investigation of
all matters pertinent hereto, and Guarantor is not relying in any manner upon
any representation or statement of PFG with respect thereto.  Guarantor represents and warrants that it is
in a position to obtain, and Guarantor hereby assumes full responsibility for
obtaining, any additional information concerning Borrower’s financial condition
and any other matter pertinent hereto as Guarantor may desire, and Guarantor is
not relying upon or expecting PFG to furnish to it any information now or
hereafter in PFG’s possession concerning the same or any other matter.  By executing this Guaranty, Guarantor
knowingly accepts the full range of risks encompassed within a contract of
continuing guaranty, which risks Guarantor acknowledges include without
limitation the possibility that Borrower will incur additional Indebtedness for
which Guarantor will be liable hereunder after Borrower’s financial condition or
ability to pay such Indebtedness has deteriorated and/or after bankruptcy or
insolvency proceedings have been commenced by or against Borrower.  Guarantor shall have no right to require PFG
to obtain or disclose any information with respect to the Indebtedness, the
financial condition or character of Borrower, the existence of any collateral
or security for any or all of the Indebtedness, the filing by or against
Borrower of any bankruptcy or insolvency proceeding, the existence of any other
guaranties of all or any part of the Indebtedness, any action or non-action on
the part of PFG, Borrower, or any other person, or any other matter, fact, or
occurrence.


 


9.              Reports
and Financial Statements of Guarantor. 
Guarantor shall, at its sole cost and expense, from time to time,
prepare or cause to be prepared, and provide to PFG upon PFG’s request
(i) such financial statements and reports concerning Guarantor for such
periods of time as PFG may designate in its good faith business judgment,
(ii) such other information concerning Guarantor’s business, financial
condition or affairs as PFG may request in its good faith business judgment.
Guarantor further agrees to give prompt written notice to PFG of any material
adverse change in Guarantor’s financial condition and of any condition or event
which constitutes an Event of Default under this Guaranty.  All reports and information furnished to PFG
hereunder shall be accurate and correct in all material respects and will not
omit information needed to make the same not misleading. The condentiality
agreement in Section 9.16 of the Security Agreement of even date between
Guarantor and PDF shall be applicable to all confidential information provided
by Guarantor pursuant to this Guaranty.


 


10.       Representations and Warranties.  Guarantor hereby represents and warrants
that (i) it is in Guarantor’s direct interest to assist Borrower in
procuring credit, because Borrower is an affiliate of Guarantor, furnishes
goods or services to Guarantor, purchases or acquires goods or services from
Guarantor, and/or otherwise has a direct or indirect corporate or business
relationship with Guarantor, (ii) this Guaranty has been duly and validly
authorized, executed and delivered and constitutes the valid and binding
obligation of Guarantor, enforceable in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency and other similar laws
affecting creditors generally and by equitable principles (regardless of
whether enforcement is sought in equity or at law), and (iii) the
execution and delivery of this Guaranty does not violate or constitute a
default under (with or without the giving of notice, the passage of time, or
both) any order, judgment, decree, or any material instrument or agreement to
which Guarantor is a party or by which it or its assets are affected or bound.


 


11.       Costs.  Whether or not suit be instituted, Guarantor
agrees to reimburse PFG on demand for all reasonable attorneys’ fees and all
other reasonable costs and expenses incurred by PFG in enforcing this Guaranty,
or arising out of or relating in any way to this Guaranty. In the event either
PFG or Guarantor files any lawsuit against the other predicated on a breach of
this Guaranty, the prevailing party in such action shall be entitled to recover
its attorneys’ fees and costs of suit from the non-prevailing party.


 


12.       Notices.  Any notice which a party shall be required
or shall desire to give to the other hereunder (except for notice of
revocation, which shall be governed by Section 6 of this Guaranty) shall
be given by personal delivery, reputable overnight courier service, or by
telecopier or by depositing the same in the United States mail, first class
postage pre-paid, addressed to PFG at its address set forth in the heading of
this Guaranty and to Guarantor at its address set forth under its signature
hereon, and such notices shall be deemed duly given on the date of personal
delivery, or one business day after sent by reputable overnight courier
service, or one day after the date telecopied or 3 business days after the date
of mailing as aforesaid.  PFG and
Guarantor may change their address for purposes of receiving notices hereunder
by giving written notice thereof to the other party in accordance
herewith.  Guarantor shall give PFG immediate
written notice of any change in its address.


 


4

















 


13.       Construction; Severability.
As used in this Guaranty, the term “property” is used in its most comprehensive
sense and shall mean all property of every kind and nature whatsoever,
including without limitation real property, personal property, mixed property,
tangible property and intangible property. 
Words used herein in the masculine gender shall include the neuter and
feminine gender, words used herein in the neuter gender shall include the
masculine and feminine, words used herein in the singular shall include the
plural and words used in the plural shall include the singular, wherever the
context so reasonably requires.  If any
provision of this Guaranty or the application thereof to any party or
circumstance is held invalid, void, inoperative or unenforceable, the remainder
of this Guaranty and the application of such provision to other parties or
circumstances shall not be affected thereby, the provisions of this Guaranty
being severable in any such instance.


 


14.       General
Provisions.  PFG shall have the
right to seek recourse against Guarantor to the full extent provided for herein
and in any other instrument or agreement evidencing obligations of Guarantor to
PFG, and against Borrower to the full extent of the Indebtedness.  No election in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of PFG’s right to proceed in any other form of action or proceeding or
against any other party.  The failure of
PFG to enforce any of the provisions of this Guaranty at any time or for any
period of time shall not be construed to be a waiver of any such provision or
the right thereafter to enforce the same. 
All remedies hereunder shall be cumulative and shall be in addition to
all rights, powers and remedies given to PFG by law or under any other
instrument or agreement.  Time is of the
essence in the performance by Guarantor of each and every obligation under this
Guaranty.  If Borrower is a corporation,
partnership or other entity, Guarantor hereby agrees that PFG shall have no
obligation to inquire into the power or authority of Borrower or any of its
officers, directors, partners, or agents acting or purporting to act on its
behalf, and any Indebtedness made or created in reliance upon the professed
exercise of any such power or authority shall be included in the Indebtedness
guaranteed hereby.  This Guaranty is the
entire and only agreement between Guarantor and PFG with respect to the
guaranty of the Indebtedness of Borrower by Guarantor, and all representations,
warranties, agreements, or undertakings heretofore or contemporaneously made,
which are not set forth herein, are superseded hereby.  No course of dealings between the parties,
no usage of the trade, and no parol or extrinsic evidence of any nature shall
be used or be relevant to supplement or explain or modify any term or provision
of this Guaranty.  There are no
conditions to the full effectiveness of this Guaranty.  The terms and provisions hereof may not be
waived, altered, modified, or amended except in a writing executed by Guarantor
and a duly authorized officer of PFG. 
All rights, benefits and privileges hereunder shall inure to the benefit
of and be enforceable by PFG and its successors and assigns and shall be
binding upon Guarantor and its successors and assigns. Section headings
are used herein for convenience only. 
Guarantor acknowledges that the same may not describe completely the
subject matter of the applicable Section, and the same shall not be used in any
manner to construe, limit, define or interpret any term or provision hereof.


 


15.       Governing Law; Venue and Jurisdiction.  This instrument and all acts and
transactions pursuant or relating hereto and all rights and obligations of the
parties hereto shall be governed, construed, and interpreted in accordance with
the internal laws of the State of California. 
In order to induce PFG to accept this Guaranty, and as a material part
of the consideration therefor, Guarantor (i) agrees that all actions or
proceedings relating directly or indirectly hereto shall, at the option of PFG,
be litigated in courts located within Santa Clara County, California,
(ii) consents to the jurisdiction of any such court and consents to the
service of process in any such action or proceeding by personal delivery or any
other method permitted by law; and (iii) waives any and all rights
Guarantor may have to transfer or change the venue of any such action or proceeding.


 


16.       Mutual
Waiver of Right to Jury Trial.  PFG AND
GUARANTOR HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION, CLAIM, LAWSUIT
OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS
GUARANTY OR ANY SUPPLEMENT OR AMENDMENT THERETO; OR (ii) ANY OTHER PRESENT OR
FUTURE INSTRUMENT OR AGREEMENT BETWEEN PFG AND GUARANTOR; OR (iii) ANY BREACH,
CONDUCT, ACTS OR OMISSIONS OF PFG OR GUARANTOR OR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSON
AFFILIATED WITH OR REPRESENTING PFG OR GUARANTOR; IN EACH OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.


 


17.       Receipt
of Copy.  Guarantor acknowledges
receipt of a copy of this Guaranty.


 


5

















 


software, computer
programs or other works of authorship being registered and confirming the grant
of a security interest therein in favor of Secured Party


 


4.                                       This Agreement is being executed and
delivered pursuant to the Security Agreement; nothing herein limits any of the
terms or provisions of the Security Agreement, and PFG’s rights hereunder and
under the Security Agreement are cumulative. This Agreement, the Security
Agreement and the other Debtor Documents set forth in full all of the
representations and agreements of the parties with respect to the subject
matter hereof and supersede all prior discussions, oral representations, oral
agreements and oral understandings between the parties.  This Agreement may not be modified or amended,
nor may any rights hereunder be waived, except in a writing signed by the
parties hereto.  In the event of any
litigation between the parties based upon, arising out of, or in any way
relating to this Agreement, the prevailing party shall be entitled to recover
all of his costs and expenses (including without limitation attorneys’ fees)
from the non-prevailing party. This Agreement and all acts, transactions,
disputes and controversies arising hereunder or relating hereto, and all rights
and obligations of PFG and Grantor shall be governed by, and construed in
accordance with the internal laws (and not the conflict of laws rules) of the
State of California.


 


	
  Address of Grantor:

  	
  INTERWAVE ADVANCED

  COMMUNICATIONS, INC.

  
	
  2495 Leghorn

  Mountain View, California 94043

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
     /s/ Cal R. Hoagland

  	
   

  
	
   

  	
  Title

  	
  SVP and CFO

  	
   

  
	
   

  	
   

  
	
  Address of PFG:

  	
   

  	
  PARTNERS FOR GROWTH, L.P.

  
	
   

  	
   

  
	
  560 Mission Street, 3rd floor

  San Francisco, CA 94105

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
     /s/ Andrew Kahn

  	
   

  
	
   

  	
  Title

  	
  Manager, Partners for Growth, LLC

  	
   

  
	
   

  	
   

  	
  Its General Partner

  	
   

  
								



 


Form:  Version-0