Exhibit 10.46


 


 




 





RELIANT TECHNOLOGIES, INC.


 


LOAN AND SECURITY AGREEMENT




 





 

















 


This
LOAN AND SECURITY AGREEMENT is entered into as of August 26, 2004, by and
between COMERICA BANK (“Bank”) and RELIANT TECHNOLOGIES, INC. (“Borrower”).


 


RECITALS


 


Borrower
wishes to obtain credit from time to time from Bank, and Bank desires to extend
credit to Borrower. This Agreement sets forth the terms on which Bank will
advance credit to Borrower, and Borrower will repay the amounts owing to Bank.


 


AGREEMENT


 


The
parties agree as follows:


 


1.             DEFINITIONS
AND CONSTRUCTION.


 


1.1           Definitions. As
used in this Agreement, the following terms shall have the following
definitions:


 


“Accounts” means all presently existing and hereafter
arising accounts, contract rights, payment intangibles, and all other forms of
obligations owing to Borrower arising out of the sale or lease of goods
(including, without limitation, the licensing of software and other technology)
or the rendering of services by Borrower, whether or not earned by performance,
and any and all credit insurance, guaranties, and other security therefor, as
well as all merchandise returned to or reclaimed by Borrower and Borrower’s
Books relating to any of the foregoing.


 


“Advance” or “Advances” means a cash advance or cash advances
under the Revolving Facility.


 


“Affiliate” means, with respect to any Person, any
Person that owns or controls directly or indirectly such Person, any Person
that controls or is controlled by or is under common control with such Person,
and each of such Person’s senior executive officers, directors, and general and
limited partners.


 


“Bank Expenses” means all:  reasonable costs or expenses (including
reasonable attorneys’ fees and expenses) incurred in connection with the
preparation, negotiation, administration, and enforcement of the Loan
Documents; reasonable Collateral audit fees; and Bank’s reasonable attorneys’
fees and expenses incurred in amending, enforcing or defending the Loan
Documents (including fees and expenses of appeal), incurred before, during and
after an Insolvency Proceeding, whether or not suit is brought.


 


“Borrowers Books” means all of Borrower’s books and
records including:  ledgers; records
concerning Borrower’s assets or liabilities, the Collateral, business
operations or financial condition; and all computer programs, or tape files,
and the equipment, containing such information.


 


“Borrowing Base” means an amount equal to eighty
percent (80%) of Eligible Accounts, and eighty percent (80%) of Eligible
Inventory (provided, that Advances based upon Eligible Inventory shall not
exceed One Million Five Hundred Thousand Dollars ($1,500,000)), all as
determined by Bank with reference to the most recent Borrowing Base Certificate
delivered by Borrower.


 


“Business Day” means any day that is not a Saturday,
Sunday, or other day on which banks in the State of California are authorized
or required to close.


 


“Change in Control” shall mean a transaction in which
any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of a sufficient number of shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors,


 


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empowering such “person” or “group” to elect a
majority of the Board of Directors of Borrower, who did not have such power
before such transaction.


 


“Closing Date” means the date of this Agreement.


 


“Code” means the California Uniform Commercial Code.


 


“Collateral” means the property described on Exhibit
A attached hereto.


 


“Contingent Obligation” means, as applied to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to (i) any indebtedness, lease, dividend, letter of credit
or other obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted
or sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable; (ii) any obligations with respect to
undrawn letters of credit, corporate credit cards, or merchant services issued
or provided for the account of that Person; and (iii) all obligations arising
under any interest rate, currency or commodity swap agreement, interest rate
cap agreement, interest rate collar agreement, or other agreement or
arrangement designed to protect such Person against fluctuation in interest
rates, currency exchange rates or commodity prices; provided, however, that the
term “Contingent Obligation” shall not include endorsements for collection or
deposit in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determined
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith;
provided, however, that such amount shall not in any event exceed the maximum
amount of the obligations under the guarantee or other support arrangement.


 


“Credit Extension” means each Advance or any other
extension of credit by Bank for the benefit of Borrower hereunder.


 


“Current Liabilities” means, as of any applicable
date, all amounts that should, in accordance with GAAP, be included as current
liabilities on the consolidated balance sheet of Borrower and its Subsidiaries,
as at such date, plus, to the extent not already included therein, all
outstanding Credit Extensions made under this Agreement, including all
Indebtedness that is payable upon demand or within one year from the date of
determination thereof unless such Indebtedness is renewable or extendible at
the option of Borrower or any Subsidiary to a date more than one year from the
date of determination.


 


“Daily Balance” means the amount of the Obligations
owed at the end of a given day.


 


“Eligible Accounts” means those Accounts that arise in
the ordinary course of Borrower’s business that comply with all of Borrower’s
representations and warranties to Bank set forth in Section 5.4; provided, that
standards of eligibility may be fixed and revised from time to time by Bank in
Bank’s good faith business judgment and upon prior written notification thereof
to Borrower in accordance with the provisions hereof. Unless otherwise agreed
to by Bank, Eligible Accounts shall not include the following:


 


(a)           Accounts that the
account debtor has failed to pay within ninety (90) days of invoice date;


 


(b)           Accounts with respect
to an account debtor, twenty-five percent (25%) of whose Accounts the account
debtor has failed to pay within ninety (90) days of invoice date;


 


(c)           Accounts with respect
to which the account debtor is an officer, employee, or agent of Borrower;


 


(d)           Accounts with respect
to which goods are placed on consignment, guaranteed sale, sale or return, sale
on approval, bill and hold, or other terms by reason of which the payment by
the account debtor may be conditional;


 


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(e)           Accounts with respect
to which the account debtor is an Affiliate of Borrower;


 


(f)            Accounts with respect
to which the account debtor does not have its principal place of business in
the United States, except for Eligible Foreign Accounts;


 


(g)           Accounts with respect
to which the account debtor is the United States or any department, agency, or
instrumentality of the United States;


 


(h)           Accounts with respect
to which Borrower is liable to the account debtor for goods sold or services
rendered by the account debtor to Borrower or for deposits or other property of
the account debtor held by Borrower, but only to the extent of any amounts
owing to the account debtor against amounts owed to Borrower;


 


(i)            Accounts with respect
to an account debtor, including Subsidiaries and Affiliates, whose total
obligations to Borrower exceed twenty-five percent (25%) of all Accounts, to the
extent such obligations exceed the aforementioned percentage, except as
approved in writing by Bank;


 


(j)            Accounts with respect
to which the account debtor disputes liability or makes any claim with respect
thereto as to which Bank believes, in its sole discretion, that there may be a
basis for dispute (but only to the extent of the amount subject to such dispute
or claim), or is subject to any Insolvency Proceeding, or becomes insolvent, or
goes out of business; and


 


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


 


“Eligible Foreign Accounts” means Accounts with
respect to which the account debtor does not have its principal place of
business in the United States and that (i) are supported by one or more letters
of credit in an amount and of a tenor, and issued by a financial institution,
acceptable to Bank, or (ii) that Bank approves on a case-by-case basis.


 


“Eligible Inventory” means those Inventory items which
are finished products or raw materials that could become finished products
within seventy two (72) hours and in all cases which Bank has not reasonably
determined are obsolete and which are approved by Bank for inclusion in the
Borrowing Base which approval shall not be unreasonably withheld.


 


“Equipment” means all present and future machinery,
equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and
attachments in which Borrower has any interest.


 


“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended, and the regulations thereunder.


 


“Event of Default” has the meaning assigned in Article
8.


 


“GAAP” means generally accepted accounting principles
as in effect from time to time.


 


“Indebtedness” means (a) all indebtedness for borrowed
money or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.


 


“Insolvency Proceeding” means any proceeding commenced
by or against any person or entity under any provision of the United States
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.


 


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“Inventory” means all present and future inventory in
which Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and
any documents of title representing any of the above, and Borrower’s Books
relating to any of the foregoing.


 


“Investment” means any beneficial ownership of
(including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person.


 


“IRC” means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.


 


“Lien” means any mortgage, lien, deed of trust,
charge, pledge, security interest or other encumbrance.


 


“Loan Documents” means, collectively, this Agreement,
any note or notes executed by Borrower, and any other agreement entered into in
connection with this Agreement, all as amended or extended from time to time.


 


“Material Adverse Effect” means a material adverse
effect on (i) the business operations or condition (financial or otherwise) of
Borrower and its Subsidiaries taken as a whole or (ii) the ability of Borrower
to repay the Obligations or otherwise perform its obligations under the Loan
Documents or (iii) the value or priority of Bank’s security interests in the
Collateral.


 


“Negotiable Collateral” means all of Borrower’s present
and future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper, and Borrower’s
Books relating to any of the foregoing.


 


“Obligations” means all debt, principal, interest,
Bank Expenses and other amounts owed to Bank by Borrower pursuant to this
Agreement or any other agreement, whether absolute or contingent, due or to
become due, now existing or hereafter arising, including any interest that
accrues after the commencement of an Insolvency Proceeding and including any
debt, liability, or obligation owing from Borrower to others that Bank may have
obtained by assignment or otherwise; provided “Obligations” shall not include
any obligations of Borrower under the terms of any warrants provided to Bank in
connection with this Agreement.


 


“Periodic Payments” means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay
to Bank pursuant to the terms and provisions of any instrument, or agreement
now or hereafter in existence between Borrower and Bank.


 


“Permitted Indebtedness” means:


 


(a)           Indebtedness of
Borrower in favor of Bank arising under this Agreement or any other Loan
Document;


 


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


 


(c)           Indebtedness secured by
a lien described in clause (c) of the defined term “Permitted Liens,” provided
(i) such Indebtedness does not exceed the lesser of the cost or fair market
value of the equipment financed with such Indebtedness;


 


(d)           Subordinated Debt;


 


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


 


(f)            Indebtedness other
than Indebtedness described in clauses (a) through (e) of this definition of
Permitted Indebtedness, provided such Indebtedness shall not exceed One Hundred
Thousand Dollars ($100,000) in the aggregate at any given time; and


 


(g)           Extensions,
refinancings and renewals of any items of Permitted Indebtedness, provided that
the principal amount is not increased or the terms modified to impose more
burdensome terms upon Borrower or its Subsidiary, as the case may be.


 


“Permitted Investment” means:


 


(a)           Investments existing on
the Closing Date disclosed in the Schedule;


 


(b)           (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of
America or any agency or any State thereof maturing within one (1) year from
the date of acquisition thereof; (ii) commercial paper maturing no more than
one (1) year from the date of creation thereof and currently having rating of
at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (iii) certificates of deposit maturing no more than one (1)
year from the date of investment therein issued by Bank and (iv) Banks money
market accounts;


 


(c)           Investments in
Subsidiaries provided that the aggregate amount of such Investments does not
exceed Two Hundred Thousand Dollars ($200,000) at any given time;


 


(d)           Repurchases of stock
from former employees or directors of Borrower under the terms of applicable
repurchase agreements; provided that no Event of Default has occurred, is
continuing or would exist after giving effect to the repurchases and that the
aggregate amount of such repurchases does not exceed One Hundred Fifty Thousand
Dollars ($150,000) during any fiscal year;


 


(e)           Investments accepted in
connection with Permitted Transfers;


 


(f)            Investments consisting
of (i) travel advances and employee relocation loans and other employee loans
and advances in the ordinary course of business, and (ii) loans to employees
relating to the purchase of equity securities of Borrower or its Subsidiaries
pursuant to employee stock purchase plan agreements approved by Borrower’s
Board of Directors; provided that the aggregate amount of such Investments does
not exceed One Million Dollars ($1,000,000) during any fiscal year;


 


(g)           Investments (including
debt obligations) received in connection with the bankruptcy or reorganization
of customers or suppliers and in settlement of delinquent obligations of, and
other disputes with, customers or suppliers arising in the ordinary course of
Borrower’s business;


 


(h)           Investments consisting
of notes receivable of, or prepaid royalties and other credit extensions, to
customers and suppliers who are not Affiliates, in the ordinary course of
business;


 


(i)            Non-cash Investments
in joint ventures, partnerships or collaborations with any third party; and


 


(j)            Investments made
pursuant to Borrower’s investment policy which has been approved by Borrower’s
Board of Directors and Bank;


 


(k)           Investments not
otherwise permitted under Section 7.7 which do not exceed One Hundred Thousand
Dollars ($100,000) in the aggregate during the term of this Agreement.


 


“Permitted Liens” means the following:


 


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(a)           Any Liens existing on
the Closing Date and disclosed in the Schedule or arising under this Agreement
or the other Loan Documents;


 


(b)           Liens for taxes, fees,
assessments or other governmental charges or levies, either not delinquent or
being contested in good faith by appropriate proceedings, provided the same
have no priority over any of Bank’s security interests;


 


(c)           Liens (i) upon or in
any equipment which was not financed by Bank acquired or held by Borrower or
any of its Subsidiaries to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment, or (ii) existing on such equipment at the time of its acquisition,
provided that the Lien is confined solely to the property so acquired and
improvements thereon, and the proceeds of such equipment;


 


(d)           Liens incurred in
connection with the extension, renewal or refinancing of the indebtedness
secured by Liens of the type described in clauses (a) through (c) above,
provided that any extension, renewal or replacement Lien shall be limited to
the property encumbered by the existing Lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase;


 


(e)           Liens arising from
judgments, decrees or attachments in circumstances not constituting an Event of
Default under Sections 8.4 or 8.8;


 


(f)            Leases or subleases
and licenses or sublicenses granted to others which do not interfere in any
material respect with the business of Borrower and its Subsidiaries taken as a
whole;


 


(g)           Deposits in the
ordinary course of business under worker’s compensation, unemployment
insurance, social security and other similar laws, or to secure the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure indemnity, performance or other similar bonds for the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure statutory obligations (other than liens arising under ERISA or
environmental liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;


 


(h)           Liens in favor of
customs and revenue authorities arising in the ordinary course of Borrower’s
business or by operation of law to secure payments of custom duties in
connection with the importation of goods;


 


(i)            Liens of materialmen,
mechanics, warehousemen, carriers, artisan’s or other similar Liens arising in
the ordinary course of Borrower’s business or by operation of law, which are
not past due or which are being contested in good faith by appropriate
proceedings and for which reserves have been established in accordance with
GAAP; and


 


(j)            Liens in favor of
other financial institutions arising in connection with Borrower’s deposit
accounts held at such institutions, provided that Bank has a prior perfected
security interest in the amounts held in such deposit accounts.


 


“Permitted Transfer” means the conveyance, grant,
sale, lease, transfer or disposition by Borrower or any Subsidiary of:


 


(a)           Inventory in the
ordinary course of business;


 


(b)           non-exclusive licenses
and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business;


 


(c)           exclusive licenses in
specific fields of use not related to Borrower’s primary business;


 


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(d)           surplus, worn-out or
obsolete Equipment not financed by Bank; or


 


(e)           transfers from any
Subsidiary to Borrower;


 


(f)            transfers of
investment property of Borrower for the sole purpose of obtaining replacement
investment property with the proceeds of such transfer; or


 


(g)           other assets of
Borrower or its Subsidiaries which do not in the aggregate exceed One Hundred
Thousand Dollars ($100,000) during any fiscal year.


 


“Person” means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, firm, joint stock company, estate, entity or governmental agency.


 


“Prime Rate” means the variable rate of interest, per
annum, most recently announced by Bank, as its “prime rate,” whether or not
such announced rate is the lowest rate available from Bank.


 


“Quick Assets “ means, at any date as of which the
amount thereof shall be determined, the unrestricted cash and cash-equivalents
and Eligible Accounts of Borrower determined in accordance with GAAP.


 


“Responsible Officer” means each of the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer,
any Vice President, the Treasurer and the Controller of Borrower.


 


“Revolving Facility” means the facility under which
Borrower may request Bank to issue Advances, as specified in Section 2.1(a)
hereof.


 


“Revolving Line” means a credit extension of up to Two
Million Dollars ($2,000,000).


 


“Revolving Maturity Date” means August 25, 2005.


 


“Schedule” means the schedule of exceptions attached
hereto and approved by Bank, if any.


 


“Subordinated Debt” means any debt incurred by
Borrower that is subordinated to the debt owing by Borrower to Bank on terms
acceptable to Bank (and identified as being such by Borrower and Bank).


 


“Subsidiary” means any corporation, company or partnership
in which (i) any general partnership interest or (ii) more than 50% of the
stock or other units of ownership which by the terms thereof has the ordinary
voting power to elect the Board of Directors, managers or trustees of the
entity, at the time as of which any determination is being made, is owned by
Borrower, either directly or through an Affiliate.


 


1.2           Accounting Terms.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP and all calculations made hereunder shall be made in
accordance with GAAP. When used herein, the terms “financial statements” shall
include the notes and schedules thereto.


 


2.             LOAN
AND TERMS OF PAYMENT.


 


2.1           Credit Extension.


 


Borrower promises to pay to the order of Bank, in
lawful money of the United States of America, the aggregate unpaid principal
amount of all Credit Extensions made by Bank to Borrower hereunder. Borrower
shall also pay interest on the unpaid principal amount of such Credit
Extensions at rates in accordance with the terms hereof.


 


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(a)           Revolving Advances.


 


(i)            Subject to and upon
the terms and conditions of this Agreement, Borrower may request Advances in an
aggregate outstanding amount not to exceed the lesser of (i) the Revolving Line
or (ii) the Borrowing Base. Subject to the terms and conditions of this
Agreement, amounts borrowed pursuant to this Section 2.1(a) may be repaid and
reborrowed at any time prior to the Revolving Maturity Date, at which time all
Advances under this Section 2.1(a) shall be immediately due and payable. Borrower
may prepay any Advances without penalty or premium.


 


(ii)           Whenever Borrower
desires an Advance, Borrower will notify Bank by facsimile transmission or
telephone no later than 3:00 p.m. Pacific time, on the Business Day that the
Advance is to be made. Each such notification shall be promptly confirmed by a
Payment/Advance Form in substantially the form of Exhibit B hereto. Bank is
authorized to make Advances under this Agreement, based upon instructions
received from a Responsible Officer or a designee of a Responsible Officer, or
without instructions if in Banks discretion such Advances arc necessary to meet
Obligations which have become due and remain unpaid. Bank shall be entitled to
rely on any telephonic notice given by a person who Bank reasonably believes to
be a Responsible Officer or a designee thereof, and Borrower shall indemnify
and hold Bank harmless for any damages or loss suffered by Bank as a result of
such reliance. Bank will credit the amount of Advances made under this Section
2.1(a) to Borrower’s deposit account.


 


2.2           Overadvances. If
the aggregate amount of the outstanding Advances exceeds the lesser of the
Revolving Line or the Borrowing Base at any time, Borrower shall immediately
pay to Bank, in cash, the amount of such excess.


 


2.3           Interest Rates,
Payments, and Calculations.


 


(a)           Interest Rates.


 


(i)            Advances. Except
as set forth in Section 2.3(b), the Advances shall bear interest, on the
outstanding Daily Balance thereof, at a rate equal to one percent (1.00%) above
the Prime Rate.


 


(b)           Late Fee:  Default Rate. If any payment is not made
within ten (10) days after the date such payment is due, Borrower shall pay
Bank a late fee equal to the lesser of (i) five percent (5%) of the amount of
such unpaid amount or (ii) the maximum amount permitted to be charged under
applicable law. All Obligations shall bear interest, from and after the
occurrence and during the continuance of an Event of Default, at a rate equal
to five (5) percentage points above the interest rate applicable immediately
prior to the occurrence of the Event of Default.


 


(c)           Payments. Interest
hereunder shall be due and payable on the last calendar day of each month
during the term hereof. Bank shall, at its option, charge such interest, all
Bank Expenses, and all Periodic Payments against any of Borrower’s deposit
accounts or against the Revolving Line, in which case those amounts shall
thereafter accrue interest at the rate then applicable hereunder. Any interest
not paid when due shall be compounded by becoming a part of the Obligations,
and such interest shall thereafter accrue interest at the rate then applicable
hereunder. All payments shall be free and clear of any taxes, withholdings,
duties, impositions or other charges, to the end that Bank will receive the
entire amount of any Obligations payable hereunder, regardless of source of
payment.


 


(d)           Computation. In
the event the Prime Rate is changed from time to time hereafter, the applicable
rate of interest hereunder shall be increased or decreased, effective as of the
day the Prime Rate is changed, by an amount equal to such change in the Prime
Rate. All interest chargeable under the Loan Documents shall be computed on the
basis of a three hundred sixty (360) day year for the actual number of days
elapsed.


 


2.4           Crediting Payments.
Prior to the occurrence and continuance of an Event of Default, Bank shall
credit a wire transfer of funds, check or other item of payment to such deposit
account or Obligation as


 


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Borrower specifies. After the occurrence and during
the continuance of an Event of Default, the receipt by Bank of any wire
transfer of funds, check, or other item of payment shall be immediately applied
to conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 12:00 noon Pacific time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.


 


2.5           Fees. Borrower
shall pay to Bank the following:


 


(a)           Commitment Fee. On
the Closing Date, a Commitment Fee equal to Ten Thousand Dollars ($10,000),
which shall be nonrefundable; and


 


(b)           Bank Expenses. On
the Closing Date, all Bank Expenses incurred through the Closing Date,
including reasonable attorneys’ fees and expenses and, after the Closing Date,
all Bank Expenses, including reasonable attorneys’ fees and expenses, as and
when they become due.


 


2.6           Additional Costs.
After the date hereof, in case any law, regulation, treaty or official
directive or the interpretation or application thereof by any court or any
governmental authority charged with the administration thereof or the compliance
with any guideline or request of any central bank or other governmental
authority (whether or not having the force of law):


 


(a)           subjects Bank to any
tax with respect to payments of principal or interest or any other amounts
payable hereunder by Borrower or otherwise with respect to the transactions
contemplated hereby (except for taxes on the overall net income of Bank imposed
by the United States of America or any political subdivision thereof);


 


(b)           imposes, modifies or
deems applicable any deposit insurance, reserve, special deposit or similar
requirement against assets held by, or deposits in or for the account of, or
loans by, Bank; or


 


(c)           imposes upon Bank any
other condition with respect to its performance under this Agreement,


 


and
the result of any of the foregoing is to increase the cost to Bank, reduce the
income receivable by Bank or impose any expense upon Bank with respect to the
Obligations, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank
the amount of such increase in cost, reduction in income or additional expense
as and when such cost, reduction or expense is incurred or determined, upon
presentation by Bank of a statement of the amount and setting forth Banks
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.


 


2.7           Term. This
Agreement shall become effective on the Closing Date and, subject to Section
13.7, shall continue in full force and effect for so long as any Obligations
remain outstanding or Bank has any obligation to make Credit Extensions under
this Agreement. Notwithstanding the foregoing, Bank shall have the right to
terminate its obligation to make Credit Extensions under this Agreement
immediately and without notice upon the occurrence and during the continuance
of an Event of Default. Notwithstanding termination, Bank’s Lien on the
Collateral shall remain in effect for so long as any Obligations are
outstanding.


 


3.             CONDITIONS
OF LOANS.


 


3.1           Conditions Precedent
to Initial Credit Extension. The obligation of Bank to make the initial
Credit Extension is subject to the condition precedent that Bank shall have
received, in form and substance satisfactory to Bank, the following:


 


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(a)           this Agreement;


 


(b)           a certificate of the
Secretary of Borrower with respect to incumbency and resolutions authorizing
the execution and delivery of this Agreement;


 


(c)           UCC National Form
Financing Statement (drafted by Bank or its counsel);


 


(d)           a warrant to purchase
stock;


 


(e)           evidence of or
authorization for termination of any Liens other than Permitted Liens;


 


(f)            securities and/or
deposit account control agreements with respect to any such accounts permitted
hereunder to be maintained outside Bank;


 


(g)           intercreditor
agreement;


 


(h)           agreement to provide
insurance;


 


(i)            payment of the fees
and Bank Expenses then due specified in Section 2.5 hereof;


 


(j)            current financial
statements of Borrower including Borrower’s 2005 Fiscal Year projections
approved by Borrower’s board of directors;


 


(k)           an audit of the
Collateral, the results of which shall be satisfactory to Bank; and


 


(l)            such other documents,
and completion of such other matters, as Bank may reasonably deem necessary or
appropriate.


 


3.2           Conditions Precedent
to all Credit Extensions. The obligation of Bank to make each Credit
Extension, including the initial Credit Extension, is further subject to the
following conditions:


 


(a)           timely receipt by Bank
of the Payment/Advance Form as provided in Section 2.1; and


 


(b)           the representations and
warranties contained in Section 5 shall be true and correct in all material
respects on and as of the date of such Payment/Advance Form and on the
effective date of each Credit Extension as though made at and as of each such
date, and no Event of Default shall have occurred and be continuing, or would
exist after giving effect to such Credit Extension (provided, however, that
those representations and warranties expressly referring to another date shall
be true, correct and complete in all material respects as of such date). The
making of each Credit Extension shall be deemed to be a representation and
warranty by Borrower on the date of such Credit Extension as to the accuracy of
the facts referred to in this Section 3.2.


 


4.             CREATION
OF SECURITY INTEREST.


 


4.1           Grant of Security
Interest. Borrower grants and pledges to Bank a continuing security
interest in all presently existing and hereafter acquired or arising Collateral
in order to secure prompt repayment of any and all Obligations and in order to
secure prompt performance by Borrower of each of its covenants and duties under
the Loan Documents. Except for Permitted Liens, such security interest
constitutes a valid, first priority security interest in the presently existing
Collateral, and, except for Permitted Liens, will constitute a valid, first
priority security interest in Collateral acquired after the date hereof. Borrower
also hereby agrees to not sell, transfer, assign, mortgage, pledge, lease,
grant a security interest in, or encumber any of its intellectual property.


 


4.2           Delivery of
Additional Documentation Required. Borrower shall from time to time execute
and deliver to Bank, at the request of Bank, all Negotiable Collateral, all
financing statements and other


 


10

















 


documents that Bank may reasonably request, in form
satisfactory to Bank, to perfect and continue the perfection of Bank’s security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents. Borrower from time to time
may deposit with Bank specific time deposit accounts to secure specific
Obligations. Borrower authorizes Bank to hold such balances in pledge and to
decline to honor any drafts thereon or any request by Borrower or any other
Person to pay or otherwise transfer any part of such balances for so long as
the Obligations are outstanding.


 


4.3           Right to Inspect.
Bank (through any of its officers, employees, or agents) shall have the right,
upon reasonable prior notice, from time to time during Borrower’s usual
business hours but no more than twice a year (unless an Event of Default has
occurred and is continuing), to inspect Borrower’s Books and to make copies
thereof and to check, test, and appraise the Collateral in order to verify
Borrower’s financial condition or the amount, condition of, or any other matter
relating to, the Collateral.


 


4.4           Termination of
Financing Statement. Upon final payment in full by Borrower of all of the
Obligations, and upon written request therefor by Borrower, Bank shall, within
a reasonable time, authorize Borrower to file a termination statement with
respect to the Collateral.


 


5.             REPRESENTATIONS
AND WARRANTIES.


 


Borrower represents and warrants as follows:


 


5.1           Due Organization and
Qualification. Borrower and each Subsidiary is a corporation duly existing
under the laws of its state of incorporation and qualified and licensed to do
business in any state in which the failure to be so qualified or licensed could
be reasonably likely to have a Material Adverse Effect.


 


5.2           Due Authorization; No
Conflict. The execution, delivery, and performance of the Loan Documents
are within Borrower’s powers, have been duly authorized, and are not in
conflict with nor constitute a breach of any provision contained in Borrower’s
Certificate of Incorporation or Bylaws, nor will they constitute an event of
default under any material agreement to which Borrower is a party or by which
Borrower is bound, Borrower is not in default under any material agreement to
which it is a party or by which it is bound.


 


5.3           No Prior
Encumbrances. Borrower has good and marketable title to its property, free
and clear of Liens, except for Permitted Liens.


 


5.4           Bona Fide Eligible
Accounts. The Eligible Accounts are bona fide existing obligations. The
property and services giving rise to such Eligible Accounts has been delivered
or rendered to the account debtor or to the account debtor’s agent for
immediate and unconditional acceptance by the account debtor. Borrower has not
received notice of actual or imminent Insolvency Proceeding of any account
debtor that is included in any Borrowing Base Certificate as an Eligible
Account.


 


5.5           Merchantable
Inventory. All Inventory is in all material respects of good and marketable
quality, free from all material defects, except for Inventory for which
adequate reserves have been made.


 


5.6           Intellectual
Property. Except as set forth in the Schedule, Borrower is the sole owner
of its patents, trademarks, copyrights and other intellectual property, except
for non-exclusive licenses granted to Borrower or by Borrower to its customers
in the ordinary course of business. To the best of Borrower’s knowledge, each
of Borrower’s patents is valid and enforceable, and no part of its intellectual
property has been judged invalid or unenforceable, in whole or in part, and,
except as set forth in the Schedule, no claim has been made that any part of
its intellectual property violates the rights of any third party.


 


5.7           Name; Location of
Chief Executive Office. Except as disclosed in the Schedule, Borrower has
not done business under any name other than that specified on the signature
page hereof. The chief executive office of Borrower is located at the address
indicated in Section 10 hereof. All Borrower’s Inventory and Equipment is
located only at the location set forth in Section 10 hereof.


 


11

















 


5.8           Litigation. Except
as set forth in the Schedule, there are no actions or proceedings pending by or
against Borrower or any Subsidiary before any court or administrative agency in
which an adverse decision could have a Material Adverse Effect, or a material
adverse effect on Borrower’s interest or Banks security interest in the Collateral.


 


5.9           No Material Adverse
Change in Financial Statements. Except as set forth on the Schedule, all
consolidated and consolidating financial statements related to Borrower and any
Subsidiary that Bank has received from Borrower fairly present in all material
respects Borrower’s financial condition as of the date thereof and Borrower’s
consolidated and consolidating results of operations for the period then ended.
There has not been a material adverse change in the consolidated or the
consolidating financial condition of Borrower since the date of the most recent
of such financial statements submitted to Bank.


 


5.10         Solvency, Payment of
Debts. Borrower is solvent and able to pay its debts (including trade
debts) as they mature.


 


5.11         Regulatory Compliance.
Borrower and each Subsidiary have met the minimum funding requirements of ERISA
with respect to any employee benefit plans subject to ERISA, and no event has
occurred resulting from Borrower’s failure to comply with ERISA that could
result in Borrower’s incurring any material liability. Borrower is not an “investment
company” or a company “controlled” by an “investment company” within the
meaning of the Investment Company Act of 1940. Borrower is not engaged
principally, or as one of the important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations T and U of the Board of Governors of the Federal
Reserve System). Borrower has complied with all the provisions of the Federal
Fair Labor Standards Act. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a Material
Adverse Effect.


 


5.12         Environmental
Condition. Except as disclosed in the Schedule, none of Borrower’s or any
Subsidiary’s properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower’s knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower’s knowledge, none of Borrower’s
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal property
owned by Borrower or any Subsidiary; and neither Borrower nor any Subsidiary
has received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal, state or other governmental agency
concerning any action or omission by Borrower or any Subsidiary resulting in
the releasing, or otherwise disposing of hazardous waste or hazardous
substances into the environment.


 


5.13         Taxes. Except as
set forth in the Schedule, Borrower and each Subsidiary have filed or caused to
be filed all tax returns required to be filed, and have paid, or have made
adequate provision for the payment of, all taxes reflected therein, except such
taxes as are being contested in good faith with adequate reserves in accordance
with GAAP.


 


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


 


5.15         Government Consents;
Borrower and each Subsidiary have obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all governmental authorities that are necessary for the continued operation
of Borrower’s business as currently conducted, the failure to obtain which
could have a Material Adverse Effect.


 


5.16         Accounts. Not more
than sixty five percent (65%) of the total dollar value of the assets in
Borrower’s or any Subsidiary’s depository, operating, or investment accounts is
maintained or invested with a Person other than Bank.


 


12

















 


5.17         Full Disclosure. No
representation, warranty or other statement made by Borrower in any certificate
or written statement furnished to Bank contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained in such certificates or statements not misleading.


 


6.             AFFIRMATIVE
COVENANTS.


 


Borrower covenants and agrees that, until payment in
full of all outstanding Obligations, and for so long as Bank may have any
commitment to make a Credit Extension hereunder, Borrower shall do all of the
following:


 


6.1           Good Standing. Borrower
shall maintain its and each of its Subsidiaries’ corporate existence and good
standing in its jurisdiction of incorporation and maintain qualification in
each jurisdiction in which the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect. Borrower shall maintain, and shall
cause each of its Subsidiaries to maintain, in force all licenses, approvals
and agreements, the loss of which could have a Material Adverse Effect.


 


6.2           Government
Compliance. Borrower shall meet, and shall cause each Subsidiary to meet,
the minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary
to comply, with all statutes, laws, ordinances and government rules and
regulations to which it is subject, noncompliance with which could have a
Material Adverse Effect.


 


6.3           Financial Statements,
Reports, Certificates. Borrower shall deliver the following to Bank:  (a) as soon as available, but in any event
within thirty (30) days after the end of each calendar month, a company
prepared consolidated balance sheet, income, and cash flow statement covering
Borrower’s consolidated operations during such period, prepared in accordance
with GAAP (except for the absence of footnotes and subject to year end adjustments),
consistently applied, in a form acceptable to Bank and certified by a Responsible
Officer; (b) as soon as available, but in any event within one hundred twenty
(120) days after the end of Borrower’s fiscal year, audited consolidated
financial statements of Borrower prepared in accordance with GAAP, consistently
applied, together with an unqualified opinion on such financial statements of
an independent certified public accounting firm reasonably acceptable to Bank
(except that with respect to Borrower’s 2003 Fiscal Year, such statements shall
be delivered no later than August 15, 2004); (c) copies of all statements,
reports and notices sent or made available generally by Borrower to its
security holders or to any holders of Subordinated Debt and, if applicable, all
reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission;
(d) promptly upon receipt of notice thereof, a report of any legal actions
pending or threatened against Borrower or any Subsidiary that could result in
damages or costs to Borrower or any Subsidiary of Fifty Thousand Dollars
($50,000) or more; and (e) such budgets, sales projections, operating plans or
other financial information as Bank may reasonably request from time to time.


 


Within
thirty (30) days after the last day of each month, Borrower shall deliver to
Bank a Borrowing Base Certificate signed by a Responsible Officer in
substantially the form of Exhibit C hereto, together with aged listings of
accounts receivable and accounts payable.


 


Borrower
shall deliver to Bank with the monthly financial statements, a Compliance
Certificate signed by a Responsible Officer in substantially the form of Exhibit
D hereto.


 


Bank
shall have a right from time to time hereafter to audit Borrower’s Accounts and
appraise Collateral at Borrower’s expense, provided that such audits or
appraisals will be conducted no more often than every six (6) months unless an
Event of Default has occurred and is continuing and shall not, in any case,
cost more than $2,000 per audit or appraisal.


 


6.4           Inventory; Returns.
Borrower shall keep all Inventory in good and marketable condition, free from
all material defects except for Inventory for which adequate reserves have been
made. Returns and allowances, if any, as between Borrower and its account
debtors shall be on the same basis and in accordance with


 


13

















 


the usual customary practices of Borrower, as they
exist at the time of the execution and delivery of this Agreement. Borrower
shall promptly notify Bank of all returns and recoveries and of all disputes
and claims, where the return, recovery, dispute or claim involves more than
Fifty Thousand Dollars ($50,000).


 


6.5           Taxes. Borrower
shall make, and shall cause each Subsidiary to make, due and timely payment or
deposit of all material federal, state, and local taxes, assessments, or
contributions required of it by law, and will execute and deliver to Bank, on
demand, appropriate certificates attesting to the payment or deposit thereof;
and Borrower will make, and will cause each Subsidiary to make, timely payment
or deposit of all material tax payments and withholding taxes required of it by
applicable laws, including, but not limited to, those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Bank with proof satisfactory to Bank indicating
that Borrower or a Subsidiary has made such payments or deposits; provided that
Borrower or a Subsidiary need not make any payment if the amount or validity of
such payment is contested in good faith by appropriate proceedings and is
reserved against (to the extent required by GAAP) by Borrower.


 


6.6           Insurance.


 


(a)           Borrower, at its
expense, shall keep the Collateral insured against loss or damage by fire,
theft, explosion, sprinklers, and all other hazards and risks, and in such
amounts, as ordinarily insured against by other owners in similar businesses
conducted in the locations where Borrowers business is conducted on the date
hereof. Borrower shall also maintain insurance relating to Borrower’s business,
ownership and use of the Collateral in amounts and of a type that are customary
to businesses similar to Borrower’s.


 


(b)           All such policies of
insurance shall be in such form, with such companies, and in such amounts as
are reasonably satisfactory to Bank. All such policies of property insurance
shall contain a lender’s loss payable endorsement, in a form satisfactory to
Bank, showing Bank as an additional loss payee thereof, and all liability
insurance policies shall show the Bank as an additional insured and shall
specify that the insurer must give at least twenty (20) days notice to Bank
before canceling its policy for any reason. Upon Bank’s request, Borrower shall
deliver to Bank certified copies of such policies of insurance and evidence of
the payments of all premiums therefor. All proceeds payable under any such
policy shall, at the option of Bank, be payable to Bank to be applied on
account of the Obligations.


 


6.7           Accounts. Borrower
shall maintain and shall cause each of its Subsidiaries to maintain not less
than thirty five percent (35%) of its total cash and investments in depository,
operating, and investment accounts with Bank and/or Comerica Securities, Inc
and within 30 days of the Closing Date, Borrower shall close Account Nos. 104756246559
and 10475790600 held at U.S. Bank and shall transfer all funds held in such
accounts to an account held at Bank.


 


6.8           Quick Ratio. Borrower
shall maintain at all times, measured as of the last day of each calendar
month, a ratio of Quick Assets to Current Liabilities plus, to the
extent not already included therein, all Indebtedness (including without
limitation any Contingent Obligations) owing from Borrower to Bank of at least
1.25 to 1.00.


 


6.9           Performance to Plan.
Borrower shall achieve Net Income (determined in accordance with GAAP) of not
less than eighty percent (80%) of the applicable amount of Net Income set out
in Borrower’s Plan and shall not suffer Net Losses (determined in accordance
with GAAP) in excess of one hundred twenty percent (120%) of the applicable
amount of Net Losses set out in Borrower’s Plan, measured on a monthly basis. As
used herein, “Borrower’s Plan” means a) through September 30, 2004, those
certain financial projections for Borrower’s 2004 Fiscal Year attached hereto
as Annex I and b) thereafter, those certain financial projections delivered to
Bank for each of Borrower’s subsequent fiscal years in form and substance
reasonably acceptable to Bank.


 


6.10         Further Assurances.
At any time and from time to time Borrower shall execute and deliver such
further instruments and take such further action as may reasonably be requested
by Bank to effect the purposes of this Agreement.


 


14

















 


7.             NEGATIVE.
COVENANTS.


 


Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until payment in full of the
outstanding Obligations or for so long as Bank may have any commitment to make
any Credit Extensions, Borrower will not do any of the following:


 


7.1           Dispositions. Convey,
sell, lease, transfer or otherwise dispose of (collectively, a “Transfer”), or
permit any of its Subsidiaries to Transfer, all or any part of its business or
property, including its intellectual property, other than Permitted Transfers.


 


7.2           Change in Business; Change
in Control or Executive Office. Engage in any business, or permit any of
its Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and any business substantially similar or related
thereto (or incidental thereto); or cease to conduct business in the manner
conducted by Borrower as of the Closing Date; or suffer or permit a Change in
Control; or without thirty (30) days prior written notification to Bank,
relocate its chief executive office or state of incorporation or change its
legal name; or without Bank’s prior written consent, change the date on which
its fiscal year ends.


 


7.3           Mergers or
Acquisitions. Without Bank’s prior written consent which shall not be
unreasonably withheld, merge or consolidate, or permit any of its Subsidiaries
to merge or consolidate, with or into any other business organization, or
acquire, or permit any of its Subsidiaries to acquire, all or substantially all
of the capital stock or property of another Person (other than Permitted
Investments).


 


7.4           Indebtedness. Create,
incur, assume or be or remain liable with respect to any Indebtedness, or
permit any Subsidiary so to do, other than Permitted Indebtedness.


 


7.5           Encumbrances. Create,
incur, assume or suffer to exist any Lien with respect to any of its property,
including its intellectual property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its
Subsidiaries so to do, except for Permitted Liens. Except as disclosed on the
Schedule, Agree with any Person other than Bank not to grant a security
interest in, or otherwise encumber, any of its property, or permit any
Subsidiary to do so.


 


7.6           Distributions. Pay
any dividends or make any other distribution or payment on account of or in
redemption, retirement or purchase of any capital stock, or permit any of its
Subsidiaries to do so, except that Borrower may (i) pay dividends in capital
stock, (ii) repurchase the stock of former employees pursuant to stock repurchase
agreements as long as an Event of Default does not exist prior to such
repurchase or would not exist after giving effect to such repurchase, (iii)
convert any of its convertible securities (including warrants) into other
securities pursuant to the terms of such convertible securities, (iv)
distribute securities to employees on the exercise of their options, or (iv)
make other such distributions, to the extent not otherwise prohibited herein
and provided that the aggregate amount of such other distributions does not
exceed Two Hundred Thousand Dollars ($100,000) during the term of this
Agreement.


 


7.7           Investments. Directly
or indirectly acquire or own, or make any Investment in or to any Person, or
permit any of its Subsidiaries so to do, other than Permitted Investments; or
maintain or invest any of its property with a Person other than Bank or permit
any of its Subsidiaries to do so unless such Person has entered into an account
control agreement with Bank in form and substance satisfactory to Bank; or suffer
or permit any Subsidiary to be a party to, or be bound by, an agreement that
restricts such Subsidiary from paying dividends or otherwise distributing
property to Borrower.


 


7.8           Transactions with
Affiliates. Directly or indirectly enter into or permit to exist any
material transaction with any Affiliate of Borrower except for transactions
that are in the ordinary course of Borrower’s business, upon fair and
reasonable terms that are no less favorable to Borrower than would be obtained
in an arm’s length transaction with a non-affiliated Person.


 


7.9           Subordinated Debt.
Make any payment in respect of any Subordinated Debt, or permit any of its
Subsidiaries to make any such payment, except in compliance with the terms of
such Subordinated Debt,


 


15

















 


or amend any provision contained in any documentation
relating to the Subordinated Debt without Bank’s prior written consent which
shall not be unreasonably withheld.


 


7.10         Inventory and
Equipment. Store the Inventory or the Equipment having a value in excess of
$ 10,000 with a bailee, warehouseman, or other third party unless the third
party has been notified of Banks security interest and Bank (a) has received an
acknowledgment from the third party that it is holding or will hold the
Inventory or Equipment for Bank’s benefit or (b) is in pledge possession of the
warehouse receipt, where negotiable, covering such Inventory or Equipment. Store
or maintain any Equipment or Inventory at a location other than the location
set forth in Section 10 of this Agreement


 


7.11         Compliance. Become
an “investment company” or be controlled by an “investment company,” within the
meaning of the Investment Company Act of 1940, or become principally engaged
in, or undertake as one of its important activities, the business of extending
credit for the purpose of purchasing or carrying margin stock, or use the
proceeds of any Credit Extension for such purpose. Fail to meet the minimum
funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur, fail to comply with the Federal
Fair Labor Standards Act or violate any law or regulation, which violation
could have a Material Adverse Effect, or a material adverse effect on the
Collateral or the priority of Banks Lien on the Collateral, or permit any of
its Subsidiaries to do any of the foregoing.


 


7.12         Negative Pledge
Agreements. Except as set forth in the Schedule, permit the inclusion in
any contract to which it or a Subsidiary becomes a party of any provisions that
could restrict or invalidate the creation of a security interest in any of
Borrower’s or such Subsidiary’s property.


 


8.             EVENTS
OF DEFAULT.


 


Any one or more of the following events shall
constitute an Event of Default by Borrower under this Agreement:


 


8.1           Payment Default.
If Borrower fails to pay, when due, any of the Obligations;


 


8.2           Covenant Default.


 


(a)           If Borrower fails to
perform any obligation under Article 6 or violates any of the covenants
contained in Article 7 of this Agreement; or


 


(b)           If Borrower fails or
neglects to perform or observe any other material term, provision, condition,
covenant contained in this Agreement, in any of the Loan Documents, or in any
other present or future agreement between Borrower and Bank and as to any
default under such other term, provision, condition or covenant that can be
cured, has failed to cure such default within ten days after Borrower receives
notice thereof or any officer of Borrower becomes aware thereof; provided,
however, that if the default cannot by its nature be cured within the ten day
period or cannot after diligent attempts by Borrower be cured within such ten
day period, and such default is likely to be cured within a reasonable time,
then Borrower shall have an additional reasonable period (which shall not in
any case exceed 30 days) to attempt to cure such default, and within such
reasonable time period the failure to have cured such default shall not be
deemed an Event of Default but no Credit Extensions will be made.


 


8.3           Material Adverse
Effect. If there occurs any circumstance or circumstances that could have a
Material Adverse Effect;


 


8.4           Attachment. If
any material portion of Borrower’s assets is attached, seized, subjected to a
writ or distress warrant, or is levied upon, or comes into the possession of
any trustee, receiver or person acting in a similar capacity and such
attachment, seizure, writ or distress warrant or levy has not been removed,
discharged or rescinded within ten (10) days, or if Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs, or if a judgment or other
claim becomes a lien or encumbrance upon any material portion of Borrower’s
assets, or if a notice of lien, levy, or assessment is filed of


 


16

















 


record with respect to any material portion of
Borrower’s assets by the United States Government, or any department, agency,
or instrumentality thereof, or by any state, county, municipal, or governmental
agency, and the same is not paid within ten (10) days after Borrower receives
notice thereof, provided that none of the foregoing shall constitute an Event
of Default where such action or event is stayed or an adequate bond has been
posted pending a good faith contest by Borrower (provided that no Credit
Extensions will be required to be made during such cure period);


 


8.5           Insolvency. If
Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by
Borrower, or if an Insolvency Proceeding is commenced against Borrower and is
not dismissed or stayed within thirty (30) days (provided that no Credit
Extensions will be made prior to the dismissal of such Insolvency Proceeding);


 


8.6           Other Agreements.
If there is a default or other failure to perform in any agreement to which
Borrower is a party or by which it is bound resulting in a right by a third
party or parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of One Hundred Thousand Dollars ($100,000)
or which could have a Material Adverse Effect;


 


8.7           Subordinated Debt.
If Borrower makes any payment on account of Subordinated Debt, except to the
extent such payment is allowed under any subordination agreement entered into
with Bank;


 


8.8           Judgments. If a
judgment or judgments for the payment of money in an amount, individually or in
the aggregate, of at least One Hundred Thousand Dollars ($100,000) shall be
rendered against Borrower and shall remain unsatisfied and unstayed for a
period of ten (10) days (provided that no Credit Extensions will be made prior
to the satisfaction or stay of such judgment); or


 


8.9           Misrepresentations.
If any material misrepresentation or material misstatement exists now or hereafter
in any warranty or representation set forth herein or in any certificate
delivered to Bank by any Responsible Officer pursuant to this Agreement or to
induce Bank to enter into this Agreement or any other Loan Document


 


9.             BANK’S
RIGHTS AND REMEDIES.


 


9.1           Rights and Remedies.
Upon the occurrence and during the continuance of an Event of Default, Bank
may, at its election, without notice of its election and without demand, do any
one or more of the following, all of which are authorized by Borrower:


 


(a)           Declare all
Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable (provided that upon the
occurrence of an Event of Default described in Section 8.5, all Obligations
shall become immediately due and payable without any action by Bank);


 


(b)           Cease advancing money
or extending credit to or for the benefit of Borrower under this Agreement or
under any other agreement between Borrower and Bank;


 


(c)           Settle or adjust
disputes and claims directly with account debtors for amounts, upon terms and
in whatever order that Bank reasonably considers advisable;


 


(d)           Make such payments and
do such acts as Bank considers necessary or reasonable to protect its security
interest in the Collateral. Borrower agrees to assemble the Collateral if Bank
so requires, and to make the Collateral available to Bank as Bank may designate.
Borrower authorizes Bank to enter the premises where the Collateral is located,
to take and maintain possession of the Collateral, or any part of it, and to
pay, purchase, contest, or compromise any encumbrance, charge, or lien which in
Bank’s determination appears to be prior or superior to its security interest
and to pay all expenses incurred in connection therewith. With respect to any
of Borrower’s owned premises, Borrower hereby grants Bank a license to enter
into possession of such premises


 


17

















 


and to occupy the same, without charge, in order to
exercise any of Bank’s rights or remedies provided herein, at law, in equity,
or otherwise;


 


(e)           Set off and apply to
the Obligations any and all (i) balances and deposits of Borrower held by Bank,
or (ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;


 


(f)            Ship, reclaim,
recover, store, finish, maintain, repair, prepare for sale, advertise for sale,
and sell (in the manner provided for herein) the Collateral. Bank is hereby
granted a license or other right, solely pursuant to the provisions of this
Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of advertising for sale,
and selling any Collateral and, in connection with Bank’s exercise of its
rights under this Section 9.1, Borrower’s rights under all licenses and all
franchise agreements shall inure to Banks benefit;


 


(g)           Dispose of the
Collateral by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower’s premises) as
Bank determines is commercially reasonable, and apply any proceeds to the
Obligations in whatever manner or order Bank deems appropriate;


 


(h)           Bank may credit bid and
purchase at any public sale; and


 


(i)            Any deficiency that
exists after disposition of the Collateral as provided above will be paid
immediately by Borrower.


 


9.2           Power of /Attorney.
Effective only upon the occurrence and during the continuance of an Event of
Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s
designated officers, or employees) as Borrower’s true and lawful attorney to:  (a) send requests for verification of
Accounts or notify account debtors of Bank’s security interest in the Accounts;
(b) endorse Borrower’s name on any checks or other forms of payment or security
that may come into Banks possession; (c) sign Borrower’s name on any invoice or
bill of lading relating to any Account, drafts against account debtors,
schedules and assignments of Accounts, verifications of Accounts, and notices
to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust
all claims under and decisions with respect to Borrower’s policies of
insurance; (f) settle and adjust disputes and claims respecting the accounts
directly with account debtors, for amounts and upon terms which Bank determines
to be reasonable; and (g) to file, in its sole discretion, one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral; provided Bank may exercise such power of attorney to sign the
name of Borrower on any of the documents described in Section 4.2 regardless of
whether an Event of Default has occurred. The appointment of Bank as Borrower’s
attorney in fact, and each and every one of Banks rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully repaid and performed and Bank’s obligation to provide Credit Extensions
hereunder is terminated.


 


9.3           Accounts Collection.
At any time during the term of this Agreement, Bank may notify any Person owing
funds to Borrower of Banks security interest in such funds and verify the
amount of such Account. Borrower shall collect all amounts owing to Borrower
for Bank, receive in trust all payments as Banks trustee, and immediately
deliver such payments to Bank in their original form as received from the
account debtor, with proper endorsements for deposit


 


9.4           Bank Expenses. If
Borrower fails to pay any amounts or furnish any required proof of payment due
to third persons or entities, as required under the terms of this Agreement,
then Bank may do any or all of the following after reasonable notice to
Borrower:  (a) make payment of the same
or any part thereof; (b) set up such reserves under a loan facility in Section
2.1 as Bank deems necessary to protect Bank from the exposure created by such
failure; or (c) obtain and maintain insurance policies of the type discussed in
Section 6.6 of this Agreement, and take any action with respect to such
policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall
constitute Bank Expenses, shall be immediately due and payable, and shall bear
interest at the then applicable rate hereinabove provided, and shall be secured
by the Collateral. Any payments made by Bank


 


18

















 


shall not constitute an agreement by Bank to make
similar payments in the future or a waiver by Bank of any Event of Default
under this Agreement.


 


9.5           Bank’s Liability for
Collateral. So long as Bank complies with reasonable banking practices,
Bank shall not in any way or manner be liable or responsible for:  (a) the safekeeping of the Collateral; (b)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause; (c) any diminution in the value thereof; or (d) any act or default
of any carrier, warehouseman, bailee, forwarding agency, or other person
whomsoever. All risk of loss, damage or destruction of the Collateral shall be
borne by Borrower.


 


9.6           Remedies Cumulative.
Bank’s rights and remedies under this Agreement, the Loan Documents, and all
other agreements shall be cumulative. Bank shall have all other rights and
remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by Bank of one right or remedy shall be deemed an election,
and no waiver by Bank of any Event of Default on Borrower’s part shall be
deemed a continuing waiver. No delay by Bank shall constitute a waiver,
election, or acquiescence by it. No waiver by Bank shall be effective unless
made in a written document signed on behalf of Bank and then shall be effective
only in the specific instance and for the specific purpose for which it was
given.


 


9.7           Demand; Protest.
Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension, or renewal of
accounts, documents, instruments, chattel paper, and guarantees at any time
held by Bank on which Borrower may in any way be liable.


 


10.           NOTICES


 


Unless otherwise provided in this Agreement, all
notices or demands by any party relating to this Agreement or any other
agreement entered into in connection herewith shall be in writing and (except
for financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by a
recognized overnight delivery service, certified mail, postage prepaid, return
receipt requested, or by telefacsimile to Borrower or to Bank, as the case may
be, at its addresses set forth below:


 


	
  If to Borrower:

  	
  RELIANT TECHNOLOGIES, INC.

  
	
   

  	
  5375 Mira Sorrento Place, Ste. 100

  
	
   

  	
  San Diego, CA 92121

  
	
   

  	
  Attn: Director of Finance/Controller

  
	
   

  	
  FAX: (858) 622-9678

  
	
   

  	
   

  
	
  If to Bank:

  	
  Comerica Bank

  
	
   

  	
  2321 Rosecrans Ave., Suite 5000

  
	
   

  	
  El Segundo, CA 90245

  
	
   

  	
  Attn: Manager

  
	
   

  	
  FAX: (310) 338-6110

  
	
   

  	
   

  
	
  with a copy to:

  	
  Comerica Bank

  
	
   

  	
  11512 El Camino Real, Suite 350

  
	
   

  	
  San Diego, CA 92130

  
	
   

  	
  Attn: Scott Foote – Vice President

  
	
   

  	
  FAX: (858)509-2365

  



 


The
parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.


 


11.           CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER.


 


This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard
to principles of conflicts of law. Each of Borrower and Bank hereby submits to
the exclusive jurisdiction of the state and Federal courts located in the
County of Santa Clara, State of California.


 


19

















 


BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.


 


12.          JUDICIAL REFERENCE.


 


If and only if the jury trial waiver set forth in
Section 11 of this Agreement is invalidated for any reason by a court of law,
statute or otherwise, the reference provisions set forth below shall be
substituted in place of the jury trial waiver. So long as the jury trial waiver
remains valid, the reference provisions set forth in this Section shall be inapplicable.


 


12.1         Each controversy, dispute
or claim (each, a “Claim”) between the parties arising out of or relating to
this Agreement, any security agreement executed by Borrower in favor of Bank,
any note executed by Borrower in favor of Bank or any other document,
instrument or agreement executed by Borrower with or in favor of Bank
(collectively in this Section, the “Loan Documents”), other than (i) all
matters in connection with nonjudicial foreclosure of security interests in
real or personal property; or (ii) the appointment of a receiver or the
exercise of other provisional remedies (any of which may be initiated pursuant
to applicable law) that are not settled in writing within fifteen (15) days
after the date on which a party subject to the Loan Documents gives written
notice to all other parties that a Claim exists (the “Claim Date”) shall be
resolved by a reference proceeding in California in accordance with the
provisions of Section 638 et seq. of the California Code of Civil Procedure, or
their successor sections (“CCP”), which shall constitute the exclusive remedy
for the resolution of any Claim concerning the Loan Documents, including
whether such Claim is subject to the reference proceeding. Except as set forth
in this section, the parties waive the right to initiate legal proceedings
against each other concerning each such Claim. Venue for these proceedings
shall be in the Superior Court in the County where the real property, if any,
is located or in a County where venue is otherwise appropriate under state law
(the “Court”). By mutual agreement, the parties shall select a retired Judge of
the Court to serve as referee, and if they cannot so agree within fifteen (15)
days after the Claim Date, the Presiding Judge of the Court (or his or her representative)
shall promptly select the referee. A request for appointment of a referee may
be heard on an ex parte or expedited basis. The referee shall be appointed to
sit as a temporary judge, with all the powers for a temporary judge, as
authorized by law, and upon selection should take and subscribe to the oath of
office as provided for in Rule 244 of the California Rules of Court (or any
subsequently enacted Rule). Each party shall have one peremptory challenge
pursuant to CCP §170.6. Upon being selected, the referee shall (a) be requested
to set the matter for a status and trial-setting conference within fifteen (15)
days after the date of selection and (b) if practicable, try any and all issues
of law or fact and report a statement of decision upon them within ninety (90)
days of the date of selection. The referee will have power to expand or limit
the amount of discovery a party may employ. Any decision rendered by the
referee will be final, binding and conclusive, and judgment shall be entered
pursuant to CCP §644 in any court in the State of California having
jurisdiction. The parties shall complete all discovery no later than fifteen
(15) days before the first trial date established by the referee. The referee
may extend such period in the event of a party’s refusal to provide requested
discovery for any reason whatsoever, including, without limitation, legal
objections raised to such discovery or unavailability of a witness due to
absence or illness. No party shall be entitled to “priority” in conducting
discovery. Either party may take depositions upon seven (7) days written
notice, and shall respond to requests for production or inspection of documents
within ten (10) days after service. All disputes relating to discovery which
cannot be resolved by the parties shall be submitted to the referee whose
decision shall be final and binding upon the parties. Pending appointment of
the referee as provided herein, the Superior Court is empowered to issue
temporary and/or provisional remedies, as appropriate.


 


12.2         Except as expressly set
forth herein, the referee shall determine the manner in which the reference
proceeding is conducted including the time and place of all hearings, the order
of presentation of evidence, and all other questions that arise with respect to
the course of the reference proceeding. Except for trial, all proceedings and
hearings conducted before the referee shall be conducted without a court
reporter unless a party


 


20

















 


requests a court reporter. The party making such a
request shall have the obligation to arrange for and pay for the court reporter.
Subject to the referee’s power to award costs to the prevailing party, the
parties shall equally bear the costs of the court reporter at the trial and the
referee’s expenses.


 


12.3         The referee shall
determine all issues in accordance with existing California case and statutory
law. California rules of evidence applicable to proceedings at law will apply
to the reference proceeding. The referee shall be empowered to enter equitable
as well as legal relief, to provide all temporary and/or provisional remedies
and to enter equitable orders that shall be binding upon the parties. At the
close of the reference proceeding, the referee shall issue a single judgment at
disposing of all the claims of the parties that are the subject of the
reference. The parties reserve the right (i) to contest or appeal from the
final judgment or any appealable order or appealable judgment entered by the
referee and (ii) to obtain findings of fact, conclusions of laws, a written
statement of decision, and (iii) to move for a new trial or a different
judgment, which new trial, if granted, shall be a reference proceeding under
this provision.


 


12.4         If the enabling legislation
which provides for appointment of a referee is repealed (and no successor
statute is enacted), any dispute between the parties that would otherwise be
determined by the reference procedure herein described will be resolved and
determined by arbitration conducted by a retired judge of the Court, in
accordance with the California Arbitration Act §1280 through §1294.2 of the CCP
as amended from time to time. The limitations with respect to discovery as set
forth in this Section shall apply to any such arbitration proceeding.


 


13.           GENERAL
PROVISIONS.


 


13.1         Successors and Assigns.
This Agreement shall bind and inure to the benefit of the respective successors
and permitted assigns of each of the parties; provided, however, that neither
this Agreement nor any rights hereunder may be assigned by Borrower without
Bank’s prior written consent, which consent may be granted or withheld in Banks
sole discretion. Bank shall have the right without the consent of or notice to
Borrower to sell, transfer, negotiate, or grant participation in all or any
part of, or any interest in, Bank’s obligations, rights and benefits hereunder.


 


13.2         Indemnification. Borrower
shall defend, indemnify and hold harmless Bank and its officers, employees, and
agents against (a) all obligations, demands, claims, and liabilities claimed or
asserted by any other party in connection with the transactions contemplated by
this Agreement; and (b) all losses or Bank Expenses in any way suffered,
incurred, or paid by Bank as a result of or in any way arising out of,
following, or consequential to transactions between Bank and Borrower whether
under this Agreement, or otherwise (including without limitation reasonable
attorneys’ fees and expenses), except for losses caused by Banks gross
negligence or willful misconduct.


 


13.3         Time of Essence. Time
is of the essence for the performance of all obligations set forth in this
Agreement.


 


13.4         Severability of
Provisions. Each provision of this Agreement shall be severable from every
other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.


 


13.5         Amendments in Writing,
Integration. Neither this Agreement nor the Loan Documents can be amended
or terminated orally. All prior agreements, understandings, representations,
warranties, and negotiations between the parties hereto with respect to the
subject matter of this Agreement and the Loan Documents, if any, are merged
into this Agreement and the Loan Documents.


 


13.6         Counterparts. This
Agreement may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered,
shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement.


 


13.7         Survival. All
covenants, representations and warranties made in this Agreement shall continue
in full force and effect so long as any Obligations remain outstanding or Bank
has any obligation to make


 


21

















 


Credit Extensions to Borrower. The obligations of
Borrower to indemnify Bank with respect to the expenses, damages, losses, costs
and liabilities described in Section 13.2 shall survive until all applicable
statute of limitations periods with respect to actions that may be brought
against Bank have run.


 


13.8         Confidentiality. In
handling any confidential information Bank and all employees and agents of
Bank, including but not limited to accountants, shall exercise the same degree
of care that it 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 Bank
in connection with their present or prospective business relations with
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 and have delivered a copy to Borrower, (iii) as required
by law, regulations, rule or order, subpoena, judicial order or similar order,
(iv) as may be required in connection with the examination, audit or similar
investigation of Bank and (v) as Bank may determine in connection with the
enforcement of any remedies hereunder. Confidential information hereunder shall
not include information that either:  (a)
is in the public domain or in the knowledge or possession of Bank when disclosed
to Bank, or becomes part of the public domain after disclosure to Bank through
no fault of Bank; or (b) is disclosed to Bank by a third party, provided Bank
does not have actual knowledge that such third party is prohibited from
disclosing such information.


 


[Balance of
Page Intentionally Left Blank]


 


22

















 


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.


 


	
   

  	
  RELIANT TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger Howe

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chairman and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA BANK

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  SVP

  
					



 


 


[Signature
Page to Loan and Security Agreement]


 














 


	
  DEBTOR

  	
  RELIANT TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
  SECURED PARTY:

  	
  COMERICA BANK

  



 


EXHIBIT A


 


COLLATERAL DESCRIPTION
ATTACHMENT

TO LOAN AND SECURITY AGREEMENT


 


All
personal property of Borrower (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:


 


(a)                                  all
accounts (including health-care -insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory
notes), inventory (including all goods held for sale or lease or to be
furnished under a contract of service, and including returns and
repossessions), investment property (including securities and securities
entitlements), letter of credit rights, money, and all of Debtor’s books and
records with respect to any of the foregoing, and the computers and equipment
containing said books and records;


 


(b)                                 all
common law and statutory copyrights and copyright registrations, applications
for registration, now existing or hereafter arising, in the United States of
America or in any foreign jurisdiction, obtained or to be obtained on or in
connection with any of the forgoing, or any parts thereof or any underlying or
component elements of any of the forgoing, together with the right to copyright
and all rights to renew or extend such copyrights and the right (but not the
obligation) of Secured Party to sue in its own name and/or in the name of the
Debtor for past, present and future infringements of copyright (collectively, “Copyrights”);


 


(c)                                  all
trademarks, service marks, trade names and service names and the goodwill
associated therewith, together with the right to trademark and all rights to
renew or extend such trademarks and the right (but not the obligation) of
Secured Party to sue in its own name and/or in the name of the Debtor for past,
present and future infringements of trademark (collectively, “Trademarks”);


 


(d)                                 all
(i) patents and patent applications filed in the United States Patent and
Trademark Office or any similar office of any foreign jurisdiction, and
interests under patent license agreements, including, without limitation, the
inventions and improvements described and claimed therein, (ii) licenses
pertaining to any patent whether Debtor is licensor or licensee, (iii) income,
royalties, damages, payments, accounts and accounts receivable now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to sue in the name of Debtor
and/or in the name of Secured Party for past, present and future infringements
thereof, (v) rights corresponding thereto throughout the world in all
jurisdictions in which such patents have been issued or applied for, and (vi) reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
respect to any of the foregoing (collectively, “Patents”); and


 


(e)                                  any
and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment. All terms
above have the meanings given to them in the California Uniform Commercial
Code, as amended or supplemented from time to time, including revised Division
9 of the Uniform Commercial Code-Secured Transactions, added by Stats. 1999,
c.991 (S.B. 45), Section 35, operative July 1, 2001.


 


Notwithstanding the foregoing, (1) the Collateral
shall not include any Copyrights, Patents, Trademarks, source code and
applications therefor, now owned or hereafter acquired, or any claims for
damages by way of any past, present and future infringement of any of the
foregoing (collectively, the “Intellectual Property”); provided, however, that
the Collateral shall include all accounts and general intangibles that consist
of rights to payment and proceeds from the sale, licensing or disposition of
all or any part, or rights in, the foregoing (the “Rights to Payment”). Notwithstanding
the foregoing, if a judicial authority (including a U.S. Bankruptcy Court)


 

















 


holds that a security interest in the underlying
Intellectual Property is necessary to have a security interest in the Rights to
Payment, then the Collateral shall automatically, and effective as of the Closing
Date, include the intellectual Property to the extent necessary to permit
perfection of Bank’s security interest in the Rights to Payment, and (2) the
Collateral shall also not include any property that (a) is nonassignable by its
terms without the consent of the licensor thereof (but only to the extent such
prohibition on transfer is enforceable under applicable law, including, without
limitation, Sections 9406 and 9408 of the Code), or (b) the granting of a
security interest therein is contrary to applicable law; provided that upon the
cessation of any such restriction or prohibition, such property shall
automatically become part of the Collateral; and provided further that the
provisions of this paragraph shall in no case exclude from the definition of “Collateral”
any Accounts, proceeds of the disposition of any property, or general
intangibles consisting of rights to payment, all of which shall at al times
constitute “Collateral”.


 

















 


EXHIBIT B


 


TECHNOLOGY
& LIFE SCIENCES DIVISION

LOAN ANALYSIS

LOAN ADVANCE/PAYDOWN REQUEST FORM

DEADLINE FOR SAME DAY
PROCESSING IS [3:00* P.M., Pacific Time/ 3:30 P.M. Eastern Time]

FORMULA BASED LINES: DEADLINE FOR NEXT
DAY PROCESSING IS [3:00* P.M., Pacific Time/ 330 P.M. Eastern Time]

DEADLINE FOR WIRE TRANSFERS IS [1:30 P.M., Pacific Time/ 3:30 P.M. Eastern
Time]

[*At month end and the day before a holiday, the cut off time is 1:30 P.M.,
Pacific Time]


 


	
  To: Loan Analysis

  	
  DATE:

  	
   

  	
   

  	
  TIME:

  	
   

  	
   

  
	
  FAX #: (650) 846-6840

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  FROM:

  	
  RELIANT TECHNOLOGIES. INC.

  	
   

  	
  TELEPHONE REQUEST (For Bank
  Use Only):

  
	
   

  	
  Borrower’s Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  FROM:

  	
   

  	
   

  	
  The following person is
  authorized to request the loan payment transfer/loan advance on the
  designated account and is known to me.

  
	
   

  	
  Authorized Signer’s Name

  	
   

  
	
   

  	
   

  
	
  FROM:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signer’s Name

  	
   

  	
  Authorized Request &
  Phone #

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PHONE #:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Received by (Bank) &
  Phone #

  
	
  FROM ACCOUNT #:

  (please include Note number, if applicable)

  	
   

  
	
   

  	
   

  
	
  TO ACCOUNT #:

  (please include Note number, if applicable)

  	
  Authorized Signature (Bank)

  
	
   

  	
   

  
	
  REQUESTED TRANSACTION TYPE

  	
  REQUESTED DOLLAR AMOUNT

  	
  For Bank Use Only

  
	
   

  	
   

  	
   

  
	
  PRINCIPAL INCREASE*
  (ADVANCE)

  	
  $

  	
  Date Rec’d:

  
	
  PRINCIPAL PAYMENT (ONLY)

  	
  $

  	
  Time:

  
	
   

  	
   

  	
  Comp. Status:                      YES                          NO

  
	
  OTHER INSTRUCTIONS:

  	
   

  	
  Status Date:

  
	
   

  	
   

  	
  Time:

  
	
   

  	
   

  	
  Approval:

  
							



 


All representations and
warranties of Borrower stated in the Loan Agreement are true, correct and
complete in all material respects as of the date of the telephone request for
and advance confirmed by this Borrowing Certificate; provided, however, that
those representations and warranties the date expressly referring to another
date shall be true, correct and complete in all material respects as of such
date.


 


*IS THERE A WIRE REQUEST TIED TO
THIS LOAN ADVANCE?  (PLEASE CIRCLE ONE)                         YES                         NO


If YES, the Outgoing Wire Transfer Instructions must be completed below.


 


	
  OUTGOING WIRE TRANSFER
  INSTRUCTIONS

  	
  Fed Reference Number

  	
  Bank Transfer Number

  
	
   

  
	
  The items marked with an asterisk (*) are required to be completed.

  
	
   

  
	
  *Beneficiary Name

  	
   

  
	
  *Beneficiary Account Number

  	
   

  
	
  *Beneficiary Address

  	
   

  
	
  Currency Type

  	
  US
  DOLLARS ONLY

  
	
  *ABA Routing Number (9
  Digits)

  	
   

  
	
  *Receiving Institution Name

  	
   

  
	
  *Receiving Institution
  Address

  	
   

  
	
  *Wire Account

  	
  $

  
				



 

















 


EXHIBIT C


 


BORROWING BASE
CERTIFICATE


 


	
  Borrower: RELIANT TECHNOLOGIES, INC.

  Comerica Bank

  	
   

  	
  Lender:

  
	
   

  	
   

  
	
  Commitment Amount: $2,000,000

  	
   

  



 


	
  ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Accounts
  Receivable Book Value as of    

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  2.

  	
  Additions
  (please explain on reverse)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  3.

  	
  TOTAL
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS
  RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Amounts over
  90 days due

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  5.

  	
  Balance of
  25% over 90 day accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  6.

  	
  Concentration
  Limits

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Foreign
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  8.

  	
  Governmental
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  9.

  	
  Contra
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  10.

  	
  Demo
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  11.

  	
  Intercompany/Employee
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  12.

  	
  Other
  (please explain on reverse)

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  13.

  	
  TOTAL
  ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  14.

  	
  Eligible
  Accounts (#3 minus #13)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  15.

  	
  LOAN VALUE
  OF ACCOUNTS (80% of #14)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INVENTORY

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  LOAN VALUE
  OF INVENTORY (80%; $1,500,000 max.)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Maximum Loan
  Amount

  	
   

  	
   

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  18.

  	
  Total Funds
  Available [Lesser of #17 or #15 plus #16]

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  19.

  	
  Present
  balance owing on Line of Credit

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  20.

  	
  RESERVE
  POSITION (#18 minus #19)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  



 


The undersigned represents and warrants that the
foregoing is true, complete and correct, and that the information reflected in
this Borrowing Base Certificate complies with the representations and
warranties set forth in the Loan and Security Agreement between the undersigned
and Comerica Bank.


 


	
  RELIANT TECHNOLOGIES, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signer

  
				



 

















 


EXHIBIT D

COMPLIANCE CERTIFICATE


 


TO:                                                                            COMERICA
BANK


 


FROM:                                                         RELIANT
TECHNOLOGIES, INC.


 


The undersigned authorized Officer of RELIANT
TECHNOLOGIES, INC. hereby certifies that in accordance with the terms and
conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”),
(i) Borrower is in complete compliance for the period ending                        
with all required covenants except as noted below and (ii) all representations
and warranties of Borrower stated in the Agreement are true and correct as of
the date hereof. Attached herewith are the required documents supporting the
above certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.


 


Please
indicate compliance status by circling Yes/No under “Complies” column.


 


	
  REPORTING COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  COMPLIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial
  statements

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Annual (CPA Audited - FY
  2003)

  	
   

  	
  August 15, 2004

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Annual (CPA Audited - FY
  2004 and thereafter)

  	
   

  	
  FYE within 120 days

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  A/R & A/P Agings,
  Borrowing Base Cert.

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  A/R Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Total amount of Borrower’s
  cash and investments

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Total amount of Borrower’s
  cash and investments maintained with Bank

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
   

  	
  NO

  



 


	
  FINANCIAL COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  ACTUAL

  	
   

  	
  COMPLIES

  
	
  Measured on a Monthly
  Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Quick Ratio

  	
   

  	
  1.25:1.00

  	
   

  	
                :1.00

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Net Loss/Net Income to Plan

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  YES

  	
   

  	
  NO

  
											



 


	
  Comments Regarding Exceptions:  See Attached.

  	
  BANK USE ONLY

  
	
   

  	
   

  
	
   

  	
  Received by:

  	
   

  	
   

  
	
  Sincerely,

  	
   

  	
  AUTHORIZED SIGNER

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SIGNATURE

  	
   

  	
  Verified:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TITLE

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DATE

  	
   

  	
  Compliance Status:                                          YES                          NO

  
								



 

















FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT


This First Amendment to Loan and Security Agreement
(this “Amendment”) is entered into as of August 17,  2005, by and between COMERICA BANK (“Bank”) and RELIANT
TECHNOLOGIES, INC. (“Borrower”).


RECITALS


Borrower and Bank are parties to that certain Loan and
Security Agreement dated as of August 26, 2004, as amended from time to time
(the “Agreement”). The parties desire to amend the Agreement in accordance with
the terms of this Amendment.


NOW, THEREFORE, the parties agree as follows:


1. The following defined term in Section 1.1 of the
Agreement is hereby amended and restated in its entirety to read as follows:


“Revolving Maturity Date” means August 24, 2006.


2. Section 1.1 of the Agreement is hereby amended to
add the following new defined terms:


“Cash” means unrestricted cash and cash equivalents.


“Liquidity” means the sum of (1) Cash, plus (2)
Accounts as set forth in Borrower’s books.


“Tangible Net Worth” means at any date as of which the
amount thereof shall be determined, the sum of the capital stock, partnership
interest or limited liability company interest of Borrower and its Subsidiaries
minus intangible assets, determined in accordance with GAAP.


3. The defined terms “Current Liabilities” and “Quick
Assets” in Section 1.1 are hereby deleted in their entirety.


4. Section 6.8 of the Agreement is hereby amended and
restated in its entirety to read as follows:


“Bank Debt Liquidity Coverage. Borrower shall
maintain at all times, measured as of the last day of each calendar month, a
ratio of Liquidity to all Indebtedness to Bank of at least 1.50 to 1.00.”


5. Section 6.9 of the Agreement is hereby amended and
restated in its entirety to read as follows:


“Tangible Net Worth. Borrower shall maintain at
all times, measured as of the last day of each calendar month, a minimum
Tangible Net Worth of not less than $1.”


6. Exhibit D to the Agreement is amended and
restated in its entirety by Exhibit D attached hereto as Annex 1.


7. No course of dealing on the part of Bank or its officers,
nor any failure or delay in the exercise of any right by Bank, shall operate as
a waiver thereof, and any single or partial exercise of any such right shall
not preclude any later exercise of any such right. Bank’s failure at any time
to require strict performance by a Borrower of any provision shall not affect
any right of Bank thereafter to demand strict compliance and performance. Any
suspension or waiver of a right must be in writing signed by an officer of
Bank.


8. Unless otherwise defined, all initially capitalized
terms in this Amendment shall be as defined in the Agreement. The Agreement, as
amended hereby, shall be and remain in full force and effect in accordance with
its respective terms and hereby is ratified and confirmed in all respects.
Except as expressly set forth herein, the execution, delivery, and performance
of this Amendment shall not operate as a waiver of, or as an amendment of, any
right, power, or remedy of Bank under the Agreement, as in effect prior to the
date hereof.


 


 


1

















 


9. Borrower represents and warrants that the
Representations and Warranties contained in the Agreement are true and correct
as of the date of this Amendment, and that no Event of Default has occurred and
is continuing.


10. As a condition to the effectiveness of this
Amendment, Bank shall have received, in form and substance satisfactory to
Bank, the following:


(a) this Amendment, duly executed by Borrower;


(b) a Certificate of the Secretary of Borrower with
respect to incumbency and resolutions authorizing the execution and delivery of
this Amendment;


(c) all reasonable Bank Expenses incurred through the
date of this Amendment, which may be debited from any of Borrower’s accounts;
and


(d) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.


11. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.


[signature
page follows]


 


 


2

















 


IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the first date above written.


 


	
   

  	
   

  	
  RELIANT TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Harvard Sung

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  CFO

  



 


	
   

  	
   

  	
  COMERICA BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: 

  	
   

  



 


 


3























Corporation Resolutions and Incumbency Certification 

Authority to Procure Loans





I certify that I am the duly elected and qualified Secretary of RELIANT
TECHNOLOGIES, INC. and that the following is a true and correct copy of
resolutions duly adopted by the Board of Directors of the Corporation in
accordance with its bylaws and applicable statutes.


Copy of Resolutions:


Be it Resolved, That:


1.                          Any
one (1) of the following CEO, CFO (insert titles only) of the Corporation
are/is authorized, for, on behalf of,
and in the name of the Corporation to:


(a)                    Negotiate and
procure loans, letters of credit and other credit or financial accommodations
from Comerica Bank (“Bank”), a Michigan banking corporation, including, without
limitation, that certain Loan and Security Agreement dated as of August 26,
2004, as amended by that certain First Amendment to Loan and Security Agreement
dated August 17, 2005, as may subsequently be amended from time to time.


(b)                   Discount with
the Bank, commercial or other business paper belonging to the Corporation made
or drawn by or upon third parties, without limit as to amount;


(c)                    Purchase,
sell, exchange, assign, endorse for transfer and/or deliver certificates and/or
instruments representing stocks, bonds, evidences of Indebtedness or other
securities owned by the Corporation, whether or not registered in the name of
the Corporation;


(d)                   Give security
for any liabilities of the Corporation to the Bank by grant, security interest,
assignment, lien, deed of trust or mortgage upon any real or personal property,
tangible or intangible of the Corporation;


(e)                    Issue a
warrant or warrants to purchase the Corporation’s capital stock; and


(f)                      Execute and
deliver in form and content as may be required by the Bank any and all notes,
evidences of Indebtedness, applications for letters of credit, guaranties,
subordination agreements, loan and security agreements, financing statements, assignments,
liens, deeds of trust, mortgages, trust receipts and other agreements,
instruments or documents to carry out the purposes of these Resolutions, any or
all of which may relate to all or to substantially all of the Corporation’s
property and assets.


2.                          Bank
be and is authorized and directed to pay the proceeds of any such loans or
discounts as directed by the persons so authorized to sign, whether so payable
to the order of any of said persons in their individual capacities or not, and
whether such proceeds are deposited to the individual credit of any of said
persons or not;


3.                          Any
and all agreements, instruments and documents previously executed and acts and
things previously done to carry out the purposes of these Resolutions are
ratified, confirmed and approved as the act or acts of the Corporation.


4.                          These
Resolutions shall continue in force, and the Bank may consider the holders of
said offices and their signatures to be and continue to be as set forth in a
certified copy of these Resolutions delivered to the Bank, until notice to the
contrary in writing is duly served on the Bank (such notice to have no effect
on any action previously taken by the Bank in reliance on these Resolutions).


 


 


1

















 


5.                          Any
person, corporation or other legal entity dealing with the Bank may rely upon a
certificate signed by an officer of the Bank to effect that these Resolutions
and any agreement, instrument or document executed pursuant to them are still
in full force and effect and binding upon the Corporation.


6.                          The
Bank may consider the holders of the offices of the Corporation and their
signatures, respectively, to be and continue to be as set forth in the
Certificate of the Secretary of the Corporation until notice to the contrary in
writing is duly served on the Bank.


I further certify that the above Resolutions are in full force and
effect as of the date of this Certificate; that these Resolutions and any
borrowings or financial accommodations under these Resolutions have been
properly noted in the corporate books and records, and have not been rescinded,
annulled, revoked or modified; that neither the foregoing Resolutions nor any
actions to be taken pursuant to them are or will be in contravention of any provision
of the articles of incorporation or bylaws of the Corporation or of any
agreement, indenture or other instrument to which the Corporation is a party or
by which it is bound; and that neither the certificate of incorporation nor
bylaws of the Corporation nor any agreement, indenture or other instrument to
which the Corporation is a party or by which it is bound require the vote or
consent of shareholders of the Corporation to authorize any act, matter or
thing described in the foregoing Resolutions.


I further certify that the following named persons have been duly
elected to the offices set opposite their respective names, that they continue
to hold these offices at the present time, and that the signatures which appear
below are the genuine, original signatures of each respectively:


(PLEASE SUPPLY GENUINE
SIGNATURES OF AUTHORIZED SIGNERS BELOW)


 


	
  NAME
  (Type or Print)

  	
   

  	
  TITLE

  	
   

  	
  SIGNATURE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HARVARD SUNG

  	
   

  	
  CFO

  	
   

  	
  /s/ Harvard Sung

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DENNIS CONDON

  	
   

  	
  CEO

  	
   

  	
  /s/ Dennis
  Condon

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



In Witness Whereof, I have affixed my name as Secretary and have caused
the corporate seal (where available) of said Corporation to be affixed on
August 17, 2005.


 


	
   

  	
   

  	
   

  	
  /s/ Harvard Sung

  
	
   

  	
   

  	
   

  	
  Secretary

  



 


	
  The Above Statements are Correct.

  	
   

  	
   

  	
  /s/ Dennis Condon

  
	
   

  	
   

  	
   

  	
  SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE, A
  SHAREHOLDER OTHER THAN SECRETARY WHEN SECRETARY IS AUTHORIZED TO SIGN ALONE.

  



Failure to complete the above when the Secretary is authorized to sign
alone shall constitute a certification by the Secretary that the Secretary is
the sole Shareholder, Director and Officer of the Corporation.


 


 


2

















Annex I


EXHIBIT D


COMPLIANCE CERTIFICATE


 


	
  TO:  

  	
  COMERICA BANK

  
	
   

  	
   

  
	
  FROM:

  	
  RELIANT TECHNOLOGIES,
  INC.

  



The undersigned authorized Officer of RELIANT
TECHNOLOGIES, INC. (“Borrower”), hereby certifies that in accordance with the
terms and conditions of the Loan and Security Agreement between Borrower and
Bank (as such agreement may be amended, modified or supplemented from time to
time, the “Agreement”), (i) Borrower is in complete compliance for the period ending                                              
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct in all material respects as of the date hereof. Attached herewith are
the required documents supporting the above certification. The Officer further
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to
the next except as explained in an accompanying letter or footnotes.


Please indicate
compliance status by circling Yes/No under “Complies” column.


 


	
  REPORTING COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  COMPLIES

  	
   

  
	
  Monthly financial statements

  	
   

  	
  Monthly,
  within 30 days

  	
   

  	
  YES

  	
   

  	
  NO

  	
   

  
	
  Annual (CPA Audited — FY 2004)

  	
   

  	
  September
  15, 2005

  	
   

  	
  YES

  	
   

  	
  NO

  	
   

  
	
  Annual (CPA Audited — FY 2005 and
  thereafter)

  	
   

  	
  FYE within
  120 days

  	
   

  	
  YES

  	
   

  	
  NO

  	
   

  
	
  10K and 10Q

  	
   

  	
  (as
  applicable)

  	
   

  	
  YES

  	
   

  	
  NO

  	
   

  
	
  A/R & A/P Agings, Borrowing Base Cert.

  	
   

  	
  Monthly,
  within 30 days

  	
   

  	
  YES

  	
   

  	
  NO

  	
   

  
	
  A/R and Inventory Audit

  	
   

  	
  Initial and
  Semi-Annual

  	
   

  	
  YES

  	
   

  	
  NO

  	
   

  
	
  Total amount of Borrower’s cash and
  investments

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
   

  	
  NO

  	
   

  
	
  Total amount of Borrower’s cash and
  investments maintained with Bank

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
   

  	
  NO

  	
   

  



 


	
  FINANCIAL COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  ACTUAL

  	
   

  	
  COMPLIES

  	
   

  
	
  Measured on a Monthly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Bank Debt Liquidity Coverage

  	
   

  	
  1.50:1.00

  	
   

  	
                 :1.00

  	
   

  	
  YES

  	
   

  	
  NO

  	
   

  
	
  Minimum TNW

  	
   

  	
  $1.00

  	
   

  	
  $

  	
   

  	
  YES

  	
   

  	
  NO

  	
   

  



Comments Regarding Exceptions: See Attached.


 


 


Exhibit D - Page 1

















 


The Officer further acknowledges that at any time
Borrower is not in compliance with all the terms set forth in the Agreement,
including, without limitation, the financial covenants, no credit extensions
will be made.


Very truly yours,


 


	
   

  	
   

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
  Rec’d By:

  	
   

  
	
  Authorized Signer

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
  Reviewed By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
  Financial Compliance Status:
             YES/NO

  
	
  Title: 

  	
   

  	
   

  	
   

  	
   

  



 


 


Exhibit D - Page 2

















 


WAIVER AND SECOND
AMENDMENT TO LOAN AND SECURITY AGREEMENT


 


This
Waiver and Second Amendment to Loan and Security Agreement (this “Waiver and
Amendment”) is entered into as of November 3, 2005, by and between COMERICA
BANK (“Bank”) and RELIANT TECHNOLOGIES, INC. (“Borrower”).


 


RECITALS


 


A.                                   Borrower
and Bank are parties to that certain Loan and Security Agreement dated as of
August 26, 2004, as amended from time to time, as amended by the First
Amendment to Loan and Security Agreement dated August 17, 2005 (as amended, the
“Agreement”). The parties desire to amend the Agreement in accordance with the
terms of this Waiver and Amendment.


 


B.                                     Certain
Events of Default have occurred and are existing under Section 8.2(a) of the
Agreement due to Borrower’s breach of the monthly reporting requirements set
forth in Section 6.3(a) of the Agreement for the months ending June, July and
August 2005 (such Events of Default hereinafter are referred to collectively as
the “Existing Events of Default”).


 


C.                                     Borrower
has requested that Bank waive the Existing Events of Default, increase the
amount of the Revolving Line, add an additional Term Loan, and make certain
other modifications to the Agreement.


 


NOW,
THEREFORE, the parties agree as follows:


 


1.                                       Any
and all initially-capitalized terms used in this Waiver and Amendment without
definition shall have their respective meanings specified in the Agreement.


 


2.                                       Bank
hereby waives each of the Existing Events of Default. Such waiver by Bank shall
constitute a waiver of only the Existing Events of Default and shall not be a
waiver of Borrower’s failure to comply with the monthly reporting requirements
set forth in Section 6.3(a) of the Agreement for any other month end other than
those specified in Recital B.


 


3.                                       The
following defined terms in Section 1.1 of the Agreement hereby are amended or
restated as follows:


 


“‘Credit Extension’ means
each Advance, the Term Advance or any other extension by Bank to or for the
benefit of Borrower hereunder.”


 


“‘Revolving Line’ means a
credit extension of up to Four Million Dollars ($4,000,000).”


 


“‘Term Maturity Date’
means February 3, 2009.”


 


“‘Term Advance’ means a
cash advance under the Term Loan.”


 


“‘Term Loan’ means a
Credit Extension of up to One Million Dollars ($1,000,000).”


 


“‘Waiver and Amendment’
means the Waiver and Second Amendment to Loan and Security Agreement, dated as
of November 3, 2005, by and between Bank and Borrower.”


 


4.                                       Section
6.7 of the Agreement is hereby amended and restated in its entirety to read as
follows:


 


“Borrower shall maintain
and shall cause each of its Subsidiaries to maintain not less than fifty
percent (50%) of its total cash and investments in depository, operating, and
investment accounts with Bank and/or Comerica Securities, Inc and within 30
days of the Closing Date, Borrower shall close


 

















 


Account Nos.
104756246559 and 10475790600 held at U.S. Bank and shall transfer all funds
held in such accounts to an account held at Bank.”


 


5.                                       A
new Section 2.1(b) is added to the Agreement to read in its entirety as
follows:


 


“(b)                           Term
Loan.


 


(i)                                     Subject
to and upon the terms and conditions of this Agreement, concurrently with the
execution of the Waiver and Amendment, Bank shall make a Term Loan to the
Borrower in a single advance in the original principal amount of One Million
Dollars ($1,000,000).


 


(ii)                                  Interest
shall accrue from the date the Term Advance is made at the rate specified in
Section 2.3(a), and shall be payable in accordance with Section 2.3(c). All
amounts outstanding under the Term Advance shall be due and payable in equal
monthly installments of principal on the last day of each month, commencing on
February 28, 2006, until the Term Maturity Date, at which time all amounts
owing under this Section 2.1(b) shall be immediately due and payable. All
amounts borrowed pursuant to this Section 2.1(b) once repaid may not be
reborrowed at any time prior to the Term Maturity Date. Borrower may prepay the
Term Advance, in whole or in part, from time to time, without penalty or
premium.”


 


6.                                       Sections
2.3(a) and (c) of the Agreement are hereby amended and restated in their
entireties to read as follows:


 


“(a)                            Interest
Rate.


 


(i)                                     Revolving
Line. Except as set forth in Section 2.3(b), the Advances shall bear
interest, on the outstanding daily balance thereof, at a variable rate equal to
one percent (1.00%) above the Prime Rate; and


 


(ii)                                  Term
Loan. Except as set forth in Section 2.3(b), the Term Advance shall bear
interest, on the outstanding daily balance thereof, at a variable rate equal to
two percent (2.00%) above the Prime Rate.”


 


“(c)                            Payments.


 


(i)                                     Revolving
Line. Interest hereunder shall be due and payable on the last calendar day
of each month during the term hereof. Bank shall, at its option, charge such
interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s
deposit accounts or against the Revolving Line, in which case those amounts
shall thereafter accrue interest at the rate then applicable hereunder. Any
interest not paid when due shall be compounded by becoming a part of the
Obligations, and such interest shall thereafter accrue interest at the rate
then applicable hereunder. All payments shall be free and clear of any taxes,
withholdings, duties, impositions or other charges, to the end that Bank will
receive the entire amount of any Obligations payable hereunder, regardless of
source of payment.


 


(ii)                                  Term
Loan. Interest hereunder shall be due and payable on the last calendar day
of each month during the term hereof. Bank shall, at its option, charge such
interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s
deposit accounts, in which case those amounts shall thereafter accrue interest
at the rate then applicable hereunder. Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder. All payments
shall be free and clear of any taxes, withholdings, duties, impositions or
other charges, to the end that Bank will receive the entire amount of any
Obligations payable hereunder, regardless of source of payment.”


 


7.                                       Section
6.8 of the Agreement is hereby amended and restated in its entirety to read as
follows:


 


2

















 


“Bank Debt Liquidity
Coverage. Borrower shall maintain at all times, measured as of the last day
of each calendar month, a ratio of Liquidity to all Indebtedness to Bank of at
least 1.25 to 1.00.”


 


8.                                       Section
6.9 of the Agreement is hereby amended and restated in its entirety to read as
follows:


 


“Maximum Net Loss. Borrower shall not suffer
net losses in excess of the following amounts for the respective periods
(measured quarterly):


 


	
  Quarter Ending

  	
   

  	
  Maximum
  Net Loss

  
	
  December 31, 2005

  	
   

  	
  ($3,000,000)

  
	
  March 31, 2006

  	
   

  	
  ($2,500,000) and

  
	
  June 30, 2006, and the last day of each fiscal
  quarter thereafter

  	
   

  	
  ($750,000)

  



 


9.                                       Exhibits
C and D to the Agreement are deleted and replaced with Exhibits C
and D attached hereto.


 


10.                                 The
first paragraph of the Schedule of Exceptions to the Agreement referencing
Permitted Indebtedness is hereby amended and restated as follows:


 


“Indebtedness in the aggregate principal amount of
$9,000,000 incurred in connection with that certain Loan and Security
Agreement, dated as of April 2, 2004, as amended by that First Amendment to
Loan and Security Agreement, dated August 26, 2004, as further amended by that
Amendment No. 2 to Loan and Security Agreement dated November 3, 2005, by and
between Borrower, Pinnacle Ventures, L.L.C., as agent, and Pinnacle Ventures
I-A (Sub) (Q), L.P., Pinnacle Ventures I-B, L.P., and Pinnacle Ventures I
Affiliates, L.P., as lenders.”


 


11.                                 Notwithstanding
anything to the contrary set forth in Section 6.3(b) of the Agreement, Borrower
shall deliver to Bank audited annual financial statements for Borrower’s fiscal
year ending December 31, 2004, on or before November 30, 2005.


 


12.                                 No
course of dealing on the part of Bank or its officers, nor any failure or delay
in the exercise of any right by Bank, shall operate as a waiver thereof, and
any single or partial exercise of any such right shall not preclude any later
exercise of any such right. Bank’s failure at any time to require strict
performance by a Borrower of any provision shall not affect any right of Bank
thereafter to demand strict compliance and performance. Any suspension or
waiver of a right must be in writing signed by an officer of Bank.


 


13.                                 Unless
otherwise defined, all initially capitalized terms in this Waiver and Amendment
shall be as defined in the Agreement. The Agreement, as amended hereby, shall
be and remain in full force and effect in accordance with its respective terms
and hereby is ratified and confirmed in all respects. Except as expressly set
forth herein, the execution, delivery, and performance of this Waiver and
Amendment shall not operate as a waiver of, or as an amendment of, any right,
power, or remedy of Bank under the Agreement, as in effect prior to the date
hereof.


 


14.                                 Borrower
represents and warrants that the Representations and Warranties contained in
the Agreement are true and correct in all material respects as of the date of
this Waiver and Amendment, and that no Event of Default has occurred and is
continuing.


 


15.                                 As
a condition to the effectiveness of this Waiver and Amendment, Bank shall have
received, in form and substance satisfactory to Bank, the following:


 


(a)                                  this
Waiver and Amendment, duly executed by Borrower;


 


(b)                                 a
Certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Waiver and
Amendment;


 


3

















 


(c)                                  an
amendment and affirmation of Subordination and Intercreditor Agreement;


 


(d)                                 a
warrant to purchase 13,333 shares of common stock of Borrower,


 


(c)                                  an
agreement to provide insurance;


 


(f)                                    an
amendment fee at to Five Thousand Dollars ($5,000), which shall be
nonrefundable;


 


(g)                                 all
reasonable Bank Expenses incurred through the data of this Waiver and
Amendment, which may be debited from any of Borrower’s accounts; and


 


(h)                                 such
other documents, and completion of such other matters, as Bank may reasonably
deem necessary or appropriate,


 


16.                                 This
Waiver and Amendment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
instrument.


 


IN WITNESS WHEREOF, the undersigned have executed this
Waiver and Amendment as of the first date above written.


 


	
   

  	
  RELIANT TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Harvard Sung

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA BANK

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. Cunningham

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  SVP

  
					



 


4

















 


EXHIBIT C


 


BORROWING BASE
CERTIFICATE


 


	
  Borrower: RELIANT TECHNOLOGIES, INC.

  Comerica Bank

  	
   

  	
  Lender:

  
	
   

  	
   

  
	
  Commitment Amount: $4,000,000

  	
   

  



 


	
  ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Accounts
  Receivable Book Value as of    

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  2.

  	
  Additions
  (please explain on reverse)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  3.

  	
  TOTAL
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS
  RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Amounts over
  90 days due

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  5.

  	
  Balance of
  25% over 90 day accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  6.

  	
  Concentration
  Limits

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Foreign
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  8.

  	
  Governmental
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  9.

  	
  Contra
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  10.

  	
  Demo
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  11.

  	
  Intercompany/Employee
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  12.

  	
  Other
  (please explain on reverse)

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  13.

  	
  TOTAL
  ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  14.

  	
  Eligible
  Accounts (#3 minus #13)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  15.

  	
  LOAN VALUE
  OF ACCOUNTS (80% of #14)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INVENTORY

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  LOAN VALUE
  OF INVENTORY (80%; $1,500,000 max.)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Maximum Loan
  Amount

  	
   

  	
   

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  18.

  	
  Total Funds
  Available [Lesser of #17 or #15 plus #16]

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  19.

  	
  Present
  balance owing on Line of Credit

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  20.

  	
  RESERVE
  POSITION (#18 minus #19)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  



 


The undersigned represents and warrants that the
foregoing is true, complete and correct, and that the information reflected in
this Borrowing Base Certificate complies with the representations and
warranties set forth in the Loan and Security Agreement between the undersigned
and Comerica Bank.


 


	
  RELIANT TECHNOLOGIES, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signer

  
				



 

















 


EXHIBIT D


 


COMPLIANCE CERTIFICATE


 


TO:                                                                            COMERICA
BANK


 


FROM:                                                         RELIANT
TECHNOLOGIES, INC.


 


The
undersigned authorized Officer of RELIANT TECHNOLOGIES, INC. (“Borrower”),
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (as such agreement may be
amended, modified or supplemented from time to time, the “Agreement”), (i)
Borrower is in complete compliance for the period ending                                with
all required covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.


 


Please indicate compliance status
by circling Yes/No under “Complies” column.


 


	
  REPORTING COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  COMPLIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Annual (CPA Audited - FY 2004)

  	
   

  	
  November 30, 2005

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Annual (CPA Audited - FY 2005 and thereafter)

  	
   

  	
  FYE within 120 days

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  A/R & A/P Agings, Borrowing Base Cert.

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  A/R and Inventory Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Total amount of Borrower’s cash and investments

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Total amount of Borrower’s cash and investments
  maintained with Bank

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
   

  	
  NO

  



 


	
  FINANCIAL COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  ACTUAL

  	
   

  	
  COMPLIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain at all Times; Measured on a Monthly Basis
  unless otherwise indicated

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Bank Debt Liquidity Coverage

  	
   

  	
  1.25:1.00

  	
   

  	
               :1.00

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Net Loss (Measured on a Quarterly Basis):

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FQE 12/31/05

  	
   

  	
  $

  	
  (3,000,000

  	
  )

  	
  $

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  FQE 3/31/06

  	
   

  	
  $

  	
  (2,500,000

  	
  )

  	
  $

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  FQE 6/30/06, and all FQE thereafter

  	
   

  	
  $

  	
  (750,000

  	
  )

  	
  $

  	
   

  	
  YES

  	
   

  	
  NO

  



 


 


Comments Regarding Exceptions: See Attached.


 

















 


The Officer further acknowledges that at any time
Borrower is not in compliance with all the terms set forth in the Agreement,
including, without limitation, the financial covenants, no credit extensions
will be made.


 


Very truly yours,


 


 


	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
  Rec’d By:

  	
   

  	
   

  
	
  Authorized Signer

  	
  Date:

  	
   

  	
   

  
	
   

  	
  Reviewed By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Financial Compliance Status:                                       YES
  / NO

  



 


2

















 


Corporation Resolutions and
Incumbency Certification

Authority to Procure Loans


 


I certify that I am the duly elected and qualified
Secretary of RELIANT TECHNOLOGIES, INC., and that the following is a true and
correct copy of resolutions duly adopted by the Board of Directors of the
Corporation in accordance with its bylaws and applicable statutes.


 


Copy of Resolutions:


 


Be it Resolved, That:


 


1.                                       Any
one (1) of the following                                                       
(insert titles only) of the Corporation are/is authorized, for, on behalf of,
and in the name of the Corporation to:


 


(a)                                  Negotiate
and procure loans, letters of credit and other credit or financial
accommodations from Comerica Bank (“Bank”), a Michigan banking corporation,
including, without limitation, that certain Loan and Security Agreement dated
as of August 26, 2004, as amended by that certain First Amendment to Loan and
Security Agreement dated August 17, 2005, and as amended by that certain Waiver
and Second Amendment to Loan and Security Agreement, dated November 3, 2005, as
may subsequently be amended from time to time.


 


(b)                                 Discount
with the Bank, commercial or other business paper belonging to the Corporation
made or drawn by or upon third parties, without limit as to amount;


 


(c)                                  Purchase,
sell, exchange, assign, endorse for transfer and/or deliver certificates and/or
instruments representing stocks, bonds, evidences of Indebtedness or other
securities owned by the Corporation, whether or not registered in the name of
the Corporation;


 


(d)                                 Give
security for any liabilities of the Corporation to the Bank by grant, security
interest, assignment, lien, deed of trust or mortgage upon any real or personal
property, tangible or intangible of the Corporation;


 


(e)                                  Issue
a warrant or warrants to purchase the Corporation’s capital stock; and


 


(f)                                    Execute
and deliver in form and content as may be required by the Bank any and all
notes, evidences of Indebtedness, applications for letters of credit,
guaranties, subordination agreements, loan and security agreements, financing
statements, assignments, liens, deeds of trust, mortgages, trust receipts and
other agreements, instruments or documents to carry out the purposes of these
Resolutions, any or all of which may relate to all or to substantially all of
the Corporation’s property and assets.


 


2.                                       Said
Bank be and it is authorized and directed to pay the proceeds of any such loans
or discounts as directed by the persons so authorized to sign, whether so
payable to the order of any of said persons in their individual capacities or
not, and whether such proceeds are deposited to the individual credit of any of
said persons or not;


 


3.                                       Any
and all agreements, instruments and documents previously executed and acts and
things previously done to carry out the purposes of these Resolutions are
ratified, confirmed and approved as the act or acts of the Corporation.


 


4.                                       These
Resolutions shall continue in force, and the Bank may consider the holders of
said offices and their signatures to be and continue to be as set forth in a
certified copy of these Resolutions delivered to the Bank, until notice to the
contrary in writing is duly served on the Bank (such notice to have no effect
on any action previously taken by the Bank in reliance on these Resolutions).


 


1

















 


5.                                       Any
person, corporation or other legal entity dealing with the Bank may rely upon a
certificate signed by an officer of the Bank to effect that these Resolutions
and any agreement, instrument or document executed pursuant to them are still
in full force and effect and binding upon the Corporation.


 


6.                                       The
Bank may consider the holders of the offices of the Corporation and their
signatures, respectively, to be and continue to be as set forth in the
Certificate of the Secretary of the Corporation until notice to the contrary in
writing is duly served on the Bank.


 


I further certify that the above Resolutions are in
full force and effect as of the date of this Certificate; that these
Resolutions and any borrowings or financial accommodations under these
Resolutions have been properly noted in the corporate books and records, and
have not been rescinded, annulled, revoked or modified; that neither the
foregoing Resolutions nor any actions to be taken pursuant to them are or will
be in contravention of any provision of the articles of incorporation or bylaws
of the Corporation or of any agreement, indenture or other instrument to which
the Corporation is a party or by which it is bound; and that neither the
certificate of incorporation nor bylaws of the Corporation nor any agreement,
indenture or other instrument to which the Corporation is a party or by which
it is bound require the vote or consent of shareholders of the Corporation to
authorize any act, matter or thing described in the foregoing Resolutions.


 


I further certify that the following named persons
have been duly elected to the offices set opposite their respective names, that
they continue to hold these offices at the present time, and that the
signatures which appear below are the genuine, original signatures of each
respectively:


 


(PLEASE SUPPLY GENUINE SIGNATURES
OF AUTHORIZED SIGNERS BELOW)


 


	
  NAME (Type or Print)

  	
   

  	
  TITLE

  	
   

  	
  SIGNATURE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


In Witness Whereof, I have affixed my name as
Secretary and have caused the corporate seal (where available) of said
Corporation to be affixed on November 3, 2005.


 


	
   

  	
   

  
	
   

  	
  Secretary

  



 


 


The
Above Statements are Correct.                             SIGNATURE
OF OFFICER OR DIRECTOR OR, IF NONE, A SHAREHOLDER OTHER THAN SECRETARY WHEN
SECRETARY IS AUTHORIZED TO SIGN ALONE.


 


Failure to complete the above when the Secretary
is authorized to sign alone shall constitute a certification by the Secretary
that the Secretary is the sole Shareholder, Director and Officer of the
Corporation.


 


2

















 


COMERICA BANK

Member FDIC

ITEMIZATION OF AMOUNT FINANCED

DISBURSEMENT INSTRUCTIONS

(Term Loan)


 


Name(s): Reliant Technologies, Inc., a Delaware
corporation                                                                  Date:
November 3, 2005


 


	
   

  	
  $1,000,000 credited to deposit account No.           
  when Term Loan Advances are requested or disbursed to Borrower by cashiers
  check or wire transfer

  





Amounts paid to others on your behalf:


 


	
                                                  $

  	
  to Comerica Bank for Document Fee

  
	
   

  	
   

  
	
                                                  $

  	
  to Bank counsel fees and expenses

  
	
   

  	
   

  
	
                                                  $

  	
  to 

  
	
   

  	
   

  
	
                                                  $

  	
  to 

  
	
   

  	
   

  
	
                                                  $

  	
  TOTAL (AMOUNT FINANCED)

  



 


Upon consummation of this transaction, this document
will also serve as the authorization for Comerica Bank to disburse the loan
proceeds as stated above.


 


	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  



 

















 


AGREEMENT TO PROVIDE INSURANCE


 


	
  TO:                            COMERICA
  BANK

  attn:  Deni M. Snider, MC 4770

  75 E. Trimble Road

  San Jose, CA 95131

  	
  Date:  November
  3, 2005

  



  Borrower:    RELIANT
  TECHNOLOGIES,

  INC.

  



 


In
consideration of a loan in the amount of $5,000,000, secured by all tangible
personal property including inventory and equipment.


 


We
agree to obtain adequate insurance coverage to remain in force during the term
of the loan.


 


We
also agree to advise the below named agent to add Comerica Bank as the loss
payee on the Lender’s loss payable endorsement to our new or existing insurance
policy(s), and to furnish Bank at above address with a copy of such policy(s)
and endorsements and any subsequent renewal policies.


 


We
understand that the policy must contain:


 


1.                                       Fire
and extended coverage in an amount sufficient to cover:


 


The amount of the
loan, OR


 


All existing
encumbrances, whichever is greater,


 


2.                                       Lender’s
“Loss Payable” Endorsement Form 438 BFU in favor of Comerica Bank, or any other
form acceptable to Bank.


 


INSURANCE INFORMATION


 


	
  Insurance
  Co./Agent

  	
  Telephone No.:

  
	
   

  	
   

  
	
  Agent’s
  Address:

  	
   

  
	
   

  	
   

  
	
  Signature
  of Obligor:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature
  of Obligor:

  	
   

  	
   

  
				



 


 


	
  FOR BANK USE ONLY

  
	
   

  
	
  INSURANCE VERIFICATION: Date:

  	
   

  
	
   

  
	
  Person Spoken to:

  	
   

  
	
   

  
	
  Policy Number:

  	
   

  
	
   

  
	
  Effective From:

  	
   

  	
   To:

  	
   

  
	
   

  
	
  Verified by:

  	
   

  
								



 

















 


WAIVER AND THIRD
AMENDMENT TO LOAN AND SECURITY AGREEMENT


 


This
Waiver and Third Amendment to Loan and Security Agreement (this “Amendment”) is
entered into as of October 30, 2006 by and between COMERICA BANK (“Bank”) and
RELIANT TECHNOLOGIES, INC. (“Borrower”).


 


RECITALS


 


Borrower
and Bank are parties to that certain Loan and Security Agreement dated as of
August 26, 2004, as amended from time to time, including as amended by that
certain first Amendment to Loan and Security Agreement dated August 17, 2005,
that certain Waiver and Second Amendment to Loan and Security Agreement dated
as of November 3 2005, that certain waiver letter dated as August 10, 2006, and
that certain bilateral agreement dated as of August 21, 2006 (collectively, the
“Agreement”). The parties desire to amend the Agreement in accordance with the
terms of this Amendment.


 


NOW,
THEREFORE, the parties agree as follows:


 


1.                                       Any
and all initially-capitalized terms used in this Amendment without definition
shall have their respective meanings specified in the Agreement.


 


2.                                       Bank
hereby waives Borrower’s violation of Section 6.9 of the Agreement (Maximum Net
Loss covenant) for the quarter ended September 30, 2006 only. This waiver is
specific as to content and time, shall be limited precisely as written, and
shall not constitute a waiver of any other current or future Default or Event
of Default or breach of any covenant Contained in the Agreement or the terms
and conditions of any other Loan Documents. Bank expressly reserves all of its
various rights, remedies, powers and privileges under the Agreement and the
other Loan Documents due to any other Default or breach not waived herein.


 


3.                                       The
following defined terms in Section 1.1 of the Agreement hereby are amended and
restated as follows:


 


“‘Borrowing Base’ means
an amount equal to eighty percent (80%) of Eligible Accounts, and forty percent
(40%) of Eligible Inventory (provided, that Advances based upon Eligible
Inventory shall not exceed One Million Five Hundred Thousand Dollars
($1,500,000)), all as determined by Bank with reference to the most recent
Borrowing Base Certificate delivered by Borrower.”


 


“‘Cash’ means
unrestricted cash and cash equivalents held to accounts with Bank and/or
Comerica Securities (so long as such accounts are subject to a control
agreement acceptable to Bank), but excluding the cash security held by Bank for
that certain $176,882.94 standby letter of credit.”


 


“‘Liquidity’ means the
sum of (i) Cash, plus (2) net Accounts as determined by Bank with
reference to the most recent Borrowing Base Certificate delivered by Borrower.”


 


“‘Revolving Maturity Date’
means October 24, 2007.”


 


4.                                       The
following new defined terms are hereby added to Section 1.1 of the Agreement in
alphabetical order:


 


“‘Profitability’ means
net income after tax excluding non cash stock based compensation expenses, to
be calculated based on a quarterly basis until two consecutive quarters of
Profitability, at which time Profitability will be calculated based on trailing
twelve months basis.”


 


5.                                       In
connection with Borrower’s obligation to provide Bank with financial
projections pursuant to Section 6.3 of the Agreement, Borrower by November 30,
2006 shall deliver to Bank its financial projections (approved by Borrower’s
board of directors) for the 12 month period following the date of this
Amendment, with such projections to be in form and substance reasonably acceptable
to Bank.


 

















 


6.                                       Section
6.8 of the Agreement is hereby amended and restated in its entirety to read as
follows:


 


“6.8                           Alternative
Covenant Structure. Borrower at all times shall fulfill the requirements of
either Covenant Structure A or Covenant Structure B below:


 


(a)                                  Covenant Structure A:


 


(i)                                     Bank
Debt Liquidity Coverage. Borrower shall maintain at all times, measured as
of the last day of each calendar month, a ratio of Liquidity to all
Indebtedness to Bank of at least 1.25 to 1.00; and


 


(ii)                                  Profitability.
Borrower shall have Profitability (measured quarterly) for the respective
periods below in excess of the amount corresponding to such period:


 


	
  Quarter Ending

  	
   

  	
  Profitability

  
	
  December 31, 2006

  	
   

  	
  $

  	
  1

  
	
   

  	
   

  	
   

  
	
  Each quarter-ended period thereafter

  	
   

  	
  Amounts to be reasonably determined by Bank
  after January 15, 2007 based upon financial projections to be
  provided by Borrower to Bank prior to November 30, 2006.

  



 


OR


 


(b)                                 Covenant Structure B:


 


(i)                                     Bank
Debt/Cash Coverage. At all times commencing November 30, 2006, a ratio of
Cash to all Indebtedness to Bank of at least 1.15 to 1.00. Borrower covenants
transfer sufficient cash from UBS Warburg to be in compliance with this
covenant as of November 30, 2006.”


 


7.                                       Section
6.9 of the Agreement is hereby amended and restated in its entirety to read as
follows:


 


“6.9                           Intentionally
Omitted.”


 


8.                                       The
Bank’s primary notice address set forth in Section 10 of the Agreement is
hereby amended to read in its entirety as follows:


 


“if to Bank:                                                                                    Comerica
Bank

75 East Trimble Road, M/C 4770

San Jose, CA 95131

Attn: Manager

FAX (408) 451-8586”


 


9.                                       Sections
11 and 12 of the Agreement are hereby amended and restated to read in their
entirety to read as follows:


 


“11                              CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER.


 


This Agreement shall be governed by, and construed in
accordance with, the internal laws of the Sate of California, without regard to
principles of conflicts of law. Each of Borrower and Bank hereby submits to the
exclusive jurisdiction of the state and Federal courts located in the County of
Santa Clara, State of California. THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL


 


2

















 


ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN
CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE
UNDERSIGNED PARTIES.


 


12.                                 JUDICIAL
REFERENCE PROVISION.


 


12.1                           In
the event the Jury Trial Waiver set forth above is not enforceable, the parties
elect to proceed under this Judicial Reference Provision.


 


12.2                           With
the exception of the items specified in clause (c), below, any controversy,
dispute or claim (each, a “Claim”) between the parties arising out of or
relating to this Agreement or any other document, instrument or agreement
between the undersigned parties (collectively in this Section, the “Comerica
Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the California Code
of Civil Procedure (“CCP”), or their successor sections, which shall constitute
the exclusive remedy for the resolution of any Claim, including whether the
Claim is subject to the reference proceeding. Except as otherwise provided in
the Comerica Documents, venue for the reference proceeding will be in the state
or federal Court in the county or district where the real property involved in
the action, if any, is located or in the state or federal court in the county
or district where venue is otherwise appropriate under applicable law (the “Court”).


 


12.3                           The
matters that shall not be subject to a reference are the following:  (i) nonjudicial foreclosure of any security
interests in real or personal property, (ii) exercise of self-help remedies
(including, without limitation, set-off), (iii) appointment of a receiver and
(iv) temporary provisional or ancillary remedies, including, without
limitation, writs of attachment, writs of possession, temporary restraining
orders or preliminary injunctions). This reference provision does not limit the
right of any party to exercise or oppose any of the rights and remedies
described in clauses (i) and (ii) or to seek or oppose from a court of
competent jurisdiction any of the items described in clauses (iii) and (iv). The
exercise of, or opposition to, any of those items does not waive the right of
any party to a reference pursuant to this reference provision as provided
herein.


 


12.4                           The
referee shall be a retired judge or justice selected by mutual written
agreement of the parties. If the parties do not agree within ten (10) days of a
written request to do so by any party, then, upon request of any party, the
referee shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party
shall have one peremptory challenge to the referee selected by the Presiding
Judge of the Court (or his or her representative).


 


12.5                           The
parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause shown, to (i) set the matter
for a status and trial-setting conference within fifteen (15) days after the
date of selection of the referee, (ii) if practicable, try all issues of law or
fact within one hundred twenty (120) days after the date of the conference and
(iii) report a statement of decision within twenty (20) days after the matter
has been submitted for decision.


 


12.6                           The
referee will have power to expand or limit the amount and duration of discovery.
The referee may set or extend discovery deadlines or cutoffs for good cause,
including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered based upon good cause shown, no party
shall be entitled to “priority” in conducting discovery, depositions may by
taken by either party upon seven (7) days written notice, and all other
discovery shall be responded to within fifteen (15) days after service. All
disputes relating to discovery which cannot be resolved by the parties shall be
submitted to the referee whose decision shall be final and binding.


 


3

















 


12.7                           Except
as expressly set forth herein, the referee shall determine the manner in which
the reference proceeding is conducted including the time and place of hearings,
the order of presentation of evidence, and all other questions that arise with
respect to the course of the reference proceeding. All proceedings and hearings
conducted before the referee, except for trial, shall be conducted without a
court reporter, except that when any party so requests, a court reporter will
be used at any hearing conducted before the referee, and the referee will be
provided a courtesy copy of the transcript. The party making such a request
shall have the obligation to arrange for and pay the court reporter. Subject to
the referee’s power to award costs to the prevailing party, the parties will
equally share the cost of the referee and the court reporter at trial.


 


12.8                           The
referee shall be required to determine all issues in accordance with existing
case law and the statutory laws of the State of California. The rules of
evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or
summary adjudication. The referee shall issue a decision at the close of the
reference proceeding which disposes of all claims of the parties that are the
subject of the reference. Pursuant to CCP § 644, such decision shall be entered
by the Court as a judgment or an order in the same manner as if the action had
been tried by the Court and any such decision will be final, binding and
conclusive. The parties reserve the right to appeal from the final judgment or
order or from any appealable decision or order entered by the referee. The
parties reserve the right to findings of fact, conclusions of laws, a written
statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference proceeding
under this provision.


 


12.9                           If
the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or justice, in accordance with the California Arbitration Act § 1280 through §
1294.2 of the CCP as amended from time to time. The limitations with respect to
discovery set forth above shall apply to any such arbitration proceeding.


 


12.10                     THE PARTIES
RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER
THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS OWN
CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL
PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY,
DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO,
THIS AGREEMENT OR THE OTHER COMERICA DOCUMENTS.


 


10.                                 No
course of dealing on the part of Bank or its officers, nor any failure or delay
in the exercise of any right by Bank, shall operate as a waiver thereof, and
any single or partial exercise of any such right shall not preclude any later
exercise of any such right. Bank’s failure at any time to require strict
performance by a Borrower of any provision shall not affect any right of Bank
thereafter to demand strict compliance and performance. Any suspension or
waiver of a right must be in writing signed by an officer of Bank.


 


11.                                 Unless
otherwise defined, all initially capitalized terms in this Amendment shall be
as defined in the agreement. The Agreement, as amended hereby, shall be and
remain in full force and effect in accordance with its respective terms and
hereby is ratified and confirmed in all respects. Except as expressly set forth
herein, the execution, delivery, and performance of this Amendment shall not
operate as a waiver of, or as an amendment of, any right, power, or remedy of
Bank under the Agreement, as in effect prior to the date hereof.


 


12.                                 Borrower
represents and warrants that the Representations and Warranties contained in
the Agreement are true and correct in all material respects as of the date of
this Amendment, and that no Event of Default has occurred and is continuing.


 


13.                                 As
a condition to the effectiveness of this Amendment, Bank shall have received,
in form and substance satisfactory to Bank, the following:


 


4

















 


(a)                                  this
Amendment, duly executed by Borrower;


 


(b)                                 a
Certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Amendment;


 


(c)                                  all
reasonable Bank Expenses incurred through the date of this Amendment, which may
be debited from any of Borrower’s accounts; and


 


(d)                                 such
other documents, and completion of such other matters, as Bank may reasonably
deem necessary or appropriate.


 


14.                                 This
Amendment may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one instrument.


 


IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the first date above written.


 


	
   

  	
  RELIANT TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/Thomas Scannell

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA BANK

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Senior Vice President

  
						



 


5

















 


EXHIBIT C


 


BORROWING BASE
CERTIFICATE


 


	
  Borrower: RELIANT TECHNOLOGIES, INC.

  	
   

  	
  Lender: Comerica Bank

  
	
   

  	
   

  
	
  Commitment Amount: $4,000,000

  	
   

  



 


	
  ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Accounts
  Receivable Book Value as of    

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  2.

  	
  Additions
  (please explain on reverse)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  3.

  	
  TOTAL
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS
  RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Amounts over
  90 days due

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  5.

  	
  Balance of
  25% over 90 day accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  6.

  	
  Concentration
  Limits

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Foreign
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  8.

  	
  Governmental
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  9.

  	
  Contra
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  10.

  	
  Demo
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  11.

  	
  Intercompany/Employee
  Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  12.

  	
  Other
  (please explain on reverse)

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  13.

  	
  TOTAL
  ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  14.

  	
  Eligible
  Accounts (#3 minus #13)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  15.

  	
  LOAN VALUE
  OF ACCOUNTS (80% of #14)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INVENTORY

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  LOAN VALUE
  OF INVENTORY (40%; $1,500,000 max.)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Maximum Loan
  Amount

  	
   

  	
   

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  18.

  	
  Total Funds
  Available [Lesser of #17 or #15 plus #16]

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  19.

  	
  Present
  balance owing on Line of Credit

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  20.

  	
  RESERVE
  POSITION (#18 minus #19)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  



 


The undersigned represents and warrants that the
foregoing is true, complete and correct, and that the information reflected in
this Borrowing Base Certificate complies with the representations and
warranties set forth in the Loan and Security Agreement between the undersigned
and Comerica Bank.


 


	
  RELIANT TECHNOLOGIES, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signer

  
				



 


6

















 


EXHIBIT D


 


COMPLIANCE CERTIFICATE


 


TO:                                                                            COMERICA
BANK


 


FROM:                                                         RELIANT
TECHNOLOGIES, INC.


 


The
undersigned authorized Officer of RELIANT TECHNOLOGIES, INC. (“Borrower”),
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (as such agreement may be
amended, modified or supplemented from time to time, the “Agreement”), (i)
Borrower is in complete compliance for the period ending                                      
with all required covenants except as noted below and (ii) all representations
and warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.


 


Please indicate compliance status
by circling Yes/No under “Complies” column.


 


	
  REPORTING COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  COMPLIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Annual (CPA Audited - FY 2004)

  	
   

  	
  November 30, 2005

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Annual (CPA Audited - FY 2005 and thereafter)

  	
   

  	
  FYE within 120 days

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  A/R & A/P Agings, Borrowing Base Cert.

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  A/R and Inventory Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Total amount of Borrower’s cash and investments

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Total amount of Borrower’s cash and investments
  maintained with Bank

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
   

  	
  NO

  



 


	
  FINANCIAL COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  ACTUAL

  	
   

  	
  COMPLIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COMPLIANCE WITH EITHER COVENANT STRUCTURE A OR B

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  Structure A:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i)Minimum Bank Debt Liquidity Coverage (measured on
  a monthly basis); and

  	
   

  	
  1.25:1.00

  	
   

  	
                  :1.00

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  (ii) Profitability (measured on a quarterly basis):

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FQE 12/31/06

  	
   

  	
  $1

  	
   

  	
  $

  	
   

  	
  YES

  	
   

  	
  NO

  
	
  FQE thereafter

  	
   

  	
  $ To be reasonably determined by Bank

  	
   

  	
  $

  	
   

  	
  YES

  	
   

  	
  NO

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OR

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Structure B:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i) Bank Debt/Cash Coverage 

      (commencing November 30, 2006 and 

      at all times thereafter)

  	
   

  	
  1.15:1.00

  	
   

  	
                  :1.00

  	
   

  	
  YES

  	
   

  	
  NO

  



 


Comments Regarding Exceptions: 
See Attached.


 

















 


The Officer further acknowledges that at any time
Borrower is not in compliance with all the terms set forth in the Agreement,
including, without limitation, the financial covenants, no credit extensions
will be made.


 


Very truly yours,


 


 


	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
  Rec’d By:

  	
   

  	
   

  
	
  Authorized Signer

  	
  Date:

  	
   

  	
   

  
	
   

  	
  Reviewed By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Financial Compliance Status:                                       YES
  / NO

  



 














 


Corporation Resolutions and
Incumbency Certification

Authority to Procure Loans


 


I certify that I am the duly elected and qualified
Secretary of RELIANT TECHNOLOGIES, INC., and that the following is a true and
correct copy of resolutions duly adopted by the Board of Directors of the
Corporation in accordance with its bylaws and applicable statutes.


 


Copy of Resolutions:


 


Be it Resolved, That:


 


1.                                       Any
one (1) of the following                                         CEO,
CFO                                          (insert
titles only) of the Corporation are/is authorized, for, on behalf of, and in
the name of the Corporation to:


 


(a)                                  Negotiate
and procure loans, letters of credit and other credit or financial
accommodations from Comerica Bank (“Bank”), a Michigan banking corporation,
including, without limitation, that certain Loan and Security Agreement dated
as of August 26, 2004, as amended by that certain First Amendment to Loan and
Security Agreement dated August 17, 2005, that certain Waiver and Second
Amendment to Loan and Security Agreement, dated November 3, 2005, that certain waiver
letter dated as of August 10, 2006, that certain bilateral agreement dated as
of August 21, 2006, and that certain Waiver and Third Amendment to Loan and
Security Agreement dated as of October 30, 2006, and as may subsequently be
amended from time to time.


 


(b)                                 Discount
with the Bank, commercial or other business paper belonging to the Corporation
made or drawn by or upon third parties, without limit as to amount;


 


(c)                                  Purchase,
sell, exchange, assign, endorse for transfer and/or deliver certificates and/or
instruments representing stocks, bonds, evidences of Indebtedness or other
securities owned by the Corporation, whether or not registered in the name of
the Corporation;


 


(d)                                 Give
security for any liabilities of the Corporation to the Bank by grant, security
interest, assignment, lien, deed of trust or mortgage upon any real or personal
property, tangible or intangible of the Corporation;


 


(e)                                  Issue
a warrant or warrants to purchase the Corporation’s capital stock; and


 


(f)                                    Execute
and deliver in form and content as may be required by the Bank any and all
notes, evidences of Indebtedness, applications for letters of credit,
guaranties, subordination agreements, loan and security agreements, financing
statements, assignments, liens, deeds of trust, mortgages, trust receipts and
other agreements, instruments or documents to carry out the purposes of these
Resolutions, any or all of which may relate to all or to substantially all of
the Corporation’s property and assets.


 


2.                                       Said
Bank be and it is authorized and directed to pay the proceeds of any such loans
or discounts as directed by the persons so authorized to sign, whether so
payable to the order of any of said persons in their individual capacities or
not, and whether such proceeds are deposited to the individual credit of any of
said persons or not;


 


3.                                       Any
and all agreements, instruments and documents previously executed and acts and
things previously done to carry out the purposes of these Resolutions are
ratified, confirmed and approved as the act or acts of the Corporation.


 


4.                                       These
Resolutions shall continue in force, and the Bank may consider the holders of
said offices and their signatures to be and continue to be as set forth in a
certified copy of these Resolutions delivered to the


 

















 


Bank, until notice
to the contrary in writing is duly served on the Bank (such notice to have no
effect on any action previously taken by the Bank in reliance on these
Resolutions).


 


5.                                       Any
person, corporation or other legal entity dealing with the Bank may rely upon a
certificate signed by an officer of the Bank to effect that these Resolutions
and any agreement, instrument or document executed pursuant to them are still
in full force and effect and binding upon the Corporation.


 


6.                                       The
Bank may consider the holders of the offices of the Corporation and their
signatures, respectively, to be and continue to be as set forth in the
Certificate of the Secretary of the Corporation until notice to the contrary in
writing is duly served on the Bank.


 


I further certify that the above Resolutions are in
full force and effect as of the date of this Certificate; that these
Resolutions and any borrowings or financial accommodations under these
Resolutions have been properly noted in the corporate books and records, and
have not been rescinded, annulled, revoked or modified; that neither the
foregoing Resolutions nor any actions to be taken pursuant to them are or will
be in contravention of any provision of the articles of incorporation or bylaws
of the Corporation or of any agreement, indenture or other instrument to which
the Corporation is a party or by which it is bound; and that neither the
certificate of incorporation nor bylaws of the Corporation nor any agreement,
indenture or other instrument to which the Corporation is a party or by which
it is bound require the vote or consent of shareholders of the Corporation to
authorize any act, matter or thing described in the foregoing Resolutions.


 


I further certify that the following named persons
have been duly elected to the offices set opposite their respective names, that
they continue to hold these offices at the present time, and that the
signatures which appear below are the genuine, original signatures of each
respectively:


 


(PLEASE SUPPLY GENUINE SIGNATURES
OF AUTHORIZED SIGNERS BELOW)


 


	
  NAME (Type or Print)

  	
   

  	
  TITLE

  	
   

  	
  SIGNATURE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Eric
  Stang

  	
   

  	
   

  	
   

  	
  CEO

  	
   

  	
   

  	
   

  	
  /s/Eric
  Stang

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tom
  Scannell

  	
   

  	
   

  	
   

  	
  CFO

  	
   

  	
   

  	
   

  	
  /s/Thomas
  Scannell

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


In Witness Whereof, I have affixed my name as
Secretary and have caused the corporate seal (where available) of said
Corporation to be affixed on October 30, 2006.


 


	
   

  	
  /s/Thomas
  J. Scannell

  
	
   

  	
  Secretary

  



 


 


	
  The Above Statements are Correct.

  	
   

  
	
   

  	
  SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE, A
  SHAREHOLDER OTHER THAN SECRETARY WHEN SECRETARY IS AUTHORIZED TO SIGN ALONE.

  



 

















 


Failure
to complete the above when the Secretary is authorized to sign alone shall
constitute a certification by the Secretary that the Secretary is the sole
Shareholder, Director and Officer of the Corporation.


 

















 


 


FOURTH AMENDMENT TO LOAN
AND SECURITY AGREEMENT


 


This
Fourth Amendment to Loan and Security Agreement (this “Amendment”) is entered
into as of March 21, 2007, by and between Comerica Bank (“Bank”) and Reliant
Technologies, Inc. (“Borrower”).


 


RECITALS


 


Borrower
and Bank are parties to that certain Loan and Security Agreement dated as of
August 26, 2004, as amended from time to time, including as amended by that
certain First Amendment to Loan and Security Agreement dated August 17, 2005,
that certain Waiver and Second Amendment to Loan and Security Agreement dated
as of November 3, 2005, that certain waiver letter dated as August 10, 2006,
that certain bilateral agreement dated as of August 21, 2006, and that certain
Waiver and Third Amendment to Loan and Security Agreement dated as of October
30, 2006 (collectively, the “Agreement”). The parties desire to amend the
Agreement in accordance with the terms of this Amendment.


 


NOW,
THEREFORE, the parties agree as follows:


 


1.                                       Any and all initially-capitalized terms
used in this Amendment without definition shall have their respective meanings
specified in the Agreement.


 


2.                                       The following defined terms in Section
1.1 of the Agreement hereby are amended and restated as follows:


 


“‘Liquidity’ means the
sum of (1) Cash, plus (2) net Eligible Accounts as determined by Bank
with reference to the most recent Borrowing Base Certificate delivered by
Borrower.”


 


“‘Net Income’ means
positive net income after tax excluding non-cash stock based compensation
expenses, to be calculated based on a trailing three months basis.”


 


“‘Net Loss’ means
negative net income after tax excluding non-cash stock based compensation
expenses, to be calculated based on a trailing three months basis.”


 


3.                                       The following defined term is hereby
deleted from Section 1.1 of the Agreement:


 


“‘Profitability’ means
positive net income after tax excluding non cash stock based compensation
expenses, to be calculated based on a trailing three months basis.”


 


4.                                       Section 6.8 of the Agreement is hereby
amended and restated in its entirety to read as follows:


 


“6.8                           Alternative
Financial Covenant Structure. Borrower at all times shall fulfill each
of either Covenant Structure A or Covenant Structure B below:


 


(a)                                  Covenant Structure A:


 


(i)                                     Bank
Debt Liquidity Coverage. Borrower shall maintain at all times, measured as
of the last day of each calendar month, a ratio of Liquidity to all
Indebtedness to Bank of at least 1.25 to 1.00; and


 


(ii)                                  (Net
Loss)/Income. As measured as of the last day of each quarter ending period
below, Borrower shall not suffer a Net Loss (if applicable) in excess of the
Net Loss amount corresponding to the applicable quarter ending period below or
Borrower shall achieve Net Income (if applicable) of not less than the Net
Income amount corresponding to the applicable quarter ending period below: 


 


1

















 




	
  Quarter Ending

  	
   

  	
  (Net Loss)/Net Income

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  (5,800,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  (2,000,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  (2,500,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  2,600,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Each quarter-ending period thereafter

  	
   

  	
  Amounts to be reasonably determined by Bank after
  January 15, 2008 based upon financial projections to be provided by Borrower
  to Bank prior to November 30, 2007.

  	
   

  






 


OR


 


(b)                                 Covenant Structure B:


 


(i)                                     Bank
Debt/Cash Coverage. Borrower shall maintain at all times, commencing
November 30, 2006, a ratio of Cash to all Indebtedness to Bank of at least 1.15
to 1.00. Borrower covenants to transfer sufficient cash from UBS Warburg to be
in compliance with this covenant as of November 30, 2006.


 


5.                                       Borrower’s and Bank’s addresses for
notices set forth in Section 10 of the Agreement are hereby amended in their entirety
to read as follows:


 


	
  “If to Borrower:

  	
  Reliant Technologies, Inc.

  
	
   

  	
  464 Ellis Street

  
	
   

  	
  Mountain View, CA 94043

  
	
   

  	
  Attn: Chief Financial Officer

  
	
   

  	
  FAX: (650) 605-2061

  
	
   

  	
   

  
	
  If to Bank:

  	
  Comerica Bank

  
	
   

  	
  75 E. Trimble Road, M/C 4770

  
	
   

  	
  San Jose, CA 95131

  
	
   

  	
  Attn: Manager

  
	
   

  	
  FAX: (408) 451-8586

  
	
   

  	
   

  
	
  With a copy to:

  	
  Comerica Bank

  
	
   

  	
  11943 El Camino Real,
  Suite 110B

  
	
   

  	
  San Diego, CA 92130

  
	
   

  	
  Attn: Killu Sanborn

  
	
   

  	
  FAX: (858) 509-2365”

  



 


6.                                       The reference to “clause (c)” in Section
12.2 is hereby changed to refer to and mean “Section 12.3”.


 


7.                                       Exhibit D (Compliance Certificate) to the Agreement is deleted
and replaced with Exhibit D attached hereto.


 


8.                                       No course of dealing on the part of Bank
or its officers, nor any failure or delay in the exercise of any right by Bank,
shall operate as a waiver thereof, and any single or partial exercise of any
such right shall not preclude any later exercise of any such right. Bank’s
failure 


 


2

















 


at any time to require
strict performance by a Borrower of any provision shall not affect any right of
Bank thereafter to demand strict compliance and performance. Any suspension or
waiver of a right must be in writing signed by an officer of Bank.


 


9.                                       Unless otherwise defined, all initially
capitalized terms in this Amendment shall be as defined in the Agreement. The
Agreement, as amended hereby, shall be and remain in full force and effect in
accordance with its respective terms and hereby is ratified and confirmed in
all respects. Except as expressly set forth herein, the execution, delivery,
and performance of this Amendment shall not operate as a waiver of, or as an
amendment of, any right, power, or remedy of Bank under the Agreement, as in
effect prior to the date hereof.


 


10.                                 Borrower represents and warrants that the
Representations and Warranties contained in the Agreement arc true and correct
in ail material respects as of the date of this Amendment, and that no Event of
Default has occurred and is continuing.


 


11.                                 As a condition to the effectiveness of
this Amendment, Bank shall have received, in form and substance satisfactory to
Bank, the following:


 


(a)                                  this Amendment, duly executed by
Borrower;


 


(b)                                 a Corporation Resolutions and Incumbency
Certification authorizing the execution and delivery of this Amendment;


 


(c)                                  all reasonable Bank Expenses incurred
through the date of this Amendment, which may be debited from any of Borrower’s
accounts; and


 


(d)                                 such other documents, and completion of
such other matters, as Bank may reasonably deem necessary or appropriate.


 


12.                                 This Amendment may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.


 


In
Witness Whereof, the undersigned have executed this Amendment as of the first
date above written.


 


	
   

  	
  RELIANT TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas J. Scannell

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP Finance and CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMERICA BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis Kim

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Corporate Banking Officer

  
					



 


3

















 


EXHIBIT D


 


COMPLIANCE CERTIFICATE


 


TO:                                                                            COMERICA
BANK


 


FROM:                                                         RELIANT
TECHNOLOGIES, INC.


 


The
undersigned authorized Officer of RELIANT TECHNOLOGIES, INC. (“Borrower”),
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (as such agreement may be
amended, modified or supplemented from time to time, the “Agreement”), (i)
Borrower is in complete compliance for the period ending                               
with all required covenants except as noted below and (ii) all representations
and warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.


 


Please indicate compliance status
by circling Yes/No under “Complies” column.


 


	
  REPORTING COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  COMPLIES

  
	
  Monthly financial statements and Compliance
  Certificate

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
  NO

  
	
  Annual (CPA Audited – FY 2005 and thereafter)

  	
   

  	
  FYE within 120 days

  	
   

  	
  YES

  	
  NO

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  YES

  	
  NO

  
	
  A/R & A/P Agings, Borrowing Base Cert.

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
  NO

  
	
  A/R and Inventory Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  YES

  	
  NO

  
	
  Total amount of Borrower’s cash and investments

  	
   

  	
  Amount $         

  	
   

  	
  YES

  	
  NO

  
	
  Total amount of Borrower’s cash and investments
  maintained with Bank

  	
   

  	
  Amount $         

  	
   

  	
  YES

  	
  NO

  



 


1

















 


	
  FINANCIAL COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  ACTUAL

  	
   

  	
  COMPLIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COMPLIANCE WITH APPLICABLE COVENANT STRUCTURE A
  OR B

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  YES

  	
  NO

  
	
  Covenant Structure A:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i) Minimum Bank Debt Liquidity Coverage, measured
  on a monthly basis; and

  	
   

  	
  1.25:1.00

  	
   

  	
               :1.00

  	
   

  	
  YES

  	
  NO

  
	
  (ii) (Net Loss)/Net Income (measured on a quarterly
  basis):

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FQE
  03/31/07

  	
   

  	
  ($5,800,000)

  	
   

  	
  $

  	
   

  	
  YES

  	
  NO

  
	
  FQE
  06/30/07

  	
   

  	
  ($2,000,000)

  	
   

  	
  $

  	
   

  	
  YES

  	
  NO

  
	
  FQE
  09/30/07

  	
   

  	
  ($2,500,000)

  	
   

  	
  $

  	
   

  	
  YES

  	
  NO

  
	
  FQE
  12/31/07

  	
   

  	
  $2,600,000

  	
   

  	
  $

  	
   

  	
  YES

  	
  NO

  
	
  FQEs
  thereafter

  	
   

  	
  $To be reasonably determined by Bank

  	
   

  	
  $

  	
   

  	
  YES

  	
  NO

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OR

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Covenant Structure B:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Bank Debt/Cash Coverage, measured at all
  times, commencing 11/30/06

  	
   

  	
  1.15:1.00

  	
   

  	
               :1.00

  	
   

  	
  YES

  	
  NO

  



 


Comments Regarding Exceptions:  See Attached.


 


The Officer further acknowledges that at any time
Borrower is not in compliance with all the terms set forth in the Agreement,
including, without limitation, the financial covenants, no credit extensions
will be made.


 


Very truly yours,


 


 


	
   

  	
   

  	
  BANK USE ONLY

  
	
  Authorized Signer

  	
   

  	
  Rec’d By:

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Reviewed By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Financial Compliance
  Status:           YES
  / NO

  
							



 


2

















 


Corporation Resolutions and
Incumbency Certification


Authority to Procure Loans


 


I certify that I am the duty elected and qualified
Secretary of RELIANT TECHNOLOGIES, INC., and that the following is a true and
correct copy of resolutions duly adopted by the Board of Directors of the
Corporation in accordance with its bylaws and applicable statutes.


 


Copy of Resolutions:


 


Be it Resolved, That:


 


13.                                 Any one (1) of the following CEO, CFO
(insert titles only) of the Corporation are/is authorized, for, on behalf of,
and in the name of the Corporation to:


 


(a)                                  Negotiate and procure loans, letters of
credit and other credit or financial accommodations from Comerica Bank
(“Bank”), a Michigan banking corporation, including, without limitation, that
certain Loan and Security Agreement dated as of August 26, 2004, as amended by
that certain First Amendment to Loan and Security Agreement dated August 17,
2005, that certain Waiver and Second Amendment to Loan and Security Agreement
dated November 3, 2005, that certain waiver letter dated as of August 10, 2006,
that certain bilateral agreement dated as of August 21, 2006, that certain
Waiver and Third Amendment to Loan and Security Agreement dated as of October
30, 2006, and that certain Fourth Amendment to Loan and Security Agreement
dated as of March 21, 2007, and as may subsequently be amended from time to
time.


 


(b)                                 Discount with the Bank, commercial or
other business paper belonging to the Corporation made or drawn by or upon
third parties, without limit as to amount;


 


(c)                                  Purchase, sell, exchange, assign, endorse
for transfer and/or deliver certificates and/or instruments representing
stocks, bonds, evidences of Indebtedness or other securities owned by the
Corporation, whether or not registered in the name of the Corporation;


 


(d)                                 Give security for any liabilities of the
Corporation to the Bank by grant, security interest, assignment, lien, deed of
trust or mortgage upon any real or personal property, tangible or intangible of
the Corporation;


 


(e)                                  Issue a warrant or warrants to purchase
the Corporation’s capital stock; and


 


(f)                                    Execute and deliver in form and content
as may be required by the Bank any and all notes, evidences of Indebtedness,
applications for letters of credit, guaranties, subordination agreements, loan
and security agreements, financing statements, assignments, liens, deeds of
trust, mortgages, trust receipts and other agreements, instruments or documents



 

















 


to
carry out the purposes of these Resolutions, any or all of which may relate to
all or to substantially all of the Corporation’s property and assets.


 


14.                                 Said Bank be and it is authorized and
directed to pay the proceeds of any such loans or discounts as directed by the
persons so authorized to sign, whether so payable to the order of any of said
persons in their individual capacities or not, and whether such proceeds are
deposited to the individual credit of any of said persons or not;


 


15.                                 Any and all agreements, instruments and
documents previously executed and acts and things previously done to carry out
the purposes of these Resolutions are ratified, confirmed and approved as the
act or acts of the Corporation.


 


16.                                 These Resolutions shall continue in
force, and the Bank may consider the holders of said offices and their
signatures to be and continue to be as set forth in a certified copy of these
Resolutions delivered to the Bank, until notice to the contrary in writing is
duly served on the Bank (such notice to have no effect on any action previously
taken by the Bank in reliance on these Resolutions).


 


17.                                 Any person, corporation or other legal
entity dealing with the Bank may rely upon a certificate signed by an officer
of the Bank to effect that these Resolutions and any agreement, instrument or
document executed pursuant to them arc still in full force and effect and
binding upon the Corporation.


 


18.                                 The Bank may consider the holders of the
offices of the Corporation and their signatures, respectively, to be and
continue to be as set forth in the Certificate of the Secretary of the
Corporation until notice to the contrary in writing is duly served on the Bank.


 


I further certify that the above Resolutions arc in
full force and effect as of the date of this Certificate; that these
Resolutions and any borrowings or financial accommodations under these
Resolutions have been properly noted in the corporate books and records, and
have not been rescinded, annulled, revoked or modified; that neither the
foregoing Resolutions nor any actions to be taken pursuant to them arc or will
be in contravention of any provision of the articles of incorporation or bylaws
of the Corporation or of any agreement, indenture or other instrument to which
the Corporation is a party or by which it is bound; and that neither the
certificate of incorporation nor bylaws of the Corporation nor any agreement,
indenture or other instrument to which the Corporation is a party or by which
it is bound require the vote or consent of shareholders of the Corporation to
authorize any act, matter or thing described in the foregoing Resolutions.


 

















 


I further certify that the following named persons
have been duly elected to the offices set opposite their respective names, that
they continue to hold these offices at the present time, and that the
signatures which appear below are the genuine, original signatures of each
respectively:


 


(PLEASE SUPPLY GENUINE SIGNATURES
OF AUTHORIZED SIGNERS BELOW)


 


	
  NAME (Type or Print)

  	
   

  	
  TITLE

  	
   

  	
  SIGNATURE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eric Stang

  	
   

  	
  CEO

  	
   

  	
  /s/ Eric Stang

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thomas Scannell

  	
   

  	
  CFO

  	
   

  	
  /s/ Thomas Scannell

  



 


In Witness Whereof, I have affixed my name as
Secretary and have caused the corporate seal (where available) of said
Corporation to be affixed on March     , 2007.


 


	
   

  	
  /s/ Thomas J. Scannell

  
	
   

  	
  Asst. Secretary

  



 


	
  The Above Statements are Correct.

  	
   

  
	
   

  	
  SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE, A
  SHAREHOLDER OTHER THAN SECRETARY WHEN SECRETARY IS AUTHORIZED TO SIGN ALONE.

  



 


Failure
to complete the above when the Secretary is authorized to sign alone shall
constitute a certification by the Secretary that the Secretary is the sole
Shareholder, Director and Officer of the Corporation.


 

















 


EXHIBIT C


 


BORROWING BASE
CERTIFICATE


 


	
  Borrower: RELIANT TECHNOLOGIES, INC.

  	
   

  	
  Lender: Comerica Bunk

  



 


Commitment Amount: 
$4,000,000


 


	
  ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Accounts Receivable Book Value as of 

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  2.

  	
  Additions (please explain on reverse)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  3.

  	
  TOTAL ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS
  RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Amounts over 90 days due

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  5.

  	
  Balance of 25% over 90 day accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  6.

  	
  Concentration Limits

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Foreign Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  8.

  	
  Governmental Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  9.

  	
  Contra Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  10.

  	
  Demo Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  11.

  	
  Intercompany/Employee Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  12.

  	
  Other (please explain on reverse)

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  13.

  	
  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  14

  	
  Eligible Accounts (#3 minus #13)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  15.

  	
  LOAN VALUE Of ACCOUNTS (80% of #14)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INVENTORY

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  LOAN VALUE
  OF INVENTORY (40%: $1,500,000 max)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Maximum Loan Amount

  	
   

  	
   

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  18.

  	
  Total Funds Available [Lesser of #17 or #15 plus
  #16]

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  19.

  	
  Present balance owing on Line of Credit

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  20.

  	
  RESERVE POSITION (#18 minus #19)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  



 


The undersigned represents and warrants that the
foregoing is true, complete and correct, and that the information reflected in
this Borrowing Base Certificate complies with the representations and
warranties set forth in the Loan and Security Agreement between the undersigned
and Comerica Bank.


 


RELIANT TECHNOLOGIES, INC


 


	
  By:

  	
   

  	
   

  
	
  Authorized
  Signer

  	
   

  



 

















 


EXHIBIT D


 


COMPLIANCE CERTIFICATE


 


	
  TO:

  	
  COMERICA BANK

  
	
   

  	
   

  
	
  FROM:

  	
  RELIANT
  TECHNOLOGIES, INC.

  



 


The
undersigned authorized Officer of RELIANT TECHNOLOGIES, INC. (“Borrower”),
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (as such agreement may be
amended, modified or supplemented from time to time, the “Agreement”), (i)
Borrower is in complete compliance for the period ending
                                   
with all required covenants except as noted below and (ii) all representations
and warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.


 


Please indicate compliance status
by circling Yes/No under “Complies” column.


 


	
  REPORTING COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  COMPLIES

  
	
  Monthly financial statements

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
  NO

  
	
  Annual (CPA Audited – FY 2004)

  	
   

  	
  November 30, 2005

  	
   

  	
  YES

  	
  NO

  
	
  Annual (CPA Audited – FY 2005 and thereafter)

  	
   

  	
  FYE within 120 days

  	
   

  	
  YES

  	
  NO

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  YES

  	
  NO

  
	
  A/R & A/P Agings, Borrowing Base Cert.

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
  NO

  
	
  A/R and Inventory Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  YES

  	
  NO

  
	
  Total amount of Borrower’s cash and investments

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
  NO

  
	
  Total amount of Borrower’s cash and investments
  maintained with Bank

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
  NO

  



 

















 


	
  FINANCIAL COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  ACTUAL

  	
   

  	
  COMPLIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COMPLIANCE WITH EITHER COVENANT STRUCTURE A OR B

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  YES

  	
  NO

  
	
  Structure A:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i) Minimum Bank Debt Liquidity Coverage (measured
  on a monthly basis); and

  	
   

  	
  1.25:1.00

  	
   

  	
            :1.00

  	
   

  	
  YES

  	
  NO

  
	
  (ii) Profitability (measured on a quarterly basis):

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FQE
  12/31/06

  	
   

  	
  $1

  	
   

  	
  $

  	
   

  	
  YES

  	
  NO

  
	
  FQEs
  thereafter

  	
   

  	
  $ To be reasonably determined by Bank

  	
   

  	
  $

  	
   

  	
  YES

  	
  NO

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OR

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Structure B:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i) Bank Debt/Cash Coverage (commencing November 30,
  2006 and at all times thereafter)

  	
   

  	
  1.15:1.00

  	
   

  	
            :1.00

  	
   

  	
  YES

  	
  NO

  



 


Comments Regarding Exceptions:  See Attached.


 


The Officer further acknowledges that at any time
Borrower is not in compliance with all the terms set forth in the Agreement,
including, without limitation, the financial covenants, no credit extensions
will be made.


 


Very truly yours,


 


 


	
   

  	
   

  	
  BANK USE ONLY

  
	
  Authorized Signer

  	
   

  	
  Rec’d By:

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Reviewed By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Financial Compliance
  Status:           YES
  / NO

  
							



 

















 


FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT


 


This
Fifth Amendment to Loan and Security Agreement (this “Amendment”) is entered
into as of August 9, 2007, by and between COMERICA BANK (“Bank”) and RELIANT
TECHNOLOGIES, INC. (“Borrower”).


 


RECITALS


 


Borrower
and Bank are parties to that certain Loan and Security Agreement dated as of
August 26, 2004, as amended from time to time including (but not limited to) by
that certain waiver letter dated December 6, 2004, that certain waiver letter
dated August 9, 2005, that certain First Amendment to Loan and Security
Agreement dated as of August 17, 2005, that certain Waiver and Second Amendment
to Loan and Security Agreement dated as of November 3, 2005, that certain
waiver letter dated as of August 10, 2006, that certain Waiver and Third
Amendment to Loan and Security Agreement dated as of October 30, 2006, that
certain waiver letter dated as of November 20, 2006, that certain waiver letter
dated as of March 19, 2007, that certain Fourth Amendment to Loan and Security
Agreement dated as of March 21, 2007, that certain waiver letter dated as of
May 23, 2007 and that certain waiver letter dated as of July 16, 2007 (the
“Agreement”). The parties desire to amend the Agreement in accordance with the
terms of this Amendment.


 


NOW,
THEREFORE, the parties agree as follows:


 


1.                                       The following defined terms in Section
1.1 of the Agreement hereby are added, amended or restated as follows:


 


“Borrowing
Base” means an amount equal to (i) eighty percent (80%) of Eligible Accounts,
(ii) forty percent (40%) of Primary Eligible Inventory (provided that Advances
based on Primary Eligible Inventory shall not exceed fifty percent (50%) of all
Advances outstanding at any time) and (iii) twenty percent (20%) of Secondary
Eligible Inventory (provided that Advances based on Secondary Eligible
Inventory shall not exceed Five Hundred Thousand Dollars ($500,000) at any
time), all as determined by Bank with reference to the most recent Borrowing
Base Certificate delivered by Borrower.


 


“Eligible
Inventory” means Primary Eligible Inventory and Secondary Eligible Inventory.


 


“Permitted
Accounts” means accounts held at financial institutions in Japan and the United
Kingdom with aggregate balances not to exceed One Hundred Thousand Dollars
($100,000).


 


“Primary
Eligible Inventory” means those Inventory items held at Borrower’s Mountain
View location which are (i) finished products or (ii) raw materials that could
become finished products within seventy two (72) hours and in all cases which
Bank has not reasonably determined are obsolete and which are approved by Bank
for inclusion in the Borrowing Base which approval shall not be unreasonably
withheld.


 


“Revolving
Line” means a credit extension of up to Eight Million Dollars ($8,000,000).


 


“Revolving
Maturity Date” means October 24, 2008.


 


“Secondary
Eligible Inventory” means those Inventory items not held at Borrower’s Mountain
View location which are finished products and in all cases (i) which Bank has
not reasonably determined are obsolete and which are approved by Bank for inclusion
in the Borrowing Base which approval shall not be unreasonably withheld and
(ii) as to which Bank is listed on Borrower’s insurance policy as loss payee
with respect to any such Inventory items that are lost, damaged or stolen.


 


“Tangible
Net Worth” means at any date as of which the amount thereof shall be
determined, the sum of the capital stock of Borrower and its Subsidiaries
(including preferred stock), plus the aggregate amount of Subordinated Debt
from Pinnacle Ventures plus all preferred stock warrant liabilities associated
with FSP 150-5 minus intangible assets, determined in accordance with GAAP.


 


2.                                       The second paragraph of Section 6.3 of
the Agreement is hereby amended and restated in its entirety to read as
follows:


 

















 


“Borrower shall deliver to
Bank a Borrowing Base Certificate signed by a Responsible Officer in
substantially the form of Exhibit C hereto, together with aged listings by
invoice date of accounts receivable and accounts payable no later than (i)
thirty (30) days after the last day of each month if there are Four Million
Dollars ($4,000,000) or less of Advances outstanding or (ii) by Friday of each
of week if there are more than Four Million Dollars ($4,000,000) of Advances
outstanding.”


 


3.                                       Section 6.7 of the Agreement is hereby
amended and restated in its entirety to read as follows:


 


“6.7                           Accounts. Borrower shall maintain all its depository and operating accounts
with Bank, and all its investment accounts with Bank or Bank’s Affiliates
subject to account control agreements in form and substance acceptable to Bank;
provided however, Borrower will have thirty days (30) days from August 9, 2007
to transfer all investment accounts from Deutsche Bank Alex Brown to Bank or
Bank’s Affiliates.”


 


4.                                       Section 6.8 of the Agreement is hereby
amended and restated in its entirety to read as follows:


 


“6.8                           Financial Covenants. Borrower shall at all times maintain the
following financial ratios and covenants:


 


(a)                                  Minimum
Cash at Bank or Bank’s Affiliates. A balance of Cash at Bank or Bank’s Affiliates
subject to account control agreements in favor of Bank of not less than Two
Million Dollars ($2,000,000).


 


(b)                                 Tangible
Net Worth. A Tangible Net Worth of not less than (i) Six Million Dollars
($6,000,000) plus (ii) fifty percent (50%) of the net proceeds from the sale of
Borrower’s equity securities after August 9, 2007.”


 


5.                                       Exhibit C to the Agreement is hereby
replaced with Exhibit C attached hereto.


 


6.                                       Exhibit D to the Agreement is hereby
replaced with Exhibit D attached hereto.


 


7.                                       No course of dealing on the part of Bank
or its officers, nor any failure or delay in the exercise of any right by Bank,
shall operate as a waiver thereof, and any single or partial exercise of any
such right shall not preclude any later exercise of any such right. Bank’s
failure at any time to require strict performance by Borrower of any provision
shall not affect any right of Bank thereafter to demand strict compliance and
performance. Any suspension or waiver of a right must be in writing signed by
an officer of Bank.


 


8.                                       Unless otherwise defined, all initially
capitalized terms in this Amendment shall be as defined in the Agreement. The
Agreement, as amended hereby, shall be and remain in full force and effect in
accordance with its respective terms and hereby is ratified and confirmed in
all respects. Except as expressly set forth herein, the execution, delivery,
and performance of this Amendment shall not operate as a waiver of, or as an
amendment of, any right, power, or remedy of Bank under the Agreement, as in
effect prior to the date hereof.


 


9.                                       Borrower represents and warrants that the
Representations and Warranties contained in the Agreement are true and correct
in all material respects as of the date of this Amendment, and that no Event of
Default has occurred and is continuing.


 


10.                                 As a condition to the effectiveness of
this Amendment, Bank shall have received, in form and substance satisfactory to
Bank, the following:


 


(a)                                  this
Amendment, duly executed by Borrower;


 


(b)                                 a
Certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Amendment;


 


(c)                                  an
amendment fee in the amount of Twenty Thousand Dollars ($20,000), which may be
debited from any of Borrower’s accounts;


 

















 


(d)                                 an
Affirmation and Amendment of Subordination and Intercreditor Agreement executed
by each Pinnacle Ventures entity which holds Subordinated Debt;


 


(e)                                  Evidence
that Borrower has received a Five Million Dollars ($5,000,000) Commitment in
Subordinated Debt from Pinnacle Ventures;


 


(f)                                    all
reasonable Bank Expenses incurred through the date of this Amendment, which may
be debited from any of Borrower’s accounts; and


 


(g)                                 such
other documents, and completion of such other matters, as Bank may reasonably
deem necessary or appropriate.


 


11.                                 This Amendment may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.


 


IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the first
date above written.


 


	
   

  	
  RELIANT TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew Galligan

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  
	
   

  	
  COMERICA BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis Kim

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Corporate Banking Officer

  
				



 


 


[Signature
Page to Fifth Amendment to Loan & Security Agreement]


 

















 


EXHIBIT C


 


BORROWING BASE CERTIFICATE


 


	
  Borrower: 
  RELIANT TECHNOLOGIES, INC.

   

  Commitment Amount: 
  $8,000,000

  	
  Lender:  Comerica Bank

  



 


	
  ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Accounts Receivable Book Value as of 

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  2.

  	
  Additions (please explain on reverse)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  3.

  	
  TOTAL ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS
  RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Amounts over 90 days due

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  5.

  	
  Balance of 25% over 90 day accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  6.

  	
  Concentration Limits

  	
   

  	
  $

  	
          

  	
   

  	
   

  	
   

  
	
  7.

  	
  Foreign Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  8.

  	
  Governmental Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  9.

  	
  Contra Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  10.

  	
  Demo Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  11.

  	
  Intercompany/Employee Accounts

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  12.

  	
  Other (please explain on reverse)

  	
   

  	
  $

  	
             

  	
   

  	
   

  	
   

  
	
  13.

  	
  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  14.

  	
  Eligible Accounts (#3 minus #13)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  15.

  	
  LOAN VALUE OF ACCOUNTS (80% of #14)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INVENTORY

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  LOAN VALUE
  OF INVENTORY (40% of Primary Eligible Inventory (50% of all Advances max) and
  20% of Secondary Eligible Inventory ($500,000 max)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Maximum Loan Amount

  	
   

  	
   

  	
   

  	
  $

  	
  8,000,000

  	
   

  
	
  18.

  	
  Total Funds Available [Lesser of #17 or #15 plus
  #16]

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  19.

  	
  Present balance owing on Line of Credit

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
	
  20.

  	
  RESERVE POSITION (#18 minus #19)

  	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  
										



 


The undersigned represents and warrants that the
foregoing is true, complete and correct, and that the information reflected in
this Borrowing Base Certificate complies with the representations and
warranties set forth in the Loan and Security Agreement between the undersigned
and Comerica Bank.


 


 


RELIANT TECHNOLOGIES, INC.


 


 


	
  By:

  	
   

  	
   

  
	
  Authorized
  Signer

  	
   

  



 

















 


EXHIBIT D


 


COMPLIANCE CERTIFICATE


 


TO:                                                    COMERICA
BANK


 


FROM:                                 RELIANT TECHNOLOGIES,
INC.


 


The undersigned authorized Officer of RELIANT
TECHNOLOGIES, INC. (“Borrower”), hereby certifies that in accordance with the
terms and conditions of the Loan and Security Agreement between Borrower and
Bank (as such agreement may be amended, modified or supplemented from time to
time, the “Agreement”), (i) Borrower is in complete compliance for the period
ending                              
with all required covenants except as noted below and (ii) all representations
and warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.


 


Please indicate compliance status
by circling Yes/No under “Complies” column.


 


	
  REPORTING COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  COMPLIES

  
	
  Monthly financial statements

  	
   

  	
  Monthly, within 30 days

  	
   

  	
  YES

  	
  NO

  
	
  Annual (CPA Audited – FY 2006)

  	
   

  	
  October 31, 2007

  	
   

  	
  YES

  	
  NO

  
	
  Annual (CPA Audited – FY 2007 and thereafter)

  	
   

  	
  FYE within 120 days

  	
   

  	
  YES

  	
  NO

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  YES

  	
  NO

  
	
  A/R & A/P Agings, Borrowing Base Cert.

  	
   

  	
  Monthly, within 30 days OR Weekly if outstanding
  Advances over $4,000,000

  	
   

  	
  YES

  	
  NO

  
	
  A/R and Inventory Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  YES

  	
  NO

  
	
  Total amount of Borrower’s cash and investments

  	
   

  	
  Amount $

  	
   

  	
  YES

  	
  NO

  
	
  Total amount of Borrower’s cash and investments
  maintained with Bank or Bank’s Affiliates

  	
   

  	
  Amount: greater of (i) All cash and investments or (ii)
  $2,000,000

  	
   

  	
  YES

  	
  NO

  



 


	
  FINANCIAL COVENANTS

  	
   

  	
  REQUIRED

  	
   

  	
  ACTUAL

  	
   

  	
  COMPLIES

  
	
  Tangible Net Worth

  	
   

  	
  $6,000,000 plus 50% of new equity issuances

  	
   

  	
  $

  	
   

  	
  YES

  	
  NO

  



 


The Officer further acknowledges that at any time
Borrower is not in compliance with all the terms set forth in the Agreement,
including, without limitation, the financial covenants, no credit extensions
will be made.


 


Very truly yours,


 


	
   

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
  Rec’d By:

  	
   

  	
   

  
	
  Authorized Signer

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Reviewed By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Financial Compliance
  Status:           YES
  / NO

  
						



 

















 


Corporation Resolutions and
Incumbency Certification

Authority to Procure Loans


 


I certify that I am the duly elected and qualified
Secretary of RELIANT TECHNOLOGIES, INC.; that the following is a true and
correct copy of resolutions duly adopted by the Board of Directors of the
Corporation in accordance with its bylaws and applicable statutes.


 


Copy of Resolutions:


 


Be it Resolved, That:


 


1.                                       Any one (1) of the following
                                 
(insert titles only) of the Corporation are/is authorized, for, on behalf of,
and in the name of the Corporation to:


 


(a)                                  Negotiate
and procure loans, letters of credit and other credit or financial
accommodations from Comerica Bank (“Bank”), a Michigan banking corporation, including,
without limitation, that certain Loan and Security Agreement dated as of August
26, 2004, as amended from time to time including by that certain waiver letter
dated December 6, 2004, that certain waiver letter dated August 9, 2005, that
certain First Amendment to Loan and Security Agreement dated as of August 17,
2005, that certain Waiver and Second Amendment to Loan and Security Agreement
dated as of November 3, 2005, that certain waiver letter dated as of August 10,
2006, that certain Waiver and Third Amendment to Loan and Security Agreement
dated as of October 30, 2006, that certain waiver letter dated as of November
20, 2006, that certain waiver letter dated as of March 19, 2007, that certain
Fourth Amendment to Loan and Security Agreement dated as of March 21, 2007,
that certain waiver letter dated as of May 23, 2007 and that certain waiver
letter dated as of July 16, 2007 and that certain Fifth Amendment to Loan and
Security Agreement dated as of August 9, 2007.


 


(b)                                 Discount
with the Bank, commercial or other business paper belonging to the Corporation
made or drawn by or upon third parties, without limit as to amount;


 


(c)                                  Purchase,
sell, exchange, assign, endorse for transfer and/or deliver certificates and/or
instruments representing stocks, bonds, evidences of Indebtedness or other
securities owned by the Corporation, whether or not registered in the name of
the Corporation;


 


(d)                                 Give
security for any liabilities of the Corporation to the Bank by grant, security
interest, assignment, lien, deed of trust or mortgage upon any real or personal
property, tangible or intangible of the Corporation; and


 


(e)                                  Execute
and deliver in form and content as may be required by the Bank any and all
notes, evidences of Indebtedness, applications for letters of credit,
guaranties, subordination agreements, loan and security agreements, financing
statements, assignments, liens, deeds of trust, mortgages, trust receipts and
other agreements, instruments or documents to carry out the purposes of these
Resolutions, any or all of which may relate to all or to substantially all of
the Corporation’s property and assets.


 


2.                                       Said Bank be and it is authorized and
directed to pay the proceeds of any such loans or discounts as directed by the
persons so authorized to sign, whether so payable to the order of any of said
persons in their individual capacities or not, and whether such proceeds are
deposited to the individual credit of any of said persons or not;


 


3.                                       Any and all agreements, instruments and
documents previously executed and acts and things previously done to carry out
the purposes of these Resolutions are ratified, confirmed and approved as the
act or acts of the Corporation.


 

















 


4.                                       These Resolutions shall continue in
force, and the Bank may consider the holders of said offices and their
signatures to be and continue to be as set forth in a certified copy of these
Resolutions delivered to the Bank, until notice to the contrary in writing is
duly served on the Bank (such notice to have no effect on any action previously
taken by the Bank in reliance on these Resolutions).


 


5.                                       Any person, corporation or other legal
entity dealing with the Bank may rely upon a certificate signed by an officer
of the Bank to effect that these Resolutions and any agreement, instrument or
document executed pursuant to them are still in full force and effect and
binding upon the Corporation.


 


6.                                       The Bank may consider the holders of the
offices of the Corporation and their signatures, respectively, to be and
continue to be as set forth in the Certificate of the Secretary of the
Corporation until notice to the contrary in writing is duly served on the Bank.


 


I further certify that the above Resolutions are in
full force and effect as of the date of this Certificate; that these
Resolutions and any borrowings or financial accommodations under these
Resolutions have been properly noted in the corporate books and records, and
have not been rescinded, annulled, revoked or modified; that neither the
foregoing Resolutions nor any actions to be taken pursuant to them are or will
be in contravention of any provision of the articles of incorporation or bylaws
of the Corporation or of any material agreement, indenture or other instrument
to which the Corporation is a party or by which it is bound; and that neither
the articles of incorporation nor bylaws of the Corporation nor any agreement,
indenture or other instrument to which the Corporation is a party or by which
it is bound require the vote or consent of shareholders of the Corporation to
authorize any act, matter or thing described in the foregoing Resolutions.


 


I further certify that the following named persons
have been duly elected to the offices set opposite their respective names, that
they continue to hold these offices at the present time, and that the
signatures which appear below are the genuine, original signatures of each
respectively:


 


(PLEASE SUPPLY GENUINE SIGNATURES
OF AUTHORIZED SIGNERS BELOW)


 


	
  NAME (Type or Print)

  	
   

  	
  TITLE

  	
   

  	
  SIGNATURE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


In Witness Whereof, I have affixed my name as
Secretary and have caused the corporate seal (where available) of said
Corporation to be affixed on August 9, 2007.


 


	
   

  	
   

  
	
   

  	
  Secretary

  



 


 


	
  The Above Statements are Correct.

  	
   

  
	
   

  	
  SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE. A 

  SHAREHOLDER OTHER THAN SECRETARY WHEN SECRETARY IS

  AUTHORIZED TO SIGN ALONE.

  



 


Failure to complete the above when the Secretary
is authorized to sign alone shall constitute a certification by the Secretary
that the Secretary is the sole Shareholder, Director and Officer of the
Corporation.


 

















 


AGREEMENT TO PROVIDE INSURANCE


 


	
  TO:                            COMERICA
  BANK

  Attn:  Lead Insurance Reviewer

  75 E. Trimble Road

  San Jose, CA 95131

  	
  Date:  August
  9, 2007

   

   

  Borrower:             RELIANT TECHNOLOGIES, INC.

  



 


In
consideration of a loan in the amount of $8,704,660,85, secured by all tangible
personal property including inventory and equipment.


 


I/We
agree to obtain adequate insurance coverage to remain in force during the term
of the loan.


 


I/We
also agree to advise the below named agent to add Comerica Bank as lender’s
loss payable on the new or existing insurance policy, and to furnish Bank at
above address with a copy of said policy/endorsements and any subsequent
renewal policies.


 


I/We
understand that the policy must contain:


 


1.                                       Fire and extended coverage in an amount
sufficient to cover:


 


(a)                                  The
amount of the loan, OR


 


(b)                                 All
existing encumbrances, whichever is greater,


 


But
not in excess of the replacement value of the improvements on the real
property.


 


2.                                       Lender’s “Loss Payable” Endorsement Form
438 BFU in favor of Comerica Bank, or any other form acceptable to Bank.


 


INSURANCE INFORMATION


 


	
  Insurance Co./Agent

  	
  Telephone No.:

  



 


Agent’s Address:


 


	
  Signature
  of Obligor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  of Obligor:

  	
   

  	
   

  



 


	
  FOR BANK USE ONLY

   

  INSURANCE VERIFICATION:  Date:

   

  Person Spoken to:

   

  Policy Number:

   

  Effective From:
                
  To:

   

  Verified by: