Document:

<PAGE>   1
                                                                   EXHIBIT 10.17

                           LOAN AND SECURITY AGREEMENT

Agreement No. __________                             Dated as of April 7, 2000

                                  by and among

                           MMC/GATX PARTNERSHIP NO. I
                              as agent and a lender

                               SILICON VALLEY BANK
                          as payment agent and a lender

                                 COMDISCO, INC.

                                       And
                          OPTICAL MICRO-MACHINES, INC.
                          9645 Scranton Road, Suite 140
                               San Diego, CA 92121
                                   as borrower

                           CREDIT AMOUNT: $10,000,000

                                    Commitment Amount    Commitment Percentage

MMC/GATX Partnership No. I              $4,000,000       40%
Comdisco, Inc.                          $4,000,000       40%
Silicon Valley Bank                     $2,000,000       20%

Repayment Period:                   36 months

Treasury Note Maturity:             36 months

Loan Margin:                        275 basis points

Final Payment Percentage:           12%

                 Commitment Termination Date: February 28, 2001

        The terms and information set forth on this cover page are a part of the
attached Loan and Security Agreement, dated as of the date first written above
(this "Agreement"), entered into by and among MMC/GATX Partnership No. I
("MMC/GATX"), in its individual capacity, Silicon Valley Bank ("SVB"), in its
individual capacity, Comdisco, Inc., in its individual capacity ("Comdisco"),
(each individually a "Lender" and collectively, "Lenders"), MMC/GATX as agent,
not individually, SVB as payment agent, not individually, and Optical
Micro-Machines, Inc. ("Borrower"). The terms and conditions of this Agreement
agreed to between the parties hereto are as follows:

<PAGE>   2

                                    AGREEMENT

        1. Definitions and Construction.

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

        "Affiliate" means any Person that owns or controls directly or
indirectly ten percent or more of the stock of another entity, any Person that
controls or is controlled by or is under common control with such Persons or any
Affiliate of such Persons or each of such Person's officers, directors, joint
venturers or partners.

        "Agent" means MMC/GATX, not in its individual capacity, but solely in
its capacity as agent on behalf of and for the benefit of Lenders and any
successor agent.

        "Agent's Expenses" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, documentation, administration, funding, and
enforcement of the Loan Documents; and Agent's reasonable attorneys' fees and
expenses incurred in amending, enforcing or defending the Loan Documents,
(including fees and expenses of appeal or review, or those incurred in any
insolvency proceeding) whether or not suit is brought.

        "Agreement" shall mean this Loan and Security Agreement, as the same may
from time to time be amended or supplemented.

        "Basic Rate" means, as of the relevant Funding Date, the per annum rate
of interest (based on a year of twelve 30-day months) equal to the sum of (a)
the U.S. Treasury note yield to maturity for a term equal to the Treasury Note
Maturity as quoted in the Western edition of The Wall Street Journal on the date
the Loan Agreement Supplement is prepared, plus (b) the Loan Margin.

        "Borrower" shall have the meaning set forth on the cover page hereof.

        "Business Day" means any day that is not a Saturday, Sunday, or other
day on which banking institutions are authorized or required to close in
California.

        "Closing Date" means the date that each of the conditions precedent
listed in Section 3.1 has been satisfied or waived in writing by Lenders.

        "Code" means the Uniform Commercial Code as adopted and in effect in the
State of California, as amended from time to time.

        "Collateral" has the meaning given that term in Section 4.1, including,
without limitation, all Financed Equipment listed in any Loan Agreement
Supplement executed from time to time pursuant to Section 4.2.

        "Comdisco" means Comdisco, Inc.

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        "Commitment Fee" has the meaning given that term in Section 2.7.

        "Commitment Termination Date" means the date following such term on the
cover page of this Agreement.

        "Commitment" or "Commitment Amount" means with respect to each Lender
the amount set forth following such term on the cover page of this Agreement
under the column titled "Commitment Amount" and "Commitments" means all such
amounts collectively.

        "Commitment Percentage" means with respect to each Lender, the
percentage set forth on the cover page of this Agreement under the column titled
"Commitment Percentage."

        "Credit Amount" means the amount set forth following such term on the
cover page of this Agreement.

        "Default" means any event which with the passing of time or the giving
of notice or both would become an Event of Default hereunder.

        "Default Rate" means the per annum rate of interest equal to 4% over the
rate at which the Basic Rate and the Final Payment amortize the Loan.

        "Disclosure Schedule" shall mean Schedule 1 attached hereto.

        "Eligible Equipment" shall mean, to the extent reasonably acceptable to
Lenders, New Equipment consisting of computer equipment, laboratory test and
measurement equipment, office equipment and furnishings.

        "Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from Property,
whether or not owned by Borrower, or (b) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.

        "Environmental Laws" means all foreign, federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act and the Emergency Planning and
Community Right-to-Know Act.

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<PAGE>   4

        "Equity Securities" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other equity
interests in and of such Person (regardless of how designated and whether or not
voting or non-voting) and (b) all warrants, options and other rights to acquire
any of the foregoing.

        "Event of Default" has the meaning given to such term in Section 8.

        "Event of Loss" has the meaning given to that term in Section 6.10.

        "Final Payment" means, with respect to each Loan, a payment (in addition
to and not in substitution for the regular monthly payments of principal and
accrued interest) due on the Maturity Date for such Loan equal to the Loan
Amount for such Loan multiplied by the Final Payment Percentage.

        "Final Payment Percentage" means the percentage set forth following such
term on the cover page of this Agreement.

        "Financed Equipment" has the meaning given to that term in Exhibit A to
any Loan Agreement Supplement, as amended or supplemented from time to time.

        "Funding Date" means any date on which a Loan is made to or on account
of Borrower under this Agreement.

        "Governmental Authority" means (a) any federal, state, county, municipal
or foreign government, or political subdivision thereof, (b) any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to whose jurisdiction that Person has consented.

        "Hazardous Materials" means all those substances which are regulated by,
or which may form the basis of liability under, any Environmental Law, including
all substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.

        "Interim Payment" means, with respect to each Loan, an amount equal to
the initial Loan Amount multiplied by the percentage equal to the product of (i)
the quotient derived from dividing the initial Loan Factor with respect to such
Loan by 30, and (ii) the number of days from (and including) the Funding Date of
such Loan to (but not including) the first Payment Date with respect to such
Loan.

        "Intellectual Property" shall mean all of Borrower's right, title and
interest in and to patents, patent rights (and applications and registrations
therefor), trademarks and service marks (and applications and registrations
therefor), inventions, copyrights, mask works (and applications and
registrations therefor), trade names, trade styles, software and computer
programs, trade secrets, methods, processes, know how, drawings, specifications,
descriptions, and all memoranda, notes, and records with respect to any research
and development, all whether now owned or subsequently acquired or developed by
Borrower and whether in tangible or

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<PAGE>   5

intangible form or contained on magnetic media readable by machine together with
all such magnetic media.

        "Landlord Agreement" means an agreement substantially in the form of
Exhibit E or such other form as Lenders may agree to accept.

        "Lenders" shall have the meaning set forth on the cover page hereof.

        "Lenders' Expenses" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, documentation, administration, funding, and
enforcement of the Loan Documents; and Lenders' reasonable attorney's fees and
expenses incurred in amending, modifying, enforcing or defending the Loan
Documents, including the exercise of any rights or remedies afforded hereunder
or under applicable law, whether or not suit is brought.

        "Lien" means any security interest, pledge, bailment, lease, mortgage,
hypothecation, conditional sales and title retention agreement, encumbrance or
other lien with respect to the Property in favor of any Person.

        "Loan" means each advance of credit by Lenders to Borrower under this
Agreement in accordance with their Commitment Percentage.

        "Loan Agreement Supplement" means a supplement to this Agreement in
substantially the form of Exhibit C.

        "Loan Amount" means, with respect to each Loan, as of any date, the
original principal amount of such Loan less prepayments pursuant to Section
6.10.

        "Loan Documents" means, collectively, this Agreement, each Loan
Agreement Supplement (including each Loan Terms Schedule), the Warrants, the
Landlord Agreements and all other documents, instruments and agreements entered
into in connection with this Agreement, all as amended or extended from time to
time.

        "Loan Factor" means, with respect to each Loan, the amount set forth as
a percentage in the Loan Terms Schedule with respect to such Loan, calculated
using the Basic Rate applicable to such Loan.

        "Loan Margin" means the number of basis points set forth following such
term on the cover page of this Agreement.

        "Loan Terms Schedule" means, with respect to each Loan, Annex B to the
Loan Agreement Supplement prepared by Lenders in connection with such Loan.

        "Maturity Date" means, with respect to each Loan, the last day of the
Repayment Period for such Loan, or if earlier, the date of acceleration of such
Loan by Lenders following an Event of Default.

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<PAGE>   6

        "Minimum Funding Amount" means $50,000.

        "MMC/GATX" means MMC/GATX Partnership No. I.

        "New Equipment" means Financed Equipment delivered to Borrower by the
manufacturer or vendor not more than ninety (90) days prior to the Funding Date
of the Loan relating to such Financed Equipment.

        "Obligations" means all debt, principal, interest, fees, charges,
expenses and attorneys' fees and costs and other amounts owing by Borrower to
Lenders or Agent of any kind and description pursuant to the Loan Documents,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, including the principal, interest and Final
Payment due with respect to the Loans, and further including all Lenders'
Expenses and Agent's Expenses that Borrower is required to pay or reimburse by
the Loan Documents, by law, or otherwise.

        "Other Equipment" means, to the extent reasonably acceptable to Lenders,
tenant improvements and buildout costs, software, tooling, equipment specially
manufactured for Borrower and other soft costs.

        "Payment Agent" means SVB, not in its individual capacity but solely in
its capacity as payment agent.

        "Payment Date" has the meaning given to that term in Section 2.2(a).

        "Permitted Liens" means the following:

               (a) The Lien created by this Agreement;

               (b) Liens existing as of the date of this Agreement which are
listed in the Disclosure Schedule;

               (c) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings and as to which full payment is bonded or adequate
reserves are maintained on Borrower's books in accordance with GAAP, provided
the same have no priority over any of Agent's security interests;

               (d) Liens of materialmen, mechanics, warehousemen, carriers, or
other similar liens accruing after the date hereof and in the ordinary course of
business or by operation of law or regulation and securing obligations not yet
due;

               (e) Easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property not constituting a material adverse effect;

               (f) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payments of customs duties in connection with the
importation of goods;

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<PAGE>   7

               (g) Liens that are not prior to the Lien of Agent which
constitute rights of set-off of a customary nature or banker's Liens with
respect to amounts on deposit, whether arising by operation of law or by
contract, in connection with arrangement entered in to with banks in the
ordinary course of business; and

               (h) Liens to secure payment of worker's compensation, employment
insurance, old age pensions or other social security obligations of Borrower in
the ordinary course of business of Borrower.

        "Person" means and includes any individual, any partnership, any
corporation, any business trust, any joint stock company, any limited liability
company, any unincorporated association or any other entity and any domestic or
foreign national, state or local government, any political subdivision thereof,
and any department, agency, authority or bureau of any of the foregoing.

        "Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.

        "Repayment Period" means the period beginning on the first Payment Date
and continuing for the Repayment Period set forth following such term on the
cover page of this Agreement.

        "Scheduled Payments" has the meaning given to such term in Section
2.2(a).

        "Stated Cost" means (i) with respect to Eligible Equipment, the original
cost to Borrower of the item of Eligible Equipment excluding any and all
freight, installation, taxes and other soft costs, and (ii) with respect to
Other Equipment, the original cost to Borrower of the item of Other Equipment
excluding any and all freight, installation, and taxes.

        "Stipulated Loan Value" means, with respect to each Loan, the percentage
set forth with respect to such Loan in the Loan Terms Schedule for such Loan,
determined as of the Payment Date on which payment of such amount is to be made,
or if such date is not a Payment Date, on the Payment Date immediately
succeeding such date.

        "Subsidiary" means any corporation, partnership, limited liability
company or similar organization of which a majority of the outstanding capital
stock entitled to vote for the election of directors or other managing body
(otherwise than as the result of a default) is owned by Borrower directly or
indirectly through Subsidiaries.

        "SVB" means Silicon Valley Bank.

        "Term" means the period from and after the date hereof until the payment
in full of all amounts and liabilities payable under this Agreement and the
other Loan Documents, including principal and interest on the Loans and the
Final Payment with respect to each Loan.

        "Treasury Note Maturity" means the periods of months set forth following
such terms on the cover page of this Agreement.

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<PAGE>   8

        "Warrants means separate warrants in favor of each of the Lenders to
purchase securities of Borrower substantially in the form of Exhibit B.

               1.2 Other Interpretive Provisions. References in this Agreement
to "Articles," "Sections," "Exhibits, "Schedules" and "Annexes" are to recitals,
articles, sections, exhibits, schedules and annexes herein and hereto unless
otherwise indicated. References in this Agreement and each of the other Loan
Documents to any document, instrument or agreement shall include (a) all
exhibits, schedules, annexes and other attachments thereto, (b) all documents,
instruments or agreements issued or executed in replacement thereof, and (c)
such document, instrument or agreement, or replacement or predecessor thereto,
as amended, modified and supplemented from time to time and in effect at any
given time. The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement or any other Loan Document shall refer to
this Agreement or such other Loan Document, as the case may be, as a whole and
not to any particular provision of this Agreement or such other Loan Document,
as the case may be. The words "include" and "including" and words or similar
import when used in this Agreement or any other Loan Document shall not be
construed to be limiting or exclusive. Unless otherwise indicated in this
Agreement or any other Loan Document, all accounting terms used in this
Agreement or any other Loan Document shall be construed, and all accounting and
financial computations hereunder or thereunder shall be computed, in accordance
with generally accepted accounting principles as in effect in the United States
of America from time to time.

        2. Loans; Repayment.

               2.1 Commitment.

                      (a) The Credit Amount. Subject to the terms and conditions
of this Agreement and relying upon the representations and warranties herein set
forth as and when made or deemed to be made, Lenders agree to lend to Borrower,
severally and not jointly, from time to time prior to the Commitment Termination
Date, the Loans according to each Lender's pro rata share of the Credit Amount
(based upon the respective Commitment of each Lender); provided that the
aggregate principal amount of the Loans shall not exceed the Credit Amount at
such time; provided, further that the aggregate original principal amount of all
Loans relating to Other Equipment shall not at any time exceed ten percent (10%)
of the then aggregate original principal amount of all Loans. Loans may not be
prepaid.

                      (b) Promissory Note. Each Loan Terms Schedule shall be
considered a promissory note evidencing the amounts due hereunder for all
purposes.

                      (c) Use of Proceeds. The proceeds of the Loans shall be
used solely for the purchase of Eligible Equipment or Other Equipment or
reimbursement to Borrower of, the Stated Cost of Eligible Equipment or Other
Equipment.

               2.2 Scheduled Payments; Payment of Interest; Final Payment; Loan
Fee.

                      (a) Scheduled Payments. Borrower shall make payments of
principal and interest in advance for each Loan (collectively, "Scheduled
Payments") as set forth in the Loan Terms Schedule, commencing on the date set
forth on the Loan Term Schedule applicable to

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<PAGE>   9

such Loan and continuing thereafter during the Repayment Period on the first
Business Day of each calendar month (each a "Payment Date"), in an amount equal
to the Loan Factor multiplied by the Loan Amount for such Loans as of such
Payment Date. In any event, all unpaid principal and accrued interest shall be
due and payable in full on the last Payment Date with respect to such Loan.

                      (b) Interim Payment. Unless the Funding Date for a Loan is
a Payment Date, Borrower shall pay the Interim Payment payable with respect to
such Loan on the Funding Date, as specified in the Loan Term Schedule applicable
to such Loan.

                      (c) Payment of Interest. Borrower shall pay interest on
each Loan at a per annum rate of interest equal to the Basic Rate specified in
the applicable Loan Agreement Supplement for such Loan. All computations of
interest on Loans shall be based on a year of twelve 30-day months.
Notwithstanding any other provision hereof, the amount of interest payable
hereunder to any Lender, including interest at the Default Rate, if applicable,
shall not in any event exceed the maximum amount permitted by law which a court
of competent jurisdiction shall deem applicable hereto (the "Maximum Rate"). If
the Borrower actually pays any Lender an amount of interest, chargeable on the
total aggregate principal Obligations of Borrower to such Lender under this
Agreement (as said rate is calculated over a period of time from the date of
this Agreement through the end of time that any principal is outstanding), which
amount of interest exceeds interest calculated at the Maximum Rate on said
principal chargeable over said period of time, then with respect to such Lender
such excess interest actually paid by Borrower shall be applied first, to the
payment of principal outstanding on the Loans payable to such Lender; second,
after all principal is repaid, to the payment of such Lender's out of pocket
costs, expenses, and professional fees which are owed by Borrower to such Lender
under this Agreement or the other Loan Documents; and third, after all
principal, costs, expenses, and professional fees owed by Borrower to such
Lender are repaid, the excess (if any) shall be refunded to Borrower, and the
effective rate of interest with respect to such Lender shall be automatically
reduced to the Maximum Rate.

                      (d) Final Payment. Unless a Loan is prepaid in full, on
the Maturity Date with respect to such Loan, Borrower shall pay, in addition to
any unpaid principal and accrued interest and all other amounts due on such date
with respect to such Loan, an amount equal to the Final Payment with respect to
such Loan.

                      (e) Termination of Commitment to Lend. Notwithstanding
anything in the Loan Documents, each Lender's obligation to lend the undisbursed
portion of the such Lender's Commitment to Borrower hereunder shall terminate on
the earlier of (i) at each Lender's sole election, the occurrence and
continuance of any Default or Event of Default hereunder, and (ii) the
Commitment Termination Date. Notwithstanding the foregoing, each Lender's
obligation to lend the undisbursed portion of such Lender's Commitment to
Borrower shall terminate if, in such Lender's sole judgment, there has been a
material adverse change in the general affairs, management, results of
operations, condition (financial or otherwise) of Borrower, whether or not
arising from transactions in the ordinary course of business, or there has been
any material adverse deviation by Borrower from the business plan of Borrower
presented to and not disapproved by Lenders, as updated from time to time.

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<PAGE>   10

               2.3 Other Payment Terms.

                      (a) Place and Manner. Borrower shall make all payments due
to Agent or Lenders in lawful money of the United States. All payments of
principal, interest, fees and other amounts payable by Borrower hereunder shall
be made, in immediately available funds, by debit to any account of Borrower
with Payment Agent not later than 10:00 a.m. California time, on the date on
which such payment is due. Borrower authorizes and directs SVB, as Payment
Agent, to debit the amount of each such payment to any account of Borrower
maintained with Payment Agent, and to disburse to each Lender its respective
share of such payment on each Payment Date or such other date that any payment
is due. Payment Agent shall disburse payments to MMC/GATX and Comdisco as
follows:

<TABLE>
<CAPTION>

        <S>                                   <C>
        MMC/GATX Payment
        ----------------
        GATX Capital Corporation
        Bank Name:                            Bank of America
        Bank Address:                         Dallas, Texas 75202
        Account No.:
        ABA Routing No.:
        Reference:                            Optical Micro-Machines Invoice
                                              #
                                               ---------------

        Comdisco Payment
        ----------------
        Comdisco, Inc.

        Bank Name:
        Account No.:
        Attention:
        ABA Routing No.:
        Reference:
</TABLE>

Any payment received by Agent, Payment Agent or any Lender for the account of
another Lender shall be paid promptly to such Lender, in like funds, for the
Loan in respect of which such payment is made.

                      (b) Date. Whenever any payment due hereunder shall fall
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of interest or fees, as the case may be.

                      (c) Default Rate. If either (i) any amounts required to be
paid by Borrower under this Agreement or the other Loan Documents (other than
the Warrants) (including principal, interest, the Final Payment payable with
respect to any Loan, and any fees or other amounts) remain unpaid after such
amounts are due, or (ii) an Event of Default has occurred and is continuing,
Borrower shall pay interest on the aggregate, outstanding balance hereunder from
the date due or from the date of the Event of Default, as applicable, until such

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<PAGE>   11

past due amounts are paid in full or until all Events of Default are cured, as
applicable, at a per annum rate equal to the Default Rate. All computations of
such interest shall be based on a year of twelve 30-day months.

               2.4 Procedure for Making Loans.

                      (a) Notice. Whenever Borrower desires that Lenders make a
Loan, Borrower shall be responsible for providing Agent with a list of equipment
proposed to be financed with such Loan together with such additional information
with respect to the Loan and the Eligible Equipment and the Other Equipment as
Agent shall reasonably request. Following the receipt by Agent of such
information in form and substance reasonably satisfactory to it, Agent shall
notify Borrower that the condition set forth in Section 3.2(b) has been met and
Borrower may then notify Agent in writing (or by telephone with prompt
confirmation in writing) of the date on which it desires Lenders to make such
Loan. Such notice shall (i) be made at least five (5) Business Days in advance
of the desired Funding Date, (ii) be irrevocable and (iii) request that Agent
prepare a Loan Agreement Supplement (including Loan Terms Schedule) for such
Loan, subject to Borrower's review and approval for mistakes (Borrower's
approval shall be evidenced by Borrower's execution of the Loan Agreement
Supplement). Within two (2) Business Days following receipt of such notice,
Agent shall notify each Lender by telephone or facsimile of the principal amount
(including such Lender's Commitment Percentage thereof) and Funding Date of the
Loan being requested by Borrower, and submit a Loan Agreement Supplement
(including Loan Terms Schedule) and UCC-1 financing statement with respect to
the Equipment for which financing is requested to Borrower for execution and
delivery to Agent. On or before noon California time on third (3rd) Business Day
following receipt of such notice, Borrower shall have duly executed and deliver
to Agent (via facsimile) the Loan Agreement Supplement (including Loan Terms
Schedule) and UCC-1 financing statement with respect to the Equipment for which
financing is requested. Borrower shall deliver the originally-executed Loan
Agreement Supplement (including Loan Terms Schedule) and UCC-1 financing
statement with respect to the Equipment for which financing is requested to
Agent at least one (1) Business Day before the Funding Date of the Loan
requested by Borrower. At least two (2) Business Days before the Funding Date of
the Loan requested by Borrower, Agent shall have delivered to Lenders a copy of
the Loan Agreement Supplement (including Loan Terms Schedule) executed by
Borrower and delivered to Agent via facsimile. Borrower's request for a Loan
shall be deemed to be a representation and warranty by Borrower that no Default
or Event of Default has occurred and is continuing, and that the representations
and warranties set forth in Section 5 are true and correct as of the time of
such notice as if made at such time. Subject to the terms and conditions of this
Agreement, as soon as practicable prior to 11:00 a.m. California Time on the
Funding Date specified in the Loan Terms Schedule, each Lender shall transfer an
amount equal to its Commitment Percentage multiplied by the amount of the Loan
to the account specified in Section 2.4(c) in immediately available funds. Each
Lender's obligation to make its Commitment Percentage of the Loan shall be
expressly subject to the satisfaction of the conditions set forth in Sections
3.1 and 3.2. Upon the request of any Lender, Agent shall deliver to such Lender
a copy of all UCC-1 financing statements filed or to be filed with respect to
any Equipment for which financing has been requested.

                      (b) Loan Factor and Stipulated Loan Value Calculation.
Prior to each Funding Date, Agent, on behalf of Lenders, shall establish the
Basic Rate, the Loan Factor and

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<PAGE>   12

Stipulated Loan Value with respect to such Loan. The Loan Factor shall be
calculated in a manner to fully amortize the Loan over the Repayment Period
applicable to such Loan in equal periodic installments of principal and
interest. The Loan Factor and Stipulated Loan Value applicable to each Loan
shall be set forth in the Loan Agreement Supplement to be executed by Borrower
with respect to each Loan and shall be conclusive in the absence of a manifest
error.

                      (c) Disbursement. Each Lender shall disburse its
Commitment Percentage of such Loan by wire transfer to Borrower at Silicon
Valley Bank, 3003 Tasman Drive, Santa Clara, CA 95054, Account No. ____________,
ABA Routing No. _________, Account Name: Optical Micro-Machines, Inc.,
Notwithstanding anything stated herein to the contrary, no Lender shall have any
obligation to advance funds on behalf of any other Lender.

               2.5 Prepayments.

                      (a) Prepayment Upon an Event of Loss. If any Financed
Equipment is subject to an Event of Loss and Borrower is required to or elects
to prepay the Loan with respect to such Financed Equipment, then such Loan shall
be prepaid to the extent and in the manner provided hereunder.

                      (b) Mandatory Prepayment Upon an Acceleration. If the
Loans are accelerated following the occurrence of an Event of Default or
otherwise (other than following an Event of Loss), then Borrower shall
immediately pay to Lenders (i) all unpaid Scheduled Payments with respect to
each Loan due prior to the date of prepayment, (ii) the Stipulated Loan Value
with respect to each Loan multiplied by the Loan Amount of such Loan, and (iii)
all other sums, if any, that shall have become due and payable hereunder.

                      (c) No Other Prepayment. Borrower may not prepay any Loan
except upon the occurrence of an event described in Section 2.5(a) or (b) above
in which event the prepayment shall be made as described in such sections.

               2.6 Minimum Funding Amount; Maximum Number of Fundings. Except
with the prior consent of Lenders, in Lenders' sole discretion, (i) there shall
not be more than one funding of a Loan in any one calendar month; and (ii) the
aggregate amount of the requested Loan shall not be less than the Minimum
Funding Amount.

               2.7 Commitment Fee; Expenses. Borrower has paid a commitment fee
in the amount of Fifty Thousand Dollars ($50,000) (the "Commitment Fee"). The
Commitment Fee, less an amount to pay Lenders' Expenses and Agent's Expenses in
connection with due diligence and the negotiation and documentation (including
filing and recording fees) of the Loan Documents, will be applied on a pro rata
basis to the final payment due by Borrower due on each Loan.

        3. Conditions of Loans.

               3.1 Conditions Precedent to Closing. At the time of the execution
and delivery of this Agreement, the Lenders shall have received, in form and
substance reasonably satisfactory to Lenders, all of the following:

                                       11

<PAGE>   13

                      (a) This Agreement duly executed by Borrower and each of
the Lenders.

                      (b) The separate Warrants to be issued to each Lender,
each duly executed by Borrower.

                      (c) The intercreditor agreement, in form and substance
satisfactory to Lenders, and duly executed by each of the Lenders.

                      (d) A certificate of the secretary or assistant secretary
of Borrower with copies of the following documents attached: (i) the articles of
incorporation and bylaws of Borrower certified by Borrower as being in full
force and effect on the Closing Date, (ii) incumbency and representative
signatures, and (iii) resolutions authorizing the execution and delivery of this
Agreement and each of the other Loan Documents.

                      (e) A good standing certificate from Borrower's state of
incorporation and the state in which Borrower's principal place of business is
located, together with certificates of the applicable governmental authorities
stating that Borrower is in compliance with the franchise tax laws of each such
state, each dated as of a recent date.

                      (f) Evidence of the insurance coverage required by Section
6.9 of this Agreement.

                      (g) All necessary consents of shareholders and other third
parties with respect to the execution, delivery and performance of this
Agreement, the Warrants and the other Loan Documents.

                      (h) A legal opinion of Borrower's counsel covering the
matters set forth in Exhibit D hereto.

                      (i) Such other documents, and completion of such other
matters, as Lenders may deem necessary or appropriate.

               3.2 Conditions Precedent to all Loans. The obligation of Lenders
to make each Loan, including the initial Loan, is further subject to the
following conditions:

                      (a) No Default or Event of Default shall have occurred and
be continuing.

                      (b) Borrower shall have provided to Agent, with respect to
the Eligible Equipment which is requested to be financed with the proceeds of
the Loan to be made on such Funding Date, such invoices, purchase orders, bills
of sale, serial numbers, agreements, canceled checks, and other documents as
Lenders shall reasonably request to evidence the ownership by Borrower of, the
payment in full of the purchase price of such Eligible Equipment, each in form
and substance reasonably satisfactory to Lenders.

                      (c) Borrower shall have provided to Agent, with respect to
the Other Equipment which is requested to be financed with the proceeds of the
Loan to be made on such Funding Date, such invoices, purchase orders, bills of
sale, agreements, canceled checks, and other documents as Lenders shall
reasonably request to evidence the ownership by Borrower of,

                                       12

<PAGE>   14

the payment in full of the purchase price of such Other Equipment, each in form
and substance reasonably satisfactory to Lenders.

                      (d) Borrower shall have provided Agent with the location
of each item of Financed Equipment and a Landlord Agreement for each such
location (unless Borrower is the fee owner thereof) from Borrower's lessor,
which has been duly executed by each of the parties thereto.

                      (e) Borrower, Agent and Lenders shall have executed a Loan
Agreement Supplement, including a Loan Terms Schedule and a list of Financed
Equipment with respect to the proposed Loan.

                      (f) Agent shall have received such documents, instruments
and agreements, including UCC financing statements or amendments to UCC
financing statements, as Agent shall reasonably request to evidence the
perfection and priority of the security interests granted to Agent, on behalf of
and for the benefit of Lenders, pursuant to Section 4.

                      (g) Borrower shall have delivered to Agent, on behalf of
Lenders, a release, or estoppel letter, as appropriate, from any Person having
an existing Lien superior to the Lien of Lenders on any item of Eligible
Equipment or Other Equipment which is requested to be financed.

                      (h) Such other documents, and completion of such other
matters, as Agent may deem necessary or appropriate.

               3.3 Covenant to Deliver. Borrower agrees (not as a condition but
as a covenant) to deliver to Agent each item required to be delivered to Agent
and/or Lenders as a condition to each Loan, if such Loan is advanced. Borrower
expressly agrees that the extension of such Loan prior to the receipt by Agent
or Lenders of any such item shall not constitute a waiver by Agent or Lenders of
Borrower's obligation to deliver such item, and any such extension in the
absence of a required item shall be in Lenders' sole discretion.

        4. Creation of Security Interest.

               4.1 Grant of Security Interest. Borrower grants to Agent on
behalf and for the benefit of Lenders, a valid, first priority, continuing
security interest in all presently existing and hereafter acquired or arising
Collateral in order to secure prompt, full and complete payment of any and all
Obligations and in order to secure prompt, full and complete performance by
Borrower of each of its covenants and duties under each of the Loan Documents.
The "Collateral" shall mean and include all right, title, interest, claims and
demands of Borrower in and to all of the following:

                All right, title, interest, claims and demands of Borrower in
        and to each and every item of equipment, fixtures or personal property,
        whether now owned or hereafter acquired, together with all
        substitutions, renewals or replacements of and additions, improvements,
        accessions, replacement parts and accumulations to any and all of such
        equipment, fixtures or personal property (collectively, the
        "Equipment"), together with all

                                       13

<PAGE>   15

        proceeds of Equipment, including, without limitation, insurance,
        condemnation, requisition or similar payments, and all proceeds from
        sales, renewals, releases or other dispositions of Equipment, which
        Equipment is financed with or is designated as collateral for the
        Obligations on and after the date of this Agreement by specifically
        designating such equipment, fixtures and personal property on a UCC
        financing statement listing Borrower as "debtor" and Agent or Lenders as
        "secured party."

               4.2 After-Acquired Property. All Financed Equipment which is
financed through Loans and any and all other Property generally described or
referred to as Collateral or Financed Equipment which is hereafter acquired by
Borrower shall ipso facto, and without any further conveyance, assignment or act
on the part of Borrower or Lenders, become and be subject to the security
interest herein granted as fully and completely as though specifically described
herein. The list of Financed Equipment shall be amended and supplemented on each
Funding Date by a Loan Agreement Supplement to incorporate all Financed
Equipment financed with the Loan advanced on such Funding Date; provided,
however, the failure to so amend and supplement the list of Financed Equipment
shall not affect the grant by Borrower to Lender of the security interest in
such Financed Equipment pursuant to this Section 4. This Agreement and the other
documents in connection herewith may be otherwise supplemented and amended from
time to time, as required by Lender, to reflect additional Collateral to be
subject to the security interest granted pursuant to this Section 4.

               4.3 Duration of Security Interest. Agent's security interest in
the Collateral shall continue until the payment in full and the satisfaction of
all Obligations, whereupon such security interest shall terminate; provided,
however, if any item of Financed Equipment is subject to an Event of Loss, then
following the prepayment of the Loan with respect to such item pursuant to
Section 2.5, Agent shall release its security interest in such item of Financed
Equipment. If the Loans relating to the financing of a particular Loan Terms
Schedule have been fully repaid, Agent shall, upon Borrower's written request,
release its security interest in specific items of Equipment listed on that Loan
Terms Schedule to facilitate Borrower's sale of such items of Equipment to third
parties. Agent shall, at Borrower's sole cost and expense, execute such further
documents and take such further actions as may be reasonably necessary to effect
the release contemplated by this Section 4.3, including duly executing and
delivering termination statements for filing in all relevant jurisdictions under
the Code.

               4.4 Location and Possession of Collateral. The Collateral is and
shall remain in the possession of Borrower at its location listed on the cover
page hereof. Borrower shall remain in full possession, enjoyment and control of
the Collateral (except only as may be otherwise required by Agent for perfection
of its security interest therein) and so long as no Event of Default has
occurred and is continuing, shall be entitled to manage, operate and use the
same and each part thereof with the rights and franchises appertaining thereto;
provided, however, that the possession, enjoyment, control and use of the
Collateral shall at all times be subject to the observance and performance of
the terms of this Agreement.

               4.5 Markings on the Collateral. At Agent's request at any time
during the Term of the Loan (including any extension thereof), Borrower shall
place in a conspicuous location on

                                       14

<PAGE>   16

each item of Financed Equipment a plaque or other marking to be supplied by
Lenders which reads substantially as follows:

        MMC/GATX PARTNERSHIP NO. I, as Agent for Lenders, Lienholder.

        Such plaque or other marking shall not be removed (or if removed or
damaged such plaque or other marking shall be replaced) until the security
interest in favor of Agent in such item of Collateral is terminated pursuant to
this Agreement.

               4.6 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Agent on behalf of Lenders, at the
request of Agent, all financing statements and other documents Agent may
reasonably request, in form satisfactory to Agent, to perfect and continue
Agent's perfected security interests in the Collateral and in order to
consummate fully all of the transactions contemplated under the Loan Documents.

               4.7 Right to Inspect. Each Lender (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, to inspect Borrower's books
and records and to make copies thereof and to inspect, 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.

        5. Representations and Warranties. Borrower represents, warrants and
covenants as follows:

               5.1 Due Organization and Qualification. Borrower is a corporation
duly organized and validly existing and in good standing under the laws of its
state of incorporation and qualified and licensed to do business in, and is in
good standing in, any state in which the conduct of its business or its
ownership of Property requires that it be so qualified or in which the
Collateral is located, except for such states as to which any failure to so
qualify would not have a material adverse effect on Borrower.

               5.2 Authority. Borrower has all necessary power and authority to
execute, deliver, and perform in accordance with the terms thereof, the Loan
Documents to which it is a party. Borrower has all requisite power and authority
to own and operate its properties and to carry on its businesses as now
conducted.

               5.3 Conflict with Other Instruments, etc. Neither the execution
and delivery of any Loan Document to which Borrower is a party nor the
consummation of the transactions therein contemplated nor compliance with the
terms, conditions and provisions thereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the articles of
incorporation and the by-laws, or other organizational documents of Borrower or
any law or any regulation, order, writ, injunction or decree of any court or
governmental instrumentality or any material agreement or instrument to which
Borrower is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject, or constitute a default thereunder or
result in the creation or imposition of any Lien, other than Permitted Liens.

               5.4 Authorization; Enforceability. The execution and delivery of
this Agreement, the granting of the security interest in the Collateral, the
incurring of the Loans, the execution

                                       15

<PAGE>   17

and delivery of the other Loan Documents to which Borrower is a party and the
consummation of the transactions herein and therein contemplated have each been
duly authorized by all necessary action on the part of Borrower. The Loan
Documents have been duly executed and delivered and constitute legal, valid and
binding obligations of Borrower, enforceable in accordance with their respective
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or other similar laws of general application relating to or affecting
the enforcement of creditors' rights or by general principles of equity.

               5.5 No Prior Encumbrances. Borrower has good and marketable title
to the Collateral, free and clear of Liens except for Permitted Liens.

               5.6 Name; Location of Chief Executive Office, Principal Place of
Business and Collateral. Borrower has not done business under any name other
than that specified on the signature page hereof. The chief executive office,
principal place of business, and the place where Borrower maintains its records
concerning the Collateral are presently located at the addresses set forth on
the cover page of this Agreement or as disclosed to the Lenders in writing. The
Collateral is presently located at the address set forth on the cover page
hereof, or as set forth in a Loan Agreement Supplement which is approved by
Agent.

               5.7 Litigation. There are no actions or proceedings pending by or
against Borrower before any court or administrative agency in which an adverse
decision could reasonably be expected to have a material adverse effect on
Borrower or the aggregate value of the Collateral. Borrower does not have
knowledge of any such pending or threatened actions or proceedings. Borrower
will promptly notify Lenders in writing if any action, proceeding or
governmental investigation involving Borrower is commenced that is reasonably
expected to result in damages or costs to Borrower of Fifty Thousand Dollars
($50,000) or more.

               5.8 Financial Statements. All financial statements relating to
Borrower or any Affiliate that have been or may hereafter be delivered by
Borrower to each Lender present fairly in all material respects Borrower's
financial condition as of the date thereof and Borrower's results of operations
for the period then ended, subject, in the case of unaudited statements, to year
end adjustments and footnote disclosures.

               5.9 Security Interest. Assuming the proper filing of one or more
financing statement(s) identifying the Collateral with the proper state and/or
local authorities, the security interests in the Collateral granted to Agent
pursuant to this Agreement (i) constitute and will continue to constitute first
priority security interests (except to the extent any Permitted Liens may have a
superior priority to Agent's Lien under this Agreement) and (ii) are and will
continue to be superior and prior to the rights of all other creditors of
Borrower (except to the extent of such Permitted Liens).

               5.10 Full Disclosure. No representation, warranty or other
statement made by Borrower in any Loan Document, certificate or written
statement furnished to Lenders or either of them 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.
There is no fact known to Borrower which materially adversely affects, or which

                                       16

<PAGE>   18

could in the future be reasonably expected to materially adversely affect, its
ability to perform its obligations under this Agreement.

        6. Affirmative Covenants. Borrower covenants and agrees that, until the
full and complete payment of the Obligations and the termination of the
Commitments, Borrower shall do all of the following:

               6.1 Good Standing. Borrower shall maintain its corporate
existence and its good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which the failure to so qualify
could reasonably be expected to have a material adverse effect on the financial
condition, operations or business of Borrower. Borrower shall maintain in force
all licenses, approvals and agreements, the loss of which could reasonably be
expected to have a material adverse effect on its financial condition,
operations or business.

               6.2 Government Compliance. Borrower shall comply with all
statutes, laws, ordinances and government rules and regulations to which it is
subject, noncompliance with which could reasonably be expected to materially
adversely affect the financial condition, operations or business of Borrower.

               6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to each Lender: (a) as soon as available, but in any event within
forty-five (45) days after the end of each month, a company prepared balance
sheet, income statement and cash flow statement covering Borrower's operations
during such period, certified by a Responsible Officer; (b) as soon as
available, but in any event within one hundred eighty (180) days after the end
of Borrower's fiscal year, audited financial statements of Borrower prepared in
accordance with generally accepted accounting principles, consistently applied,
together with an unqualified opinion on such financial statements of a
nationally recognized or other independent public accounting firm reasonably
acceptable to Agent; (c) as soon as available, but in any event within ninety
(90) days of year-end, unaudited internally prepared draft annual statements
(which may be without footnotes); and (d) such other financial information as
Lender may reasonably request from time to time. From and after such time as
Borrower becomes a publicly reporting company, promptly as they are available
and in any event: (x) at the time of filing of Borrower's Form 10-K with the
Securities and Exchange Commission after the end of each fiscal year of
Borrower, the financial statements of Borrower filed with such Form 10-K; and
(y) at the time of filing of Borrower's Form 10-Q with the Securities and
Exchange Commission after the end of each of the first three fiscal quarters of
Borrower, the financial statements of Borrower filed with such Form 10-Q. In
addition, Borrower shall deliver to each Lender (i) promptly upon becoming
available, copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders; and (ii) such other financial
information as Lenders may reasonably request from time to time.

               6.4 Certificates of Compliance. Each time financial statements
are furnished pursuant to Section 6.3 above, there shall be delivered to each
Lender, a certificate signed by a Responsible Officer (each, an "Officer's
Certificate") with respect to such financial reports to the effect that: (i) no
Event of Default or Default has occurred and is continuing hereunder since the
date of this Agreement or, if later, since the date of the prior Officer's
Certificate or, if such an event or condition has occurred and is continuing,
the nature and extent thereof and the action

                                       17

<PAGE>   19

Borrower proposes to take with respect thereto, and (ii) except as disclosed in
clause (i), Borrower is in compliance with the provisions of Sections 6 and 7.

               6.5 Notice of Event of Loss. As soon as possible, and in any
event within ten (10) days after Borrower has knowledge thereof, Borrower shall
notify Agent in writing in reasonable detail of any Event of Loss.

               6.6 Notice of Defaults. As soon as possible, and in any event
within five (5) days after the discovery of a Default or an Event of Default
provide Agent, with an Officer's Certificate of Borrower setting forth the facts
relating to or giving rise to such Default or Event of Default and the action
which Borrower proposes to take with respect thereto.

               6.7 Taxes. Borrower shall make due and timely payment or deposit
of all federal, state, and local taxes, assessments, or contributions required
of it by law or imposed upon any properties belonging to it, including the
Financed Equipment, and will execute and deliver to Agent, on demand,
appropriate certificates attesting to the payment or deposit thereof; and
Borrower will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including 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 Agent with proof satisfactory to Agent
and Lenders indicating that Borrower has made such payments or deposits;
provided that Borrower need not make any payment if the amount or validity of
such payment is contested in good faith by appropriate proceedings and as to
which payment in full is bonded or is adequately reserved against by Borrower.

               6.8 Use; Maintenance.

                      (a) Borrower, at its expense, shall make all necessary
site preparations and cause the Collateral to be operated in accordance with any
applicable manufacturer's manuals or instructions. So long as no Default or
Event of Default has occurred and is continuing, Borrower shall have the right
to quietly possess and use the Collateral as provided herein without
interference by Agent or Lenders.

                      (b) Borrower, at its expense, shall maintain the
Collateral in good condition, reasonable wear and tear excepted, and will comply
in all material respects with all laws, rules and regulations to which the use
and operation of the Collateral may be or become subject. Such obligation shall
extend to repair and replacement of any partial loss or damage to the Collateral
which does not constitute an Event of Loss, regardless of the cause. If
maintenance is mandated by manufacturer, Borrower shall obtain and keep in
effect, at all times during the Term maintenance service contracts with
suppliers reasonably acceptable to the manufacturer. All parts furnished in
connection with such maintenance or repair shall immediately become part of the
Collateral. All such maintenance, repair and replacement services shall be
immediately paid for and discharged by Borrower with the result that no Lien
will attach to the Collateral.

               6.9 Insurance. Borrower shall, obtain and maintain for the Term,
at its own expense:

                                       18

<PAGE>   20

                      (a) "All risk" insurance against loss or damage to the
Collateral. The coverage limit shall be the greater of the replacement cost of
the Equipment or the Stipulated Loan Value of the Loan Amount applicable to each
Loan. The deductible shall not exceed $25,000. The policy shall name Agent, on
behalf of Lenders, as sole loss payee with respect to the Equipment, shall not
be invalidated by any action of or breach of warranty by Borrower of any
provision thereof and waive subrogation against Agent, on behalf of Lenders.

                      (b) Commercial general liability insurance (including
contractual liability, products liability and completed operations coverages)
reasonably satisfactory to Lenders. The limit of liability shall be at least
$5,000,000 per occurrence. The policy shall be without deductible, except for
products liability coverage which may have a deductible up to $25,000. The
policy(ies) shall name Agent, on behalf of Lenders, as additional insured in the
full amount of Borrower's liability coverage limits (or the coverage limits of
any successor to Borrower or such successor's parent which is providing
coverage), be primary and without contribution as respects any insurance carried
by Agent or Lenders, and contain cross liability and severability of interest
clauses.

                      (c) Such other insurance against risks of loss and with
terms as shall be reasonably required by Agent and Lenders.

        All policies of insurance shall be placed with financially sound,
commercial insurers reasonably satisfactory to Agent and Lenders. All policies
of insurance shall provide that Agent, on behalf of Lenders, shall be given 30
days notice of cancellation of coverage. This notice provision shall be without
qualification. On or prior to the first Funding Date and prior to each policy
renewal, Borrower shall furnish to Agent, on behalf of Lenders, certificates of
insurance or other evidence satisfactory to Agent that insurance complying with
all of the above requirements is in effect.

               6.10 Loss; Damage; Destruction and Seizure.

                      (a) Borrower shall bear the risk of the Financed Equipment
being lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit
for use, or seized by a governmental authority for any reason whatsoever at any
time until the expiration or termination of the Term.

                      (b) If during the Term any item of Financed Equipment is
lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for
use, or seized by a governmental authority for any reason whatsoever for a
period equal to at least the remainder of the Term (an "Event of Loss"), then in
each case Agent, on behalf of Lenders, shall receive from the proceeds of
insurance maintained pursuant to Section 6.9, from any award paid by the seizing
governmental authority or, to the extent not received from the proceeds of
insurance or award or both, from Borrower, on or before the Payment Date next
succeeding such Event of Loss, an amount equal to the sum of: (i) all accrued
and unpaid Scheduled Payments with respect to such Loan due prior to the next
such Payment Date, (ii) a prepayment in an amount equal to the Stipulated Loan
Value with respect to such Loan multiplied by the Stated Cost of each affected
item of Financed Equipment, and (iii) all other sums, if any, that shall have
become due and payable hereunder with respect to such Loan, including interest
at the Default Rate with respect

                                       19

<PAGE>   21

to any past due amounts. On the date of receipt by Agent, on behalf of Lenders,
of the amount specified above with respect to each such item of Financed
Equipment subject to an Event of Loss, this Agreement shall terminate as to such
Financed Equipment. Except as provided in Section 6.10(c), any proceeds of
insurance maintained by Borrower pursuant to Section 6.9 and received by
Borrower shall be paid to Agent, on behalf of Lenders, promptly upon their
receipt by Borrower. If any proceeds of insurance or awards received from
governmental authorities are in excess of the amount owed under this Section
6.10, Agent shall promptly remit to Borrower the amount in excess of the amount
owed to Lenders.

                      (c) So long as no Event of Default has occurred and is
continuing, any proceeds of insurance maintained pursuant to Section 6.9
received by Lenders or Borrower with respect to an item of Financed Equipment,
the repair of which is practicable, shall, at the election of Borrower, be
applied either to the repair or replacement of such Financed Equipment or, upon
Agent's receipt, on behalf of Lenders, of evidence of the repair or replacement
of the Financed Equipment reasonably satisfactory to Lenders, to the
reimbursement of Borrower for the cost of such repair or replacement. All
replacement parts and equipment acquired by Borrower in replacement of Financed
Equipment pursuant to this Section 6.10(c) shall immediately become part of the
Financed Equipment upon acquisition by Borrower. Borrower shall take such
actions and provide such documentation as may be reasonably requested by Agent,
on behalf of Lenders, to protect and preserve their first priority security
interest and otherwise to avoid any impairment of Agent's and Lenders' rights
under the Loan Documents in connection with such repair or replacement.

               6.11 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 Lenders to effect the purposes
of this Agreement.

               6.12 Operating Accounts. Until payment in full of all Obligations
hereunder, Borrower shall maintain its primary operating accounts with Payment
Agent.

        7. Negative Covenants. Borrower covenants and agrees that until the full
and complete payment of the Obligations and termination of the Commitments,
Borrower will not do any of the following:

               7.1 Chief Executive Office. During the continuance of this
Agreement, change its chief executive office or principal place of business
without thirty (30) days prior written notice to Lenders.

               7.2 Collateral Control. Subject to its rights under Section 4,
(i) terminate, waive or release any material right with respect to any
Collateral, (ii) except upon thirty days' prior written notice to Lenders,
remove any items of Collateral from Borrower's facility located at the address
set forth on the cover page hereof or such other address agreed to in writing by
Lenders, or (iii) affix or attach or permit to be affixed or attached to any
item of Collateral any other item of property owned by Borrower or any other
lender, lessor or financing party which is not readily identifiable or separable
without any damage to such item of Collateral, without each Lender's prior
written consent.

                                       20

<PAGE>   22

               7.3 Liens. Create, incur, assume or suffer to exist any Lien of
any kind upon any Collateral, whether now owned or hereafter acquired, except
Permitted Liens.

               7.4 Other Dispositions of Collateral. Convey, sell, lease or
otherwise dispose of all or any part of the Collateral to any Person except for
Financed Equipment in which Lenders shall have released their security interest
pursuant to Section 4.3.

               7.5 Extraordinary Transactions; Restructure. Dispose of any
Collateral not in the ordinary and usual course of Borrower's business; change
Borrower's name without prior written notice to Agent and Lenders; make or
suffer any material adverse change in Borrower's financial condition or any
material adverse change in Borrower's operations; cause, permit, or suffer any
material change in Borrower's ownership by merger or otherwise (other than a
sale of Borrower's new Equity Securities in a public offering or a private
offering to venture capital or other investors, including but not limited to,
customers and other strategic partners); engage in any business other than the
business currently engaged in by Borrower or reasonably related thereto; or
suspend operation of Borrower's business.

               7.6 Distributions. (i) Pay any dividends or make any
distributions on its Equity Securities, except stock splits; (ii) purchase,
redeem, retire or otherwise acquire for value any of its Equity Securities
(other than repurchases pursuant to the terms of employee stock purchase plans,
employee restricted stock agreements or similar arrangements: (A) where Borrower
may repurchase shares previously issued to employee(s) of Borrower pursuant to
Borrower's stock option plans using the proceeds from such issuance, or (B)
otherwise in an aggregate amount not to exceed $250,000); (iii) return any
capital to any holder of its Equity Securities as such; (iv) make any
distribution of assets, Equity Securities, obligations or securities to any
holder of its Equity Securities as such, except for stock splits; or (v) set
apart any sum for any such purpose; provided, however, that Borrower may pay
dividends payable solely in common stock.

               7.7 Transactions With Affiliates. Enter into any contractual
obligation with any affiliate or engage in any other transaction with any
affiliate except upon terms at least as favorable to Borrower as an arms-length
transaction with unaffiliated Persons.

               7.8 Indebtedness Payments. Repay any notes to officers, directors
or shareholders, prior to all Obligations to Lenders being fully satisfied,
except repayments made solely through the issuance of Borrower's Equity
Securities.

        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 If Borrower fails to pay when due and payable or when
declared due and payable in accordance with the Loan Documents, any portion of
the Obligations.

               8.2 If Borrower fails to perform any obligation under Sections
6.9, 6.10 and 6.12 or violates any of the covenants contained in Section 7 of
this Agreement.

               8.3 If Borrower fails or neglects to perform, keep, or observe
any other material term, provision, condition, covenant, or agreement contained
in this Agreement (other than as set

                                       21

<PAGE>   23

forth in Sections 8.1 or 8.2), in any of the other Loan Documents, or in any
other present or future agreement between Borrower and Lenders and as to any
default under such other term, provision, condition, covenant or agreement that
can be cured, has failed to cure such default within fifteen (15) days after the
occurrence of such default.

               8.4 If there occurs a material adverse change in Borrower's
business, or if there is a material impairment of the prospect of repayment of
any portion of the Obligations owing to Lenders or a material impairment of the
value or priority of Agent's security interest in the Collateral.

               8.5 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 thirty (30) 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
record with respect to any 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 thirty (30)
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 contesting by Borrower.

               8.6 If there is a payment default in any agreement to which
Borrower is a party resulting in a right by the other party or parties to such
agreement, whether or not exercised, to accelerate the maturity of any
indebtedness in an aggregate principal amount not to exceed Two Hundred Fifty
Thousand Dollars ($250,000) or if there is any default in any agreement which
could reasonably be expected to have a material adverse effect on the financial
condition, operations or business of Borrower or if there is any default in any
other agreement with any Lender (and the applicable cure period has expired).

               8.7 If a judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least Two Hundred Fifty Thousand
Dollars ($250,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of thirty (30) days.

               8.8 If any material misrepresentation or material misstatement
exists now or hereafter in any warranty, representation, statement, or report
made to Lenders or either of them by Borrower or any officer, employee, agent,
or director of Borrower.

               8.9 If there shall be a material breach by Borrower of any of the
Warrants.

               8.10 If any Loan Document shall in any material respect cease to
be, or Borrower shall assert that any Loan Document is not, a legal, valid and
binding obligation of Borrower enforceable in accordance with its terms.

                                       22

<PAGE>   24

               8.11 If a proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect of
Borrower in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian, trustee (or similar official) of
Borrower or for any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of thirty (30) consecutive days or such
court shall enter a decree or order granting the relief sought in such
proceeding.

               8.12 If Borrower shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian (or other similar
official) of Borrower or for any substantial part of its property, or shall make
a general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action in
furtherance of any of the foregoing.

        9. Agent's and Lenders' Rights and Remedies.

               9.1 Rights and Remedies. Upon the occurrence and during the
continuance of any Default or Event of Default, neither Agent nor Lenders shall
have any further obligation to advance money or extend credit to or for the
benefit of Borrower. In addition, upon the occurrence and during the continuance
of an Event of Default, Lenders or Agent on behalf of Lenders, shall have the
rights, options, duties and remedies of a secured party as permitted by law and,
in addition to and without limitation of the foregoing, Lenders may, at the
election of Lenders, without notice of 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, including the
Stipulated Loan Value of the Loan Amount of each Loan, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.11 or 8.12 all Obligations shall become immediately due and payable
without any action by Lenders);

                      (b) Make such payments and do such acts as Agent or
Lenders consider necessary or reasonable to protect Agent's security interest in
the Collateral. Borrower agrees to assemble the Collateral if Agent, on behalf
of Lenders, so requires, and to make the Collateral available to Agent as Agent
may designate. Borrower authorizes Agent 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 Lenders' determination appears to be prior or superior
to their security interest and to pay all expenses incurred in connection
therewith. With respect to any of Borrower's owned premises, Borrower hereby
grants Agent, on behalf of Lenders, a license to enter into possession of such
premises and to occupy the same, without charge, for up to one hundred twenty
(120) days in order to exercise any of Agent's or Lenders' rights or remedies
provided herein, at law, in equity, or otherwise;

                                       23

<PAGE>   25

                      (c) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Lenders and their agents and any purchasers at or
after foreclosure are hereby granted an irrevocable, perpetual, fully paid,
royalty-free license or other right, solely pursuant to the provisions of this
Section 9.1, to use, without charge, Borrower's intellectual property, including
without limitation, 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, now or at any time hereafter owned or
acquired by Borrower or in which Borrower now or at any time hereafter has any
rights, relating to the ownership, operation, maintenance or repair or the
development or construction of any Collateral, in completing production of,
advertising for sale, and selling any Collateral and in operating, maintaining,
foreclosing or selling any Collateral and, in connection with Lenders' exercise
of their rights under this Section 9.1, Borrower's rights under all licenses and
all franchise agreements shall inure to Lenders' benefit;

                      (d) Sell the Collateral at either a public or private
sale, or both, 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
Lenders determine are commercially reasonable;

                      (e) Agent or any Lender may credit bid and purchase at any
public sale; and

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

               9.2 Set Off Right. During the occurrence and continuance of an
Event of Default arising out of Borrower's failure to comply with Section 8.1,
Lenders may set off and apply to the Obligations any and all indebtedness at any
time owing to or for the credit or the account of Borrower.

               9.3 Effect of Sale. Any sale, whether under any power of sale
hereby given or by virtue of judicial proceedings, shall operate to divest all
right, title, interest, claim and demand whatsoever, either at law or in equity,
of Borrower in and to the Property sold, and shall be a perpetual bar, both at
law and in equity, against Borrower, its successors and assigns, and against any
and all Persons claiming the Property sold or any part thereof under, by or
through Borrower, its successors or assigns.

               9.4 Power of Attorney in Respect of the Collateral. Borrower does
hereby irrevocably appoint Agent on behalf of Lenders (which appointment is
coupled with an interest), the true and lawful attorney in fact of Borrower with
full power of substitution, for it and in its name to file any notices of
security interests, financing statements and continuations and amendments
thereof pursuant to the Uniform Commercial Code or federal law, as may be
necessary to perfect, or to continue the perfection of Agent's security
interests in the Collateral. Borrower does hereby irrevocably appoint Agent on
behalf of Lenders (which appointment is coupled with an interest) on the
occurrence and during the continuance of an Event of Default, the true and
lawful attorney in fact of Borrower with full power of substitution, for it and
in its name: (a) to ask, demand, collect, receive, receipt for, sue for,
compound and give acquittance for any and all rents, issues, profits, avails,
distributions, income, payment draws and other sums

                                       24

<PAGE>   26

in which a security interest is granted under Section 4 with full power to
settle, adjust or compromise any claim thereunder as fully as if Agent were a
Borrower itself, (b) to receive payment of and to endorse the name of Borrower
to any items of Collateral (including checks, drafts and other orders for the
payment of money) that come into Agent's possession or under Agent's control,
(c) to make all demands, consents and waivers, or take any other action with
respect to, the Collateral, (d) in Agent's discretion to file any claim or take
any other action or proceedings, either in their own names or in the name of
Borrower or otherwise, which Agent or Lenders may reasonably deem necessary or
appropriate to protect and preserve the right, title and interest of Agent, on
behalf of Lenders, in and to the Collateral, or (e) to otherwise act with
respect thereto as though Agent, on behalf of Lenders, were the outright owner
of the Collateral.

               9.5 Agent's 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 Agent may do any or all of the
following: (a) make payment of the same or any part thereof; or (b) obtain and
maintain insurance policies of the type discussed in Section 6.9 of this
Agreement, and take any action with respect to such policies as Agent deems
prudent. Any amounts paid or deposited by Agent shall constitute Agent's
Expenses, shall be due and payable within 30 days after demand, and shall bear
interest at the then applicable rate hereinabove provided, and shall be secured
by the Collateral. Any payments made by Agent shall not constitute an agreement
by Agent to make similar payments in the future or a waiver by Agent or any
Lender of any Event of Default under this Agreement.

               9.6 Remedies Cumulative. Agent's and Lenders' rights and remedies
under this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Agent and Lenders shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by Agent or any Lender of one right or remedy shall be deemed an
election, and no waiver by Lenders of any Event of Default on Borrower's part
shall be deemed a continuing waiver. No delay by Agent or any Lender shall
constitute a waiver, election, or acquiescence by it or either of them.

               9.7 Application of Collateral Proceeds. The proceeds and/or
avails of the Collateral, or any part thereof, and the proceeds and the avails
of any remedy hereunder (as well as any other amounts of any kind held by Agent,
on behalf of Lenders, at the time of or received by Agent, on behalf of Lenders,
after, the occurrence of an Event of Default hereunder) shall be paid to and
applied as follows:

                      (a) First, to the payment of reasonable out-of-pocket
costs and expenses, including all amounts expended to preserve the value of the
Collateral, of foreclosure or suit, if any, and of such sale and the exercise of
any other rights or remedies, and of all proper fees, expenses, liability and
advances, including reasonable legal expenses and attorneys' fees, incurred or
made hereunder by Agent or any Lender, including without limitation, Agent's
Expenses and Lenders' Expenses;

                      (b) Second, to the payment to Lenders of the amount then
owing or unpaid on the Loans for Scheduled Payments, the Stipulated Loan Value
of the Loan Amount, and all other Obligations with respect to all Loans,
provided, however, that if such proceeds shall be insufficient to pay in full
the whole amount so due, owing or unpaid upon the Loans, then to the

                                       25

<PAGE>   27

unpaid interest thereon, then to unpaid principal thereof, then to the
Stipulated Loan Value of the Loan Amount with respect to all Loans, and then to
the payment of other amounts then payable to Lenders under any of the Loan
Documents; and

                      (c) Third, to the payment of the surplus, if any, to
Borrower, its successors and assigns, or to whomsoever may be lawfully entitled
to receive the same.

               9.8 Reinstatement of Rights. If Agent or Lenders shall have
proceeded to enforce any right under this Agreement or any other Loan Document
by foreclosure, sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then and in every such case (unless otherwise ordered by a court of
competent jurisdiction), Agent and Lenders shall be restored to their former
position and rights hereunder with respect to the Property subject to the
security interest created under this Agreement.

        10. Waivers; Indemnification.

               10.1 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 Agent on which Borrower may in any way be liable.

               10.2 Agent's Liability for Collateral. So long as Agent complies
with its obligations, if any, under the Code, Lenders 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 other than Lender's gross negligence or willful misconduct; (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.

               10.3 Indemnification and Waiver. Whether or not the transactions
contemplated hereby shall be consummated:

                      (a) General Indemnity. Borrower shall pay, indemnify, and
hold Agent and each Lender and each of their respective officers, directors,
employees, counsel, partners, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including Agent's Expenses, Lenders'
Expenses and reasonable attorney's fees and the allocated cost of in-house
counsel) of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement and any
other Loan Documents, or the transactions contemplated hereby and thereby, and
with respect to any investigation, litigation or proceeding (including any case,
action or proceeding before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of
debtors or any appellate proceeding) related to this Agreement or the Loans or
the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified

                                       26

<PAGE>   28

Liabilities"); provided, that Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of such Indemnified Person.

                      (b) Environmental Indemnity. Borrower hereby agrees to
indemnify, defend and hold harmless each Indemnified Person, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements (including
reasonable attorneys' fees and the allocated cost of in-house counsel and
internal environmental audit or review services), which may be incurred by or
asserted against such Indemnified Person in connection with or arising out of
any pending or threatened investigation, litigation or proceeding, or any action
taken by any Person, with respect to any Environmental Claim arising out of or
related to any Property owned, leased or operated by Borrower. No action taken
by legal counsel chosen by any Lender or Agent in defending against any such
investigation, litigation or proceeding or requested remedial, removal or
response action (except for actions which constitute fraud, willful misconduct,
gross negligence or material violations of law) shall vitiate or in any way
impair Borrower's obligation and duty hereunder to indemnify and hold harmless
each Lender and Agent. Lenders and Agent agree to use reasonable efforts to
cooperate with Borrower respecting the defense of any matter indemnified
hereunder, except insofar as and to the extent that their respective interests
may be adverse to Borrower's, in each Lenders' reasonable discretion.

                      (c) Waivers. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES THAT IT SHALL NOT
SEEK FROM AGENT OR LENDERS UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY
IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.

                      (d) Survival; Defense. The obligations in this Section
10.3 shall survive payment of all other Obligations pursuant to Section 12.8 of
this Agreement. At the election of any Indemnified Person, Borrower shall defend
such Indemnified Person using legal counsel satisfactory to such Indemnified
Person in such Person's reasonable discretion, at the sole cost and expense of
Borrower. All amounts owing under this Section 10.3 shall be paid within thirty
(30) days after written demand.

        11. Notices.

                      (a) 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
certified mail, postage prepaid, return receipt requested, or by prepaid
facsimile to Borrower or to Lenders, as the case may be, at their respective
addresses set forth below:

                                       27

<PAGE>   29

If to Borrower:                 Optical Micro-Machines, Inc.
                                9645 Scranton Road, Suite 140
                                San Diego, CA 92121
                                Attention: Kathryn M. White, Controller
                                Fax: (858) 457-6852
                                PH: (858) 320-7111
If to MMC/GATX:                 MMC/GATX Partnership No. I
                                c/o Meier Mitchell & Company
                                4 Orinda Way, Suite 200-B
                                Orinda, CA 94563
                                Attention: Contract Administration
                                Fax: (925) 254-9528
                                PH: (925) 254-9520

                                With a copy to:

                                MMC/GATX Partnership No. I
                                c/o GATX Capital Corporation
                                Four Embarcadero Center, Suite 2200
                                San Francisco, CA 94111
                                Attention: Contract Administration
                                FAX: (415) 955-3288
                                PH: (415) 955-3372

If to SVB:                      Silicon Valley Bank
                                3003 Tasman Drive
                                Santa Clara, CA 95054
                                Attention: General Counsel
                                PH: (408) 654-1005
                                FAX: (408) 496-2419

                                With a copy to:

                                Silicon Valley Bank
                                9645 Scranton Road, Suite 110
                                San Diego, CA 92121
                                Attention: Jeff Huhn
                                Fax: (858) 622-1692
                                PH: (858) 784-3306

If to Comdisco:                 Comdisco, Inc.
                                Legal Department
                                Attention: General Counsel
                                6111 North River Road
                                Rosemont, IL 60018
                                Fax: (847) 518-5088

                                       28

<PAGE>   30

                                   PH: (847) 698-3000

With copies to:                    Comdisco, Inc./Comdisco Ventures
                                   6111 North River Road
                                   Rosemont, IL 60018
                                   Fax: (847) 518-5465

with copies to:                    Murphy Sheneman Julian & Rogers
                                   Attention: Jane K. Springwater, Esq.
                                   101 California Street, 39th Floor
                                   San Francisco, CA 94111
                                   Fax: (415) 421-7879
                                   PH: (415) 398-4700

        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.

        12. General Provisions.

               12.1 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 each Lender's prior written consent, which
consent may be granted or withheld in Lenders' sole discretion. Each Lender
shall have the right without the consent of or notice to Borrower to sell,
transfer, negotiate, or grant participation's in all or any part of, or any
interest in such Lender's rights and benefits hereunder. Agent shall have the
right to resign as Agent hereunder without Borrower's consent and pursuant to
the terms of a separate intercreditor agreement entered into between the
Lenders.

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

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

                                       29

<PAGE>   31

               12.4 Entire Agreement; Construction; Amendments and Waivers.

                      (a) This Agreement and each of the other Loan Documents
dated as of the date hereof, taken together, constitute and contain the entire
agreement among Borrower, Agent and Lenders and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
between the parties, whether written or oral, respecting the subject matter
hereof. Borrower acknowledges that it is not relying on any representation or
agreement made by any Lender or Agent or any employee, attorney or agent
thereof, other than the specific agreements set forth in this Agreement and the
Loan Documents.

                      (b) This Agreement is the result of negotiations between
and has been reviewed by each of Borrower and Lenders executing this Agreement
as of the date hereof and their respective counsel; accordingly, this Agreement
shall be deemed to be the product of the parties hereto, and no ambiguity shall
be construed in favor of or against Borrower, Agent or Lenders. Borrower, Agent
and Lenders agree that they intend the literal words of this Agreement and the
other Loan Documents and that no parol evidence shall be necessary or
appropriate to establish Borrower's, Agent's or any Lender's actual intentions.

                      (c) Any and all amendments, modifications, discharges or
waivers of, or consents to any departures from any provision of this Agreement
or of any of the other Loan Documents shall not be effective without the written
consent of each Agent and Lenders. Notwithstanding the foregoing, in all cases,
any material change of maturity dates, any interest rate reduction, or any
release of any Collateral or any guarantor, or any forbearances or waiver of
rights under the Loan Documents shall require the written consent of each
Lender. Any waiver or consent with respect to any provision of the Loan
Documents shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Borrower in any case
shall entitle Borrower to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, waiver or consent effected in
accordance with this Section 12.4 shall be binding upon Agent, each Lender and
on Borrower.

               12.5 Reliance by Agent and Lenders. All covenants, agreements,
representations and warranties made herein by Borrower shall be deemed to be
material to and to have been relied upon by Lenders, notwithstanding any
investigation by Lenders.

               12.6 No Set-Offs by Borrower. All sums payable by Borrower
pursuant to this Agreement or any of the other Loan Documents shall be payable
without notice or demand and shall be payable in United States Dollars without
set-off or reduction of any manner whatsoever.

               12.7 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.

               12.8 Survival. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Lenders
with respect to the expenses, damages, losses,

                                       30

<PAGE>   32

costs and liabilities described in Section 10.3 shall survive until all
applicable statute of limitations periods with respect to actions that may be
brought against Lenders have run.

        13. Relationship of Parties. Borrower, Agent and each Lender
acknowledge, understand and agree that the relationship between the Borrower, on
the one hand, and Agent and Lenders, on the other, is, and at all time shall
remain solely that of a borrower and lenders. Neither Agent nor any Lender shall
under any circumstances be construed to be partners or joint venturers of
Borrower or any of its Affiliates; nor shall Agent or any Lender under any
circumstances be deemed to be in a relationship of confidence or trust or a
fiduciary relationship with Borrower or any of its Affiliates, or to owe any
fiduciary duty to Borrower or any of its Affiliates. Neither Agent nor any
Lender undertakes or assumes any responsibility or duty to Borrower or any of
its Affiliates to select, review, inspect, supervise, pass judgment upon or
otherwise inform Borrower or any of its Affiliates of any matter in connection
with its or their Property, any Collateral held by Agent or the operations of
Borrower or any of its Affiliates. Borrower and each of its Affiliates shall
rely entirely on their own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by Agent or any Lender in connection with such matters is
solely for the protection Agent or such Lender and neither Borrower nor any
Affiliate is entitled to rely thereon.

        14. 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
ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER,
AGENT AND LENDERS HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN THE NORTHERN DISTRICT OF CALIFORNIA. BORROWER, AGENT
AND LENDERS 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.

                                       31

<PAGE>   33

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

                                      BORROWER:

                                      OPTICAL MICRO-MACHINES, INC.

                                             HUS TIGLI

                                      By: /s/ Hus Tigli
                                          -----------------------
                                      Title: President & CEO
                                              ---------------

                                      AGENT:

                                      MMC/GATX PARTNERSHIP NO. I
                                      By: GATX Capital Corporation,
                                             its General Partner

                                      By:   Patricia W. Lacher
                                         ------------------------------

                                      Title: V.P.
                                            ---------------------------

                                      PAYMENT AGENT:
                                      SILICON VALLEY BANK

                                      By:  /s/ Signature Illegible
                                         ------------------------------

                                      Title:   SVP
                                            ---------------------------

                                      LENDERS:

                                      MMC/GATX PARTNERSHIP NO. I
                                      By: GATX Capital Corporation,
                                             its General Partner

                                      By:   Patricia W. Lacher
                                         ------------------------------

                                      Title:  V.P.
                                            ---------------------------

                                      SILICON VALLEY BANK

                                      By:  /s/ Signature Illegible
                                         ------------------------------

                                      Title:   SVP
                                            ---------------------------

                                       32

<PAGE>   34

                                      COMDISCO, INC.

                                      By: /s/ James P. Labe
                                          ------------------------------
                                             JAMES P. LABE, PRESIDENT

                                      Title: COMDISCO VENTURES DIVISION
                                             ----------------------------

                                       33

<PAGE>   35

LIST OF EXHIBITS AND SCHEDULES

Exhibit A      Reserved
Exhibit B      Form of Warrant
Exhibit C      Form of Loan Agreement Supplement
Exhibit D      Form of Legal Opinion
Exhibit E      Form of Landlord Agreement

Schedule 1     Disclosure Schedule

<PAGE>   36

                                    EXHIBIT A
                                    ---------

                                    RESERVED

<PAGE>   37

                                    EXHIBIT B
                                    ---------

                                     WARRANT

<PAGE>   38

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION
OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THIS WARRANT.

                          OPTICAL MICRO-MACHINES, INC.
                          ----------------------------

                           WARRANT TO PURCHASE SHARES
                          OF SERIES D PREFERRED STOCK

        THIS CERTIFIES THAT, for value received, _____________________ and its
assignees are entitled to subscribe for and purchase _______ shares of the fully
paid and nonassessable Series D Preferred Stock (as adjusted pursuant to Section
4 hereof, the "Shares") of OPTICAL MICRO-MACHINES, INC., a Delaware corporation
(the "Company"), at the price of $2.477 per share (such price and such other
price as shall result, from time to time, from the adjustments specified in
Section 4 hereof is herein referred to as the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth. As used
herein, (a) the term "Series Preferred" shall mean the Company's presently
authorized Series D Preferred Stock, and after the automatic conversion of the
Series D Preferred Stock to Common Stock shall mean the Company's Common Stock,
(b) the term "Date of Grant" shall mean April 7, 2000, and (c) the term "Other
Warrants" shall mean any other warrants issued by the Company in connection with
the transaction with respect to which this Warrant was issued, and any warrant
issued upon transfer or partial exercise of or in lieu of this Warrant. The term
"Warrant" as used herein shall be deemed to include Other Warrants unless the
context clearly requires otherwise.

        1. Term. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through ten (10) years after the Date of Grant.

        2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, at
the election of the holder hereof, by (a) the surrender of this Warrant (with
the notice of exercise substantially in the form attached hereto as Exhibit A-1
duly completed and executed) at the principal office of the Company and by the
payment to the Company, by certified or bank check, or by wire transfer to an
account designated by the Company (a "Wire Transfer") of an amount equal to the
then applicable Warrant Price multiplied by the number of Shares then being
purchased; (b) if in connection with a registered public offering of the
Company's securities, the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A-2 duly completed and executed) at the
principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either

<PAGE>   39

by certified or bank check or by Wire Transfer of an amount equal to the then
applicable Warrant Price per share multiplied by the number of Shares then being
purchased; or (c) exercise of the "net issuance" right provided for in Section
10.2 hereof. The person or persons in whose name(s) any certificate(s)
representing shares of Series Preferred shall be issuable upon exercise of this
Warrant shall be deemed to have become the holder(s) of record of, and shall be
treated for all purposes as the record holder(s) of, the shares represented
thereby (and such shares shall be deemed to have been issued) immediately prior
to the close of business on the date or dates upon which this Warrant is
exercised. In the event of any exercise of the rights represented by this
Warrant, certificates for the shares of stock so purchased shall be promptly
delivered to the holder hereof and in any event within thirty (30) days after
such exercise and, unless this Warrant has been fully exercised or expired, a
new Warrant representing the portion of the Shares, if any, with respect to
which this Warrant shall not then have been exercised shall also be promptly
issued to the holder hereof and in any event within such thirty-day period;
provided, however, at such time as the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, if requested by
the holder of this Warrant, the Company shall cause its transfer agent to
deliver the certificate representing Shares issued upon exercise of this Warrant
to a broker or other person (as directed by the holder exercising this Warrant).

        3. Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Series Preferred
to provide for the exercise of the rights represented by this Warrant and a
sufficient number of shares of its Common Stock to provide for the conversion of
the Series Preferred into Common Stock.

        4. Adjustment of Warrant Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:

               (a) Reclassification or Merger. In case of any reclassification
or change of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Company with or into another corporation (other than a
merger with another corporation in which the Company is the acquiring and the
surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, shall
duly execute and deliver to the holder of this Warrant a new Warrant (in form
and substance reasonably satisfactory to the holder of this Warrant), or the
Company shall make appropriate provision without the issuance of a new Warrant,
so that the holder of this Warrant shall have the right to receive, at a total
purchase price not to exceed that payable upon the exercise of the

                                       -2-

<PAGE>   40

unexercised portion of this Warrant, and in lieu of the shares of Series
Preferred theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money and property receivable upon
such reclassification, change, merger or sale by a holder of the number of
shares of Series Preferred then purchasable under this Warrant. Any new Warrant
shall provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4. The provisions of
this subparagraph (a) shall similarly apply to successive reclassifications,
changes, mergers and transfers.

               (b) Subdivision or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its outstanding shares of Series Preferred, the Warrant Price shall be
proportionately decreased and the number of Shares issuable hereunder shall be
proportionately increased in the case of a subdivision and the Warrant Price
shall be proportionately increased and the number of Shares issuable hereunder
shall be proportionately decreased in the case of a combination.

               (c) Stock Dividends and Other Distributions. If the Company at
any time while this Warrant is outstanding and unexpired shall (i) pay a
dividend with respect to Series Preferred payable in Series Preferred, then the
Warrant Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date of determination by a fraction (A) the numerator of which shall be the
total number of shares of Series Preferred outstanding immediately prior to such
dividend or distribution, and (B) the denominator of which shall be the total
number of shares of Series Preferred outstanding immediately after such dividend
or distribution; or (ii) make any other distribution with respect to Series
Preferred (except any distribution specifically provided for in Sections 4(a)
and 4(b)), then, in each such case, provision shall be made by the Company such
that the holder of this Warrant shall receive upon exercise of this Warrant a
proportionate share of any such dividend or distribution as though it were the
holder of the Series Preferred (or Common Stock issuable upon conversion
thereof) as of the record date fixed for the determination of the shareholders
of the Company entitled to receive such dividend or distribution.

               (d) Adjustment of Number of Shares. Upon each adjustment in the
Warrant Price, the number of Shares of Series Preferred purchasable hereunder
shall be adjusted, to the nearest whole share, to the product obtained by
multiplying the number of Shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be
the Warrant Price immediately prior to such adjustment and the denominator of
which shall be the Warrant Price immediately thereafter.

               (e) Antidilution Rights. The other antidilution rights applicable
to the Shares of Series Preferred purchasable hereunder are set forth in the
Company's Certificate of Incorporation, as amended through the Date of Grant, a
true and complete copy of which is attached hereto as Exhibit B (the "Charter").
Such antidilution rights shall not be restated, amended, modified or waived in
any manner without the holder's prior written consent if the effect of such
restatement, amendment, modification or waiver on the holder hereof would be
more adverse to the holder hereof

                                       -3-

<PAGE>   41

than, and substantially dissimilar to, its effect on the other holders of the
Company's Series Preferred. The Company shall promptly provide the holder hereof
with any restatement, amendment, modification or waiver of the Charter promptly
after the same has been made.

        5. Notice of Adjustments. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate signed by its chief financial officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant. In addition, whenever the conversion price or
conversion ratio of the Series Preferred shall be adjusted, the Company shall
make a certificate signed by its chief financial officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the
conversion price or ratio of the Series Preferred after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (without
regard to Section 13 hereof, by first class mail, postage prepaid) to the holder
of this Warrant.

        6. Fractional Shares. No fractional shares of Series Preferred will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor based on the fair market
value of the Series Preferred on the date of exercise as reasonably determined
in good faith by the Company's Board of Directors.

        7. Compliance with Act; Disposition of Warrant or Shares of Series
Preferred.

               (a) Compliance with Act. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant, and the shares of Series Preferred
to be issued upon exercise hereof and any Common Stock issued upon conversion
thereof are being acquired for investment and that such holder will not offer,
sell or otherwise dispose of this Warrant, or any shares of Series Preferred to
be issued upon exercise hereof or any Common Stock issued upon conversion
thereof except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act") or any applicable state
securities laws. Upon exercise of this Warrant, unless the Shares being acquired
are registered under the Act and any applicable state securities laws or an
exemption from such registration is available, the holder hereof shall confirm
in writing that the shares of Series Preferred so purchased (and any shares of
Common Stock issued upon conversion thereof) are being acquired for investment
and not with a view toward distribution or resale in violation of the Act and
shall confirm such other matters related thereto as may be reasonably requested
by the Company. All shares of Series Preferred issued upon exercise of this
Warrant and all shares of Common Stock issued upon conversion thereof (unless
registered under the Act and any applicable state securities laws) shall be
stamped or imprinted with a legend in substantially the following form:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE
"ACT") OR ANY STATE SECURITIES LAWS. SUCH SHARES

                                       -4-

<PAGE>   42

MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT. COPIES OF THE AGREEMENTS COVERING
THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICE OF THE
CORPORATION."

        Said legend shall be removed by the Company, upon the request of a
holder, at such time as the restrictions on the transfer of the applicable
security shall have terminated. In addition, in connection with the issuance of
this Warrant, the holder specifically represents to the Company by acceptance of
this Warrant as follows:

                      (1) The holder is aware of the Company's business affairs
and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant. The holder is acquiring this Warrant for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof in violation of the Act.

                      (2) The holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the holder's
investment intent as expressed herein.

                      (3) The holder further understands that this Warrant must
be held indefinitely unless subsequently registered under the Act and qualified
under any applicable state securities laws, or unless exemptions from
registration and qualification are otherwise available. The holder is aware of
the provisions of Rule 144, promulgated under the Act.

                      (4) The holder is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated under the Act.

               (b) Disposition of Warrant or Shares. With respect to any offer,
sale or other disposition of this Warrant or any shares of Series Preferred
acquired pursuant to the exercise of this Warrant prior to registration of such
Warrant or shares, the holder hereof agrees to give written notice to the
Company prior thereto, describing briefly the manner thereof, together with a
written opinion of such holder's counsel, or other evidence, if reasonably
satisfactory to the Company and its counsel, to the effect that such offer, sale
or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state securities law then in
effect) of this Warrant or such shares of Series Preferred or Common Stock and
indicating whether or not under the Act certificates for this Warrant or such
shares of Series Preferred to be sold or otherwise disposed of require any
restrictive legend as to applicable restrictions on transferability in order to
ensure compliance with such law. Upon receiving such written notice and
reasonably satisfactory opinion or other evidence, the Company, as promptly as
practicable but no later than fifteen (15) days after receipt of the written
notice, shall notify such holder that such holder may sell or

                                       -5-

<PAGE>   43

otherwise dispose of this Warrant or such shares of Series Preferred or Common
Stock, all in accordance with the terms of the notice delivered to the Company.
If a determination has been made pursuant to this Section 7(b) that the opinion
of counsel for the holder or other evidence is not reasonably satisfactory to
the Company, the Company shall so notify the holder promptly with details
thereof after such determination has been made. Notwithstanding the foregoing,
this Warrant or such shares of Series Preferred or Common Stock may, as to such
federal laws, be offered, sold or otherwise disposed of in accordance with Rule
144 or 144A under the Act, provided that the Company shall have been furnished
with such information as the Company may reasonably request to provide a
reasonable assurance that the provisions of Rule 144 or 144A have been
satisfied. Each certificate representing this Warrant or the shares of Series
Preferred thus transferred (except a transfer pursuant to Rule 144 or 144A)
shall bear a legend as to the applicable restrictions on transferability in
order to ensure compliance with such laws, unless in the aforesaid opinion of
counsel for the holder, such legend is not required in order to ensure
compliance with such laws. The Company may issue stop transfer instructions to
its transfer agent in connection with such restrictions.

               (c) Applicability of Restrictions. Neither any restrictions of
any legend described in this Warrant nor the requirements of Section 7(b) above
shall apply to any transfer of, or grant of a security interest in, this Warrant
(or the Series Preferred or Common Stock obtainable upon exercise thereof) or
any part hereof (i) to a partner of the holder if the holder is a partnership or
to a member of the holder if the holder is a limited liability company, (ii) to
a partnership of which the holder is a partner or to a limited liability company
of which the holder is a member, or (iii) to any affiliate of the holder if the
holder is a corporation; provided, however, in any such transfer, if applicable,
the transferee shall agree in writing to be bound by the terms of this Warrant
as if an original holder hereof.

        8. Rights as Shareholders; Information. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Series Preferred or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised
and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. Notwithstanding the foregoing, the Company will
transmit to the holder of this Warrant such information, documents and reports
as are generally distributed to the holders of any Series Preferred of the
Company concurrently with the distribution thereof to the shareholders.

        9. Market Stand-Off Agreement. In connection with the closing of the
Company's initial public offering of its Common Stock ("IPO") effected pursuant
to a Registration Statement on Form S-1 (or its successor) filed under the Act,
if requested by the Company and the managing underwriter, the holder of this
Warrant agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Series Preferred (or other
securities) of the Company held by the holder pursuant to this Warrant without
the prior written consent of the

                                       -6-

<PAGE>   44

Company or such managing underwriter for such period of time (not to exceed the
period beginning seven (7) days prior to the effective date of the registration
statement for the IPO and ending 180 days after the date of the Final Prospectus
relating to such IPO), as may be requested by the Company and the managing
underwriter, provided that all officers, directors, Founders (as defined in the
Rights Agreement) and holders of at least 5% of the outstanding shares
(calculated on an as-converted-to Common Stock basis) of the Company enter into
similar agreements; provided, further, that the holder will not be bound by the
terms of this Section 9 of this Warrant if there is an Acquisition (as defined
in Section 10.1 of this Warrant) prior to an IPO. In addition, if any
shareholder of the Series Preferred of the Company is not bound by, or is
released from, or otherwise not required to abide by the terms of the market
stand-off agreement set forth in section 9 (the "Stand-Off Provision") of
Optical Micro Machines, Inc. Amended and Restated Shareholders Rights Agreement
dated as of November 16, 1999 (the "Rights Agreement"), or if such shareholder
of Series Preferred may sell or otherwise dispose or transfer its shares on a
date earlier than set forth pursuant to the Stand-Off Provision, then the holder
of this Warrant shall be treated similarly. If there is an Acquisition prior to
an IPO, the holder agrees to abide by the market stand-off provisions of this
Section 9 (as if there were no Acquisition) or the market stand off provision
negotiated by the holders of Series Preferred with the acquirer, whichever is
less stringent, if the acquirer requests that the holder be subject to a market
stand off provision. The holder further agrees to execute and deliver to the
managing underwriter for the Company's IPO a separate written agreement in the
form signed by the officers, directors and other shareholders of Series
Preferred to further evidence the provisions of this Section 9. The Company may
impose stop-transfer instructions with respect to the Shares (or securities)
subject to the foregoing restriction until the end of said period.

        10. Additional Rights.

        10.1 Acquisition Transactions. The Company shall provide the holder of
this Warrant with written notice of the following transactions (an
"Acquisition") (to the extent the Company has notice thereof) not later than ten
(10) days prior to the shareholders' meeting called to approve such transaction,
or ten (10) days prior to the closing of such transaction, whichever is earlier,
and shall also notify the holder in writing of the final approval of such
transaction; the first of such notices shall describe the material terms and
conditions of the impending transaction and the Company shall thereafter give
the holder prompt notice of any material changes: (i) the sale, lease, exchange,
conveyance or other disposition of all or substantially all of the Company's
property or business, or (ii) its merger into or consolidation with any other
corporation (other than a wholly-owned subsidiary of the Company), or any
transaction (including a merger or other reorganization) or series of related
transactions, in which more than 50% of the voting power of the Company is
disposed of.

        10.2 Right to Convert Warrant into Stock: Net Issuance.

               (a) Right to Convert. In addition to and without limiting the
rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the "Conversion Right")
into shares of Series Preferred (or Common Stock if the Series Preferred has
been automatically converted into Common Stock) as provided in this Section 10.2
at any time or from time to time during the term of this Warrant. Upon exercise
of the Conversion

                                       -7-

<PAGE>   45

Right with respect to a particular number of shares subject to this Warrant (the
"Converted Warrant Shares"), the Company shall deliver to the holder (without
payment by the holder of any exercise price or any cash or other consideration)
that number of shares of fully paid and nonassessable Series Preferred (or
Common Stock if the Series Preferred has been automatically converted into
Common Stock) as is determined according to the following formula:

        X = B - A
            -----
               Y

        Where: X =    the number of shares of Series Preferred (or Common
                      Stock if the Series Preferred has been automatically
                      converted to Common Stock) that shall be issued to
                      holder

               Y =    the fair market value of one share of Series Preferred
                      (or Common Stock if the Series Preferred has been
                      automatically converted to Common Stock)

               A =    the aggregate Warrant Price of the specified number of
                      Converted Warrant Shares immediately prior to the exercise
                      of the Conversion Right (i.e., the number of Converted
                      Warrant Shares multiplied by the Warrant Price)

               B =    the aggregate fair market value of the specified number
                      of Converted Warrant Shares (i.e., Y multiplied by the
                      number of Converted Warrant Shares)

        No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). For purposes
of Section 10 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.

               (b) Method of Exercise. The Conversion Right may be exercised by
the holder by the surrender of this Warrant at the principal office of the
Company together with a written statement (which may be in the form of Exhibit
A-1 or Exhibit A-2 hereto) specifying that the holder thereby intends to
exercise the Conversion Right and indicating the number of shares subject to
this Warrant which are being surrendered (referred to in Section 10.2(a) hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"), and, at the election of the holder
hereof, may be made contingent upon the closing of the sale of the Company's
Common Stock to the public in a public offering pursuant to a Registration
Statement under the Act (a "Public Offering"). Certificates for the shares
issuable upon exercise of the Conversion Right and, if applicable, a new warrant
evidencing the balance of the shares remaining subject to this Warrant, shall be
issued as of the

                                       -8-

<PAGE>   46

Conversion Date and shall be delivered to the holder within thirty (30) days
following the Conversion Date.

               (c) Determination of Fair Market Value. For purposes of this
Section 10.2, "fair market value" of a share of Series Preferred (or Common
Stock if the Series Preferred has been automatically converted into Common
Stock) as of a particular date (the "Determination Date") shall mean:

                      (i) If the Conversion Right is exercised in connection
with and contingent upon a Public Offering, and if the Company's Registration
Statement relating to such Public Offering ("Registration Statement") has been
declared effective by the Securities and Exchange Commission, then "fair market
value" shall be deemed to be the initial "Price to Public" specified in the
final prospectus with respect to such offering.

                      (ii) If the Conversion Right is not exercised in
connection with and contingent upon a Public Offering, then as follows:

               (A) If traded on a securities exchange, the fair market value of
the Common Stock shall be deemed to be the average of the closing prices of the
Common Stock on such exchange over the 30-day period ending five business days
prior to the Determination Date, and the fair market value of the Series
Preferred shall be deemed to be such fair market value of the Common Stock
multiplied by the number of shares of Common Stock into which each share of
Series Preferred is then convertible;

               (B) If traded on the Nasdaq Stock Market or other
over-the-counter system, the fair market value of the Common Stock shall be
deemed to be the average of the closing bid prices of the Common Stock over the
30-day period ending five business days prior to the Determination Date, and the
fair market value of the Series Preferred shall be deemed to be such fair market
value of the Common Stock multiplied by the number of shares of Common Stock
into which each share of Series Preferred is then convertible; and

               (C) If there is no public market for the Common Stock, then fair
market value shall be determined in good faith by the board of directors of the
Company.

        10.3 Exercise Prior to Expiration. To the extent this Warrant is not
previously exercised as to all of the Shares subject hereto, and if the fair
market value of one share of the Series Preferred is greater than the Warrant
Price then in effect, this Warrant shall be deemed automatically exercised
pursuant to Section 10.2 above (even if not surrendered) immediately before its
expiration. For purposes of such automatic exercise, the fair market value of
one share of the Series Preferred upon such expiration shall be determined
pursuant to Section 10.2(c). To the extent this Warrant or any portion thereof
is deemed automatically exercised pursuant to this Section 10.3, the Company
agrees to promptly notify the holder hereof of the number of Shares, if any, the
holder hereof is to receive by reason of such automatic exercise.

                                       -9-

<PAGE>   47

        11. Representations and Warranties. The Company represents and warrants
to the holder of this Warrant as follows:

               (a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;

               (b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable;

               (c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Series Preferred and the holders thereof are as set forth
in the Charter, and on the Date of Grant, each share of the Series Preferred
represented by this Warrant is convertible into one share of Common Stock;

               (d) The shares of Common Stock issuable upon conversion of the
Shares have been duly authorized and reserved for issuance by the Company and,
when issued in accordance with the terms of the Charter will be validly issued,
fully paid and nonassessable;

               (e) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Charter or by-laws, do
not and will not contravene any law, governmental rule or regulation, judgment
or order applicable to the Company, and do not and will not conflict with or
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument of which the Company is a party or by
which it is bound or require the consent or approval of, the giving of notice
to, the registration or filing with or the taking of any action in respect of or
by, any Federal, state or local government authority or agency or other person,
except for the filing of notices pursuant to federal and state securities laws,
which filings will be effected by the time required thereby; and

               (f) There are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company in any court or before any governmental commission, board or authority
which, if adversely determined, will have a material adverse effect on the
ability of the Company to perform its obligations under this Warrant.

               (g) As of the Date of Grant, the number of shares of Common Stock
of the Company outstanding on the date hereof, on a fully diluted basis
(assuming the conversion of all outstanding convertible securities and the
exercise of all outstanding options and warrants), does not exceed 29,300,000
shares.

                                      -10-

<PAGE>   48

        12. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.

        13. Notices. Any notice, request, communication or other document
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered, or shall be sent by certified or registered mail,
postage prepaid, to each such holder at its address as shown on the books of the
Company or to the Company at the address indicated therefor on the signature
page of this Warrant.

        14. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Series Preferred issuable upon the exercise or
conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the holder
hereof.

        15. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.

        16. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.

        17. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of California.

        18. Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.

        19. Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.

                                      -11-

<PAGE>   49

        20. No Impairment of Rights. The Company will not, by amendment of its
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holder of this Warrant against impairment.

        21. Severability. The invalidity or unenforceability of any provision of
this Warrant in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction, or affect any other provision of
this Warrant, which shall remain in full force and effect.

        22. Recovery of Litigation Costs. If any legal action or other
proceeding is brought for the enforcement of this Warrant, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Warrant, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.

        23. Entire Agreement; Modification. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.

                                      -12-

<PAGE>   50

        The Company has caused this Warrant to be duly executed and delivered as
of the Date of Grant specified above.

                                        OPTICAL MICRO-MACHINES, INC.

                                        By
                                          --------------------------------------

                                        Title
                                             -----------------------------------

                                        Address: 9645 Scranton Road, Suite 140

                                               San Diego, CA 92121

                                      -13-

<PAGE>   51

                                   EXHIBIT A-1

                               NOTICE OF EXERCISE

To:     OPTICAL MICRO-MACHINES, INC. (the "Company")

        1. The undersigned hereby:

        [ ] elects to purchase_____shares of [Series Preferred Stock] [Common
Stock] of the Company pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full, or

        [ ] elects to exercise its net issuance rights pursuant to Section 10.2
of the attached Warrant with respect to_____Shares of [Series Preferred Stock]
[Common Stock].

        2. Please issue a certificate or certificates representing _____ shares
in the name of the undersigned or in such other name or names as are specified
below:

                             ------------------------------------
                                            (Name)

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

                             ------------------------------------
                                            (Address)

        3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.

                                       -----------------------------------
                                                  (Signature)

-----------------
     (Date)

<PAGE>   52

                                   EXHIBIT A-2

                               NOTICE OF EXERCISE

To:     OPTICAL MICRO-MACHINES, INC. (the "Company")

        1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S____, filed_______, 20__, the undersigned hereby:

        [ ] elects to purchase______shares of [Series Preferred Stock] [Common
Stock] of the Company pursuant to the terms of the attached Warrant, or

        [ ] elects to exercise its net issuance rights pursuant to Section 10.2
of the attached Warrant with respect to______Shares of [Series Preferred Stock]
[Common Stock]:

        2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such_______shares.

                                             ----------------------------------
                                                          (Signature)

------------------
        (Date)

<PAGE>   53

                                    EXHIBIT C
                                    ---------

                        FORM OF LOAN AGREEMENT SUPPLEMENT

                        LOAN AGREEMENT SUPPLEMENT No. []

        LOAN AGREEMENT SUPPLEMENT No. [], dated_______, _____("Supplement"), to
the Loan and Security Agreement dated as of April 7, 2000 (the "Loan Agreement")
by and among OPTICAL MICRO-MACHINES, INC., a Delaware corporation ("Borrower"),
MMC/GATX Partnership No. I, Comdisco, Inc., and Silicon Valley Bank
(collectively, "Lenders") and Agent.

        Unless otherwise defined herein, capitalized terms have the meanings
given to such terms in the Loan Agreement.

        1. To secure the prompt payment by Borrower of the principal of and
interest on, and all other amounts from time to time outstanding under the Loan
Agreement, and the performance and observance by Borrower of all the agreements,
covenants and provisions contained in the Loan Agreement, Borrower does hereby
grant to Agent, on behalf and for the benefit of Lenders, their respective
successors and assigns, a first priority security interest in all of Borrower's
right, title and interest in each item of equipment and other property described
in Annex A hereto, which equipment and other property shall be deemed to be
additional "Financed Equipment." The list of Financed Equipment in Annex A
hereto shall be construed as a supplement to, and deemed part of, the Collateral
listed in Section 4.1 of the Loan Agreement and shall form a part thereof, and
the Loan Agreement is hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.

        2. Attached as Annex B hereto is the Loan Terms Schedule with respect to
the Loan the proceeds of which will be used to finance the Financed Equipment
listed in Annex A hereto.

        3. The Financed Equipment shall be located at the following address:

        4. The proceeds of the Loan should be transferred to Borrower's account
as set forth in Section 2.4(c) of the Loan Agreement.

        5. Borrower hereby certifies that (a) the foregoing information is true
and correct and authorizes Lenders to endorse in their respective books and
records, the Basic Rate applicable to the Funding Date of the Loan contemplated
in this Loan Agreement Supplement and the principal amount set forth in the Loan
Terms Schedule; (b) the representations and warranties made by Borrower in
Section 5 of the Loan Agreement and in the other Loan Documents are true and
correct on the date hereof and will be true and correct on such Funding Date, in
each case except to the extent they relate to a prior date; (c) Borrower has met
or will by such Funding Date meet all conditions set forth in Section 3 of the
Loan Agreement; (d) Borrower is now, and on such Funding Date will be, in
compliance with the covenants and the requirements contained in Sections 6 and 7
of the Loan Agreement; and (e) no Default or Event of Default has occurred and
is continuing under the Loan Agreement.

<PAGE>   54

        6. This Supplement is being delivered in the State of California and
governed by Illinois law.

        7. This Supplement may be executed by Borrower, Agent and Lenders in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

                  [Remainder of page intentionally left blank.]

<PAGE>   55

        IN WITNESS WHEREOF, Borrower, Agent and Lenders have caused this
Supplement to be duly executed and delivered as of this day and year first above
written.

                                       BORROWER:

                                       OPTICAL MICRO-MACHINES, INC.

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

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

                                       AGENT:

                                       MMC/GATX PARTNERSHIP NO. I
                                       By: GATX Capital Corporation,
                                              its General Partner

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

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

                                       LENDERS:

                                       MMC/GATX PARTNERSHIP NO. I
                                       By: GATX Capital Corporation,
                                              its General Partner

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

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

                                       SILICON VALLEY BANK

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

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

                                       COMDISCO, INC.

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

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

<PAGE>   56

Annex A - Description of Financed Equipment

Annex B - Loan Terms Schedule

<PAGE>   57

                                     ANNEX A

                                       to

                                    EXHIBIT C

The Financed Equipment being financed with the Loan for which this Loan
Agreement Supplement is being executed is listed below. Upon the funding of such
Loan, this Schedule automatically shall be deemed to be a part of the Collateral
listed in Section 4.1 of the Loan Agreement.

FINANCED EQUIPMENT

See Attached Pages.

<PAGE>   58

                                     ANNEX B

                               LOAN TERMS SCHEDULE

Loan Funding Date:______, 200_

Original Loan Amount: $_____

Basic Rate________%

Loan Factor:_______%

Original Scheduled Payment Amount*: $____________

Date of First Scheduled Payment: $____________

To MMC/GATX: $_________________

To Comdisco: $_____________________

To SVB: $________________________

Maturity Date: _______________________

Final Payment: An additional amount equal to the Final Payment Percentage
multiplied by the original Loan Amount, shall be paid on the Maturity Date with
respect to such Loan.

Stipulated Loan Value:

<TABLE>
<CAPTION>

<S>                          <C>               <C>
Payment No.                  Payment Date      Stipulated Loan Value**
-----------                  ------------      ---------------------
</TABLE>

1

2

 ...

[35]

[36]

*/The amount of each Scheduled Payment will change as the Loan Amount changes.

**/Each Stipulated Loan Value amount assumes payment of all Scheduled Payments
due on or before the indicated Payment Date.

<PAGE>   59

                                    EXHIBIT D
                                    ---------

              ITEMS TO BE COVERED BY OPINION OF BORROWER'S COUNSEL

        The opinions hereafter expressed are subject to the following
qualifications:

        (a) We assume the genuineness of all signatures on original documents,
the authenticity and completeness of all documents submitted to us as originals,
the conformity to original documents of all copies submitted to us and the due
execution and delivery of all documents (except as to due execution and delivery
by the Company) where due execution and delivery are a prerequisite to the
effectiveness thereof;

        (b) We express no opinion as to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar federal or state laws
affecting the rights of creditors;

        (c) We express no opinion as to the effect of rules of law governing
specific performance, injunctive relief or other equitable remedies (regardless
of whether any such remedy is considered in a proceeding at law or in equity).

        Based on and subject to the foregoing, we are of the opinion that:

        1. Borrower is a corporation, duly organized, validly existing and in
good standing under the laws of the State of [___], and is duly qualified and
authorized to do business in the state of California.

        2. Borrower has the full corporate power, authority and legal right, and
has obtained all necessary approvals, consents and given all notices to execute
and deliver the Loan Documents and perform the terms thereof.

        3. The Loan Documents have been duly authorized, executed and delivered
by Borrower and constitute valid, legal and binding agreements.

        4. To our knowledge, there is no action, suit, audit, investigation,
proceeding or patent claim pending or threatened against Borrower in any court
or before any governmental commission, agency, board or authority which might
have a material adverse effect on the business, condition or operations of
Borrower or the ability of Borrower to perform its obligations under the Loan
Documents.

        5. The Shares issuable pursuant to exercise or conversion of the
Warrants have been duly authorized and reserved for issuance by Borrower and,
when issued in accordance with the terms thereof, will be validly issued, fully
paid and nonassessable.

        6. The shares of Common Stock issuable upon conversion of the Shares
have been duly authorized and reserved and, when issued in accordance with the
terms of Borrower's [Articles/Certificate] of Incorporation, as amended, will be
validly issued, fully paid and nonassessable.

<PAGE>   60

        7. The rights, preferences, privileges and restrictions granted to or
imposed upon Borrower's Series [ ] Preferred Stock and the holders thereof are
as set forth in Borrower's [Articles/Certificate] of Incorporation, as amended
to the Date of Grant, a true and complete copy of which has been delivered to
Lenders.

        8. The execution and delivery of the Loan Documents are not, and the
issuance of the Shares upon exercise of the Warrants in accordance with the
terms thereof will not be, inconsistent with Borrower's [Articles/Certificate]
of Incorporation, as amended, or Bylaws, do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to Borrower, and
do not and will not conflict with or contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other agreement or
instrument of which Borrower is a party or by which it is bound or require the
consent or approval of, the giving of notice to, the registration or filing with
or the taking of any action in respect of or by, any federal, state or local
government authority or agency or other person, except for the filing of notices
pursuant to federal and state securities laws, which filings will be effected by
the time required thereby.

<PAGE>   61

                                    EXHIBIT E
                                    ---------

                               LANDLORD AGREEMENT

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
MMC/GATX Partnership No. I, as Agent
4 Orinda Way, Suite 200-B
Orinda, CA 94563

                     CONSENT TO REMOVAL OF PERSONAL PROPERTY

        KNOW ALL PERSONS BY THESE PRESENTS:

        (a) The undersigned has an interest as [owner/landlord] in the following
described real property (the "Real Property"):

        That certain real property in the County of [____________], State of
California, described as:

        SEE ATTACHMENT 1 ATTACHED HERETO FOR FULL LEGAL DESCRIPTION, commonly
known as [street address].

        (b) Optical Micro-Machines, Inc., a Delaware corporation ("Borrower"),
has entered into or will enter into a Loan and Security Agreement with Silicon
Valley Bank, Comdisco, Inc. and MMC/GATX Partnership No. I (collectively,
"Lenders") dated as of April 7, 2000 (as amended and supplemented from time to
time, the "Loan Agreement").

        (c) Lenders, as a condition to entering into the Loan Agreement, require
that the undersigned consent to the removal by Lenders of the equipment and
other assets covered by the Loan Agreement (hereinafter called "Equipment") from
the Real Property, no matter how it is affixed thereto, and to the other matters
set forth below.

        NOW, THEREFORE, for good and sufficient consideration, receipt of which
is hereby acknowledged, the undersigned consents to the placing of the Equipment
on the Real Property, and agrees with Lenders as follows:

        1. The undersigned waives and releases each and every right which
undersigned now has, under laws of the State of California or by virtue of the
lease for the Real Property now in effect, to levy or distrain upon for rent, in
arrears, in advance or both, or to claim or assert title to the Equipment that
is already on said Real Property, or may hereafter be delivered or installed
thereon.

        2. The Equipment shall be considered to be personal property and shall
not be considered part of the Real Property regardless of whether or by what
means it is or may become attached or affixed to the Real Property.

<PAGE>   62

        3. The undersigned will permit Lenders, or their agent or
representative, to enter upon the Real Property for the purpose of exercising
any right they may have under the terms of the Loan Agreement or otherwise,
including, without limitation, the right to remove the Equipment; provided,
however, that if Lenders, in removing the Equipment damage any improvements of
the undersigned on the Real Property, Lenders will, at their expense, cause same
to be repaired.

        4. This agreement shall be binding upon the heirs, successors and
assigns of the undersigned and shall inure to the benefit of each Lender and its
respective successors and assigns.

        IN WITNESS WHEREOF, the undersigned has executed this instrument at
_____________, this _____________ day of _______________, 2000.

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

                                       OWNER/LESSOR

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

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

        The foregoing Consent must be acknowledged before a Notary Public.

<PAGE>   63

        STATE OF __________________ )
                                    )    ss
        COUNTY OF _________________ )

        On the ___________ day of ____________, 2000 before me, _____________
Notary Public, personally appeared ________________________________________

                             personally known to me
------------------------
                or

------------------------
                              proved to me on the basis of satisfactory evidence

               to be the person(s) whose name(s) is/are subscribed to the within
        instrument and acknowledged to me that he/she/they executed the same in
        his/her/their authorized capacity(ies), and that by his/her/their
        signature(s) on the instrument the person(s), or the entity upon behalf
        of which the person(s) acted, executed the instrument.

               WITNESS my hand and official seal

                                             --------------------------------
                                                SIGNATURE OF NOTARY PUBLIC

        (S E A L)

<PAGE>   64

                                   SCHEDULE 1

                               DISCLOSURE SCHEDULE

                                      NONE<PAGE>   1
                                                                   EXHIBIT 10.18

--------------------------------------------------------------------------------
                           LOAN AND SECURITY AGREEMENT
                          OPTICAL MICRO MACHINES, INC.
--------------------------------------------------------------------------------

<PAGE>   2

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                               Page
                                                                               ----
<S>                                                                            <C>
1   ACCOUNTING AND OTHER TERMS                                                  4

2   LOAN AND TERMS OF PAYMENT                                                   4
    2.1   Credit Extensions                                                     4
    2.2   Interest Rate, Payments                                               5
    2.3   Fees                                                                  6

3   CONDITIONS OF LOANS                                                         7

    3.1   Conditions Precedent to Initial Credit Extension                      7
    3.2   Conditions Precedent to all Credit Extensions                         7

4   CREATION OF SECURITY INTEREST                                               7

    4.1   Grant of Security Interest                                            7

5   REPRESENTATIONS AND WARRANTIES                                              7

    5.1   Due Organization and Authorization                                    7
    5.2   Collateral                                                            8
    5.3   Litigation                                                            8
    5.4   No Material Adverse Change in Financial Statements                    8
    5.5   Solvency                                                              8
    5.6   Regulatory Compliance                                                 8
    5.7   Subsidiaries                                                          8
    5.8   Full Disclosure                                                       8

6   AFFIRMATIVE COVENANTS                                                       9

    6.1   Government Compliance                                                 9
    6.2   Financial Statements, Reports, Certificates                           9
    6.3   Inventory; Returns                                                    9
    6.4   Taxes                                                                 9
    6.5   Insurance                                                             9
    6.6   Primary Accounts                                                      10
    6.7   Registration of Intellectual Property Rights                          10
    6.8   Further Assurances                                                    10
    6.9   Loss; Destruction; or Damage                                          10

7   NEGATIVE COVENANTS                                                          11
    7.1   Dispositions                                                          11
    7.2   Changes in Business, Ownership, Management or Business Locations      11
    7.3   Mergers or Acquisitions                                               11
    7.4   Indebtedness                                                          11
    7.5   Encumbrance                                                           11
    7.6   Distributions; Investments                                            11
    7.7   Transactions with Affiliates                                          12
    7.8   Subordinated Debt                                                     12
    7.9   Compliance                                                            12

8   EVENTS OF DEFAULT                                                           12
    8.1   Payment Default                                                       12
    8.2   Covenant Default                                                      12
    8.3   Material Adverse Change                                               12
    8.4   Attachment                                                            12
    8.5   Insolvency                                                            13
</TABLE>

                                        2
<PAGE>   3

<TABLE>
<S>                                                                             <C>
    8.6   Other Agreements                                                      13
    8.7   Judgments                                                             13
    8.8   Misrepresentations                                                    13

9   BANK'S RIGHTS AND REMEDIES                                                  13
    9.1   Rights and Remedies                                                   13
    9.2   Power of Attorney                                                     14
    9.3   Accounts Collection                                                   14
    9.4   Bank Expenses                                                         14
    9.5   Bank's Liability for Collateral                                       14
    9.6   Remedies Cumulative                                                   14
    9.7   Demand Waiver                                                         14

10  NOTICES                                                                     15

11  CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER                                  15

12  GENERAL PROVISIONS                                                          15

    12.1  Successors and Assigns                                                15
    12.2  Indemnification                                                       15
    12.3  Time of Essence                                                       15
    12.4  Severability of Provision                                             15
    12.5  Amendments in Writing, Integration                                    15
    12.6  Counterparts                                                          16
    12.7  Survival                                                              16
    12.8  Confidentiality                                                       16
    12.9  Attorneys' Fees, Costs and Expenses                                   16

13  DEFINITIONS                                                                 16

    13.1  Definitions                                                           16
</TABLE>

                                        3
<PAGE>   4

         This LOAN AND SECURITY AGREEMENT dated April 5, 1999, between SILICON
VALLEY BANK ("Bank"), whose address is 3003 Tasman Drive, Santa Clara,
California 95054 with an office located at 5414 Oberlin Drive, Ste. 230, San
Diego, California 92121 and OPTICAL MICRO MACHINES, INC. ("Borrower"), whose
address is 6160 Lusk Blvd., Suite C105, San Diego, California 92121 provides the
terms on which Bank will lend to Borrower and Borrower will repay Bank. The
parties agree as follows:

1 ACCOUNTING AND OTHER TERMS

         Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. This Agreement shall be construed to
impart upon Bank a duty to act reasonably at all times.

2 LOAN AND TERMS OF PAYMENT

2.1 CREDIT EXTENSIONS.

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

2.1.1 NON FORMULA ADVANCES.

         (a) Bank will make advances ("Non Formula Advance" and, collectively,
"Non Formula Advances") not exceeding the Committed Non Formula Line through the
Non Formula Maturity Date when all outstanding Non Formula Advances plus all
accrued interest will be due and payable. Non Formula Advances, when repaid may
be reborrowed.

         (b) To obtain a Non Formula Advance, Borrower must notify Bank by
facsimile or telephone by 3:00 p.m. Pacific time on the Business Day the Non
Formula Advance is to be made. Borrower must promptly confirm any telephone
notification by delivering to Bank the Payment/Advance Form attached as Exhibit
B. Bank will credit Non Formula Advances to Borrower's deposit account. Bank may
make Non Formula Advances under this Agreement based on instructions from a
Responsible Officer or his or her designee or without instructions if the Non
Formula Advances are necessary to meet Obligations which have become due. Bank
may rely on any telephone notice given by a person whom Bank believes is a
Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank
suffers due to reliance.

         (c) The Committed Non Formula Line terminates on the Non Formula
Maturity Date, when all Non Formula Advances and other amounts due under this
Agreement are immediately payable.

2.1.2 EQUIPMENT FACILITY.

         Subject to the terms and conditions of this Agreement, Bank agrees to
lend to Borrower, from time to time prior to the Commitment Termination Date,
equipment advances (each an "Equipment Advance" and collectively the "Equipment
Advances"). When repaid, the principal of the Equipment Advances may not be
re-borrowed. Each Equipment Advance shall be considered a promissory note
evidencing the amounts due hereunder for all purposes. Bank's obligation to lend
hereunder shall terminate on the earlier of (i) the occurrence and continuance
of an Event of Default, and (ii) the Commitment Termination Date. For purposes
of this Section, the minimum amount of each Equipment Advance is $50,000 and the
maximum number of Equipment Advances that will be made are 12.

         (a) To obtain an Equipment Advance, Borrower will deliver to Bank a
completed supplement in substantially the form attached ("Loan Supplement") and
such additional information as Bank may reasonably request at least five (5)
Business Days before the proposed funding date (the "Funding Date"). On each
Funding Date, Bank will specify in the Loan Supplement for each Equipment
Advance, the Basic Rate, the Loan Factor, the Payment Dates, and a table of
Stipulated Loss Values, together with a UCC Financing Statement covering the
Equipment described on the Loan Supplement. If Borrower satisfies

                                        4
<PAGE>   5

the conditions of each Equipment Advance specified from time to time by Bank,
Bank will disburse such Equipment Advance by internal transfer to Borrower's
deposit account with Bank.

         (b) Bank's obligation to lend the undisbursed portion of the Committed
Equipment Line will terminate if, in Bank's sole discretion, there has been a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospects of Borrower,
whether or not arising from transactions in the ordinary course of business, or
there has been any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Bank prior to the
execution of this Agreement.

2.2 INTEREST RATE, PAYMENTS.

2.2.1 AS TO NON FORMULA ADVANCES.

         (a) INTEREST RATE. Non Formula Advances accrue interest on the
outstanding principal balance at a per annum rate of 0.5 percentage point above
the Prime Rate. The interest rate increases or decreases when the Prime Rate
changes. Interest is computed on a 360 day year for the actual number of days
elapsed. Any amounts outstanding during the continuance of an Event of Default
shall bear interest at a per annum rate equal to 5% above the otherwise
effective interest rate.

         (b) PAYMENTS. Interest due on the Committed Non Formula Line is payable
on the 4th of each month.

2.2.2 AS TO EQUIPMENT ADVANCES

         (a) PRINCIPAL AND INTEREST PAYMENTS ON PAYMENT DATES. Borrower will
make payments monthly in advance of principal and accrued interest for each
Equipment Advance (collectively, "Scheduled Payments"), on the first Business
Day of the month following the Funding Date (or commencing on the Funding Date
if the Funding Date is the first Business Day of the month) with respect to such
Equipment Advance and continuing thereafter during the Repayment Period on the
first Business Day of each calendar month (each a "Payment Date"), in an amount
equal to the Loan Factor multiplied by the Loan Amount for such Equipment
Advance as of such Payment Date. All unpaid principal and accrued interest is
due and payable in full on the last Payment Date with respect to such Equipment
Advance. An Equipment Advance may be prepaid only in compliance with Section
2.2.2(g), below.

         (b) INTEREST RATE. Borrower will pay interest on the unpaid principal
amount of each Equipment Advance from the first Payment Date after the Funding
Date of such Equipment Advance until the Equipment Advance has been paid in
full, at the per annum rate of interest equal to the Basic Rate determined by
Bank as of the Funding Date for each Equipment Advance in accordance with the
definition of the Basic Rate. "Basic Rate" is, as of the Funding Date, the per
annum rate of interest (based on a year of 360 days) equal to the sum of (a) the
U.S. Treasury note yield to maturity for a term equal to the Treasury Note
Maturity as quoted in The Wall Street Journal on the day the applicable Loan
Terms Schedule is prepared, plus (b) the applicable Loan Margin for the type of
Eligible Equipment being financed. The Loan Margin is 300 basis points. The
Treasury Note Maturity is 42 months.

         (c) INTERIM PAYMENT. In addition to the Scheduled Payments, on the
Funding Date for each Equipment Advance (unless the Funding Date is the first
Business Day of the month) Borrower shall pay to Bank, on behalf of Bank
interest as the applicable Basic Rate Calculated for the number of days from the
Funding Date of the Equipment Advance Loan until the first Payment Date with
respect to such Equipment Advance.

         (d) FINAL PAYMENT. On the Maturity Date with respect to such Equipment
Advance, Borrower will pay, in addition to the unpaid principal and accrued
interest and all other amounts due on such date with respect to such Equipment
Advance, an amount equal to the Final Payment. "Final Payment" is with respect
to each Equipment Advance, a payment (in addition to and not a substitution for
the regular monthly payments of principal plus accrued interest) due on the
maturity date for such Equipment

                                        5
<PAGE>   6

Advance equal to the Loan Amount for such Equipment Advance at such time
multiplied by the Final Payment Percentage.

         "Final Payment Percentage" is, for each Equipment Advance, 8%.

         "Loan Amount" is the original principal amount of the Equipment Advance
less the aggregate of all Prepayment Amounts relating to payments of such
Equipment Advance prior to such dates.

         "Prepayment Amount" means in the case of the mandatory repayment in
accordance with Section 2.2.2(e) and Section 6.9, the amount of such payment
required pursuant to Section 6.9.

         (e) PREPAYMENT UPON AN EVENT OF LOSS. If any Financed Equipment is
subject to an Event of Loss and Borrower is required to or elects to prepay the
Equipment Advance with respect to such Financed Equipment pursuant to Section
6.9, then such Equipment Advance shall be prepaid to the extent and in the
manner provided in such section.

         (f) MANDATORY PREPAYMENT UPON AN ACCELERATION. If the Equipment
Advances are accelerated during the occurrence and continuance of an Event of
Default or otherwise (other than following an Event of Loss), then Borrower will
immediately pay to Bank (i) all unpaid Scheduled Payments with respect to each
Equipment Advance due prior to the date of prepayment, and (ii) the Stipulated
Loss Value with respect to each Equipment Advance, all other sums, if any, that
shall have become due and payable with respect to any Equipment Advance.

         (g) PERMITTED PREPAYMENT OF LOANS. Borrower will repay the Equipment
Advances on the terms provided in the Loan Supplement. With Bank's prior written
consent, Borrower shall have the option to prepay all, but not less than all, of
the Equipment Advances advanced by Bank under this Agreement, provided Borrower
(i) provides written notice to Bank of its election to exercise to prepay the
Equipment Advances at least five (5) days prior to such prepayment, and (ii)
pays, on the date of the prepayment (A) all accrued and unpaid interest with
respect to the Equipment Advances through the date the prepayment is made; (B)
all unpaid principal with respect to the Equipment Advances; (C) a premium equal
to the Make-Whole Premium; and (D) all other sums, if any, that shall have
become due and payable hereunder with respect to this Agreement, including Bank
Expenses.

         (h) Any amounts outstanding during the continuance of an Event of
Default shall bear interest at a per annum rate equal to the Basic Rate plus
five percent (5%). If any change in the law increases Bank's expenses or
decreases its return from the Equipment Advances, Borrower will pay Bank upon
request the amount of such increase or decrease.

         (i) Bank may debit any of Borrower's deposit accounts including Account
Number ____________ for principal and interest payments when due or any amounts
Borrower owes Bank. Bank will notify Borrower when it debits Borrower's
accounts. These debits are not a set-off. Payments received after 12:00 noon
Pacific time are considered received at the opening of business on the next
Business Day. When a payment is due on a day that is not a Business Day, the
payment is due the next Business Day and additional fees or interest accrue.

2.3 FEES.

         Borrower will pay:

         (a) Facility Fee. A fully earned, non-refundable Facility Fee of $5,000
for the Committed Non Formula Line and $2,500 for the Committed Equipment Line
due on the Closing Date; and

         (b) Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and expenses) incurred through and after the date of this Agreement, are
payable when due.

                                        6
<PAGE>   7

3 CONDITIONS OF LOANS

3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.

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

3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.

         Bank's obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following:

         (a) timely receipt of any Payment/Advance Form; and

         (b) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Credit Extension and no Event of Default may have occurred and be continuing, or
result from the Credit Extension. Each Credit Extension is Borrower's
representation and warranty on that date that the representations and warranties
of Section 5 remain true.

4 CREATION OF SECURITY INTEREST

4.1 GRANT OF SECURITY INTEREST.

         Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral. Notwithstanding the foregoing, the security interest granted herein
shall not extend to and the term "Collateral" shall not include any license or
contract rights that are nonassignable by their terms, provided this exclusion
shall not extend to accounts, chattel paper or general intangibles for money due
or to become due in accordance with Section 9318(4) of the Code. Except as
disclosed on the Schedule, Borrower is not a party to, nor is bound by, any
license or other agreement that prohibits or otherwise restricts Borrower from
granting a security interest in Borrower's interest in such license or agreement
or any other property. Without prior notice to Bank, Borrower shall not enter
into, or become bound by, any such material license or agreement. Borrower shall
take such steps as Bank requests to obtain the consent of, or waiver by, any
person whose consent or waiver is necessary for Bank to have a security interest
that might otherwise be restricted or prohibited by the terms of any such
license or agreement whether now existing or entered into in the future. Bank's
lien and security interest in the Collateral will continue until Borrower fully
satisfies its Obligations.

5 REPRESENTATIONS AND WARRANTIES

         Borrower represents and warrants as follows:

5.1 DUE ORGANIZATION AND AUTHORIZATION.

         Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified, except where the failure to so qualify
could not reasonably be expected to cause a Material Adverse Change.

         The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could cause a Material Adverse Change.

                                        7
<PAGE>   8

5.2 COLLATERAL.

         Borrower has good title to the Collateral, free of Liens except
Permitted Liens. All Inventory is in all material respects of good and
marketable quality, free from material defects. Borrower is the sole owner of
the Intellectual Property, except for non-exclusive licenses granted to its
customers in the ordinary course of business. To the best of Borrower's
knowledge, each Patent is valid and enforceable and no part of the Intellectual
Property has been judged invalid or unenforceable, in whole or in part, and no
claim has been made that any part of the Intellectual Property violates the
rights of any third party.

5.3 LITIGATION.

         Except as shown in the Schedule, there are no actions or proceedings
pending or, to Borrower's knowledge, threatened by or against Borrower or any
Subsidiary in which an adverse decision could reasonably be expected to cause a
Material Adverse Change.

5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.

         All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.

5.5 SOLVENCY.

         The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement, and Borrower is able to pay its debts (including trade debts) as they
mature.

5.6 REGULATORY COMPLIANCE.

         Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). Borrower has
complied with the Federal Fair Labor Standards Act. Borrower has not violated
any laws, ordinances or rules, the violation of which could reasonably be
expected to cause a Material Adverse Change. None of Borrower's or any
Subsidiary's properties or assets has been used by Borrower or any Subsidiary
or, to the best of Borrower's knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous substance other than
legally. Borrower and each Subsidiary has timely filed all required tax returns
and paid, or made adequate provision to pay, all taxes, except those being
contested in good faith with adequate reserves under GAAP. Borrower and each
Subsidiary has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted
except where the failure to do so could not reasonably be expected to cause a
Material Adverse Change.

5.7 SUBSIDIARIES.

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

5.8 FULL DISCLOSURE.

         No representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank taken together with all such
certificates and written statements given to Bank contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained in the certificates or statements not misleading.

                                        8
<PAGE>   9

6 AFFIRMATIVE COVENANTS

         Borrower will do all of the following:

6.1 GOVERNMENT COMPLIANCE.

         Borrower will maintain its and all Subsidiaries' legal existence and
good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify could have a material
adverse effect on Borrower's business or operations. Borrower will comply, and
have each Subsidiary comply, with all laws, ordinances and regulations to which
it is subject, noncompliance with which could (i) reasonably be expected to have
a material adverse effect on Borrower's business or operations or (ii) cause a
Material Adverse Change.

6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.

         (a) Borrower will deliver to Bank: (i) as soon as available, but no
later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during the period, in a form and certified by a Responsible Officer
acceptable to Bank; (ii) as soon as available, but no later than 90 days after
the last day of Borrower's fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an
unqualified opinion or an opinion satisfactory to the Bank on the financial
statements from an independent certified public accounting firm acceptable to
Bank; (iii) a prompt report of any legal actions pending or threatened against
Borrower or any Subsidiary that could reasonably result in damages or costs to
Borrower or any Subsidiary of $100,000 or more; (iv) budgets, sales projections,
operating plans or other financial information Bank reasonably requests; and (v)
prompt notice of any material change in the composition of the Intellectual
Property, including any subsequent ownership right of Borrower in or to any
Copyright, Patent or Trademark not shown in any intellectual property security
agreement between Borrower and Bank or knowledge of an event that materially
adversely affects the value of the Intellectual Property.

         (b) Bank has the right to audit Borrower's Collateral at Borrower's
expense, if an Event of Default has occurred and is continuing.

6.3 INVENTORY; RETURNS.

         Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims, that involve more than $50,000.

6.4 TAXES.

         Borrower will make, and cause each Subsidiary to make, timely payment
of all material federal, state, and local taxes or assessments and will deliver
to Bank, on demand, appropriate certificates attesting to the payment.

6.5 INSURANCE.

         Borrower will keep its business and the Collateral insured for risks
and in amounts, as Bank requests. Insurance policies will be in a form, with
companies, and in amounts that are satisfactory to Bank. All property policies
will have a lender's loss payable endorsement showing Bank as an additional loss
payee and all liability policies will show the Bank as an additional insured and
all policies will provide that the insurer must give Bank at least 20 days
notice before canceling its policy. At Bank's request, Borrower will deliver
certified copies of policies and evidence of all premium payments. Subject to
Section 6.7 below, so long as no Event of Default has occurred and is
continuing, Borrower shall have the option of applying the proceeds of any
casualty policy to the replacement or repair of destroyed or damaged property;
provided that, after the occurrence and during the continuance of an Event of
Default, all

                                        9
<PAGE>   10

proceeds payable under any such casualty policy shall, at the option of Bank, be
payable to Bank on account of the Obligations.

6.6 PRIMARY ACCOUNTS.

         Borrower will maintain its primary depository and operating accounts
with Bank.

6.7 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.

         Borrower will register or cause to be registered with the United States
Copyright Office (i) any software (material to the business of Borrower)
developed or acquired by Borrower at any time and from time to time hereafter in
connection with any product developed or acquired for sale or licensing and (ii)
any major revision or upgrades to any software that has previously been
registered with the United States Copyright Office. Such registrations with the
United States Copyright Office shall be registered within 30 days from the
development or acquisition of such software, major revision or upgrade. Borrower
will notify Bank within 10 days of Borrower's filing of any application or
registration of any Intellectual Property rights with the United States Patent
and Trademark Office and Borrower shall execute and deliver any and all
instruments and documents as Bank may require to evidence or perfect Bank's
security interest in such application or registration.

         Borrower will (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property and promptly advise Bank in writing
of material infringements and (ii) not allow any Intellectual Property to be
abandoned, forfeited or dedicated to the public without Bank's written consent.

6.8 FURTHER ASSURANCES.

         Borrower will execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank's security interest in
the Collateral or to effect the purposes of this Agreement.

6.9 LOSS; DESTRUCTION; OR DAMAGE.

         Borrower will bear the risk of the Financed Equipment being lost,
stolen, destroyed, or damaged. If during the term of this Agreement any item of
Financed Equipment becomes obsolete or is lost, stolen, destroyed, damaged
beyond repair, rendered permanently unfit for use, or seized by a governmental
authority for any reason for a period equal to at least the remainder of the
term of this Agreement (an "Event of Loss"), then in each case, Borrower:

         (a) prior to the occurrence of an Event of Default, at Borrower's
option, will (i) pay to Bank on account of the Obligations in accordance with
subsection (b) below; or (ii) repair or replace any Financed Equipment subject
to an Event of Loss provided the repaired or replaced Financed Equipment is of
equal or like value to the Financed Equipment subject to an Event of Loss and
provided further that Bank has a first priority perfected security interest in
such repaired or replaced Financed Equipment.

         (b) during the continuance of an Event of Default, on or before the
Payment Date after such Event of Loss for each such item of Financed Equipment
subject to such Event of Loss, Borrower will, at Bank's option, pay to Bank an
amount equal to the sum of: (i) all accrued and unpaid Scheduled Payments (with
respect to such Equipment Advance related to the Event of Loss) due prior to the
next such Payment Date, (ii) a prepayment in an amount equal to the Stipulated
Loss Value, (iii) the Final Payment plus (iv) all other sums, if any, that shall
have become due and payable, including interest at the Default Rate with respect
to any past due amounts.

         (c) On the date of receipt by Bank of the amount specified above with
respect to each such item of Financed Equipment subject to an Event of Loss,
this Agreement shall terminate as to such Financed Equipment. If any proceeds of
insurance or awards received from governmental authorities are in excess of the
amount owed under this Section, Bank shall promptly remit to Borrower the amount
in excess of the amount owed to Bank.

                                       10
<PAGE>   11

7 NEGATIVE COVENANTS

         Borrower will not do any of the following without prior consent of
Bank, which such consent may be granted or withheld in Bank's sole discretion:

7.1 DISPOSITIONS.

         Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, other than Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; or (iii) of worn-out or obsolete Equipment or (iv) not otherwise
permitted in this Section 7.1, in an aggregate amount not exceeding $100,000 in
any fiscal year or (v) otherwise permitted under this Section 7..

7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.

         Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or have a material
change in its ownership of greater than 49% (provided the management of Borrower
remains the same). Borrower will not, without at least 30 days prior written
notice, relocate its chief executive office or add any new offices or business
locations.

7.3 MERGERS OR ACQUISITIONS.

         Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement or result in a decrease of more than 25% of Tangible Net Worth; or
(ii) merge or consolidate a Subsidiary into another Subsidiary or into Borrower.

7.4 INDEBTEDNESS.

         Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.

7.5 ENCUMBRANCE.

         Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here except for Collateral subject to Permitted Liens.

7.6 DISTRIBUTIONS; INVESTMENTS.

         Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so. Pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock except for (i) repurchase of stock
from former employees or consultants of Borrower in accordance with the terms of
repurchase agreement between Borrower or consultant in an aggregate amount not
to exceed $25,000 provided, however, that immediately prior to and following
such repurchases there exists no Event of Default under the Loan Documents, (ii)
distributions payable solely in Borrower's capital stock, and (iii) Borrower may
convert any of its convertible securities into other securities pursuant to the
terms of such convertible securities or otherwise in exchange thereof.

                                       11
<PAGE>   12

7.7 TRANSACTIONS WITH AFFILIATES.

         Directly or indirectly enter or permit any material transaction with
any Affiliate, except transactions that are in the ordinary course of Borrower's
business, on terms less favorable to Borrower than would be obtained in an arm's
length transaction with a non-affiliated Person.

7.8 SUBORDINATED DEBT.

         Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.

7.9 COMPLIANCE.

         Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to (i) have a material adverse effect on
Borrower's business or operations or (ii) cause a Material Adverse Change, or
permit any of its Subsidiaries to do so.

8 EVENTS OF DEFAULT

         Any one of the following is an Event of Default:

8.1 PAYMENT DEFAULT.

         If Borrower fails to pay any of the Obligations.

8.2 COVENANT DEFAULT.

         If Borrower violates any covenant in Section 7 or does not perform or
observe any other material term, condition or covenant in this Agreement, any
Loan Documents, or in any agreement between Borrower and Bank and as to any
default under a term, condition or covenant that can be cured, has not cured the
default within 30 days after it occurs, or if the default cannot be cured within
30 days or cannot be cured after Borrower's attempts within 30 day period, and
the default may be cured within a reasonable time, then Borrower has an
additional period (of not more than 30 days) to attempt to cure the default.
During the additional time, the failure to cure the default is not an Event of
Default (but no Credit Extensions will be made during the cure period);

8.3 MATERIAL ADVERSE CHANGE.

         (i) If there occurs a material impairment in the perfection or priority
of the Bank's security interest in the Collateral or in the value of such
Collateral which is not covered by adequate insurance or (ii) if the Bank
determines, based upon information available to it and in its reasonable
judgment, that Borrower's financial condition has materially deteriorated.

8.4 ATTACHMENT.

         If any material portion of Borrower's assets is attached, seized,
levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 30 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 30 days
after Borrower receives notice. These are not Events of Default if stayed or if

                                       12
<PAGE>   13

a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);

8.5 INSOLVENCY.

         If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);

8.6 OTHER AGREEMENTS.

         If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $100,000 or that could cause a Material Adverse Change;

8.7 JUDGMENTS.

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

8.8 MISREPRESENTATIONS.

         If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.

9 BANK'S RIGHTS AND REMEDIES

9.1 RIGHTS AND REMEDIES.

         When an Event of Default occurs and is continuing Bank may, without
notice or demand, do any or all of the following:

         (a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);

         (b) Stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and Bank;

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

         (d) Make any payments and do any acts it considers necessary and
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;

         (e) Apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;

         (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral. Bank is granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower's labels, Patents, Copyrights, Mask Works, rights of use of any name,
trade secrets,

                                       13
<PAGE>   14

trade names, Trademarks, service marks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank's
exercise of its rights under this Section, Borrower's rights under all licenses
and all franchise agreements inure to Bank's benefit; and

         (g) Dispose of the Collateral according to the Code.

9.2 POWER OF ATTORNEY.

         Effective only when an Event of Default occurs and is continuing,
Borrower irrevocably appoints Bank as its lawful attorney to: (i) endorse
Borrower's name on any checks or other forms of payment or security; (ii) sign
Borrower's name on any invoice or bill of lading for any Account or drafts
against account debtors, (iii) make, settle, and adjust all claims under
Borrower's insurance policies; (iv) settle and adjust disputes and claims about
the Accounts directly with account debtors, for amounts and on terms Bank
determines, in good faith, reasonable; and (v) transfer the Collateral into the
name of Bank or a third party as the Code permits. Bank may exercise the power
of attorney to sign Borrower's name on any documents necessary to perfect or
continue the perfection of any security interest regardless of whether an Event
of Default has occurred. Bank's appointment as Borrower's attorney in fact, and
all of Bank's rights and powers, coupled with an interest, are irrevocable until
all Obligations have been fully repaid and performed and Bank's obligation to
provide Credit Extensions terminates.

9.3 ACCOUNTS COLLECTION.

         When an Event of Default occurs and continues, Bank may notify any
Person owing Borrower money of Bank's security interest in the funds and verify
the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.

9.4 BANK EXPENSES.

         If Borrower fails to pay any amount or furnish any required proof of
payment to third persons Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank reasonably deems prudent. Any amounts paid by Bank are Bank
Expenses and immediately due and payable, bearing interest at the then
applicable rate and secured by the Collateral. No payments by Bank are deemed an
agreement to make similar payments in the future or Bank's waiver of any Event
of Default.

9.5 BANK'S LIABILITY FOR COLLATERAL.

         If Bank complies with reasonable banking practices it is not liable
for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other person. Borrower bears
all risk of loss, damage or destruction of the Collateral.

9.6 REMEDIES CUMULATIVE.

         Bank's rights and remedies under this Agreement and the Loan Documents
are cumulative. Bank has all rights and remedies provided under the Code, by
law, or in equity. Bank's exercise of one right or remedy is not an election,
and Bank's waiver of any Event of Default is not a continuing waiver. Bank's
delay is not a waiver, election, or acquiescence. No waiver is effective unless
signed by Bank and then is only effective for the specific instance and purpose
for which it was given.

9.7 DEMAND WAIVER.

         Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of

                                       14
<PAGE>   15

accounts, documents, instruments, chattel paper, and guarantees held by Bank on
which Borrower is liable.

10 NOTICES

         All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.

11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

         California law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in San Diego County, California.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

12 GENERAL PROVISIONS

12.1 SUCCESSORS AND ASSIGNS.

         This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.

12.2 INDEMNIFICATION.

         Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.

12.3 TIME OF ESSENCE.

         Time is of the essence for the performance of all obligations in this
Agreement.

12.4 SEVERABILITY OF PROVISION.

         Each provision of this Agreement is severable from every other
provision in determining the enforceability of any provision.

12.5 AMENDMENTS IN WRITING, INTEGRATION.

         All amendments to this Agreement must be in writing and signed by
Borrower and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement merge into this
Agreement and the Loan Documents.

                                       15
<PAGE>   16

12.6 COUNTERPARTS.

         This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.

12.7 SURVIVAL.

         All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.

12.8 CONFIDENTIALITY.

         In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the Loans, (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank's
examination or audit and (v) as Bank considers appropriate exercising remedies
under this Agreement. Confidential information does not include information that
either: (a) is in the public domain or in Bank's possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank, or (b) is
disclosed to Bank by a third party, if Bank does not know that the third party
is prohibited from disclosing the information.

12.9 ATTORNEYS' FEES, COSTS AND EXPENSES.

         In any action or proceeding between Borrower and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys' fees and other costs and expenses incurred, in addition to
any other relief to which it may be entitled.

13 DEFINITIONS

13.1 DEFINITIONS.

         In this Agreement:

         "AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.

         "BANK EXPENSES" are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).

         "BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.

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

         "CLOSING DATE" is the date of this Agreement.

         "CODE" is the California Uniform Commercial Code.

         "COLLATERAL" is the property described on Exhibit A.

                                       16
<PAGE>   17

         "COMMITTED EQUIPMENT LINE" is an Equipment Advance of up to $1,000,000.

         "COMMITTED NON FORMULA LINE" is an Non Formula Advance of up to
$500,000.

         "COMMITMENT TERMINATION DATE" April 5, 2000.

         "CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.

         "CREDIT EXTENSION" is each Equipment Advance, Non Formula Advance or
any other extension of credit by Bank for Borrower's benefit.

         "COPYRIGHTS" are all copyright rights, applications or registrations
and like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.

         "EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

         "ELIGIBLE EQUIPMENT" is (i) 100% of general purpose computer equipment,
office equipment, test and laboratory equipment, purchased within 90 days prior
from the Closing Date and (ii) 100% of the book value of general purpose
computer equipment, office equipment, test and laboratory equipment, furnishing
purchased within 91 but no later than 180 days prior to the Closing Date,
subject to the limitations set forth below. Equipment Advances against
furnishings, desk top personal computers and software shall be limited to the
lesser of (i) 15% of outstanding Equipment Advances or (ii) $150,000. All
Equipment financed with the proceeds of Equipment Advances shall be new,
provided that Bank, in its sole discretion, may finance used equipment.

         "EQUIPMENT ADVANCE" is defined in Section 2.1.2.

         "EQUIPMENT MATURITY DATE" is defined in Loan Supplement.

         "ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.

         "FINAL PAYMENT PERCENTAGE" is defined in Section 2.2.2(d).

         "FINANCED EQUIPMENT" is defined in the Loan Supplement.

         "FUNDING DATE" is any date on which an Equipment Advance is made to or
on account of Borrower.

         "GAAP" is generally accepted accounting principles.

         "INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b)

                                       17
<PAGE>   18

obligations evidenced by notes, bonds, debentures or similar instruments, (c)
capital lease obligations and (d) Contingent Obligations.

         "INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

         "INTELLECTUAL PROPERTY" is:

         (a) Copyrights, Trademarks, Patents, and Mask Works including
amendments, renewals, extensions, and all licenses or other rights to use and
all license fees and royalties from the use;

         (b) Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created, acquired
or held;

         (c) All design rights which may be available to Borrower now or later
created, acquired or held;

         (d) Any claims for damages (past, present or future) for infringement
of any of the rights above, with the right, but not the obligation, to sue and
collect damages for use or infringement of the intellectual property rights
above;

         All proceeds and products of the foregoing, including all insurance,
indemnity or warranty payments.

         "INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.

         "LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

encumbrance.

         "LOAN AMOUNT" is defined in Section 2.2.2(d).

         "LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.

         "LOAN FACTOR" is the amount set forth as a percentage in the Loan
Supplement calculated using the Basic Rate.

         "LOAN SUPPLEMENT" is attached as Exhibit C.

         "MAKE-WHOLE PREMIUM" is an amount equal to $40,000 if the prepayment is
made on or before the first anniversary of the date hereof; $30,000 if the
prepayment is made on or after the first anniversary hereof but before the
second anniversary hereof; $20,000 if the prepayment is made on or after the
second anniversary hereof but before the third anniversary hereof; $10,000 if
the prepayment is made on or after the third anniversary hereof but before the
end of the Repayment Period with respect to such Equipment Advances.

         "MASK WORKS" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.

         "MATERIAL ADVERSE CHANGE" is defined in Section 8.3.

         "NON FORMULA ADVANCE" is defined in Section 2.1.1.

                                       18
<PAGE>   19

         "NON FORMULA MATURITY DATE" is the earlier of (i) April 4, 2000 or (ii)
the close of Borrower's Series D Preferred round of financing.

         "OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit and
Exchange Contracts and including interest accruing after Insolvency Proceedings
begin and debts, liabilities, or obligations of Borrower assigned to Bank.

         "ORIGINAL STATED COST" is stated in Section 2.2(d).

         "OTHER EQUIPMENT" is leasehold improvements, intangible property such
as computer software and software licenses, equipment designed or manufactured
for Borrower, other intangible property, limited use property and other similar
property.

         "PATENTS" are patents, patent applications and like protections,
including, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

         "PERMITTED INDEBTEDNESS" is:

         (a) Borrower's indebtedness to Bank under this Agreement or any other
Loan Document;

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

         (c) Subordinated Debt;

         (d) Indebtedness to trade creditors and with respect to surety bonds
and similar agreements incurred in the ordinary course of business; and

         (e) Indebtedness secured by Permitted Liens.

         (f) Other Indebtedness, not otherwise permitted by Section 7.4 not
exceeding $100,000 in the aggregate outstanding; and

         (g) Extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (f) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.

         "PERMITTED INVESTMENTS" are:

         (a) Investments shown on the Schedule and existing on the Closing Date;

         (b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or Moody's Investors Service, Inc., and (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue;

         (c) Investments consisting of the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business;

         (d) Investments consisting of receivables owing to Borrower or its
Subsidiaries by Persons and advances to customers or suppliers, in each case, if
created, acquired or made in the ordinary course of business; provided that this
paragraph (d) shall not apply to Investments owing by Subsidiaries to Borrower;

         (e) Investments consisting of (i) compensation of employees, officers
and directors of Borrower or its Subsidiaries so long as the Board of Directors
or Borrower determines that such compensation is in the

                                       19
<PAGE>   20

best interests of Borrower, (ii) travel advances, employee relocation loans and
other employee loans and advances in the ordinary course of business, (iii)
loans to employees, officers or directors relating to the purchase of equity
securities of Borrower or its Subsidiaries pursuant to employee stock purchase
plans approved by Borrower's Board of Directors, (iv) other loans to officers
and employees approved by the Board of Directors in an aggregate amount not in
excess of One Hundred Thousand Dollars ($100,000) outstanding at any time;

         (f) 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 business;

         (g) Investments pursuant to or arising under currency agreements or
interest rate agreements entered into in the ordinary course of business;

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

         (i) Investments constituting acquisitions permitted under Section 7.3;

         (j) Deposit accounts of Borrower in which Bank has a Lien prior to any
other Lien;

         (k) Deposit accounts of any subsidiaries maintained in the ordinary
course of business;

         (l) Investments accepted in connection with Transfers permitted by
Section 7.1;

         (m) Joint ventures or strategic partnerships in the ordinary course of
Borrower's business consisting of the non-exclusive licensing of technology, the
development of technology or the providing of technical support, provided that
any cash investment by Borrower shall not exceed $100,000 in the aggregate in
any fiscal year; and

         (m) Other Investments aggregating not in excess of One Hundred Thousand
Dollars ($100,000).

         "PERMITTED LIENS" are:

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

         (b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's security interests;

         (c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the -- proceeds of the equipment;

         (d) Leases or subleases and licenses or sublicenses granted in the
ordinary course of Borrower's business, if the leases, subleases, licenses and
sublicenses permit granting Bank a security interest;

         (e) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c) but any extensions,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase;

         (f) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Sections 8.4 and 8.7;

         (g) Liens in favor of other financial institutions arising in
connection with Borrower's deposit accounts held at such institutions, provided
that Bank has a perfected security interest in the amounts held in such deposit
accounts; and

                                       20
<PAGE>   21

         (h) Other Liens not described above arising in the ordinary course of
business and not having or not reasonably likely to have a material adverse
effect on Borrower and its Subsidiaries taken as a whole.

         "PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.

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

         "REPAYMENT PERIOD" as to the Equipment Advances, is 42 months.

         "RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.

         "SCHEDULE" is any attached schedule of exceptions.

         "STATED COST" is (i) with respect to new equipment, the original cost
to Borrower of the item of new equipment net of any and all freight,
installation, tax and other soft costs or (ii) with respect to used equipment,
the net book value assigned to such item of used equipment by Bank, after
consultation with Borrower, at the time of the making of the Equipment Advance
such item of used equipment.

         "STIPULATED LOSS VALUE" is the percentage set forth with respect to
each Equipment Advance in the Loan Supplement, determined as of the Payment Date
on which payment of such amount is to be made, or if such date is not a Payment
Date, on the Payment Date immediately succeeding such date multiplied by the
Loan Amount.

         "SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank on terms and in a form acceptable to Bank.

         "SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.

         "TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities plus Subordinated Debt.

         "TOTAL LIABILITIES" is on any day, obligations that are, under GAAP,
classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.

         "TRADEMARKS" are trademark and servicemark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Assignor connected with the trademarks.

                                       21
<PAGE>   22

BORROWER:

OPTICAL MICRO MACHINES, INC.

By: /s/ Anis Husain
   --------------------------
Title: President/ CFO
      ------------------------

BANK:

SILICON VALLEY BANK

By: /s/ Signature Illegible
   --------------------------
Title: VP
     ------------------------

                                       22
<PAGE>   23

                                    EXHIBIT A

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

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

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

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

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

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

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

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

Notwithstanding the foregoing, the security interest granted herein shall not
extend to and the term "Collateral" shall not include any property, rights or
licenses to the extent the granting of a security interest herein (i) would be
contrary to applicable law or (ii) is prohibited by or would constitute a
default under any agreement or document governing such property, rights or
licenses (but only to the extent such prohibition is enforceable under
applicable law).

<PAGE>   24

                                    EXHIBIT B

                   LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM

              DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.

TO: CENTRAL CLIENT SERVICE DIVISION                         DATE:
                                                                 ---------------
FAX#: (408) 496-2426                                        TIME:
                                                                 ---------------

FROM: OPTICAL MICRO MACHINES, INC.

--------------------------------------------------------------------------------
                             CLIENT NAME (BORROWER)

REQUESTED BY:
             -------------------------------------------------------------------
                            AUTHORIZED SIGNER'S NAME

AUTHORIZED SIGNATURE:
                     -----------------------------------------------------------

PHONE NUMBER:
             -------------------------------------------------------------------

FROM ACCOUNT #                       TO ACCOUNT #
               --------------                    -------------------------------

REQUESTED TRANSACTION TYPE                      REQUESTED DOLLAR AMOUNT
--------------------------                      -----------------------
INCREASE (ADVANCE)                              $
                                                 -------------------------------
PRINCIPAL PAYMENT (ONLY)                        $
                                                 -------------------------------
INTEREST PAYMENT (ONLY)                         $
                                                 -------------------------------
PRINCIPAL AND INTEREST (PAYMENT)                $
                                                 -------------------------------

OTHER INSTRUCTIONS:
                   -------------------------------------------------------------

All Borrower's representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone request for and Advance confirmed by this Borrowing Certificate; but
those representations and warranties expressly referring to another date shall
be true, correct and complete in all material respects as of that date.

                                  BANK USE ONLY

TELEPHONE REQUEST:

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

----------------------------                     ------------------------------
    Authorized Requester                                    Phone #

---------------------------                      ------------------------------
    Received By (Bank)                                      Phone #

                         -------------------------------
                           Authorized Signature (Bank)

<PAGE>   25

                                    EXHIBIT C

                        FORM OF LOAN AGREEMENT SUPPLEMENT

                        LOAN AGREEMENT SUPPLEMENT No. [ ]

        LOAN AGREEMENT SUPPLEMENT No. [ ], dated _______, 199__ ("Supplement"),
to the Loan and Security Agreement dated as of April 5, 1999 (the "Loan
Agreement) by and between the undersigned ("Borrower"), and Silicon Valley Bank
("Bank").

        Capitalized terms used herein but not otherwise defined herein are used
with the respective meanings given to such terms in the Loan Agreement.

        To secure the prompt payment by Borrower of all amounts from time to
time outstanding under the Loan Agreement, and the performance by Borrower of
all the terms contained in the Loan Agreement, Borrower grants Bank, a first
priority security interest in each item of equipment and other property
described in Annex A hereto, which equipment and other property shall be deemed
to be additional Financed Equipment and Collateral. The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached
hereto. The proceeds of the Loan should be transferred to Borrower's account
with Bank set forth below:

                  Bank Name:  Silicon Valley Bank
                  Account No.:
                              ---------------------------------

Borrower hereby certifies that (a) the foregoing information is true and correct
and authorizes Bank to endorse in its respective books and records, the Basic
Rate applicable to the Funding Date of the Loan contemplated in this Loan
Agreement Supplement and the principal amount set forth in the Loan Terms
Schedule; (b) the representations and warranties made by Borrower in the Loan
Agreement are true and correct on the date hereof and will be true and correct
on such Funding Date. No Event of Default has occurred and is continuing under
the Loan Agreement. This Supplement may be executed by Borrower and Bank in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

        This Supplement is delivered as of this day and year first above
written.

SILICON VALLEY BANK
                                                  ------------------------------

By:                                            By:
   ---------------------------------              ------------------------------
   Name:                                          Name:
        ----------------------------                   -------------------------
   Title:                                         Title:
         ---------------------------                    ------------------------

Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule

<PAGE>   26

                              Annex A to Exhibit C
                              --------------------

        The Financed Equipment being financed with the Equipment Advance which
this Loan Agreement Supplement is being executed is listed below. Upon the
funding of such Equipment Advance, this schedule automatically shall be deemed
to be a part of the Collateral.

                                        2
<PAGE>   27

                              Annex B to Exhibit C

LOAN TERMS SCHEDULE #
                     ---------------

Loan Funding Date:          , 199
                   ---------     --
Original Loan Amount: $
                       -----------

Basic Rate:             %
           -------------
Loan Factor:            %
            ------------

Scheduled Payment Dates and Amounts*:

     One (1) payment of $_____ due _______________
     _______ payment of $_____ due monthly in advance from ______ through _____.
     One (1) payment of $_____ due ___________

Maturity Date:
              ----------------

Final Payment:          An additional amount equal to the Final Payment
                        Percentage multiplied by the Loan Amount then in effect,
                        shall be paid on the Maturity Date with respect to such
                        Loan.

Stipulated Loan Value: The Loan Amount multiplied by the applicable stipulated
Loan Value Percentage set forth below.

<TABLE>
<CAPTION>
Payment No.                         Payment Date                        Stipulated Loss Value Percentage**
<S>                                 <C>                                 <C>
1
2
3
4

 . . .
35
[36]

 . . .
</TABLE>

*/ The amount of each Scheduled Payment will change as the Loan Amount changes.

**/Each Stipulated Loan Value amount assumes payment of all Scheduled Payments
due on or before the indicated Payment Date.

                                        3
<PAGE>   28

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

                            WARRANT TO PURCHASE STOCK

Corporation: OPTICAL MICRO MACHINES, INC., a California corporation
Number of Shares: 98,493 (subject to the provision set forth below)
Class of Stock: Series C Preferred
Initial Exercise Price: $0.73 per share
Issue Date: April 5, 1999
Expiration Date: April 5, 2004

        THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, SILICON VALLEY BANK ("Holder") is
entitled to purchase the number of fully paid and nonassessable shares of the
class of securities (the "Shares") of the corporation (the "Company") at the
initial exercise price per Share (the "Warrant Price") all as set forth above
and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions
and upon the terms and conditions set forth in this Warrant. Notwithstanding the
foregoing, in the event Company does not request a Non Formula Advance, Holder
shall only be entitled to 83,493 Shares.

ARTICLE 1.  EXERCISE.

                1.1 Method of Exercise. Holder may exercise this Warrant by
delivering a duly executed Notice of Exercise in substantially the form attached
as Appendix 1 to the principal office of the Company. Unless Holder is
exercising the conversion right set forth in Section 1.2, Holder shall also
deliver to the Company a check for the aggregate Warrant Price for the Shares
being purchased.

                1.2 Conversion Right. In lieu of exercising this Warrant as
specified in Section 1.1, Holder may from time to time convert this Warrant, in
whole or in part, into a number of Shares determined by dividing (a) the
aggregate fair market value of the Shares or other securities otherwise issuable
upon exercise of this Warrant minus the aggregate Warrant Price of such Shares
by (b) the fair market value of one Share. The fair market value of the Shares
shall be determined pursuant to Section 1.4.

                1.3 Intentionally Omitted

                1.4 Fair Market Value. If the Shares are traded in a public
market, the fair market value of the Shares shall be the closing price of the
Shares (or the closing price of the Company's stock into which the Shares are
convertible) reported for the business day immediately before Holder delivers
its Notice of Exercise to the Company. If the Shares are not traded in a public
market, the Board of Directors of the Company shall determine fair market value
in its reasonable good faith judgment.

                1.5 Delivery of Certificate and New Warrant. Within 30 days
after Holder exercises or converts this Warrant, the Company shall deliver to
Holder certificates for the Shares acquired and, if this Warrant has not been
fully exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.

                1.6 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.

<PAGE>   29

                1.7 Repurchase on Sale, Merger, or Consolidation of the Company.

                        1.7.1. "Acquisition". For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.

                        1.7.2. Assumption of Warrant. Upon the closing of any
Acquisition the successor entity shall assume the obligations of this Warrant
except as otherwise provided for herein, the term of this Warrant Agreement and
the right to purchase Preferred Stock as granted herein shall commence on the
Issue Date and shall be exercisable for a period of (i) five (5) years or (ii)
three (3) years from the effective date of the Company's initial public
offering.

ARTICLE 2.  ADJUSTMENTS TO THE SHARES.

                2.1 Stock Dividends, Splits, Etc. If the Company declares or
pays a dividend on its common stock (or the Shares if the Shares are securities
other than common stock) payable in common stock, or other securities,
subdivides the outstanding common stock into a greater amount of common stock,
or, if the Shares are securities other than common stock, subdivides the Shares
in a transaction that increases the amount of common stock into which the Shares
are convertible, then upon exercise of this Warrant, for each Share acquired,
Holder shall receive, without cost to Holder, the total number and kind of
securities to which Holder would have been entitled had Holder owned the Shares
of record as of the date the dividend or subdivision occurred.

                2.2 Reclassification, Exchange or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event. Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company's Articles of
Incorporation upon the closing of a registered public offering of the Company's
common stock. The Company or its successor shall promptly issue to Holder a new
Warrant for such new securities or other property. The new Warrant shall provide
for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price and to the number of securities or property
issuable upon exercise of the new Warrant. The provisions of this Section 2.2
shall similarly apply to successive reclassifications, exchanges, substitutions,
or other events.

                2.3 Adjustments for Combinations, Etc. If the outstanding Shares
are combined or consolidated, by reclassification or otherwise, into a lesser
number of shares, the Warrant Price shall be proportionately increased.

                2.4 Adjustments for Diluting Issuances. The Warrant Price and
the number of Shares issuable upon exercise of this Warrant or, if the Shares
are Preferred Stock, the number of shares of common stock issuable upon
conversion of the Shares, shall be subject to adjustment, from time to time in
the manner set forth on Exhibit A in the event of Diluting Issuances (as defined
on Exhibit A).

                                        2
<PAGE>   30

                2.5 No Impairment. The Company shall not, by amendment of its
Articles of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out of all the provisions of
this Article 2 and in taking all such action as may be necessary or appropriate
to protect Holder's rights under this Article against impairment. If the Company
takes any action affecting the Shares or its common stock other than as
described above that adversely affects Holder's rights under this Warrant, the
Warrant Price shall be adjusted downward and the number of Shares issuable upon
exercise of this Warrant shall be adjusted upward in such a manner that the
aggregate Warrant Price of this Warrant is unchanged.

                2.6 Fractional Shares. No fractional Shares shall be issuable
upon exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder amount computed by
multiplying the fractional interest by the fair market value of a full Share.

                2.7 Certificate as to Adjustments. Upon each adjustment of the
Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish Holder with a certificate of its Chief Financial Officer
setting forth such adjustment and the facts upon which such adjustment is based.
The Company shall, upon written request, furnish Holder a certificate setting
forth the Warrant Price in effect upon the date thereof and the series of
adjustments leading to such Warrant Price.

ARTICLE 3.  REPRESENTATIONS AND COVENANTS OF THE COMPANY.

                3.1 Representations and Warranties. The Company hereby
represents and warrants to the Holder as follows:

                        (a) The initial Warrant Price referenced on the first
page of this Warrant is not greater than (i) the price per share at which the
Shares were last issued in an arms-length transaction in which at least $500,000
of the Shares were sold and (ii) the fair market value of the Shares as of the
date of this Warrant.

                        (b) All Shares which may be issued upon the exercise of
the purchase right represented by this Warrant, and all securities, if any,
issuable upon conversion of the Shares, shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws.

                        (c) The Capitalization Table attached to this Warrant is
true and complete as of the Issue Date.

                3.2 Notice of Certain Events. If the Company proposes at any
time (a) to declare any dividend or distribution upon its common stock, whether
in cash, property, stock, or other securities and whether or not a regular cash
dividend; (b) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (c) to effect any reclassification or recapitalization of common
stock; (d) to merge or consolidate with or into any other corporation, or sell,
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the company's
securities for cash, then, in connection with each such event, the Company shall
give Holder (1) at least 20 days prior written notice of the date on which a
record will be taken for such dividend, distribution, or subscription rights
(and specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of

                                        3
<PAGE>   31

common stock will be entitled to exchange their common stock for securities or
other property deliverable upon the occurrence of such event); and (3) in the
case of the matter referred to in (e) above, the same notice as is given to the
holders of such registration rights.

                3.3 Information Rights. So long as the Holder holds this Warrant
and/or any of the Shares, the Company shall deliver to the Holder (a) promptly
after mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company certified by independent public accountants of recognized standing and
(c) such other financial statements required under and in accordance with any
loan documents between Holder and the Company (or if there are no such
requirements [or if the subject loan(s) no longer are outstanding]), then within
forty-five (45) days after the end of each of the first three quarters of each
fiscal year, the Company's quarterly, unaudited financial statements.

                3.4 Registration Under Securities Act of 1933, as amended. The
Company agrees that the Shares or, if the Shares are convertible into common
stock of the Company, such common stock, shall be subject to the registration
rights set forth on Exhibit B, if attached.

ARTICLE 4.  MISCELLANEOUS.

                4.1 Term; Notice of Expiration. This Warrant is exercisable, in
whole or in part, at any time and from time to time on or before the Expiration
Date set forth above. The Company shall give Holder written notice of Holder's
right to exercise this Warrant in the form attached as Appendix 2 not more than
90 days and not less than 30 days before the Expiration Date. If the notice is
not so given, the Expiration Date shall automatically be extended until 30 days
after the date the Company delivers the notice to Holder.

                4.2 Legends. This Warrant and the Shares (and the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) shall
be imprinted with a legend in substantially the following form:

        THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
        AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
        WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO
        RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
        CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

                4.3 Compliance with Securities Laws on Transfer. This Warrant
and the Shares issuable upon exercise this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder or if there is
no material question as to the availability of current information as referenced
in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
in reasonable detail, the selling broker represents that it has complied with
Rule 144(f), and the Company is provided with a copy of Holder's notice of
proposed sale.

                4.4 Transfer Procedure. Subject to the provisions of Section 4.3
Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant (or the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) at any time to Silicon Valley Bancshares
or The Silicon Valley Bank Foundation, or to any affiliate of Holder, by giving
the Company notice of the portion of the Warrant being transferred setting forth
the name, address and taxpayer identification number of the transferee and
surrendering this Warrant to the Company for reissuance to the transferee(s)
(and Holder if applicable). Unless the Company is filing financial information
with the SEC

                                        4
<PAGE>   32

pursuant to the Securities Exchange Act of 1934, the Company shall have the
right to refuse to transfer any portion of this Warrant to any person who
directly competes with the Company.

                4.5 Notices. All notices and other communications from the
Company to the Holder, or vice versa, shall be deemed delivered and effective
when given personally or mailed by first-class registered or certified mail,
postage prepaid, at such address as may have been furnished to the Company or
the Holder, as the case may be, in writing by the Company or such holder from
time to time. All notices to be provided under this Warrant shall be send to the
following address:

                        Silicon Valley Bank
                        Attn: Treasury Department
                        3003 Tasman Drive
                        Santa Clara, CA 95054

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

                4.7 Attorneys Fees. In the event of any dispute between the
parties concerning the terms and provisions of this Warrant, the party
prevailing in such dispute shall be entitled to collect from the other party all
costs incurred in such dispute, including reasonable attorneys' fees.

                4.8 Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to its principles regarding conflicts of law.

                                            "COMPANY"

                                            OPTICAL MICRO MACHINES, INC.

                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
                                               (Print)
                                            Title: Chairman of the Board,
                                            President or Vice President

                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
                                                 (Print)

                                            Title: Chief Financial Officer,
                                                   Secretary, Assistant
                                                   Treasurer or Assistant
                                                   Secretary

                                        5
<PAGE>   33

                                   APPENDIX 1

                               NOTICE OF EXERCISE

        1. The undersigned hereby elects to purchase ________ shares of the
Common/Preferred Series _____ [Strike one] Stock of OPTICAL MICRO MACHINES, INC.
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full.

        1. The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This conversion
is exercised with respect to _______________________ of the Shares covered by
the Warrant.

        [Strike paragraph that does not apply.]

        2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name as is specified below:

                    -------------------------------------------
                    (Name)

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

                    -------------------------------------------
                    (Address)

        3. The undersigned represents it is acquiring the shares solely for it
is own account and not as a nominee for any other party and not with a view
toward the resale or distribution thereof except in compliance with applicable
securities laws.

                                            ------------------------------------
                                               (Signature)

-----------------------
       (Date)

<PAGE>   34

                                   APPENDIX 2

                     Notice that Warrant Is About to Expire

                              ------------, -------

(Name of Holder)

(Address of Holder)

Attn: Chief Financial Officer

Dear:
     ------------------

        This is to advise you that the Warrant issued to you described below
will expire on ____________________, 19__.

        Issuer:

        Issue Date:

        Class of Security Issuable:

        Exercise Price per Share:

        Number of Shares Issuable:

        Procedure for Exercise:

        Please contact [name of contact person at (phone number)] with any
questions you may have concerning exercise of the Warrant. This is your only
notice of pending expiration.

                                            ------------------------------------
                                            (Name of Issuer)

                                            By:

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

                                            Its:

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

<PAGE>   35

                                    EXHIBIT A

                            Anti-Dilution Provisions
      (For Preferred Stock Warrants With Existing Anti-Dilution Protection)

        In the event of the issuance (a "Diluting Issuance") by the Company,
after the Issue Date of the Warrant, of securities at a price per share less
than the Warrant Price, then the number of shares of common stock issuable upon
conversion of the Shares shall be adjusted in accordance with those provisions
(the "Provisions") of the Company's Articles (Certificate) of Incorporation
which apply to Diluting Issuances.

        The Company agrees that the Provisions, as in effect on the Issue Date,
shall be deemed to remain in full force and effect during the term of the
Warrant notwithstanding any subsequent amendment, waiver or termination thereof
by the Company's shareholders.

        Under no circumstances shall the aggregate Warrant Price payable by the
Holder upon exercise of the Warrant increase as a result of any adjustment
arising from a Diluting Issuance.

<PAGE>   36

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

        This Intellectual Property Security Agreement is entered into as of
April 5, 1999 by and between SILICON VALLEY BANK ("Bank") and OPTICAL MICRO
MACHINES, INC. ("Grantor").

                                    RECITALS

        A. Bank has agreed to make certain advances of money and to extend
certain financial accommodation to Grantor (the "Loans") in the amounts and
manner set forth in that certain Loan and Security Agreement by and between Bank
and Grantor dated April 5, 1999 (as the same may be amended, modified or
supplemented from time to time, the "Loan Agreement"; capitalized terms used
herein are used as defined in the Loan Agreement). Bank is willing to make the
Loans to Grantor, but only upon the condition, among others, that Grantor shall
grant to Bank a security interest in certain Copyrights, Trademarks, Patents,
and Mask Works to secure the obligations of Grantor under the Loan Agreement.
Capitalized terms used but not otherwise defined herein shall have the same
meaning as in the Loan Agreement.

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

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

                                    AGREEMENT

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

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

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

<PAGE>   37

                                            GRANTOR:

Address of Grantor:                         OPTICAL MICRO MACHINES, INC.

6160 Lusk Blvd., Suite C105                 By: /s/ Anis Husain
-------------------------------                 --------------------------------
San Diego, CA 92121
-------------------------------

                                            Title: President/CEO
                                                  ------------------------------

Attn: ANIS HUSAIN
      -------------------------

                                            BANK:

Address of Bank:                            SILICON VALLEY BANK

5414 Oberlin Drive, Ste. 230                By: /s/ Signature Illegible
San Diego, CA 92121                            ---------------------------------
                                            Title: VP
                                                  ------------------------------

Attn:
     --------------------------

                                        2
<PAGE>   38

                                    EXHIBIT A

                                   Copyrights

<TABLE>
<CAPTION>
                             Registration/                       Registration/
                             Application                         Application
Description                  Number                              Date
-----------                  ------                              ----
<S>                          <C>                                 <C>

</TABLE>

<PAGE>   39
                                   EXHIBIT B

                                    PATENTS

<TABLE>
<CAPTION>
                             Registration/                       Registration/
                             Application                         Application
Description                  Number                              Date
-----------                  ------                              ----
<S>                          <C>                                 <C>

</TABLE>

<PAGE>   40

                                    EXHIBIT C

                                   Trademarks

<TABLE>
<CAPTION>
                             Registration/                       Registration/
                             Application                         Application
Description                  Number                              Date
-----------                  ------                              ----
<S>                          <C>                                 <C>

</TABLE>

<PAGE>   41

                                    EXHIBIT D

                                   Mask Works

<TABLE>
<CAPTION>
                             Registration/                       Registration/
                             Application                         Application
Description                  Number                              Date
-----------                  ------                              ----
<S>                          <C>                                 <C>

</TABLE>

<PAGE>   42

                         CORPORATE BORROWING RESOLUTION

BORROWER: OPTICAL MICRO MACHINES, INC.     BANK: SILICON VALLEY BANK
          6160 LUSK BLVD., SUITE C105            5414 OBERLIN DRIVE, STE. 230
          SAN DIEGO, CA 92121                    SAN DIEGO, CA 92121

I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF OPTICAL MICRO MACHINES,
INC. ("BORROWER"), HEREBY CERTIFY that Borrower is a corporation duly organized
and existing under and by virtue of the laws of the State of California.

I FURTHER CERTIFY that at a meeting of the Directors of Borrower (or by other
duly authorized corporate action in lieu of a meeting), duly called and held, at
which a quorum was present and voting, the following resolutions were adopted.

BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of Borrower, whose actual signatures are shown below:

<TABLE>
<CAPTION>
NAMES                            POSITIONS               ACTUAL SIGNATURES
-----                            ---------               -----------------
<S>                              <C>                     <C>
ANIS HUSAIN                      PRESIDENT               /s/ Anis Husain

MICHELLE HAYS                    CFO                     /s/ M. Hays

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

------------------------         -----------------       -----------------------
</TABLE>

acting for and on behalf of Borrower and as its act and deed be, and they hereby
are, authorized and empowered:

        BORROW MONEY. To borrow from time to time from Silicon Valley Bank
        ("Bank"), on such terms as may be agreed upon between the officers of
        Borrower and Bank, such sum or sums of money as in their judgment should
        be borrowed.

        EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank the loan
        documents of Borrower, on Bank's forms, at such rates of interest and on
        such terms as may be agreed upon, evidencing the sums of money so
        borrowed or any indebtedness of Borrower to Bank, and also to execute
        and deliver to Bank one or more renewals, extensions, modifications,
        refinancings, consolidations, or substitutions for one or more of the
        loan documents, or any portion of the loan documents.

        GRANT SECURITY. To grant a security interest to Bank in any of
        Borrower's assets, which security interest shall secure all of
        Borrower's obligations to Bank

        NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
        trade acceptances, promissory notes, or other evidences of indebtedness
        payable to or belonging to Borrower or in which Borrower may have an
        interest, and either to receive cash for the same or to cause such
        proceeds to be credited to the account of Borrower with Bank, or to
        cause such other disposition of the proceeds derived therefrom as they
        may deem advisable.

        LETTERS OF CREDIT. To execute letter of credit applications and other
        related documents pertaining to Bank's issuance of letters of credit.

        FOREIGN EXCHANGE CONTRACTS. To execute and deliver foreign exchange
        contracts, either spot or forward, from time to time, in such amount as,
        in the judgment of the officer or officers herein authorized.

<PAGE>   43

        ISSUE WARRANTS. To issue warrants to purchase Borrower's capital stock,
        for such class, series and number, and on such terms, as an officer of
        Borrower shall deem appropriate.

        FURTHER ACTS. In the case of lines of credit, to designate additional or
        alternate individuals as being authorized to request advances
        thereunder, and in all cases, to do and perform such other acts and
        things, to pay any and all fees and costs, and to execute and deliver
        such other documents and agreements, including agreements waiving the
        right to a trial by jury, as they may in their discretion deem
        reasonably necessary or proper in order to carry into effect the
        provisions of these Resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of Borrower's agreements or commitments in effect at the
time notice is given.

I FURTHER CERTIFY that the persons named above are principal officers of the
Borrower and occupy the positions set opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Borrower; and that
they are in full force and effect and have not been modified or revoked in any
manner whatsoever.

IN WITNESS WHEREOF, I have hereunto set my hand on April 5, 1999 and attest that
the signatures set opposite the names listed above are their genuine signatures.

CERTIFIED TO AND ATTESTED BY:

X /s/ M. Hays
  -----------------------------------
  * Secretary or Assistant Secretary

X /s/ Anis Husain
  -----------------------------------

*NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, this resolution should
also be signed by a second Officer or Director of Borrower.

                                        2
<PAGE>   44

                                [EXHIBIT OMITTED]

               [EXHIBIT IS A UCC-1 FORM OF FINANCING STATEMENT.]
<PAGE>   45

                                    EXHIBIT A

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

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

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

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

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

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

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

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

<PAGE>   46

                                    EXHIBIT C

                        FORM OF LOAN AGREEMENT SUPPLEMENT

                       LOAN AGREEMENT SUPPLEMENT No. [] #1

        LOAN AGREEMENT SUPPLEMENT No. 1, dated June 15, 1999 ("Supplement"), to
the Loan and Security Agreement dated as of April 5, 1999 (the "Loan Agreement)
by and between the undersigned ("Borrower"), and Silicon Valley Bank ("Bank").

        Capitalized terms used herein but not otherwise defined herein are used
with the respective meanings given to such terms in the Loan Agreement.

        To secure the prompt payment by Borrower of all amounts from time to
time outstanding under the Loan Agreement, and the performance by Borrower of
all the terms contained in the Loan Agreement, Borrower grants Bank, a first
priority security interest in each item of equipment and other property
described in Annex A hereto, which equipment and other property shall be deemed
to be additional Financed Equipment and Collateral. The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.

Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached
hereto. The proceeds of the Loan should be transferred to Borrower's account
with Bank set forth below:

            Bank Name:              Silicon Valley Bank
            Account No.:

Borrower hereby certifies that (a) the foregoing information is true and correct
and authorizes Bank to endorse in its respective books and records, the Basic
Rate applicable to the Funding Date of the Loan contemplated in this Loan
Agreement Supplement and the principal amount set forth in the Loan Terms
Schedule; (b) the representations and warranties made by Borrower in the Loan
Agreement are true and correct on the date hereof and will be true and correct
on such Funding Date. No Event of Default has occurred and is continuing under
the Loan Agreement. This Supplement may be executed by Borrower and Bank in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

            This Supplement is delivered as of this day and year first above
written.

SILICON VALLEY BANK                         Optical Micro-Machines, Inc.

By:                                         By: /s/ Anis Husain
   ---------------------------------           ---------------------------------
   Name:                                        Name: Anis Husain
         ---------------------------                  --------------------------
   Title:                                       Title: President & CEO
         ---------------------------                  --------------------------

Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule

<PAGE>   47

                      ANNEX B TO LOAN AGREEMENT SUPPLEMENT

BORROWER:                Optical Micro Machines, Inc.

LOAN FUNDING DATE:       07/01/1999

LOAN AMOUNT:             $295,471

BASIC RATE:              8 79%

LOAN FACTOR:             2 7544%

Final Payment %:         8.00%

<TABLE>
<CAPTION>
                                                                     STIPULATED
PAYMENT            PAYMENT                                           LOSS VALUE
NUMBER              DATE                   PAYMENT                    (NOTE 2)
------              ----                   -------                    --------
<S>               <C>                     <C>                        <C>
 1                01-Jul-99               -8,138.51                    97.25%
 2                01-Aug-99               -8,138.51                    95.48%
 3                01-Sep-99               -8,138.51                    93.69%
 4                01-Oct-99               -8,138.51                    91.89%
 5                01-Nov-99               -8,138.51                    90.07%
 6                01-Dec-99               -8,138.51                    88.23%
 7                01-Jan-00               -8,138.51                    86.37%
 8                01-Feb-00               -8,138.51                    84.49%
 9                01-Mar-00               -8,138.51                    82.59%
10                01-Apr-00               -8,138.51                    80.67%
11                01-May-00               -8,138.51                    78.74%
12                01-Jun-00               -8,138.51                    76.78%
13                01-Jul-00               -8,138.51                    74.81%
14                01-Aug-00               -8,138.51                    72.81%
15                01-Sep-00               -8,138.51                    70.80%
16                01-Oct-00               -8,138.51                    68.76%
17                01-Nov-00               -8,138.51                    66.70%
18                01-Dec-00               -8,138.51                    64.63%
19                01-Jan-01               -8,138.51                    62.53%
20                01-Feb-01               -8,138.51                    60.41%
21                01-Mar-01               -8,138.51                    58.27%
22                01-Apr-01               -8,138.51                    56.10%
23                01-May-01               -8,138.51                    53.92%
24                01-Jun-01               -8,138.51                    51.71%
25                01-Jul-01               -8,138.51                    49.48%
26                01-Aug-01               -8,138.51                    47.23%
27                01-Sep-01               -8,138.51                    44.95%
28                01-Oct-01               -8,138.51                    42.66%
29                01-Nov-01               -8,138.51                    40.33%
30                01-Dec-01               -8,138.51                    37.99%
31                01-Jan-02               -8,138.51                    35.62%
32                01-Feb-02               -8,138.51                    33.23%
33                01-Mar-02               -8,138.51                    30.81%
34                01-Apr-02               -8,138.51                    28.37%
35                01-May-02               -8,138.51                    25.90%
36                01-Jun-02               -8,138.51                    23.41%
37                01-Jul-02               -8,138.51                    20.89%
38                01-Aug-02               -8,138.51                    18.35%
39                01-Sep-02               -8,138.51                    15.78%
40                01-Oct-02               -8,138.51                    13.19%
41                01-Nov-02               -8,138.51                    10.57%
42                01-Dec-02               -8,138.51                     7.92%
43                01-Jan-03              -23,637.69                     0.00%
44                                             0.00                     0.00%
45                                             0.00                     0.00%
46                                             0.00                     0.00%
47                                             0.00                     0.00%
48                                             0.00                     0.00%
49                                             0.00                     0.00%
</TABLE>

NOTE 1 The amount of such Scheduled Payment will change as the Loan Amount
changes.

NOTE 2 Each Stipulated Loss Value amount assumes payment of all Scheduled
Payments due on or before the indicated Payment Date.

<PAGE>   48

                                    EXHIBIT C

                        FORM OF LOAN AGREEMENT SUPPLEMENT

                       LOAN AGREEMENT SUPPLEMENT No.[ ] #2

        LOAN AGREEMENT SUPPLEMENT No 2 dated Sept. 1 1999 ("Supplement"), to the
Loan and Security Agreement dated as of April 5, 1999 (the "Loan Agreement) by
and between the undersigned ("Borrower"), and Silicon Valley Bank ("Bank").

        Capitalized terms used herein but not otherwise defined herein are used
with the respective meanings given to such terms in the Loan Agreement.

        To secure the prompt payment by Borrower of all amounts from time to
time outstanding under the Loan Agreement, and the performance by Borrower of
all the terms contained in the Loan Agreement, Borrower grants Bank, a first
priority security interest in each item of equipment and other property
described in Annex A hereto, which equipment and other property shall be deemed
to be additional Financed Equipment and Collateral. The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.

Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached
hereto. The proceeds of the Loan should be transferred to Borrower's account
with Bank set forth below:

            Bank Name:     Silicon Valley Bank
            Account No.:

Borrower hereby certifies that (a) the foregoing information is true and correct
and authorizes Bank to endorse in its respective books and records, the Basic
Rate applicable to the Funding Date of the Loan contemplated in this Loan
Agreement Supplement and the principal amount set forth in the Loan Terms
Schedule; (b) the representations and warranties made by Borrower in the Loan
Agreement are true and correct on the date hereof and will be true and correct
on such Funding Date. No Event of Default has occurred and is continuing under
the Loan Agreement. This Supplement may be executed by Borrower and Bank in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

            This Supplement is delivered as of this day and year first above
written.

SILICON VALLEY BANK                        Optical Micro-Machines, Inc.

By:                                        By: /s/  M. Hays
   ---------------------------------           ---------------------------------
   Name:                                      Name:  Michelle M. Hays
         ---------------------------                 --------------------------
   Title:                                     Title: CFO
         ---------------------------                  --------------------------

Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule

<PAGE>   49

                               LOAN TERMS SCHEDULE

BORROWER:         Optical Micro-Machines, Inc.     DATE OF FUNDING:       9/3/99
COMMITMENT AMOUNT:       $1,000,000                SCHEDULE NUMBER:       Two

ANNEX B TO LOAN AGREEMENT SUPPLEMENT

BORROWER:                                  Optical Micro-Machines, Inc.

LOAN FUNDING DATE:                         9/3/99

LOAN AMOUNT:                               $672,884

BASIC RATE:                                8.87%

LOAN FACTOR:                               2.7580%

FINAL PAYMENT %:                           8.00%

<TABLE>
<CAPTION>
                                                     STIPULATED
PAYMENT       PAYMENT                                LOSS VALUE
NUMBER        DATE                  PAYMENT           (NOTE 2)
------        ----                  -------           --------
<S>           <C>                 <C>                <C>
 1            1-Oct-99            -18,557.89            97%
 2            1-Nov-99            -18,557.89            95%
 3            1-Dec-99            -18,557.89            94%
 4            1-Jan-00            -18,557.89            92%
 5            1-Feb-00            -18,557.89            90%
 6            1-Mar-00            -18,557.89            88%
 7            1-Apr-00            -18,557.89            86%
 8            1-May-00            -18,557.89            84%
 9            1-Jun-00            -18,557.89            83%
10            1-Jul-00            -18,557.89            81%
11            1-Aug-00            -18,557.89            79%
12            1-Sep-00            -18,557.89            77%
13            1-Oct-00            -18,557.89            75%
14            1-Nov-00            -18,557.89            73%
15            1-Dec-00            -18,557.89            71%
16            1-Jan-01            -18,557.89            69%
17            1-Feb-01            -18,557.89            67%
18            1-Mar-01            -18,557.89            65%
19            1-Apr-01            -18,557.89            63%
20            1-May-01            -18,557.89            60%
21            1-Jun-01            -18,557.89            58%
22            1-Jul-01            -18,557.89            56%
23            1-Aug-01            -18,557.89            54%
24            1-Sep-01            -18,557.89            52%
25            1-Oct-01            -18,557.89            50%
26            1-Nov-01            -18,557.89            47%
27            1-Dec-01            -18,557.89            45%
28            1-Jan-02            -18,557.89            43%
29            1-Feb-02            -18,557.89            40%
30            1-Mar-02            -18,557.89            38%
31            1-Apr-02            -18,557.89            36%
32            1-May-02            -18,557.89            33%
33            1-Jun-02            -18,557.89            31%
34            1-Jul-02            -18,557.89            28%
35            1-Aug-02            -18,557.89            26%
36            1-Sep-02            -18,557.89            23%
37            1-Oct-02            -18,557.89            21%
38            1-Nov-02            -18,557.89            18%
39            1-Dec-02            -18,557.89            16%
40            1-Jan-03            -18,557.89            13%
41            1-Feb-03            -18,557.89            11%
42            1-Mar-03            -18,557.89             8%
43            1-Apr-03            -53,830.75             0%
</TABLE>

NOTE 1 The amount of such Scheduled Payment will change as the Loan Amount
changes.

NOTE 2 Each Stipulated Loss Value amount assumes payment of all Scheduled
Payments due on or before the indicated Payment Date

<PAGE>   50

                                    EXHIBIT C

                        FORM OF LOAN AGREEMENT SUPPLEMENT

                       LOAN AGREEMENT SUPPLEMENT No. [] #3

        LOAN AGREEMENT SUPPLEMENT No. 3, dated 9/30, 1999 ("Supplement"), to
the Loan and Security Agreement dated as of April 5, 1999 (the "Loan Agreement)
by and between the undersigned ("Borrower"), and Silicon Valley Bank ("Bank").

        Capitalized terms used herein but not otherwise defined herein are used
with the respective meanings given to such terms in the Loan Agreement.

To secure the prompt payment by Borrower of all amounts from time to time
outstanding under the Loan Agreement, and the performance by Borrower of all the
terms contained in the Loan Agreement, Borrower grants Bank, a first priority
security interest in each item of equipment and other property described in
Annex A hereto, which equipment and other property shall be deemed to be
additional Financed Equipment and Collateral. The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached
hereto. The proceeds of the Loan should be transferred to Borrower's account
with Bank set forth below:

            Bank Name:    Silicon Valley Bank
            Account No.:

Borrower hereby certifies that (a) the foregoing information is true and correct
and authorizes Bank to endorse in its respective books and records, the Basic
Rate applicable to the Funding Date of the Loan contemplated in this Loan
Agreement Supplement and the principal amount set forth in the Loan Terms
Schedule; (b) the representations and warranties made by Borrower in the Loan
Agreement are true and correct on the date hereof and will be true and correct
on such Funding Date. No Event of Default has occurred and is continuing under
the Loan Agreement. This Supplement may be executed by Borrower and Bank in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

        This Supplement is delivered as of this day and year first above
written.

SILICON VALLEY BANK                         Optical Micro-Machines, Inc.

By:                                         By: /s/  M. Hays
   ---------------------------------           ---------------------------------
   Name:                                       Name: Michelle M. Hays
         ---------------------------                  --------------------------
   Title:                                      Title: CFO
         ---------------------------                  --------------------------

Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule

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