Document:

<P ALIGN="RIGHT">Exhibit 10.2</P>
<B><U><P>&#9;</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
</U><P ALIGN="CENTER">LOAN AND SECURITY AGREEMENT</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">between</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">THERMA-WAVE, INC.,</P>
<P ALIGN="CENTER">as Borrower</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">and</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">SILICON VALLEY BANK,</P>
<P ALIGN="CENTER">as Lender</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<U><P>&#9;</P>
<P ALIGN="CENTER">TABLE OF CONTENTS</P>
</B></U><P ALIGN="JUSTIFY">&#9;<U>Page</P>
</U><P ALIGN="JUSTIFY">1.&#9;ACCOUNTING AND OTHER TERMS.&#9;<A
HREF="#_Toc43225236">*</A><DIR>
<DIR>

<P ALIGN="JUSTIFY">2.&#9;LOAN AND TERMS OF PAYMENT&#9;<A
HREF="#_Toc43225237">*</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">2.1&#9;Credit Extensions.&#9;<A
HREF="#_Toc43225238">*</A></P>
<P ALIGN="JUSTIFY">2.2&#9;Overadvances.&#9;<A HREF="#_Toc43225239">*</A></P>
<P ALIGN="JUSTIFY">2.3&#9;Interest Rate, Payments.&#9;<A
HREF="#_Toc43225240">*</A></P>
<P ALIGN="JUSTIFY">2.4&#9;Fees.&#9;<A HREF="#_Toc43225241">*</A></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">3.&#9;CONDITIONS OF LOANS&#9;<A
HREF="#_Toc43225242">*</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">3.1&#9;Conditions Precedent to Initial Credit
Extension.&#9;<A HREF="#_Toc43225243">*</A></P>
<P ALIGN="JUSTIFY">3.2&#9;Conditions Precedent to all Credit Extensions.&#9;<A
HREF="#_Toc43225244">*</A></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">4.&#9;CREATION OF SECURITY INTEREST&#9;<A
HREF="#_Toc43225245">*</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">4.1&#9;Grant of Security Interest.&#9;<A
HREF="#_Toc43225246">*</A></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">5.&#9;REPRESENTATIONS AND WARRANTIES&#9;<A
HREF="#_Toc43225247">*</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">5.1&#9;Due Organization and Authorization.&#9;<A
HREF="#_Toc43225248">*</A></P>
<P ALIGN="JUSTIFY">5.2&#9;Collateral.&#9;<A HREF="#_Toc43225249">*</A></P>
<P ALIGN="JUSTIFY">5.3&#9;Litigation.&#9;<A HREF="#_Toc43225250">*</A></P>
<P ALIGN="JUSTIFY">5.4&#9;No Material Adverse Change in Financial
Statements.&#9;<A HREF="#_Toc43225251">*</A></P>
<P ALIGN="JUSTIFY">5.5&#9;Solvency.&#9;<A HREF="#_Toc43225252">*</A></P>
<P ALIGN="JUSTIFY">5.6&#9;Regulatory Compliance.&#9;<A
HREF="#_Toc43225253">*</A></P>
<P ALIGN="JUSTIFY">5.7&#9;Subsidiaries.&#9;<A HREF="#_Toc43225254">*</A></P>
<P ALIGN="JUSTIFY">5.8&#9;Full Disclosure.&#9;<A
HREF="#_Toc43225255">*</A></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">6.&#9;AFFIRMATIVE COVENANTS&#9;<A
HREF="#_Toc43225256">*</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">6.1&#9;Government Compliance.&#9;<A
HREF="#_Toc43225257">*</A></P>
<P ALIGN="JUSTIFY">6.2&#9;Financial Statements, Reports, Certificates.&#9;<A
HREF="#_Toc43225258">*</A></P>
<P ALIGN="JUSTIFY">6.3&#9;Inventory; Returns.&#9;<A
HREF="#_Toc43225259">*</A></P>
<P ALIGN="JUSTIFY">6.4&#9;Taxes.&#9;<A HREF="#_Toc43225260">*</A></P>
<P ALIGN="JUSTIFY">6.5&#9;Insurance.&#9;<A HREF="#_Toc43225261">*</A></P>
<P ALIGN="JUSTIFY">6.6&#9;Primary and Investment Accounts.&#9;<A
HREF="#_Toc43225262">*</A></P>
<P ALIGN="JUSTIFY">6.7&#9;Financial Covenants.&#9;<A
HREF="#_Toc43225263">*</A></P>
<P ALIGN="JUSTIFY">6.8&#9;Registration of Intellectual Property Rights.&#9;<A
HREF="#_Toc43225264">*</A></P>
<P ALIGN="JUSTIFY">6.9&#9;Control Agreements.&#9;<A
HREF="#_Toc43225265">*</A></P>
<P ALIGN="JUSTIFY">6.10&#9;Further Assurances.&#9;<A
HREF="#_Toc43225266">*</A></P>
<P ALIGN="JUSTIFY">6.11&#9;Exim Insurance.&#9;<A HREF="#_Toc43225267">*</A></P>
<P ALIGN="JUSTIFY">6.12&#9;Borrower Agreement.&#9;<A
HREF="#_Toc43225268">*</A></P>
<P ALIGN="JUSTIFY">6.13&#9;Terms of Sale.&#9;<A
HREF="#_Toc43225269">*</A></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">7.&#9;NEGATIVE COVENANTS&#9;<A
HREF="#_Toc43225270">*</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">7.1&#9;Dispositions.&#9;<A HREF="#_Toc43225271">*</A></P>
<P ALIGN="JUSTIFY">7.2&#9;Changes in Business, Ownership, Management or Business
Locations.&#9;<A HREF="#_Toc43225272">*</A></P>
<P ALIGN="JUSTIFY">7.3&#9;Mergers or Acquisitions.&#9;<A
HREF="#_Toc43225273">*</A></P>
<P ALIGN="JUSTIFY">7.4&#9;Indebtedness.&#9;<A HREF="#_Toc43225274">*</A></P>
<P ALIGN="JUSTIFY">7.5&#9;Encumbrance.&#9;<A HREF="#_Toc43225275">*</A></P>
<P ALIGN="JUSTIFY">7.6&#9;Distributions; Investments.&#9;<A
HREF="#_Toc43225276">*</A></P>
<P ALIGN="JUSTIFY">7.7&#9;Transactions with Affiliates.&#9;<A
HREF="#_Toc43225277">*</A></P>
<P ALIGN="JUSTIFY">7.8&#9;Subordinated Debt.&#9;<A
HREF="#_Toc43225278">*</A></P>
<P ALIGN="JUSTIFY">7.9&#9;Compliance.&#9;<A HREF="#_Toc43225279">*</A></P>
<P ALIGN="JUSTIFY">7.10&#9;Borrower Agreement and Exim Guarantee.&#9;<A
HREF="#_Toc43225280">*</A></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">8.&#9;EVENTS OF DEFAULT&#9;<A
HREF="#_Toc43225281">*</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">8.1&#9;Payment Default.&#9;<A HREF="#_Toc43225282">*</A></P>
<P ALIGN="JUSTIFY">8.2&#9;Covenant Default.&#9;<A HREF="#_Toc43225283">*</A></P>
<P ALIGN="JUSTIFY">8.3&#9;Material Adverse Change.&#9;<A
HREF="#_Toc43225284">*</A></P>
<P ALIGN="JUSTIFY">8.4&#9;Attachment.&#9;<A HREF="#_Toc43225285">*</A></P>
<P ALIGN="JUSTIFY">8.5&#9;Insolvency.&#9;<A HREF="#_Toc43225286">*</A></P>
<P ALIGN="JUSTIFY">8.6&#9;Other Agreements.&#9;<A HREF="#_Toc43225287">*</A></P>
<P ALIGN="JUSTIFY">8.7&#9;Judgments.&#9;<A HREF="#_Toc43225288">*</A></P>
<P ALIGN="JUSTIFY">8.8&#9;Misrepresentations.&#9;<A
HREF="#_Toc43225289">*</A></P>
<P ALIGN="JUSTIFY">8.9&#9;Guaranty.&#9;<A HREF="#_Toc43225290">*</A></P>
<P ALIGN="JUSTIFY">8.10&#9;Borrower Agreement Default .&#9;<A
HREF="#_Toc43225291">*</A></P>
<P ALIGN="JUSTIFY">8.11&#9;Exim Guarantee .&#9;<A
HREF="#_Toc43225292">*</A></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">9.&#9;BANK'S RIGHTS AND REMEDIES&#9;<A
HREF="#_Toc43225293">*</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">9.1&#9;Rights and Remedies.&#9;<A
HREF="#_Toc43225294">*</A></P>
<P ALIGN="JUSTIFY">9.2&#9;Power of Attorney.&#9;<A
HREF="#_Toc43225295">*</A></P>
<P ALIGN="JUSTIFY">9.3&#9;Accounts Collection.&#9;<A
HREF="#_Toc43225296">*</A></P>
<P ALIGN="JUSTIFY">9.4&#9;Bank Expenses.&#9;<A HREF="#_Toc43225297">*</A></P>
<P ALIGN="JUSTIFY">9.5&#9;Bank's Liability for Collateral.&#9;<A
HREF="#_Toc43225298">*</A></P>
<P ALIGN="JUSTIFY">9.6&#9;Remedies Cumulative.&#9;<A
HREF="#_Toc43225299">*</A></P>
<P ALIGN="JUSTIFY">9.7&#9;Demand Waiver.&#9;<A HREF="#_Toc43225300">*</A></P>
<P ALIGN="JUSTIFY">9.8&#9;Exim Direction.&#9;<A HREF="#_Toc43225301">*</A></P>
<P ALIGN="JUSTIFY">9.9&#9;Exim Notification.&#9;<A
HREF="#_Toc43225302">*</A></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">10.&#9;NOTICES&#9;<A HREF="#_Toc43225303">*</A></P>
<P ALIGN="JUSTIFY">11.&#9;CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER&#9;<A
HREF="#_Toc43225304">*</A></P>
<P ALIGN="JUSTIFY">12.&#9;GENERAL PROVISIONS&#9;<A
HREF="#_Toc43225305">*</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">12.1&#9;Successors and Assigns.&#9;<A
HREF="#_Toc43225306">*</A></P>
<P ALIGN="JUSTIFY">12.2&#9;Indemnification.&#9;<A HREF="#_Toc43225307">*</A></P>
<P ALIGN="JUSTIFY">12.3&#9;Time of Essence.&#9;<A HREF="#_Toc43225308">*</A></P>
<P ALIGN="JUSTIFY">12.4&#9;Severability of Provision.&#9;<A
HREF="#_Toc43225309">*</A></P>
<P ALIGN="JUSTIFY">12.5&#9;Amendments in Writing, Integration.&#9;<A
HREF="#_Toc43225310">*</A></P>
<P ALIGN="JUSTIFY">12.6&#9;Counterparts.&#9;<A HREF="#_Toc43225311">*</A></P>
<P ALIGN="JUSTIFY">12.7&#9;Survival.&#9;<A HREF="#_Toc43225312">*</A></P>
<P ALIGN="JUSTIFY">12.8&#9;Confidentiality.&#9;<A HREF="#_Toc43225313">*</A></P>
<P ALIGN="JUSTIFY">12.9&#9;Attorneys' Fees, Costs and Expenses.&#9;<A
HREF="#_Toc43225314">*</A></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">13.&#9;DEFINITIONS&#9;<A HREF="#_Toc43225315">*</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">13.1&#9;Definitions.&#9;<A HREF="#_Toc43225316">*</A></P>
<P ALIGN="JUSTIFY"></P></DIR>
</DIR>
</DIR>
</DIR>
</P>
<B><P ALIGN="JUSTIFY"><A NAME="Top"></A>This LOAN AND SECURITY AGREEMENT</B>
dated June&nbsp;13, 2003, between SILICON VALLEY BANK (&quot;Bank&quot;), whose
address is 3003 Tasman Drive, Santa Clara, California 95054 and THERMA-WAVE,
INC., a Delaware corporation (&quot;Borrower&quot;), whose address is
1250&nbsp;Reliance Way, Fremont, California  94539 provides the terms on which
Bank will lend to Borrower and Borrower will repay Bank. The parties agree as
follows:</P>
<OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081000"><A
NAME="_Toc43225236"><U>ACCOUNTING AND OTHER TERMS</A></U>.</A></LI></P>
<P ALIGN="JUSTIFY">Accounting terms not defined in this Agreement will be
construed following GAAP. Calculations and determinations must be made following
GAAP.  The term &quot;financial statements&quot; includes the notes and
schedules.  The terms &quot;including&quot; and &quot;includes&quot; always mean
&quot;including (or includes) without limitation,&quot; in this or any Loan
Document.</P>
<B><P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081001"><A
NAME="_Toc43225237"></B><U>LOAN AND TERMS OF PAYMENT<A
NAME="_Toc395081002"></A></A></LI></P>
<OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225238">Credit
Extensions</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower will pay Bank the unpaid principal amount of all
Credit Extensions and interest on the unpaid principal amount of the Credit
Extensions.</P>
<OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394892950"><U>Revolving
Advances</U>.</A></LI></P>
<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Bank will make Advances under the Committed Revolving
Line as follows:</LI></P>
<P ALIGN="JUSTIFY">(1) &#9;Advances under the Domestic Committed Line not to
exceed (X)&nbsp;the lesser of (A)&nbsp;the Domestic Committed Line <U>minus</U>
the sum of (x) the aggregate amounts deemed outstanding under the Cash
Management Services sublimit described in <U>Section&nbsp;2.1.4,</U>
<U>plus</U>, (y)&nbsp;the amount of all outstanding Letters of Credit (including
such drawn but unreimbursed Letters of Credit) booked under the Domestic
Committed Line, <U>plus</U> (z) the FX Reserve (arising from FX Forward
Contracts booked under the Domestic Committed Line), or (B)<B>&nbsp;</B>the
Domestic Borrowing Base <U>minus</U> the sum of (x)&nbsp;the aggregate amounts
deemed outstanding under the Cash Management Services sublimit described in
<U>Section&nbsp;2.1.4,</U> <U>plus</U>, (y)&nbsp;the amount of all outstanding
domestic Letters of Credit (including such drawn but unreimbursed Letters of
Credit) booked under the Domestic Committed Line and (z)&nbsp;the FX Reserve
(arising from FX Forward Contracts booked under the Domestic Committed Line);
and  </P>
<P ALIGN="JUSTIFY">(2)&#9;Advances under the Exim Committed Line not to exceed
(X) the lesser of (A) the Exim Committed Line <U>minus</U> the sum of (x) the FX
Reserve (arising from FX Forward Contracts booked under the Exim Committed
Line), <U>plus</U>, (y) the amount of all outstanding export related Letters of
Credit (including such drawn but unreimbursed Letters of Credit) booked under
the Exim Committed Line, <U>plus</U>, (z)&nbsp;the Domestic Standby Letter of
Credit Reserve or (B) the Exim Borrowing Base <U>minus</U> the sum of (x) the FX
Reserve (arising from FX Forward Contracts under the Exim Committed Line),
<U>plus</U>, (y) the amount of all outstanding export related Letters of Credit
(including such drawn but unreimbursed Letters of Credit) booked under the Exim
Committed Line, <U>plus</U>, (z)&nbsp;the Domestic Standby Letter of Credit
Reserve.  The sum of subparagraphs (x) and (y) are sometimes referred to herein
as the &quot;Exim Soft Advances&quot;.   </P>
<P ALIGN="JUSTIFY">Amounts borrowed under this Section may be repaid and
reborrowed during the term of this Agreement.</P>
<P ALIGN="JUSTIFY"><LI>To obtain an Advance, Borrower must notify Bank by
facsimile or telephone by 12:00&nbsp;noon Pacific time on the Business Day the
Advance is to be made.  Borrower must promptly confirm the notification by
delivering to Bank the Payment/Advance Form attached as Exhibit&nbsp;B and
submit copies of Export Orders in connection with any Exim Advance.  Bank will
credit Advances to Borrower's deposit account.  Bank may make Advances under
this Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due.  Bank may rely on any telephone notice given
by a person whom Bank believes is a Responsible Officer or designee. Borrower
will indemnify Bank for any loss Bank suffers due to such reliance, unless such
loss is the result of Bank's gross negligence or willful misconduct.</LI></P>
<P ALIGN="JUSTIFY"><LI>The Committed Revolving Line terminates on the Revolving
Maturity Date, when all Advances are immediately payable.</LI></P></OL>

<P ALIGN="JUSTIFY"><LI><A NAME="LCs"><A NAME="_Ref394893083"><A
NAME="_Ref433448954"></A><U>Letters of Credit Sublimit</U>.</A></LI></P>
<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Bank will issue or have issued letters of credit (the
&quot;Letters of Credit&quot;) as follows: </LI></P>
<P ALIGN="JUSTIFY">(1) &#9;Letters of Credit booked under the Domestic Committed
Line for Borrower's account not exceeding the lesser of:  (i)&nbsp;$5,000,000
and (ii)&nbsp;Availability under the Domestic Committed Line;</P>
<P ALIGN="JUSTIFY">(2)  &#9;export related Letters of Credit booked under the
Exim Committed Line for Borrower's account not exceed the lesser of (i)
$10,000,000 and (ii) Availability under the Exim Committed Line; and </P>
<P ALIGN="JUSTIFY">(3)&#9;Excess Standby Letters of Credit.</P>
<P ALIGN="JUSTIFY"><LI>Each Letter of Credit will have an expiry date of no
later than ninety (90) days after the Revolving Maturity Date, but Borrower's
reimbursement obligation will be secured by cash on terms acceptable to Bank
(provided that Bank agrees that cash equal to 105% of the outstanding letter of
credit shall be deemed acceptable) at any time after the Revolving Maturity Date
if the term of this Agreement is not extended by Bank.</A>  Borrower agrees to
execute any further documentation in connection with the Letters of Credit as
Bank may reasonably request.</LI></P></OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394893102"><U>Foreign Exchange
Sublimit</U>.</LI></P>
<P ALIGN="JUSTIFY">Subject to the limits set forth below in this
Section&nbsp;2.1.3, Borrower may enter into foreign exchange forward contracts
with the Bank under which Borrower commits to purchase from or sell to Bank a
set amount of foreign currency more than one business day after the contract
date (the &quot;FX Forward Contract&quot;) (the amount equal to 10% of the
aggregate outstanding FX Forward Contracts is hereinafter referred to as the
&quot;FX Reserve&quot;).  The FX&nbsp;Reserve may not exceed the lesser of:
(i)&nbsp;$15,000,000 and (ii)&nbsp;Availability under the Domestic Committed
Line and the Exim Committed Line.  The total FX Forward Contracts at any one
time may not exceed the amount calculated as 10 multiplied by the
FX&nbsp;Reserve.  Bank may terminate the FX Forward Contracts if an Event of
Default occurs and is continuing.</A></P>
<B><P ALIGN="JUSTIFY"><LI><A NAME="_Ref394915324"></B><U>Cash Management
Services Sublimit</U>.</LI></P></OL>

<P ALIGN="JUSTIFY">Borrower may utilize Bank's Cash Management Services up to an
amount equal to the lesser of: (i)&nbsp;$5,000,000 and (ii)&nbsp;Availability
under the Domestic Committed Line (&quot;Cash Management Services
Sublimit&quot;).  Such services may include merchant services, direct deposit of
payroll, business credit card, and check cashing services identified in various
cash management services agreements related to such services (the &quot;Cash
Management Services&quot;).  The aggregate amount of the credit limits under all
such agreements with respect to the Cash Management Services shall be deemed to
be the amount of the Cash Management Services for the purposes of calculating
the Cash Management Services Sublimit.  </A>Bank will advise Borrower of any
amounts that would affect the Cash Management Services Sublimit.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="EquipAdvance"><A NAME="_Toc395081004"><A
NAME="_Toc43225239"></A><U>Overadvances</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">If Borrower's Obligations under Section&nbsp;2.1 at any time
exceed: (i) the Committed Line (ii) the lesser of  (a) the Domestic Committed
Line, and (b) the Domestic Borrowing Base, or (iii) the lesser of (a) the Exim
Committed Line, and (b) the Exim Borrowing Base; Borrower must immediately pay
Bank the excess.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="InterestRates"><A NAME="_Ref394892183"><A
NAME="_Toc395081005"><A NAME="_Toc43225240"></A><U>Interest Rate,
Payments</U>.</A></A></A></LI></P><OL>

<OL TYPE="a">

<U><P ALIGN="JUSTIFY"><LI><A NAME="_Ref394892162"></U>Interest Rate.  (i)
Advances under the Domestic Committed Line accrue interest on the outstanding
principal balance at a per annum rate of 150&nbsp;basis points
(1.50&nbsp;percentage points) above the Prime Rate; and (ii)&nbsp;Advances under
the Exim Committed Line accrue interest on the outstanding principal balance at
a per annum rate of 175&nbsp;basis points (1.75 percentage points) above the
Prime Rate.  While an Event of Default exists, Obligations accrue interest at 4
percent above the rate effective immediately before the Event of Default. 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.</A></LI></P>
<P ALIGN="JUSTIFY"><LI>Payments.  Interest due on the Domestic Committed Line is
payable on the first day of each month.  Interest due on the Exim Committed Line
is payable on the 11<SUP>th</SUP> of each month. Bank may debit Borrower's
deposit Account Number ____________________________ for principal and interest
payments owing or any amounts Borrower owes Bank, when due.  Bank will promptly
notify Borrower when it debits Borrower's accounts.  These debits are not a set-
off.  Payments received after 12:00 noon Pacific time are considered received at
the opening of business on the next Business Day.  When a payment is due on a
day that is not a Business Day, the payment is due the next Business Day and
additional fees or interest accrue.</LI></P></OL>
</OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081006"><A
NAME="_Toc43225241"><U>Fees</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower will pay:</P><OL>

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Closing Fee.  A closing fee in the amount of $200,000 to
be fully earned and payable on the Closing Date.</LI></P>
<P ALIGN="JUSTIFY"><LI>Bank Expenses. All Bank Expenses (including reasonable
attorneys' fees and reasonable expenses) incurred through and after the date of
this Agreement, are payable when due.</LI></P>
<P ALIGN="JUSTIFY"><LI>Exim Bank Expenses.  On the Closing Date, Exim Bank
Expenses incurred through the date hereof. </LI></P></OL>
</OL>
</OL>

<P ALIGN="JUSTIFY">2.5&#9;<U>Use of Exim Advance Proceeds.</U>    </P>
<P ALIGN="JUSTIFY">&#9;Borrower will use the proceeds of the Exim Advances only
for the purposes specified in the Borrower Agreement.  Borrower will not use the
proceeds of the Exim Advances for any purpose prohibited by the Borrower
Agreement.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="ConditionsOfLoans"><A NAME="_Toc395081010"><A
NAME="_Toc43225242"></A><U>CONDITIONS OF LOANS</A></A></LI></P>
<OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081011"><A NAME="_Toc43225243">Conditions
Precedent to Initial Credit Extension</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Bank's obligation to make the initial Credit Extension is
subject to the conditions precedent that it receive the following:</P><OL>

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>a fully executed copy of this Agreement;</LI></P>
<P ALIGN="JUSTIFY"><LI>a fully executed copy of the Borrower Agreement;</LI></P>
<P ALIGN="JUSTIFY"><LI>an intellectual property security agreement which
confirms the grant to Bank of a security interest in the Intellectual
Property;</LI></P>
<P ALIGN="JUSTIFY"><LI>subordination agreements from all officers, directors,
and Affiliates of Borrower wherein the obligations for borrowed money owing by
Borrower to such parties are subordinated in favor of Borrower's obligations
owing to Bank;</LI></P>
<P ALIGN="JUSTIFY"><LI>borrowing resolutions;</LI></P>
<P ALIGN="JUSTIFY"><LI>receipt by Bank of the Closing Fee;</LI></P>
<P ALIGN="JUSTIFY"><LI>receipt by Bank of Borrower's insurance certificates
together with a lender's loss payable endorsement reflecting Bank as a lender's
loss payee;</LI></P>
<P ALIGN="JUSTIFY"><LI>receipt by Bank of the results of UCC searches or other
evidence satisfactory to Bank (in each case dated as of a date reasonably
satisfactory to Bank) indicating the absence of liens on the assets of Borrower,
except for Permitted Liens;</LI></P>
<P ALIGN="JUSTIFY"><LI>Bank shall have filed all such UCC financing statements
as Bank deems appropriate and shall have received UCC searches to reflect Bank's
first priority security interest subject only to Permitted Liens; provided
however, this Section 3.1(i) shall not be a condition precedent to issuance of
letters of credit to replace those existing letters of credit, described on
Exhibit 3.1(i), outstanding on the Closing Date; provided further however, that
an Event of Default shall occur if all actions contemplated by this Section
3.1(i) are not completed prior to September 1, 2003; </LI></P>
<P ALIGN="JUSTIFY"><LI>Receipt by Bank of evidence of termination or
authorization to terminate the following UCC-1 financing statements:
(i)&nbsp;No.&nbsp;23271198, filed with the Secretary of State of Delaware and
reflecting Comerica Bank-California as secured party and
(ii)&nbsp;No.&nbsp;0115660410, filed with the Secretary of State of California
and reflecting Comerica Bank-California as secured party; </LI></P>
<P ALIGN="JUSTIFY"><LI>Bank's completion of an audit of Borrower's Collateral,
with results satisfactory to Bank, at Borrower's expense; provided however, this
Section 3.1(j) shall not be a condition precedent to issuance of letters of
credit to replace those existing letters of credit, described on Exhibit 3.1(i),
outstanding on the Closing Date; provided further however, that an Event of
Default shall occur if all actions contemplated by this Section 3.1(j) are not
completed prior to September 1, 2003; and</LI></P>
<P ALIGN="JUSTIFY"><LI>Receipt by Bank of all other agreements, documents and
fees that Bank may reasonably require in its good faith credit judgment in
connection with the transactions contemplated hereunder.</LI></P></OL>
</OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081012"><A
NAME="_Toc43225244"><U>Conditions Precedent to all Credit
Extensions</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Bank's obligations to make each Credit Extension, including
the initial Credit Extension, is subject to the following:</P><OL>

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>timely receipt of any Payment/Advance Form; </LI></P>
<P ALIGN="JUSTIFY"><LI>the representations and warranties in Section&nbsp;5 must
be materially true on the date of the Payment/Advance Form and on the effective
date of each Credit Extension (except to the extent that they relate to an
earlier date, in which case such representations and warranties shall continue
to have been materially true as of such date) 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&nbsp;5 remain materially true (except
to the extent that they relate to an earlier date, in which case such
representations and warranties shall continue to have been materially true as of
such date);</LI></P>
<P ALIGN="JUSTIFY"><LI>receipt of the reports and certificates set forth in
Section 6.2 required prior to each and every Credit Extension, including copies
of Export Orders in connection with any Exim Advance; and</LI></P>
<P ALIGN="JUSTIFY"><LI>the Exim Guarantee will be in full force and
effect.</LI></P></OL>
</OL>
</OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081014"><A
NAME="_Toc43225245"><U>CREATION OF SECURITY INTEREST</A></A></LI></P>
<OL>

<B><P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225246"></B>Grant of Security
Interest</U>.</A></LI></P></OL>

<P ALIGN="JUSTIFY">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, and except with respect to property located outside the United
States, the security interest granted will be a first priority security interest
in the Collateral.  If this Agreement is terminated, Bank's lien and security
interest in the Collateral will continue until Borrower fully satisfies its
Obligations arising hereunder (other than contingent indemnification obligations
with respect to unasserted claims), at which time Bank will release its Liens in
the Collateral and all rights therein will revert to Borrower.  Bank agrees to
execute and deliver to Borrower from time to time such Collateral releases as
Borrower may request and as are necessary to give other lenders of lessors that
finance the purchase of Equipment and related software after the date hereof a
first priority Lien in such Equipment and related software so long as the Liens
and Indebtedness incurred with respect thereto are permitted under this
Agreement.</P>
<P ALIGN="JUSTIFY">Notwithstanding the foregoing, the security interest granted
herein does not extend to and the term &quot;Collateral&quot; does not include:
(A) Equipment and related software subject to the Permitted Liens of lenders or
lessors providing financing for the acquisition of such property; (B)  any
license or contract rights or any other property to the extent (i) the granting
of a security interest in it would be contrary to applicable law, or (ii) that
such rights are nonassignable by their terms (but only to the extent the
prohibition is enforceable under applicable law, including, without limitation,
Section 9406(d) of the Code) without the consent of the licensor or other party
(but only to the extent such consent has not been obtained); and (C) more than
65% of the presently existing and hereafter arising issued and outstanding
shares of capital stock owned by Borrower of any foreign subsidiary which shares
entitle the holder thereof to vote for directors or any other matter.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="RepsAndWarranties"><A NAME="_Ref394894708"><A
NAME="_Toc395081025"><A NAME="_Toc43225247"></A><U>REPRESENTATIONS AND
WARRANTIES</A></A></A></LI></P>
</U><P ALIGN="JUSTIFY">Except as set forth on the attached Schedule, Borrower
represents and warrants as follows:</P>
<OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081026"><A NAME="_Toc43225248"><U>Due
Organization and Authorization</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower and each Subsidiary is duly existing and in good
standing in its respective jurisdiction of formation and qualified and licensed
to do business in, and in good standing in, any jurisdiction in which the
conduct of its business or its ownership of property requires that it be
qualified, except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change.</P>
<P ALIGN="JUSTIFY">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 it is a party or by which it is bound in which the default could
reasonably be expected to cause a Material Adverse Change.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394997474"><A NAME="_Ref394997687"><A
NAME="_Toc395081028"><A
NAME="_Toc43225249"><U>Collateral</U>.</A></A></A></A></LI></P><OL>

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Borrower has good title to the Collateral, free of Liens
except Permitted Liens.  </LI></P>
<P ALIGN="JUSTIFY"><LI>The Accounts designated as eligible accounts (Eligible
Accounts, Eligible Retainage Accounts, Exim Eligible Foreign Accounts and Exim
Eligible Foreign Retainage Accounts) in any borrowing base certificate, or other
report submitted to Bank, are bona fide, existing obligations and the service or
property has been performed or delivered to the account debtor or its agent
(subject only to installation and warranty obligations arising in the ordinary
course of Borrower's business), for immediate shipment to and unconditional
acceptance by the account debtor (except in the case of Retainage Accounts where
customary acceptance terms in the ordinary course of business shall apply).
Borrower has no notice of any actual or imminent Insolvency Proceeding of any
account debtor whose accounts are an eligible account in any borrowing base
certificate.  </LI></P>
<P ALIGN="JUSTIFY"><LI>All Inventory designated as eligible inventory (Exim
Eligible Foreign Inventory) in any borrowing base certificate, or other report
submitted to Borrower, is in all material respects of good and marketable
quality, free from material defects, except for Inventory for which adequate
reserves have been made in accordance with GAAP, which reserves have been, and
at all times will be, disclosed to Bank in Borrower's borrowing base
certificates.   </LI></P>
<P ALIGN="JUSTIFY"><LI>Borrower is the sole owner of the Intellectual Property,
except for: (i) non-exclusive licenses granted to others in the ordinary course
of business, and (ii) joint ownership rights and licensing and cross-licensing
agreements with respect to Intellectual Property entered into from time to time
in connection with strategic relationships and development agreements, approved
by Borrower's senior management, provided that such joint ownership rights,
licenses and cross-licenses do not materially adversely impact Borrower's
ability to conduct its business or the value of the Collateral.  To the best of
Borrower's knowledge and except as reported to Bank in writing, each of the
Patents in which Borrower has an interest is valid and enforceable and no part
of the Intellectual Property in which Borrower has an interest has been judged
invalid or unenforceable, in whole or in part, and no claim has been made that
any part of the Intellectual Property in which Borrower has an interest violates
the rights of any third party, except to the extent such invalidity,
unenforceability or claim could not reasonably be expected to cause a Material
Adverse Change.  </LI></P></OL>
</OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081030"><A
NAME="_Toc43225250"><U>Litigation</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Except as shown in the Schedule and except as reported to
Bank in writing, there are no actions or proceedings pending or, to the
knowledge of Borrower's Responsible Officers, threatened by or against Borrower
or any Subsidiary  in which a likely adverse decision could reasonably be
expected to cause a Material Adverse Change.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081032"><A NAME="_Toc43225251"><U>No
Material Adverse Change in Financial Statements</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081035"><A
NAME="_Toc43225252"><U>Solvency</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081037"><A
NAME="_Toc43225253"><U>Regulatory Compliance</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower is not an &quot;investment company&quot; or a
company &quot;controlled&quot; by an &quot;investment company&quot; under the
Investment Company Act.  Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations&nbsp;T and U
of the Federal Reserve Board of Governors).  Borrower has complied in all
material respects with the Federal Fair Labor Standards Act.  Borrower has not
violated any laws, ordinances or rules, the violation of which could reasonably
be expected to cause a Material Adverse Change.  None of Borrower's or any
Subsidiary's properties or assets has been used by Borrower or any Subsidiary
or, to the best of Borrower's knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous substance other than
legally.  Borrower and each Subsidiary has timely filed all required tax returns
and paid, or made adequate provision to pay, all material taxes, except those
being contested in good faith with adequate reserves under GAAP.  Borrower and
each Subsidiary has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted,
except where the failure to do so could not reasonably be expected to cause a
Material Adverse Change.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081038"><A
NAME="_Toc43225254"><U>Subsidiaries</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower does not own any stock, partnership interest or
other equity securities except for Permitted Investments.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081039"><A NAME="_Toc43225255"><U>Full
Disclosure</U>.</A></A></LI></P></OL>

<P ALIGN="JUSTIFY">No written representation, warranty or other statement of
Borrower in any certificate or written statement given to Bank (taken together
with all such written certificates and written statements to Bank) contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in the certificates or statements not
misleading.  It being recognized by Bank that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected and forecasted
results.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394907832"><A NAME="_Toc395081040"><A
NAME="_Toc43225256"><U>AFFIRMATIVE COVENANTS</A></A></A></LI></P>
</U><P ALIGN="JUSTIFY">Borrower will do all of the following while Obligations
arising hereunder or any commitment by Bank to lend remain outstanding (other
than contingent indemnification obligations for unasserted claims):</P>
<OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081041"><A
NAME="_Toc43225257"><U>Government Compliance</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower will maintain its and all Subsidiaries' legal
existence and good standing in its jurisdiction of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to cause a material adverse effect on Borrower's business
or operations.  Borrower will comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with
which could reasonably be expected to cause a Material Adverse Change.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="FinStatements"><A NAME="_Toc395081043"><A
NAME="_Toc43225258"></A><U>Financial Statements, Reports,
Certificates</U>.</A></A></LI></P><OL>

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>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 together with a statement of
cash flows 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 120 days after the last day of Borrower's fiscal
year, audited consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion (except for a going
concern qualification that does not constitute a Material Adverse Change) n the
financial statements from an independent certified public accounting firm
reasonably acceptable to Bank; (iii) within 5 days of filing, copies of all
statements, reports and notices made available to Borrower's security holders or
to any holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K
filed with the Securities and Exchange Commission; (iv) a prompt report of any
legal actions pending or threatened in writing against Borrower or any
Subsidiary that could reasonably be expected to result in damages or costs to
Borrower or any Subsidiary of $700,000 or more; (v) budgets, sales projections,
operating plans or other financial information Bank reasonably requests; and
(vi) 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.</LI></P>
<P ALIGN="JUSTIFY"><LI>Prior to each and every Credit Extension and in any event
within 30 days after the last day of each month, Borrower will deliver to Bank
Borrowing Base Certificates signed by a Responsible Officer in the forms of
Exhibit&nbsp;C and E, with aged listings of accounts receivable and accounts
payable, together with Inventory reports reasonably requested by Bank.  Each
Credit Extension under the Exim Committed Line shall be supported by Export
Orders in connection with such Credit Extension.  </LI></P>
<P ALIGN="JUSTIFY"><LI>Within 30 days after the last day of each month, Borrower
will deliver to Bank with the monthly financial statements a Compliance
Certificate signed by a Responsible Officer in the form of
Exhibit&nbsp;D.</LI></P>
<P ALIGN="JUSTIFY"><LI>Bank has the right to audit Borrower's Collateral at
Borrower's expense, but the audits will be conducted no more often than twice
yearly, during normal business hours, upon two (2) Business Days advance notice
(telephonic or otherwise), except that during the existence of an Event of
Default no such frequency or business hours limitations or notice requirements
shall apply.  </LI></P>
<P ALIGN="JUSTIFY"><LI>Borrower will deliver to Bank such other reports as
reasonably requested by  Bank from time to time.</LI></P>
<P ALIGN="JUSTIFY"><LI>Borrower shall deliver all reports, certificates and
other documents to Bank as provided in the Borrower Agreement, including,
without limitation, the Borrowing Base Certificates on a monthly basis as
described on Exhibit D hereof, copies of Export Orders and any other information
that Bank and Exim Bank may reasonably request.  </LI></P></OL>
</OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081046"><A
NAME="_Toc43225259"><U>Inventory; Returns</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower will keep all Inventory in good and marketable
condition, free from material defects except for Inventory for which adequate
reserves have been made in accordance with GAAP, which reserves have been, and
at all times will be with respect to Exim Eligible Inventory, disclosed to Bank
in Borrower's Exim Borrowing Base Certificate.  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
$1,500,000.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081048"><A
NAME="_Toc43225260"><U>Taxes</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower will make, and cause each Subsidiary to make, timely
payment of all material federal, state, and local taxes or assessments (except
for taxes and assessments being contested in good faith with adequate reserves
under GAAP, provided that no Lien having any priority over Bank's security
interests arising from such contest) and will deliver to Bank, on demand,
appropriate certificates attesting to the payment.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394997320"><A NAME="_Toc395081050"><A
NAME="_Toc43225261"><U>Insurance</U>.</A></A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower will keep its business and the Collateral insured
for risks and in amounts, as Bank may reasonably request.  Insurance policies
will be in a form, with companies, and in amounts that are satisfactory to Bank
in Bank's reasonable discretion.  All property policies will have a lender's
loss payable endorsement showing Bank as an additional loss payee and all
liability policies will show the Bank as an additional insured and provide that
the insurer must give Bank at least 20 days notice before canceling its policy.
At Bank's request, Borrower will deliver certified copies of policies and
evidence of all premium payments. Proceeds payable under any policy (not subject
to a senior purchase money Permitted Lien) will, at Bank's option, be payable to
Bank on account of the Obligations; <U>provided</U> that, so long as no Event of
Default or no event which, with notice or passage of time or both would
constitute an Event of Default, shall have occurred and be continuing, insurance
proceeds of less than $1,500,000 shall be released by Bank to Borrower to be
applied by Borrower to the repair or replacement of the property with respect to
which the insurance proceeds were paid, and Bank may request reasonable
assurance that such proceeds will be so applied, and with Borrower hereby
granting a security interest to Bank in such property and agreeing to take such
action necessary, if any, to perfect such security interest.  </P>
<B><P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081052"><A
NAME="_Toc43225262"></B><U>Primary and Investment Accounts</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower will maintain its primary depository, operating and
investment accounts with Bank, except that with respect to its investment
accounts, Borrower will only be required to maintain 75% of its total
consolidated depository, operating and investment balances with Bank or one of
its Affiliates.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394915242"><A NAME="_Toc395081054"><A
NAME="FinCovenants"><A NAME="_Ref395337720"><A NAME="_Ref395338529"><A
NAME="_Toc43225263"></A><U>Financial Covenants</U>.</A></A></A></A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower will maintain:</P><OL>
<OL TYPE="a">

<OL TYPE="i">

<B><P ALIGN="JUSTIFY"><LI>Quick Ratio (Adjusted)</B>.  As of the last day of
each month, a ratio of Quick Assets to Current Liabilities minus current
portions of Deferred Revenue of at least 1.50 to 1.00.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Profitability</B>.  Borrower will have a net
profit/loss (exclusive of non-cash charges related to (1)&nbsp;expensing, re-
pricing, and variable accounting for stock options, and (2)&nbsp;the write-down
of up to an additional $2,000,000 of intangible assets through the period ending
on the original Revolving Maturity Date) of not less than the required amount
set forth in the following table for the applicable period set forth opposite
thereto.</LI></P></OL>
</OL>
</OL>

<U><P>Applicable Amount</U>&#9;<U>Applicable Period</P>
</U><P>&lt;$18,775,000&gt;&#9;Quarter-ended 03/31/03</P>
<P>&lt;$8,500,000&gt;&#9;Quarter-ended 06/30/03</P>
<P>&lt;$4,500,000&gt;&#9;Quarter-ended 09/30/03</P>
<P>&lt;$2,000,000&gt;&#9;Quarter-ended 12/31/03</P>
<P>&lt;$1,000,000&gt;&#9;Quarter-ended 03/31/04</P>
<P>$0&#9;Each quarter-ended period thereafter.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081057"><A
NAME="_Toc43225264"><U>Registration of Intellectual Property
Rights</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">In the absence of an Event of Default, Borrower shall provide
Bank with quarterly reports of its applications for registration with the United
States Patent and Trademark Office or the United States Copyright Office for its
Intellectual Property that is material to its business and shall provide Bank
with copies of any proposed applications.  During the existence of an Event of
Default, Borrower will notify Bank 30 days prior to any registration of
Intellectual Property with the United States Patent and Trademark Office or the
United States Copyright Office, and shall provide Bank with a copy of the
proposed application.  Borrower will (i)&nbsp;protect, defend and maintain the
validity and enforceability of the Intellectual Property that it owns where it
is a reasonable business practice to do so as determined by Borrower's Board of
Directors, and promptly advise Bank in writing of material infringements and
(ii)&nbsp;not allow any Intellectual Property that it owns and is material to
the continued operation of Borrower's business to be abandoned, forfeited or
dedicated to the public without Bank's written consent.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225265"><U>Control
Agreements</U>.</A></LI></P>
<P ALIGN="JUSTIFY">With respect to deposit accounts or investment accounts
located in the United States and maintained at financial institutions other than
Bank, within 7 days of the opening of any such deposit account or investment
account, Borrower will execute and deliver to Bank, control agreements in form
reasonably satisfactory to Bank in order for Bank to perfect its security
interest in Borrower's deposit accounts or investment accounts.  Notwithstanding
the foregoing sentence and provided that Borrower is in compliance with Section
6.6, Borrower may maintain up to $350,000 in the aggregate in such deposit
accounts or investment accounts without providing Bank with such control
agreements.  </P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081060"><A NAME="_Toc43225266"><U>Further
Assurances</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225267"><U>Exim
Insurance</U>.</A></LI></P>
<P ALIGN="JUSTIFY">If required by Bank, Borrower will obtain, with respect to
Accounts that are otherwise ineligible under Exim borrowing criteria and where
Borrower has requested or obtained an Advance, and pay when due all premiums
with respect to, and maintain uninterrupted foreign credit insurance.  In
addition, Borrower will execute in favor of Bank an assignment of proceeds of
any insurance policy obtained by Borrower and issued by Exim Bank insuring
against comprehensive commercial and political risk (the &quot;EXIM Bank
Policy&quot;).  The insurance proceeds from the EXIM Bank Policy assigned or
paid to Bank will be applied to the balance outstanding under this Agreement.
Borrower will immediately notify Bank and Exim Bank in writing upon submission
of any claim under the Exim Bank Policy.  Then Bank will not be obligated to
make any further Credit Extensions to Borrower based on Exim Eligible Foreign
Accounts without prior approval from Exim Bank.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225268"><U>Borrower
Agreement</U>.</A></LI></P>
<P ALIGN="JUSTIFY">Borrower will comply with all terms of the Borrower
Agreement.  If any provision of the Borrower Agreement conflicts with any
provision contained in this Exim Agreement, the more strict provision, with
respect to the Borrower, will control; <U>provided</U>, <U>however</U>, any
action or event that is permitted hereunder shall be deemed to satisfy any
requirement for consent of Bank under the Borrower Agreement.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225269"><U>Terms of
Sale</U>.</A></LI></P></OL>

<P ALIGN="JUSTIFY">Borrower will, if required by Exim Bank or Bank, cause all
sales of products on which the Exim Advances are based to satisfy at least one
of the following: (i) be supported by one or more irrevocable letters of credit
in an amount and of matter, naming a beneficiary and issued by a financial
institution acceptable to Bank and negotiated by Bank, (ii) be for any Account
which satisfies all of the requirements to constitute an Exim Eligible Foreign
Account, or (iii)&nbsp;where the Accounts from the Buyer exceed twenty-five
percent (25%) of all Exim Eligible Foreign Accounts, to be preapproved in
writing, by Bank or Exim Bank.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="NegCovenants"><A NAME="_Ref394907854"><A
NAME="_Toc395081062"><A NAME="_Toc43225270"></A><U>NEGATIVE
COVENANTS</A></A></A></LI></P>
</U><P ALIGN="JUSTIFY">Borrower will not do any of the following without Bank's
prior written consent, which will not be unreasonably withheld:</P>
<OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081064"><A
NAME="_Toc43225271"><U>Dispositions</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Convey, sell, lease, transfer or otherwise dispose of
(collectively &quot;Transfer&quot;), 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 (a) non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; and (b) of joint-ownership
rights, licenses and cross-licenses entered into from time to time in connection
with strategic relationships and development agreements, approved by Borrower's
senior management, provided that such joint ownership rights, licenses and
cross-licenses do not materially impact Borrower's ability to conduct its
business or the value of the Collateral; (iii) worn-out, obsolete or surplus
Equipment; (iv) constituting Permitted Liens or Permitted Investments; (v) of
assets in connection with the sale of Borrower's &quot;Designated Product
Line&quot;, including inventory and related Intellectual Property; and (vi)
other property that Borrower reasonably determines is not necessary or useful
for the ordinary operations of Borrower, so long as  the disposition of same
will not have a material adverse effect on the business or operations of
Borrower.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394997621"><A NAME="_Toc395081066"><A
NAME="_Toc43225272"><U>Changes in Business, Ownership, Management or Business
Locations</U>.</A></A></A></LI></P>
<P ALIGN="JUSTIFY">Suffer a Change of Control, or engage in or permit any of its
Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower and its Subsidiaries or reasonably related thereto.
Borrower will not, without at least 30 days prior written notice, relocate its
chief executive office or add any new offices or business locations.  Neither
Borrower nor any of its Subsidiaries shall be under any restriction with respect
to the offer, sale or issuance of equity securities in a public or private
offering so long as no Event of Default exists or will result from such public
or private offering.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081068"><A NAME="_Toc43225273"><U>Mergers
or Acquisitions</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Merge or consolidate, or permit any of its Subsidiaries to
merge or consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) such transaction would not result in a decrease of more than
25% of Tangible Net Worth. A Subsidiary may merge or consolidate into another
Subsidiary or into Borrower.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081069"><A
NAME="_Toc43225274"><U>Indebtedness</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Create, incur, assume, or be liable for any Indebtedness, or
permit any Subsidiary to do so, other than Permitted Indebtedness.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081070"><A
NAME="_Toc43225275"><U>Encumbrance</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Create, incur, or allow any Lien on any of its property, or
assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted here, subject to Permitted Liens.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081071"><A
NAME="_Toc43225276"><U>Distributions; Investments</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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 cash (or  property of Borrower other than
Borrower's capital stock) as dividends or make any cash distribution or payment
(or distribution or payment of Borrower's property other than in the form of
Borrower's capital stock) or redeem, retire or purchase with cash (or any
property of Borrower) any capital stock; provided that (i) Borrower may convert
any of its convertible securities into other securities pursuant to the terms of
such convertible securities or otherwise in exchange thereof, (ii) Borrower may
repurchase the stock of former employees or consultants pursuant to stock
repurchase agreements so long (a) as an Event of Default does not exist at the
time of such repurchase and would not exist after giving effect to such
repurchase, and (b) such repurchases do not exceed $500,000 in the aggregate
during any fiscal year of Borrower; and (iii) Borrower may make any open-market
purchase or exchange of Borrower's publicly-traded equity securities, so long as
(x) an Event of Default does not exist at the time of such purchase or exchange
and would not exist after giving effect to such purchase or exchange, and (y)
such purchase and exchange do not exceed $1,500,000 in the aggregate during any
fiscal year of Borrower.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081072"><A
NAME="_Toc43225277"><U>Transactions with Affiliates</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Directly or indirectly enter into or permit any material
transaction with any Affiliate except transactions that are in the ordinary
course of Borrower's business, on terms less favorable to Borrower than would be
obtained in an arm's length transaction with a non-affiliated Person.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081075"><A
NAME="_Toc43225278"><U>Subordinated Debt</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081077"><A
NAME="_Toc43225279"><U>Compliance</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Become an &quot;investment company&quot; or a company
controlled by an &quot;investment company,&quot; 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 have a material
adverse effect on Borrower's business or operations or would reasonably be
expected to cause a Material Adverse Change, or permit any of its Subsidiaries
to do so. </P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225280"><U>Borrower Agreement and Exim
Guarantee</U>.</A></LI></P></OL>

<P ALIGN="JUSTIFY">Violate or fail to comply with any provision of the Borrower
Agreement or take an action, or permit any action to be taken, that causes, or
could be expected to cause, the Exim Guarantee to not be in full force and
effect.  Notwithstanding the introductory sentence to this Section 7, at no time
will Bank give or be required to give its consent to the actions set forth in
this Section 7.10.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="EventofDefault"><A NAME="_Toc395081078"><A
NAME="_Toc43225281"></A><U>EVENTS OF DEFAULT</A></A></LI></P>
</U><P ALIGN="JUSTIFY">Any one of the following is an Event of Default:</P>
<OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081079"><A NAME="_Toc43225282"><U>Payment
Default</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">If Borrower fails to pay any of the Obligations within 3
Business Days after their due date.  During the additional period the failure to
cure the default is not an Event of Default (but no Credit Extension will be
made during the cure period).</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081080"><A
NAME="_Toc43225283"><U>Covenant Default</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">If Borrower does not perform any obligation in Section&nbsp;6
or violates any covenant in Section&nbsp;7 or does not perform or observe any
other material term, condition or covenant in this Agreement, any Loan
Documents, or in any agreement between Borrower and Bank and as to any default
under a term, condition or covenant that can be cured, has not cured the default
within 10 days after it occurs, or if the default cannot be cured within 10 days
or cannot be cured after Borrower's attempts within 10 day period, and the
default may be cured within a reasonable time, then Borrower has an additional
period (of not more than 30 days) to attempt to cure the default.  During the
additional time, the failure to cure the default is not an Event of Default (but
no Credit Extensions will be made during the cure period).</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081081"><A NAME="_Ref401479463"><A
NAME="_Ref401479497"><A NAME="_Ref401479518"><A NAME="_Toc43225284"><U>Material
Adverse Change</U>.</A></A></A></A></A></LI></P>
<P ALIGN="JUSTIFY">If there (i) occurs a material adverse change in the business
operations, or condition (financial or otherwise) of the Borrower; or (ii) is a
material impairment of the prospect of repayment of any portion of the
Obligations; or (iii) is a material impairment of the value or priority of
Bank's security interests in the Collateral.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394908047"><A NAME="_Toc395081083"><A
NAME="_Toc43225285"><U>Attachment</U>.</A></A></A></LI></P>
<P ALIGN="JUSTIFY">If any material portion of Borrower's assets is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in 10 days, or if Borrower is
enjoined, restrained, or prevented by court order from conducting a material
part of its business or if a judgment or other claim becomes a Lien on a
material portion of Borrower's assets, or if a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency
and not paid within 10 days after Borrower receives notice.  These are not
Events of Default if stayed or if a bond is posted pending contest by Borrower
(but no Credit Extensions will be made during the cure period).</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394908077"><A NAME="_Ref394908115"><A
NAME="_Toc395081084"><A
NAME="_Toc43225286"><U>Insolvency</U>.</A></A></A></A></LI></P>
<P ALIGN="JUSTIFY">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 45 days (but no Credit Extensions will be made
before any Insolvency Proceeding is dismissed).</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081085"><A NAME="_Toc43225287"><U>Other
Agreements</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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 $500,000 or that could cause a Material Adverse Change provided,
however, that the Event of Default under this Section&nbsp;8.6 caused by the
occurrence of a default under another agreement described in this Section 8.6
shall be automatically cured for purposes of this Agreement upon the cure or
waiver of the default under such other agreement, if (i) Bank has not exercised
its right to accelerate the maturity of the Obligations under Section 9.1(a)
hereof, and (ii) any such cure by Borrower does not result in an Event of
Default under any other provision of this Agreement, and (iii) in connection
with such cure, the agreement with the third party is not modified in a manner
which increases the payments from the Borrower to the third party or otherwise
makes it materially less advantageous to Borrower.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394908097"><A NAME="_Toc395081086"><A
NAME="_Toc43225288"><U>Judgments</U>.</A></A></A></LI></P>
<P ALIGN="JUSTIFY">If a money judgment(s) in the aggregate of at least $200,000
is rendered against Borrower and is unsatisfied, unstayed or not covered by
adequate insurance or indemnity (as to which coverage has been confirmed to
Bank's reasonable satisfaction, provided that the terms of Section 8.4 remain in
effect notwithstanding any confirmation of such insurance or indemnity) for 10
days (but no Credit Extensions will be made before the judgment is stayed or
satisfied).</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081087"><A
NAME="_Toc43225289"><U>Misrepresentations</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081089"><A
NAME="_Toc43225290"><U>Guaranty</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Any guaranty of any Obligations ceases for any reason to be
in full force or any Guarantor does not perform any obligation under any
guaranty of the Obligations, or any material misrepresentation or material
misstatement exists now or later in any warranty or representation in any
guaranty of the Obligations or in any certificate delivered to Bank in
connection with the guaranty, or any circumstance described in
Sections&nbsp;8.4, 8.5 or 8.7 occurs to any Guarantor.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225291"><U>Borrower Agreement Default
</U>.</A></LI></P>
<P ALIGN="JUSTIFY">If Borrower violates any covenant in the Borrower Agreement
or otherwise defaults thereunder. </P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225292"><U>Exim Guarantee
</U>.</A></LI></P></OL>

<P ALIGN="JUSTIFY">If the Exim Guarantee ceases for any reason to be in full
force and effect, or if the Exim Bank declares the Exim Guarantee void or
revokes any obligations under the Exim Guarantee.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="BanksRights"><A NAME="_Toc395081091"><A
NAME="_Toc43225293"></A><U>BANK'S RIGHTS AND REMEDIES</A></A></LI></P>
<OL>

<B><P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081092"><A NAME="_Ref398609521"><A
NAME="_Toc43225294"></B>Rights and Remedies</U>.</A></A></A></LI></P>
<P ALIGN="JUSTIFY">When an Event of Default occurs and continues Bank may,
without notice or demand, do any or all of the following:</P><OL>

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Declare all Obligations immediately due and payable (but
if an Event of Default described in Section&nbsp;8.5 occurs all Obligations are
immediately due and payable without any action by Bank);</LI></P>
<P ALIGN="JUSTIFY"><LI>Stop advancing money or extending credit for Borrower's
benefit under this Agreement or under any other agreement between Borrower and
Bank;</LI></P>
<P ALIGN="JUSTIFY"><LI>Settle or adjust disputes and claims directly with
account debtors for amounts, on terms and in any order that Bank considers
advisable;</LI></P>
<P ALIGN="JUSTIFY"><LI>Make any payments and do any acts it considers necessary
or reasonable to protect its security interest in the Collateral.  Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates.  Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;</LI></P>
<P ALIGN="JUSTIFY"><LI>(i) Bank may place a &quot;hold&quot; on any deposit
account of Borrower maintained with Bank, and (ii)  apply to the Obligations any
(1)&nbsp;balances and deposits of Borrower it holds, or (2)&nbsp;any amount held
by Bank owing to or for the credit or the account of Borrower;</LI></P>
<P ALIGN="JUSTIFY"><LI>Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral.  To the extent
not prohibited under applicable law or under an enforceable provision of a
contract, Bank is granted a non-exclusive, royalty-free license or other right
to use while an Event of Default exists, without charge, Borrower's labels,
Patents, Copyrights, Mask Works, rights of use of any name, trade secrets, trade
names, Trademarks, service marks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank's
exercise of its rights under this Section, Borrower's rights under all licenses
and all franchise agreements inure to Bank's benefit; and</LI></P>
<P ALIGN="JUSTIFY"><LI>Dispose of the Collateral according to the
Code.</LI></P></OL>
</OL>

<P ALIGN="JUSTIFY">Notwithstanding anything to the contrary herein or in the
Loan Documents, Bank will not deliver to any Person any notice of exclusive
control, any entitlement order, or other directions or instructions pursuant to
any account control agreement or similar agreement providing for control of any
deposit, investment or other accounts of Borrower, unless an Event of Default
has occurred and is continuing.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081095"><A NAME="_Toc43225295"><U>Power
of Attorney</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Effective only when an Event of Default occurs and continues,
Borrower irrevocably appoints Bank as its lawful attorney to:  (i)&nbsp;endorse
Borrower's name on any checks or other forms of payment or security;
(ii)&nbsp;sign Borrower's name on any invoice or bill of lading for any Account
or drafts against account debtors, (iii)&nbsp;make, settle, and adjust all
claims under Borrower's insurance policies; (iv)&nbsp;settle and adjust disputes
and claims about the Accounts directly with account debtors, for amounts and on
terms Bank determines reasonable; and (v)&nbsp;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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081096"><A
NAME="_Toc43225296"><U>Accounts Collection</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081099"><A NAME="_Toc43225297"><U>Bank
Expenses</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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&nbsp;6.5, and take any action
under the policies Bank deems prudent.  Any amounts paid by Bank are Bank
Expenses and immediately due and payable, bearing interest at the then
applicable rate and secured by the Collateral.  No payments by Bank are deemed
an agreement to make similar payments in the future or Bank's waiver of any
Event of Default.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081101"><A NAME="_Toc43225298"><U>Bank's
Liability for Collateral</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">If Bank complies with reasonable banking practices and
Section 9207 of the Code, it is not liable for: (a) the safekeeping of the
Collateral; (b)&nbsp;any loss or damage to the Collateral; (c)&nbsp;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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081104"><A
NAME="_Toc43225299"><U>Remedies Cumulative</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Bank's rights and remedies under this Agreement, the Loan
Documents, and all other agreements are cumulative.  Bank has all rights and
remedies provided under the Code, by law, or in equity. Bank's exercise of one
right or remedy is not an election, and Bank's waiver of any Event of Default is
not a continuing waiver. Bank's delay is not a waiver, election, or
acquiescence. No waiver is effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it was given.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081106"><A NAME="_Toc43225300"><U>Demand
Waiver</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Borrower waives demand, notice of default or dishonor, notice
of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225301"><U>Exim
Direction</U>.</A></LI></P>
<P ALIGN="JUSTIFY">Upon the occurrence and during the continuance of an Event of
Default, Exim Bank shall have right to (i) direct Bank to exercise the remedies
specified in Section 9.1 and (ii) request that Bank accelerate the maturity of
any other loans to Borrower. </P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225302"><U>Exim
Notification</U>.</A></LI></P></OL>

<P ALIGN="JUSTIFY">Bank has the right to immediately notify Exim Bank in writing
if it has knowledge of any of the following events:  (1) any failure to pay any
amount due under this Agreement; (2) the Borrowing Base is less than the sum of
the outstanding Credit Extensions; (3) any failure to pay when due any amount
payable to Bank under any loan owing by Borrower to Bank; (4) the filing of an
action for debtor's relief by, against or on behalf of Borrower; (5) any
threatened or pending material litigation against Borrower, or any dispute
involving Borrower.</P>
<P ALIGN="JUSTIFY">If Bank sends a notice to Exim Bank, Bank has the right to
send Exim Bank a written report on the status of events covered by the notice
every 30 days after the date of the original notification, until Bank files a
claim with Exim Bank or the defaults have been cured (but no Advances may be
required during the cure period unless Exim Bank gives its written approval).
If directed by Exim Bank, Bank will have the right to exercise any rights it may
have against the Borrower to demand the immediate repayment of all amount
outstandings under the Exim Loan Documents.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="Notices"><A NAME="_Toc395081108"><A
NAME="_Toc43225303"></A><U>NOTICES</A></A></LI></P>
</U><P ALIGN="JUSTIFY">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.<A NAME="ChoiceOfLaw"><A
NAME="_Toc395081109"></A></P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225304"><U>CHOICE OF LAW , VENUE AND JURY
TRIAL WAIVER</A></A></LI></P>
</U><P ALIGN="JUSTIFY">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 Santa Clara County,
California.  Any references in the Borrower Agreement to the laws of the State
of New York, shall be deemed a reference to the laws of the State of
California.</P>
<B><P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="GeneralProvs"><A NAME="_Toc395081111"><A
NAME="_Toc43225305"></A></B><U>GENERAL PROVISIONS</A></A></LI></P>
<OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081112"><A NAME="_Toc43225306">Successors
and Assigns</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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; provided that if Bank grants any participation in Bank's
rights and benefits under this Agreement, the Borrower shall only be required to
deal with Bank with respect to the administration of the transactions under this
Agreement, including, without limitation, by only being required to give any
notices hereunder to Bank or take directions hereunder from Bank.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Ref394997360"><A NAME="_Toc395081113"><A
NAME="_Toc43225307"><U>Indemnification</U>.</A></A></A></LI></P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081114"><A NAME="_Toc43225308"><U>Time of
Essence</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Time is of the essence for the performance of all obligations
in this Agreement.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081115"><A
NAME="_Toc43225309"><U>Severability of Provision</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">Each provision of this Agreement is severable from every
other provision in determining the enforceability of any provision.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081116"><A
NAME="_Toc43225310"><U>Amendments in Writing, Integration</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081117"><A
NAME="_Toc43225311"><U>Counterparts</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081118"><A
NAME="_Toc43225312"><U>Survival</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">All covenants, representations and warranties made in this
Agreement continue in full force while any Obligations arising hereunder remain
outstanding (other than contingent indemnification obligations with respect to
unasserted claims).  Borrower may terminate this Agreement at any time without
penalty or premium upon five (5) days' prior written notice to Bank with payment
in full of all outstanding monetary Obligations, so long as Borrower shall have
fully secured with cash any outstanding reimbursement obligations pursuant to
Section 2.1.2.  The obligations of Borrower in Section&nbsp;12.2 to indemnify
Bank will survive until all statutes of limitations for actions that may be
brought against Bank have run.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc395081119"><A
NAME="_Toc43225313"><U>Confidentiality</U>.</A></A></LI></P>
<P ALIGN="JUSTIFY">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)&nbsp;to Bank's subsidiaries or
affiliates in connection with their business with Borrower, (ii)&nbsp;to
prospective transferees or purchasers of any interest in the loans that are not
competitors of Borrower (provided, however, Bank shall use commercially
reasonable efforts in obtaining such prospective transferees or purchasers
agreement of the terms of this provision), (iii)&nbsp;as required by law,
regulation, subpoena, or other order, (iv)&nbsp;as required in connection with
Bank's examination or audit and (v)&nbsp;as Bank considers appropriate in
exercising remedies under this Agreement in its good faith judgment.
Confidential information does not include information that either: (a) is in the
public domain (other than as a result of Bank's disclosure) 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.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225314"><U>Attorneys' Fees, Costs and
Expenses</U>.</A></LI></P></OL>

<P ALIGN="JUSTIFY">In any action or proceeding between Borrower and Bank arising
out of the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys' fees and other reasonable costs and expenses incurred, in
addition to any other relief to which it may be entitled.</P>
<P ALIGN="JUSTIFY"><LI><A NAME="Definitions"><A NAME="_Toc395081120"><A
NAME="_Toc43225315"></A><U>DEFINITIONS</A></A></LI></P>
<OL>

<P ALIGN="JUSTIFY"><LI><A NAME="_Toc43225316">Definitions</U>.</A></LI></P></OL>
</OL>

<P ALIGN="JUSTIFY">In this Agreement:</P>
<P ALIGN="JUSTIFY">&quot;<B>Accounts</B>&quot; are all existing and later
arising accounts, contract rights, and other obligations owed Borrower in
connection with its sale or lease of goods (including licensing software and
other technology) or provision of services,<I> </I>all credit insurance,
guaranties, other security and  all merchandise returned or reclaimed by
Borrower and Borrower's Books relating to any of the foregoing.</P>
<P ALIGN="JUSTIFY">&quot;<B>Advance</B>&quot; or &quot;<B>Advances</B>&quot; is
a loan advance (or advances) under the Committed Revolving Line.</P>
<P ALIGN="JUSTIFY">&quot;<B>Affiliate</B>&quot; 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.</P>
<B><P ALIGN="JUSTIFY">&quot;Availability&quot;</B> means, as of any date of
determination, the amount that Borrower is entitled to borrow as Advances under
the Committed Domestic Line or the Committed Exim Line, as applicable, (after
giving effect to all then outstanding Advances and all sublimits and reserves
applicable thereunder).</P>
<P ALIGN="JUSTIFY">&quot;<B>Bank Expenses</B>&quot; are all audit fees and
expenses and reasonable costs and expenses (including reasonable attorneys' fees
and expenses) for preparing, negotiating, administering, defending and enforcing
the Loan Documents (including appeals or Insolvency Proceedings).</P>
<B><P ALIGN="JUSTIFY">&quot;Borrower Agreement&quot;</B> is the Export-Import
Bank of the United States Working Capital Guarantee Program Borrower Agreement
between Borrower and Bank.</P>
<P ALIGN="JUSTIFY">&quot;<B>Borrower's Books</B>&quot; 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.</P>
<P ALIGN="JUSTIFY">&quot;<B>Borrowing Base</B>&quot; is the sum of:</P>
<OL TYPE="i">

<OL TYPE="i">

<P ALIGN="JUSTIFY"><LI>the sum of (x) 80% of Eligible Accounts and (y) the
lesser of (A) 50% all Eligible Retainage Accounts, and (B) $500,000, as
determined by Bank from Borrower's most recent Domestic Borrowing Base
Certificate (the &quot;Domestic Borrowing Base&quot;), <U>plus</U> </LI></P>
<P ALIGN="JUSTIFY"><LI>the sum of (x) 90% of Exim Eligible Foreign Accounts, (y)
the lesser of (A) 25% of all Exim Eligible Foreign Retainage Accounts, and (B)
$500,000, and (z) the least of (I) 75% of Exim Eligible Foreign Inventory
(valued at the lower of cost or market), (II) $4,000,000, and (III) 60% of the
aggregate outstanding amount of Exim Advances including the Exim Soft Advances,
as determined by Bank from Borrower's most recent Exim Borrowing Base
Certificate (the &quot;Exim Borrowing Base&quot;).</LI></P></OL>
</OL>

<U><P ALIGN="JUSTIFY">provided</U>, <U>however</U>, that Bank may lower the
percentages set forth in the Borrowing Base in its good faith credit judgment
after performing an audit of Borrower's Collateral.</P>
<P ALIGN="JUSTIFY">&quot;<B>Business Day</B>&quot; is any day that is not a
Saturday, Sunday or a day on which the Bank is closed.</P>
<B><P ALIGN="JUSTIFY">&quot;Cash Management Services&quot;</B> are defined in
Section&nbsp;2.1.4.</P>
<B><P ALIGN="JUSTIFY">&quot;Change in Control&quot;</B> shall mean a transaction
in which any &quot;person&quot; or &quot;group&quot; (within the meaning of
Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
&quot;beneficial owner&quot; (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of a sufficient number of shares
of all classes of stock then outstanding of Borrower ordinarily entitled to vote
in the election of directors, empowering such &quot;person&quot; or
&quot;group&quot; to elect a majority of the Board of Directors of Borrower, who
did not have such power before such transaction.</P>
<P ALIGN="JUSTIFY">&quot;<B>Closing Date</B>&quot; is the date of this
Agreement.</P>
<P ALIGN="JUSTIFY">&quot;<B>Code</B>&quot; is the California Uniform Commercial
Code.</P>
<P ALIGN="JUSTIFY">&quot;<B>Collateral</B>&quot; is the property described on
<U>Exhibit&nbsp;A</U>.</P>
<P ALIGN="JUSTIFY">&quot;<B>Committed Revolving Line</B>&quot; are Advances of
up to $15,000,000 in the aggregate, under the Exim Committed Line and the
Domestic Committed Line.</P>
<P ALIGN="JUSTIFY">&quot;<B>Contingent Obligation</B>&quot; is, for any Person,
any direct or indirect liability, contingent or not, of that Person for
(i)&nbsp;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)&nbsp;any obligations for undrawn
letters of credit for the account of that Person; and (iii)&nbsp;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 &quot;Contingent Obligation&quot; 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.</P>
<P ALIGN="JUSTIFY">&quot;<B>Copyrights</B>&quot; 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.</P>
<P ALIGN="JUSTIFY">&quot;<B>Credit Extension</B>&quot; is each Advance, Letter
of Credit, Exchange Contract, or any other extension of credit by Bank for
Borrower's benefit.</P>
<P ALIGN="JUSTIFY">&quot;<B>Current Liabilities</B>&quot; are the aggregate
amount of Borrower's Total Liabilities that mature within one (1) year, which
Current Liabilities include the Obligations.</P>
<P ALIGN="JUSTIFY">&quot;<B>Deferred Revenue</B>&quot; is all amounts received
in advance of performance under a contract and not yet recognized as
revenue.</P>
<B><P ALIGN="JUSTIFY">&quot;Designated Product Line&quot;</B> means Borrower's
product line as set forth on Schedule 13.1(D).</P>
<B><P ALIGN="JUSTIFY">&quot;Domestic Advance&quot; </B>is a loan advance (or
advances) under the Domestic Committed Line.</P>
<P ALIGN="JUSTIFY">&quot;<B>Domestic Borrowing Base</B>&quot; is defined in the
definition of &quot;Borrowing Base&quot; set forth in this
Section&nbsp;13.1.</P>
<B><P ALIGN="JUSTIFY">&quot;Domestic Borrowing Base Certificate&quot;</B> is a
Domestic Borrowing Base Certificate in the form of Exhibit C.</P>
<P ALIGN="JUSTIFY">&quot;<B>Domestic Committed Line</B>&quot; is a  Domestic
Advance of up to $5,000,000, pursuant to Section 2.1.1(a)(1).</P>
<P ALIGN="JUSTIFY">&quot;<B>Domestic Standby Letter of Credit Reserve</B>&quot;
is an amount equal to the issued and outstanding (including drawn but
unreimbursed Letters of Credit) Excess Standby Letters of Credit.</P>
<P ALIGN="JUSTIFY">&quot;<B>Eligible Accounts</B>&quot; are Accounts in the
ordinary course of Borrower's business that meet all Borrower's representations
and warranties in Section&nbsp;5; <U>but</U> Bank in its good faith business
judgment may change eligibility standards by giving Borrower notice.  Unless
Bank agrees otherwise in writing, Eligible Accounts will not include:</P>
<OL TYPE="a">
<OL TYPE="a">
<OL TYPE="a">
<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Accounts that the account debtor has not paid within 90
days of invoice date;</LI></P>
<P ALIGN="JUSTIFY"><LI>Accounts for an account debtor, 50% or more of whose
Accounts have not been paid within 90 days of invoice date;</LI></P>
<P ALIGN="JUSTIFY"><LI>Credit balances over 90 days from invoice date;</LI></P>
<P ALIGN="JUSTIFY"><LI>Accounts for an account debtor, including Affiliates,
whose total obligations to Borrower exceed 25% of all Accounts, for the amounts
that exceed that percentage, unless the Bank approves otherwise in writing,
except that such percentage shall be 40% with respect to the domestic Accounts
of the Significant Account Debtor;</LI></P>
<P ALIGN="JUSTIFY"><LI>Accounts for which the account debtor does not have its
principal place of business in the United States;</LI></P>
<P ALIGN="JUSTIFY"><LI>Accounts for which the account debtor is a federal entity
or any department, agency, or instrumentality except for Accounts of the United
States if the payee has assigned its payment rights to Bank and the assignment
has been acknowledged under the Assignment of Claims Act of 1940 (31 U.S.C.ss.
3727);</LI></P>
<P ALIGN="JUSTIFY"><LI>Accounts for which Borrower owes the account debtor, but
only up to the amount owed (sometimes called &quot;contra&quot; accounts,
accounts payable, customer deposits or credit accounts);</LI></P>
<P ALIGN="JUSTIFY"><LI>Accounts for demonstration or promotional equipment, or
in which goods are consigned, sales guaranteed, sale or return, sale on
approval, bill and hold, or other terms if account debtor's payment may be
conditional;</LI></P>
<P ALIGN="JUSTIFY"><LI>Accounts for which the account debtor is Borrower's
Affiliate, officer, employee, or agent;</LI></P>
<P ALIGN="JUSTIFY"><LI>Accounts in which the account debtor disputes liability
or makes any claim and Bank reasonably believes there may be a basis for dispute
(but only up to the disputed or claimed amount), or if the Account Debtor is
subject to an Insolvency Proceeding, or becomes insolvent, or goes out of
business; and</LI></P>
<P ALIGN="JUSTIFY"><LI>Accounts for which Bank reasonably determines
collection<B> </B>to be doubtful.</LI></P>
<P ALIGN="JUSTIFY">&quot;<B>Eligible Retainage Accounts</B>&quot; are Accounts
that would otherwise constitute Eligible Accounts but for the fact that such
Accounts are Retainage Accounts.</P>
<P ALIGN="JUSTIFY">&quot;<B>Equipment</B>&quot; is all present and future
machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools,
parts and attachments in which Borrower has any interest.</P>
<P ALIGN="JUSTIFY">&quot;<B>ERISA</B>&quot; is the Employment Retirement Income
Security Act of 1974, and its regulations.</P>
<B><P ALIGN="JUSTIFY">&quot;Excess Standby Letters of Credit&quot; </B>are
standby Letters of Credit for which there is insufficient Availability under the
Domestic Committed Line (and therefore are reserved against the Exim Committed
Line) in an aggregate face amount (including drawn but unreimbursed letters of
credit) not to exceed the lesser of: (i)&nbsp;Availability under the Exim
Committed Line and (ii)&nbsp;$3,500,000.</P>
<B><P ALIGN="JUSTIFY">&quot;Exim Advance&quot;</B> is a loan advance (or
advances) under the Exim Committed Line.</P>
<B><P ALIGN="JUSTIFY">&quot;Exim Bank&quot;</B> is the Export-Import Bank of the
United States.</P>
<B><P ALIGN="JUSTIFY">&quot;Exim Bank Expenses&quot;</B> are all audit fees and
expenses; reasonable costs or expenses (including reasonable attorneys' fees and
expenses) for preparing, negotiating, administering, defending and enforcing the
Exim Loan Documents (including appeals or Insolvency Proceedings) and the fees
that the Bank pays to the Exim Bank in consideration of the issuance of the Exim
Guarantee.</P>
<P ALIGN="JUSTIFY">&quot;<B>Exim Borrowing Base</B>&quot; is defined in the
definition of &quot;Borrowing Base&quot; set forth in this
Section&nbsp;13.1.</P>
<B><P ALIGN="JUSTIFY">&quot;Exim Borrowing Base Certificate&quot;</B> is a  Exim
Borrowing Base Certificate in the form of Exhibit C.</P>
<B><P ALIGN="JUSTIFY">&quot;Exim Committed Line&quot;</B> is an Exim Advance of
up to $10,000,000, pursuant to Section 2.1.1(a)(2).</P>
<P ALIGN="JUSTIFY">&quot;<B>Exim Eligible Foreign Accounts</B>&quot; are
Accounts payable in United States Dollars that arise in the ordinary course of
Borrower's business from Borrower's sale of Exim Eligible Foreign Inventory (i)
that the account debtor does not have its principal place of business in the
United&nbsp;States and (ii) that have been assigned and comply with all of
Borrower's representations and warranties in; <U>but</U> Bank, in its good faith
business judgment, may change eligibility standards by giving Borrower notice.
Unless Bank agrees otherwise in writing, Exim Eligible Foreign Accounts will not
include:</P>
<P ALIGN="JUSTIFY">(a)&#9;Accounts with terms of sales greater than 90 days.</P>
<P ALIGN="JUSTIFY">(b) Accounts which are more than sixty (60) calendar days
past the original due date, unless it is insured through Exim Bank export credit
insurance for comprehensive commercial and political risk, or through Exim Bank
approved private insurers for a comparable coverage, in which case ninety (90)
calendar days shall apply;</P>
<P ALIGN="JUSTIFY">            (c) Credit balances over 60 days from due date of
the relevant invoice;</P>
<P ALIGN="JUSTIFY">(d) Accounts evidenced by a letter of credit until the date
of shipment of the items covered by the subject letter of credit;</P>
<P ALIGN="JUSTIFY">(e) Accounts for which the account debtor is a military or
defense entity;</P>
<P ALIGN="JUSTIFY">(f) Accounts for which Borrower owes the account debtor, but
only up to the amount owed (sometimes called &quot;contra&quot; accounts,
accounts payable, customer deposits or credit accounts);</P>
<P ALIGN="JUSTIFY">(g) Accounts for demonstration or promotional equipment, or
in which goods are consigned, sales guaranteed, sale or return, sale on
approval, bill and hold, or other terms if account debtor's payment may be
conditional;</P>
<P ALIGN="JUSTIFY">(h) Accounts for which the account debtor is Borrower's
Affiliate, officer, employee, or agent;</P>
<P ALIGN="JUSTIFY">(i) Accounts in which the account debtor disputes liability
or makes any claim and Bank believes there may be a basis for dispute (but only
up to the disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business;</P>
<P ALIGN="JUSTIFY">            (j) Accounts generated by the sale of products
purchased for military purposes;</P>
<P ALIGN="JUSTIFY">(k) Accounts generated by the sales of Inventory which
constitute defense articles or defense services;</P>
<P ALIGN="JUSTIFY">(l) Accounts excluded from the Borrowing Base under the
Borrower Agreement;</P>
<P ALIGN="JUSTIFY">           (m) Accounts that arise from the sales of items
not in the ordinary course of Borrower's business;</P>
<P ALIGN="JUSTIFY">(n)&#9;Accounts not owned by Borrower or that are subject to
any right, claim or interest of another person other than the lien in favor of
Bank;</P>
<P ALIGN="JUSTIFY">(o)&#9;Accounts with respect to which an invoice has not been
sent;</P>
<P ALIGN="JUSTIFY">(p)&#9;Accounts billed and payable outside the United Stated
unless approved in writing by Exim Bank, however, limited to no more than 50% of
the Exim Borrowing Base shall be of such accounts; and such Accounts are subject
to the following:</P>
<OL TYPE="i">

<LI>Each subsidiary or affiliate is a party to the Loan Agreement;</LI>
<LI>All proceeds are remitted to the United States on a monthly basis
(excluding the retention of proceeds for the purpose of funding local
expenses);</LI>
<LI>Accounts are derived from eligible exports originating from the United
States;</LI>
<LI>Bank obtains a valid first priority security interest (or equivalent) in the
jurisdiction where the Accounts are located; and</LI>
<LI>Bank obtains a legal opinion from local counsel with regard to the
enforceability of such security interest.</LI></OL>
</OL>
</OL>
</OL>
</OL>

<P ALIGN="JUSTIFY">(q)&#9;Accounts from account debtors with balance of 50% over
60 days past the invoice due date;</P>
<P ALIGN="JUSTIFY">(r)&#9;Accounts with open account term with balance more than
25% concentration of total Exim Eligible Foreign Accounts, unless pre-approved
by Bank;</P>
<P ALIGN="JUSTIFY">(s)&#9;Accounts billed in currencies other than U.S. Dollars,
unless approved in writing by Exim Bank;</P>
<P ALIGN="JUSTIFY">(t)&#9;Accounts from foreign buyers in countries where Exim
Bank is legally prohibited from doing business or in which Exim Bank coverage is
not available (as designated in the Country Limitation Schedule);</P>
<P ALIGN="JUSTIFY">(u)&#9;Accounts backed by letters of credit unacceptable to
Bank in its reasonable and good faith credit judgment; </P>
<P ALIGN="JUSTIFY">            (v) Accounts for which Bank or Exim Bank
determines collection<B> </B>to be doubtful, with Bank's determination of same
to be reasonable;</P>
<P ALIGN="JUSTIFY">(w) Accounts for which the items giving rise to such Account
have not been shipped and delivered to and accepted by the Buyer or the services
giving rise to such Account have not been performed by Borrower and accepted by
the Buyer or the Account does not represent a final sale;</P>
<P ALIGN="JUSTIFY">(x)&#9;Accounts for which Borrower has made any agreement
with the Buyer for any deduction therefrom, except for discounts or allowances
made in the ordinary course of business for prompt payment, all of which
discounts or allowances are reflected in the calculation of the face value of
each respective invoice related thereto; and</P>
<P ALIGN="JUSTIFY">&#9;(y)  Accounts for which any of the items giving rise to
such Account have been returned, rejected or repossessed.</P>
<B><P ALIGN="JUSTIFY">&quot;Exim Eligible Foreign Inventory&quot; </B>is
Borrower's Inventory purchased or manufactured for resale (to buyers located
outside the United States), located in the United States, other than Inventory
that is excluded under the Borrower Agreement and this Agreement.  Exim Eligible
Foreign Inventory will not include the following:</P>
<P ALIGN="JUSTIFY">&#9;(a)&#9;Inventory not located in the United
States;&#9;&#9;</P>
<OL START=2 TYPE="a">

<P ALIGN="JUSTIFY"><LI>&#9;(b)&#9;Any demonstration Inventory or Inventory sold
on consignment;</LI></P></OL>

<P ALIGN="JUSTIFY">&#9;&#9;&#9;(c)&#9;Inventory consisting of proprietary
software not intended for sale;&#9;</P>
<P ALIGN="JUSTIFY">&#9;(d)&#9;Inventory previously exported from the United
States;&#9;&#9;&#9;</P>
<P ALIGN="JUSTIFY">&#9;(e)&#9;Inventory which constitutes defense articles or
defense services; &#9;&#9;</P>
<P ALIGN="JUSTIFY">&#9;(f)&#9;Inventory destined for shipment to prohibited
countries in which Exim Bank is legally prohibited from doing business as
designated in the most recent Country Limitation Schedule;&#9;&#9;</P>
<P ALIGN="JUSTIFY">&#9;(g)&#9;Inventory destined for shipment to a country in
which Exim coverage is not available as designated in the most recent Country
Limitation Schedule;&#9;</P>
<P ALIGN="JUSTIFY">&#9;(h)&#9;Inventory which is to be incorporated into items
whose sale would result in ineligible accounts receivable;</P>
<P ALIGN="JUSTIFY">&#9;(i)&#9;Inventory with offsetting claims; </P>
<P ALIGN="JUSTIFY">&#9;(j)&#9;Inventory that is damaged, defective, obsolete,
returned, recalled or unfit for further processing; </P>
<P ALIGN="JUSTIFY">&#9;(k)&#9;Inventory that is not subject to a valid,
perfected first priority Lien in favor of Bank;</P>
<OL TYPE="a">
<OL TYPE="a">
<OL TYPE="a">
<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Inventory that is located at an address that has not been
disclosed to Bank in writing; and</LI></P>
<P ALIGN="JUSTIFY"><LI>Inventory that is in the possession of a processor or
bailee, or located on premises leased or subleased to Borrower, or on premises
subject to a mortgage in favor of a Person other than Bank, unless such
processor or bailee or mortgagee or the lessor or sublessor of such premises, as
the case may be, has executed and delivered all documentation which Bank shall
require to evidence the subordination or other limitation or extinguishment of
such Person's rights with respect to such Inventory and Bank's right to gain
access thereto; and</LI></P>
<P ALIGN="JUSTIFY"><LI>Inventory incorporated into items which are destined for
shipment to a country in which Exim coverage is not available as designated in
the most recent Country Limitation Schedule unless sold under a letter of credit
reasonably acceptable to Exim Bank;</LI></P>
<P ALIGN="JUSTIFY">&quot;<B>Exim Eligible Foreign Retainage Accounts</B>&quot;
are Accounts that would otherwise constitute Exim Eligible Foreign Accounts but
for the fact that such Accounts are Retainage Accounts.</P>
<P ALIGN="JUSTIFY">&quot;<B>Exim Guarantee</B>&quot; is that certain Master
Guarantee Agreement or other agreement, as amended from time to time, the terms
of which are incorporated into this Agreement.</P>
<B><P ALIGN="JUSTIFY">&quot;Exim Loan Documents&quot;</B> means this Agreement,
any note or notes executed by Borrower or any other agreement entered into in
connection with this Agreement, pursuant to which Exim Bank guarantees
Borrower's obligations under this Agreement.</P>
<B><P ALIGN="JUSTIFY">&quot;Exim Soft Advances&quot;</B> is defined in Section
2.1.1(a)(2). </P>
<B><P ALIGN="JUSTIFY">&quot;Export Order&quot;</B> is a written export order or
contract for the purchase by the buyer from the Borrower of any finished goods
or services which are intended for export.</P>
<P ALIGN="JUSTIFY">&quot;<B>FX Forward Contract</B>&quot; is defined in
Section&nbsp;2.1.3.</P>
<P ALIGN="JUSTIFY">&quot;<B>FX Reserve</B> &quot; is defined in
Section&nbsp;2.1.3.</P>
<P ALIGN="JUSTIFY">&quot;<B>GAAP</B>&quot; is generally accepted accounting
principles.</P>
<P ALIGN="JUSTIFY">&quot;<B>Guarantor</B>&quot; is any present or future
guarantor of the Obligations, including sample.</P>
<P ALIGN="JUSTIFY">&quot;<B>Indebtedness</B>&quot; is (a)&nbsp;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)&nbsp;obligations evidenced by notes, bonds, debentures or similar
instruments, (c)&nbsp;capital lease obligations and (d)&nbsp;Contingent
Obligations.</P>
<P ALIGN="JUSTIFY">&quot;<B>Insolvency Proceeding</B>&quot; are proceedings
commenced by the filing of a petition for relief 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.</P>
<P ALIGN="JUSTIFY">&quot;<B>Intellectual</B> <B>Property</B>&quot; is:<A
NAME="Go"></A></P>
<P ALIGN="JUSTIFY"><LI VALUE=1>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;</LI></P>
<P ALIGN="JUSTIFY"><LI>Any trade secrets and any intellectual property rights in
computer software and computer software products now or later existing, created,
acquired or held;</LI></P>
<P ALIGN="JUSTIFY"><LI>All design rights which may be available to Borrower now
or later created, acquired or held;</LI></P>
<P ALIGN="JUSTIFY"><LI>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;</LI></P>
<P ALIGN="JUSTIFY">All proceeds and products of the foregoing, including all
insurance, indemnity or warranty payments.</P>
<P ALIGN="JUSTIFY">&quot;<B>Inventory</B>&quot; is present and future inventory
in which Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or later owned by or in the custody or
possession, actual or constructive, of Borrower, including inventory temporarily
out of its custody or possession or in transit and including returns on any
accounts or other proceeds (including insurance proceeds) from the sale or
disposition of any of the foregoing and any documents of title.</P>
<P ALIGN="JUSTIFY">&quot;<B>Investment</B>&quot; is any beneficial ownership of
(including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person.</P>
<P ALIGN="JUSTIFY">&quot;<B>Letter of Credit</B>&quot; is defined in Section
2.1.2.</P>
<P ALIGN="JUSTIFY">&quot;<B>Lien</B>&quot; is a mortgage, lien, deed of trust,
charge, pledge, security interest or other encumbrance.</P>
<P ALIGN="JUSTIFY">&quot;<B>Loan Documents</B>&quot; 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.</P>
<P ALIGN="JUSTIFY">&quot;<B>Mask Works</B>&quot; are all mask works or similar
rights available for the protection of semiconductor chips, now owned or later
acquired.</P>
<P ALIGN="JUSTIFY">&quot;<B>Material Adverse Change</B>&quot; is defined in
Section&nbsp;8.3.</P>
<P ALIGN="JUSTIFY">&quot;<B>Obligations</B>&quot; are debts, principal,
interest, Bank Expenses and other amounts Borrower owes Bank now or later,
including cash management services, letters of credit and foreign exchange
contracts, if any and including interest accruing after Insolvency Proceedings
begin and debts, liabilities, or obligations of Borrower assigned to Bank.</P>
<P ALIGN="JUSTIFY">&quot;<B>Patents</B>&quot; are patents, patent applications
and like protections, including improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same.</P>
<P ALIGN="JUSTIFY">&quot;<B>Permitted Indebtedness</B>&quot; is:</P>
<P ALIGN="JUSTIFY"><LI VALUE=1>Borrower's indebtedness to Bank under this
Agreement or any other Loan Document;</LI></P>
<P ALIGN="JUSTIFY"><LI>Indebtedness existing on the Closing Date and shown on
the Schedule;</LI></P>
<P ALIGN="JUSTIFY"><LI>Subordinated Debt;</LI></P>
<P ALIGN="JUSTIFY"><LI>Indebtedness to trade creditors incurred in the ordinary
course of business; </LI></P>
<P ALIGN="JUSTIFY"><LI>Indebtedness secured by Permitted Liens; </LI></P>
<P ALIGN="JUSTIFY"><LI>The following Indebtedness incurred in the ordinary
course of Borrower's business: Indebtedness of Borrower to any Subsidiary and
Contingent Obligations of any Subsidiary with respect to obligations of Borrower
(provided that the primary obligations of Borrower are not prohibited hereby),
Indebtedness of any Subsidiary to Borrower or any domestic Subsidiary and
Contingent Obligations of any Subsidiary with respect to obligations of another
Subsidiary (provided that the primary obligations of the other Subsidiary are
not prohibited hereby); and</LI></P>
<P ALIGN="JUSTIFY"><LI>    Extensions, refinancings, modifications, amendments
and restatements of any items of Permitted Indebtedness described in (a) through
(f) above, provided that (i) the principal amount thereof is not increased, (ii)
the terms thereof are not modified to impose more burdensome terms upon Borrower
or its Subsidiaries, and (iii) any subordination agreements relating thereto
which existed prior to the taking of such actions must be effective in all
respects after the completion of such actions. </LI></P>
<B><P ALIGN="JUSTIFY">&quot;Permitted Investments</B>&quot; are:</P>
<P ALIGN="JUSTIFY"><LI VALUE=1>Investments shown on the Schedule and existing on
the Closing Date; </LI></P>
<P ALIGN="JUSTIFY"><LI>(i)&nbsp; 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)&nbsp;commercial paper maturing
no more than 1 year after its creation and having the highest rating from either
Standard&nbsp;&amp; Poor's Corporation or Moody's Investors Service, Inc.,
(iii)&nbsp;Bank's certificates of deposit issued maturing no more than 1 year
after issue, and (iv) Investments permitted by Borrower's investment policy, a
copy of which is attached hereto as Exhibit 13.1(P), together with Investments
allowed from time to time by Borrower's Board of Directors with prior written
notice to Bank;</LI></P>
<P ALIGN="JUSTIFY"><LI>Acquisitions permitted under Section 7.3;</LI></P>
<P ALIGN="JUSTIFY"><LI>Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of Borrower's business;</LI></P>
<P ALIGN="JUSTIFY"><LI>Investments in the ordinary course of Borrower's business
consisting of (i) travel advances and employee relocation loans and other
employee loans, and (ii) loans to employees, officers or directors relating to
the purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase or employee stock option plans approved by Borrower's
Board of Directors;</LI></P>
<P ALIGN="JUSTIFY"><LI> 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 pursuant to Borrower's customary practices as they exist at
execution of this Agreement; </LI></P>
<P ALIGN="JUSTIFY"><LI> Investments consisting of notes receivable of, or
prepaid royalties and other credit extensions, to customers and suppliers who
are not Affiliates pursuant to Borrower's customary practices as they exist at
execution of  this Agreement;</LI></P>
<P ALIGN="JUSTIFY"><LI>  Strategic Investments in customers, vendors, suppliers
and other Persons in the same industries as Borrower and its Subsidiaries,
including the exercise of warrants to purchase capital stock of such Persons in
an aggregate amount not to exceed $1,000,000 per year so long as no Event of
Default exists or will result from such actions;</LI></P>
<P ALIGN="JUSTIFY"><LI> Investments pursuant to or arising under currency
agreements or interest rate agreements entered into in the ordinary course of
business and consistent with policies issued by Borrower's Board of Directors;
</LI></P>
<P ALIGN="JUSTIFY"><LI> Subject to the terms of Section 6.6, deposit and
investment accounts of Borrower in which Bank has a Lien prior to any other Lien
(other than Liens securing fees and expenses of the depository or investment
intermediary); </LI></P>
<P ALIGN="JUSTIFY"><LI> Investments in Subsidiaries, consisting of loans, cash
Investments, and other capital contributions, to cover operating expenses and
capital expenditures so long as such investments do not exceed $3,000,000 in the
aggregate during any fiscal year of Borrower; and </LI></P>
<P ALIGN="JUSTIFY"><LI>Subject to the terms and conditions of Section 6.6,
Deposits and investment accounts of any Subsidiary maintained in the ordinary
course of business </LI></P>
<B><P ALIGN="JUSTIFY">&quot;Permitted Liens&quot;</B> are:</P>
<P ALIGN="JUSTIFY"><LI VALUE=1>Liens existing on the Closing Date and shown on
the Schedule or arising under this Agreement or other Loan Documents;</LI></P>
<P ALIGN="JUSTIFY"><LI>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, <U>if</U> they have
no priority over any of Bank's security interests;</LI></P>
<P ALIGN="JUSTIFY"><LI>Liens (i)&nbsp;on Equipment and related software acquired
or held by Borrower or its Subsidiaries incurred for financing the acquisition
of the Equipment, related software and related soft costs, or (ii)&nbsp;existing
on Equipment when acquired, <U>if</U> the Lien is confined to the property and
improvements and the proceeds of the Equipment and related software;</LI></P>
<P ALIGN="JUSTIFY"><LI>Liens in favor of other financial institutions arising in
connection with Borrower's deposit or investment accounts held at such
institutions to secure fees and charges in connection with said accounts if such
deposit or investment accounts are permitted by Section 6.6;</LI></P>
<P ALIGN="JUSTIFY"><LI>Statutory Liens securing claims or demands not yet
delinquent of materialmen, mechanics, carriers, warehousemen, landlords and
other like Persons imposed without action of such parties;</LI></P>
<P ALIGN="JUSTIFY"><LI>Liens to secure payment of workers' compensation,
employment insurance, old-age pensions, social security and other like
obligations arising in the ordinary course of Borrower's business for
obligations not yet delinquent;</LI></P>
<P ALIGN="JUSTIFY"><LI>Liens on insurance proceeds in favor of insurance
companies granted solely as security for financed premiums;</LI></P>
<P ALIGN="JUSTIFY"><LI>Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection with the
importation of goods;</LI></P>
<P ALIGN="JUSTIFY"><LI>Liens arising from the filing of any financing statement
relating to operating leases otherwise permitted hereunder;</LI></P>
<P ALIGN="JUSTIFY"><LI>Liens that are not prior to the Bank's security interests
which constitute rights of offset of a customary nature;</LI></P>
<P ALIGN="JUSTIFY"><LI VALUE=1>Licenses or sublicenses granted in the ordinary
course of Borrower's business and any interest or title of a licensor or under
any license or sublicense;</LI></P>
<P ALIGN="JUSTIFY"><LI>Leases or subleases granted in the ordinary course of
Borrower's business, including in connection with Borrower's leased premises or
leased property;</LI></P>
<P ALIGN="JUSTIFY"><LI>Liens incurred in the extension, renewal or refinancing
of the indebtedness secured by Liens described in (a) through (c), <U>but</U>
any extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness may
not increase.</LI></P></OL>
</OL>
</OL>
</OL>

<P ALIGN="JUSTIFY">&quot;<B>Person</B>&quot; 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.</P>
<P ALIGN="JUSTIFY">&quot;<B>Prime Rate</B>&quot; is Bank's most recently
announced &quot;prime rate,&quot; even if it is not Bank's lowest rate.</P>
<P ALIGN="JUSTIFY">&quot;<B>Quick Assets</B>&quot; is, on any date, the sum of
Borrower's consolidated, unrestricted cash, cash equivalents, and net billed
accounts receivable, and investments with maturities of less than twelve
months,<B> </B>determined according to GAAP.</P>
<P ALIGN="JUSTIFY">&quot;<B>Responsible</B> <B>Officer</B>&quot; is each of the
Chief Executive Officer, the President, the Chief Financial Officer and the
Controller of Borrower.</P>
<B><P ALIGN="JUSTIFY">&quot;Retainage Account&quot;</B> is a portion of an
Account that is conditional and remains subject to buyer's acceptance.</P>
<P ALIGN="JUSTIFY">&quot;<B>Revolving Maturity Date</B>&quot; is June&nbsp;13,
2004.</P>
<P ALIGN="JUSTIFY">&quot;<B>Schedule</B>&quot; is any attached schedule of
exceptions.</P>
<B><P ALIGN="JUSTIFY">&quot;Significant Account Debtor&quot;</B> means the
account debtor identified on Schedule 13.1(S). </P>
<P ALIGN="JUSTIFY">&quot;<B>Subordinated Debt</B>&quot; is debt incurred by
Borrower subordinated to Borrower's indebtedness owed to Bank and which is
reflected in a written agreement in a manner and form acceptable to Bank and
approved by Bank in writing.</P>
<P ALIGN="JUSTIFY">&quot;<B>Subsidiary</B>&quot; 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.</P>
<P ALIGN="JUSTIFY">&quot;<B>Tangible Net Worth</B>&quot; is, on any date, the
consolidated total assets of Borrower and its Subsidiaries <U>minus</U>,
(i)&nbsp;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, <U>and</U> (ii)&nbsp;Total
Liabilities.</P>
<P ALIGN="JUSTIFY">&quot;<B>Total</B> <B>Liabilities</B>&quot; is on any day,
obligations that should, under GAAP, be classified as liabilities on Borrower's
consolidated balance sheet, including all Indebtedness, and current portion
Subordinated Debt allowed to be paid, but excluding all other Subordinated
Debt.</P>
<P ALIGN="JUSTIFY">&quot;<B>Trademarks</B>&quot; 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.</P>
<P>BORROWER:</P>

<P>THERMA-WAVE, INC.</P>

<P>&nbsp;</P>
<P>By: <U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U>
<P>Title: <U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U>
<P>&nbsp;</P>
<P>BANK:</P>

<P>SILICON VALLEY BANK</P>

<P>&nbsp;</P>
<P>By: <U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U>
<P>Title: <U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
<FONT SIZE=2>
</FONT><P ALIGN="CENTER"><A NAME="CollateralExh"></A>EXHIBIT A</P>
</U><P ALIGN="JUSTIFY">The Collateral consists of all of Borrower's right, title
and interest in and to the following whether now owned or hereafter arising and
whether the Borrower has rights now or hereafter has rights therein and wherever
located:</P>
<P ALIGN="JUSTIFY"><A NAME="_DV_M445"></A>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;</P>
<P ALIGN="JUSTIFY"><A NAME="_DV_M446"></A>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 held for sale or lease, or to be furnished under
a contract of service or is temporarily out of Borrower's custody or possession
or in transit and including any returns or repossession 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;</P>
<P ALIGN="JUSTIFY"><A NAME="_DV_M447"></A>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, payment
intangibles, and rights to payment of any kind;</P>
<P ALIGN="JUSTIFY"><A NAME="_DV_M448"></A>All now existing and hereafter arising
accounts (including health-care insurance receivables), 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;</P>
<P ALIGN="JUSTIFY"><A NAME="_DV_M449"></A>All documents (including negotiable
documents), cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
letter of credit rights, money, certificates of deposit, instruments (including
promissory notes) and chattel paper (including tangible and electronic chattel
paper) now owned or hereafter acquired and Borrower's Books relating to the
foregoing;</P>
<P ALIGN="JUSTIFY"><A NAME="_DV_M450"></A>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
claims for damages by way of any past, present and future infringement of any of
the foregoing; and</P>
<P ALIGN="JUSTIFY"><A NAME="_DV_M451"></A>All Borrower's Books relating to the
foregoing, and the computers and equipment containing said books and records,
and any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof.</P>
<P ALIGN="CENTER"><A NAME="LoanPaymentForm"></A></P>
<P ALIGN="CENTER">EXHIBIT B</P>
<FONT SIZE=2><P ALIGN="CENTER">LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM</P>
<P ALIGN="CENTER">DEADLINE FOR SAME DAY PROCESSING IS 12:00&nbsp;NOON, P.S.T.
</P>
<P>TO: CENTRAL CLIENT SERVICE DIVISION&#9;DATE:   <U>&#9;&#9;&#9;&#9;</P>
</U>
<P>FAX#:  (408) 496-2426&#9;&#9;&#9;&#9;TIME:   <U>&#9;&#9;&#9;&#9;</P>
</U>
<P>FROM:  <U>Therma-Wave, Inc.&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P>&#9;&#9;&#9;&#9;&#9;CLIENT NAME (BORROWER)</P>

<P>REQUESTED BY:  <U>&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P>&#9;&#9;&#9;&#9;&#9;AUTHORIZED SIGNER'S NAME</P>

<P>AUTHORIZED SIGNATURE:  <U>&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U>
<P>PHONE NUMBER: <U>&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U>
<P>FROM ACCOUNT #
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp
;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
TO ACCOUNT # <U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U>
<U><P>REQUESTED TRANSACTION TYPE</U>&#9;&#9;&#9;<U>REQUESTED DOLLAR AMOUNT</P>
</U>
<P>PRINCIPAL INCREASE (ADVANCE)&#9;&#9;$<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P>PRINCIPAL PAYMENT (ONLY)&#9;&#9;&#9;$<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P>INTEREST PAYMENT (ONLY)&#9;&#9;&#9;$<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P>PRINCIPAL AND INTEREST (PAYMENT)&#9;$<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U>
<P>OTHER INSTRUCTIONS: <U>&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
<P>&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U>
<P>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.
</P>
<P>1</P>
<P ALIGN="CENTER">BANK USE ONLY</P>

<U><P>TELEPHONE REQUEST</U>:  </P>

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

<U><P>&#9;&#9;&#9;&#9;&#9;&#9;&#9;</U>&#9;<U>&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P>&#9;&#9;Authorized Requester&#9;&#9;&#9;&#9;&#9;&#9;&#9;Phone #</P>
<U>
<P>&#9;&#9;&#9;&#9;&#9;&#9;&#9;</U>&#9;<U>&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P>&#9;&#9;Received By (Bank)&#9;&#9;&#9;&#9;&#9;&#9;&#9;Phone #</P>

<P>&nbsp;</P>
<P>&#9;&#9;&#9;<U>&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P>&#9;&#9;&#9;&#9;&#9;&#9;    Authorized Signature (Bank)</P>
<P>2</P>
</FONT><B><P ALIGN="JUSTIFY"><A NAME="BBCert"></A></P>
<P ALIGN="CENTER">EXHIBIT C<BR>
<BR>
DOMESTIC BORROWING BASE CERTIFICATE</P></B>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=734>
<TR><TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=2><P>Borrower:</FONT></TD>
<TD WIDTH="53%" VALIGN="TOP">
<FONT SIZE=2><P>Therma-Wave, Inc.</P>
<P>1250 Reliance Way</P>
<P>Fremont, CA  94539</P>
</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P>Bank:</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT SIZE=2><P>Silicon Valley Bank</P>
<P>3003 Tasman Drive</P>
<P>Santa Clara, CA 95054</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2><P>Commitment Amount:&#9;$5,000,000</P>
<P></P>

<P>ACCOUNTS RECEIVABLE </P>
<P>1.&#9;Accounts Receivable Book Value as of  _____________&#9;$<U>&#9;&#9;</P>
</U><P>2.&#9;Additions (please explain on reverse)&#9;$<U>&#9;&#9;</P>
</U><P>3.&#9;<A NAME="_Ref399210211">TOTAL ACCOUNTS
RECEIVABLE&#9;$</A><U>&#9;&#9;</P>
</U>
<P>ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)</P>
<P>4.&#9;Amounts over 90 days past invoice date&#9;$<U>&#9;&#9;</P>
</U><P>5.&#9;Balance of 50% over 90 day accounts&#9;$<U>&#9;&#9;</P>
</U><P>6.&#9;Credit balances over 90 days from invoice date&#9;$<U>&#9;&#9;</P>
</U><P>7.&#9;Concentration Limits*&#9;$<U>&#9;&#9;</P>
</U><P>8.&#9;Governmental Accounts&#9;$<U>&#9;&#9;</P>
</U><P>9.&#9;Contra Accounts&#9;$<U>&#9;&#9;</P>
</U><P>10.&#9;Promotion or Demo Accounts&#9;$<U>&#9;&#9;</P>
</U><P>11.&#9;Intercompany/Employee Accounts&#9;$<U>&#9;&#9;</P>
</U><P>12.&#9;Disputed Accounts&#9;$_____________</P>
<P>13.&#9;Doubtful Accounts&#9;$_____________</P>
<P>14.&#9;Other (please explain on reverse)&#9;$<U>&#9;&#9;</P>
</U><P>15.&#9;<A NAME="_Ref399210247">TOTAL ACCOUNTS RECEIVABLE
DEDUCTIONS&#9;&#9;$</A><U>&#9;&#9;</P>
</U><P>16.&#9;<A NAME="_Ref399210279">Eligible Accounts (#3 minus
#15)&#9;$</A><U>&#9;&#9;</P>
</U><P>17.&#9;Eligible Retainage Accounts&#9;$_____________</P>
<P>18.&#9;<A NAME="_Ref399210779">LOAN VALUE OF ACCOUNTS (80% of #16 plus the
lesser of (i) 50% of  </P>
<P>&#9;  (#17and (ii) $500,000)&#9;&#9;$</A><U>&#9;&#9;</P>
</U><P>* 40% for Significant Account Debtor</P>

<P>BALANCES</P>
<P>19.&#9;<A NAME="_Ref399210758">Maximum Loan Amount&#9;$</A>5,000,000</P>
<P>20.&#9;<A NAME="_Ref399211157">Total Funds Available [Lesser of #19 or
#18]&#9;$</A><U>&#9;&#9;</P>
</U><P>21.&#9;<A NAME="_Ref399211186">Present balance owing on Line of
Credit&#9;$</A><U>&#9;&#9;</P>
</U><P>22.&#9;a.  Total outstanding under standby LCs&#9;$_____________</P>
<P>&#9;b.  Line 60 from EXIM BBC&#9;$_____________</P>
<P>&#9;c.  Lessor of $0 or 22a. minus 22b.&#9;$_____________</P>
<P>23.&#9;<A NAME="_Ref399211190">Outstanding under Sublimits (commercial LC, CM
and FX)&#9;$</A><U>&#9;&#9;</P>
</U><P>&#9;RESERVE POSITION (#20 minus #21, #22c and #23)&#9;$<U>&#9;&#9;</P>
</U>
<P>The undersigned represents and warrants that this is true, complete and
correct, and that the information in this Borrowing Base Certificate complies
with the representations and warranties in the Loan and Security Agreement
between the undersigned and Silicon Valley Bank.</P>
</FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=734>
<TR><TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=2><P>COMMENTS:</P>

<P>THERMA-WAVE, INC.</P>

<P>&nbsp;</P>
<P>By:<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P>&#9;Authorized Signer</FONT></TD>
<TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=2><P>BANK USE ONLY</P>

<P>Rec'd By<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P>&#9;&#9;Authorized Signer</P>

<P>Date:<U>&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U>
<P>Verified:<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U></FONT></TD>
</TR>
</TABLE>

<B><P ALIGN="CENTER"><A NAME="ComplianceCert"></A>EXHIBIT D</P>
<P ALIGN="CENTER">COMPLIANCE CERTIFICATE</P>
</B><P ALIGN="JUSTIFY"></P>
<FONT SIZE=2><P>TO:&#9;&#9;SILICON VALLEY BANK</P>
<P>&#9;&#9;3003 Tasman Drive</P>
<P>&#9;&#9;Santa Clara, CA 95054</P>

<P>FROM:&#9;&#9;THERMA-WAVE, INC.</P>
<P>&#9;&#9;1250 Reliance Way</P>
<P>&#9;&#9;Fremont, CA  94539</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The undersigned authorized officer of Therma-Wave, Inc.
(&quot;Borrower&quot;) certifies that under the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (the &quot;Agreement&quot;),
(i)&nbsp;Borrower is in complete compliance for the period ending
_______________ with all required covenants except as noted below and
(ii)&nbsp;all representations and warranties in the Agreement are true and
correct in all material respects on this date.  Attached are the required
documents supporting the certification together with supporting calculations.
The Officer certifies that these are prepared in accordance with Generally
Accepted Accounting Principles (GAAP) consistently applied from one period to
the next except as explained in an accompanying letter or footnotes.  The
Officer acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.</P>
<B><P ALIGN="JUSTIFY">Please indicate compliance status by circling Yes/No under
&quot;Complies&quot; column</B>.</P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=686>
<TR><TD WIDTH="42%" VALIGN="TOP">
<B><U><FONT SIZE=2><P>Reporting Covenant</B></U></FONT></TD>
<TD WIDTH="35%" VALIGN="TOP">
<B><U><FONT SIZE=2><P>Required</B></U></FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" COLSPAN=2>
<B><U><FONT SIZE=2><P>Complies</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="35%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP">
<FONT SIZE=2><P>Monthly financial statements + CC</FONT></TD>
<TD WIDTH="35%" VALIGN="TOP">
<FONT SIZE=2><P>Monthly within 30 days</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>Yes</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>No</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP">
<FONT SIZE=2><P>Annual (Audited)</FONT></TD>
<TD WIDTH="35%" VALIGN="TOP">
<FONT SIZE=2><P>FYE within 120 days</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>Yes</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>No</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP">
<FONT SIZE=2><P>10-Q, 10-K and 8-K</FONT></TD>
<TD WIDTH="35%" VALIGN="TOP">
<FONT SIZE=2><P>Within 5 days after filing with SEC</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>Yes</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>No</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP">
<FONT SIZE=2><P>A/R &amp; A/P Agings and Inventory reports</FONT></TD>
<TD WIDTH="35%" VALIGN="TOP">
<FONT SIZE=2><P>Prior to every Advance*, and Monthly within 30 days</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>Yes</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>No</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP">
<FONT SIZE=2><P>A/R Audit</FONT></TD>
<TD WIDTH="35%" VALIGN="TOP">
<FONT SIZE=2><P>Initial and Semi-Annual</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>Yes</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>No</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP">
<FONT SIZE=2><P>Borrowing Base Certificates</FONT></TD>
<TD WIDTH="35%" VALIGN="TOP">
<FONT SIZE=2><P>Prior to every Advance*, and Monthly within 30 days</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>Yes</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>No</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2><P>* An Advance under the Exim Committed Line shall be supported by
copies of Export Orders, invoices, etc.</P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=734>
<TR><TD WIDTH="42%" VALIGN="TOP" COLSPAN=3>
<B><U><FONT SIZE=2><P>Financial Covenant</B></U></FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" COLSPAN=2>
<B><U><FONT SIZE=2><P>Required</B></U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" COLSPAN=2>
<B><U><FONT SIZE=2><P>Actual</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=3>
<B><U><FONT SIZE=2><P>Complies</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" COLSPAN=3>&nbsp;</TD>
<TD WIDTH="27%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" COLSPAN=3>
<FONT SIZE=2><P>Maintain on a Monthly Basis:</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" COLSPAN=3>
<FONT SIZE=2><P>  Minimum Quick Ratio (Adjusted)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" COLSPAN=2>
<FONT SIZE=2><P>1:50:1.00</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" COLSPAN=2>
<FONT SIZE=2><P>$_______</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP" COLSPAN=2>
<FONT SIZE=2><P>Yes</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P>No</FONT></TD>
</TR>
<TR><TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Profitability:</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="27%" VALIGN="TOP" COLSPAN=2>
<FONT SIZE=2><P ALIGN="JUSTIFY">Quarterly </P>
<P ALIGN="JUSTIFY">(see below)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" COLSPAN=2>
<FONT SIZE=2><P ALIGN="JUSTIFY">$_______ (Actual)</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP" COLSPAN=2>
<FONT SIZE=2><P ALIGN="JUSTIFY">Yes</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">No</FONT></TD>
</TR>
<TR><TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="29%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="41%" VALIGN="TOP" COLSPAN=4>
<U><FONT SIZE=2><P>Applicable Amt. Req'd.</U>&#9;<U>Applicable Period</P>
</U><P>&lt;$18,775,000&gt;&#9;&#9;Quarter-ended 03/31/03</P>
<P>&lt;$8,500,000&gt;&#9;&#9;Quarter-ended 06/30/03</P>
<P>&lt;$4,500,000&gt;&#9;&#9;Quarter-ended 09/30/03</P>
<P>&lt;$2,000,000&gt;&#9;&#9;Quarter-ended 12/31/03</P>
<P>&lt;$1,000,000&gt;&#9;&#9;Quarter-ended 03/31/04</P><DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>

<P>$0&#9;Each quarter-ended period thereafter.</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
</TR>
<TR><TD WIDTH="74%" VALIGN="TOP" COLSPAN=6 HEIGHT=30>
<FONT SIZE=2><P ALIGN="JUSTIFY">          With respect to the Profitability
financial covenant above, Borrower hereby discloses the
write-down of intangibles assets in the amounts set forth in the columns
opposite hereto.</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2 HEIGHT=30>
<FONT SIZE=2><P ALIGN="JUSTIFY">Current  Compliance Period        Write-downs
</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">$__________</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2 HEIGHT=30>
<FONT SIZE=2><P ALIGN="JUSTIFY">Cumulative       Write-downs since 01/01/03</P>
<P ALIGN="JUSTIFY">             </P>
<P ALIGN="JUSTIFY">$_________</FONT></TD>
</TR>
<TR><TD WIDTH="74%" VALIGN="TOP" COLSPAN=6 HEIGHT=30><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2 HEIGHT=30><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2 HEIGHT=30><P></P></TD>
</TR>
<TR><TD WIDTH="74%" VALIGN="TOP" COLSPAN=6 HEIGHT=30>
<FONT SIZE=2><P ALIGN="JUSTIFY">Have there been updates to Borrower's
intellectual property, if appropriate?</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2 HEIGHT=30>
<FONT SIZE=2><P ALIGN="JUSTIFY">Yes</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2 HEIGHT=30>
<FONT SIZE=2><P ALIGN="JUSTIFY">No</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" COLSPAN=4>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<B><FONT SIZE=2><P ALIGN="JUSTIFY">Comments Regarding Exceptions:</B>  See
Attached.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Sincerely,</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">THERMA-WAVE, INC.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<U><P ALIGN="JUSTIFY">&#9;</P>
</U><P ALIGN="JUSTIFY">Signature</P>
<P ALIGN="JUSTIFY"></P>
<U><P ALIGN="JUSTIFY">&#9;</P>
</U><P ALIGN="JUSTIFY">Title</P>
<P ALIGN="JUSTIFY"></P>
<U><P ALIGN="JUSTIFY">&#9;</P>
</U><P ALIGN="JUSTIFY">Date</P>
</FONT><P ALIGN="JUSTIFY"></TD>
<TD WIDTH="50%" VALIGN="TOP" COLSPAN=6>
<B><FONT SIZE=2><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">BANK USE ONLY</P>
</B><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Received by: <U>&#9;</P>
</U><P ALIGN="JUSTIFY">&#9;&#9;authorized signer</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Date: <U>&#9;</P>
</U><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Verified: <U>&#9;</P>
</U><P ALIGN="JUSTIFY">&#9;&#9;authorized signer</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Date: <U>&#9;</P>
</U><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Compliance Status:&#9;Yes     No</P>
<P ALIGN="JUSTIFY"></P>
</FONT><P ALIGN="JUSTIFY">&nbsp;</TD>
</TR>
</TABLE>

<B><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="CENTER">EXHIBIT E<BR>
<BR>
EXIM BORROWING BASE CERTIFICATE</P>
</B><P ALIGN="CENTER">COLLATERAL SCHEDULE</P>
<P ALIGN="CENTER">(FOREIGN A/R LINE OF CREDIT)</P>
<P ALIGN="JUSTIFY"></P>
<B><P ALIGN="JUSTIFY">Borrower: Therma-Wave,
Inc.&#9;&#9;&#9;&#9;&#9;&#9;Bank:&#9;Silicon Valley Bank</P>
</B><P ALIGN="JUSTIFY"></P><DIR>

<B><I><P ALIGN="JUSTIFY">FOREIGN ACCOUNTS RECEIVABLE FROM EXPORT ACTIVITIES</P>
</B></I><P ALIGN="JUSTIFY">&#9; 1.  Foreign Accounts Receivable Book Value as of
____________&#9;&#9;$______________</P>
<P ALIGN="JUSTIFY">&#9; 2.  Additions (please explain on
reverse)&#9;&#9;&#9;&#9;&#9;$______________</P>
<P ALIGN="JUSTIFY">&#9; 3.  <B>TOTAL FOREIGN ACCOUNTS
RECEIVABLE</B>&#9;&#9;&#9;$______________</P>
<B><I><P ALIGN="JUSTIFY">ACCOUNTS RECEIVABLE DEDUCTIONS </P>
</B></I><P ALIGN="JUSTIFY">&#9; 4.  Accounts with sale terms over 90 days
&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9; 5.  Accounts more than 60 calendar days past original
&#9;&#9;&#9;&#9;&#9;&#9;&#9;     due date unless insured through Exim
Bank&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9; 6. Credit Balances over 60 days from due
date&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;     of the relevant
invoice&#9;&#9;&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9; 7. Accounts in the form of L/Cs, if subject
items&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;     have not yet been shipped by
Borrower&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9; 8.  Military and Defense Entity
Accounts&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9; 9.  Contra
Accounts&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;10.  Promotion, Demo or Consignment
Accounts&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;11.  Intercompany/Employee and affiliate
Accts&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;12.  Disputed
Accounts&#9;&#9;&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;13.  Accounts arising from the sale of defense
&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;       articles or items
&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">      &#9;14. Accounts excluded under the Borrower
Agrt&#9;&#9;&#9;&#9;$____________</P><DIR>

<P ALIGN="JUSTIFY">15. Accounts from sales not in the
ordinary&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;   course of
business&#9;&#9;&#9;&#9;&#9; &#9;&#9;&#9;$____________</P></DIR>

<P ALIGN="JUSTIFY">&#9;16.  Accounts not owned by
Borrower&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;17.  Accounts without
invoices&#9;&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;18.  Accounts billed and payable outside U.S.
&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;19.  Accounts with 50% over 60 days past
invoice&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;20.  Accounts over 25%
concentration&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;21.  Accounts billed in non U.S.
currency&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;22.  Accounts in countries prohibited by
EXIM&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;23.  Accts supported by LCs not accepted by
EXIM&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;24.  Accounts determined
doubtful&#9;&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">       25. Accounts if the subject items have not been
shipped &#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;26. Accounts subject to
deduction&#9;&#9;&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;27. Accounts if the subject items have been rejected
&#9;&#9;&#9;&#9;$_____________</P>
<P ALIGN="JUSTIFY">&#9;28.
Other&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;$____________</P></DIR>

<P ALIGN="JUSTIFY">&#9;29.  <B>TOTAL ACCOUNTS RECEIVABLE
DEDUCTIONS</B>&#9;&#9;$_______________</P><DIR>

<P ALIGN="JUSTIFY">&#9;30.  Eligible Accounts (No. 3 - No.
29)&#9;&#9;&#9;&#9;&#9;$_______________</P>
<P ALIGN="JUSTIFY">&#9;31.  Exim Eligible Foreign Retainage Accounts
&#9;&#9;&#9;&#9;$____________</P>
<P ALIGN="JUSTIFY">&#9;32. Loan Value of Accounts (90% of No. 30 plus the lesser
of (i) 25% &#9;&#9;&#9;&#9;&#9;      of No.31, and (ii) $500,000)
&#9;&#9;&#9;&#9;&#9;&#9;$_______________ </P>
<B><I><P ALIGN="JUSTIFY">INVENTORY</P>
</B></I><P ALIGN="JUSTIFY">&#9;33.  Inventory Book Value as of
____________________&#9;&#9;&#9;$_______________</P>
<P ALIGN="JUSTIFY">&#9;34.  Additions (please explain on reverse)
&#9;&#9;&#9;&#9;&#9;$_______________</P>
<P ALIGN="JUSTIFY">&#9;35.  <B>TOTAL
INVENTORY</B>&#9;&#9;&#9;&#9;&#9;&#9;&#9;$_______________</P>
<B><I><P ALIGN="JUSTIFY">INVENTORY DEDUCTIONS</P>
</B></I><P ALIGN="JUSTIFY">&#9;36. Inventory for which reserves
have&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;      been made in accordance with
GAAP&#9;&#9;&#9;&#9;&#9;$________________</P>
<P ALIGN="JUSTIFY">&#9;37. Inventory not located in the
U.S.&#9;&#9;&#9;&#9;&#9;&#9;$________________</P>
<P ALIGN="JUSTIFY">&#9;38.  Any Demo Inventory or
Inventory&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;       sold on
consignment&#9;&#9;&#9;&#9;&#9;&#9;&#9;$_______________</P>
<P ALIGN="JUSTIFY">&#9;39.  Inventory consisting of proprietary
&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;      &#9;
software.&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;$_______________</P><DIR>

<P ALIGN="JUSTIFY">40.  Inventory previously exported
&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;
from the United States&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;$_______________</P></DIR>

<P ALIGN="JUSTIFY">&#9;41.  Inventory which constitutes military defense
articles&#9;&#9;&#9;&#9;&#9;&#9;&#9;      or military defense services.
&#9;&#9;&#9;&#9;&#9;&#9;$_______________</P>
<P ALIGN="JUSTIFY">&#9;42.  Inventory destined for shipment to
&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;       prohibited
countries&#9;&#9;&#9;&#9;&#9;&#9;&#9;$_______________</P>
<P ALIGN="JUSTIFY">&#9;43.  Inventory destined for shipment to
&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;&#9;      a county in which Exim coverage is not
available&#9;&#9;&#9;&#9;$_______________</P></DIR>

<OL START=44>

<OL>

<P ALIGN="JUSTIFY"><LI>Inventory which is to be incorporated into</LI></P></OL>
</OL>
<DIR>
<DIR>

<P ALIGN="JUSTIFY">&#9;items whose sale would result in ineligible </P>
<P ALIGN="JUSTIFY">&#9;accounts
receivable&#9;&#9;&#9;&#9;&#9;&#9;&#9;$________________</P></DIR>
</DIR>

<P ALIGN="JUSTIFY">&#9;45.  Inventory with offsetting
claims&#9;&#9;&#9;&#9;&#9;&#9;$________________</P>
<P ALIGN="JUSTIFY">&#9;46.  Inventory that is
damaged&#9;&#9;&#9;&#9;&#9;&#9;&#9;$________________</P>
<P ALIGN="JUSTIFY">&#9;47.  Inventory not subject to Bank's
lien&#9;&#9;&#9;&#9;&#9;$________________</P>
<P ALIGN="JUSTIFY">&#9;48.  Inventory located in undisclosed
location&#9;&#9;&#9;&#9;&#9;$________________</P>
<P ALIGN="JUSTIFY">&#9;49.  Inventory in which Bank does not have access
&#9;&#9;&#9;&#9;$________________</P><DIR>
<DIR>
<DIR>

<P ALIGN="JUSTIFY">50. Inventory incorporated in items destined to
location&#9;&#9;&#9;&#9;&#9;&#9;              in which EXIM coverage is not
available&#9;&#9;&#9;&#9;&#9;$________________</P></DIR>
</DIR>
</DIR>

<P ALIGN="JUSTIFY">&#9;51.  Other (please explain on
reverse)&#9;&#9;&#9;&#9;&#9;&#9;$________________</P>
<P ALIGN="JUSTIFY">&#9;52.  <B>TOTAL INVENTORY
DEDUCTIONS</B>&#9;&#9;&#9;&#9;$_________________</P>
<P ALIGN="JUSTIFY">&#9;53.  Eligible Inventory (No. 35 -
No.52)&#9;&#9;&#9;&#9;&#9;$_________________</P>
<P ALIGN="JUSTIFY">&#9;54.  <B>LOAN VALUE OF INVENTORY (<U>75% of No.
53</U>)&#9;</B>&#9;&#9;$_________________</P>
<P ALIGN="JUSTIFY">&#9;55.  <B>TOTAL AVAILABLE BASE
*</B>&#9;&#9;&#9;&#9;&#9;&#9;$_________________</P>
<P ALIGN="JUSTIFY">&#9;*Not to exceed the lesser of  $4,000,000 or 60% of the
total Exim Advances plus Exim Soft Advances.</P>
<B><I><P ALIGN="JUSTIFY">BALANCES</P>
</B></I><P ALIGN="JUSTIFY">&#9;56.  Maximum Loan
Amount&#9;&#9;&#9;&#9;&#9;$10,000,000</P><DIR>
<DIR>

<P ALIGN="JUSTIFY">57. Total Available </P>
<P ALIGN="JUSTIFY">       [Lesser of No. 56 or (No.32 + No.
55)]&#9;&#9;&#9;$______________</P></DIR>
</DIR>

<P ALIGN="JUSTIFY">&#9;58.  Present balance owing on Line of
Credit&#9;&#9;&#9;$______________</P>
<P ALIGN="JUSTIFY">&#9;59.  Outstanding under Sublimits
&#9;&#9;&#9;&#9;$______________</P>
<P ALIGN="JUSTIFY">&#9;60.  Domestic Standby Letter of
Credit**&#9;&#9;&#9;$______________</P>
<P ALIGN="JUSTIFY">&#9;61. <B>RESERVE POSITION -</P>
<P ALIGN="JUSTIFY">&#9;</B>[No.57 - (No.58 + No. 59 + No. 60)].  </P>
<P ALIGN="JUSTIFY">&#9;If there are no outstandings under the</P>
<P ALIGN="JUSTIFY">&#9;Exim Committed Line, then the greater</P>
<P ALIGN="JUSTIFY">&#9;of  [No.57 - (No.58 + No. 59 + No. 60)]</P>
<P ALIGN="JUSTIFY">&#9;and $0.&#9;&#9;&#9;&#9;&#9;&#9;&#9;$______________</P>
<P ALIGN="JUSTIFY">** Domestic Standby Letter of Credit Reserve:</P>

<UL>
<P ALIGN="JUSTIFY"><LI>If there are outstandings under the Exim Committed Line:
the lesser $3,500,000 and No.57 - (No.58 + No. 59).</LI></P>
<P ALIGN="JUSTIFY"><LI>If there are <U>no</U> outstandings under the Exim
Committed Line: the lesser $3,500,000 and No.&nbsp;32 + (lesser of $4,000,000
and 1.5 times No.&nbsp;32 and No.&nbsp;54).</LI></P></UL>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The undersigned represents and warrants that as of the date
hereof the foregoing is true, complete and correct, that the information
reflected in this Collateral Schedule complies with the representations and
warranties set forth in the Loan and Security Agreement, between Borrower and
Bank, and the Borrower Agreement, executed by Borrower and acknowledged by
Lender, each dated June 13, 2003, as may be amended from time to time, as if all
representations and warranties were made as of the date hereof, and that
Borrower is, and shall remain, in full compliance with its agreements,
covenants, and obligations under such agreements.  Such representations and
warranties include, without limitation, the following:  Borrower is using
disbursements only for the purpose of enabling Borrower to finance the cost of
manufacturing, purchasing or selling items intended for export.  Borrower is not
using disbursements for the purpose of: (a) servicing any of Borrower's
unrelated pre-existing or future indebtedness; (b) acquiring fixed assets or
capital goods for the use of Borrower's business; (c) acquiring, equipping, or
renting commercial space outside the United States; or (d) paying salaries of
non-U.S. citizens or non-U.S. permanent residents who are located in the offices
of the United States.  Additionally, disbursements are not being used to finance
the manufacture, purchase or sale of all of the following:  (a)  Items to be
sold to a buyer located in a country in which the Export Import Bank of the
United States is legally prohibited from doing business; (b) that part of the
cost of the items which is not U.S. Content unless such part is not greater than
fifty percent (50%) of the cost of the items and is incorporated into the items
in the United States; (c) defense articles or defense services or items directly
or indirectly destined for use by military organizations designed primarily for
military use (regardless of the nature or actual use of the items); or (d) any
items to be used in the construction, alteration, operation or maintenance of
nuclear power, enrichment, reprocessing, research or heavy water production
facilities.     </P>
<P ALIGN="JUSTIFY">Sincerely,</P>
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=1118>
<TR><TD WIDTH="34%" VALIGN="TOP">
<P ALIGN="JUSTIFY">BORROWER</P>
<P ALIGN="JUSTIFY">THERMA-WAVE, INC.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">By:<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P ALIGN="JUSTIFY">Name:<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P ALIGN="JUSTIFY">Title:<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P ALIGN="JUSTIFY">Date:<U>&#9;&#9;&#9;&#9;&#9;&#9;</U></TD>
<TD WIDTH="33%" VALIGN="TOP">
<P ALIGN="JUSTIFY"><B>&#9;</P>
<P ALIGN="CENTER">BANK USE ONLY</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Received By:<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P ALIGN="JUSTIFY">Date:<U>&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</U><P ALIGN="JUSTIFY">Verified By:<U>&#9;&#9;&#9;&#9;&#9;&#9;</P>
</B></U><P ALIGN="JUSTIFY"></TD>
<TD WIDTH="33%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">The following are the exceptions to the representations,
warranties and covenants in Sections 5, 6 and 7 made by Therma-Wave, Inc. (the
&quot;<U>Company</U>&quot;) in the Loan and Security Agreement, dated as of June
13, 2003, by and between the Company and Silicon Valley Bank (the
&quot;<U>Agreement</U>&quot;).  Capitalized terms used in this schedule, unless
otherwise specified, shall have the same meaning given them in the Agreement.
The section references used herein are to the particular subsections in Sections
5, 6 and 7, respectively, of the Agreement.  However, because a particular
disclosure may apply to multiple sections of the Agreement, all information
disclosed herein shall be deemed disclosed under and incorporated into any
section herein where such disclosure would be applicable.  This schedule is
qualified in its entirety by reference to the Agreement and is not intended to
constitute any representation or warranty of the Company except as and to the
extent expressly provided in the Agreement.</P>
<U><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">SCHEDULE 3.1(i)</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">EXISTING LETTERS OF CREDIT</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P></U>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=718>
<TR><TD WIDTH="29%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P ALIGN="CENTER">Beneficiary</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P ALIGN="CENTER">Property Involved</B></U></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P ALIGN="CENTER">Last Date of Issue</B></U></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P ALIGN="CENTER">Issuing Bank</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P ALIGN="CENTER">Original Value</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P ALIGN="CENTER">Expiration Date</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=2><P>Danilo &amp; Lola Piccinini<BR>
999 Chip Court<BR>
Incline Village, NV 89450</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">3171 Jay Street<BR>
Santa Clara</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">7/16/2002</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">Comerica</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">&#9;$&#9;150,000.00</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">4/30/2006</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=2><P>SDC 950<BR>
10600 N. De Anza Blvd<BR>
Suite 200<BR>
Cupertino, CA 95014</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">1250 Reliance Way<BR>
Fremont, CA</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">5/8/2003</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">Comerica</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">&#9;$&#9;3,500,000.00</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">5/15/2004</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=2><P>A.I. Credit Corp.<BR>
160 Water Street<BR>
New York, NY 10038</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">D&amp;O Insurance</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3/4/2003</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">SVB</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">&#9;$&#9;1,169,630.55</P>
<P ALIGN="JUSTIFY">Monthly decrease</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">3/4/2004</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=2><P>Minos Management Company Inc.<BR>
c/o Lend Lease Management<BR>
3424 Peachtree Rd. N.E. Suite 800<BR>
Atlanta, GA 30326<BR>
Att: D. Denney Jr.</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">48500 Kato Rd<BR>
Fremont, CA</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">5/31/2000</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">Comerica</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">&#9;$&#9;102,194.27</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">5/31/2008</FONT></TD>
</TR>
</TABLE>

<P ALIGN="JUSTIFY"></P>
<U><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">SCHEDULE 5.2</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">COLLATERAL</P>
<OL>

<B><P ALIGN="JUSTIFY"><LI>Exceptions to Sole Ownership Of Intellectual
Property.</LI></P>
</B></U><P ALIGN="JUSTIFY">The Company licenses, on an exclusive and non-
exclusive basis, technology and other Intellectual Property developed under
development and joint development agreements with other Persons, including an
arrangement with Tokyo Electron with respect to certain software commonly known
as &quot;OVERLAY&quot; used in measurement and testing processes.</P>
<P ALIGN="JUSTIFY"></P>
<B><U><P ALIGN="JUSTIFY"><LI>Claims of Infringement on Rights of Third
Parties</U>.</LI></P></OL>

<P ALIGN="JUSTIFY"></P><DIR>
<DIR>

</B><P>On April 22, 2002, the Company filed a patent infringement suit against
Boxer Cross Inc. in the United States District Court, Northern District of
California. The suit alleges that Boxer Cross' BX-10 product infringes certain
patents held by Therma-Wave related to ion implant monitoring. Two of the
asserted patents were previously found to be valid and infringed in a suit filed
against Jenoptik, AG, in 1994. The earlier court rulings led to Jenoptik's
withdrawal from the U.S.&nbsp;market. On June 7, 2002, Boxer Cross filed its
amended answer and counterclaims to Therma-Wave's complaint and asserted various
affirmative defenses to Therma-Wave's claims of patent infringement. The
pleading also contained various counterclaims including allegations that Therma-
Wave's Therma-Probe product infringed upon certain patents owned by Boxer Cross
and also raised claims of misappropriation of trade secrets, tortious
interference with contract, unfair competition and unfair business practices.
The Company replied to Boxer Cross's counterclaims, denying the material
allegations and asserting declaratory judgment counterclaims. On December 9,
2002, the Court held a Markman claim construction hearing on our patents-in-
suit. The Court has not yet issued its ruling. No discovery deadline or trial
date has been set. On April&nbsp;29, 2003, Applied Materials announced that it
had acquired all of the outstanding stock of Boxer Cross. </P>

<P>On December&nbsp;28, 2001, Sensys Instruments Corporation, or Sensys, who
became a wholly-owned subsidiary of the Company in January 2002, was named in a
patent infringement suit filed by KLA-Tencor. KLA-Tencor alleged that it
patented an aspect of the integrated metrology technology that Sensys uses in
its integrated product family. KLA-Tencor is seeking damages and an injunction
to stop the sale of the equipment it alleges uses this aspect. The Company
believe none of the current Sensys products infringes any of the claims of KLA-
Tencor's patent. </P>
<P ALIGN="CENTER"></P></DIR>
</DIR>

<P ALIGN="CENTER">SCHEDULE 5.3</P>
<U><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">LITIGATION</P>
</U><I><P ALIGN="CENTER">&nbsp;</P>
</I><P ALIGN="JUSTIFY">For information purposes only:</P>
<FONT SIZE=2><DIR>
<DIR>

</FONT><P>On April 22, 2002, the Company filed a patent infringement suit
against Boxer Cross Inc. in the United States District Court, Northern District
of California. The suit alleges that Boxer Cross' BX-10 product infringes
certain patents held by Therma-Wave related to ion implant monitoring. Two of
the asserted patents were previously found to be valid and infringed in a suit
filed against Jenoptik, AG, in 1994. The earlier court rulings led to Jenoptik's
withdrawal from the U.S.&nbsp;market. On June 7, 2002, Boxer Cross filed its
amended answer and counterclaims to Therma-Wave's complaint and asserted various
affirmative defenses to Therma-Wave's claims of patent infringement. The
pleading also contained various counterclaims including allegations that Therma-
Wave's Therma-Probe product infringed upon certain patents owned by Boxer Cross
and also raised claims of misappropriation of trade secrets, tortious
interference with contract, unfair competition and unfair business practices.
The Company replied to Boxer Cross's counterclaims, denying the material
allegations and asserting declaratory judgment counterclaims. On December 9,
2002, the Court held a Markman claim construction hearing on our patents-in-
suit. The Court has not yet issued its ruling. No discovery deadline or trial
date has been set. On April&nbsp;29, 2003, Applied Materials announced that it
had acquired all of the outstanding stock of Boxer Cross. </P>

<P>On December&nbsp;28, 2001, Sensys Instruments Corporation, or Sensys, who
became a wholly-owned subsidiary of the Company in January 2002, was named in a
patent infringement suit filed by KLA-Tencor. KLA-Tencor alleged that it
patented an aspect of the integrated metrology technology that Sensys uses in
its integrated product family. KLA-Tencor is seeking damages and an injunction
to stop the sale of the equipment it alleges uses this aspect. The Company
believe none of the current Sensys products infringes any of the claims of KLA-
Tencor's patent. </P>
<P ALIGN="JUSTIFY">The Company has an ongoing dispute with Korean taxing and
revenue authorities regarding VAT liability arising from an audit of VAT
payments.  The total amount in dispute is approximately US$650,000.</P>
<P ALIGN="CENTER"></P>
<I><P ALIGN="CENTER">&nbsp;</P></DIR>
</DIR>

</I><U><P ALIGN="CENTER">SCHEDULE 5.7</P>
</U><P ALIGN="CENTER"></P>
<U><P ALIGN="CENTER">SUBSIDIARIES BRANCHES AND INVESTMENTS</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P></U>
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=680>
<TR><TD WIDTH="52%" VALIGN="BOTTOM" BGCOLOR="#ffffff">
<FONT SIZE=3><P ALIGN="CENTER">Issuer Name</FONT></TD>
<TD WIDTH="48%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<FONT SIZE=3><P ALIGN="CENTER">Shares/ Equity Interests Owned by Company
</FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="48%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="JUSTIFY">Sensys Instruments Corporation</P>
</B><P ALIGN="JUSTIFY">1250 Reliance Way</P>
<P ALIGN="JUSTIFY">Fremont, CA 94539</P>
<B><P ALIGN="JUSTIFY"></P>
</B><P ALIGN="JUSTIFY">Incorporated in California, January 18, 2002</P>
<P ALIGN="JUSTIFY">Statement by Domestic Stock Corporation filed March 8, 2002,
file #02-655932</FONT></TD>
<TD WIDTH="48%" VALIGN="MIDDLE">
<FONT SIZE=3><P ALIGN="CENTER">100%</FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="48%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="JUSTIFY">Therma-Wave International Sales Corp.
(DISC)</P>
</B><P ALIGN="JUSTIFY">1250 Reliance Way</P>
<P ALIGN="JUSTIFY">Fremont, CA 94539</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Fed ID # 94 2856453</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Established: November 10, 1982</P>
<P ALIGN="JUSTIFY">Business:  Currently Inactive.</FONT></TD>
<TD WIDTH="48%" VALIGN="MIDDLE">
<FONT SIZE=3><P ALIGN="CENTER">100%</FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="48%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="JUSTIFY">Thermawave, LTD</P>
</B><P ALIGN="JUSTIFY">The Coach House</P>
<P ALIGN="JUSTIFY">Cross Road</P>
<P ALIGN="JUSTIFY">Leamington Spa</P>
<P ALIGN="JUSTIFY">Warwickshire CV32 5PB</P>
<P ALIGN="JUSTIFY">United Kingdom</FONT></TD>
<TD WIDTH="48%" VALIGN="MIDDLE">
<FONT SIZE=3><P ALIGN="CENTER">100%</FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="48%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="JUSTIFY">Therma-Wave, K.K.</P>
</B><P ALIGN="JUSTIFY">Yokohama Creation Square 5-1</P>
<P ALIGN="JUSTIFY">Sakaecho Kanagawa-ku</P>
<P ALIGN="JUSTIFY">Yokohama 221-0052</P>
<P ALIGN="JUSTIFY">Japan</P>
<P ALIGN="JUSTIFY"><BR>
Established:  November 8, 1990</P>
<P ALIGN="JUSTIFY">Business:  Service of Therma-Wave, Inc. products.</FONT></TD>
<TD WIDTH="48%" VALIGN="MIDDLE">
<FONT SIZE=3><P ALIGN="CENTER">100%</FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="48%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=3><P>Therma-Wave Korea&#9;Branch </P>
</B><P>Representative&#9;Jong Ho Yoon</P>
<P ALIGN="JUSTIFY">5th &amp; 6<SUP>th</SUP> Floors, Dungdo Building</P>
<P ALIGN="JUSTIFY">974-9 Inkye-dong, Paldal-ku</P>
<P ALIGN="JUSTIFY">Suwon City, Kyunggi-do</P>
<P ALIGN="JUSTIFY">Korea</P>
<P ALIGN="JUSTIFY"></FONT></TD>
<TD WIDTH="48%" VALIGN="MIDDLE">
<FONT SIZE=3><P ALIGN="CENTER">N/A</FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="48%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="JUSTIFY"></P>
<B><P>Therma-Wave Taiwan- Branch <BR>
</B>7F No 118, SEC. 1, Tung Ta Road</P>
<P>Hsin-Chu City</P>
<P>Taiwan, ROC 300</P>
<P ALIGN="JUSTIFY"></FONT></TD>
<TD WIDTH="48%" VALIGN="MIDDLE">
<FONT SIZE=3><P ALIGN="CENTER">N/A</FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="48%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="JUSTIFY"></P>
<B><P>Therma-Wave Israel  - Branch<BR>
</B>5 Badner St.</P>
<P>Ramat-Gan 52542 Israel</P>
<P ALIGN="JUSTIFY"></FONT></TD>
<TD WIDTH="48%" VALIGN="MIDDLE">
<FONT SIZE=3><P ALIGN="CENTER">N/A</FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="48%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="JUSTIFY">Therma-Wave (Shanghai) Co.,  Ltd.</P>
</B></U><P ALIGN="JUSTIFY">Unit 1, 16th Floor, Hua Du Mansion</P>
<P ALIGN="JUSTIFY">No. 838 Shang Yang Road</P>
<P ALIGN="JUSTIFY">Pu Dong, Shanghai</P>
<P ALIGN="JUSTIFY">ROC</P>
<P ALIGN="JUSTIFY"><BR>
&quot;Trading&quot; company in WaiGaoQiao Free Trade Zone (&quot;GQ
FTZ&quot;).</P>
</FONT><B><P ALIGN="JUSTIFY"></B></TD>
<TD WIDTH="48%" VALIGN="MIDDLE">
<FONT SIZE=3><P ALIGN="CENTER">100%</FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="48%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="JUSTIFY">Praesagus, Inc.</FONT></TD>
<TD WIDTH="48%" VALIGN="MIDDLE">
<FONT SIZE=3><P ALIGN="CENTER">217,808 shares of Series A Preferred
Stock</FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="48%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
</TABLE>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<U><P ALIGN="CENTER">SCHEDULE 7.4<BR>
<BR>
EXISTING INDEBTEDNESS</P>
</U><P ALIGN="CENTER"></P>
<FONT SIZE=3><P ALIGN="JUSTIFY">As of May 31, 2003: </P>
<P ALIGN="JUSTIFY">The Company owes Therma-Wave, K.K.
(Japan)&#9;&#9;US$1,716,315</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">As of June 5, 2003:</P>
<P ALIGN="JUSTIFY">Thermawave, LTD (UK) owes to the
Company&#9;&#9;&#9;US$724,890</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Thema-Wave (Shanghai) Co., Ltd. owes to the
Company&#9;&#9;US$149,500</P>
</FONT><U><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">SCHEDULE 7.5<BR>
<BR>
EXISTING LIENS</P>
</U><P ALIGN="CENTER"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">Liens evidenced by the following financing statements:</P>
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER"></P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=655>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Jurisdiction</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Secured Party</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Filing Date</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">File Number</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Delaware</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">DeLage Landen Financial Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">02/12/02</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">20598353</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">DeLage Landen Financial Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">05/26/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0015760055</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">DeLage Landen Financial Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">05/31/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0016060402</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">CIT Technology Financial Services
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">07/26/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0021460327</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">CIT Technology Financing Services
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">07/26/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0021460333</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">DeLage Landen Finacial Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">08/14/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0023460479</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Newcourt Communications Finance
Corporation</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">08/21/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0023560807</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">DeLage Landen Financial Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">09/26/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0027960257</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">CIT Technology Financing Services
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">09/26/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0027961467</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">DeLage Landen Financial Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">10/16/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0029860982</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">DeLage Landen Financial Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">12/01/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0034660386</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">CIT Technology Financing
Services</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">12/04/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0034760765</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Micron Leasing</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">12/06/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0035060620</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">The CIT Group/Equipment Financing
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">12/06/00</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0035060630</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Micron Leasing</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">01/16/01</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0102260704</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">DeLage Landen Financial Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">02/02/01</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0103960788</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Micron Leasing</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">02/15/01</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0105360681</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">DeLage Landen Financial Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">02/23/01</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0105861085</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">CIT Technology Financing Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">03/22/01</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0108760124</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">CIT Technology Financing Services
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">05/03/01</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0112860713</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California*</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">CIT Technology Financing Services
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">07/13/01</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0119760182</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">California*</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">DeLage Landen Financial Services,
Inc.</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">07/25/01</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">0121160185</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER"></P>
</FONT><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<U><P ALIGN="CENTER">SCHEDULE 7.6</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">EXISTING INVESTMENTS</P>
<P ALIGN="CENTER"></P>
</U><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">Investments identified on Schedule 5.6.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Two loans to Allan Rosencwaig, a former officer of the
Company, in the approximate aggregate outstanding principal amount of
$1,025,172.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Two loans to David Willenborg, a former officer of the
Company, in the approximate aggregate outstanding principal amount of
$55,470..</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="CENTER">&nbsp;</P>
<U><P ALIGN="CENTER">SCHEDULE 13.1</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">DESIGNATED PRODUCT LINE</P>
<P ALIGN="CENTER"></P>
</U><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">All &quot;Meta-Probe&quot; product line assets.</P>
<P ALIGN="JUSTIFY"></P>

<U><P ALIGN="CENTER">SCHEDULE 13.1</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">SIGNIFICANT ACCOUNT DEBTOR</P></U>

<P ALIGN="JUSTIFY">&nbsp;</P>
<B><U><P ALIGN="CENTER">INTELLECTUAL PROPERTY SECURITY AGREEMENT</P>
</B></U><P ALIGN="JUSTIFY">This Intellectual Property Security Agreement is
entered into as of June&nbsp;13, 2003 by and between SILICON VALLEY BANK
("Bank") and THERMA-WAVE, INC., a Delaware corporation ("Grantor").</P>
<U><P ALIGN="CENTER">RECITALS</P>
</U><P ALIGN="JUSTIFY">A.&#9;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 June&nbsp;13, 2003 (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.</P>
<P ALIGN="JUSTIFY">B.&#9;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.</P>
<P ALIGN="JUSTIFY">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:</P>
<U><P ALIGN="CENTER">AGREEMENT</P>
</U><P ALIGN="JUSTIFY">To secure its obligations under the Loan Agreement,
Grantor grants and pledges to Bank a security interest in all of Grantor's
right, title and interest in, to and under its Intellectual Property Collateral
(including without limitation those Copyrights, Patents, Trademarks and Mask
Works listed on Schedules A, B, C, and D hereto), and including without
limitation all proceeds thereof (such as, by way of example but not by way of
limitation, license royalties and proceeds of infringement suits), the right to
sue for past, present and future infringements, all rights corresponding thereto
throughout the world and all re-issues, divisions continuations, renewals,
extensions and continuations-in-part thereof.</P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY">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.</P>
<P>&#9;&#9;&#9;&#9;&#9;&#9;GRANTOR:</P>

<P>Address of Grantor:&#9;&#9;&#9;&#9;THERMA-WAVE, INC.</P>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="46%" VALIGN="TOP">
<P>1250 Reliance Way</P>
<P>Fremont, California  94539</P>
<P>Attn: &#9;<U>&#9;&#9;&#9;&#9;</U></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="47%" VALIGN="TOP">
<P>By:<U>&#9;&#9;&#9;&#9;&#9;</P>
</U>
<P>Title:<U>&#9;&#9;&#9;&#9;&#9;</U></TD>
</TR>
</TABLE>

<P>&#9;&#9;&#9;&#9;&#9;&#9;BANK:</P>

<P>Address of Bank:&#9;&#9;&#9;&#9;SILICON VALLEY BANK</P>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="46%" VALIGN="TOP">
<P>3003 Tasman Drive</P>
<P>Santa Clara, CA 95054-1191</P>

<P>Attn: <U>&#9;&#9;&#9;&#9;</U></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="47%" VALIGN="TOP">
<P>By:<U>&#9;&#9;&#9;&#9;&#9;</P>
</U>
<P>Title:<U>&#9;&#9;&#9;&#9;&#9;</U></TD>
</TR>
</TABLE>

<P ALIGN="JUSTIFY"></P>
<U><P ALIGN="CENTER">EXHIBIT A</P>
<P ALIGN="CENTER">Copyrights</P></U>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=624>
<TR><TD WIDTH="57%" VALIGN="TOP">
<U><P>Description</U></TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>Registration/</P>
<P>Application</P>
<U><P>Number&#9; </U></TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Registration/</P>
<P>Application</P>
<U><P>Date&#9;&#9;</U></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<U><P ALIGN="CENTER">EXHIBIT B</P>
<P ALIGN="CENTER">Patents</P>
</U><FONT SIZE=2></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=624>
<TR><TD WIDTH="57%" VALIGN="TOP">
<U><P>Description</U></TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>Registration/</P>
<P>Application</P>
<U><P>Number&#9;</U></TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Registration/</P>
<P>Application</P>
<U><P>Date&#9;&#9;</U></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for analyzing multi-layer thin film stacks on semiconductors</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6567213</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>May 20, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Wafer metrology apparatus and method</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6563586</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>May 13, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Combination thermal wave and optical spectroscopy measurement system</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6535285</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Mar. 18, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for multidomain data analysis</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6532076</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Mar. 11, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method for determining ion concentration and energy of shallow junction
implants</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6532070</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Mar. 11, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for evaluating metalized layers on semiconductors</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6522413</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Feb. 18, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Thin film optical measurement system and method with calibrating
ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6515746</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Feb. 4, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Small spot ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6515744 </TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Feb. 4, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for analyzing samples using combined thermal wave and X-ray
reflectance measurements</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6512815</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 28, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Spatial averaging technique for ellipsometry and reflectometry</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6509199</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 21, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>System and method for X-ray reflectometry measurement of low density
films</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6507634</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 14, 2003</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Evaluation of etching processes in semiconductors</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6472238</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Oct. 29, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Analysis of interface layer characteristics</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6465265</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Oct. 15, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Calibration and alignment of X-ray reflectometric systems</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6453006</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Sep. 17, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for evaluating metalized layers on semiconductors</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6452685</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Sep. 17, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Broadband spectroscopic rotating compensator ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6449043</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Sep. 10, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Critical dimension analysis with simultaneous multiple angle of incidence
measurements</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6429943</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Aug. 6, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for analyzing multi-layer thin film stacks on semiconductors </TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6417921</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>July 9, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Thin film optical measurement system and method with calibrating
ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6411385</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>June 25, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for analyzing samples using combined thermal wave and X-ray
reflectance measurements</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6408048</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>June 18, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for evaluating metalized layers on semiconductors</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6320666</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Nov. 20, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Broadband spectroscopic rotating compensator ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6320657</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Nov. 20, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Thin film optical measurement system and method with calibrating
ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6304326</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Oct. 16, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for analyzing multi-layer thin film stacks on semiconductors</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6297880</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Oct. 2, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for analyzing multi-layer thin film stacks on semiconductors</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6278519</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Aug. 21, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for preparing semiconductor wafers for measurement</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6261853</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>July 17, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for evaluating metalized layers on semiconductors</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6191846</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Feb. 20, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Ellipsometer and polarimeter with zero-order plate compensator</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6181421</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 30, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Broadband spectroscopic rotating compensator ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>6134012</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Oct. 17, 2000</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for evaluating metalized layers on semiconductors</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5978074</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Nov. 2, 1999</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Broadband spectroscopic rotating compensator ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5973787</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Oct. 26, 1999</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for optical data analysis; Method for evaluating
parameters of a semiconductor wafer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5953446</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Sep. 14, 1999</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Thin film optical measurement system and method with calibrating
ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5900939</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>May 4, 1999</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Thin film optical measurement system and method with calibrating
ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5798837</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Aug. 25, 1998</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Integrated spectroscopic ellipsometer</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5596411</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 21, 1997</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Sample characteristic analysis utilizing multi wavelength and multi angle
polarization and magnitude change detection</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5596406</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 21, 1997</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Multiple angle spectroscopic analyzer utilizing interferometric and
ellipsometric devices</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5412473</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>May 2, 1995</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for evaluating thermal and electrical characteristics in a
sample</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5228776</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>July 20, 1993</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for evaluating the thickness of thin films</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5181080</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 19, 1993</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Optical measurement device with enhanced sensitivity</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5159412</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Oct. 27, 1992</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for measuring grain sizes in metalized layers</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5149978</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Sep. 22, 1992</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for evaluating ion implant dosage levels in
semiconductors</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5074669</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Dec. 24, 1991</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apapratus for evaluating surface and subsurface features in a
semiconductor</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5042952</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Aug, 27, 1991</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>High resolution ellipsometric apparatus</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>5042951</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Aug. 27, 1991</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for measuring thickness of thin films</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4999014</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Mar. 12, 1991</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for evaluating surface and subsurface features in a
semiconductor</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4952063</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Aug. 28, 1990</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for evaluating surface and subsurface features in a
semiconductor</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4854710</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Aug. 8, 1989</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Apparatus for locating and testing areas of interest on a workpiece</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4795260</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 3, 1989</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for optically detecting surface states in materials</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4750822</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>June 14, 1988</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Evaluating both thickness and compositional variables in a thin film
sample</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4679946</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>July 14, 1987</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for evaluating surface conditions of a sample</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4636088</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 13, 1987</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method and apparatus for detecting thermal waves</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4634290</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 6, 1987</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Evaluation of surface and subsurface characteristics of a sample</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4632561</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Dec. 30, 1986</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Thin film thickness measurement with thermal waves </TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4522510</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>June 11, 1985</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method for detection of thermal waves with a laser probe</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4521118</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>June 4, 1985</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Thin film thickness measurements and depth profiling utilizing a thermal wave
detection system</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4513384</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>April 23, 1985</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>Method for evaluating the quality of the bond between two members utilizing
thermoacoustic microscopy</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>4484820</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Nov. 27, 1984</TD>
</TR>
</TABLE>

<U><P ALIGN="CENTER">EXHIBIT C</P>
<P ALIGN="CENTER">Trademarks</P>
</U>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=624>
<TR><TD WIDTH="57%" VALIGN="TOP">
<U><P>Description</U></TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>Registration/</P>
<P>Application</P>
<U><P>Number&#9;</U></TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Registration/</P>
<P>Application</P>
<U><P>Date&#9;&#9;</U></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>CD-PROBE</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>76-315, 694</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Sep. 21, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>RT/CD</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>76-313, 612</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Sep. 12, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>COILS</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>76-274, 897</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>June 21, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>WBWS</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,547,288</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Mar. 12, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>META-PROBE X</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,522,390</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Dec. 25, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>INTEGRA</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,669,787</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Dec. 31, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>ENVIRONMENTAL FILM DESORBER</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,605,497</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Aug. 6, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>EFD</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,632,559</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Oct. 8, 2002</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>DESORBER</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,420,246</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Jan. 9, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>ABSOLUTE ELLIPSOMETER</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,364,232</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>July 4, 2000</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>FAB PRODUCTIVITY ENHANCEMENT</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,518,811</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Dec. 11, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>FPE</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,403,438</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Nov. 14, 2000</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>MICROAE</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>75-601,345</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Dec. 8, 1998</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>UAE</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>75-601,342</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Dec. 8, 1998</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>AE</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,290,866</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Nov. 9, 1999</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>BPR</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,271,440</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Aug. 24, 1999</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>BPE</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,268,211</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Aug. 10, 1999</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>BEAM PROFILE ELLIPSOMETRY</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,518,933</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Dec. 18, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>BEAM PROFILE REFLECTOMETRY</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,521,459</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Dec. 25, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>THERMA-WAVE</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,165,847</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>June 16, 1998</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>META-PROBE</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>2,517,657</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Dec. 11, 2001</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>THERMA-PROBE</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>1,715,145</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Sep. 15, 1992</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>OPTI-PROBE</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>1,661,280</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Oct. 15, 1991</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<P>DESIGN</TD>
<TD WIDTH="24%" VALIGN="TOP">
<P>1,636,760</TD>
<TD WIDTH="19%" VALIGN="TOP">
<P>Mar. 5, 1991</TD>
</TR>
</TABLE>

<U><P ALIGN="CENTER">EXHIBIT D</P>
<P ALIGN="CENTER">Mask Works</P>
</U><P ALIGN="JUSTIFY"></P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=624>
<TR><TD WIDTH="57%" VALIGN="TOP">
<U><P ALIGN="JUSTIFY">Description</U></TD>
<TD WIDTH="24%" VALIGN="TOP">
<P ALIGN="JUSTIFY">Registration/</P>
<P ALIGN="JUSTIFY">Application</P>
<U><P ALIGN="JUSTIFY">Number&#9;</U></TD>
<TD WIDTH="19%" VALIGN="TOP">
<P ALIGN="JUSTIFY">Registration/</P>
<P ALIGN="JUSTIFY">Application</P>
<U><P ALIGN="JUSTIFY">Date&#9;&#9;</U></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&nbsp;</P>

</U><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&#9;<B>ANNEX B</P>
<FONT SIZE=4><P ALIGN="CENTER">Export-Import Bank of the United States</P>
<P ALIGN="CENTER">Working Capital Guarantee Program</P>
<P ALIGN="CENTER">Borrower Agreement</P>
</B></FONT><P ALIGN="JUSTIFY">THIS BORROWER AGREEMENT (this "Agreement") is made
and entered into by the entity identified as Borrower on the signature page
hereof ("Borrower") in favor of the Export-Import Bank of the United States
("Ex-Im Bank") and the institution identified as Lender on the signature page
hereof ("Lender").</P>
<B><P ALIGN="CENTER">RECITALS</P>
</B><P ALIGN="JUSTIFY">Borrower has requested that Lender establish a Loan
Facility in favor of Borrower for the purposes of providing Borrower with pre-
export working capital to finance the manufacture, production or purchase and
subsequent export sale of Items.</P>
<P ALIGN="JUSTIFY">It is a condition to the establishment of such Loan Facility
that Ex-Im Bank guarantee the payment of ninety percent (90%) of certain credit
accommodations subject to the terms and conditions of a Master Guarantee
Agreement, the Loan Authorization Agreement, and to the extent applicable, the
Delegated Authority Letter Agreement.</P>
<P ALIGN="JUSTIFY">Borrower is executing this Agreement for the benefit of
Lender and Ex-Im Bank in consideration for and as a condition to Lender's
establishing the Loan Facility and Ex-Im Bank's agreement to guarantee such Loan
Facility pursuant to the Master Guarantee Agreement.</P>
<P ALIGN="JUSTIFY">NOW, THEREFORE, Borrower hereby agrees as follows:</P>
<OL>

<B><FONT FACE="Arial"><P ALIGN="JUSTIFY"><LI><BR>
DEFINITIONS</LI></P>
<U><P ALIGN="JUSTIFY">Definition of Terms</U>.  As used in this Agreement,
including the Recitals to this Agreement and the Loan Authorization Agreement,
the following terms shall have the following meanings:</P>
</B></FONT><P ALIGN="JUSTIFY">"Accounts Receivable" shall mean all of Borrower's
now owned or hereafter acquired (a) "accounts" (as such term is defined in the
UCC), other receivables, book debts and other forms of obligations, whether
arising out of goods sold or services rendered or from any other transaction;
(b) rights in, to and under all purchase orders or receipts for goods or
services; (c) rights to any goods represented or purported to be represented by
any of the foregoing (including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods); (d) moneys due or to become due to such Borrower under all
purchase orders and contracts for the sale of goods or the performance of
services or both by Borrower (whether or not yet earned by performance on the
part of Borrower), including the proceeds of the foregoing; (e) any notes,
drafts, letters of credit, insurance proceeds or other instruments, documents
and writings evidencing or supporting the foregoing; and (f)&nbsp;all collateral
security and guarantees of any kind given by any other Person with respect to
any of the foregoing.</P>
<P ALIGN="JUSTIFY">"Advance Rate" shall mean the rate specified in Section 5(C)
of the Loan Authorization Agreement for each category of Collateral.</P>
<P ALIGN="JUSTIFY">"Business Day" shall mean any day on which the Federal
Reserve Bank of New York is open for business.</P>
<P ALIGN="JUSTIFY">"Buyer" shall mean a Person that has entered into one or more
Export Orders with Borrower.</P>
<P ALIGN="JUSTIFY">"Collateral" shall mean all property and interest in property
in or upon which Lender has been granted a Lien as security for the payment of
all the Loan Facility Obligations including the Collateral identified in Section
6 of the Loan Authorization Agreement and all products and proceeds (cash and
non-cash) thereof.</P>
<P ALIGN="JUSTIFY">"Commercial Letters of Credit" shall mean those letters of
credit subject to the UCP payable in Dollars and issued or caused to be issued
by Lender on behalf of Borrower under a Loan Facility for the benefit of a
supplier(s) of Borrower in connection with Borrower's purchase of goods or
services from the supplier in support of the export of the Items.</P>
<P ALIGN="JUSTIFY">"Country Limitation Schedule" shall mean the schedule
published from time to time by Ex-Im Bank and provided to Borrower by Lender
which sets forth on a country by country basis whether and under what conditions
Ex-Im Bank will provide coverage for the financing of export transactions to
countries listed therein.</P>
<P ALIGN="JUSTIFY">"Credit Accommodation Amount" shall mean, the sum of (a) the
aggregate outstanding amount of Disbursements and (b) the aggregate outstanding
face amount of Letter of Credit Obligations.</P>
<P ALIGN="JUSTIFY">"Credit Accommodations" shall mean, collectively,
Disbursements and Letter of Credit Obligations.</P>
<P ALIGN="JUSTIFY">"Debarment Regulations" shall mean, collectively, (a) the
Governmentwide Debarment and Suspension (Nonprocurement) regulations (Common
Rule), 53 Fed. Reg. 19204 (May 26, 1988), (b) Subpart 9.4 (Debarment,
Suspension, and Ineligibility) of the Federal Acquisition Regulations, 48 C.F.R.
9.400-9.409 and (c) the revised Governmentwide Debarment and Suspension
(Nonprocurement) regulations (Common Rule), 60 Fed. Reg. 33037 (June 26,
1995).</P>
<P ALIGN="JUSTIFY">"Delegated Authority Letter Agreement" shall mean the
Delegated Authority Letter Agreement, if any, between Ex-Im Bank and Lender.</P>
<P ALIGN="JUSTIFY">"Disbursement" shall mean, collectively, (a) an advance of a
working capital loan from Lender to Borrower under the Loan Facility, and (b) an
advance to fund a drawing under a Letter of Credit issued or caused to be issued
by Lender for the account of Borrower under the Loan Facility. </P>
<P ALIGN="JUSTIFY">"Dollars" or "$" shall mean the lawful currency of the United
States.</P>
<P ALIGN="JUSTIFY">"Effective Date" shall mean the date on which (a) the Loan
Documents are executed by Lender and Borrower or the date, if later, on which
agreements are executed by Lender and Borrower adding the Loan Facility to an
existing working capital loan arrangement between Lender and Borrower and (b)
all of the conditions to the making of the initial Credit Accommodations under
the Loan Documents or any amendments thereto have been satisfied.</P>
<P ALIGN="JUSTIFY">"Eligible Export-Related Accounts Receivable" shall mean an
Export-Related Account Receivable which is acceptable to Lender and which is
deemed to be eligible pursuant to the Loan Documents, but in no event shall
Eligible Export-Related Accounts Receivable include any Account Receivable:</P>
<P ALIGN="JUSTIFY">(a)&#9;that does not arise from the sale of Items in the
ordinary course of Borrower's business;</P>
<P ALIGN="JUSTIFY">(b)&#9;that is not subject to a valid, perfected first
priority Lien in favor of Lender;</P>
<P ALIGN="JUSTIFY">(c)&#9;as to which any covenant, representation or warranty
contained in the Loan Documents with respect to such Account Receivable has been
breached;</P>
<P ALIGN="JUSTIFY">(d)&#9;that is not owned by Borrower or is subject to any
right, claim or interest of another Person other than the Lien in favor of
Lender;</P>
<P ALIGN="JUSTIFY">(e)&#9;with respect to which an invoice has not been
sent;</P>
<P ALIGN="JUSTIFY">(f)&#9;that arises from the sale of defense articles or
defense services;</P>
<P ALIGN="JUSTIFY">(g)&#9;that is due and payable from a Buyer located in a
country with which Ex-Im Bank is prohibited from doing business as designated in
the Country Limitation Schedule;</P>
<P ALIGN="JUSTIFY">(h)&#9;that does not comply with the requirements of the
Country Limitation Schedule;</P>
<P ALIGN="JUSTIFY">(i)&#9;that is due and payable more than one hundred eighty
(180) days from the date of the invoice;</P>
<P ALIGN="JUSTIFY">(j)&#9;that is not paid within sixty (60) calendar days from
its original due date, unless it is insured through Ex-Im Bank export credit
insurance for comprehensive commercial and political risk, or through Ex-Im Bank
approved private insurers for comparable coverage, in which case it is not paid
within ninety (90) calendar days from its due date;</P>
<P ALIGN="JUSTIFY">(k)&#9;that arises from a sale of goods to or performance of
services for an employee of Borrower, a stockholder of Borrower, a subsidiary of
Borrower, a Person with a controlling interest in Borrower or a Person which
shares common controlling ownership with Borrower;</P>
<P ALIGN="JUSTIFY">(l)&#9;that is backed by a letter of credit unless the Items
covered by the subject letter of credit have been shipped;</P>
<P ALIGN="JUSTIFY">(m)&#9;that Lender or Ex-Im Bank, in its reasonable judgment,
deems uncollectible for any reason;</P>
<P ALIGN="JUSTIFY">(n)&#9;that is due and payable in a currency other than
Dollars, except as may be approved in writing by Ex-Im Bank;</P>
<P ALIGN="JUSTIFY">(o)&#9;that is due and payable from a military Buyer, except
as may be approved in writing by Ex-Im Bank;</P>
<P ALIGN="JUSTIFY">(p)&#9;that does not comply with the terms of sale set forth
in Section 7 of the Loan Authorization Agreement; </P>
<P ALIGN="JUSTIFY">(q)&#9;that is due and payable from a Buyer who (i) applies
for, suffers, or consents to the appointment of, or the taking of possession by,
a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property or calls a meeting of its creditors, (ii)
admits in writing its inability, or is generally unable, to pay its debts as
they become due or ceases operations of its present business, (iii) makes a
general assignment for the benefit of creditors, (iv) commences a voluntary case
under any state or federal bankruptcy laws (as now or hereafter in effect), (v)
is adjudicated as bankrupt or insolvent, (vi) files a petition seeking to take
advantage of any other law providing for the relief of debtors, (vii) acquiesces
to, or fails to have dismissed, any petition which is filed against it in any
involuntary case under such bankruptcy laws, or (viii) takes any action for the
purpose of effecting any of the foregoing; </P>
<P ALIGN="JUSTIFY">(r)&#9;that arises from a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper;</P>
<P ALIGN="JUSTIFY">(s)&#9;for which the Items giving rise to such Account
Receivable have not been shipped and delivered to and accepted by the Buyer or
the services giving rise to such Account Receivable have not been performed by
Borrower and accepted by the Buyer or the Account Receivable otherwise does not
represent a final sale;</P>
<P ALIGN="JUSTIFY">(t)&#9;that is subject to any offset, deduction, defense,
dispute, or counterclaim or the Buyer is also a creditor or supplier of Borrower
or the Account Receivable is contingent in any respect or for any reason;</P>
<P ALIGN="JUSTIFY">(u)&#9;for which Borrower has made any agreement with the
Buyer for any deduction therefrom, except for discounts or allowances made in
the ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto; or</P>
<P ALIGN="JUSTIFY">(v)&#9;for which any of the Items giving rise to such Account
Receivable have been returned, rejected or repossessed.</P>
<P ALIGN="JUSTIFY">"Eligible Export-Related Inventory" shall mean Export-Related
Inventory which is acceptable to Lender and which is deemed to be eligible
pursuant to the Loan Documents, but in no event shall Eligible Export-Related
Inventory include any Inventory:</P>
<P ALIGN="JUSTIFY">(a)&#9;that is not subject to a valid, perfected first
priority Lien in favor of Lender;</P>
<P ALIGN="JUSTIFY">(b)&#9;that is located at an address that has not been
disclosed to Lender in writing;</P>
<P ALIGN="JUSTIFY">(c)&#9;that is placed by Borrower on consignment or held by
Borrower on consignment from another Person;</P>
<P ALIGN="JUSTIFY">(d)&#9;that is in the possession of a processor or bailee, or
located on premises leased or subleased to Borrower, or on premises subject to a
mortgage in favor of a Person other than Lender, unless such processor or bailee
or mortgagee or the lessor or sublessor of such premises, as the case may be,
has executed and delivered all documentation which Lender shall require to
evidence the subordination or other limitation or extinguishment of such
Person's rights with respect to such Inventory and Lender's right to gain access
thereto;  </P>
<P ALIGN="JUSTIFY">(e)&#9;that is produced in violation of the Fair Labor
Standards Act or subject to the "hot goods" provisions contained in 29 U.S.C.ss 215
or any successor statute or section;</P>
<P ALIGN="JUSTIFY">(f)&#9;as to which any covenant, representation or warranty
with respect to such Inventory contained in the Loan Documents has been
breached;</P>
<P ALIGN="JUSTIFY">(g)&#9;that is not located in the United States;</P>
<P ALIGN="JUSTIFY">(h)&#9;that is demonstration Inventory;</P>
<P ALIGN="JUSTIFY">(i)&#9;that consists of proprietary software (i.e. software
designed solely for Borrower's internal use and not intended for resale);</P>
<P ALIGN="JUSTIFY">(j)&#9;that is damaged, obsolete, returned, defective,
recalled or unfit for further processing;</P>
<P ALIGN="JUSTIFY">(k)&#9;that has been previously exported from the United
States;</P>
<P ALIGN="JUSTIFY">(l)&#9;that constitutes defense articles or defense
services;</P>
<P ALIGN="JUSTIFY">(m)&#9;that is to be incorporated into Items destined for
shipment to a country as to which Ex-Im Bank is prohibited from doing business
as designated in the Country Limitation Schedule;</P>
<P ALIGN="JUSTIFY">(n)&#9;that is to be incorporated into Items destined for
shipment to a Buyer located in a country in which Ex-Im Bank coverage is not
available for commercial reasons as designated in the Country Limitation
Schedule, unless and only to the extent that such Items are to be sold to such
country on terms of a letter of credit confirmed by a bank acceptable to Ex-Im
Bank; or</P>
<P ALIGN="JUSTIFY">(o)&#9;that is to be incorporated into Items whose sale would
result in an Account Receivable which would not be an Eligible Export-Related
Account Receivable.</P>
<P ALIGN="JUSTIFY">"Eligible Person" shall mean a sole proprietorship,
partnership, limited liability partnership, corporation or limited liability
company which (a) is domiciled, organized, or formed, as the case may be, in the
United States; (b) is in good standing in the state of its formation or
otherwise authorized to conduct business in the United States; (c) is not
currently suspended or debarred from doing business with the United States
government or any instrumentality, division, agency or department thereof; (d)
exports or plans to export Items; (e) operates and has operated as a going
concern for at least one (1) year; (f) has a positive tangible net worth
determined in accordance with GAAP; and (g) has revenue generating operations
relating to its core business activities for at least one year.</P>
<P ALIGN="JUSTIFY">"ERISA" shall mean the Employee Retirement Income Security
Act of 1974 and the rules and regulations promulgated thereunder.</P>
<P ALIGN="JUSTIFY">"Export Order" shall mean a written export order or contract
for the purchase by the Buyer from Borrower of any of the Items.</P>
<P ALIGN="JUSTIFY">"Export-Related Accounts Receivable" shall mean those
Accounts Receivable arising from the sale of Items which are due and payable to
Borrower in the United States.</P>
<P ALIGN="JUSTIFY">"Export-Related Accounts Receivable Value" shall mean, at the
date of determination thereof, the aggregate face amount of Eligible Export-
Related Accounts Receivable less taxes, discounts, credits, allowances and
Retainages, except to the extent otherwise permitted by Ex-Im Bank in
writing.</P>
<P ALIGN="JUSTIFY">"Export-Related Borrowing Base" shall mean, at the date of
determination thereof, the sum of (a) the Export-Related Inventory Value
multiplied by the Advance Rate applicable to Export-Related Inventory set forth
in Section 5(C)(1) of the Loan Authorization Agreement, (b) the Export-Related
Accounts Receivable Value multiplied by the Advance Rate applicable to Export-
Related Accounts Receivable set forth in Section 5(C)(2) of the Loan
Authorization Agreement, (c) if permitted by Ex-Im Bank in writing, the
Retainage Value multiplied by the Retainage Advance Rate set forth in Section
5(C)(3) of the Loan Authorization Agreement and (d) the Other Assets Value
multiplied by the Advance Rate applicable to Other Assets set forth in Section
5(C)(4) of the Loan Authorization Agreement.</P>
<P ALIGN="JUSTIFY">"Export-Related Borrowing Base Certificate" shall mean a
certificate in the form provided or approved by Lender, executed by Borrower and
delivered to Lender pursuant to the Loan Documents detailing the Export-Related
Borrowing Base supporting the Credit Accommodations which reflects, to the
extent included in the Export-Related Borrowing Base, Export-Related Accounts
Receivable, Eligible Export-Related Accounts Receivable, Export-Related
Inventory and Eligible Export-Related Inventory balances that have been
reconciled with Borrower's general ledger, Accounts Receivable aging report and
Inventory schedule.</P>
<P ALIGN="JUSTIFY">"Export-Related General Intangibles" shall mean those General
Intangibles necessary or desirable to or for the disposition of Export-Related
Inventory.</P>
<P ALIGN="JUSTIFY">"Export-Related Inventory" shall mean the Inventory of
Borrower located in the United States that has been purchased, manufactured or
otherwise acquired by Borrower for resale pursuant to Export Orders.</P>
<P ALIGN="JUSTIFY">"Export-Related Inventory Value" shall mean, at the date of
determination thereof, the lower of cost or market value of Eligible Export-
Related Inventory of Borrower as determined in accordance with GAAP.</P>
<P ALIGN="JUSTIFY">"Final Disbursement Date" shall mean, unless subject to an
extension of such date agreed to by Ex-Im Bank, the last date on which Lender
may make a Disbursement set forth in Section 10 of the Loan Authorization
Agreement or, if such date is not a Business Day, the next succeeding Business
Day; <U>provided</U>, <U>however</U>, to the extent that Lender has not received
cash collateral or an indemnity with respect to Letter of Credit Obligations
outstanding on the Final Disbursement Date, the Final Disbursement Date with
respect to an advance to fund a drawing under a Letter of Credit shall be no
later than thirty (30) Business Days after the expiry date of the Letter of
Credit related thereto.</P>
<P ALIGN="JUSTIFY">"GAAP" shall mean the generally accepted accounting
principles issued by the American Institute of Certified Public Accountants as
in effect from time to time.</P>
<P ALIGN="JUSTIFY">"General Intangibles" shall mean all intellectual property
and other "general intangibles" (as such term is defined in the UCC) necessary
or desirable to or for the disposition of Inventory.</P>
<P ALIGN="JUSTIFY">"Guarantor" shall mean each Person, if any, identified in
Section 3 of the Loan Authorization Agreement who shall guarantee (jointly and
severally if more than one) the payment and performance of all or a portion of
the Loan Facility Obligations.</P>
<P ALIGN="JUSTIFY">"Guaranty Agreement" shall mean a valid and enforceable
agreement of guaranty executed by each Guarantor in favor of Lender.</P>
<P ALIGN="JUSTIFY">"Inventory" shall mean all "inventory" (as such term is
defined in the UCC), now or hereafter owned or acquired by Borrower, wherever
located, including all inventory, merchandise, goods and other personal property
which are held by or on behalf of Borrower for sale or lease or are furnished or
are to be furnished under a contract of service or which constitute raw
materials, work in process or materials used or consumed or to be used or
consumed in Borrower's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies.</P>
<P ALIGN="JUSTIFY">&quot;ISP&quot; shall mean the International Standby
Practices-ISP98, International Chamber of Commerce Publication No. 590 and any
amendments and revisions thereof.</P>
<P ALIGN="JUSTIFY">&quot;Issuing Bank&quot; shall mean the bank that issues a
Letter of Credit, which bank is Lender itself or a bank that Lender has caused
to issue a Letter of Credit by way of guarantee.</P>
<P ALIGN="JUSTIFY">"Items" shall mean the finished goods or services which are
intended for export from the United States, as specified in Section 4(A) of the
Loan Authorization Agreement.</P>
<P ALIGN="JUSTIFY">"Letter of Credit" shall mean a Commercial Letter of Credit
or a Standby Letter of Credit.</P>
<P ALIGN="JUSTIFY">"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Lender, whether direct or indirect, contingent or
otherwise, due or not due, in connection with the issuance or guarantee by
Lender or the Issuing Bank of Letters of Credit.</P>
<P ALIGN="JUSTIFY">"Lien" shall mean any mortgage, security deed or deed of
trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge,
claim, security interest, security title, easement or encumbrance, or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any lease or title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the UCC or comparable law of any
jurisdiction) by which property is encumbered or otherwise charged.</P>
<P ALIGN="JUSTIFY">"Loan Agreement" shall mean a valid and enforceable agreement
between Lender and Borrower setting forth the terms and conditions of the Loan
Facility.</P>
<P ALIGN="JUSTIFY">"Loan Authorization Agreement" shall mean the Loan
Authorization Agreement entered into between Lender and Ex-Im Bank or the Loan
Authorization Notice setting forth certain terms and conditions of the Loan
Facility, a copy of which is attached hereto as Annex A.</P>
<P ALIGN="JUSTIFY">"Loan Authorization Notice" shall mean the Loan Authorization
Notice executed by Lender and delivered to Ex-Im Bank in accordance with the
Delegated Authority Letter Agreement setting forth the terms and conditions of
each Loan Facility.</P>
<P ALIGN="JUSTIFY">"Loan Documents" shall mean the Loan Authorization Agreement,
the Loan Agreement, this Agreement, each promissory note (if applicable), each
Guaranty Agreement, and all other instruments, agreements and documents now or
hereafter executed by Borrower or any Guarantor evidencing, securing,
guaranteeing or otherwise relating to the Loan Facility or any Credit
Accommodations made thereunder.</P>
<P ALIGN="JUSTIFY">"Loan Facility" shall mean the Revolving Loan Facility, the
Transaction Specific Loan Facility or the Transaction Specific Revolving Loan
Facility established by Lender in favor of Borrower under the Loan
Documents.</P>
<P ALIGN="JUSTIFY">"Loan Facility Obligations" shall mean all loans, advances,
debts, expenses, fees, liabilities, and obligations for the performance of
covenants, tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or amounts are liquidated or
determinable) owing by Borrower to Lender, of any kind or nature, present or
future, arising in connection with the Loan Facility.</P>
<P ALIGN="JUSTIFY">"Loan Facility Term" shall mean the number of months from the
Effective Date to the Final Disbursement Date as originally set forth in the
Loan Authorization Agreement.</P>
<P ALIGN="JUSTIFY">"Master Guarantee Agreement" shall mean the Master Guarantee
Agreement between Ex-Im Bank and Lender, as amended, modified, supplemented and
restated from time to time.</P>
<P ALIGN="JUSTIFY">"Material Adverse Effect" shall mean a material adverse
effect on (a) the business, assets, operations, prospects or financial or other
condition of Borrower or any Guarantor, (b) Borrower's ability to pay or perform
the Loan Facility Obligations in accordance with the terms thereof, (c) the
Collateral or Lender's Liens on the Collateral or the priority of such Lien or
(d) Lender's rights and remedies under the Loan Documents.</P>
<P ALIGN="JUSTIFY">"Maximum Amount" shall mean the maximum principal balance of
Credit Accommodations that may be outstanding at any time under the Loan
Facility specified in Section 5(A) of the Loan Authorization Agreement.</P>
<P ALIGN="JUSTIFY">"Other Assets" shall mean the Collateral, if any, described
in Section 5(C)(4) of the Loan Authorization Agreement.</P>
<P ALIGN="JUSTIFY">"Other Assets Value" shall mean, at the date of determination
thereof, the value of the Other Assets as determined in accordance with
GAAP.</P>
<P ALIGN="JUSTIFY">"Permitted Liens" shall mean (a) Liens for taxes, assessments
or other governmental charges or levies not delinquent, or, being contested in
good faith and by appropriate proceedings and with respect to which proper
reserves have been taken by Borrower; <U>provided</U>, <U>that</U>, the Lien
shall have no effect on the priority of the Liens in favor of Lender or the
value of the assets in which Lender has such a Lien and a stay of enforcement of
any such Lien shall be in effect; (b) deposits or pledges securing obligations
under worker's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (c) deposits or pledges securing bids,
tenders, contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of Borrower's business; (d) judgment Liens
that have been stayed or bonded; (e) mechanics', workers', materialmen's or
other like Liens arising in the ordinary course of Borrower's business with
respect to obligations which are not due; (f) Liens placed upon fixed assets
hereafter acquired to secure a portion of the purchase price thereof, provided,
that, any such Lien shall not encumber any other property of Borrower; (g)
security interests being terminated concurrently with the execution of the Loan
Documents; (h) Liens in favor of Lender securing the Loan Facility Obligations;
and (i) Liens disclosed in Section 6(D) of the Loan Authorization Agreement.</P>
<P ALIGN="JUSTIFY">"Person" shall mean any individual, sole proprietorship,
partnership, limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
public benefit corporation, entity or government (whether national, federal,
provincial, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof), and shall
include such Person's successors and assigns.</P>
<P ALIGN="JUSTIFY">"Principals" shall mean any officer, director, owner,
partner, key employee, or other Person with primary management or supervisory
responsibilities with respect to Borrower or any other Person (whether or not an
employee) who has critical influence on or substantive control over the
transactions covered by this Agreement.</P>
<P ALIGN="JUSTIFY">"Retainage" shall mean that portion of the purchase price of
an Export Order that a Buyer is not obligated to pay until the end of a
specified period of time following the satisfactory performance under such
Export Order.</P>
<P ALIGN="JUSTIFY">"Retainage Accounts Receivable" shall mean those portions of
Eligible Export-Related Accounts Receivable arising out of a Retainage.</P>
<P ALIGN="JUSTIFY">"Retainage Advance Rate" shall mean the percentage rate
specified in Section 5(C)(3) of the Loan Authorization Agreement as the Advance
Rate for the Retainage Accounts Receivable of Borrower.</P>
<P ALIGN="JUSTIFY">"Retainage Value" shall mean, at the date of determination
thereof, the aggregate face amount of Retainage Accounts Receivable, less taxes,
discounts, credits and allowances, except to the extent otherwise permitted by
Ex-Im Bank in writing.</P>
<P ALIGN="JUSTIFY">"Revolving Loan Facility" shall mean the credit facility or
portion thereof established by Lender in favor of  Borrower for the purpose of
providing pre-export working capital in the form of loans and/or Letters of
Credit to finance the manufacture, production or purchase and subsequent export
sale of Items pursuant to Loan Documents under which Credit Accommodations may
be made and repaid on a continuous basis based solely on the Export-Related
Borrowing Base during the term of such credit facility.</P>
<P ALIGN="JUSTIFY">"Special Conditions" shall mean those conditions, if any, set
forth in Section 13 of the Loan Authorization Agreement.</P>
<P ALIGN="JUSTIFY">"Specific Export Orders" shall mean those Export Orders
specified in Section 5(D) of the Loan Authorization Agreement.</P>
<P ALIGN="JUSTIFY">&quot;Standby Letter of Credit&quot; shall mean those letters
of credit subject to the ISP or UCP issued or caused to be issued by Lender for
Borrower's account that can be drawn upon by a Buyer only if Borrower fails to
perform all of its obligations with respect to an Export Order.</P>
<P ALIGN="JUSTIFY">"Transaction Specific Loan Facility" shall mean a credit
facility or a portion thereof established by Lender in favor of Borrower for the
purpose of providing pre-export working capital in the form of loans and/or
Letters of Credit to finance the manufacture, production or purchase and
subsequent export sale of Items pursuant to Loan Documents under which Credit
Accommodations are made based solely on the Export-Related Borrowing Base
relating to Specific Export Orders and once such Credit Accommodations are
repaid they may not be reborrowed.</P>
<P ALIGN="JUSTIFY">"Transaction Specific Revolving Loan Facility" shall mean a
Revolving Credit Facility established to provide financing of Specific Export
Orders.</P>
<P ALIGN="JUSTIFY">"UCC" shall mean the Uniform Commercial Code as the same may
be in effect from time to time in the jurisdiction in which Borrower or
Collateral is located.</P>
<P ALIGN="JUSTIFY">"UCP" shall mean the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 and any amendments and revisions thereof.</P>
<P ALIGN="JUSTIFY">"U.S." or "United States" shall mean the United States of
America and its territorial possessions.</P>
<P ALIGN="JUSTIFY">"U.S. Content" shall mean with respect to any Item all the
labor, materials and services which are of U.S. origin or manufacture, and which
are incorporated into an Item in the United States.</P>
<P ALIGN="JUSTIFY">"Warranty" shall mean Borrower's guarantee to Buyer that the
Items will function as intended during the warranty period set forth in the
applicable Export Order.</P>
<P ALIGN="JUSTIFY">"Warranty Letter of Credit" shall mean a Standby Letter of
Credit which is issued or caused to be issued by Lender to support the
obligations of Borrower with respect to a Warranty or a Standby Letter of Credit
which by its terms becomes a Warranty Letter of Credit.</P>
<B><U><FONT FACE="Arial"><P ALIGN="JUSTIFY">Rules of Construction</U>.  For
purposes of this Agreement, the following additional rules of construction shall
apply, unless specifically indicated to the contrary: (a) wherever from the
context it appears appropriate, each term stated in either the singular or
plural shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, the feminine
and the neuter; (b) the term "or" is not exclusive; (c) the term "including" (or
any form thereof) shall not be limiting or exclusive; (d) all references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations; (e) the words "this Agreement", "herein",
"hereof", "hereunder" or other words of similar import refer to this Agreement
as a whole including the schedules, exhibits, and annexes hereto as the same may
be amended, modified or supplemented; (f) all references in this Agreement to
sections, schedules, exhibits, and annexes shall refer to the corresponding
sections, schedules, exhibits, and annexes of or to this Agreement; and (g) all
references to any instruments or agreements, including references to any of the
Loan Documents, or the Delegated Authority Letter Agreement shall include any
and all modifications, amendments and supplements thereto and any and all
extensions or renewals thereof to the extent permitted under this Agreement.</P>
<U><P ALIGN="JUSTIFY">Incorporation of Recitals</U>.  The Recitals to this
Agreement are incorporated into and shall constitute a part of this
Agreement.</P>
<P ALIGN="JUSTIFY"><LI><BR>
OBLIGATIONS OF BORROWER</LI></P>
</B></FONT><P ALIGN="JUSTIFY">Until payment in full of all Loan Facility
Obligations and termination of the Loan Documents, Borrower agrees as
follows:</P>
<B><U><FONT FACE="Arial"><P ALIGN="JUSTIFY">Use of Credit Accommodations</U>.
Borrower shall use Credit Accommodations only for the purpose of enabling
Borrower to finance the cost of manufacturing, producing, purchasing or selling
the Items.  Borrower may not use any of the Credit Accommodations for the
purpose of: (i) servicing or repaying any of Borrower's pre-existing or future
indebtedness unrelated to the Loan Facility (unless approved by Ex-Im Bank in
writing); (ii) acquiring fixed assets or capital goods for use in Borrower's
business; (iii) acquiring, equipping or renting commercial space outside of the
United States; (iv) paying the salaries of non U.S. citizens or non-U.S.
permanent residents who are located in offices outside of the United States; or
(v) in connection with a Retainage or Warranty (unless approved by Ex-Im Bank in
writing).  </P>
</B><P ALIGN="JUSTIFY">In addition, no Credit Accommodation may be used to
finance the manufacture, purchase or sale of any of the following:</P>
<P ALIGN="JUSTIFY">Items to be sold or resold to a Buyer located in a country as
to which Ex-Im Bank is prohibited from doing business as designated in the
Country Limitation Schedule; </P>
<P ALIGN="JUSTIFY">that part of the cost of the Items which is not U.S. Content
unless such part is not greater than fifty percent (50%) of the cost of the
Items and is incorporated into the Items in the United States;</P>
<P ALIGN="JUSTIFY">defense articles or defense services; or</P>
<P ALIGN="JUSTIFY">without Ex-Im Bank's prior written consent, any Items to be
used in the construction, alteration, operation or maintenance of nuclear power,
enrichment, reprocessing, research or heavy water production facilities.</P>
<B><U><P ALIGN="JUSTIFY">Loan Documents and Loan Authorization Agreement</U>.
Each Loan Document and this Agreement have been duly executed and delivered on
behalf of Borrower, and each such Loan Document and this Agreement are and will
continue to be a legal and valid obligation of Borrower, enforceable against it
in accordance with its terms. </P>
</B><P ALIGN="JUSTIFY">Borrower shall comply with all of the terms and
conditions of the Loan Documents, this Agreement and the Loan Authorization
Agreement.</P>
<B><U><P ALIGN="JUSTIFY">Export-Related Borrowing Base Certificates and Export
Orders</U>.  In order to receive Credit Accommodations under the Loan Facility,
Borrower shall have delivered to Lender an Export-Related Borrowing Base
Certificate as frequently as required by Lender but at least within the past
thirty (30) calendar days and a copy of the Export Order(s) (or, for Revolving
Loan Facilities, if permitted by Lender, a written summary of the Export Orders)
against which Borrower is requesting Credit Accommodations.  If Lender permits
summaries of Export Orders, Borrower shall also deliver promptly to Lender
copies of any Export Orders requested by Lender.  In addition, so long as there
are any Credit Accommodations outstanding under the Loan Facility, Borrower
shall deliver to Lender at least once each month no later than the twentieth
(20<SUP>th</SUP>) day of such month or more frequently as required by the Loan
Documents, an Export-Related Borrowing Base Certificate.</P>
<U><P ALIGN="JUSTIFY">Exclusions from the Export-Related Borrowing Base</U>.  In
determining the Export-Related Borrowing Base, Borrower shall exclude therefrom
Inventory which is not Eligible Export-Related Inventory and Accounts Receivable
which are not Eligible Export-Related Accounts Receivable.  Borrower shall
promptly, but in any event within five (5) Business Days, notify Lender (a) if
any then existing Export-Related Inventory no longer constitutes Eligible
Export-Related Inventory or (b) of any event or circumstance which to Borrower's
knowledge would cause Lender to consider any then existing Export-Related
Accounts Receivable as no longer constituting an Eligible Export-Related
Accounts Receivable.</P>
<U><P ALIGN="JUSTIFY">Financial Statements</U>.  Borrower shall deliver to
Lender the financial statements required to be delivered by Borrower in
accordance with Section 11 of the Loan Authorization Agreement.</P>
<U><P ALIGN="JUSTIFY">Schedules, Reports and Other Statements</U>.  Borrower
shall submit to Lender in writing each month (a) an Inventory schedule for the
preceding month and (b) an Accounts Receivable aging report for the preceding
month detailing the terms of the amounts due from each Buyer.  Borrower shall
also furnish to Lender promptly upon request such information, reports,
contracts, invoices and other data concerning the Collateral as Lender may from
time to time specify.</P>
<U><P ALIGN="JUSTIFY">Additional Security or Payment</U>.    Borrower shall at
all times ensure that the Export-Related Borrowing Base equals or exceeds the
Credit Accommodation Amount.  If informed by Lender or if Borrower otherwise has
actual knowledge that the Export-Related Borrowing Base is at any time less than
the Credit Accommodation Amount, Borrower shall, within five (5) Business Days,
either (i) furnish additional Collateral to Lender, in form and amount
satisfactory to Lender and Ex-Im Bank or (ii) pay to Lender an amount equal to
the difference between the Credit Accommodation Amount and the Export-Related
Borrowing Base.</P>
</B><P ALIGN="JUSTIFY">For purposes of this Agreement, in determining the
Export-Related Borrowing Base there shall be deducted from the Export-Related
Borrowing Base (i) an amount equal to twenty-five percent (25%) of the
outstanding face amount of Commercial Letters of Credit and Standby Letters of
Credit and (ii) one hundred percent (100%) of the face amount of Warranty
Letters of Credit less the amount of cash collateral held by Lender to secure
Warranty Letters of Credit.</P>
<P ALIGN="JUSTIFY">Unless otherwise approved in writing by Ex-Im Bank, for
Revolving Loan Facilities (other than Transaction Specific Revolving Loan
Facilities), Borrower shall at all times ensure that the outstanding principal
balance of the Credit Accommodations that is supported by Export-Related
Inventory does not exceed sixty percent (60%) of the sum of the total
outstanding principal balance of the Disbursements and the undrawn face amount
of all outstanding Commercial Letters of Credit.  If informed by Lender or if
Borrower otherwise has actual knowledge that the outstanding principal balance
of the Credit Accommodations that is supported by Inventory exceeds sixty
percent (60%) of the sum of the total outstanding principal balance of the
Disbursements and the undrawn face amount of all outstanding Commercial Letters
of Credit, Borrower shall, within five (5) Business Days, either (i) furnish
additional non-Inventory Collateral to Lender, in form and amount satisfactory
to Lender and Ex-Im Bank, or (ii) pay down the applicable portion of the Credit
Accommodations so that the above described ratio is not exceeded.</P>
<B><U><P ALIGN="JUSTIFY">Continued Security Interest</U>.  Borrower shall not
change (a) its name or identity in any manner, (b) the location of its principal
place of business, (c) the location of any of the Collateral or (d) the location
of any of the books or records related to the Collateral, in each instance
without giving thirty (30) days prior written notice thereof to Lender and
taking all actions deemed necessary or appropriate by Lender to continuously
protect and perfect Lender's Liens upon the Collateral.</P>
<U><P ALIGN="JUSTIFY">Inspection of Collateral</U>.  Borrower shall permit the
representatives of Lender and Ex-Im Bank to make at any time during normal
business hours inspections of the Collateral and of Borrower's facilities,
activities, and books and records, and shall cause its officers and employees to
give full cooperation and assistance in connection therewith.</P>
<U><P ALIGN="JUSTIFY">General Intangibles</U>.  Borrower represents and warrants
that it owns, or is licensed to use, all General Intangibles necessary to
conduct its business as currently conducted except where the failure of Borrower
to own or license such General Intangibles could not reasonably be expected to
have a Material Adverse Effect.</P>
<U><P ALIGN="JUSTIFY">Notice of Certain Events</U>.  Borrower shall promptly,
but in any event within five (5) Business Days, notify Lender in writing of the
occurrence of any of the following:</P>
</B><P ALIGN="JUSTIFY">Borrower or any Guarantor (i) applies for, consents to or
suffers the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar fiduciary of itself or of all or a
substantial part of its property or calls a meeting of its creditors, (ii)
admits in writing its inability, or is generally unable, to pay its debts as
they become due or ceases operations of its present business, (iii) makes a
general assignment for the benefit of creditors, (iv) commences a voluntary case
under any state or federal bankruptcy laws (as now or hereafter in effect), (v)
is adjudicated as bankrupt or insolvent, (vi) files a petition seeking to take
advantage of any other law providing for the relief of debtors, (vii) acquiesces
to, or fails to have dismissed within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (vii) takes
any action for the purpose of effecting any of the foregoing;</P>
<P ALIGN="JUSTIFY">any Lien in any of the Collateral, granted or intended by the
Loan Documents to be granted to Lender, ceases to be a valid, enforceable,
perfected, first priority Lien (or a lesser priority if expressly permitted
pursuant to Section 6 of the Loan Authorization Agreement) subject only to
Permitted Liens;</P>
<P ALIGN="JUSTIFY">the issuance of any levy, assessment, attachment, seizure or
Lien, other than a Permitted Lien, against any of the Collateral which is not
stayed or lifted within thirty (30) calendar days;</P>
<P ALIGN="JUSTIFY">any proceeding is commenced by or against Borrower or any
Guarantor for the liquidation of its assets or dissolution;</P>
<P ALIGN="JUSTIFY">any litigation is filed against Borrower or any Guarantor
which has had or could reasonably be expected to have a Material Adverse Effect
and such litigation is not withdrawn or dismissed within thirty (30) calendar
days of the filing thereof;</P>
<P ALIGN="JUSTIFY">any default or event of default under the Loan Documents;</P>
<P ALIGN="JUSTIFY">any failure to comply with any terms of the Loan
Authorization Agreement;</P>
<P ALIGN="JUSTIFY">any material provision of any Loan Document or this Agreement
for any reason ceases to be valid, binding and enforceable in accordance with
its terms;</P>
<P ALIGN="JUSTIFY">any event which has had or could reasonably be expected to
have a Material Adverse Effect; or </P>
<P ALIGN="JUSTIFY">the Credit Accommodation Amount exceeds the applicable
Export-Related Borrowing Base.</P>
<B><U><P ALIGN="JUSTIFY">Insurance</U>. Borrower will at all times carry
property, liability and other insurance, with insurers acceptable to Lender, in
such form and amounts, and with such deductibles and other provisions, as Lender
shall require, and Borrower will provide evidence of such insurance to Lender,
so that Lender is satisfied that such insurance is, at all times, in full force
and effect.  Each property insurance policy shall name Lender as loss payee and
shall contain a lender's loss payable endorsement in form acceptable to Lender
and each liability insurance policy shall name Lender as an additional insured.
All policies of insurance shall provide that they may not be cancelled or
changed without at least ten (10) days' prior written notice to Lender and shall
otherwise be in form and substance satisfactory to Lender.  Borrower will
promptly deliver to Lender copies of all reports made to insurance
companies.</P>
<U><P ALIGN="JUSTIFY">Taxes</U>. Borrower has timely filed all tax returns and
reports required by applicable law, has timely paid all applicable taxes,
assessments, deposits and contributions owing by Borrower and will timely pay
all such items in the future as they became due and payable.  Borrower may,
however, defer payment of any contested taxes; provided, that Borrower
(a)&nbsp;in good faith contests Borrower's obligation to pay such taxes by
appropriate proceedings promptly and diligently instituted and conducted;
(b)&nbsp;notifies Lender in writing of the commencement of, and any material
development in, the proceedings; (c)&nbsp;posts bonds or takes any other steps
required to keep the contested taxes from becoming a Lien upon any of the
Collateral; and (d)&nbsp;maintains adequate reserves therefor in conformity with
GAAP.</P>
<U><P ALIGN="JUSTIFY">Compliance with Laws</U>. Borrower represents and warrants
that it has complied in all material respects with all provisions of all
applicable laws and regulations, including those relating to Borrower's
ownership of real or personal property, the conduct and licensing of Borrower's
business, the payment and withholding of taxes, ERISA and other employee
matters, safety and environmental matters.</P>
<U><P ALIGN="JUSTIFY">Negative Covenants</U>.  Without the prior written consent
of Ex-Im Bank and Lender, Borrower shall not (a) merge, consolidate or otherwise
combine with any other Person; (b) acquire all or substantially all of the
assets or capital stock of any other Person; (c) sell, lease, transfer, convey,
assign or otherwise dispose of any of its assets, except for the sale of
Inventory in the ordinary course of business and the disposition of obsolete
equipment in the ordinary course of business; (d) create any Lien on the
Collateral except for Permitted Liens; (e) make any material changes in its
organizational structure or identity; or (f) enter into any agreement to do any
of the foregoing.</P>
<U><P ALIGN="JUSTIFY">Reborrowings and Repayment Terms</U>.    If the Loan
Facility is a Revolving Loan Facility, provided that Borrower is not in default
under any of the Loan Documents, Borrower may borrow, repay and reborrow amounts
under the Loan Facility until the close of business on the Final Disbursement
Date.  Unless the Revolving Loan Facility is renewed or extended by Lender with
the consent of Ex-Im Bank, Borrower shall pay in full the outstanding Loan
Facility Obligations and all accrued and unpaid interest thereon no later than
the first Business Day after the Final Disbursement Date.</P>
</B><P ALIGN="JUSTIFY">If the Loan Facility is a Transaction Specific Loan
Facility, Borrower shall, within two (2) Business Days of the receipt thereof,
pay to Lender (for application against the outstanding Loan Facility Obligations
and accrued and unpaid interest thereon) all checks, drafts, cash and other
remittances it may receive in payment or on account of the Export-Related
Accounts Receivable or any other Collateral, in precisely the form received
(except for the endorsement of Borrower where necessary).  Pending such deposit,
Borrower shall hold such amounts in trust for Lender separate and apart and
shall not commingle any such items of payment with any of its other funds or
property.</P>
<B><U><P ALIGN="JUSTIFY">Cross Default</U>.  Borrower shall be deemed in default
under the Loan Facility if Borrower fails to pay when due any amount payable to
Lender under any loan or other credit accommodations to Borrower whether or not
guaranteed by Ex-Im Bank.</P>
<U><P ALIGN="JUSTIFY">Munitions List</U>.  If any of the Items are articles,
services, or related technical data that are listed on the United States
Munitions List (part 121 of title 22 of the Code of Federal Regulations),
Borrower shall send a written notice promptly, but in any event within five (5)
Business Days, of Borrower learning thereof to Lender describing the Items(s)
and the corresponding invoice amount.</P>
<U><P ALIGN="JUSTIFY">Suspension and Debarment, etc</U>.  On the date of this
Agreement neither Borrower nor its Principals are (a) debarred, suspended,
proposed for debarment with a final determination still pending, declared
ineligible or voluntarily excluded (as such terms are defined under any of the
Debarment Regulations referred to below) from participating in procurement or
nonprocurement transactions with any United States federal government department
or agency pursuant to any of the Debarment Regulations or (b) indicted,
convicted or had a civil judgment rendered against Borrower or any of its
Principals for any of the offenses listed in any of the Debarment Regulations.
Unless authorized by Ex-Im Bank, Borrower will not knowingly enter into any
transactions in connection with the Items with any person who is debarred,
suspended, declared ineligible or voluntarily excluded from participation in
procurement or nonprocurement transactions with any United States federal
government department or agency pursuant to any of the Debarment Regulations.
Borrower will provide immediate written notice to Lender if at any time it
learns that the certification set forth in this Section 2.19 was erroneous when
made or has become erroneous by reason of changed circumstances.</P>
<P ALIGN="JUSTIFY"><LI><BR>
RIGHTS AND REMEDIES</LI></P>
<U><P ALIGN="JUSTIFY">Indemnification</U>.  Upon Ex-Im Bank's payment of a Claim
to Lender in connection with the Loan Facility pursuant to the Master Guarantee
Agreement, Ex-Im Bank may assume all rights and remedies of Lender under the
Loan Documents and may enforce any such rights or remedies against Borrower, the
Collateral and any Guarantors.  Borrower shall hold Ex-Im Bank and Lender
harmless from and indemnify them against any and all liabilities, damages,
claims, costs and losses incurred or suffered by either of them resulting from
(a) any materially incorrect certification or statement knowingly made by
Borrower or its agent to Ex-Im Bank or Lender in connection with the Loan
Facility, this Agreement, the Loan Authorization Agreement or any other Loan
Documents or (b) any material breach by Borrower of the terms and conditions of
this Agreement, the Loan Authorization Agreement or any of the other Loan
Documents.  Borrower also acknowledges that any statement, certification or
representation made by Borrower in connection with the Loan Facility is subject
to the penalties provided in Article 18 U.S.C. Section 1001.</P>
<U><P ALIGN="JUSTIFY">Liens</U>.  Borrower agrees that any and all Liens granted
by it to Lender are also hereby granted to Ex-Im Bank to secure Borrower's
obligation, however arising, to reimburse Ex-Im Bank for any payments made by
Ex-Im Bank pursuant to the Master Guarantee Agreement.  Lender is authorized to
apply the proceeds of, and recoveries from, any property subject to such Liens
to the satisfaction of Loan Facility Obligations in accordance with the terms of
any agreement between Lender and Ex-Im Bank.</P>
<P ALIGN="JUSTIFY"><LI><BR>
MISCELLANEOUS</LI></P></OL>

<U><P ALIGN="JUSTIFY">Governing Law</U>.  This Agreement and the Loan
Authorization Agreement and the obligations arising under this Agreement and the
Loan Authorization Agreement shall be governed by, and construed in accordance
with, the law of the state governing the Loan Documents.</P>
<U><P ALIGN="JUSTIFY">Notification</U>.  All notices required by this Agreement
shall be given in the manner and to the parties provided for in the Loan
Agreement.</P>
<U><P ALIGN="JUSTIFY">Partial Invalidity</U>.  If at any time any of the
provisions of this Agreement becomes illegal, invalid or unenforceable in any
respect under the law of any jurisdiction, neither the legality, the validity
nor the enforceability of the remaining provisions hereof shall in any way be
affected or impaired.</P>
<U><P ALIGN="JUSTIFY">Waiver of Jury Trial</U>. BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY ACTION, SUIT, PROCEEDING OR OTHER LITIGATION BROUGHT
TO RESOLVE ANY DISPUTE ARISING UNDER, ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, THE LOAN AUTHORIZATION AGREEMENT, ANY LOAN DOCUMENT, OR ANY OTHER
AGREEMENT, DOCUMENT OR INSTRUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR THEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OR OMMISSIONS OF LENDER, EX-IM BANK, OR ANY OTHER
PERSON, RELATING TO THIS AGREEMENT, THE LOAN AUTHORIZATION AGREEMENT OR ANY
OTHER LOAN DOCUMENT.</P>
</B></FONT><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">IN WITNESS WHEREOF, Borrower has caused this Agreement to be
duly executed as of the ______ day of June, 2003.</P>
<P ALIGN="JUSTIFY">THERMA-WAVE, INC.</P>
<P ALIGN="JUSTIFY">By:______________________________<BR>
&#9;(Signature)</P>
<P ALIGN="JUSTIFY">Name:____________________________<BR>
&#9;(Print or Type)</P>
<P ALIGN="JUSTIFY">Title:_____________________________<BR>
&#9;(Print or Type)</P>
<P ALIGN="JUSTIFY">ACKNOWLEDGED:</P>
<P ALIGN="JUSTIFY">SILICON VALLEY BANK</P>
<P ALIGN="JUSTIFY">By:______________________________<BR>
&#9;(Signature)</P>
<P ALIGN="JUSTIFY">Name:____________________________<BR>
&#9;(Print or Type)</P>
<P ALIGN="JUSTIFY">Title:_____________________________<BR>
&#9;(Print or Type)</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">ANNEXES:</P>
<P ALIGN="JUSTIFY">Annex A&#9;-&#9;Loan Authorization Agreement or Loan
Authorization Notice</P>
<P ALIGN="JUSTIFY"></P>
<B><P ALIGN="JUSTIFY">&nbsp;</P></B><P ALIGN="RIGHT">Exhibit 10.6</P>

<P>April 15, 2003</P>

<P>To: Talat Hasan</P>
<P>From: Boris Lipkin</P>
<P>Re: Employment  Contract</P>
<P>CC: Ray Christie, Noel Simmons</P>

<P>&nbsp;</P>
<P>The following is a summary of the closure of your employment contract. Please
signify your agreement by signing below.</P>

<OL>

<LI>You will be resigning as an employee on Friday, April 25.</LI>
<LI>You will remain on the Board of Directors.</LI>
<LI>You will receive regular benefits until the end of April 2003.</LI>
<LI>You will receive Severance Pay in the amount of $225,000, of which will be
paid to you in July, and the remaining will be paid to you on regular payroll
intervals from April 26 through October 31, 2003.</LI>
<LI>Upon your application for benefits under COBRA, Therma-Wave will pay your
COBRA payments from May 1, 2003 through April 30, 2004. (Our medical plans
require that you be an active employee to remain on the employee rolls).</LI>
<LI>Your stock options will continue to vest until April 30, 2004.</LI></OL>

<P>&nbsp;</P>
<U><P>/s/&#9;Boris Lipkin&#9;</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>/s/&#9;Talat Hasan&#9;</P>
</U><P>Boris Lipkin&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Talat Hasan</P>

<U><P> &#9;4/15/03&#9;</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#9;4/15/03&#9;</P>
</U><P>Date&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date</P>

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