Document:

Loan and Security Agreement

 Exhibit 10.1 
  

  
 LOAN AND SECURITY AGREEMENT 
  
 by and between

  
 PORTALPLAYER, INC., 
  
 as Borrower 
  
 and 
  
 SILICON VALLEY BANK, 
  
 as Bank 
  
 MAY 31, 2005 
  

 LOAN AND SECURITY AGREEMENT 
  
 THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated May 31, 2005, between SILICON VALLEY BANK (“Bank”),
whose address is 3003 Tasman Drive, Santa Clara, California 95054, fax number: (408) 654-5517, and PORTALPLAYER, INC., a corporation organized and in good standing in the State of California (“Borrower”), whose address is 70 W. Plumeria
Drive, San Jose, California 95134, fax number: (408) 855-0841 provides the terms on which Bank will lend to Borrower and Borrower will repay Bank. 
  
 The Borrower and Bank have entered into that certain Loan and Security Agreement, dated September 26, 2002, as modified by a Loan and Security Agreement
dated November 10, 2003 (the same, as amended, modified, substituted, extended, and renewed from time to time, including, without limitation pursuant to that certain Loan Modification Agreement dated as of June 15, 2004, are collectively referred to
herein as the “Existing Loan Agreement”). The Existing Loan Agreement provided for loans up to the principal amount of Five Million Dollars ($5,000,000) and an Equipment Term Loan in the principal amount of Two Million Dollars
($2,000,000). The Borrower and Bank have agreed to replace the Existing Loan Agreement with this Agreement and to cause all Obligations owed under the Existing Loan Agreement as of the date hereof to become Advances hereunder upon the terms and
conditions as more fully set forth herein. 
  
 1. ACCOUNTING AND OTHER
TERMS 
  
 Accounting terms not defined in this Agreement
will be construed following GAAP. Calculations and determinations must be made following GAAP. The term “financial statements” includes the notes and schedules. The terms “including” and “includes” always mean
“including (or includes) without limitation,” in this or any Loan Document.  
  
 2. LOAN AND TERMS OF PAYMENT 
  
 2.1 Promise to Pay. 
  
 Borrower promises to pay
Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid principal amount of the Credit Extensions. 
  
 2.1.1 Revolving Advances. 
  
 (a) Bank will make Advances not exceeding the Committed Revolving Line minus (i) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit), minus (ii) all amounts utilized under the Cash Management Services Sublimit and minus (iii) the FX Reserve. Amounts borrowed under this Section may be repaid and reborrowed during the term of this Agreement.

  
 (b) To obtain an Advance, Borrower must notify Bank by
facsimile or telephone by 3:00 p.m. Pacific time on the Business Day the Advance is to be made. Borrower must promptly confirm the notification by delivering to Bank the Loan Payment/Advance Request Form attached as Exhibit B (the
“Payment/Advance Form”). 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 reasonably believes is a Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due
to such reliance. 
  
 (c) The Committed Revolving Line terminates
on the Revolving Maturity Date, when all Advances are immediately payable. 
  
 (d) Bank’s obligation to lend the undisbursed portion of the Obligations will terminate if, in Bank’s sole discretion, there has been a material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospect of repayment of the Obligations, or there has been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank prior to the
execution of this Agreement. 
  
 2.1.2 Letters of Credit Sublimit.

  
 Bank will issue or have issued letters of credit (each a
“Letter of Credit” and collectively the “Letters of Credit”) for Borrower’s account not exceeding (i) the Committed Revolving Line, minus (ii) the outstanding principal balance of the Advances minus the Cash Management
Sublimit, minus the FX 

 Reserve; however, the face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit),
together with all outstanding Advances, all amounts for services utilized under the Cash Management Services Sublimit and the FX Reserve, may not at any time exceed Fifteen Million Dollars ($15,000,000). Each Letter of Credit will have an expiry
date of no later than one hundred eighty (180) days after the Revolving Maturity Date, but Borrower’s obligations to reimburse Bank under the Letters of Credit will be secured by cash on terms acceptable to Bank at any time after the Revolving
Maturity Date if the term of this Agreement is not extended by Bank. Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request. Prior to or simultaneously with the opening of each
Letter of Credit, Borrower shall pay to Bank, a letter of credit fee (each a “Letter of Credit Fee” and collectively the “Letter of Credit Fees”) in an amount equal to one percent (1%) per annum of the face amount of the Letter
of Credit. Such Letter of Credit Fees shall be paid in advance upon the issuance of the Letter of Credit and upon each anniversary thereof, if any. In addition, Borrower shall pay to Bank any and all additional issuance, negotiation, processing,
transfer or other fees to the extent and as and when required by Bank.  
  
 2.1.3 Foreign Exchange Sublimit. 
  
 If there is
availability under the Committed Revolving Line, then Borrower may enter in 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 “FX Forward Contract”). Bank will subtract 10% of each outstanding FX Forward Contract from the foreign exchange sublimit which, together with all outstanding Advances, all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) and all amounts utilized under the Cash Management Services Sublimit, shall not exceed Fifteen Million Dollars ($15,000,000) (the “FX Reserve”). The total FX Forward Contracts at any one
time may not exceed 10 times the amount of the FX Reserve. Bank may terminate the FX Forward Contracts if an Event of Default occurs. 
  
 2.1.4 Cash Management Services Sublimit. 
  
 Borrower may use up to Fifteen Million Dollars ($15,000,000), minus all outstanding Advances, minus all outstanding Letters of Credit, (including drawn
but unreimbursed Letters of Credit), minus the FX Reserve, (the “Cash Management Services Sublimit”) for Bank’s Cash Management Services, which 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 “Cash Management Services”). Such aggregate amounts utilized under the Cash Management Services Sublimit will at all times reduce the
amount otherwise available to be borrowed under the Committed Revolving Line. Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for any Cash Management Services will be treated as Advances under the Committed
Revolving Line and will accrue interest at the rate for Advances. 
  
 2.2
Interest Rate, Payments. 
  
 Interest Rate. Advances accrue
interest on the outstanding principal balance at a floating per annum rate of interest equal to the Prime Rate. After an Event of Default, Obligations accrue interest at three percent (3%) 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) Payments. Interest due on the Committed Revolving Line is payable on the first (1st) day of each month. Bank may debit any of Borrower’s deposit
accounts including Account Number              for principal and interest payments owing or any amounts Borrower owes Bank. Bank will promptly notify Borrower when it debits
Borrower’s accounts. These debits are not a set-off. Payments received after 12:00 Noon Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the
payment is due the next Business Day and additional fees or interest accrue. 
  
 2.3 Fees. 
  
 Borrower will pay all Bank Expenses
(including reasonable attorneys’ fees and reasonable expenses) incurred through and after the date of this Agreement, which Bank Expenses shall be payable immediately upon request by Bank. 
  

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 3. CONDITIONS OF LOANS 
  
 3.1 Conditions Precedent to Initial Credit Extension. 
  
 Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that it receive the
agreements, documents and fees it requires. 
  
 3.2 Conditions Precedent to all
Credit Extensions. 
  
 Bank’s obligations to make each
Credit Extension, including the initial Credit Extension, is subject to the following: 
  
 (a) timely receipt of any Payment/Advance Form; and 
  
 (b) the representations and warranties in Section 5 must be true on the date of the Payment/Advance Form and on the effective date of each Credit Extension and no Event of Default may have occurred and be continuing,
or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties of Section 5 remain true. 
  
 4. CREATION OF SECURITY INTEREST 
  
 4.1 Grant of Security Interest. 
  
 Borrower grants Bank a continuing security interest in all presently existing and later acquired Collateral to secure all Obligations and performance of
each of Borrower’s duties under the Loan Documents. Except for Permitted Liens, any security interest will be a first priority security interest in the Collateral. Bank upon the occurrence of any Event of Default, may place a “hold”
on any deposit account of Borrower maintained with Bank. If this Agreement is terminated, Bank’s lien and security interest in the Collateral shall continue until Borrower fully satisfies the Obligations (other than inchoate indemnity
obligations). Upon payment in full of the Obligations and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall release its liens and security interests in the Collateral and all rights therein shall revert to
Borrower. 
  
 4.2 Authorization to File. 
  
 Borrower authorizes Bank to file financing statements without notice to
Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order to perfect or protect Bank’s interest in the Collateral. 
  
 5. REPRESENTATIONS AND WARRANTIES 
  
 Borrower represents and warrants as follows: 
  
 5.1 Due Organization and Authorization. 
  
 Borrower and each Subsidiary is duly existing and in good standing in the State of California and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. Borrower and each
Subsidiary’s exact legal name is as set forth on the first page of this Agreement. The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower’s formation documents, nor
constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which, or by which it is bound, in which the default could reasonably be expected to cause a Material Adverse
Change. 
  
 5.2 Collateral. 
  
 Borrower has good title to the Collateral, free of Liens except Permitted
Liens. 
  
 5.3 Litigation. 
  
 Except as disclosed in Borrower’s public filings with the SEC, there
are no actions or proceedings pending or, to the knowledge of Borrower’s Responsible Officers, overtly threatened by or against Borrower or any Subsidiary in which a likely adverse decision would reasonably be expected to cause a Material
Adverse Change. 
  

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 5.4 No Material Adverse Change in Financial Statements. 
  
 All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated
financial condition since the date of the most recent consolidated financial statements submitted to Bank. 
  
 5.5 Solvency. 
  
 The fair
salable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; the Borrower is not left with unreasonably small capital after the transactions in this Agreement or any of the Loan
Documents; and Borrower is able to pay its debts (including trade debts) as they mature. 
  
 5.6 Regulatory Compliance. 
  
 Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for
margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of
which could reasonably be expected to cause a Material Adverse Change. None of Borrower’s or any Subsidiary’s properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous
Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes,
except those being contested in good faith with adequate reserves under GAAP. Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. 
  
 5.7 Subsidiaries. 
  
 Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments. 
  
 5.8 Full Disclosure. 
  
 No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank
(taken together with all such written certificates and written statements to Bank) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not
misleading. It being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such
projections and forecasts may differ from the projected and forecasted results. 
  
 6. AFFIRMATIVE COVENANTS 
  
 Borrower will
do all of the following for so long as Bank has an obligation to make any Credit Extension, or there are outstanding Obligations: 
  
 6.1 Government Compliance. 
  
 Borrower will maintain its and all Subsidiaries’ legal existence and good standing as a Registered Organization in only the State of California and
maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to cause a material adverse effect on Borrower’s business or operations. Borrower will comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change. 
  
 6.2 Financial Statements, Reports, Certificates. 
  
 (a) Borrower shall deliver to Bank: (i) as soon as available, but no later
than five (5) days after filing with the Securities and Exchange Commission, the Borrower’s 10K and 10Q reports; (ii) a 
  

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 Compliance Certificate together with delivery of the 10K and 10Q reports; (iii) within 30 days after the end of each
fiscal year, annual financial projections for the following fiscal year (on a quarterly basis) as approved by Borrower’s board of directors, together with any related business forecasts used in the preparation of such annual financial
projections; (iv) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of $3,000,000 or more; and (v) budgets, sales projections, operating
plans or other financial information Bank reasonably requests. 
  
 Borrower’s 10K and 10Q reports required to be delivered pursuant to Section 6.2(a)(i) shall be deemed to have been delivered on the date on which Borrower posts such report or provides a link thereto on Borrower’s website on the
Internet; provided, that Borrower shall provide paper copies to Bank of the Compliance Certificates required by Section 6.2(a)(ii). 
  
 (b) Within 30 days after the last day of each month, Borrower will deliver to Bank a cash balance report, including account statements detailing cash
management types of investments held and maturity dates. 
  
 (c)
Borrower will allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such audits will be conducted during normal Business Days and normal business hours and no more often than every six (6) months unless an Event of Default has
occurred and is continuing. 
  
 6.3 Inventory; Returns. 
  
 Borrower will keep all Inventory in good and marketable condition, free from
material defects. Returns and allowances between Borrower and its account debtors will follow Borrower’s customary practices as they exist at execution of this Agreement. Borrower must promptly notify Bank of all returns, recoveries, disputes
and claims, that involve more than $750,000. 
  
 6.4 Taxes. 
  
 Borrower will make, and cause each Subsidiary to make, timely payment of all
material federal, state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting in good faith, with adequate reserves maintained in accordance with GAAP) and will deliver to Bank, on demand, appropriate
certificates attesting to the payment. 
  
 6.5 Insurance. 
  
 Borrower will keep its business and the Collateral insured for risks and in
amounts standard for Borrower’s industry, and 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 twenty (20) days notice before
canceling its policy. At Bank’s request, Borrower will deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy will, at Bank’s option, be payable to Bank on account of the
Obligations. 
  
 6.6 Primary Accounts. 
  
 Borrower will maintain an operating account with Bank. 
  
 6.7 Financial Covenants. 
  
 Borrower will maintain as of the last day of each quarter: 
  
 (a) Quick Ratio. A ratio of Quick Assets to Current Liabilities plus
all outstanding Indebtedness owed by Borrower to Bank of at least 2.00 to 1.00. 
  
 (b) Tangible Net Worth. A Tangible Net Worth of at least $75,000,000. 
  
 6.8 Intellectual Property Rights. 
  
 Borrower will (1) protect, defend and maintain the validity and enforceability of the Intellectual Property and promptly advise Bank in writing of material infringements and (ii) not allow any Intellectual Property
material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent. 
  

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 6.9 Further Assurances. 
  

Borrower will execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s security interest
in the Collateral or to effect the purposes of this Agreement. 
  
 7.
NEGATIVE COVENANTS 
  
 Borrower will not do any of the
following without Bank’s prior written consent, for so long as Bank has an obligation to make Credit Extensions or there are any outstanding Obligations: 
  

7.1 Dispositions. 
  
 Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part
of its business or property, except for: 
  
 (a) Transfers in the
ordinary course of business; 
  
 (b) Transfers to Borrower or any
of its Subsidiaries from Borrower or any of its Subsidiaries; 
  
 (c) Transfers of property for fair market value; 
  
 (d)
Transfers constituting non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business and other non-perpetual licenses that may be exclusive in some respects, such as,
by way of example, with respect to field of use or geographic territory, but that do not result, under applicable law, in a sale of all of Borrower’s interest in the property that is the subject of the license; 
  
 (e) Transfers otherwise permitted by the Loan Documents; 
  
 (f) Transfers associated with the making or disposition of a Permitted
Investment; and 
  
 (g) Transfers in connection with an
acquisition permitted under Section 7.3. 
  
 7.2 Changes in Business; Change in
Control; Jurisdiction of Formation. 
  
 Engage in any
material line of business other than those lines of business conducted by Borrower and its Subsidiaries on the date hereof and any businesses reasonably related, complementary or incidental thereto or reasonable extensions thereof; permit or suffer
any Change in Control. Borrower will not, without prior written notice, change its jurisdiction of formation. 
  
 7.3 Mergers or Acquisitions. 
  
 Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any Person other than with Borrower or any Subsidiary, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital
stock or property of a Person other than Borrower or any Subsidiary, except where no Event of Default has occurred and is continuing or would result from such action during the term of this Agreement, and (a) Borrower is the surviving entity or (b)
such merger or consolidation is a Transfer otherwise permitted pursuant to Section 7.1 hereof. 
  
 7.4 Indebtedness. 
  
 Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 
  

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

7.6 Distributions; Investments. 
  
 Directly or indirectly acquire or own any Person, or make any Investment in any Person, other than Permitted Investments. Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock, except for Permitted Distributions. 
  
 7.7 Transactions with Affiliates. 
  
 Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for (a) transactions that are in the ordinary course of Borrower’s business, upon fair and
reasonable terms (when viewed in the context of any series of transactions of which it may be a part, if applicable); or (b) transactions among Borrower and its Subsidiaries and among Borrower’s Subsidiaries so long as no Event of Default
exists or could result therefrom. 
  
 7.8 Compliance. 
  
 Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve
System), 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 permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to
withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result
in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 
  
 8. EVENTS OF DEFAULT 
  
 Any one of the following is an Event of Default: 
  
 8.1 Payment Default. 
  
 If Borrower fails to pay any of the Obligations when due within three (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); 
  
 8.2 Covenant Default. 
  
 (a) If Borrower fails to perform any obligation under Sections 6.2, 6.4, 6.5 or 6.7 or violates any of the covenants contained in Article 7 of this Agreement, or 
  
 (b) If Borrower fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or
agreement contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition, covenant or agreement that can be cured,
has failed to cure such default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such
ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such
reasonable time period the failure to have cured such default shall not be deemed an Event of Default (provided that no Credit Extensions will be made during such cure period); 
  

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 8.3 Material Adverse Change. 
  
 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. 
  
 8.4 Attachment. 
  
 If any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or
receiver and the attachment, seizure or levy is not removed in ten (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 ten (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); 
  
 8.5 Insolvency. 
  
 If Borrower becomes insolvent or if Borrower begins an Insolvency Proceeding or an Insolvency Proceeding is begun against Borrower and not dismissed or
stayed within forty-five (45) days (but no Credit Extensions will be made before any Insolvency Proceeding is dismissed); 
  
 8.6 Other Agreements. 
  
 If there is a default in any agreement between Borrower and a third party that is not cured within the applicable cure period and gives the third party
the right to accelerate any Indebtedness exceeding $500,000 or that could reasonably be expected to cause a Material Adverse Change; 
  
 8.7 Judgments. 
  
 If a money judgment(s) in the aggregate of at least $3,000,000 is rendered against Borrower and is unsatisfied and unstayed for twenty (20) days (but no
Credit Extensions will be made before the judgment is stayed or satisfied); 
  
 8.8 Misrepresentations. 
  
 If Borrower or any
Person acting for Borrower makes any material misrepresentation or material misstatement now or later in any warranty or representation in this Agreement or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan
Document; or 
  
 8.9 Guaranty. 
  
 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 8.3, 8.4, 8.5 or 8.7 occurs to any Guarantor. 
  
 9. BANK’S RIGHTS AND REMEDIES 
  
 9.1 Rights and Remedies. 
  
 When an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following: 
  
 (a) Declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank); 
  
 (b) Stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank;

  
 (c) Settle or adjust disputes and claims directly with account
debtors for amounts, on terms and in any order that Bank considers advisable; 
  
 (d) Make any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral. Borrower will assemble the Collateral if Bank requires and make it 
  

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 available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises,
without charge, to exercise any of Bank’s rights or remedies; 
  
 (e) Apply to the Obligations any (i) balances and deposits of Borrower with Bank or its Affiliate it holds, or (ii) amount held by Bank owing to or for the credit or the account of Borrower; 
  
 (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, Mask Works, rights of use of any name, trade secrets, trade
names, Trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its
rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit; 
  
 (g) Bank may place a “hold” on any account maintained with Bank and deliver a notice of exclusive control, any entitlement order, or other
directions or instructions pursuant to any control agreement or similar agreements providing control of any Collateral; and 
  
 (h) Dispose of the Collateral according to the Code. 
  
 9.2 Power of Attorney. 
  
 Effective only when an Event of Default occurs and continues, Borrower irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower’s
name on any checks or other forms of payment or security; (ii) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against account debtors, (iii) make, settle, and adjust all claims under Borrower’s insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts and on terms Bank determines reasonable; and (v) transfer the Collateral into the name of Bank or a third party as the Code permits.
Bank may exercise the power of attorney to sign Borrower’s name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has occurred. Bank’s appointment as
Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates.

  
 9.3 Accounts Collection. 
  
 When an Event of Default occurs and continues, Bank may notify any Person
owing Borrower money of Bank’s security interest in the funds and verify the amount of the Account. Borrower must collect all payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in the form received
from the account debtor, with proper endorsements for deposit. 
  
 9.4 Bank
Expenses. 
  
 If Borrower fails to pay any amount or furnish
any required proof of payment to third persons, Bank may make all or part of the payment or obtain insurance policies required in Section 6.5, and take any action under the policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and secured by the Collateral. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default. 
  
 9.5 Bank’s Liability for Collateral. 
  
 If Bank complies with reasonable banking practices and the Code, it is not
liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other person. Borrower bears all risk
of loss, damage or destruction of the Collateral. 
  
 9.6 Remedies Cumulative.

  
 Bank’s rights and remedies under this Agreement, the
Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election, and Bank’s waiver of any Event of

  

 9 

 Default is not a continuing waiver. Bank’s delay is not a waiver, election, or acquiescence. No waiver is effective
unless signed by Bank and then is only effective for the specific instance and purpose for which it was given. 
  
 9.7 Demand Waiver. 
  
 Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel
paper, and guarantees held by Bank on which Borrower is liable. 
  
 10.
NOTICES 
  
 All notices or demands by any party about
this Agreement or any other related agreement must be in writing and be personally delivered or sent by an overnight delivery service, by certified mail, postage prepaid, return receipt requested, or by telefacsimile to the addresses set forth at
the beginning of this Agreement. A party may change its notice address by giving the other party written notice. 
  
 11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER 
  
 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. 
  
 BORROWER
AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL
INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 
  
 12. GENERAL PROVISIONS 
  
 12.1 Successors and Assigns. 
  
 This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights
under it without Bank’s prior written consent which may be granted or withheld in Bank’s discretion. Bank has the right, without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part
of, or any interest in, Bank’s obligations, rights and benefits under this Agreement. 
  
 12.2 Indemnification. 
  
 Borrower will indemnify, defend and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities asserted by any other party in connection with the transactions contemplated by
the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank and Borrower (including reasonable attorneys fees and expenses), except for losses caused by Bank’s
gross negligence or willful misconduct. 
  
 12.3 Time of Essence.

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

  
 Each provision of this Agreement is severable from every
other provision in determining the enforceability of any provision. 
  
 12.5
Amendments in Writing, Integration. 
  
 All amendments to
this Agreement must be in writing and signed by Borrower and Bank. This Agreement represents the entire agreement about this subject matter, and supersedes prior negotiations or agreements. All prior agreements, understandings, representations,
warranties, and negotiations between the parties about the subject matter of this Agreement merge into this Agreement and the Loan Documents. 
  

 10 

 12.6 Counterparts. 
  
 This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement. 
  
 12.7 Survival. 
  
 All covenants, representations
and warranties made in this Agreement continue in full force while any Obligations remain outstanding. The obligations of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought
against Bank have run. 
  
 12.8 Confidentiality. 
  
 In handling any confidential information, Bank will exercise the same degree
of care that it exercises for its own proprietary information, but disclosure of information may be made (i) to Bank’s subsidiaries or affiliates, (ii) to prospective transferees or purchasers of any interest in the loans (provided, however,
Bank shall use commercially reasonable efforts in obtaining such prospective transferee or purchasers agreement to the terms of this provision), (iii) as required by law, regulation, subpoena, or other order, (iv) as required in connection with
Bank’s examination or audit and (v) as Bank considers appropriate in exercising remedies under this Agreement. Confidential information does not include information that either: (a) is in the public domain or in Bank’s possession when
disclosed to Bank, or becomes part of the public domain after disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bank does not know, after exercising reasonable diligence, that the third party is prohibited from disclosing the
information. 
  
 12.9 Effective Date. 
  
 Notwithstanding anything set forth in this Agreement or any Loan Document to
the contrary, this Agreement and all of the Loan Documents shall not be effective until the date on which the Bank executes this Agreement as indicated on the signature page to this Agreement. 
  
 12.10 Attorneys’ Fees, Costs and Expenses. 
  
 In any action or proceeding between Borrower and Bank arising out of the
Loan Documents, the prevailing party will be entitled to recover its reasonable attorneys’ fees and other reasonable costs and expenses incurred, in addition to any other relief to which it may be entitled. 
  
 13. DEFINITIONS 
  
 13.1 Definitions. 
  
 In this Agreement: 
  
 “Accounts” has the meaning set forth in the Code and includes all existing and later arising accounts, contract rights, and other
obligations owed Borrower in connection with its sale or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by
Borrower and Borrower’s Books relating to any of the foregoing. 
  
 “Advance” or “Advances” is a loan advance (or advances) under the Committed Revolving Line. 
  
 “Affiliate” of a Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by
or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members. 
  
 “Bank Expenses” are all audit fees and expenses and
reasonable costs and expenses (including reasonable attorneys’ fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including appeals or Insolvency Proceedings). 
  
 “Borrower’s Books” are all Borrower’s books and
records including ledgers, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the information. 
  
 “Business Day” is any day that is not a Saturday, Sunday or
a day on which the Bank is closed. 
  

 11 

 “Cash Management Services” are defined in Section 2.1.4. 
  
 “Change in Control” is a transaction in which any
“person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended), directly or indirectly, of greater than 35% of the shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors. 
  
 “Closing Date” is the date of this Agreement. 
  
 “Code” is the Uniform Commercial Code, in effect in the
State of California as in effect from time to time. 
  
 “Collateral” is the property described on Exhibit A. 
  
 “Committed Revolving Line” is Advances of up to Fifteen Million Dollars ($15,000,000). 
  
 “Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (i) any indebtedness,
lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable;
(ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent
Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount
may not exceed the maximum of the obligations under the guarantee or other support arrangement. 
  
 “Copyrights” are all copyright rights, applications or registrations and like protections in each work or authorship or derivative work,
whether published or not (whether or not it is a trade secret) now or later existing, created, acquired or held. 
  
 “Credit Extension” is each Advance, Letter of Credit, Exchange Contract, or any other extension of credit by Bank for Borrower’s
benefit. 
  
 “Current Liabilities” are the
aggregate amount of Borrower’s Total Liabilities which mature within one (1) year. 
  
 “Equipment” has the meaning set forth in the Code and includes all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which
Borrower has any interest. 
  
 “ERISA” is the
Employment Retirement Income Security Act of 1974, and its regulations. 
  
 “FX Forward Contract” is defined in Section 2.1.3. 
  
 “FX Reserve” is defined in Section 2.1.3. 
  
 “GAAP” is generally accepted accounting principles. 
  
 “Guarantor” is any present or future guarantor of the Obligations. 
  
 “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such
as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and (d) Contingent Obligations. 
  
 “Insolvency Proceeding” are proceedings by or against any
Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement,
or other relief. 
  
 “Intellectual Property” is:

  
 (a) Copyrights, Trademarks and 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; 
  

 12 

 (b) Any trade secrets and any intellectual property rights in computer software and computer software
products now or later existing, created, acquired or held; 
  
 (c)
All design rights which may be available to Borrower now or later created, acquired or held; 
  
 (d) Any claims for damages (past, present or future) for infringement of any of the rights above, with the right, but not the obligation, to sue and collect damages for use or infringement of the intellectual property
rights above; 
  
 (e) All Proceeds and products of the foregoing,
including all insurance, indemnity or warranty payments. 
  
 “Inventory” has the meaning set forth in the Code and includes 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 from the sale or disposition of any of the foregoing and any documents of title. 
  
 “Investment” is any beneficial ownership of (including
stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person. 
  
 “Letter of Credit” is defined in Section 2.1.2. 
  

“Letter-of-credit right” means a right to payment or performance under a letter of credit, whether or not the beneficiary has demanded
or is at the time entitled to demand payment or performance. 
  
 “Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. 
  
 “Loan Documents” are, collectively, this Agreement, any note, or notes or guaranties executed by Borrower or any Guarantor, and any other
present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated. 
  
 “Mask Works” are all mask works or similar rights available for the protection of semiconductor chips, now owned or later acquired.

  
 “Material Adverse Change” means the
occurrence of any of the events set forth in Section 8.3. 
  
 “Obligations” are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including cash management services, letters of credit and foreign exchange contracts, if any and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank. 
  
 “Patents” are patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same. 
  
 “Permitted Distributions” means: 
  
 (a) purchases of capital stock from former employees, consultants and directors pursuant to repurchase agreements or other similar agreements; 
  
 (b) distributions or dividends consisting solely of Borrower’s capital stock; 
  
 (c) purchases for value of any rights distributed in connection with any stockholder rights plan; 
  
 (d) purchases of capital stock or options to acquire such capital stock with
the proceeds received from a substantially concurrent issuance of capital stock or convertible securities; 
  

 13 

 (e) purchases of capital stock in connection with the exercise of stock options or stock appreciation
rights by way of cashless exercise or in connection with the satisfaction of withholding tax obligations; 
  
 (f) purchases of fractional shares of capital stock arising out of stock dividends, splits or combinations or business combinations; and 
  
 (g) the settlement or performance of such Person’s obligations under any
equity derivative transaction, option contract or similar transaction or combination of transactions. 
  
 “Permitted Indebtedness” is: 
  
 (a) Borrower’s Indebtedness to Bank under this Agreement or any other Loan Document; 
  
 (b) (i) any Indebtedness that does not exceed $500,000 in principal amount existing on the Effective Date, and (ii) any
Indebtedness in excess of $500,000 in principal amount existing on the Effective Date and shown on the Disclosure Schedule; 
  
 (c) Subordinated Debt; 
  
 (d) Indebtedness to trade creditors and with respect to surety bonds and similar obligations; 
  
 (e) guaranties of Permitted Indebtedness; 
  
 (f) Indebtedness between Borrower and any of its Subsidiaries or among any of
Borrower’s Subsidiaries; 
  
 (g) Indebtedness with respect to
documentary letters of credit; 
  
 (h) capitalized leases and
purchase money Indebtedness secured by Permitted Liens; 
  
 (i)
Indebtedness of entities acquired in any permitted merger or acquisition transaction; 
  
 “Permitted Investments” are: 
  
 (a) Investments existing on the Effective Date; 
  
 (b) (i) marketable direct obligations issued or unconditionally guaranteed by the United States or its agencies or any State maturing within 1 year from its acquisition, (ii) commercial paper maturing no more than 2
years after its creation and having the highest rating from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and (iii) Bank’s certificates of deposit issued maturing no more than 2 years after issue;

  
 (c) Investments approved by the Borrower’s Board of
Directors or otherwise pursuant to a Board-approved investment policy; 
  
 (d) Investments in or to Borrower or any of its Subsidiaries; 
  
 (e) Investments consisting of deposit and investment accounts in the name of Borrower or any Subsidiary so long as Bank has a first priority, perfected security interest in such accounts; 
  
 (f) Investments consisting of extensions of credit to Borrower’s or its
Subsidiaries’ customers in the nature of accounts receivable, prepaid royalties or notes receivable arising from the sale or lease of goods, provision of services or licensing activities of Borrower; 
  
 “Permitted Liens” are: 
  
 (a) (i) Liens existing on the Effective Date securing Indebtedness that does
not exceed $500,000 in principal amount and (ii) Liens existing on the Effective Date securing Indebtedness in excess of $500,000 in principal amount and shown on the Disclosure Schedule or (iii) Liens arising under this Agreement or other Loan
Documents; 
  

 14 

 (b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or
being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank’s security interests; 
  
 (c) Liens (including with respect to capital leases) (i) on property (including accessions, additions, parts, replacements,
fixtures, improvements and attachments thereto, and the proceeds thereof) acquired or held by Borrower or its Subsidiaries incurred for financing such property (including accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof), or (ii) existing on property (and accessions, additions, parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof) when acquired, if the Lien is confined to such
property (including accessions, additions, parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof); 
  
 (d) licenses or sublicenses granted in the ordinary course of Borrower’s business and any interest or title of a licensor or under any license or
sublicense, if the licenses and sublicenses permit granting Bank a security interest; 
  
 (e) leases or subleases granted in the ordinary course of Borrower’s business, including in connection with Borrower’s leased premises or leased property; 
  
 (f) Liens in favor of custom and revenue authorities arising as a matter of
law to secure the payment of custom duties in connection with the importation of goods; 
  
 (g) customary Liens granted in favor of a trustee to secure fees and other amounts owing to such trustee under an indenture or other similar agreement; 
  
 (h) Liens on assets acquired in mergers and acquisitions not prohibited by the covenant limiting mergers and acquisitions;

  
 (i) Liens consisting of pledges of cash, cash equivalents or
government securities to secure swap or foreign exchange contracts or letters of credit; 
  
 (j) Liens in favor of other financial institutions arising in connection with Borrower’s deposit or securities accounts held at such institutions; 
  
 (k) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising
in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceeding if adequate reserves with respect thereto are maintained on the books of the
applicable Person; 
  
 (l) pledges or deposits in the ordinary
course of business in connection with workers’ compensation, unemployment insurance and other social security legislation; 
  
 (m) deposits to secure the performance of bids, trade contracts (other than for borrowed money), contracts for the purchase of property, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case, incurred in the ordinary course of business and not representing an obligation for borrowed money; 
  
 (n) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which do not materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person; and 
  

 15 

 (o) other Liens not described above arising in the ordinary course of business and not having or not
reasonably likely to have a material adverse effect on the Borrower and its Subsidiaries taken as a whole. 
  
 “Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company association, trust,
unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency. 
  

“Proceeds” has the meaning described in the Code as in effect from time to time. 
  
 “Prime Rate” is Bank’s most recently announced
“prime rate,” even if it is not Bank’s lowest rate. 
  
 “Quick Assets” is, on any date, the Borrower’s consolidated, unrestricted cash, cash equivalents, accounts receivable and short and long-term marketable securities, determined according to GAAP. 
  
 “Registered Organization” means an organization organized
solely under the law of a single state or the United States and as to which the state or the United States must maintain a public record showing the organization to have been organized. 
  
 “Responsible Officer” is each of the Chief Executive Officer, the President, the Chief Financial
Officer and the Controller of Borrower. 
  
 “Revolving
Maturity Date” is May 31, 2007. 
  
 “Schedule” is any attached schedule of exceptions. 
  
 “Subordinated Debt” is (a) Indebtedness incurred by Borrower subordinated to Borrower’s Indebtedness owed to Bank and which is reflected in a written agreement in a manner and form reasonably
acceptable to Bank and approved by Bank in writing, and (b) to the extent the terms of subordination do not change adversely to Bank, refinancings, refundings, renewals, amendments or extensions of any of the foregoing. 
  
 “Subsidiary” is for any Person, or any other business entity
of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person. 
  
 “Supporting Obligation” means a Letter-of-credit right, secondary obligation or obligation of a secondary
obligor or that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument or investment property. 
  
 “Tangible Net Worth” is, on any date, the consolidated total assets of Borrower and its Subsidiaries minus, (i) all notes,
accounts receivable and other obligations owing to Borrower from its officers or other Affiliates; (ii) all assets which would be classified as intangible assets under GAAP, including, without limitation, goodwill, licenses, Patents, Trademarks,
trade names, Copyrights, capitalized software and organizational costs, licenses and franchises and (iii) Total Liabilities. 
  
 “Total Liabilities” is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower’s
consolidated balance sheet, including all Indebtedness, but excluding all Subordinated Debt. 
  
 “Trademarks” are trademark and servicemark rights, registered or not, applications to register and registrations and like protections, and the entire goodwill of the business of Borrower connected
with the trademarks. 
  
 [Signatures appear on the
following page] 
  

 16 

			
	 BORROWER:

	
	 PORTALPLAYER, INC.

		
	 By:
	 	 /s/ Svend-Olav Carlsen

	 Name:
	 	 Svend-Olav Carlsen

	 Title:
	 	 Vice President and Chief Financial Officer

	
	 BANK:

	
	 SILICON VALLEY BANK

		
	 By:
	 	 /s/ Tom Smith

	 Name:
	 	 Tom Smith

	 Title:
	 	 Senior Relationship Manager

	
	 Effective as of May 31, 2005

  

 17 

 EXHIBIT A 
  

The Collateral consists of all of Borrower’s right, title and interest in and to the following: 
  
 All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the
foregoing, wherever located; 
  
 All inventory, now owned or
hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returns upon any accounts or other Proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above; 
  
 All contract rights and general intangibles now owned or hereafter acquired,
including, without limitation, goodwill, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, computer discs, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payments of insurance and rights to payment of any kind; 
  
 All now existing and hereafter arising accounts, contract rights, royalties, license rights and all other forms of obligations owing to Borrower arising
out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower; 
  
 All Letter-Of-Credit
Rights (whether or not the letter of credit is evidenced by a writing); 
  
 All documents, cash, deposit accounts, securities, securities entitlements, securities accounts, investment property, financial assets, letters of credit, certificates of deposit, instruments and chattel paper now owned or hereafter
acquired and Borrower’s Books relating to the foregoing; 
  
 All Supporting Obligations and all Borrower’s Books relating to the foregoing and any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and Proceeds thereof. 
  
 Notwithstanding the foregoing, the Collateral shall not be deemed to include
any copyrights, copyright applications, copyright registration and like protection in each work of authorship and derivative work thereof, whether published or unpublished, now owned or hereafter acquired; any patents, patent applications and like
protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same, trademarks, servicemarks and applications therefor, whether registered or not, and the goodwill of
the business of Borrower connected with and symbolized by such trademarks, any trade secret rights, including any rights to unpatented inventions, know-how, operating manuals, license rights and agreements and confidential information, now owned or
hereafter acquired; or any claims for damage by way of any past, present and future infringement of any of the foregoing (collectively, the “Intellectual Property”). 
  
 Borrower has further agreed, among other things, not to sell, transfer, assign, mortgage, pledge, lease or grant a security
interest in, or encumber any of its Intellectual Property, except as expressly permitted under Section 7.1(d) of the Loan and Security Agreement between Borrower and Bank dated as of May 31, 2005, as amended from time to time, or enter into any
agreement, document, instrument or other arrangement (except with or in favor of the Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower from selling, transferring, assigning, mortgaging, pledging,
leasing, granting a security interest in, or encumbering any of its Intellectual Property, without Bank’s prior written consent. 

 EXHIBIT B 
  
 LOAN PAYMENT/ADVANCE REQUEST FORM 
 DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.S.T. 

					
	Fax To: (408) 748-9478	 	 	 	Date:                     

  

	 ̈	Loan Payment:
                                        
                     Client Name (Borrower) 

  
 From Account
#                                        
                                        
                     To Account
#                                        

                         (Deposit Account #)
                                        
                                        
         (Loan Account #) 
  
 Principal $                     and/or Interest
$                     
  
 All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects to on the
date of the telephone transfer request for and advance, but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of the date: 
  

							
	 	 	Authorized Signature:	 	______________________________________	 	Phone Number:
                                

  

	 ̈	LOAN ADVANCE: 

  
 Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.

  
 From Account
#                                        
                                        
                     To Account
#                                        

                         (Loan Account
#)                                        
                                        
        (Deposit Account #) 
  
 Amount of Advance $                     
  
 All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects to on the
date of the telephone transfer request for and advance, but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of the date: 
  

							
	 	 	Authorized Signature:	 	______________________________________	 	Phone Number:
                                

  
 OUTGOING WIRE REQUEST 
 Complete only if all or a portion of
funds from the loan advance above are to be wired. 
 Deadline for same day processing is 12:00 p.m., P.S.T.

  
 Beneficiary Name:
                                        
                                       
 Amount of Wire: $                     
  
 Beneficiary Bank:
                                        
                                        
 Account Number:                       
  
 City and State:
                                       
                          
  
 Beneficiary Bank Transit (ABA) #:
                                        
             Beneficiary Bank Code (Swift, Sort, Chip, etc.):              
                 (For International Wire Only)

  
 Intermediary Bank:
                                        
                                      Transit (ABA) #:
                                       
                      
  
 For Further Credit to:
                                       
                                        
                                        
              
  
 Special Instruction:
                                       
                                        
                                        
                  
  
 By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us). 
  

											
	 	 	 Authorized Signature:

	 	 	 	 2nd Signature (If Required):

	 	 	 Print Name/Title:

	 	 	 	 Print Name/Title:

	 	 	 Telephone #

	 	 	 	 Telephone # 

 EXHIBIT C 
 COMPLIANCE CERTIFICATE 
  

			
	 TO:
	  	 SILICON VALLEY BANK

	 	  	 3003 Tasman Drive

	 	  	 Santa Clara, CA 95054

		
	 FROM:
	  	 PORTALPLAYER, INC.

	 	  	 70 W. Plumeria Drive

	 	  	 San Jose, California 95134

  
 The undersigned
authorized officer of PortalPlayer, Inc. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the
period ending                          with all required covenants except as noted below and (ii) all representations and
warranties in the Agreement are true and correct in all material respects on this date. In addition, the undersigned certifies that (i) 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 and (ii) no liens has been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits which
Borrower has not previously notified in writing to Bank. Attached are the required documents supporting the certification. 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. 
  
 Please indicate compliance status by circling Yes/No under “Complies” column. 
  

										
	 Reporting Covenant

	 	 Required

	    	Complies

	Monthly cash holding report	 	Monthly within 30 days	    	Yes	  	No
	Quarterly financial statements (10Q) + CC	 	Within 5 days after filing	    	Yes	  	No
	Annual (Audited) (10K) + CC	 	Within 5 days after filing	    	Yes	  	No
	Business Forecast	 	 Within 30 days prior to
     each fiscal year end
	    	Yes	  	No
				
	 Financial Covenant

	 	 Required

	    	Actual

	    	Complies

	 Maintain on a Quarterly Basis:
	 	 	    	 	 	    	 	  	 
	 Minimum Quick Ratio
	 	2.00:1.00	    	 	            :1.00	    	Yes	  	No
	 Minimum Tangible Net Worth
	 	$75,000,000	    	$	                    	    	Yes	  	No

  
 Borrower only has
deposit accounts located at the following institutions:                         . 

	
	Comments Regarding Exceptions: See Attached.
	
	Sincerely,
	
	PortalPlayer, Inc.
	
	  

	SIGNATURE
	
	  

	TITLE
	
	  

	DATE

  

			
	BANK USE ONLY
	
	 Received by:

	 	 	AUTHORIZED SIGNER                
	 Date:

	
	 Verified:

	 	 	AUTHORIZED SIGNER                
	 Date:

		
	Compliance Status:	 	Yes    No

 Schedule to Loan and Security Agreement 
  
 The exact correct corporate name of Borrower is (attach a copy of the formation documents,
e.g., articles, partnership agreement): PortalPlayer, Inc. 
  
 Borrower’s
State of formation: California/Delaware 
  
 Borrower has operated under only the
following other names (if none, so state): None 
  
 All other addresses at which
the Borrower does business are as follows (attach additional sheets if necessary and include all warehouse addresses): 
  
 Borrower has deposit accounts and/or investment accounts located only at the following institutions: 
  
 List Acct. Numbers: See attached 
  
 Liens existing on the Closing Date and disclosed to and accepted by Bank in writing: No Change 
  
 Investments existing on the Closing Date and disclosed to and accepted by Bank in writing: Capital Advisor’s Group and Silicon Valley
Management 
  
 Subordinated Debt: 
  
 Indebtedness on the Closing Date and disclosed to and consented to by Bank in writing: No
change 
  
 The following is a list of the Borrower’s copyrights (including
copyrights of software) which are registered with the United States Copyright Office. (Please include name of the copyright and registration number and attach a copy of the registration): No change 
  
 The following is a list of all software which the Borrower sells, distributes or licenses to
others, which is not registered with the United States Copyright Office. (Please include versions which are not registered: No change 
  
 The following is a list of all of the Borrower’s patents which are registered with the United States Patent Office. (Please include name of the patent and
registration number and attach a copy of the registration.): Attached 
  
 The
following is a list of all of the Borrower’s patents which are pending with the United States Patent Office. (Please include name of the patent and a copy of the application.): Attached 

 The following is a list of all of the Borrower’s registered trademarks. (Please include name of the trademark and a
copy of the registration.): No change 
  
 Borrower is not subject to litigation
which would have a material adverse effect on the Borrower’s financial condition, except the following (attach additional comments, if needed): No change 
  

Tax ID Number    77-0513807 
  
 Organizational Number, if any:                     

			
	1.	  	 Plot No 249
 Prashasan Nagar
 Road No.72, Jubilee Hills,
 Hyderabad—500 034.

	2.	  	 Plot No 242A
 Prashasan Nagar
 Road No.72, Jubilee Hills,
 Hyderabad—500 034.

	3.	  	 Plot No 243
 Prashasan Nagar
 Road No.72, Jubilee Hills,
 Hyderabad—500 034.

	4.	  	 Plot No 241
 Prashasan Nagar
 Road No.72, Jubilee Hills,
 Hyderabad—500 034.

	5.	  	12131 113th Avenue NE, Kirkland, WA
	6.	  	8720 Red Oak Blvd, Charlotte, NC

 PortalPlayer 
 Summary of Patent Matters 
 January 26, 2005 
  
 Issued U.S. Patent 
  

							
	 Title

	  	 Inventors

	  	 Registration No.

	  	 Issued

	 RESAMPLING
 SYSTEM AND
 METHOD
	  	Ken Chu	  	 09/847,920
  
 6,531,969
	  	 May 2, 2001
  
 March 11, 2003

				
	 EQUALIZER
 EFFECTS ON CD
	  	Sandeep Patil, Nitan Ghate	  	 10/119,568
  
 6,831,881 B2
	  	 April 9, 2002
  
 December 14, 2004

				
	 RANDOM NUMBER
 GENERATION
 METHOD AND
 SYSTEMS
	  	Jason Kim	  	 09/847,982
  
 6,829,628 B2
	  	 May 2, 2001
  
 December 7, 2004Agreement between Eric Brenk and Riddell, Inc.

 Exhibit 10.1 
  
 AGREEMENT 
  
 This Agreement amends the agreement between Riddell, Inc. (the “Company”) and Eric Brenk (“Executive”) captioned “Employment
Agreement” and dated as of May 4, 2004 (the “Employment Agreement”). All capitalized terms used in this Agreement shall have the meaning ascribed to them in the Employment Agreement, unless otherwise expressly provided herein.

  
 For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows: 
  

	1.	Section 1 of the Employment Agreement is amended by extending the Expiration Date from May 4, 2005 to December 31, 2005. 

  

	2.	Section 2(a) of the Employment Agreement is amended by adding the following sentence at the end of this Section: “Notwithstanding anything to the contrary contained in this
Agreement, however, during the period from May 4, 2005 through December 31, 2005 (the “Extension Period”), Executive shall serve as Chief Operating Officer of Riddell Sports Group Inc. (“RSG, Inc.”), a position he has held since
May 4, 2005, and of Riddell Bell Holdings, Inc. (“RB Holdings”), a position he has held since February of 2005, and in those positions the Executive shall have such reporting relationships during the Extension Period as the Company shall
designate from time to time.” 

  

	3.	Section 3 of the Employment Agreement is amended by adding the following sentence to the end of the current provision: “From October 1 through December 1, 2005, Executive shall
be permitted to work a reasonable number of days from his residence in San Diego, California; provided, however, that the resulting absence from Company facilities does not unreasonably interfere with Executive’s fulfillment of his
employment duties.” 

  

	4.	Section 5(a) of the Employment Agreement is amended to read as follows: 

  
 (a) Bonus. 
  

	 	(i)	If Executive continues in the employ of the Company through May 4, 2005, then Executive shall receive a cash incentive payment of $250,000, payable on or before May 31, 2005.

  

	 	(ii)	 If Executive is still employed on the Expiration Date, then, in addition to the case incentive payment described in clause (i) directly above, Executive shall
receive a bonus with a target equal to the product of $250,000 multiplied by a fraction, the numerator of which is the number of days during the period from May 5, 2005 through December 31, 2005 and the denominator of which is 365, but with the
actual amount of such bonus being determined by the Company based on the following formula: Fifty percent (50%) shall be based on the performance of RSG, Inc. against its target EBITDA and fifty percent (50%), on the achievement of specific goals
and objectives established by RSG, Inc. 

  

 1 

	 	 
Those specific goals and objectives will be evaluated by comparing the actual savings achieved in 2005 against the projection for total forecasted savings to
be achieved in 2005 as outlined in the BRG Operations Team Update presented to the Board of Directors on February 17, 2005 and summarized as follows: 

  

				
	 Sourcing:
	  	$	886,000
	 Logistics:
	  	$	820,000
	 Facilities:
	  	$	1,144,000
	 	  	
	

	 Total:
	  	$	2,850,000

  

	5.	Section 5(b) is hereby amended by substituting “May 4, 2005” for “the Expiration Date” at the end of the provision and by adding the following sentences
thereafter: “The Company shall give Executive notice, on or before May 31, 2005, of the number of the Class B Units granted to him hereunder which were vested, and those which remained unvested, as of May 4, 2005.”

  

	6.	Section 6(b) of the Employment Agreement is hereby amended by adding the following between the first and second sentences of the original provision: “Notwithstanding anything
to the contrary contained in the immediately preceding sentence or the policies or practices of the Company, as in effect from time to time, Executive shall be entitled to carry forward one week (five business days) of vacation from May 4, 2005 and
to earn an additional three weeks (fifteen business days) of vacation during the period from May 5, 2005 through the Expiration Date.” 

  

	7.	Section 9(b) of the Employment Agreement is hereby amended by deleting the word ‘and’ between clause (D) and clause (E) thereof and by adding the following to the end of
the provision: “and (F), in the event that Executive’s employment ends on the Expiration Date as a result of the expiration of the term hereof, salary continuation at Executive’s final base rate of pay for the period of six months
following the Expiration Date, payable at the Company’s regular paydays for its executives, beginning with the first regular payday following the effective date of the release of claims set forth in Exhibit C hereof, but with the first
payment retroactive to January 1, 2006. 

  

	8.	Except as expressly modified herein, the Employment Agreement, and all of its terms and provisions, shall remain unchanged and in full force and effect. This Agreement may be
executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. 

  

[Signature page immediately follows] 
  

 2 

 Intending to be legally bound, the parties have signed this Agreement, to take effect on the date on which it is signed
by the second of the parties. 
  

			
	THE EXECUTIVE:
		
	Signature: 	 	 /s/ Eric Brenk

	 	 	 Eric Brenk

			
		
	 Date:
	 	 5/31/05

  

			
	 THE COMPANY:
 RIDDELL,
INC.

		
	 By:
	 	 /s/ Mark Genender

		
	 Title:
	 	 Vice President

		
	 Date:
	 	 6/1/05

  

 3

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