Document:

exv10w50

 

Exhibit 10.50

EXECUTION COPY

AMENDMENT NO. 11 dated as of April 10, 2008 to the Amended and
Restated Credit, Security, Guaranty and Pledge Agreement dated as
of December 15, 2003 among Lions Gate Entertainment Corp. and
Lions Gate Entertainment Inc. (together, the
“Borrowers”), the Guarantors named therein, the Lenders
referred to therein, JPMorgan Chase Bank, National Association
(formerly known as JPMorgan Chase Bank), as Administrative Agent
and as Issuing Bank for the Lenders (the “Administrative
Agent”), JPMorgan Chase Bank, National Association Toronto
Branch (formerly known as JPMorgan Chase Bank, Toronto Branch) as
Canadian Agent, Bank of America, N.A. (as successor by merger to
Fleet National Bank), as Co-Syndication Agent and BNP Paribas, as
Co-Syndication Agent (as the same is hereby amended and may be
amended, supplemented or otherwise modified, the “Credit
Agreement”).

INTRODUCTORY STATEMENT

     The Lenders have made available to the Borrowers a credit facility pursuant to the terms of
the Credit Agreement.

     Pursuant to Amendment Number 10 to the Credit Agreement dated as of August 8, 2007
(“Amendment No. 10”), the Credit Agreement was amended to, among other things, permit PA
Lender (as defined below) to make loans of up to $60,000,000 to Lions Gate Pennsylvania, Inc., a
Pennsylvania corporation (“LGPA”) substantially on the terms set forth in Schedule 1.7
thereof to fund the production of motion pictures and televisions shows in the Pennsylvania
Regional Center subject to the requirements that (i) the PA Lender has entered into an
intercreditor agreement with the Administrative Agent reasonably satisfactory to the Administrative
Agent in all respects and (ii) a cash collateral account, holding an amount equal to the principal
amount of the outstanding loans made by the PA Lender, is maintained with the Administrative Agent.

     In order to (i) implement Amendment No. 10, (ii) provide guarantees and a security interest in
the Film Library (as defined below) to the PA Lender for the obligations under the PA Credit
Agreement and (iii) permit an increase in the amount of the loans by the PA Lender to $66,000,000
and approve certain other changes to the terms thereof, the parties hereto have agreed to amend the
Credit Agreement, all on the terms and subject to the conditions herein set forth.

 

 

     Therefore, the parties hereto hereby agree as follows:

     Section 1. Defined Terms. Capitalized terms used herein and not otherwise defined
herein shall have the meaning given them in the Credit Agreement.

     Section 2. Amendments to the Credit Agreement. Subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Credit Agreement is hereby amended as of
the Effective Date (as hereinafter defined) as follows:

     (A) Article 1 of the Credit Agreement is hereby amended to insert the following definitions in
their appropriate alphabetical sequence:

‘Film
Library’ shall mean with respect to each Credit Party, that portion
of the Collateral representing all of such Credit Party’s right, title and interest
in and to all items of Product including the distribution rights for each item of
Product, commencing on the date that is eighteen (18) months after the date that any
such item of Product was first commercially distributed, exhibited or released, and
any proceeds thereof.

‘Group Lender’ and ‘Group Lenders’ shall mean, at any time for which
it is to be determined, the Sterling Lender and/or the U.S. Dollar Lenders, as
applicable.

‘LGPA’ shall mean Lions Gate Pennsylvania, Inc., a Pennsylvania corporation.

‘PA Borrower’ shall mean, jointly and severally, LGPA together with its
Subsidiaries party to the PA Credit Agreement from time to time.

‘PA Credit Agreement’ shall mean that certain Loan Agreement entered into on
April ___, 2008, by and between PA Lender and PA Borrowers.

‘PA Event of Default’ shall mean an Event of Default, as defined in the PA
Credit Agreement.

‘PA Lender’ shall mean Pennsylvania Regional Center, LP I and its permitted
successors and assigns, as lender to PA Borrowers pursuant to the terms of the PA
Credit Agreement.

‘PA Loan’ shall mean the loans made under, and in accordance with, the PA
Credit Agreement.

‘PA Obligations’ shall mean all “Obligations” owing by the PA Borrowers to
PA Lender as defined in the PA Credit Agreement.”

     (B) Article 1 is hereby further amended by replacing the definitions of “Borrower,” “Event of
Default,” “Lender,” “Lenders,” “Guarantors” and “Obligations,” contained therein in their entirety
with the following, respectively:

‘Borrower’ shall mean LGEC and LGEI, except that with respect to the UK
Loans, Borrower shall mean the UK Borrower; provided, however, that
for the

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purposes of Articles 8, 9 and 12 hereof, the term “Borrower” shall also include the
PA Borrowers in respect of the PA Obligations.

‘Event of Default’ shall have the meaning given to such term in Article 7
hereof and for the purposes of Articles 8, 9, 10, 11 and 12, hereof, the term “Event
of Default” shall also include a PA Event of Default.

‘Guarantors’ shall mean (i) LGEC with respect to (a) the Obligations of LGEI
and (b) the PA Obligations, (ii) LGEI with respect to (a) the Obligations of LGEC
and (b) the PA Obligations, (iii) all the other entities listed on Schedule 3.7(a)
and Schedule 1.3 hereto and any other direct or indirect Subsidiary of a Credit
Party acquired or created after the date hereof (other than, with respect to the
guaranty of PA Obligations, any PA Borrower) which Subsidiary becomes a signatory to
this Credit Agreement as a Guarantor as required by Section 5.17 with respect to (1)
the obligations of all of the Borrowers under this Credit Agreement, the Notes, any
other Fundamental Document and the Fee Letter and (2) the PA Obligations and (iv)
Redbus Pictures and Redbus Home Entertainment Limited and any other Subsidiaries of
Redbus acquired or created after the date hereof, which Subsidiary becomes a
signatory to this Credit Agreement as a Guarantor as required by Section 5.17 with
respect to the obligations of the UK Borrower; provided, however,
that for the sake of clarification, no Unrestricted Subsidiary or Inactive
Subsidiary shall be a Guarantor hereunder; provided, further, that
neither Redbus nor any of its Subsidiaries shall be considered Guarantor of the
Obligations of LGEI, LGEC or any PA Borrower hereunder.

‘Lender’ and ‘Lenders’ shall mean the Sterling Lender and/or the
U.S. Dollar Lenders and/or the PA Lender, as applicable.

‘Obligations’ shall mean (a) the obligation of the Borrowers to make due and
punctual payment of (i) principal of and interest on the Loans, the face amount of
the Commitment Fees, any reimbursement obligations in respect of Letters of Credit,
monetary obligations of any Credit Party pursuant to interparty agreements delivered
in connection with Special Purpose Producer Agreements, costs and attorneys’ fees
and all other monetary obligations of the Borrowers to the Administrative Agent, the
Issuing Bank or any Group Lender under this Credit Agreement, the Notes, any other
Fundamental Document or the Fee Letter, (ii) all amounts payable by the Borrowers to
any Group Lender under any Currency Agreement or Interest Rate Protection Agreement,
provided that the Administrative Agent shall have received written notice thereof
within ten (10) Business Days after execution of such Currency Agreement or Interest
Rate Protection Agreement and (iii) amounts payable to JPMorgan Chase Bank or any of
its Affiliates in connection with any bank account maintained by the Borrowers or
any other Credit Party at JPMorgan Chase Bank or any such Affiliate or any other
banking services provided to the Borrowers or any other Credit Party by JPMorgan
Chase Bank or any such Affiliate and (b) for the purposes of Articles 8, 9 and 12, hereof and Annex I hereto, the term “Obligations” shall also include the PA
Obligations.”

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     (C) Article I of the Credit Agreement is hereby amended by replacing each use, throughout, of:
(i) “the Lenders” with “the Group Lenders”, (ii) “Lender” with “Group Lender” (including, without
limitation, in the definition of “Required Lenders”) and (iii) “all Lenders” with “all Group
Lenders”, except that uses of “the Lenders”, “Lender” and “all Lenders” in the following
definitions shall not be replaced:

(1) “Administrative Agent”;

(2) “Initial Date”, item (iii); and

(3) “Material Adverse Effect”.

     (D) The definition of “Pennsylvania Regional Financing Arrangement” appearing in Article 1 of
the Credit Agreement is hereby amended by deleting the words “on Schedule 1.7 annexed hereto” and
inserting in the place the words “set forth in the PA Credit Agreement”.

     (E) The definition of “Percentage” appearing in Article 1 of the Credit Agreement is hereby
amended by adding the following proviso at the end of the existing text:

          ”; provided however, that solely for purposes of Section 12.6 hereof (including determination
of Pro Rata Share for use in connection with Section 12.6), Percentage shall be determined as if
the PA Lender holds a U.S. Dollar Credit Commitment equal to its commitment under the PA Credit
Agreement and the Total U.S. Dollar Revolving Credit Commitment were increased by such amount.”

     (F) Articles 2 through 7 and Articles 10, 11 and 13 (excluding Sections 6.2(a), 6.3(iii),
13.1, 13.2, 13.5, 13.8, 13.9, 13.11A and 13.13) of the Credit Agreement are hereby amended by
replacing each use, throughout, of: (i) “the Lenders” with “the Group Lenders”, (ii) “Lender” with
“Group Lender” and (iii) “all Lenders” with “all Group Lenders”.

     (G) Section 6.1(r) of the Credit Agreement is hereby amended by deleting the figure
“$60,000,000” and replacing it with the figure “$66,000,000”.

     (H) Section 8.7 of the Credit Agreement is hereby amended by replacing the proviso at the end
thereof with the following proviso:

          “provided, however, that, the Administrative Agent may in its discretion and
with the consent of the Required Lenders (and PA Lender, if the funds constitute proceeds of the
Film Library), apply funds comprising the Collateral to pay the cost (i) of completing any item of
Product owned in whole or in part by any Credit Party in any stage of production and (ii) of making
delivery to the distributors of such item of Product. Any amounts remaining after such
indefeasible payment in full shall be remitted to the appropriate Credit Party or as a court of
competent jurisdiction may otherwise direct.”

     (F) Article 11 of the Credit Agreement is hereby amended to insert a new Section 11.5 at the
end of the existing text to read as follows:

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          “SECTION 11.5 LGPA Financing. In order to induce the Group Lenders to permit the
making of the PA Loan, the Credit Parties agree that prior to or simultaneously with each advance
of the PA Loan under the PA Credit Agreement, the Borrowers shall deposit or cause to be deposited
in the U. S. Cash Collateral Account an amount in cash or Cash Equivalents equal to 105% of the
principal amount of such advance. If the principal of any PA Loan under the PA Credit Agreement is
repaid, in whole or in part, the Administrative Agent will if requested by the Borrowers at a time
when no Default or Event of Default shall have occurred and be continuing, release the portion of
such deposit in excess of 105% of the principal amount of the PA Loan then outstanding. The PA
Lender acknowledges that it shall have no interest whatsover in any collateral provided pursuant to
this Section 11.5 or any proceeds thereof, and that such collateral is being provided solely for
the benefit of the Group Lenders, the Administrative Agent and the Issuing Bank.”

     (G) Section 12.5(a) of the Credit Agreement is hereby amended by replacing the second sentence
thereof with the following:

          “The Administrative Agent, the Issuing Bank and their respective directors, officers, agents,
and employees shall in no event be liable to the Lenders or to any of them for any action taken or
omitted to be taken by it pursuant to: (i) instructions received by it from the Required Lenders
(and PA Lender, if such instructions relate to the Film Library), (ii) Section 12.15 hereof, or
(iii) in reliance upon the advice of counsel selected by it with reasonable care.”

     (H) The Credit Agreement is hereby amended by inserting Section 12.15 immediately after
Section 12.14, as follows:

          “SECTION 12.15 Annex I to Amendment Number 11 to the Credit Agreement. The relative
rights of Group Lenders, PA Lender and Administrative Agent with respect to the Collateral are
governed by the provisions of Annex I hereto, and each of the Lenders, the Credit Parties and the
Administrative Agent hereby agrees to be bound by such provisions and each of the Lenders and
Credit Parties authorizes the Administrative Agent to take any action necessary to carry out the
purpose of such provisions.”

     (I) The Credit Agreement is hereby amended by inserting a new Section 13.11A immediately after
Section 13.11, to read as follows:

          “SECTION 13.11A Certain Matters Regarding PA Lender and Amendments. No modification,
amendment or waiver of any provision of Amendment No. 11, dated as of April 10, 2008 to the Credit
Agreement (“Amendment No. 11”) or Annex I thereto or any provisions of the Credit Agreement amended
by such Amendment No. 11, and no consent to any departure by any other party therefrom, shall in
any event be effective unless the same shall be in writing and signed by the PA Lender and then
such waiver or consent shall be effective only in the specific instance and for the purpose for
which given. No provision of Amendment No. 11, Annex I thereto or any provision of the Credit
Agreement amended by such Amendment No. 11 shall be terminated without the written consent of the
PA Lender as long as the PA Obligations are outstanding. The PA Lender hereby consents to any
modification, waiver, consent or amendment which is hereafter approved by the requisite Group
Lenders which may (i) release a substantial portion of the Collateral which does not include the
Film Library, (ii) extend the

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Maturity Date, (iii) amend the definition of “Required Lenders,” (iv) amend the definition of
“Collateral” (and defined terms used in the definition of Collateral) other than the Film Library,
(v) amend or modify Section 2.1(c), 2.2, 2.13(d), 2.6(a)(i), 2.6(i) or Section 13.11 or (vi)
increase the advance rates of any components or add any new components to the Borrowing Base.

     (J) The Credit Agreement is hereby amended to add Annex I thereto in the form thereof attached
to this Amendment No. 11.

     Section 3. Conditions to Effectiveness. The effectiveness of this Amendment is subject
to the satisfaction of all of the following conditions precedent (the date on which all such
conditions have been satisfied being herein called the “ Effective Date”):

     (A) the receipt by the Administrative Agent of counterparts of this Amendment which, when
taken together, bear the signatures of the Borrowers, each Guarantor, the Administrative Agent, the
PA Lender and the Required Lenders;

     (B) the payment of all fees and expenses (including, without limitation, fees and
disbursements of counsel and consultants retained by the Administrative Agent) due and payable by
any Credit Party to the Administrative Agent and/or the Lenders; and

     (C) all legal matters incident to this Amendment shall be satisfactory to Morgan, Lewis &
Bockius LLP, counsel for the Administrative Agent.

     Section 4. Representations and Warranties. Each Credit Party represents and warrants
that:

     (A) after giving effect to this Amendment, the representations and warranties contained in the
Credit Agreement are true and correct in all material respects on and as of the date hereof as if
such representations and warranties had been made on and as of the date hereof (except to the
extent that any such representations and warranties specifically relate to an earlier date);

     (B) after giving effect to this Amendment, no Event of Default or Default will have occurred
and be continuing on and as of the date hereof.

     Section 5. Further Assurances. At any time and from time to time, upon the
Administrative Agent’s request and at the sole expense of the Credit Parties, each Credit Party
will promptly and duly execute and deliver any and all further instruments and documents and take
such further action as the Administrative Agent reasonably deems necessary to effect the purposes
of this Amendment.

     Section 6. Fundamental Documents. This Amendment (including Annex I hereto) is
designated a Fundamental Document by the Administrative Agent.

     Section 7. Full Force and Effect. Except as expressly amended hereby, the Credit
Agreement and the other Fundamental Documents shall continue in full force and effect in accordance
with the provisions thereof on the date hereof. As used in the Credit Agreement, the terms
“Agreement”, “this Agreement”, “herein”, “hereafter”, “hereto”, “hereof”, and words of

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similar import, shall, unless the context otherwise requires, mean the Credit Agreement as
amended by this Amendment.

     Section 8. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     Section 9. Counterparts. This Amendment may be executed by facsimile or by electronic
mail of a pdf file, and in two or more counterparts, each of which shall constitute an original,
but all of which when taken together shall constitute but one instrument.

     Section 10. Expenses. The Borrowers agree to pay all out-of-pocket expenses incurred
by the Administrative Agent in connection with the preparation, execution and delivery of this
Amendment, including, but not limited to, the reasonable fees and disbursements of counsel for the
Administrative Agent.

     Section 11. Headings. The headings of this Amendment are for the purposes of reference
only and shall not affect the construction of or be taken into consideration in interpreting this
Amendment.

     Section 12. Ratification By Borrowers and Guarantors. Each of the Borrowers and
Guarantors hereby acknowledges, confirms and agrees that (i) its guarantee(s) contained within
Article 9 of the Credit Agreement are continuing guarantee(s) of the “Obligations”, including,
without limitation, the PA Obligations, (ii) the security interests granted by it pursuant to
Article 8 of the Credit Agreement secure its “Obligations” owing to the Lenders, including, without
limitation, the PA Obligations and (iii) the security interests granted by it pursuant to Articles
10 and 11 of the Credit Agreement secure its “Obligations” owing to the Group Lenders.

     Section 13. PA Lender Acknowledgement and Agreement. The PA Lender hereby
acknowledges that by executing this Amendment No. 11 it has become a party to the Credit Agreement
solely for the purpose of obtaining the benefit of the guarantees and security interests described
in clauses (i) and (ii) of Section 12 above with respect to the PA Obligations and for no other
purpose and agrees that for the purposes of the Credit Agreement, including, without limitation,
Annex I, it will be a Lender and will comply with all obligations of the Lenders set out therein,
including, without limitation, the obligations of the Lenders set forth in Articles 8, 9, and 12
and Sections 13.1, 13.2, 13.5, 13.8, 13.9 13.11A and 13.13 thereof.

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     IN WITNESS WHEREOF, the parties hereby have caused this Amendment to be duly executed as of
the date first written above:

	 	 	 	 	 
	 	BORROWERS (in their capacities both as 

Borrowers and as Guarantors):

LIONS GATE ENTERTAINMENT CORP.
 	 
	 	By  	/s/
 	 
	 	 	Name: 	 
	 	 	Title: General Counsel & EVP 	 
	 
	 	LIONS GATE ENTERTAINMENT INC.

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	General Counsel & EVP 	 
	 

	 	 	 	 	 	 	 
	 

	 	Executed as a Deed by
	 	 	)	 
	 

	 	LION GATE UK LIMITED
	 	 	)	 
	 

	 	by
	 	 	)	 
	 
	 	 	 	 	 	 
	 

	 	/s/	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	(Director) and	 	 	 	 
	 

	 	/s/	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	(Director/Secretary)	 	 	 	 

GUARANTORS:

3WISE GUYS PRODUCTIONS INC.

3F SERVICES, INC.

ALL ABOUT US PRODUCTIONS, INC.

AM PSYCHO PRODUCTIONS, INC.

ARIMA INC.

ARTISAN ENTERTAINMENT INC.

ARTISAN FILMED PRODUCTIONS, INC.

ARTISAN HOME ENTERTAINMENT INC.

ARTISAN MUSIC INC.

ARTISAN PICTURES INC.

ARTISAN RELEASING INC.

ARTISAN TELEVISION INC.

ATTRACTION PRODUCTIONS LLC

BD OPTICAL MEDIA, INC.

BL DISTRIBUTION CORP.

BLUE PRODUCTIONS INC.

BURROWERS PRODUCTIONS, INC.

CAVE PRODUCTIONS, INC.

CINEPIX ANIMATION INC./ANIMATION

          CINEPIX INC.

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CINEPIX FILMS INC./FILMS CINEPIX INC.

CONFIDENCE PRODUCTIONS, INC.

CUT PRODUCTIONS INC.

DEAD ZONE PRODUCTION CORP.

DEBMAR/MERCURY, LLC

DEBMAR STUDIOS INC.

DEVILS REJECTS, INC.

DJM SERVICES, INC.

DRESDEN FILES PRODUCTIONS CORP.

DRESDEN FILES PRODUCTIONS I CORP.

EMPLOYEE PRODUCTIONS, INC.

FHCL, LLC

FILM HOLDINGS CO.

FINAL CUT PRODUCTIONS CORP.

FIVE DAYS PRODUCTIONS CORP.

FRAILTY PRODUCTIONS, INC.

FUSION PRODUCTIONS, INC.

GC FILMS, INC.

HIGH CONCEPT PRODUCTIONS INC.

HYPERCUBE PRODUCTIONS CORP.

KILL PIT PRODUCTIONS INC.

KING OF THE WORLD PRODUCTIONS LLC

INVISIBLE CASTING INC.

LANDSCAPE ENTERTAINMENT CORP.

LC PRODUCTIONS CORP.

LG PICTURES INC.

LIONS GATE FILMS DEVELOPMENT CORP.

LIONS GATE FILMS INC.

LIONS GATE FILMS PRODUCTIONS

          CORP./PRODUCTIONS FILMS LIONS

          GATE S.A.R.F.

LIONS GATE MUSIC CORP.

LIONS GATE MUSIC PUBLISHING LLC

LIONS GATE RECORDS, INC.

LIONS GATE SPIRIT HOLDINGS, LLC

LIONS GATE STUDIO MANAGEMENT LTD.

LIONS GATE TELEVISION DEVELOPMENT

          LLC

LIONS GATE TELEVISION INC.

LG HORROR CHANNEL HOLDINGS LLC

LOVESPRING PRODUCTIONS, INC.

LUCKY 7 PRODUCTIONS CORP.

MOTEL MAN PRODUCTIONS INC.

MOTHER PRODUCTIONS CORP.

NGC FILMS, INC.

PALM SPRINGS PRODUCTIONS INC.

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PLANETARY PRODUCTIONS, LLC

POST PRODUCTION, INC.

PRODUCTION MANAGEMENT INC.

PROFILER PRODUCTIONS CORP.

PSYCHO PRODUCTIONS SERVICES CORP.

PUNISHER PRODUCTIONS, INC.

SCARLETT, LLC

SCREENING ROOM, INC.

SILENT DEVELOPMENT CORP.

TALK PRODUCTIONS CORP.

TOUCH PRODUCTIONS CORP.

TERRESTRIAL PRODUCTIONS CORP.

U.R.O.K. PRODUCTIONS INC.

VESTRON INC.

WEEDS PRODUCTIONS INC.

WILDFIRE PRODUCTIONS INC.

WILDFIRE 2 PRODUCTIONS INC.

WILDFIRE 3 PRODUCTIONS INC.

WILDFIRE 4 PRODUCTIONS INC.

WRITERS ON THE WAVE, INC.

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	General Counsel 	 
	 
	 	BLAIR WITCH FILM PARTNERS LTD.

By: Artisan Filmed Productions Inc.

Its: General Partner

 	 
	 	By:  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	General Counsel 	 
	 

	 	 	 	 	 	 	 
	 

	 	Executed as a Deed by
	 	 	)	 
	 

	 	LIONS GATE PICTURES UK LIMITED
	 	 	)	 
	 

	 	by
	 	 	)	 

	 	 	 	 	 
	 	 	 
	 	
/s/
 	 
	 	(Director) and 	 
	 	 	 
	 
	 	 	 
	 	                       /s/
 	 
	 	(Director/Secretary) 	 
	 	 	 
	 

10

 

	 	 	 	 	 	 	 	 	 
	 
	 	Executed as a Deed by	 	 	)	 
	 
	 	LIONS GATE HOME	 	 	)	 
	 
	 	ENTERTAINMENT UK LIMITED	 	 	)	 
	 
	 	by	 	 	)	 

	 	 	 	 	 
	 	 	 
	 	                       /s/
 	 
	 	(Director) and 	 
	 	 	 
	 
	 	 	 
	 	                       /s/
 	 
	 	(Director/Secretary) 	 
	 	 	 
	 

	 	 	 	 	 
	 	PA BORROWERS (in their capacities both as PA

Borrowers and as Guarantors):

LIONS GATE PENNSYLVANIA, INC.

 	 
	 	By  	                                              /s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	VERDICT PRODUCTIONS, INC.

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CUPID PRODUCTIONS, INC.

 	 
	 	By  	                                              /s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

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	 	LENDERS:

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, (formerly known as JPMorgan Chase Bank),
individually and as Administrative Agent
 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	BANK LEUMI USA

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	BNP PARIBAS

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	 	 
	 	By  	                                              /s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 

12

 

	 	 	 	 	 
	 	CITY NATIONAL BANK

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	BANK OF AMERICA, N.A. (as successor by merger to

Fleet National Bank)

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	ISRAEL DISCOUNT BANK OF NEW YORK

 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	MANUFACTURERS BANK

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 

13

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	SOCIETE GENERALE

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	THE LEWIS HORWITZ ORGANIZATION, a division of

Imperial Capital Bank

 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	UNION BANK OF CALIFORNIA, N.A.

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 

14

 

	 	 	 	 	 
	 	WESTLB AG (formerly Westdeutsche Landesbank

Girozentrale), NEW YORK BRANCH

 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	THE ROYAL BANK OF SCOTLAND PLC

 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	GRAYSON & CO.

 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 
	 	PENNSYLVANIA REGIONAL CENTER, LP I

 	 
	 	By  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:
Address:
Attention:
Facsimile:	 	 
	 

15exv10w1

 

Exhibit 10.1

LOAN AND SECURITY AGREEMENT

     This LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of the Effective Date is between
SILICON VALLEY BANK, a California corporation (“Bank”), with its principal place of business at
3003 Tasman Drive, Santa Clara, California 95054 (FAX (408) 654-1099), SOURCE PHOTONICS, INC., a
Delaware corporation, FIBERXON, INC., a Delaware corporation and LUMINENTOIC, INC., a Delaware
corporation, each with its principal place of business at 20550 Nordhoff Street, Chatsworth, CA
91311 (FAX 818-349-9258) (each a “Borrower” and collectively “Borrowers”), and provides the terms
on which Bank shall lend to Borrowers, and Borrowers shall repay Bank. The parties agree as
follows:

     1 ACCOUNTING AND OTHER TERMS

     Accounting terms not defined in this Agreement shall 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. Capitalized terms not otherwise
defined in this Agreement shall have the meanings set forth in Section 13. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings provided by the
Code, to the extent such terms are defined therein.

     2 LOAN AND TERMS OF PAYMENT

     2.1 Promise to Pay. Borrowers hereby unconditionally promise to pay Bank the unpaid
principal amount of all Advances hereunder with all interest, fees and finance charges due thereon
as and when due in accordance with this Agreement.

     2.1.1 Financing of Accounts.

          (a) Availability. Subject to the terms of this Agreement, Borrowers may request that
Bank finance specific Eligible Accounts. Bank may, in its good faith business discretion, finance
such Eligible Accounts by extending credit to Borrowers in an amount equal to the result of the
Advance Rate multiplied by the face amount of the Eligible Account (the “Advance”). Bank may, in
its sole reasonable business discretion and with reasonable advance notice to Borrower, change the
percentage of the Advance Rate for a particular Eligible Account on a case by case basis. When
Bank makes an Advance, the Eligible Account becomes a “Financed Receivable.”

          (b) Maximum Advances. The aggregate face amount of all Financed Receivables
outstanding at any time may not exceed the Facility Amount.

          (c) Borrowing Procedure. Borrowers will deliver an Invoice Transmittal for each
Eligible Account it offers. Bank may rely on information set forth in or provided with the Invoice
Transmittal.

          (d) Credit Quality; Confirmations. Bank may, at its option, conduct a credit check of
the Account Debtor for each Account requested by Borrowers for financing hereunder in order to
approve any such Account Debtor’s credit before agreeing to finance such Account. Bank may also
verify directly with the respective Account Debtors the validity, amount and other matters relating
to the Accounts (including confirmations of Borrowers’ representations in Section 5.3) by means of
mail, telephone or otherwise, either in the name of Borrowers or Bank from time to time in its sole
discretion.

          (e) Accounts Notification/Collection. Bank may notify any Person owing Borrowers
money of Bank’s security interest in the funds and verify and/or collect the amount of the Account
in accordance with the terms of this Agreement.

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          (f) Maturity. This Agreement shall terminate and all Obligations outstanding
hereunder shall be immediately due and payable on the Maturity Date.

          (g) Suspension of Advances. Borrowers’ ability to request that Bank finance Eligible
Accounts hereunder will terminate if, in Bank’s sole reasonable 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 a Borrower from the most recent business plan of such Borrower
presented to and accepted by Bank prior to the execution of this Agreement.

     2.2 Collections, Finance Charges, Remittances and Fees. The Obligations shall be
subject to the following fees and Finance Charges. Unpaid fees and Finance Charges may, in Bank’s
discretion, accrue interest and fees as described in Section 9.2 hereof.

     2.2.1 Collections. Collections will be credited to the Financed Receivable Balance
for such Financed Receivable, but if there is an Event of Default, Bank may apply Collections to
the Obligations in any order it chooses. If Bank receives a payment for both a Financed Receivable
and a non-Financed Receivable, the funds will first be applied to the Financed Receivable and, if
there is no Event of Default then existing, the excess will be remitted to Borrowers, subject to
Section 2.2.7.

     2.2.2 Facility Fee. A fully earned, non-refundable facility fee of Fifty Thousand
Dollars ($50,000) is due upon execution of this Agreement (the “Facility Fee”).

     2.2.3 Finance Charges. In computing Finance Charges on the Obligations under this
Agreement, all Collections received by Bank shall be deemed applied by Bank on account of the
Obligations two (2) Business Days after receipt of the Collections. Borrowers will pay a finance
charge (the “Finance Charge”) on the Financed Receivable Balance which is equal to the Applicable
Rate divided by 360 multiplied by the number of days each such Financed Receivable
is outstanding multiplied by the outstanding Financed Receivable Balance. The Finance
Charge is payable when the Advance made based on such Financed Receivable is payable in accordance
with Section 2.3 hereof. After an Event of Default, the Applicable Rate will increase an
additional five percent (5.0%) per annum effective immediately upon the occurrence of such Event of
Default.

     2.2.4 Administrative Fee. If at the end of any Reconciliation Period, Borrowers’
Quick Ratio is less than 1.25 to 1.00, Borrowers shall pay to Bank an administrative fee equal to
one quarter of one percent (0.25%) of the face amount of each Financed Receivable financed during
the subsequent Reconciliation Period (the “Administrative Fee”). The Administrative Fee is payable
when the Advance made based on such Financed Receivable is payable in accordance with Section 2.3
hereof. After an Event of Default, the Administrative Fee will increase an additional 0.50%
effective immediately upon the occurrence of such Event of Default.

     2.2.5 Accounting. After each Reconciliation Period, Bank will provide an accounting
of the transactions for that Reconciliation Period, including the amount of all Financed
Receivables, all Collections, Adjustments, Finance Charges, Administrative Fee and the Facility
Fee. If Borrowers do not object to the accounting in writing within thirty (30) days it shall be
considered accurate. All Finance Charges and other interest and fees are calculated on the basis
of a 360 day year and actual days elapsed.

     2.2.6 Deductions. Bank may deduct fees, Finance Charges, Advances which become due
pursuant to Section 2.3, and other amounts due pursuant to this Agreement from any Advances made or
Collections received by Bank.

     2.2.7 Lockbox; Account Collection Services.

          (a) As and when directed by Bank from time to time, at Bank’s option and at the sole and
exclusive discretion of Bank (regardless of whether an Event of Default has occurred), Borrowers
shall direct each Account Debtor (and each depository institution where proceeds of Accounts are on
deposit) to remit payments with

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respect to the Accounts to a lockbox account established with Bank
or to wire transfer payments to a cash collateral
account that Bank controls (collectively, the “Lockbox”). It will be considered an immediate
Event of Default if the Lockbox is not set-up and operational on the Effective Date.

          (b) Until such Lockbox is established, the proceeds of the Accounts shall be paid by the
Account Debtors to an address consented to by Bank. Upon receipt by Borrowers of such proceeds,
Borrowers shall immediately transfer and deliver same to Bank, along with a detailed cash receipts
journal. Provided no Event of Default exists or an event that with notice or lapse of time will be
an Event of Default, within two (2) days of receipt of such amounts by Bank, Bank will turn over to
Borrowers the proceeds of the Accounts other than Collections with respect to Financed Receivables
and the amount of Collections in excess of the amounts for which Bank has made an Advance to
Borrowers, less any amounts due to Bank, such as the Finance Charge, the Facility Fee, payments due
to Bank, other fees and expenses, or otherwise; provided, however, Bank may hold such excess amount
with respect to Financed Receivables as a reserve until the end of the applicable Reconciliation
Period if Bank, in its reasonable discretion, determines that other Financed Receivable(s) may no
longer qualify as an Eligible Account at any time prior to the end of the subject Reconciliation
Period. This Section does not impose any affirmative duty on Bank to perform any act other than as
specifically set forth herein. All Accounts and the proceeds thereof are Collateral and if an
Event of Default occurs, Bank may apply the proceeds of such Accounts to the Obligations.

     2.2.8 Bank Expenses. Borrowers shall pay all Bank Expenses (including reasonable
attorneys’ fees and expenses, plus expenses, for documentation and negotiation of this Agreement)
incurred through and after the Effective Date, when due.

     2.2.9 Good Faith Deposit. Borrowers have paid to Bank a deposit of $15,000 (the “Good
Faith Deposit”) to initiate Bank’s due diligence review process. Any portion of the Good Faith
Deposit not utilized to pay Bank Expenses will be applied to the Facility Fee.

     2.3 Repayment of Obligations; Adjustments.

     2.3.1 Repayment. Borrowers will repay each Advance on the earliest of: (a) the date
on which payment is received of the Financed Receivable with respect to which the Advance was made,
(b) the date on which the Financed Receivable is no longer an Eligible Account, (c) the date on
which any Adjustment is asserted to the Financed Receivable (but only to the extent of the
Adjustment if the Financed Receivable remains otherwise an Eligible Account), (d) the date on which
there is a breach of any warranty or representation set forth in Section 5.3, or a breach of any
covenant in this Agreement or (e) the Maturity Date (including any early termination). Each payment
will also include all accrued Finance Charges and Administrative Fees with respect to such Advance
and all other amounts then due and payable hereunder.

     2.3.2 Repayment on Event of Default. When there is an Event of Default, Borrowers
will, if Bank demands (or, upon the occurrence of an Event of Default under Section 8.5,
immediately without notice or demand from Bank) repay all of the Advances. The demand may, at
Bank’s option, include the Advance for each Financed Receivable then outstanding and all accrued
Finance Charges, Administrative Fee, attorneys’ and professional fees, court costs and expenses,
and any other reasonable Obligations.

     2.3.3 Debit of Accounts. Bank may debit any of Borrowers’ deposit accounts for
payments or any amounts Borrowers owe Bank hereunder. Bank shall promptly notify Borrowers when it
debits Borrowers’ accounts. These debits shall not constitute a remedial set-off.

     2.3.4 Material Adjustments. If, at any time during the term of this Agreement, any
Account Debtor asserts a material Adjustment, a Borrower issues a credit memorandum, or any of the
representations and warranties in Section 5.3 or covenants in this Agreement are no longer true in
all material respects, Borrowers will promptly advise Bank.

     2.4 Power of Attorney. Each Borrower irrevocably appoints Bank and its successors and
assigns as attorney-in-fact and authorizes Bank, to: (a) following the occurrence of an Event of
Default, (i) sell, assign,

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transfer, pledge, compromise, or discharge all or any part of the
Financed Receivables; (ii) demand, collect, sue, and
give releases to any Account Debtor for monies due and compromise, prosecute, or defend any
action, claim, case or proceeding about the Financed Receivables, including filing a claim or
voting a claim in any bankruptcy case in Bank’s or a Borrower’s name, as Bank chooses; and (iii)
prepare, file and sign a Borrower’s name on any notice, claim, assignment, demand, draft, or notice
of or satisfaction of lien or mechanics’ lien or similar document; and (b) regardless of whether
there has been an Event of Default, (i) notify all Account Debtors to pay Bank directly; (ii)
receive, open, and dispose of mail addressed to a Borrower; (iii) endorse a Borrower’s name on
checks or other instruments (to the extent necessary to pay amounts owed pursuant to this
Agreement); and (iv) execute on a Borrower’s behalf any instruments, documents, financing
statements to perfect Bank’s interests in the Financed Receivables and Collateral and do all acts
and things necessary or expedient, as determined solely and exclusively by Bank, to protect or
preserve, Bank’s rights and remedies under this Agreement, as directed by Bank.

     3 CONDITIONS OF LOANS

     3.1 Conditions Precedent to Initial Advance. Bank’s agreement to make the initial
Advance is subject to the condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably
deem necessary or appropriate, including, without limitation:

          (a) certificates of the Secretaries of Borrowers with respect to articles, certificate of
formation, operating agreement, bylaws, incumbency and resolutions authorizing the execution and
delivery of this Agreement;

          (b) Perfection Certificates by Borrowers;

          (c) Account Control Agreements/ Investment Account Control Agreements for any domestic
accounts maintained outside Bank;

          (d) evidence satisfactory to Bank that the insurance policies required by Section 6.4 hereof
are in full force and effect, together with appropriate evidence showing lender loss payable and/or
additional insured clauses or endorsements in favor of Bank;

          (e) payment of the fees and Bank Expenses then due and payable;

          (f) the certificate(s) for the Shares of any foreign Subsidiary, together with Assignment(s)
Separate from Certificate, duly executed by in blank;

          (g) Certificates of Foreign Qualification (if applicable);

          (h) Certificates of Good Standing/Legal Existence; and

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

     3.2 Conditions Precedent to all Advances. Bank’s agreement to make each Advance,
including the initial Advance, is subject to the following:

          (a) receipt of the Invoice Transmittal;

          (b) Bank shall have (at its option) conducted the confirmations and verifications as described
in Section 2.1.1 (d); and

          (c) each of the representations and warranties in Section 5 shall be true on the date of the
Invoice Transmittal and on the effective date of each Advance and no Event of Default shall have
occurred and be

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continuing, or result from the Advance. Each Advance is Borrowers’ representation
and warranty on that date that the representations and warranties in Section 5 remain true.

     4 CREATION OF SECURITY INTEREST

     4.1 Grant of Security Interest. Each Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations, a continuing security interest in, and
pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof. Each Borrower represents, warrants, and covenants
that the security interest granted herein shall be a first priority security interest in the
Collateral. If a Borrower shall at any time, acquire a commercial tort claim, such Borrower shall
promptly notify Bank in a writing signed by such Borrower of the general details thereof and grant
to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms
of this Agreement, with such writing to be in form and substance satisfactory to Bank.

     If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the
Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment
in full in cash of the Obligations and at such time as Bank’s obligation to make Advances has
terminated, Bank shall, at Borrowers’ sole cost and expense, release its Liens in the Collateral
and all rights therein shall revert to Borrowers.

     4.2 Authorization to File Financing Statements. Each Borrower hereby authorizes Bank
to file financing statements with all appropriate jurisdictions to perfect or protect Bank’s
interest or rights hereunder, including a notice that any disposition of the Collateral, by either
Borrowers or any other Person, shall be deemed to violate the rights of Bank under the Code. Any
such financing statements may indicate the Collateral as “all assets of the Debtor” or words of
similar effect, or as being of an equal or lesser scope, or with greater detail, all in Bank’s
discretion.

     4.3 Pledge of Collateral. Each Borrower hereby pledges, assigns and grants to Bank a
security interest in all the Shares, together with all proceeds and substitutions thereof, all
cash, stock and other moneys and property paid thereon, all rights to subscribe for securities
declared or granted in connection therewith, and all other cash and noncash proceeds of the
foregoing, as security for the performance of the Obligations. On the Effective Date, if such
Shares are certificated, the certificate or certificates for the Shares of any foreign Subsidiary
will be delivered to Bank, accompanied by an instrument of assignment duly executed in blank by the
appropriate Borrower. To the extent required by the terms and conditions governing the Shares, the
relevant Borrower shall cause the books of each entity whose Shares are part of the Collateral and
any transfer agent to reflect the pledge of the Shares. Upon the occurrence of an Event of Default
hereunder, Bank may effect the transfer of any securities included in the Collateral (including but
not limited to the Shares) into the name of Bank and cause new certificates representing such
securities to be issued in the name of Bank or its transferee. Each Borrower will execute and
deliver such documents, and take or cause to be taken such actions, as Bank may reasonably request
to perfect or continue the perfection of Bank’s security interest in the Shares. Unless an Event
of Default shall have occurred and be continuing, each Borrower shall be entitled to exercise any
voting rights with respect to the relevant Shares and to give consents, waivers and ratifications
in respect thereof, provided that no vote shall be cast or consent, waiver or ratification given or
action taken which would be inconsistent with any of the terms of this Agreement or which would
constitute or create any violation of any of such terms. All such rights to vote and give
consents, waivers and ratifications shall terminate upon the occurrence and continuance of an Event
of Default.

     5 REPRESENTATIONS AND WARRANTIES

     Each Borrower represents and warrants as follows:

     5.1 Due Organization and Authorization. Borrowers and each of their Subsidiaries are
duly existing and in good standing in their respective jurisdictions of formation and are qualified
and licensed to do business and are in good standing in any jurisdiction in which the conduct of
their respective business or ownership of property requires that they be qualified except where the
failure to do so could not reasonably be expected to have a material adverse effect on Borrowers’
businesses. In connection with this Agreement, Borrowers have delivered to Bank completed
certificates each signed by the appropriate Borrower, entitled “Perfection Certificate.” Each
Borrower represents and warrants to Bank that (a) such Borrower’s exact legal name is that
indicated on the

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Perfection Certificate and on the signature page hereof; (b) such Borrower is an
organization of the type and is organized in the jurisdiction set forth in the Perfection
Certificate; (c) the Perfection Certificate accurately sets forth such Borrower’s organizational
identification number or accurately states that such Borrower has none; (d) the
Perfection Certificate accurately sets forth such Borrower’s place of business, or, if more
than one, its chief executive office as well as such Borrower’s mailing address (if different than
its chief executive office); (e) such Borrower (and each of its predecessors) has not, in the past
five (5) years, changed its jurisdiction of formation, organizational structure or type, or any
organizational number assigned by its jurisdiction; and (f) all other information set forth on the
Perfection Certificate pertaining to such Borrower and each of its Subsidiaries is accurate and
complete (it being understood and agreed that such Borrower may from time to time update certain
information in the Perfection Certificate after the Effective Date to the extent permitted by one
or more specific provisions in this Agreement). If a Borrower is not now a Registered Organization
but later becomes one, Borrowers shall promptly notify Bank of such occurrence and provide Bank
with such Borrower’s organizational identification number.

     The execution, delivery and performance by Borrowers of the Loan Documents to which they are a
party have been duly authorized, and do not (i) conflict with any of a Borrower’s organizational
documents, (ii) contravene, conflict with, constitute a default under or violate any material
Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by which a Borrower or any
its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any
action by, filing, registration, or qualification with, or Governmental Approval from, any
Governmental Authority (except such Governmental Approvals which have already been obtained and are
in full force and effect or (v) constitute an event of default under any material agreement by
which a Borrower is bound. No Borrower is 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 have a material adverse
effect on such Borrower’s business.

     5.2 Collateral. Borrowers have good title, have rights in, and the power to transfer
each item of the Collateral upon which they purport to grant a Lien hereunder, free and clear of
any and all Liens except Permitted Liens. No Borrower has deposit accounts other than the deposit
accounts with Bank, the deposit accounts, if any, described in the Perfection Certificate delivered
to Bank in connection herewith, or of which such Borrower has given Bank notice and taken such
actions as are necessary to give Bank a perfected security interest therein. The Accounts are bona
fide, existing obligations of the Account Debtors.

     The Collateral is not in the possession of any third party bailee (such as a warehouse) except
as otherwise provided in the Perfection Certificate. None of the components of the Collateral
shall be maintained at locations other than as provided in the Perfection Certificate or as
permitted pursuant to Section 7.2. In the event that Borrowers, after the date hereof, intend to
store or otherwise deliver any portion of the Collateral to a bailee, then Borrowers will first
receive the written consent of Bank and such bailee must execute and deliver a bailee agreement in
form and substance satisfactory to Bank in its sole discretion.

     5.3 Financed Receivables. Each Borrower represents and warrants for each Financed
Receivable:

          (a) Such Financed Receivable is an Eligible Account;

          (b) Such Borrower is the owner of and has the legal right to sell, transfer, assign and
encumber such Financed Receivable;

          (c) The correct amount is on the Invoice Transmittal and is not disputed;

          (d) Payment is not contingent on any obligation or contract and such Borrower has fulfilled
all its obligations as of the Invoice Transmittal date;

          (e) Such Financed Receivable is based on an actual sale and delivery of goods and/or services
rendered, is due to such Borrower, is not past due or in default, has not been previously sold,
assigned, transferred, or pledged and is free of any liens, security interests and encumbrances
other than Permitted Liens;

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          (f) There are no defenses, offsets, counterclaims or agreements for which the Account Debtor
may claim any deduction or discount other than normal warranty rights in the ordinary course of
business;

          (g) Such Borrower reasonably believes no Account Debtor is insolvent or subject to any
Insolvency Proceedings;

          (h) Such Borrower has not filed or had filed against it Insolvency Proceedings and does not
anticipate any filing;

          (i) Bank has the right to endorse and/ or require such Borrower to endorse all payments
received on Financed Receivables and all proceeds of Collateral; and

          (j) No representation, warranty or other statement of such Borrower in any certificate or
written statement given to Bank contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statement contained in the certificates or statement not
misleading.

     5.4 Litigation. There are no actions or proceedings pending or, to the knowledge of
Borrowers’ Responsible Officers, threatened in writing by or against any Borrower or any Subsidiary
in which an adverse decision could reasonably be expected to cause a Material Adverse Change.

     5.5 No Material Deviation in Financial Statements. All consolidated financial
statements for Borrowers and any Subsidiaries delivered to Bank fairly present in all material
respects Borrowers’ consolidated financial conditions and Borrowers’ consolidated results of
operations. There has not been any material deterioration in any Borrower’s consolidated financial
condition since the date of the most recent financial statements submitted to Bank.

     5.6 Solvency. The fair salable value of each Borrower’s assets (including goodwill
minus disposition costs) exceeds the fair value of its liabilities; no Borrower is left with
unreasonably small capital after the transactions in this Agreement; and each Borrower is able to
pay its debts (including trade debts) as they mature.

     5.7 Regulatory Compliance. No Borrower is an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act of 1940, as amended. No
Borrower is engaged as one of its important activities in extending credit for margin stock (under
Regulations X, T and U of the Federal Reserve Board of Governors). Neither Borrowers nor any of
their Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or a “subsidiary
company” of a “holding company” as each term is defined and used in the Public Utility Holding
Company Act of 2005. Each Borrower has complied in all material respects with the Federal Fair
Labor Standards Act. No Borrower has violated any laws, ordinances or rules, the violation of
which could reasonably be expected to cause a Material Adverse Change. None of Borrowers’ or any
Subsidiary’s properties or assets has been used by a Borrower or any Subsidiary or, to the best of
Borrowers’ knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally. Each Borrower and each of its
Subsidiaries have 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
their respective businesses as currently conducted.

     5.8 Subsidiaries. No Borrower owns any stock, partnership interest or other equity
securities except for Permitted Investments.

     5.9 Tax Returns and Payments; Pension Contributions. Each Borrower and each
Subsidiary have timely filed all required tax returns and reports, and each Borrower and each
Subsidiary have timely paid all foreign, federal, state and local taxes, assessments, deposits and
contributions owed by each Borrower and each Subsidiary. A Borrower may defer payment of any
contested taxes, provided that such Borrower (a) in good faith contests its obligation to pay the
taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies
Bank in writing of the commencement of, and any material development in, the proceedings, (c) posts
bonds or takes any other steps required to prevent the governmental authority levying such
contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted
Lien”. No Borrower is aware of any claims or

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adjustments proposed for any of such Borrower’s prior
tax years which could result in additional taxes becoming due and payable by such Borrower. Each
Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred
compensation plans in accordance with their terms, and no Borrower has withdrawn from
participation in, and has not permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could reasonably be expected to
result in any liability of such Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency.

     5.10 Shares. Borrower has full power and authority to create a first lien on the
Shares and no disability or contractual obligation exists that would prohibit Borrower from
pledging the Shares pursuant to this Agreement. To Borrower’s knowledge, there are no
subscriptions, warrants, rights of first refusal or other restrictions on transfer relative to, or
options exercisable with respect to the Shares. The Shares have been and will be duly authorized
and validly issued, and are fully paid and non-assessable. To Borrower’s knowledge, the Shares are
not the subject of any present or threatened suit, action, arbitration, administrative or other
proceeding, and Borrower knows of no reasonable grounds for the institution of any such
proceedings.

     5.11 Full Disclosure. No written representation, warranty or other statement of any
Borrower in any certificate or written statement given to Bank, as of the date such representation,
warranty, or other statement was made, taken together with all such written certificates and
written statements given to Bank, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained in the certificates or statements
not misleading (it being recognized by Bank that projections and forecasts provided by Borrowers 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 or forecasted results).

     6 AFFIRMATIVE COVENANTS

     Each Borrower shall do all of the following:

     6.1 Government Compliance.

          (a) Maintain its and all its Subsidiaries’ legal existence and good standing in their
respective jurisdictions of formation and maintain qualification in each jurisdiction in which the
failure to so qualify would reasonably be expected to have a material adverse effect on such
Borrower’s business or operations. Each Borrower shall 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 such Borrower’s business.

          (b) Obtain all of the Governmental Approvals necessary for the performance by such Borrower of
its obligations under the Loan Documents to which it is a party and the grant of a security
interest to Bank in all of its property. Each Borrower shall promptly provide copies of any such
obtained Governmental Approvals to Bank.

     6.2 Financial Statements, Reports, Certificates.

          (a) Deliver to Bank: (i) as soon as available, but no later than thirty (30) days after the
last day of each month through September 2008, a company prepared consolidated and consolidating
condensed balance sheet showing current assets, current liabilities, and non-current liabilities
for the purpose of calculating the quick ratio (with a footnote that adjustments to certain assets
and liabilities have not been updated from the prior quarter-end), and summary income statement
reflecting revenues, cost of goods sold, and operating expenses (with a footnote that adjusting
entries have not been completed as of the prior quarter-end; (ii) as soon as available, but no
later than (a) forty five (45) days after the quarters ended March 31, 2008, June 30, 2008 and
September 30, 2008 and (b) thirty (30) days after the last day of each month beginning October
2008, a company prepared consolidated and consolidating financial statements prepared in accordance
with GAAP (including P&L, balance sheet and statement of cash flow) covering each Borrower and each
of its Subsidiary’s operations during the period certified by a Responsible Officer and in a form
acceptable to Bank; (iii) as soon as available, but no later than one hundred

8

 

eighty (180) days
after the last day of each Borrower’s fiscal year, audited consolidated financial statements
prepared under GAAP, consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm reasonably acceptable to Bank;
(iii) in the event that a Borrower’s
stock becomes publicly held, within five (5) days of filing, copies of all statements, reports
and notices made available to a 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 against any Borrower or any Subsidiary
that could result in damages or costs to a Borrower or any Subsidiary of One Hundred Thousand
Dollars ($100,000.00) or more; and (v) budgets, sales projections, operating plans or other
financial information reasonably requested by Bank, including annual financial projections approved
by Borrower’s chief executive officer to be delivered no later than thirty (30) days after the end
of Borrower’s fiscal year (with any interim revisions approved by Borrower’s chief executive
officer to be delivered to Bank within fifteen (15) days of such approval).

          (b) Within (i) forty five (45) days after the quarters ended March 31, 2008, June 30, 2008 and
September 30, 2008 and (ii) thirty (30) days after the last day of each month beginning October
2008, deliver to Bank with the monthly/quarterly financial statements a Compliance Certificate
signed by a Responsible Officer in the form of Exhibit B.

          (c) Allow Bank to audit each Borrower’s Collateral, including, but not limited to, such
Borrower’s Accounts at Borrowers’ expense, upon reasonable notice to such Borrower; provided,
however, prior to the occurrence of an Event of Default, the cost to Borrowers for such audits
shall not exceed Seven Hundred Fifty Dollars ($750) per person, per day, plus any out of pocket
expenses. Each Borrower hereby acknowledges that the first such audit will be conducted within
sixty (60) days after the execution of this Agreement. After the occurrence of an Event of
Default, Bank may audit each Borrower’s Collateral, including, but not limited to, each Borrower’s
Accounts at Borrowers’ expense (without a cap) and at Bank’s sole and exclusive discretion and
without notification and authorization from any Borrower.

          (d) Upon Bank’s reasonable request, provide a written report respecting any Financed
Receivable, if payment of any Financed Receivable does not occur by its due date and include the
reasons for the delay.

          (e) Provide Bank with, as soon as available, but no later than fifteen (15) days after the
last day of each Reconciliation Period, an aged listing of accounts receivable and accounts payable
by invoice date, in form acceptable to Bank.

     6.3 Taxes. Each Borrower shall make, and cause each Subsidiary to make, timely
payment of all federal, state, and local taxes or assessments (other than taxes and assessments
which such 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 such
payments.

     6.4 Insurance. Keep its business and the Collateral insured for risks and in amounts
standard for companies in such Borrower’s industry and location, and as Bank may reasonably
request. Insurance policies shall be in a form, with companies, and in amounts that are
satisfactory to Bank. All property policies shall have a lender’s loss payable endorsement showing
Bank as lender loss payee and waive subrogation against Bank, and all liability policies shall
show, or have endorsements showing, Bank as an additional insured. All policies (or the loss
payable and additional insured endorsements) shall provide that the insurer must give Bank at least
twenty (20) days notice before canceling, amending, or declining to renew its policy. At Bank’s
request, Borrowers shall deliver certified copies of policies and evidence of all premium payments.
If a Borrower fails to obtain insurance as required under this Section 6.4 or to pay any amount or
furnish any required proof of payment to third persons and Bank, Bank may make all or part of such
payment or obtain such insurance policies required in this Section 6.4, and take any action under
the policies Bank deems prudent.

9

 

     6.5 Accounts.

          (a) To permit Bank to monitor each Borrower’s financial performance and condition, each
Borrower, and all such Borrower’s domestic Subsidiaries, shall maintain such Borrower’s and such
Subsidiaries’, primary depository and operating accounts with Bank or with Bank’s Affiliates.

          (b) Each Borrower shall identify to Bank, in writing, any deposit or securities account opened
by such Borrower with any institution other than Bank. In addition, for each such account that a
Borrower at any time opens or maintains, such Borrower shall, at Bank’s request and option,
pursuant to an agreement in form and substance acceptable to Bank, cause the depository bank or
securities intermediary to agree that such account is the collateral of Bank pursuant to the terms
hereunder. The provisions of the previous sentence shall not apply to deposit accounts exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit
of a Borrower’s employees.

     6.6 Inventory; Returns. Keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between a Borrower and its Account Debtors shall
follow such Borrower’s customary practices as they exist at the Effective Date. Each Borrower must
promptly notify Bank of all returns, recoveries, disputes and claims that involve more than One
Hundred Thousand Dollars ($100,000) per occurrence.

     6.7 Intentionally Omitted.

     6.8 Protection of Intellectual Property Rights. Each Borrower shall: (a) protect,
defend and maintain the validity and enforceability of its intellectual property; (b) promptly
advise Bank in writing of material infringements of its intellectual property if determinable; and
(c) not allow any intellectual property material to such Borrower’s business to be abandoned,
forfeited or dedicated to the public without Bank’s written consent.

     6.9 Litigation Cooperation. From the date hereof and continuing through the
termination of this Agreement, make available to Bank, without expense to Bank, each Borrower and
its officers, employees and agents and such Borrower’s books and records, to the extent that Bank
may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding
instituted by or against Bank with respect to any Collateral or relating to such Borrower.

     6.10 Further Assurances. Each Borrower shall 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

     No Borrower shall do any of the following without Bank’s prior written consent.

     7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively a “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its
business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b)
of worn-out or obsolete Equipment; (c) in connection with Permitted Liens and Permitted Investments
and (d) of non-exclusive licenses for the use of the property of a Borrower or its Subsidiaries in
the ordinary course of business.

     7.2 Changes in Business, Ownership, Management or Business Locations. Engage in or
permit any of its Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrowers or reasonably related thereto, or have a material change in its ownership
(other than by the sale of a Borrower’s equity securities in a public offering or to venture
capital investors so long as such Borrower identifies to Bank the venture capital investors prior
to the closing of the investment), or management. No Borrower shall, without at least thirty (30)
days prior written notice to Bank: (a) relocate its chief executive office, or add any new offices
or business locations, including warehouses (unless such new offices or business locations contain
less than Five Thousand Dollars ($5,000.00) in such Borrower’s assets or property), or (b) change
its jurisdiction of organization, or (c)

10

 

change its organizational structure or type, or (d) change
its legal name, or (e) change any organizational number (if any) assigned by its jurisdiction of
organization.

     7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries
to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another Person. A Subsidiary
may merge or consolidate into another Subsidiary or into a Borrower. A Borrower may merge or
consolidate into another Borrower.

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

     7.5 Encumbrance. Create, incur, or allow any Lien on any of its property, or assign
or convey any right to receive income, including the sale of any Accounts, or permit any of its
Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to
the first priority security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank) with any Person which directly or
indirectly prohibits or has the effect of prohibiting a Borrower or any Subsidiary from assigning,
mortgaging, pledging, granting a security interest in or upon, or encumbering any of a Borrower’s
or any Subsidiary’s intellectual property, except as is otherwise permitted in Section 7.1 hereof
and the definition of “Permitted Lien” herein.

     7.6 Distributions; Investments. (a) 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; or (b) pay any dividends or make any distribution or payment or redeem,
retire or purchase any capital stock other than dividends, distributions or other payments to MRV
Communications, Inc. of funds raised by a Borrower in connection with its initial public offering.

     7.7 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of a Borrower (including, but not limited to,
Intercompany receivables), except for transactions that (i) are in the ordinary course of a
Borrower’s business, upon fair and reasonable terms that are no less favorable to such Borrower
than would be obtained in an arm’s length transaction with a non-affiliated Person and (ii) do not
exceed Nine Million Two Hundred Thousand Dollars ($9,200,000) in value in the aggregate.

     7.8 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar agreement to which
such Subordinated Debt is subject, or (b) amend any provision in any document relating to the
Subordinated Debt which would increase the amount thereof or adversely affect the subordination
thereof to Obligations owed to Bank.

     7.9 Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended, 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
Advance for that purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, each 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 a 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 a Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency, all to the extent
applicable to Borrowers.

     8 EVENTS OF DEFAULT

     Any one of the following shall constitute an event of default (an “Event of Default”) under
this Agreement:

     8.1 Payment Default. Borrowers fail to pay any of the Obligations when due;

11

 

     8.2 Covenant Default. Borrowers fail or neglect to perform any obligation in Section
6 or violate any covenant in Section 7 or fail or neglect to perform, keep, or observe any other
material term, provision, condition, covenant or agreement contained in this Agreement, any Loan
Documents and as to any default under such other term, provision, condition, covenant or agreement
that can be cured, have failed to cure the default within ten (10) days after the occurrence
thereof; provided, however, grace and cure periods provided under this section shall not apply to
financial covenants or any other covenants that are required to be satisfied, completed or tested
by a date certain;

     8.3 Material Adverse Change. A Material Adverse Change occurs;

     8.4 Attachment; Levy; Restraint on Business. (a) (i) The service of process seeking
to attach, by trustee or similar process, any funds of a Borrower or of any entity under control of
a Borrower (including a Subsidiary) on deposit with Bank or any Bank Affiliate, or (ii) a notice of
lien, levy, or assessment is filed against any of a Borrower’s assets by any government agency, and
the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence
thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided,
however, no Credit Extensions shall be made during any ten (10) day cure period; and (b) (i) any
material portion of a Borrower’s assets is attached, seized, levied on, or comes into possession of
a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents a Borrower from
conducting any part of its business;

     8.5 Insolvency. (a) A Borrower is unable to pay its debts (including trade debts) as
they become due or otherwise becomes insolvent; (b) a Borrower begins an Insolvency Proceeding; or
(c) an Insolvency Proceeding is begun against a Borrower and not dismissed or stayed within thirty
(30) days (but no Advances shall be made while of any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);

     8.6 Other Agreements. If there is a default in any agreement to which a Borrower is a
party with a third party or parties resulting in a right by such third party or parties, whether or
not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of One Hundred
Thousand Dollars ($100,000) or that could result in a Material Adverse Change;

     8.7 Judgments. One or more judgments, orders, or decrees for the payment of money in
an amount, individually or in the aggregate, of at least One Hundred Thousand Dollars ($100,000)
(not covered by independent third-party insurance as to which liability has been accepted by such
insurance carrier) shall be rendered against a Borrower and shall remain unsatisfied, unvacated, or
unstayed for a period of ten (10) days after the entry thereof (provided that no Advances will be
made prior to the satisfaction, vacation, or stay of such judgment, order, or decree);

     8.8 Misrepresentations. A Borrower or any Person acting for a Borrower makes any
representation, warranty, or other statement now or later in this Agreement, any Loan Document or
in writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and
such representation, warranty, or other statement is incorrect in any material respect when made;

     8.9 Subordinated Debt. A default or breach occurs under any agreement between a
Borrower and any creditor of such Borrower that signed a subordination agreement, intercreditor
agreement, or other similar agreement with Bank, or any creditor that has signed such an agreement
with Bank breaches any terms of the agreement;

     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);

12

 

          (b) Stop advancing money or extending credit for Borrowers’ benefit under this Agreement or
under any other agreement between Borrowers 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 and notify any Person owing a Borrower money of
Bank’s security interest in such funds and verify the amount of such account. Borrowers shall
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;

          (d) Make any payments and do any acts it considers necessary or reasonable to protect its
security interest in the Collateral. Borrowers shall assemble the Collateral if Bank requests 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. Each 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 Borrowers it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of a Borrower;

          (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for
sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or
other right to use, without charge, each 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, each Borrower’s rights under all licenses and all franchise agreements inure to
Bank’s benefit;

          (g) Place a “hold” on any account maintained with Bank and/or 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;

          (h) Demand and receive possession of a full copy of Borrowers’ Books; and

          (i) Exercise all rights and remedies available to Bank under the Loan Documents or at law or
equity, including all remedies provided by the Code (including disposal of the Collateral pursuant
to the terms thereof).

     9.2 Protective Payments. If Borrowers fail to obtain insurance called for by Section
6.4 or fail to pay any premium thereon or fail to pay any other amount which Borrowers are
obligated to pay under this Agreement or by any other Loan Document, Bank may obtain such insurance
or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately due and
payable, bearing interest at the then highest applicable rate, and secured by the Collateral. Bank
will make reasonable effort to provide Borrowers with notice of Bank obtaining such insurance at
the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an
agreement to make similar payments in the future or Bank’s waiver of any Event of Default.

     9.3 Bank’s Liability for Collateral. So long as Bank complies with reasonable banking
practices regarding the safekeeping of Collateral in possession or under the control of Bank, Bank
shall not be liable or responsible 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. Borrowers bear all risk of loss,
damage or destruction of the Collateral.

     9.4 Remedies Cumulative. Bank’s failure, at any time or times, to require strict
performance by Borrowers of any provision of this Agreement or any other Loan Document shall not
waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance
herewith or therewith. No waiver hereunder shall be effective unless signed by Bank and then is
only effective for the specific instance and purpose for which it

13

 

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

     9.5 Demand Waiver. Each 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 a Borrower is liable.

     10 NOTICES.

     All notices, consents, requests, approvals, demands, or other communication by any party to
this Agreement or any other Loan Document must be in writing and shall be deemed to have been
validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business
Days after deposit in the U.S. mail, first class, registered or certified mail return receipt
requested, with proper postage prepaid; (b) upon transmission, when sent by facsimile transmission;
(c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid;
or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party
to be notified and sent to the address or facsimile number provided at the beginning of this
Agreement. Bank or a Borrower may change its address or facsimile number by giving the other party
written notice thereof in accordance with the terms of this Section 10.

     11 CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE

     California law governs the Loan Documents without regard to principles of conflicts of law.
Borrowers and Bank each submit to the exclusive jurisdiction of the State and Federal courts in
Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed
to operate to preclude Bank from bringing suit or taking other legal action in any other
jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce
a judgment or other court order in favor of Bank. Each Borrower expressly submits and consents in
advance to such jurisdiction in any action or suit commenced in any such court, and each Borrower
hereby waives any objection that it may have based upon lack of personal jurisdiction, improper
venue, or forum non conveniens and hereby consents to the granting of such legal or equitable
relief as is deemed appropriate by such court. Each Borrower hereby waives personal service of the
summons, complaints, and other process issued in such action or suit and agrees that service of
such summons, complaints, and other process may be made by registered or certified mail addressed
to such Borrower at the address set forth in Section 10 of this Agreement and that service so made
shall be deemed completed upon the earlier to occur of such Borrower’s actual receipt thereof or
three (3) days after deposit in the U.S. mails, proper postage prepaid.

     TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWERS AND BANK EACH WAIVE THEIR RIGHT
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, 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.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A
TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties
hereto agree that any and all disputes or controversies of any nature between them arising at any
time shall be decided by a reference to a private judge, mutually selected by the parties (or, if
they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court)
appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to
comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the
federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby
submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to
and in accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1,
inclusive. The private judge shall have the power, among others, to grant provisional relief,
including without limitation, entering temporary restraining orders, issuing preliminary and
permanent injunctions and appointing receivers. All such

14

 

proceedings shall be closed to the public
and confidential and all records relating thereto shall be permanently sealed. If during the
course of any dispute, a party desires to seek provisional relief, but a judge has not been
appointed at that point pursuant to the judicial reference procedures, then such party may apply to
the Santa Clara County, California Superior Court for such relief. The proceeding before the
private judge shall be conducted in the same manner as it would be before a court under the rules
of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which
shall be conducted in the same manner as it would be before a court under the rules of discovery
applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all
discovery rules and order applicable to judicial proceedings in the same manner as a trial court
judge. The parties agree that the selected or appointed private judge shall have the power to
decide all issues in the action or proceeding, whether of fact or of law, and shall report a
statement of decision thereon pursuant to the California
Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at
any time to exercise self-help remedies, foreclose against collateral, or obtain provisional
remedies. The private judge shall also determine all issues relating to the applicability,
interpretation, and enforceability of this paragraph.

     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. No Borrower may assign this Agreement or any
rights or obligations 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 any
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, the Loan Documents or
any related agreement.

     12.2 Indemnification. Each Borrower agrees to indemnify, defend, and hold Bank and
its officers, directors, employees, agents, attorneys or any other Person affiliated with or
representing Bank (each, an “Indemnified Person”) harmless against: (a) all obligations, demands,
claims, and liabilities (collectively, “Claims”) 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 such Indemnified Person from, following, or arising from transactions between Bank and
Borrowers (including reasonable attorneys’ fees and expenses), except for Claims and/or losses
directly caused by such Indemnified Person’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 Provisions. Each provision of this Agreement is severable from
every other provision in determining the enforceability of any provision.

     12.5 Correction of Loan Documents. Bank may correct patent errors and fill in any
blanks in this Agreement and the other Loan Documents consistent with the agreement of the parties.

     12.6 Amendments in Writing; Integration. All amendments to this Agreement must be in
writing signed by both Bank and Borrowers. This Agreement and the Loan Documents represent the
entire agreement about this subject matter, and supersede prior negotiations or agreements. All
prior agreements, understandings, representations, warranties, and negotiations between the parties
about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the
Loan Documents.

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

     12.8 Borrower Liability. Either Borrower may, in accordance with the terms of this
Agreement, acting singly, request Advances hereunder. Each Borrower hereby appoints the other as
agent for the other for all purposes hereunder, including with respect to requesting Advances
hereunder. Each Borrower hereunder shall be obligated to repay all Advances made hereunder,
regardless of which Borrower actually receives said Advance, as if each Borrower hereunder directly
received all Advances. Notwithstanding any other provision of this Agreement or

15

 

other
related document, each Borrower irrevocably waives all rights that it may have at law or in equity
(including, without limitation, any law subrogating Borrower to the rights of Bank under this
Agreement) to seek contribution, indemnification or any other form of reimbursement from any other
Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by Borrower with respect to the Obligations in connection with
this Agreement or otherwise and all rights that it might have to benefit from, or to participate
in, any security for the Obligations as a result of any payment made by Borrower with respect to
the Obligations in connection with this Agreement or otherwise. Any agreement providing for
indemnification, reimbursement or any other arrangement prohibited under this Section shall be null
and void. If any payment is made to a Borrower in contravention of this Section, such Borrower
shall hold such payment in trust for Bank and such payment shall be promptly delivered to Bank for
application to the Obligations, whether matured or unmatured.

     Each Borrower waives any suretyship defenses available to it under the Code or any other
applicable law. Each Borrower waives any right to require Bank to: (a) proceed against any
Borrower or any other person; (b) proceed against or exhaust any security; or (c) pursue any other
remedy. Bank may exercise or not exercise any right or remedy it has against any Borrower or any
security it holds (including the right to foreclose by judicial or non-judicial sale) without
affecting any Borrower’s liability.

     12.9 Survival. All covenants, representations and warranties made in this Agreement
continue in full force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations which, by their
terms, are to survive the termination of this Agreement) have been satisfied. The obligation of
Borrowers in Section 12.2 to indemnify Bank shall survive until the statute of limitations with
respect to such claim or cause of action shall have run.

     12.10 Confidentiality. In handling any confidential information, Bank shall exercise
the same degree of care that it exercises for its own proprietary information, but disclosure of
information may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to prospective transferees
or purchasers of any interest in the Credit Extensions (provided, however, Bank shall obtain such
prospective transferee’s or purchaser’s agreement in writing to the terms of this Section 12.10);
(c) as required by law, regulation, subpoena, or other order, upon reasonable notice to the
Borrower; (d) to Bank’s regulators or as otherwise required in connection with Bank’s examination
or audit; (e) as commercially reasonable in the exercise of the Bank’s remedies under the Loan
Documents; and (f) to third-party service providers of Bank, so long as such service providers have
executed a confidentiality agreement with Bank with terms no less restrictive than those contained
in this Section 12.10. Confidential information does not include information that either: (i) 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 (ii) is disclosed to Bank by a third party, if Bank does not
know that the third party is prohibited from disclosing the information,

     Bank may use confidential information for any purpose, including, without limitation, for the
development of client databases, reporting purposes, and market analysis, so long as Bank does not
disclose any Borrower’s identity or the identity of any person associated with a Borrower unless
otherwise expressly permitted by this Agreement. Bank shall, and Bank shall use commercially
reasonable efforts to insure that others made privy to any Borrower’s confidential information
pursuant to this provision shall, abstain from trading in the securities of all of the Borrowers in
reliance on any such confidential information until one or more of the Borrowers publicly discloses
such confidential information. The provisions of this Section 12.10 shall survive the termination
of this Agreement.

     12.11 Attorneys’ Fees, Costs and Expenses. In any action or proceeding between
Borrowers and Bank arising out of or relating to the Loan Documents, the prevailing party shall be
entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred, in
addition to any other relief to which it may be entitled.

     13 DEFINITIONS

     13.1 Definitions. In this Agreement:

     “Account” is any “account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable and other sums owing
to a Borrower.

16

 

     “Account Debtor” is as defined in the Code and shall include, without limitation, any person
liable on any Financed Receivable, such as, a guarantor of the Financed Receivable and any issuer
of a letter of credit or banker’s acceptance.

     “Adjustments” are all discounts, allowances, returns, disputes, counterclaims, offsets,
defenses, rights of recoupment, rights of return, warranty claims, or short payments, asserted by
or on behalf of any Account Debtor for any Financed Receivable.

     “Administrative Fee” shall have the meaning as set forth in Section 2.2.4 hereof.

     “Advance” is defined in Section 2.1.1.

     “Advance Rate” eighty percent (80.0%), net of any offsets related to each specific Account
Debtor.

     “Affiliate” of any 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.

     “Applicable Interest Rate Percentage” is (i) zero percent (0%) if Borrowers’ Quick Ratio as of
the most recently ended Reconciliation Period is greater than 1.00:1.00, (ii) two percent (2.00%)
if Borrowers’ Quick Ratio as of the most recently ended Reconciliation Period is less than or equal
to 1.00:1.00 but greater than 0.75:1.00 or (iii) four percent (4.00%) if Borrowers’ Quick Ratio as
of the most recently ended Reconciliation Period is less than or equal to 0.75:1.00.

     “Applicable Rate” is a per annum rate equal to the Prime Rate plus the Applicable Interest
Rate Percentage.

     “Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable
attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and
enforcing the Loan Documents (including, without limitation, those incurred in connection with
appeals or Insolvency Proceedings) or otherwise incurred with respect to a Borrower.

     “Borrowers’ Books” are all Borrowers’ books and records including ledgers, federal and state
tax returns, records regarding Borrowers’ assets or liabilities, the Collateral, business
operations or financial condition, and all computer programs or storage or any equipment containing
such information.

     “Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed.

     “Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in
effect in the State of California; provided, that, to the extent that the Code is used to define
any term herein or in any Loan Document and such term is defined differently in different Articles
or Divisions of the Code, the definition of such term contained in Article or Division 9 shall
govern; provided further, that in the event that, by reason of mandatory provisions of law, any or
all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any
Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the
State of California, the term “Code” shall mean the Uniform Commercial Code as enacted and in
effect in such other jurisdiction solely for purposes on the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of definitions relating to such
provisions.

     “Collateral” is any and all properties, rights and assets of Borrowers described on
Exhibit A-1, Exhibit A-2, and Exhibit A-3.

     “Collections” are all funds received by Bank from or on behalf of an Account Debtor for
Financed Receivables.

17

 

     “Compliance Certificate” is attached as Exhibit B.

     “Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or
not, of that Person for (a) 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;
(b) any obligations for undrawn letters of credit for the account of that Person; and (c) 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 any guarantee or other support arrangement.

     “Current Liabilities” are all obligations and liabilities of a Borrower to Bank, plus, without
duplication, the aggregate amount of such Borrower’s Total Liabilities that mature within one (1)
year.

     “Deferred Revenue” is all amounts received or invoiced, as appropriate, in advance of
performance under contracts and not yet recognized as revenue.

     “Effective Date” is the date Bank executes this Agreement as indicated on the signature page
hereof.

     “Eligible Accounts” are billed Accounts in the ordinary course of a Borrower’s business that
meet all Borrowers’ representations and warranties in Section 5.3, have been, at the option of
Bank, confirmed in accordance with Section 2.1.1(d), and are due and owing from Account Debtors
deemed creditworthy by Bank in its sole discretion. Without limiting the fact that the
determination of which Accounts are eligible hereunder is a matter of Bank discretion in each
instance, Eligible Accounts shall not include the following Accounts (which listing may be amended
or changed in Bank’s discretion with notice to Borrowers):

     (a) Accounts that the Account Debtor has not paid within ninety (90) days of invoice date
regardless of invoice payment period terms;

     (b) Accounts billed and payable outside of the United States unless the Bank has a first
priority, perfected security interest or other enforceable Lien in such Accounts;

     (c) Accounts owing from an Account Debtor to the extent that a Borrower is indebted or
obligated in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise -
sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts), with
the exception of customary credits, adjustments and/or discounts given to an Account Debtor by a
Borrower in the ordinary course of its business;

     (d) Accounts for which the Account Debtor is a Borrower’s Affiliate, officer, employee, or
agent, except as approved by Bank;

     (e) Accounts owing from an Account Debtor which is a United States government entity or any
department, agency, or instrumentality thereof unless a Borrower has assigned its payment rights to
Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940,
as amended;

     (f) Accounts for demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other terms if Account
Debtor’s payment may be conditional;

     (g) Accounts owing from an Account Debtor that has not been invoiced or where goods or
services have not yet been rendered to the Account Debtor (sometimes called memo billings or
pre-billings);

18

 

     (h) Accounts subject to contractual arrangements between a Borrower and an Account Debtor
where payments shall be scheduled or due according to completion or fulfillment requirements where
the Account Debtor has a right of offset for damages suffered as a result of a Borrower’s failure
to perform in accordance with the contract (sometimes called contracts accounts receivable,
progress billings, milestone billings, or fulfillment contracts);

     (i) Accounts owing from an Account Debtor the amount of which may be subject to withholding
based on the Account Debtor’s satisfaction of a Borrower’s complete performance (but only to the
extent of the amount withheld; sometimes called retainage billings);

     (j) Accounts subject to trust provisions, subrogation rights of a bonding company, or a
statutory trust;

     (k) Accounts owing from an Account Debtor that has been invoiced for goods that have not been
shipped to the Account Debtor unless Bank, Borrowers, and the Account Debtor have entered into an
agreement acceptable to Bank in its sole discretion wherein the Account Debtor acknowledges that
(i) it has title to and has ownership of the goods wherever located, (ii) a bona fide sale of the
goods has occurred, and (iii) it owes payment for such goods in accordance with invoices from a
Borrower (sometimes called “bill and hold” accounts);

     (l) Accounts for which the Account Debtor has not been invoiced;

     (m) Accounts that represent non-trade receivables or that are derived by means other than in
the ordinary course of a Borrower’s business;

     (n) Accounts subject to chargebacks or others payment deductions taken by an Account Debtor
(but only to the extent the chargeback is determined invalid and subsequently collected by a
Borrower);

     (o) Accounts owing from an Account Debtor with respect to which a Borrower has received
Deferred Revenue (but only to the extent of such Deferred Revenue);

     (p) Accounts in which the Account Debtor disputes liability or makes any claim (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

     (q) Accounts for which Bank in its reasonable good faith business judgment determines
collection to be doubtful.

     “ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.

     “Events of Default” are set forth in Article 8.

     “Facility Amount” is a gross amount of Eighteen Million Seven Hundred Fifty Thousand Dollars
($18,750,000).

     “Facility Fee” is defined in Section 2.2.2.

     “Finance Charges” is defined in Section 2.2.3.

     “Financed Receivables” are all those Eligible Accounts, including their proceeds which Bank
finances and makes an Advance, as set forth in Section 2.1.1. A Financed Receivable stops being a
Financed Receivable (but remains Collateral) when the Advance made for the Financed Receivable has
been fully paid.

     “Financed Receivable Balance” is the total outstanding gross face amount, at any time, of any
Financed Receivable.

19

 

     “GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other Person as may be approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date of determination.

     “General Intangibles” is all “general intangibles” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without
limitation, all copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise
agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims,
income and other tax refunds, security
and other deposits, options to purchase or sell real or personal property, rights in all
litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance
policies (including without limitation key man, property damage, and business interruption
insurance), payments of insurance and rights to payment of any kind.

     “Good Faith Deposit” is defined in Section 2.2.9.

     “Governmental Approval” is any consent, authorization, approval, order, license, franchise,
permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or
other act by or in respect of, any Governmental Authority.

     “Governmental Authority” is any nation or government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions
of or pertaining to government, any securities exchange and any self-regulatory organization.

     “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.

     “Indemnified Person” is defined in Section 12.2.

     “Insolvency Proceeding” is any proceeding 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.

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

     “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.

     “Invoice Transmittal” shows Eligible Accounts which Bank may finance and, for each such
Account, includes the Account Debtor’s, name, address, invoice amount, invoice date and invoice
number.

     “Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other
encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise
against any property.

20

 

     “Loan Documents” are, collectively, this Agreement, the Perfection Certificate, any note, or
notes or guaranties executed by Borrowers, and any other present or future agreement between
Borrowers and/or for the benefit of Bank in connection with this Agreement, all as amended,
restated, or otherwise modified.

     “Lockbox” is defined in Section 2.2.7.

     “Material Adverse Change” is: (a) a material impairment in the perfection or priority of
Bank’s security interest in the Collateral or in the value of such Collateral; (b) a material
adverse change in the business, operations, or condition (financial or otherwise) of a Borrower; or
(c) a material impairment of the prospect of repayment of any portion of the Obligations.

     “Maturity Date” is three hundred sixty four (364) days from the date of this Agreement.

     “Obligations” are Borrowers’ obligation to pay when due any debts, principal, interest, Bank
Expenses, and other amounts Borrowers owe Bank now or later, whether under this Agreement, the Loan
Documents, or
otherwise, including, without limitation, any interest accruing after Insolvency Proceedings
begin and debts, liabilities, or obligations of Borrowers assigned to Bank, and the performance of
Borrowers’ duties under the Loan Documents.

     “Perfection Certificates” are certain Perfection Certificates completed and delivered by
Borrowers to Bank in connection with this Agreement.

     “Permitted Indebtedness” is:

     (a) Borrowers’ indebtedness to Bank under this Agreement or the Loan Documents;

     (b) Subordinated Debt;

     (c) Indebtedness to MRV Communications, Inc. in the principal amount of Five Million Dollars
($5,000,000).

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

     (e) Indebtedness secured by Permitted Liens.

     “Permitted Investments” are: (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any state maturing within 1 year from its
acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the
highest rating from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., (iii)
Bank’s certificates of deposit issued maturing no more than 1 year after issue, (iv) any other
investments administered through Bank; (v) Investments in Subsidiaries existing on the Effective
Date and (vi) Investments in Subsidiaries made after the Effective Date in an amount not to exceed
One Hundred Thousand Dollars ($100,000) per calendar year.

     “Permitted Liens” are:

          (a) Liens arising under this Agreement or other Loan Documents;

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

          (c) Purchase money Liens securing no more than One Hundred Thousand Dollars ($100,000) in the
aggregate amount outstanding (i) on equipment acquired or held by a Borrower incurred for
financing the acquisition of the equipment, or (ii) existing on equipment when acquired, if
the Lien is confined to the property and improvements and the proceeds of the equipment;

21

 

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

          (e) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (d), but 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.

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

     “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.

     “Quick Assets” is, on any date, a Borrower’s unrestricted cash and cash equivalents held at
Bank and net Accounts receivable.

     “Quick Ratio” is a ratio of Borrowers’ consolidated Quick Assets to Current Liabilities.

     “Reconciliation Day” is the last calendar day of each month.

     “Reconciliation Period” is each calendar month.

     “Registered Organization” is any “registered organization” as defined in the Code with such
additions to such term as may hereafter be made.

     “Requirement of Law” is as to any Person, the organizational or governing documents of such
Person, and any law (statutory or common), treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its property is subject.

     “Responsible Officer” is each of the Chief Executive Officer, President, Chief Financial
Officer and Controller of each Borrower.

     “Shares” means (i) sixty-five percent (65%) of the issued and outstanding capital stock,
membership units or other securities owned or held of record by a Borrower in any Subsidiary of
such Borrower which is not an entity organized under the laws of the United States or any territory
thereof, and (ii) one hundred percent (100%) of the issued and outstanding capital stock,
membership units or other securities owned or held of record by a Borrower in any Subsidiary of
such Borrower which is an entity organized under the laws of the United States or any territory
thereof.

     “Subordinated Debt” is indebtedness incurred by a Borrower subordinated to all of such
Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or
other similar agreement in form and substance satisfactory to Bank entered into between Bank and
the other creditor), on terms acceptable to Bank.

     “Subsidiary” is, with respect to any Person, any Person of which more than 50.0% of the voting
stock or other equity interests (in the case of Persons other than corporations) is owned or
controlled directly or indirectly by such Person or one or more of Affiliates of such Person.

     “Total Liabilities” is on any day, obligations that should, under GAAP, be classified as
liabilities on a Borrower’s consolidated balance sheet, including all Indebtedness, and current
portion of Subordinated Debt permitted by Bank to be paid by such Borrower, but excluding all other
Subordinated Debt.

22

 

[Signature page follows.]

23

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
Effective Date.

	 	 	 	 	 
	SOURCE PHOTONICS, INC.

 	 	 
	By  	/s/ Brett Chloupek
 	 	 
	 	Name:  	Brett Chloupek 	 	 
	 	Title:  	CFO 	 	 
	 

	 	 	 	 	 
	FIBERXON, INC.

 	 	 
	By  	/s/ Brett Chloupek
 	 	 
	 	Name:  	Brett Chloupek 	 	 
	 	Title:  	CFO 	 	 
	 

	 	 	 	 	 
	LUMINENTOIC, INC.

 	 	 
	By  	/s/ Brett Chloupek
 	 	 
	 	Name:  	Brett Chloupek 	 	 
	 	Title:  	CFO 	 	 
	 

	 	 	 	 	 
	BANK:

SILICON VALLEY BANK

 	 	 
	By  	/s/ BEN FARGO
 	 	 
	 	Name:  	BEN FARGO 	 	 
	 	Title:  	RELATIONSHIP MANAGER 	 	 
	 	Effective Date: APRIL 7, 2008	 

 

 

	 	 	 	 	 

EXHIBIT A-1

SOURCE PHOTONICS, INC.

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

     All goods, equipment, inventory, contract rights or rights to payment of money, leases,
license agreements, franchise agreements, general intangibles (including payment intangibles)
accounts (including health-care receivables), documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters
of credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort
claims, securities, and all other investment property, supporting obligations, and financial
assets, whether now owned or hereafter acquired, wherever located; and any copyright rights,
copyright applications, copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, now owned or later acquired; any patents,
trademarks, service marks and applications therefor; trade styles, trade names, 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
damages by way of any past, present and future infringement of any of the foregoing; and

     All Borrower’s books relating to the foregoing and any and all claims, rights and interests in
any of the above and all substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of any or all of the
foregoing.

     Notwithstanding the foregoing, the Collateral shall not be deemed to include any copyrights
(including computer programs, blueprints and drawings), 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 design rights; 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, except that the Collateral shall
include all accounts, license and royalty fees and other revenues, proceeds, or income arising out
of or relating to any of the foregoing.

     Borrower and Bank are parties to that certain negative pledge arrangement whereby Borrower, in
connection with Bank’s loan(s) to Borrower, has agreed not to sell, transfer, assign, mortgage,
pledge, lease grant a security interest in, or encumber any of its intellectual property without
Bank’s prior written consent.

 

 

EXHIBIT A-2

FIBERXON, INC.

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

     All goods, equipment, inventory, contract rights or rights to payment of money, leases,
license agreements, franchise agreements, general intangibles (including payment intangibles)
accounts (including health-care receivables), documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters
of credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort
claims, securities, and all other investment property, supporting obligations, and financial
assets, whether now owned or hereafter acquired, wherever located; and any copyright rights,
copyright applications, copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, now owned or later acquired; any patents,
trademarks, service marks and applications therefor; trade styles, trade names, 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
damages by way of any past, present and future infringement of any of the foregoing; and

     All Borrower’s books relating to the foregoing and any and all claims, rights and interests in
any of the above and all substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of any or all of the
foregoing.

     Notwithstanding the foregoing, the Collateral shall not be deemed to include any copyrights
(including computer programs, blueprints and drawings), 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 design rights; 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, except that the Collateral shall
include all accounts, license and royalty fees and other revenues, proceeds, or income arising out
of or relating to any of the foregoing.

     Borrower and Bank are parties to that certain negative pledge arrangement whereby Borrower, in
connection with Bank’s loan(s) to Borrower, has agreed not to sell, transfer, assign, mortgage,
pledge, lease grant a security interest in, or encumber any of its intellectual property without
Bank’s prior written consent.

 

 

EXHIBIT A-3

LUMINENTOIC, INC.

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

     All goods, equipment, inventory, contract rights or rights to payment of money, leases,
license agreements, franchise agreements, general intangibles (including payment intangibles)
accounts (including health-care receivables), documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters
of credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort
claims, securities, and all other investment property, supporting obligations, and financial
assets, whether now owned or hereafter acquired, wherever located; and any copyright rights,
copyright applications, copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, now owned or later acquired; any patents,
trademarks, service marks and applications therefor; trade styles, trade names, 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
damages by way of any past, present and future infringement of any of the foregoing; and

     All Borrower’s books relating to the foregoing and any and all claims, rights and interests in
any of the above and all substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of any or all of the
foregoing.

     Notwithstanding the foregoing, the Collateral shall not be deemed to include any copyrights
(including computer programs, blueprints and drawings), 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 design rights; 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, except that the Collateral shall
include all accounts, license and royalty fees and other revenues, proceeds, or income arising out
of or relating to any of the foregoing.

     Borrower and Bank are parties to that certain negative pledge arrangement whereby Borrower, in
connection with Bank’s loan(s) to Borrower, has agreed not to sell, transfer, assign, mortgage,
pledge, lease grant a security interest in, or encumber any of its intellectual property without
Bank’s prior written consent.

 

 

EXHIBIT B

SPECIALTY FINANCE DIVISION

Compliance Certificate

     I, an authorized officer of SOURCE PHOTONICS, INC. (“Borrower”), in my capacity as said
officer, certify under the Loan and Security Agreement (the “Agreement”) between Borrower,
FIBERXON, INC., LUMINENTOIC, INC. and Silicon Valley Bank (“Bank”) as follows, on behalf of all
Borrowers (all capitalized terms used herein shall have the meaning set forth in the Agreement):

Each Borrower represents and warrants for each Financed Receivable:

Each Financed Receivable is an Eligible Account.

Borrower is the owner with legal right to sell, transfer, assign and encumber such Financed
Receivable;

The correct amount is on the Invoice Transmittal and is not disputed;

Payment is not contingent on any obligation or contract and Borrower has fulfilled all its
obligations as of the Invoice Transmittal date;

Each Financed Receivable is based on an actual sale and delivery of goods and/or services rendered,
is due to Borrower, is not past due or in default, has not been previously sold, assigned,
transferred, or pledged and is free of any liens, security interests and encumbrances other than
Permitted Liens;

There are no defenses, offsets, counterclaims or agreements for which the Account Debtor may claim
any deduction or discount;

It reasonably believes no Account Debtor is insolvent or subject to any Insolvency Proceedings;

It has not filed or had filed against it Insolvency Proceedings and does not anticipate any filing;

Bank has the right to endorse and/ or require Borrower to endorse all payments received on Financed
Receivables and all proceeds of Collateral.

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

Additionally, Borrower represents and warrants as follows:

Borrower and each Subsidiary is duly existing and in good standing in its state of formation and
qualified and licensed to do business in, and in good standing in, any state in which the conduct
of its business or its ownership of property requires that it be qualified except where the failure
to do so could not reasonably be expected to cause a Material Adverse Change. The execution,
delivery and performance of the Loan Documents have been duly authorized, and do not conflict with
Borrower’s organizational 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.

Borrower has good title to the Collateral, free of Liens except Permitted Liens. All inventory is
in all material respects of good and marketable quality, free from material defects.

Borrower is 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 X, 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 obtain or make such consents, declarations, notices or
filings would not reasonably be expected to cause a Material Adverse Change.

All representations and warranties in the Agreement are true and correct in all material respects
on this date, and the Borrower represents that there is no existing Event of Default.

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

	 	 	 	 	 
	Reporting Covenant	 	Required	 	Complies
	 
	 	 	 	 
	Monthly condensed financial statements
	 	Monthly within 30 days until September 2008	 	Yes  No
	 
	 	 	 	 
	Monthly financial statements with
	 	Quarterly within 45 days for quarters ending 3/31/08, 6/30/08 and 9/30/08, Monthly within 30 days beginning October 2008	 	Yes  No
	Compliance Certificate
	 	 	 
	 
	 	 	 
	 
	 	 	 
	Annual financial statement (CPA Audited)
	 	FYE within 180 days	 	Yes  No
	 
	 	 	 	 
	A/R, A/P Agings
	 	Monthly within 15 days	 	Yes  No
	 
	 	 	 	 
	10-Q, 10-K and 8-K
	 	Within 5 days after filing with SEC	 	Yes  No
	 
	 	 	 	 
	CEO approved financial projections, revisions
	 	Within 30 days of FYE, revisions within 15	 	Yes  No
	 
	 	days of approval	 	 
	 
	 	 	 	 
	Quick Ratio Calculation under the Revolving Line of Credit
	 	 
	 
	 	 	 	 
	A. Unrestricted Cash and Cash Equivalents at Bank
	 	$                     	 	 
	 
	 	 	 	 
	B. Net Trade Accounts Receivable
	 	$                     	 	 
	 
	 	 	 	 
	C. Current Liabilities
	 	$                     	 	 
	 
	 	 	 	 
	Quick Ratio (A+B divided by C)
	 	______ : 1.00	 	 

The following are the exceptions with respect to the certification above: (If no exceptions exist,
state “No exceptions to note.”)

 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	SOURCE PHOTONICS, INC., on behalf of all Borrowers	 	 	 	AGENT USE ONLY	 	 
	 
	By:	 	 	 	 	 	 	 	Received by:	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	 	 	AUTHORIZED SIGNER	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Verified:	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	AUTHORIZED SIGNER	 	 
	 

	 	 	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Compliance Status: Yes No	 	 

 

 

BORROWING RESOLUTIONS

	 
		  Silicon Valley Bank

CORPORATE BORROWING CERTIFICATE

					
	 
	Borrower: SOURCE PHOTONICS, INC.

Bank: Silicon Valley Bank
	 	 
	 	Date: April 4, 2008

     I hereby certify, in my capacity as CFO of the Borrower, as follows, as of the date set forth
above:

1. I am the Secretary, Assistant Secretary or other officer of the Borrower. My title is as set
forth below.

2. Borrower’s exact legal name is set forth above. Borrower is a corporation existing under the
laws of the State of
Delaware.

3. Attached hereto are true, correct and complete copies of Borrower’s Articles/Certificate of
Incorporation (including amendments), as filed with the Secretary of State of the state in which
Borrower is incorporated as set forth in paragraph 1 above. Such Articles/Certificate of
Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in
full force and effect as of the date hereof.

4. The following resolutions were duly and validly adopted by Borrower’s Board of Directors at a
duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized
corporate action). Such resolutions are in full force and effect as of the date hereof and have
not been in any way modified, repealed, rescinded, amended or revoked, and Bank may rely on them
until Bank receives written notice of revocation from Borrower.

Resolved, that any one of the following officers or employees of
Borrower, whose names, titles and signatures are below, may act on behalf of
Borrower:

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Authorized to
	 	 	 	 	 	 	Add or Remove
	Name	 	Title	 	Signature	 	Signatories
	 
	Mayank Singhvi

	 	Corporate Controller
	 	/s/ Mayank Singhvi
	 	þ
	 

	 	 	 	 	 	 
	Near Margalit

	 	CEO
	 	/s/ Near Margalit
	 	þ
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	o
	 

	 	 
	 	 
	 	o
	 

	 	 
	 	 
	 	 

Resolved Further, that any one of the persons designated above with a checked box
beside his or her name may, from time to time, add or remove any individuals to and from the
above list of persons authorized to act on behalf of Borrower.

Resolved Further, that such individuals may, on behalf of Borrower:

Borrow Money. Borrow money from Silicon Valley Bank (“Bank”).

Execute Loan Documents. Execute any loan documents Bank requires.

Grant Security. Grant Bank a security interest in any of Borrower’s assets.

Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory notes, or
other indebtedness in which Borrower has an interest and receive cash or otherwise use the
proceeds.

 

 

Further Acts. Designate other individuals to request advances, pay fees and costs and
execute other documents or agreements (including documents or agreement that waive Borrowers
right to a jury trial) they believe to be necessary to effectuate such resolutions.

Resolved Further, that all acts authorized by the above resolutions and any prior
acts relating thereto are ratified.

5. The persons listed above are Borrower’s officers or employees with their titles and signatures
shown next to their names.

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Brett Chloupek
 	 
	 	 	Name:  	Brett Chloupek 	 
	 	 	Title:  	CFO 	 
	 

			
	***	If the Secretary, Assistant Secretary or other certifying officer executing above is
designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers,
this Certificate must also be signed by a second authorized officer
or director of Borrower.

     I, the CEO of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

     [print title]

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Near Margalit
 	 
	 	 	Name:  	Near Margalit 	 
	 	 	Title:  	CEO 	 

 

 

	 	 	 	 	 

BORROWING RESOLUTIONS

	 
		  Silicon Valley Bank

CORPORATE BORROWING CERTIFICATE

					
	 
	Borrower: LUMINENTOIC, INC.
	 	 
	 	Date: April 4, 2008
	Bank: Silicon Valley Bank	 	 	 	 

     I hereby certify, in my capacity as CFO of the Borrower, as follows, as of the date set forth
above:

1. I am the Secretary, Assistant Secretary or other officer of the Borrower. My title is as set
forth below.

2. Borrower’s exact legal name is set forth above. Borrower is a corporation existing under the
laws of the State of
Delaware.

3. Attached hereto are true, correct and complete copies of Borrower’s Articles/Certificate of
Incorporation (including amendments), as filed with the Secretary of State of the state in which
Borrower is incorporated as set forth in paragraph 1 above. Such Articles/Certificate of
Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in
full force and effect as of the date hereof.

4. The following resolutions were duly and validly adopted by Borrower’s Board of Directors at a
duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized
corporate action). Such resolutions are in full force and effect as of the date hereof and have
not been in any way modified, repealed, rescinded, amended or revoked, and Bank may rely on them
until Bank receives written notice of revocation from Borrower.

Resolved, that any one of the following officers or employees of
Borrower, whose names, titles and signatures are below, may act on behalf of
Borrower:

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Authorized to
	 	 	 	 	 	 	Add or Remove
	Name	 	Title	 	Signature	 	Signatories
	 
	Mayank Singhvi

	 	Corporate Controller
	 	/s/ Mayank Singhvi
	 	þ
	 

	 	 	 	 	 	 
	Near Margalit

	 	CEO
	 	/s/ Near Margalit
	 	þ
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	o
	 

	 	 
	 	 
	 	o
	 

	 	 
	 	 
	 	 

Resolved Further, that any one of the persons designated above with a checked box
beside his or her name may, from time to time, add or remove any individuals to and from the
above list of persons authorized to act on behalf of Borrower.

Resolved Further, that such individuals may, on behalf of Borrower:

Borrow Money. Borrow money from Silicon Valley Bank (“Bank”).

Execute Loan Documents. Execute any loan documents Bank requires.

Grant Security. Grant Bank a security interest in any of Borrower’s assets.

Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory notes, or
other indebtedness in which Borrower has an interest and receive cash or otherwise use the
proceeds.

 

 

Further Acts. Designate other individuals to request advances, pay fees and costs and
execute other documents or agreements (including documents or agreement that waive Borrowers
right to a jury trial) they believe to be necessary to effectuate such resolutions.

Resolved Further, that all acts authorized by the above resolutions and any prior
acts relating thereto are ratified.

5. The persons listed above are Borrower’s officers or employees with their titles and signatures
shown next to their names.

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Brett Chloupek
 	 
	 	 	Name:  	Brett Chloupek 	 
	 	 	Title:  	CFO 	 
	 

			
	***	If the Secretary, Assistant Secretary or other certifying officer executing above is
designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers,
this Certificate must also be signed by a second authorized officer or director of Borrower.

     I, the CEO of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

     [print title]

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Near Margalit
 	 
	 	 	Name:  	Near Margalit 	 
	 	 	Title:  	CEO 	 
	 

 

 

BORROWING RESOLUTIONS

	 
		  Silicon Valley Bank

CORPORATE BORROWING CERTIFICATE

					
	 
	Borrower:
FIBERXON, INC.

Bank: Silicon Valley Bank
	 	 
	 	Date:
April    , 2008

     I hereby certify, in my capacity as CFO of the Borrower, as follows, as of the date set forth
above:

1. I am the Secretary, Assistant Secretary or other officer of the Borrower. My title is as set
forth below.

2. Borrower’s exact legal name is set forth above. Borrower is a corporation existing under the
laws of the State of
Delaware.

3. Attached hereto are true, correct and complete copies of Borrower’s Articles/Certificate of
Incorporation (including amendments), as filed with the Secretary of State of the state in which
Borrower is incorporated as set forth in paragraph 1 above. Such Articles/Certificate of
Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in
full force and effect as of the date hereof.

4. The following resolutions were duly and validly adopted by Borrower’s Board of Directors at a
duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized
corporate action). Such resolutions are in full force and effect as of the date hereof and have
not been in any way modified, repealed, rescinded, amended or revoked, and Bank may rely on them
until Bank receives written notice of revocation from Borrower.

Resolved, that any one of the following officers or employees of
Borrower, whose names, titles and signatures are below, may act on behalf of
Borrower:

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Authorized to
	 	 	 	 	 	 	Add or Remove
	Name	 	Title	 	Signature	 	Signatories
	 
	Mayank Singhvi

	 	Corporate Controller
	 	/s/ Mayank Singhvi
	 	þ
	 

	 	 	 	 	 	 
	Near Margalit

	 	CEO
	 	/s/ Near Margalit
	 	þ
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	o
	 

	 	 
	 	 
	 	o
	 

	 	 
	 	 
	 	 

Resolved Further, that any one of the persons designated above with a checked box
beside his or her name may, from time to time, add or remove any individuals to and from the
above list of persons authorized to act on behalf of Borrower.

Resolved Further, that such individuals may, on behalf of Borrower:

Borrow Money. Borrow money from Silicon Valley Bank (“Bank”).

Execute Loan Documents. Execute any loan documents Bank requires.

Grant Security. Grant Bank a security interest in any of Borrower’s assets.

Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory notes, or
other indebtedness in which Borrower has an interest and receive cash or otherwise use the
proceeds.

 

 

Further Acts. Designate other individuals to request advances, pay fees and costs and
execute other documents or agreements (including documents or agreement that waive Borrowers
right to a jury trial) they believe to be necessary to effectuate such resolutions.

Resolved Further, that all acts authorized by the above resolutions and any prior
acts relating thereto are ratified.

5. The persons listed above are Borrower’s officers or employees with their titles and signatures
shown next to their names.

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Brett Chloupek
 	 
	 	 	Name:  	Brett Chloupek 	 
	 	 	Title:  	CFO 	 
	 

			
	***	If the Secretary, Assistant Secretary or other certifying officer executing above is
designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers,
this Certificate must also be signed by a second authorized officer or director of Borrower.

     I, the CEO of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

     [print title]

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Near Margalit
 	 
	 	 	Name:  	Near Margalit 	 
	 	 	Title:  	CEO

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