Document:

exv10w1

 

Exhibit 10.1

 

Silicon Valley Bank

Amended and Restated Loan and

Security Agreement

	 	 	 
	Borrower:

	 	THERMA-WAVE, INC.
	Address:

	 	1250 Reliance Way
	 

	 	Fremont, CA 94539
	 
	 	 
	Date:

	 	June 10, 2005

THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between SILICON VALLEY BANK
(“Silicon”), whose address is 3003 Tasman Drive, Santa Clara, California 95054 and the borrower
named above (the “Borrower”), whose chief executive office is located at the above address
(“Borrower’s Address”). The Schedule to this Agreement (the “Schedule”) shall for all purposes be
deemed to be a part of this Agreement, and the same is an integral part of this Agreement.
Definitions of certain terms used in this Agreement are set forth in Section 8 below.

Silicon and Borrower entered into an Amended and Restated Loan and Security Agreement dated as of
June 13, 2003 (as amended, the “Original Credit Agreement”). It is not the intention of Silicon
and Borrower that this Agreement constitute a novation of the indebtedness governed by the Original
Credit Agreement, and from and after the date hereof, the Original Credit Agreement shall be
amended and restated in its entirety in accordance with the terms and provisions hereof.

1. LOANS.

     1.1 Loans. Silicon will make loans to Borrower (the “Loans”) up to the amounts shown on the
Schedule, provided no Default or Event of Default has occurred and is continuing, and subject to
deduction of Reserves for accrued interest and such other Reserves as Silicon deems proper from
time to time in its good faith business judgment.

     1.2 Interest. All Loans and all other monetary Obligations shall bear interest at the rate
shown on the Schedule, except where expressly set forth to the contrary in this Agreement.
Interest shall be payable monthly, on the last day of the month. Interest may, in Silicon’s
discretion, be charged to Borrower’s loan account, and the same shall thereafter bear interest at
the same rate as the other Loans. Silicon may, in its discretion, charge interest to Borrower’s
Deposit Accounts maintained with Silicon.

     1.3 Overadvances. If Borrower’s Obligations at any time exceed: (i) the Credit Limit, (ii)
the lesser of (a) the Domestic Credit Limit and (b) the Domestic Borrowing Base, or (iii) the
lesser of (a) the Exim Credit Limit and (b) the Exim Borrowing Base; Borrower must immediately pay
Silicon the excess. Without limiting Borrower’s obligation to repay Silicon the amount of any
Overadvance, Borrower agrees to pay Silicon interest on the outstanding amount of any Overadvance,
on demand, at the Default Rate.

     1.4 Fees. Borrower shall pay Silicon the fees shown on the Schedule, which are in addition to
all interest and other sums payable to Silicon and are not refundable.

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     1.5 Loan Requests. To obtain a Loan, Borrower shall make a request to Silicon by facsimile or
telephone. Loan requests received after 12:00 Noon will not be considered by Silicon until the next
Business Day. Silicon may rely on any telephone request for a Loan given by a person whom Silicon
believes is an authorized representative of Borrower, and Borrower will indemnify Silicon for any
loss Silicon suffers as a result of that reliance unless such loss is the result of Silicon’s gross
negligence or willful misconduct. Borrower shall submit copies of Export Orders in connection with
any Exim Loan.

     1.6 Letters of Credit. At the request of Borrower, Silicon may, in its good faith business
judgment, issue or arrange for the issuance of letters of credit for the account of Borrower, in
each case in form and substance satisfactory to Silicon in its sole discretion (collectively,
“Letters of Credit”). The aggregate face amount of all Letters of Credit from time to time
outstanding shall not exceed the amount shown on the Schedule (the “Letter of Credit Sublimit”),
and shall be reserved against Loans which would otherwise be available hereunder, and in the event
at any time there are insufficient Loans available to Borrower for such reserve, Borrower shall
deposit and maintain with Silicon cash collateral in an amount at all times equal to such
deficiency, which shall be held as Collateral for all purposes of this Agreement. Borrower shall
pay all bank charges (including charges of Silicon) for the issuance of Letters of Credit, together
with such additional fee as Silicon’s letter of credit department shall charge in connection with
the issuance of the Letters of Credit. Any payment by Silicon under or in connection with a Letter
of Credit shall constitute a Loan hereunder on the date such payment is made. Each Letter of
Credit shall have an expiry date no later than thirty days prior to the Maturity Date. Borrower
hereby agrees to indemnify and hold Silicon harmless from any loss, cost, expense, or liability,
including payments made by Silicon, expenses, and reasonable attorneys’ fees incurred by Silicon
arising out of or in connection with any Letters of Credit. Borrower agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit guarantied by Silicon and
opened for Borrower’s account or by Silicon’s interpretations of any Letter of Credit issued by
Silicon for Borrower’s account, and Borrower understands and agrees that Silicon shall not be
liable for any error, negligence, or mistake, whether of omission or commission, in following
Borrower’s instructions or those contained in the Letters of Credit or any modifications,
amendments, or supplements thereto. Borrower understands that Letters of Credit may require
Silicon to indemnify the issuing bank for certain costs or liabilities arising out of claims by
Borrower against such issuing bank. Borrower hereby agrees to indemnify and hold Silicon harmless
with respect to any loss, cost, expense, or liability incurred by Silicon under any Letter of
Credit as a result of Silicon’s indemnification of any such issuing bank. The provisions of this
Loan Agreement, as it pertains to Letters of Credit, and any other Loan Documents relating to
Letters of Credit are cumulative.

2. SECURITY INTEREST.

          (a) To secure the payment and performance of all of the Obligations when due, Borrower hereby
grants to Silicon a security interest in all of the following (collectively, the “Collateral”):
all right, title and interest of Borrower in and to all of the following, whether now owned or
hereafter arising or acquired and wherever located: all Accounts; all Inventory; all Equipment; all
Deposit Accounts; all General Intangibles (including without limitation all Intellectual Property);
all Investment Property; all Other Property; and any and all claims, rights and interests in any of
the above, and all guaranties and security for any of the above, and all substitutions and
replacements for, additions, accessions, attachments, accessories, and improvements to, and
proceeds (including proceeds of any insurance policies, proceeds of proceeds and claims against
third parties) of, any and all of the above, and all Borrower’s books relating to any and all of
the above.

          (b) Notwithstanding the foregoing, the security interest granted herein does not extend to and
the term “Collateral” does not include: (A) Equipment and related software subject to the Permitted
Liens of lenders or lessors providing financing for the acquisition of such property; (B) any
license or contract rights or any other property to the extent (i) the granting of a security
interest in it would be contrary to applicable law, or (ii) that such rights are nonassignable by
their terms (but only to the extent the prohibition is enforceable under applicable law, including,
without limitation, Section 9406(d) of the Code) without the consent of the licensor or other party
(but only to the extent such consent has not been obtained); and (C) more than 65% of the presently
existing and hereafter arising issued and outstanding shares of capital stock owned by Borrower of
any foreign subsidiary which shares entitle the holder thereof to vote for directors or any other
matter.

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3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. In order to induce Silicon to enter into
this Agreement and to make Loans, Borrower represents and warrants to Silicon as follows, and
Borrower covenants that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants, throughout the term of this Agreement
and until all Obligations (other than contingent indemnification obligations for unasserted claims)
have been paid and performed in full:

     3.1 Corporate Existence and Authority. Borrower is and will continue to be, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation.
Borrower is and will continue to be qualified and licensed to do business in all jurisdictions in
which any failure to do so would result in a Material Adverse Change. The execution, delivery and
performance by Borrower of this Agreement, and all other documents contemplated hereby (i) have
been duly and validly authorized, (ii) are enforceable against Borrower in accordance with their
terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to creditors’ rights generally), and (iii) do
not violate Borrower’s articles or certificate of incorporation, or Borrower’s bylaws, or any law
or any material agreement or instrument which is binding upon Borrower or its property, and (iv)
do not constitute grounds for acceleration of any material indebtedness or obligation under any
agreement or instrument which is binding upon Borrower or its property.

     3.2 Name; Trade Names and Styles. The name of Borrower set forth in the heading to this
Agreement is its correct name. Listed in the Representations are all prior names of Borrower and
all of Borrower’s present and prior trade names. Borrower shall give Silicon 30 days’ prior
written notice before changing its name or doing business under any other name. Borrower has
complied, and will in the future comply, in all material respects, with all laws relating to the
conduct of business under a fictitious business name, except where the failure to so comply would
not reasonably be expected to result in a Material Adverse Change.

     3.3 Place of Business; Location of Collateral. The address set forth in the heading to this
Agreement is Borrower’s chief executive office. In addition, Borrower has places of business and
Collateral is located only at the locations set forth in the Representations. Borrower will give
Silicon at least 30 days prior written notice before opening any additional place of business,
changing its chief executive office, or moving any of the Collateral to a location other than
Borrower’s Address or one of the locations set forth in the Representations, except that Borrower
may maintain sales offices in the ordinary course of business at which not more than a total of
$10,000 fair market value of Equipment is located.

     3.4 Title to Collateral; Perfection; Permitted Liens; Intellectual Property Licenses.

          (a) Borrower is now, and will at all times in the future be, the sole owner of all the
Collateral, except for items of Equipment which are leased to Borrower. The Collateral now is and
will remain free and clear of any and all liens, charges, security interests, encumbrances and
adverse claims, except for Permitted Liens and except with respect to property located outside the
United States. Silicon now has, and will continue to have, a first-priority perfected and
enforceable security interest in all of the Collateral, subject only to the Permitted Liens, and
Borrower will at all times defend Silicon and the Collateral against all claims of others.

          (b) Borrower has set forth in the Representations all of Borrower’s Deposit Accounts, and
Borrower will give Silicon five Business Days advance written notice before establishing any new
Deposit Accounts and will cause the institution where any such new Deposit Account is maintained to
execute and deliver to Silicon a control agreement in form sufficient to perfect Silicon’s security
interest in the Deposit Account and otherwise satisfactory to Silicon in its good faith business
judgment. Nothing herein limits any requirements which may be set forth in the Schedule as to
where Deposit Accounts will be maintained.

          (c) In the event that Borrower shall at any time after the date hereof have any commercial
tort claims against others, which it is asserting or intends to assert, and in which the potential
recovery exceeds $100,000, Borrower shall promptly notify Silicon thereof in writing and provide
Silicon with such information regarding the same as Silicon shall request (unless providing such
information would waive the Borrower’s attorney-client privilege). Such notification to Silicon
shall constitute a grant of a security interest in the

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commercial tort claim and all proceeds thereof to Silicon, and Borrower shall execute and
deliver all such documents and take all such actions as Silicon shall request in connection
therewith.

          (d) None of the Collateral now is or will be affixed to any real property in such a manner, or
with such intent, as to become a fixture. Borrower is not and will not become a lessee under any
real property lease pursuant to which the lessor may obtain any rights in any of the Collateral and
no such lease now prohibits, restrains, impairs or will prohibit, restrain or impair Borrower’s
right to remove any Collateral from the leased premises. Whenever any Collateral is located upon
premises in which any third party has an interest, Borrower shall, whenever requested by Silicon,
use its best efforts to cause such third party to execute and deliver to Silicon, in form
acceptable to Silicon, such waivers and subordinations as Silicon shall specify in its good faith
business judgment. Borrower will keep in full force and effect, and will comply with all material
terms of, any lease of real property where any of the Collateral now or in the future may be
located.

          (e) Except as noted on the Representations, Borrower is not a party to, nor is bound by, any
material license or other material agreement with respect to which the Borrower is the licensee
that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s
interest in such license or agreement or any other property. Borrower will provide written notice
to Silicon within ten (10) of entering or becoming bound by any such license or agreement which is
reasonably likely to have a material impact on Borrower’s business or financial condition (other
than over-the-counter software that is commercially available to the public). Borrower shall take
such steps as Silicon reasonably requests to obtain the consent of, authorization by, or waiver by,
any person whose consent or waiver is necessary for all such licenses or contract rights to be
deemed “Collateral” and for Silicon to have a security interest in it that might otherwise be
restricted or prohibited by law or by the terms of any such license or agreement (such consent or
authorization may include a licensor’s agreement to a contingent assignment of the license to
Silicon if the Silicon determines that is necessary in its good faith judgment), whether now
existing or entered into in the future.

     3.5 Maintenance of Collateral. Borrower will maintain the Collateral in good working
condition (ordinary wear and tear excepted), and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise Silicon in writing of any material loss or
damage to the Collateral.

     3.6 Inventory; Returns. Borrower will keep all Inventory in good and marketable condition,
free from material defects except for Inventory for which adequate reserves have been made in
accordance with GAAP, which reserves have been, and at all times will be with respect to Exim
Eligible Inventory, disclosed to Silicon in Borrower’s Exim Borrowing Base Certificate. Returns
and allowances between Borrower and its account debtors will follow Borrower’s customary practices
as they exist at execution of this Agreement. Borrower must promptly notify Silicon of all
returns, recoveries, disputes and claims, that involve more than $1,500,000.

     3.7 Books and Records. Borrower has maintained and will maintain at Borrower’s Address
complete and accurate books and records, comprising an accounting system in accordance with GAAP.

     3.8 Financial Condition, Statements and Reports. All financial statements now or in the
future delivered to Silicon have been, and will be, prepared in conformity with GAAP and now and in
the future will fairly present the results of operations and financial condition of Borrower, in
accordance with GAAP, at the times and for the periods therein stated. Between the last date
covered by any such statement provided to Silicon and the date hereof, there has been no Material
Adverse Change.

     3.9 Tax Returns and Payments; Pension Contributions. Borrower has timely filed, and will
timely file, all required tax returns and reports, and Borrower has timely paid, and will timely
pay, all foreign, federal, state and local taxes, assessments, deposits and contributions now or in
the future owed by Borrower. Borrower may, however, defer payment of any contested taxes, provided
that Borrower (i) in good faith contests Borrower’s obligation to pay the taxes by appropriate
proceedings promptly and diligently instituted and conducted, (ii) notifies Silicon in writing of
the commencement of, and any material development in, the proceedings, and (iii) posts bonds or
takes any other steps required to keep the contested taxes from becoming a lien upon any of the
Collateral. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior
tax years which could result

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in additional taxes becoming due and payable by Borrower. Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension, profit sharing and
deferred compensation plans in accordance with their terms, and Borrower has not and will not
withdraw from participation in, permit partial or complete termination of, or permit the occurrence
of any other event with respect to, any such plan which could reasonably be expected to result in
any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or
its successors or any other governmental agency.

     3.10 Compliance with Law. Borrower has, to the best of its knowledge, complied, and will
comply, in all material respects, with all provisions of all foreign, federal, state and local laws
and regulations applicable to Borrower, including, but not limited to, those relating to Borrower’s
ownership of real or personal property, the conduct and licensing of Borrower’s business, and all
environmental matters.

     3.11 Litigation. Except as shown on the Representation and except as reported to Silicon in
writing, there is no claim, suit, litigation, proceeding or investigation pending or (to best of
Borrower’s knowledge) threatened against or affecting Borrower in any court or before any
governmental agency (or any basis therefor known to Borrower) which could reasonably be expected to
result, either separately or in the aggregate, in any Material Adverse Change. Borrower will
promptly inform Silicon in writing of any claim, proceeding, litigation or investigation in the
future threatened or instituted against Borrower involving any single claim of $50,000 or more, or
involving $100,000 or more in the aggregate.

     3.12 Use of Proceeds. All proceeds of all Loans shall be used solely for lawful business
purposes. Borrower is not purchasing or carrying any “margin stock” (as defined in Regulation U of
the Board of Governors of the Federal Reserve System) and no part of the proceeds of any Loan will
be used to purchase or carry any “margin stock” or to extend credit to others for the purpose of
purchasing or carrying any “margin stock.” Borrower will use the proceeds of the Exim Loans only
for the purposes specified in the Borrower Agreement. Borrower will not use the proceeds of the
Exim Loans for any purpose prohibited by the Borrower Agreement.

     3.13 Exim Insurance. If required by Silicon, Borrower will obtain, with respect to Accounts
that are otherwise ineligible under Exim borrowing criteria and where Borrower has requested or
obtained an Exim Loan, and pay when due all premiums with respect to, and maintain uninterrupted
foreign credit insurance. In addition, Borrower will execute in favor of Silicon an assignment of
proceeds of any insurance policy obtained by Borrower and issued by Exim Bank insuring against
comprehensive commercial and political risk (the “EXIM Bank Policy”). The insurance proceeds from
the EXIM Bank Policy assigned or paid to Silicon will be applied to the balance outstanding under
this Agreement. Borrower will immediately notify Silicon and Exim Bank in writing upon submission
of any claim under the Exim Bank Policy. Then Silicon will not be obligated to make any further
Loans to Borrower based on Exim Eligible Foreign Accounts without prior approval from Exim Bank.

     3.14 Borrower Agreement. Borrower will comply with all terms of the Borrower Agreement. If
any provision of the Borrower Agreement conflicts with any provision contained in this Exim
Agreement, the more strict provision, with respect to the Borrower, will control; provided,
however, any action or event that is permitted hereunder shall be deemed to satisfy any
requirement for consent of Silicon under the Borrower Agreement.

     3.15 Terms of Sale. Borrower will, if required by Exim Bank or Silicon, cause all sales of
products on which the Exim Loans are based to satisfy at least one of the following: (i) be
supported by one or more irrevocable letters of credit in an amount and of matter, naming a
beneficiary and issued by a financial institution acceptable to Silicon and negotiated by Silicon,
(ii) be for any Account which satisfies all of the requirements to constitute an Exim Eligible
Foreign Account, or (iii) where the Accounts from the account debtor exceed twenty-five percent
(25%) of all Exim Eligible Foreign Accounts, to be preapproved in writing, by Silicon or Exim Bank.

     3.16 Borrower Agreement and Exim Guarantee. Borrower will not violate or fail to comply with
any provision of the Borrower Agreement or take an action, or permit any action to be taken, that
causes, or could be expected to cause, the Exim Guarantee to not be in full force and effect.

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4. ACCOUNTS.

     4.1 Representations Relating to Accounts.

          (a) Borrower represents and warrants to Silicon as follows: Each Account with respect to
which Loans are requested by Borrower shall, on the date each Loan is requested and made, (i)
represent an undisputed bona fide existing unconditional obligation of the Account Debtor created
by the sale, delivery, and acceptance of goods or the rendition of services, or the nonexclusive
licensing of Intellectual Property, in the ordinary course of Borrower’s business, and (ii) meet
the requirements set forth in the definition of Eligible Receivables with respect to Domestic Loans
and Exim Eligible Foreign Accounts with respect to Exim Loans in Section 8 below.

          (b) Borrower represents and warrants that the Accounts designated as eligible accounts
(Eligible Accounts, Eligible Retainage Accounts, Exim Eligible Foreign Accounts and Exim Eligible
Foreign Retainage Accounts) in any borrowing base certificate, or other report submitted to
Silicon, are bona fide, existing obligations and the service or property has been performed or
delivered to the account debtor or its agent (subject only to installation and warranty obligations
arising in the ordinary course of Borrower’s business), for immediate shipment to and unconditional
acceptance by the account debtor (except in the case of Retainage Accounts where customary
acceptance terms in the ordinary course of business shall apply). Borrower has no notice of any
actual or imminent insolvency proceeding of any account debtor whose accounts are an eligible
account in any borrowing base certificate.

     4.2 Representations Relating to Documents and Legal Compliance. Borrower represents and
warrants to Silicon as follows: All statements made and all unpaid balances appearing in all
invoices, instruments and other documents evidencing the Accounts are and shall be true and correct
and all such invoices, instruments and other documents and all of Borrower’s books and records are
and shall be genuine and in all respects what they purport to be. All sales and other transactions
underlying or giving rise to each Account shall comply in all material respects with all applicable
laws and governmental rules and regulations. To the best of Borrower’s knowledge, all signatures
and endorsements on all documents, instruments, and agreements relating to all Accounts are and
shall be genuine, and all such documents, instruments and agreements are and shall be legally
enforceable in accordance with their terms.

     4.3 Schedules and Documents relating to Accounts. Borrower shall deliver to Silicon weekly
transaction reports and schedules of collections, as provided in the Schedule, on Silicon’s
standard forms; provided, however, that Borrower’s failure to execute and deliver the same shall
not affect or limit Silicon’s security interest and other rights in all of Borrower’s Accounts, nor
shall Silicon’s failure to advance or lend against a specific Account affect or limit Silicon’s
security interest and other rights therein. If requested by Silicon, Borrower shall furnish Silicon
with copies (or, at Silicon’s request, originals) of all contracts, orders, invoices, and other
similar documents, and all shipping instructions, delivery receipts, bills of lading, and other
evidence of delivery, for any goods the sale or disposition of which gave rise to such Accounts,
and Borrower warrants the genuineness of all of the foregoing. Borrower shall also furnish to
Silicon an aged accounts receivable trial balance as provided in the Schedule. In addition,
Borrower shall deliver to Silicon, on its request, the originals of all instruments, chattel paper,
security agreements, guarantees and other documents and property evidencing or securing any
Accounts, in the same form as received, with all necessary indorsements, and copies of all credit
memos.

     4.4 Collection of Accounts. Borrower shall have the right to collect all Accounts, unless and
until a Default or an Event of Default has occurred and is continuing. Whether or not an Event of
Default has occurred and is continuing, Borrower shall hold all payments on, and proceeds of,
Accounts in trust for Silicon, and Borrower shall immediately deliver all such payments and
proceeds to Silicon in their original form, duly endorsed, to be applied to the Obligations in such
order as Silicon shall determine. Silicon may, in its good faith business judgment, require that
all proceeds of Collateral be deposited by Borrower into a lockbox account, or such other “blocked
account” as Silicon may specify, pursuant to a blocked account agreement in such form as Silicon
may specify in its good faith business judgment.

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     4.5 Remittance of Proceeds. All proceeds arising from the disposition of any Collateral shall
be delivered, in kind, by Borrower to Silicon in the original form in which received by Borrower
not later than the following Business Day after receipt by Borrower, to be applied to the
Obligations in such order as Silicon shall determine; provided that, if no Default or Event of
Default has occurred and is continuing, Borrower shall not be obligated to remit to Silicon the
proceeds of the sale of worn out or obsolete Equipment disposed of by Borrower in good faith in an
arm’s length transaction for an aggregate purchase price of $25,000 or less (for all such
transactions in any fiscal year). Borrower agrees that it will not commingle proceeds of
Collateral with any of Borrower’s other funds or property, but will hold such proceeds separate and
apart from such other funds and property and in an express trust for Silicon. Nothing in this
Section limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement.

     4.6 Disputes. Borrower shall notify Silicon promptly of all disputes or claims relating to
Accounts. Borrower shall not forgive (completely or partially), compromise or settle any Account
for less than payment in full, or agree to do any of the foregoing, except that Borrower may do so,
provided that: (i) Borrower does so in good faith, in a commercially reasonable manner, in the
ordinary course of business, and in arm’s length transactions, which are reported to Silicon on the
regular reports provided to Silicon; (ii) no Default or Event of Default has occurred and is
continuing; and (iii) taking into account all such discounts, settlements and forgiveness, the
total outstanding Loans will not exceed the Credit Limit.

     4.7 Returns. Provided no Event of Default has occurred and is continuing, if any Account
Debtor returns any Inventory to Borrower, Borrower shall promptly determine the reason for such
return and promptly issue a credit memorandum to the Account Debtor in the appropriate amount. In
the event any attempted return occurs after the occurrence and during the continuance of any Event
of Default, Borrower shall hold the returned Inventory in trust for Silicon, and immediately notify
Silicon of the return of the Inventory.

     4.8 Verification. Silicon may, from time to time, verify directly with the respective Account
Debtors the validity, amount and other matters relating to the Accounts, by means of mail,
telephone or otherwise, either in the name of Borrower or Silicon or such other name as Silicon may
choose.

     4.9 No Liability. Silicon shall not be responsible or liable for any shortage or discrepancy
in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives
rise to an Account, or for any error, act, omission, or delay of any kind occurring in the
settlement, failure to settle, collection or failure to collect any Account, or for settling any
Account in good faith for less than the full amount thereof, nor shall Silicon be deemed to be
responsible for any of Borrower’s obligations under any contract or agreement giving rise to an
Account. Nothing herein shall, however, relieve Silicon from liability for its own gross
negligence or willful misconduct.

5. ADDITIONAL DUTIES OF BORROWER.

     5.1 Financial and Other Covenants. Borrower shall at all times comply with the financial and
other covenants set forth in the Schedule.

     5.2 Insurance. Borrower shall, at all times insure all of the tangible personal property
Collateral and carry such other business insurance, with insurers reasonably acceptable to Silicon,
in such form and amounts as Silicon may reasonably require and that are customary and in accordance
with standard practices for Borrower’s industry and locations, and Borrower shall provide evidence
of such insurance to Silicon. All such insurance policies shall name Silicon as an additional loss
payee, and shall contain a lenders loss payee endorsement in form reasonably acceptable to Silicon.
Upon receipt of the proceeds of any such insurance, Silicon shall apply such proceeds in reduction
of the Obligations as Silicon shall determine in its good faith business judgment, except that,
provided no Default or Event of Default has occurred and is continuing, Silicon shall release to
Borrower insurance proceeds with respect to Equipment totaling less than $100,000, which shall be
utilized by Borrower for the replacement of the Equipment with respect to which the insurance
proceeds were paid. Silicon may require reasonable assurance that the insurance proceeds so
released will be so used. If Borrower fails to provide or pay for

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any insurance, Silicon may, but is not obligated to, obtain the same at Borrower’s expense.
Borrower shall promptly deliver to Silicon copies of all material reports made to insurance
companies.

     5.3 Reports. Borrower, at its expense, shall provide Silicon with the written reports set
forth in the Schedule, and such other written reports with respect to Borrower (including budgets,
sales projections, operating plans and other financial documentation), as Silicon shall from time
to time specify in its good faith business judgment.

     5.4 Access to Collateral, Books and Records. At reasonable times, and on one Business Day’s
notice, Silicon, or its agents, shall have the right to inspect the Collateral, and the right to
audit and copy Borrower’s books and records. In handling any confidential information, Silicon
will exercise the same degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (a) to Silicon’s subsidiaries or affiliates, (b) to
prospective transferees or purchasers of any interest in the loans (provided, however, Silicon
shall use commercially reasonable efforts in obtaining such prospective transferee or purchasers
agreement of the terms of this provision), (c) as required by law, regulation, subpoena, or other
order, (d) as required in connection with Silicon’s examination or audit and (e) as Silicon
considers appropriate exercising remedies under this Agreement. Confidential information does not
include information that either: (i) is in the public domain or in Silicon’s possession when
disclosed to Silicon, or becomes part of the public domain after disclosure to Silicon; or (ii) is
disclosed to Silicon by a third party, if Silicon does not know that the third party is prohibited
from disclosing the information. The foregoing inspections and audits shall be at Borrower’s
expense and the charge therefor shall be $750 per person per day (or such higher amount as shall
represent Silicon’s then current standard charge for the same), plus reasonable out-of-pocket
expenses. In the event Borrower and Silicon schedule an audit more than 10 days in advance, and
Borrower seeks to reschedules the audit with less than 10 days written notice to Silicon, then
(without limiting any of Silicon’s rights or remedies), Borrower shall pay Silicon a cancellation
fee of $1,000 plus any out-of-pocket expenses incurred by Silicon, to compensate Silicon for the
anticipated costs and expenses of the cancellation.

     5.5 Negative Covenants. Except as may be permitted in the Schedule, Borrower shall not,
without Silicon’s prior written consent (which shall be a matter of its good faith business
judgment), do any of the following: (i) merge or consolidate with another corporation or entity;
(ii) acquire any assets, except in the ordinary course of business; (iii) enter into any other
transaction outside the ordinary course of business; (iv) sell or transfer any Collateral, except
for the sale (a) of finished Inventory in the ordinary course of Borrower’s business; (b) of
obsolete or unneeded Equipment in the ordinary course of business; (c) of (1) non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in
the ordinary course of business; and (2) of joint-ownership rights, licenses and cross-licenses
entered into from time to time in connection with strategic relationships and development
agreements, approved by Borrower’s senior management, provided that such joint ownership rights,
licenses and cross-licenses do not materially impact Borrower’s ability to conduct its business or
the value of the Collateral; (d) of assets in connection with the sale of Borrower’s “Designated
Product Line”, including inventory and related Intellectual Property; and (e) other property that
Borrower reasonably determines is not necessary or useful for the ordinary operations of Borrower,
so long as the disposition of same will not have a material adverse effect on the business or
operations of Borrower; (v) store any Inventory or other Collateral with any warehouseman or other
third party; (vi) sell any Inventory on a sale-or-return, guaranteed sale, consignment, or other
contingent basis; (vii) make any loans of any money or other assets; (viii) incur any debts,
outside the ordinary course of business, which would result in a Material Adverse Change; (ix)
guarantee or otherwise become liable with respect to the obligations of another party or entity;
(x) pay or declare any dividends on Borrower’s stock (except for dividends payable solely in stock
of Borrower) provided that (a) Borrower may convert any of its convertible securities into other
securities pursuant to the terms of such convertible securities or otherwise in exchange thereof,
(b) Borrower may repurchase the stock of former employees or consultants pursuant to stock
repurchase agreements so long (1) as an Event of Default does not exist at the time of such
repurchase and would not exist after giving effect to such repurchase, and (2) such repurchases do
not exceed $500,000 in the aggregate during any fiscal year of Borrower; and (c) Borrower may make
any open-market purchase or exchange of Borrower’s publicly-traded equity securities, so long as
(1) an Event of Default does not exist at the time of such purchase or exchange and would not exist
after giving effect to such purchase or exchange, and (2) such purchase and exchange do not exceed
$1,500,000 in the aggregate during any fiscal year of Borrower; (xi) redeem, retire,

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purchase or otherwise acquire, directly or indirectly, any of Borrower’s stock; (xii) make any
change in Borrower’s capital structure which would result in a Material Adverse Change; (xiii)
engage, directly or indirectly, in any business other than the businesses currently engaged in by
Borrower or reasonably related thereto; (xiv) change the persons holding the offices of Chief
Executive Officer or Chief Financial Officer (each a “Senior Executive”) unless a replacement is
approved by a majority of Borrower’s Board of Directors, including a majority of those members of
the Board of Directors who were members of the Board of Directors and not employees of Borrower as
of the date of this Agreement (the “Outside Directors”), within 90 days of the date of the
termination of such Senior Executive (provided that if a majority of the Outside Directors
determine that such Senior Executive shall not be replaced, that Borrower shall so notify Silicon
within 30 days of the determination); or (xv) dissolve or elect to dissolve. Transactions
permitted by the foregoing provisions of this Section are only permitted if no Default or Event of
Default would occur as a result of such transaction.

     5.6 Litigation Cooperation. Should any third-party suit or proceeding be instituted by or
against Silicon with respect to any Collateral or relating to Borrower, Borrower shall, without
expense to Silicon, make available Borrower and its officers, employees and agents and Borrower’s
books and records, to the extent that Silicon may deem them reasonably necessary in order to
prosecute or defend any such suit or proceeding.

     5.7 Further Assurances. Borrower agrees, at its expense, on request by Silicon, to execute
all documents and take all actions, as Silicon, may, in its good faith business judgment, deem
necessary or useful in order to perfect and maintain Silicon’s perfected first-priority security
interest in the Collateral (subject to Permitted Liens), and in order to fully consummate the
transactions contemplated by this Agreement.

6. TERM.

     6.1 Maturity Date. This Agreement shall continue in effect until the maturity date set forth
on the Schedule (the “Maturity Date”), subject to Section 6.3 below.

     6.2 Early Termination. This Agreement may be terminated prior to the Maturity Date as
follows: (i) by Borrower, effective three Business Days after written notice of termination is
given to Silicon; or (ii) by Silicon at any time after the occurrence and during the continuance of
an Event of Default, without notice, effective immediately. If this Agreement is terminated by
Borrower or by Silicon under this Section 6.2, Borrower shall pay to Silicon a termination fee in
an amount equal to (i) one percent (1.0%) of the Credit Limit if the Agreement is terminated within
one year of the date hereof or (ii) one-half of one percent (0.5%) of the Credit Limit if the
Agreement is terminated after one year from the date hereof and before the Maturity Date, provided
that no termination fee shall be charged if the credit facility hereunder is replaced with a new
facility from another division of Silicon Valley Bank. The termination fee shall be due and
payable on the effective date of termination and thereafter shall bear interest at a rate equal to
the highest rate applicable to any of the Obligations.

     6.3 Payment of Obligations. On the Maturity Date or on any earlier effective date of
termination, Borrower shall pay and perform in full all Obligations, whether evidenced by
installment notes or otherwise, and whether or not all or any part of such Obligations are
otherwise then due and payable. Without limiting the generality of the foregoing, if on the
Maturity Date, or on any earlier effective date of termination, there are any outstanding Letters
of Credit issued by Silicon or issued by another institution based upon an application, guarantee,
indemnity or similar agreement on the part of Silicon, then on such date Borrower shall provide to
Silicon cash collateral in an amount equal to 105% of the face amount of all such Letters of Credit
plus all interest, fees and cost due or to become due in connection therewith (as estimated by
Silicon in its good faith business judgment), to secure all of the Obligations relating to said
Letters of Credit, pursuant to Silicon’s then standard form cash pledge agreement. Notwithstanding
any termination of this Agreement, all of Silicon’s security interests in all of the Collateral and
all of the terms and provisions of this Agreement shall continue in full force and effect until all
Obligations have been paid and performed in full other than contingent indemnification obligations
with respect to unasserted claims, at which time Silicon will release its Liens in the Collateral
and all rights therein will revert to Borrower. No termination shall in any way affect or impair
any right or remedy of Silicon, nor shall any such termination relieve Borrower of any Obligation
to Silicon, until all of the Obligations have been paid and performed in full. Upon payment and
performance in full of all the Obligations and termination of this Agreement, Silicon

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shall promptly terminate its financing statements with respect to the Borrower and deliver to
Borrower such other documents as may be required to fully terminate Silicon’s security interests.
Silicon agrees to execute and deliver to Borrower from time to time such Collateral releases as
Borrower may request and as are necessary to give other lenders of lessors that finance the
purchase of Equipment and related software after the date hereof a first priority Lien in such
Equipment and related software so long as the Liens and Indebtedness incurred with respect thereto
are permitted under this Agreement; provided that Silicon may, in its sole discretion, refuse to
make any further Loans after termination.

7. EVENTS OF DEFAULT AND REMEDIES.

     7.1 Events of Default. The occurrence of any of the following events shall constitute an
“Event of Default” under this Agreement, and Borrower shall give Silicon immediate written notice
thereof: (a) Any warranty, representation, statement, report or certificate made or delivered to
Silicon by Borrower or any of Borrower’s officers, employees or agents, now or in the future, shall
be untrue or misleading in a material respect when made or deemed to be made; or (b) Borrower shall
fail to pay when due any Loan or any interest thereon or any other monetary Obligation; or (c) the
total Loans and other Obligations outstanding at any time shall exceed the Credit Limit; or (d)
Borrower shall fail to comply with any of the financial covenants set forth in the Schedule, or
shall fail to perform any other nonmonetary Obligation which by its nature cannot be cured, or
shall fail to permit Silicon to conduct an inspection or audit as specified in Section 5.4 hereof;
or (e) Borrower shall fail to perform any other nonmonetary Obligation, which failure is not cured
within five Business Days after the date due; or (f) any levy, assessment, attachment, seizure,
lien or encumbrance (other than a Permitted Lien) is made on all or any part of the Collateral
which is not cured within 10 days after the occurrence of the same; or (g) any default or event of
default occurs under any obligation secured by a Permitted Lien, which is not cured within any
applicable cure period or waived in writing by the holder of the Permitted Lien; or (h) Borrower
breaches any material contract or obligation, which has resulted or may reasonably be expected to
result in a Material Adverse Change provided, however, that the Event of Default under this clause
(h) caused by the occurrence of a default under another agreement described in this clause (h)
shall be automatically cured for purposes of this Agreement upon the cure or waiver of the default
under such other agreement, if (i) Silicon has not exercised its right to accelerate the maturity
of the Obligations under Section 7.2 hereof, and (ii) any such cure by Borrower does not result in
an Event of Default under any other provision of this Agreement, and (iii) in connection with such
cure, the agreement with the third party is not modified in a manner which increases the payments
from the Borrower to the third party or otherwise makes it materially less advantageous to
Borrower; or (i) Dissolution, termination of existence, insolvency or business failure of Borrower;
or appointment of a receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any proceeding by Borrower under
any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect; or (j) the
commencement of any proceeding against Borrower or any guarantor of any of the Obligations under
any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect, which is not cured
by the dismissal thereof within 30 days after the date commenced; or (k) revocation or termination
of, or limitation or denial of liability upon, any guaranty of the Obligations or any attempt to do
any of the foregoing, or commencement of proceedings by any guarantor of any of the Obligations
under any bankruptcy or insolvency law; or (l) revocation or termination of, or limitation or
denial of liability upon, any pledge of any certificate of deposit, securities or other property or
asset of any kind pledged by any third party to secure any or all of the Obligations, or any
attempt to do any of the foregoing, or commencement of proceedings by or against any such third
party under any bankruptcy or insolvency law; or (m) Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other than as permitted
in the applicable subordination agreement, or if any Person who has subordinated such indebtedness
or obligations terminates or in any way limits his subordination agreement; or (n) there shall be a
change in the record or beneficial ownership of an aggregate of more than 20% of the outstanding
shares of stock of Borrower, in one or more transactions, compared to the ownership of outstanding
shares of stock of Borrower in effect on the date hereof, without the prior written consent of
Silicon; or (o) Borrower shall generally not pay its debts as they become due, or Borrower shall
conceal, remove or transfer any part of its property, with intent to hinder, delay or defraud its
creditors, or make or suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or (p) a Material Adverse Change shall occur or
(q) if Borrower violates any covenant in the Borrower

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Agreement or otherwise defaults thereunder or (r) the Exim Guarantee ceases for any reason to
be in full force and effect, or if the Exim Bank declares the Exim Guarantee void or revokes any
obligations under the Exim Guarantee. Silicon may cease making any Loans hereunder during any of
the above cure periods, and thereafter if an Event of Default has occurred and is continuing.

     7.2 Remedies. Upon the occurrence and during the continuance of any Event of Default, and at
any time thereafter, Silicon, at its option, and without notice or demand of any kind (all of which
are hereby expressly waived by Borrower), may do any one or more of the following: (a) Cease making
Loans or otherwise extending credit to Borrower under this Agreement or any other Loan Document;
(b) Accelerate and declare all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by any instrument
evidencing or relating to any Obligation; (c) Take possession of any or all of the Collateral
wherever it may be found, and for that purpose Borrower hereby authorizes Silicon without judicial
process to enter onto any of Borrower’s premises without interference to search for, take
possession of, keep, store, or remove any of the Collateral, and remain on the premises or cause a
custodian to remain on the premises in exclusive control thereof, without charge for so long as
Silicon deems it necessary, in its good faith business judgment, in order to complete the
enforcement of its rights under this Agreement or any other agreement; provided, however, that
should Silicon seek to take possession of any of the Collateral by court process, Borrower hereby
irrevocably waives: (i) any bond and any surety or security relating thereto required by any
statute, court rule or otherwise as an incident to such possession; (ii) any demand for possession
prior to the commencement of any suit or action to recover possession thereof; and (iii) any
requirement that Silicon retain possession of, and not dispose of, any such Collateral until after
trial or final judgment; (d) Require Borrower to assemble any or all of the Collateral and make it
available to Silicon at places designated by Silicon which are reasonably convenient to Silicon and
Borrower, and to remove the Collateral to such locations as Silicon may deem advisable; (e)
Complete the processing, manufacturing or repair of any Collateral prior to a disposition thereof
and, for such purpose and for the purpose of removal, Silicon shall have the right to use
Borrower’s premises, vehicles, hoists, lifts, cranes, and other Equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its condition at
the time Silicon obtains possession of it or after further manufacturing, processing or repair, at
one or more public and/or private sales, in lots or in bulk, for cash, exchange or other property,
or on credit, and to adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Silicon shall have the right to conduct such
disposition on Borrower’s premises without charge, for such time or times as Silicon deems
reasonable, or on Silicon’s premises, or elsewhere and the Collateral need not be located at the
place of disposition. Silicon may directly or through any affiliated company purchase or lease any
Collateral at any such public disposition, and if permissible under applicable law, at any private
disposition. Any sale or other disposition of Collateral shall not relieve Borrower of any
liability Borrower may have if any Collateral is defective as to title or physical condition or
otherwise at the time of sale; (g) Demand payment of, and collect any Accounts and General
Intangibles comprising Collateral and, in connection therewith, Borrower irrevocably authorizes
Silicon to endorse or sign Borrower’s name on all collections, receipts, instruments and other
documents, to take possession of and open mail addressed to Borrower and remove therefrom payments
made with respect to any item of the Collateral or proceeds thereof, and, in Silicon’s good faith
business judgment, to grant extensions of time to pay, compromise claims and settle Accounts and
the like for less than face value; (h) Offset against any sums in any of Borrower’s general,
special or other Deposit Accounts with Silicon against any or all of the Obligations; and (i)
Demand and receive possession of any of Borrower’s federal and state income tax returns and the
books and records utilized in the preparation thereof or referring thereto. All reasonable
attorneys’ fees, expenses, costs, liabilities and obligations incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be due on demand, and
shall bear interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon’s rights and remedies, from and after the occurrence
and during the continuance of any Event of Default, the interest rate applicable to the Obligations
shall be increased by an additional four percent per annum (the “Default Rate”).

     7.3 Standards for Determining Commercial Reasonableness. Borrower and Silicon agree that a
sale or other disposition (collectively, “sale”) of any Collateral which complies with the
following standards will conclusively be deemed to be commercially reasonable: (i) Notice of the
sale is given to Borrower at least ten days prior to the sale, and, in the case of a public sale,
notice of the sale is published at least five days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted; (ii) Notice of the sale describes the

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collateral in general, nonspecific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences at any time between
8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in cash or by cashier’s check or wire
transfer is required; (vi) With respect to any sale of any of the Collateral, Silicon may (but is
not obligated to) direct any prospective purchaser to ascertain directly from Borrower any and all
information concerning the same. Silicon shall be free to employ other methods of noticing and
selling the Collateral, in its discretion, if they are commercially reasonable.

     7.4 Power of Attorney. Upon the occurrence and during the continuance of any Event of
Default, without limiting Silicon’s other rights and remedies, Borrower grants to Silicon an
irrevocable power of attorney coupled with an interest, authorizing and permitting Silicon (acting
through any of its employees, attorneys or agents) at any time, at its option, but without
obligation, with or without notice to Borrower, and at Borrower’s expense, to do any or all of the
following, in Borrower’s name or otherwise, but Silicon agrees that if it exercises any right
hereunder, it will do so in good faith and in a commercially reasonable manner: (a) Execute on
behalf of Borrower any documents that Silicon may, in its good faith business judgment, deem
advisable in order to perfect and maintain Silicon’s security interest in the Collateral, or in
order to exercise a right of Borrower or Silicon, or in order to fully consummate all the
transactions contemplated under this Agreement, and all other Loan Documents; (b) Execute on behalf
of Borrower, any invoices relating to any Account, any draft against any Account Debtor and any
notice to any Account Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of
mechanic’s, materialman’s or other lien, or assignment or satisfaction of mechanic’s, materialman’s
or other lien; (c) Take control in any manner of any cash or noncash items of payment or proceeds
of Collateral; endorse the name of Borrower upon any instruments, or documents, evidence of payment
or Collateral that may come into Silicon’s possession; (d) Endorse all checks and other forms of
remittances received by Silicon; (e) Pay, contest or settle any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment based thereon, or
otherwise take any action to terminate or discharge the same; (f) Grant extensions of time to pay,
compromise claims and settle Accounts and General Intangibles for less than face value and execute
all releases and other documents in connection therewith; (g) Pay any sums required on account of
Borrower’s taxes or to secure the release of any liens therefor, or both; (h) Settle and adjust,
and give releases of, any insurance claim that relates to any of the Collateral and obtain payment
therefor; (i) Instruct any third party having custody or control of any books or records belonging
to, or relating to, Borrower to give Silicon the same rights of access and other rights with
respect thereto as Silicon has under this Agreement; and (j) Take any action or pay any sum
required of Borrower pursuant to this Agreement and any other Loan Documents. Any and all
reasonable sums paid and any and all reasonable costs, expenses, liabilities, obligations and
attorneys’ fees incurred by Silicon with respect to the foregoing shall be added to and become part
of the Obligations, shall be payable on demand, and shall bear interest at a rate equal to the
highest interest rate applicable to any of the Obligations. In no event shall Silicon’s rights
under the foregoing power of attorney or any of Silicon’s other rights under this Agreement be
deemed to indicate that Silicon is in control of the business, management or properties of
Borrower.

     7.5 Application of Proceeds. All proceeds realized as the result of any sale of the
Collateral shall be applied by Silicon first to the reasonable costs, expenses, liabilities,
obligations and attorneys’ fees incurred by Silicon in the exercise of its rights under this
Agreement, second to the interest due upon any of the Obligations, and third to the principal of
the Obligations, in such order as Silicon shall determine in its sole discretion. Any surplus
shall be paid to Borrower or other persons legally entitled thereto; Borrower shall remain liable
to Silicon for any deficiency. If, Silicon, in its good faith business judgment, directly or
indirectly enters into a deferred payment or other credit transaction with any purchaser at any
sale of Collateral, Silicon shall have the option, exercisable at any time, in its good faith
business judgment, of either reducing the Obligations by the principal amount of purchase price or
deferring the reduction of the Obligations until the actual receipt by Silicon of the cash
therefor.

     7.6 Remedies Cumulative. In addition to the rights and remedies set forth in this Agreement,
Silicon shall have all the other rights and remedies accorded a secured party under the California
Uniform Commercial Code and under all other applicable laws, and under any other instrument or
agreement now or in the future entered into between Silicon and Borrower, and all of such rights
and remedies are cumulative and none is exclusive. Exercise or partial exercise by Silicon of one
or more of its rights or remedies shall not be deemed an election, nor bar Silicon from subsequent
exercise or partial exercise of any other rights or remedies. The failure or delay of

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Silicon to exercise any rights or remedies shall not operate as a waiver thereof, but all
rights and remedies shall continue in full force and effect until all of the Obligations have been
fully paid and performed.

     7.7 Exim Direction. Upon the occurrence and during the continuance of an Event of Default,
Exim Bank shall have right to (i) direct Silicon to exercise the remedies specified in Section 7.2
and (ii) request that Silicon accelerate the maturity of any other loans to Borrower.

     7.8 Exim Notification. Silicon has the right to immediately notify Exim Bank in writing if it
has knowledge of any of the following events: (1) any failure to pay any amount due under this
Agreement; (2) the Exim Borrowing Base is less than the sum of the outstanding Exim Loans; (3) any
failure to pay when due any amount payable to Silicon under any loan owing by Borrower to Silicon;
(4) the filing of an action for debtor’s relief by, against or on behalf of Borrower; (5) any
threatened or pending material litigation against Borrower, or any dispute involving Borrower. If
Silicon sends a notice to Exim Bank, Silicon has the right to send Exim Bank a written report on
the status of events covered by the notice every 30 days after the date of the original
notification, until Silicon files a claim with Exim Bank or the defaults have been cured (but no
Exim Loans may be required during the cure period unless Exim Bank gives its written approval). If
directed by Exim Bank, Silicon will have the right to exercise any rights it may have against the
Borrower to demand the immediate repayment of all amount outstandings under the Exim Loan
Documents.

8. DEFINITIONS. As used in this Agreement, the following terms have the following meanings:

     “Account Debtor” means the obligor on an Account.

     “Accounts” means all present and future “accounts” as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all accounts receivable and other sums owing to
Borrower.

     “Affiliate” means, with respect to any Person, a relative, partner, shareholder,
director, officer, or employee of such Person, or any parent or subsidiary of such Person, or any
Person controlling, controlled by or under common control with such Person.

     “Availability” means, as of any date of determination, the amount that Borrower is
entitled to borrow as Domestic Loans under Section 1.1 of the Schedule or as EXIM Loans under
Section 1.2 of the Schedule, as applicable (after giving effect to all then outstanding Loans and
all sublimits and reserves applicable thereunder).

     “Borrower Agreement” is the Export-Import Bank of the United States Working Capital
Guarantee Program Borrower Agreement between Borrower and Silicon.

     “Business Day” means a day on which Silicon is open for business.

     “Code” means the Uniform Commercial Code as adopted and in effect in the State of
California from time to time.

     “Collateral” has the meaning set forth in Section 2 above.

     “continuing” and “during the continuance of” when used with reference to a
Default or Event of Default means that the Default or Event of Default has occurred and has not
been either waived in writing by Silicon or cured within any applicable cure period.

     “Default” means any event which with notice or passage of time or both, would
constitute an Event of Default.

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     “Credit Limit” means the sum of the Domestic Credit Limit and the Exim Credit Limit.

     “Default Rate” has the meaning set forth in Section 7.2 above.

     “Deposit Accounts” means all present and future “deposit accounts” as defined in the
California Uniform Commercial Code in effect on the date hereof with such additions to such term as
may hereafter be made, and includes without limitation all general and special bank accounts,
demand accounts, checking accounts, savings accounts and certificates of deposit.

     “Designated Product Line” means Borrower’s “Meta-Probe” product line assets.

     “Domestic Borrowing Base” is the sum of (x) 80% of Eligible Accounts and (y) the
lesser of (A) 50% all Eligible Retainage Accounts, and (B) $500,000, as determined by Silicon from
Borrower’s most recent Domestic Borrowing Base Certificate; provided, that, if
Borrower’s Tangible Net Worth is less than $20,000,000, then Eligible Retainage Accounts shall be
excluded from the calculation of Domestic Borrowing Base.

     “Domestic Loans” means loans made pursuant to Section 1.1 of the Schedule.

     “Domestic Credit Limit” is defined in Section 11 of the Schedule.

     “Domestic Standby Letter of Credit Reserve” is an amount equal to the issued and
outstanding (including drawn but unreimbursed Letters of Credit) Excess Standby Letters of Credit.

     “Eligible Accounts” are Accounts in the ordinary course of Borrower’s business that
meet all Borrower’s representations and warranties in Section 4; but Silicon in its good
faith business judgment may change eligibility standards by giving Borrower notice. Unless Silicon
agrees otherwise in writing, Eligible Accounts will not include:

     (a) Accounts that the account debtor has not paid within 90 days of invoice date;

     (b) Accounts for an account debtor, 50% or more of whose Accounts have not been paid within 90
days of invoice date;

     (c) Credit balances over 90 days from invoice date;

     (d) Accounts for an account debtor, including Affiliates, whose total obligations to Borrower
exceed 25% of all Accounts, for the amounts that exceed that percentage, unless the Silicon
approves otherwise in writing, except that such percentage shall be 40% with respect to the
domestic Accounts of the Significant Account Debtor;

     (e) Accounts for which the account debtor does not have its principal place of business in the
United States;

     (f) Accounts for which the account debtor is a federal entity or any department, agency, or
instrumentality except for Accounts of the United States if the payee has assigned its payment
rights to Silicon and the assignment has been acknowledged under the Assignment of Claims Act of
1940 (31 U.S.C.§ 3727);

     (g) Accounts for which Borrower owes the account debtor, but only up to the amount owed
(sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts);

     (h) Accounts for demonstration or promotional equipment, or in which goods are consigned,
sales guaranteed, sale or return, sale on approval, bill and hold, or other terms if account
debtor’s payment may be conditional;

     (i) Accounts for which the account debtor is Borrower’s Affiliate, officer, employee, or
agent;

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     (j) Accounts in which the account debtor disputes liability or makes any claim and Silicon
reasonably believes there may be a basis for dispute (but only up to the disputed or claimed
amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or
goes out of business; and

     (k) Accounts for which Silicon reasonably determines collection to be doubtful.

     “Eligible Retainage Accounts” are Accounts that would otherwise constitute Eligible
Accounts but for the fact that such Accounts are Retainage Accounts.

     “Equipment” means all present and future “equipment” as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the foregoing.

     “Event of Default” means any of the events set forth in Section 7.1 of this Agreement.

     “Excess Standby Letters of Credit” are standby Letters of Credit for which there is
insufficient availability under the Domestic Credit Limit (and therefore are reserved against the
Exim Credit Limit) in an aggregate face amount (including drawn but unreimbursed letters of credit)
not to exceed the lesser of: (i) Availability under the Exim Credit Limit and (ii) $3,500,000.

     “Exim Bank” is the Export-Import Bank of the United States.

     “Exim Credit Limit” is defined in Section 1.2 of the Schedule.

     “Exim Bank Expenses” are all audit fees and expenses; reasonable costs or expenses
(including reasonable attorneys’ fees and expenses) for preparing, negotiating, administering,
defending and enforcing the Exim Loan Documents (including appeals or Insolvency Proceedings) and
the fees that the Silicon pays to the Exim Bank in consideration of the issuance of the Exim
Guarantee.

     “Exim Borrowing Base” is the sum of (x) 90% of Exim Eligible Foreign Accounts, (y) the
lesser of (A) 25% of all Exim Eligible Foreign Retainage Accounts, and (B) $500,000, and (z) the
lesser of (I) 75% of Exim Eligible Foreign Inventory (valued at the lower of cost or market), (II)
$4,000,000, and (III) 60% of the aggregate outstanding amount of Exim Loans, as determined by
Silicon from Borrower’s most recent Exim Borrowing Base Certificate; provided,
that, if Borrower’s Tangible Net Worth is less than $20,000,000, then Exim Eligible Foreign
Retainage Accounts will be excluded from the calculation of EXIM Borrowing Base.

     “Exim Eligible Foreign Accounts” are Accounts payable in United States Dollars that
arise in the ordinary course of Borrower’s business from Borrower’s sale of Exim Eligible Foreign
Inventory (i) that the account debtor does not have its principal place of business in the United
States and (ii) that have been assigned and comply with all of Borrower’s representations and
warranties in; but Silicon, in its good faith business judgment, may change eligibility
standards by giving Borrower notice. Unless Silicon agrees otherwise in writing, Exim Eligible
Foreign Accounts will not include:

          (a) Accounts with terms of sales greater than 90 days.

          (b) Accounts which are more than sixty (60) calendar days past the original due date, unless
it is insured through Exim Bank export credit insurance for comprehensive commercial and political
risk, or through Exim Bank approved private insurers for a comparable coverage, in which case
ninety (90) calendar days shall apply;

          (c) Credit balances over 60 days from due date of the relevant invoice;

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          (d) Accounts evidenced by a letter of credit until the date of shipment of the items covered
by the subject letter of credit;

          (e) Accounts for which the account debtor is a military or defense entity;

          (f) Accounts for which Borrower owes the account debtor, but only up to the amount owed
(sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts);

          (g) Accounts for demonstration or promotional equipment, or in which goods are consigned,
sales guaranteed, sale or return, sale on approval, bill and hold, or other terms if account
debtor’s payment may be conditional;

          (h) Accounts for which the account debtor is Borrower’s Affiliate, officer, employee, or
agent;

          (i) Accounts in which the account debtor disputes liability or makes any claim and Silicon
believes there may be a basis for dispute (but only up to the disputed or claimed amount), or if
the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of
business;

          (j) Accounts generated by the sale of products purchased for military purposes;

          (k) Accounts generated by the sales of Inventory which constitute defense articles or defense
services;

          (l) Accounts excluded from the Borrowing Base under the Borrower Agreement;

          (m) Accounts that arise from the sales of items not in the ordinary course of Borrower’s
business;

          (n) Accounts not owned by Borrower or that are subject to any right, claim or interest of
another person other than the lien in favor of Silicon;

          (o) Accounts with respect to which an invoice has not been sent;

          (p) Accounts billed and payable outside the United Stated unless approved in writing by Exim
Bank, however, limited to no more than 50% of the Exim Borrowing Base shall be of such accounts;
and such Accounts are subject to the following:

               (i) Each subsidiary or affiliate is a party to the Loan Agreement;

               (ii) All proceeds are remitted to the United States on a monthly basis (excluding
the retention of proceeds for the purpose of funding local expenses);

               (iii) Accounts are derived from eligible exports originating from the United States;

               (iv) Silicon obtains a valid first priority security interest (or equivalent) in the
jurisdiction where the Accounts are located; and

               (v) Silicon obtains a legal opinion from local counsel with regard to the enforceability of
such security interest.

          (q) Accounts from account debtors with balance of 50% over 60 days past the invoice due date;

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          (r) Accounts with open account term with balance more than 25% concentration of total Exim
Eligible Foreign Accounts, unless pre-approved by Silicon;

          (s) Accounts billed in currencies other than U.S. Dollars, unless approved in writing by Exim
Bank;

          (t) Accounts from foreign buyers in countries where Exim Bank is legally prohibited from doing
business or in which Exim Bank coverage is not available (as designated in the Country Limitation
Schedule);

          (u) Accounts backed by letters of credit unacceptable to Silicon in its reasonable and good
faith credit judgment;

          (v) Accounts for which Silicon or Exim Bank determines collection to be doubtful, with
Silicon’s determination of same to be reasonable;

          (w) Accounts for which the items giving rise to such Account have not been shipped and
delivered to and accepted by the Buyer or the services giving rise to such Account have not been
performed by Borrower and accepted by the Buyer or the Account does not represent a final sale;

          (x) Accounts for which Borrower has made any agreement with the Buyer for any deduction
therefrom, except for discounts or allowances made in the ordinary course of business for prompt
payment, all of which discounts or allowances are reflected in the calculation of the face value of
each respective invoice related thereto; and

          (y) Accounts for which any of the items giving rise to such Account have been returned,
rejected or repossessed.

     “Exim Eligible Foreign Inventory” is Borrower’s Inventory purchased or manufactured
for resale (to buyers located outside the United States), located in the United States, other than
Inventory that is excluded under the Borrower Agreement and this Agreement. Exim Eligible Foreign
Inventory will not include the following:

          (a) Inventory not located in the United States;

          (b) Any demonstration Inventory or Inventory sold on consignment;

          (c) Inventory consisting of proprietary software not intended for sale;

          (d) Inventory previously exported from the United States;

          (e) Inventory which constitutes defense articles or defense services;

          (f) Inventory destined for shipment to prohibited countries in which Exim Bank is legally
prohibited from doing business as designated in the most recent Country Limitation Schedule;

          (g) Inventory destined for shipment to a country in which Exim coverage is not available as
designated in the most recent Country Limitation Schedule;

          (h) Inventory which is to be incorporated into items whose sale would result in ineligible
accounts receivable;

          (i) Inventory with offsetting claims;

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          (j) Inventory that is damaged, defective, obsolete, returned, recalled or unfit for further
processing;

          (k) Inventory that is not subject to a valid, perfected first priority Lien in favor of
Silicon;

          (l) Inventory that is located at an address that has not been disclosed to Silicon in writing;
and

          (m) Inventory that is in the possession of a processor or bailee, or located on premises
leased or subleased to Borrower, or on premises subject to a mortgage in favor of a Person other
than Silicon, unless such processor or bailee or mortgagee or the lessor or sublessor of such
premises, as the case may be, has executed and delivered all documentation which Silicon shall
require to evidence the subordination or other limitation or extinguishment of such Person’s rights
with respect to such Inventory and Silicon’s right to gain access thereto; and

Inventory incorporated into items which are destined for shipment to a country in which Exim
coverage is not available as designated in the most recent Country Limitation Schedule unless sold
under a letter of credit reasonably acceptable to Exim Bank;

     “Exim Eligible Foreign Retainage Accounts” are Accounts that would otherwise
constitute Exim Eligible Foreign Accounts but for the fact that such Accounts are Retainage
Accounts.

     “Exim Guarantee” is that certain Master Guarantee Agreement or other agreement, as
amended from time to time, the terms of which are incorporated into this Agreement.

     “Exim Loan Documents” means this Agreement, any note or notes executed by Borrower or
any other agreement entered into in connection with this Agreement, pursuant to which Exim Bank
guarantees Borrower’s obligations under this Agreement.

     “Export Order” is a written export order or contract for the purchase by the buyer
from the Borrower of any finished goods or services which are intended for export.

     “GAAP” means generally accepted accounting principles consistently applied.

     “General Intangibles” means all present and future “general intangibles” as defined in
the California Uniform Commercial Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all Intellectual Property, payment
intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income 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 business judgment” means honesty in fact and good faith (as defined in
Section 1201 of the Code) in the exercise of Silicon’s business judgment.

     “including” means including (but not limited to).

     “Intellectual Property” means all present and future (a) copyrights, copyright rights,
copyright applications, copyright registrations and like protections in each work of authorship and
derivative work thereof, whether published or unpublished, (b) trade secret rights, including all
rights to unpatented inventions and know-how, and confidential information; (c) mask work or
similar rights available for the protection of semiconductor chips; (d) patents, patent
applications and like protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the same; (e)
trademarks, servicemarks, trade styles, and

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trade names, whether or not any of the foregoing are registered, and all applications to
register and registrations of the same and like protections, and the entire goodwill of the
business of Borrower connected with and symbolized by any such trademarks; (f) computer software
and computer software products; (g) designs and design rights; (h) technology; (i) all claims for
damages by way of past, present and future infringement of any of the rights included above; (j)
all licenses or other rights to use any property or rights of a type described above.

     “Inventory” means all present and future “inventory” as defined in the California
Uniform Commercial 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 Borrower’s custody or possession or in transit
and including any returned goods and any documents of title representing any of the above.

     “Investment Property” means all present and future investment property, securities,
stocks, bonds, debentures, debt securities, partnership interests, limited liability company
interests, options, security entitlements, securities accounts, commodity contracts, commodity
accounts, and all financial assets held in any securities account or otherwise, and all options and
warrants to purchase any of the foregoing, wherever located, and all other securities of every
kind, whether certificated or uncertificated.

     “Loans” means the Domestic Loans and the Exim Loans.

     “Loan Documents” means, collectively, this Agreement, the Representations, and all
other present and future documents, instruments and agreements between Silicon and Borrower,
including, but not limited to those relating to this Agreement, and all amendments and
modifications thereto and replacements therefor.

     “Material Adverse Change” means any of the following: (i) a material adverse change in
the business, operations, or financial or other condition of the Borrower, or (ii) a material
impairment of the prospect of repayment of any portion of the Obligations; or (iii) a material
impairment of the value or priority of Silicon’s security interests in the Collateral.

     “Obligations” means all present and future Loans, advances, debts, liabilities,
obligations, guaranties, covenants, duties and indebtedness at any time owing by Borrower to
Silicon, whether evidenced by this Agreement or any note or other instrument or document, or
otherwise, whether arising from an extension of credit, opening of a letter of credit, banker’s
acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment and any participation by Silicon in Borrower’s
debts owing to others), absolute or contingent, due or to become due, including, without
limitation, all interest, charges, expenses, fees, attorney’s fees, expert witness fees, audit
fees, letter of credit fees, collateral monitoring fees, closing fees, facility fees, termination
fees, minimum interest charges and any other sums chargeable to Borrower under this Agreement or
under any other Loan Documents.

     “Other Property” means the following as defined in the California Uniform Commercial
Code in effect on the date hereof with such additions to such term as may hereafter be made, and
all rights relating thereto: all present and future “commercial tort claims” (including without
limitation any commercial tort claims identified in the Representations), “documents”,
“instruments”, “promissory notes”, “chattel paper”, “letters of credit”, “letter-of-credit rights”,
“fixtures”, “farm products” and “money”; and all other goods and personal property of every kind,
tangible and intangible, whether or not governed by the California Uniform Commercial Code.

     “Payment” means all checks, wire transfers and other items of payment received by
Silicon (including proceeds of Accounts and payment of the Obligations in full) for credit to
Borrower’s outstanding Loans or, if the balance of the Loans have been reduced to zero, for credit
to its Deposit Accounts.

     “Permitted Liens” means the following: (i) purchase money security interests in
specific items of Equipment; (ii) leases of specific items of Equipment; (iii) liens for taxes not
yet payable; (iv) additional security interests and liens consented to in writing by Silicon, which
consent may be withheld in its good faith business judgment; (v) security interests being
terminated substantially concurrently with this Agreement; (vi) liens of

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materialmen, mechanics, warehousemen, carriers, or other similar liens arising in the ordinary
course of business and securing obligations which are not delinquent; (vii) liens incurred in
connection with the extension, renewal or refinancing of the indebtedness secured by liens of the
type described above in clauses (i) or (ii) above, provided that any extension, renewal or
replacement lien is limited to the property encumbered by the existing lien and the principal
amount of the indebtedness being extended, renewed or refinanced does not increase; (viii) Liens in
favor of customs and revenue authorities which secure payment of customs duties in connection with
the importation of goods. Silicon will have the right to require, as a condition to its consent
under subparagraph (iv) above, that the holder of the additional security interest or lien sign an
intercreditor agreement on Silicon’s then standard form, acknowledge that the security interest is
subordinate to the security interest in favor of Silicon, and agree not to take any action to
enforce its subordinate security interest so long as any Obligations remain outstanding, and that
Borrower agree that any uncured default in any obligation secured by the subordinate security
interest shall also constitute an Event of Default under this Agreement.

     “Payment” means all checks, wire transfers and other items of payment received by
Silicon (including proceeds of Accounts and payment of the Obligations in full) for credit to
Borrower’s outstanding Loans or, if the balance of the Loans have been reduced to zero, for credit
to its Deposit Accounts.

     “Person” means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, government, or any agency or political
division thereof, or any other entity.

     “Representations” means the written Representations and Warranties provided by
Borrower to Silicon referred to in the Schedule.

     “Reserves” means, as of any date of determination, such amounts as Silicon may from
time to time establish and revise in its good faith business judgment, reducing the amount of
Loans, Letters of Credit and other financial accommodations which would otherwise be available to
Borrower under the lending formula(s) provided in the Schedule: (a) to reflect events, conditions,
contingencies or risks which, as determined by Silicon in its good faith business judgment, do or
may adversely affect (i) the Collateral or any other property which is security for the Obligations
or its value (including without limitation any increase in delinquencies of Accounts), (ii) the
assets, business or prospects of Borrower or any Guarantor, or (iii) the security interests and
other rights of Silicon in the Collateral (including the enforceability, perfection and priority
thereof); or (b) to reflect Silicon’s good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any Guarantor to Silicon is or may have been
incomplete, inaccurate or misleading in any material respect; or (c) in respect of any state of
facts which Silicon determines in good faith constitutes an Event of Default or may, with notice or
passage of time or both, constitute an Event of Default.

     “Retainage Account” is a portion of an Account that is conditional and remains subject
to buyer’s acceptance.

     “Significant Account Debtor” means Intel.

     Other Terms. All accounting terms used in this Agreement, unless otherwise indicated,
shall have the meanings given to such terms in accordance with GAAP, consistently applied. 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.

9. GENERAL PROVISIONS.

     9.1 Interest Computation. In computing interest on the Obligations, all Payments received
after 12:00 Noon on any day shall be deemed received on the next Business Day.

     9.2 Application of Payments. All payments with respect to the Obligations may be applied, and
in Silicon’s good faith business judgment reversed and reapplied, to the Obligations, in such order
and manner as Silicon shall determine in its good faith business judgment.

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     9.3 Charges to Accounts. Silicon may, in its discretion, require that Borrower pay monetary
Obligations in cash to Silicon, or charge them to Borrower’s Loan account, in which event they will
bear interest at the same rate applicable to the Loans. Silicon may also, in its discretion,
charge any monetary Obligations to Borrower’s Deposit Accounts maintained with Silicon.

     9.4 Monthly Accountings. Silicon shall provide Borrower monthly with an account of advances,
charges, expenses and payments made pursuant to this Agreement. Such account shall be deemed
correct, accurate and binding on Borrower and an account stated (except for reverses and
reapplications of payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within 60 days after such account is rendered,
describing the nature of any alleged errors or omissions.

     9.5 Notices. All notices to be given under this Agreement shall be in writing and shall be
given either personally or by reputable private delivery service or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or Borrower at the addresses shown in
the heading to this Agreement, or at any other address designated in writing by one party to the
other party. Notices to Silicon shall be directed to the Commercial Finance Division, to the
attention of the Division Manager or the Division Credit Manager. All notices shall be deemed to
have been given upon delivery in the case of notices personally delivered, or at the expiration of
one Business Day following delivery to the private delivery service, or two Business Days following
the deposit thereof in the United States mail, with postage prepaid.

     9.6 Severability. Should any provision of this Agreement be held by any court of competent
jurisdiction to be void or unenforceable, such defect shall not affect the remainder of this
Agreement, which shall continue in full force and effect.

     9.7 Integration. This Agreement and such other written agreements, documents and instruments
as may be executed in connection herewith are the final, entire and complete agreement between
Borrower and Silicon and supersede all prior and contemporaneous negotiations and oral
representations and agreements, all of which are merged and integrated in this Agreement.
There are no oral understandings, representations or agreements between the parties which are
not set forth in this Agreement or in other written agreements signed by the parties in connection
herewith.

     9.8 Waivers; Indemnity. The failure of Silicon at any time or times to require Borrower to
strictly comply with any of the provisions of this Agreement or any other Loan Document shall not
waive or diminish any right of Silicon later to demand and receive strict compliance therewith.
Any waiver of any default shall not waive or affect any other default, whether prior or subsequent,
and whether or not similar. None of the provisions of this Agreement or any other Loan Document
shall be deemed to have been waived by any act or knowledge of Silicon or its agents or employees,
but only by a specific written waiver signed by an authorized officer of Silicon and delivered to
Borrower. Borrower waives the benefit of all statutes of limitations relating to any of the
Obligations or this Agreement or any other Loan Document, and Borrower waives demand, protest,
notice of protest and notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper, instrument, account, General
Intangible, document or guaranty at any time held by Silicon on which Borrower is or may in any way
be liable, and notice of any action taken by Silicon, unless expressly required by this Agreement.
Borrower hereby agrees to indemnify Silicon and its affiliates, subsidiaries, parent, directors,
officers, employees, agents, and attorneys, and to hold them harmless from and against any and all
claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and
expenses (including reasonable attorneys’ fees), of every kind, which they may sustain or incur
based upon or arising out of any of the Obligations, or any relationship or agreement between
Silicon and Borrower, or any other matter, relating to Borrower or the Obligations; provided that
this indemnity shall not extend to damages proximately caused by the indemnitee’s own gross
negligence or willful misconduct. Notwithstanding any provision in this Agreement to the contrary,
the indemnity agreement set forth in this Section shall survive any termination of this Agreement
and shall for all purposes continue in full force and effect.

     9.9 No Liability for Ordinary Negligence. Neither Silicon, nor any of its directors,
officers, employees, agents, attorneys or any other Person affiliated with or representing Silicon
shall be liable for any

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claims, demands, losses or damages, of any kind whatsoever, made, claimed, incurred or
suffered by Borrower or any other party through the ordinary negligence of Silicon, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated with or
representing Silicon, but nothing herein shall relieve Silicon from liability for its own gross
negligence or willful misconduct.

     9.10 Amendment. The terms and provisions of this Agreement may not be waived or amended,
except in a writing executed by Borrower and a duly authorized officer of Silicon.

     9.11 Time of Essence. Time is of the essence in the performance by Borrower of each and every
obligation under this Agreement.

     9.12 Attorneys Fees and Costs. Borrower shall reimburse Silicon for all reasonable attorneys’
fees and all filing, recording, search, title insurance, appraisal, audit, and other reasonable
costs incurred by Silicon, pursuant to, or in connection with, or relating to this Agreement
(whether or not a lawsuit is filed), including, but not limited to, any reasonable attorneys’ fees
and costs Silicon incurs in order to do the following: prepare and negotiate this Agreement and all
present and future documents relating to this Agreement; obtain legal advice in connection with
this Agreement or Borrower; enforce, or seek to enforce, any of its rights; prosecute actions
against, or defend actions by, Account Debtors; commence, intervene in, or defend any action or
proceeding; initiate any complaint to be relieved of the automatic stay in bankruptcy; file or
prosecute any probate claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of Borrower’s books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce Silicon’s security interest in, the
Collateral; and otherwise represent Silicon in any litigation relating to Borrower. In satisfying
Borrower’s obligation hereunder to reimburse Silicon for attorneys fees, Borrower may, for
convenience, issue checks directly to Silicon’s attorneys, Buchalter, Nemer, Fields & Younger, but
Borrower acknowledges and agrees that Buchalter, Nemer, Fields & Younger is representing only
Silicon and not Borrower in connection with this Agreement. If either Silicon or Borrower files
any lawsuit against the other predicated on a breach of this Agreement, the prevailing party in
such action shall be entitled to recover its reasonable costs and attorneys’ fees, including (but
not limited to) reasonable attorneys’ fees and costs incurred in the enforcement of, execution upon
or defense of any order, decree, award or judgment. All attorneys’ fees and costs to which Silicon
may be entitled pursuant to this Paragraph shall immediately become part of Borrower’s Obligations,
shall be due on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.

     9.13 Benefit of Agreement. The provisions of this Agreement shall be binding upon and inure
to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of
Borrower and Silicon; provided, however, that Borrower may not assign or transfer any of its rights
under this Agreement without the prior written consent of Silicon, and any prohibited assignment
shall be void. No consent by Silicon to any assignment shall release Borrower from its liability
for the Obligations.

     9.14 Intentionally Left Blank.

     9.15 Limitation of Actions. Any claim or cause of action by Borrower against Silicon, its
directors, officers, employees, agents, accountants or attorneys, based upon, arising from, or
relating to this Loan Agreement, or any other Loan Document, or any other transaction contemplated
hereby or thereby or relating hereto or thereto, or any other matter, cause or thing whatsoever,
occurred, done, omitted or suffered to be done by Silicon, its directors, officers, employees,
agents, accountants or attorneys, shall be barred unless asserted by Borrower by the commencement
of an action or proceeding in a court of competent jurisdiction by the filing of a complaint within
one year after the first act, occurrence or omission upon which such claim or cause of action, or
any part thereof, is based, and the service of a summons and complaint on an officer of Silicon, or
on any other person authorized to accept service on behalf of Silicon, within thirty (30) days
thereafter. Borrower agrees that such one-year period is a reasonable and sufficient time for
Borrower to investigate and act upon any such claim or cause of action. The one-year period
provided herein shall not be waived, tolled, or extended except by the written consent of Silicon
in its sole discretion. This provision shall survive any termination of this Loan Agreement or any
other Loan Document.

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     9.16 Paragraph Headings; Construction. Paragraph headings are only used in this Agreement for
convenience. Borrower and Silicon acknowledge that the headings may not describe completely the
subject matter of the applicable paragraph, and the headings shall not be used in any manner to
construe, limit, define or interpret any term or provision of this Agreement. This Agreement has
been fully reviewed and negotiated between the parties and no uncertainty or ambiguity in any term
or provision of this Agreement shall be construed strictly against Silicon or Borrower under any
rule of construction or otherwise.

     9.17 Governing Law; Jurisdiction; Venue. This Agreement and all acts and transactions
hereunder and all rights and obligations of Silicon and Borrower shall be governed by the laws of
the State of California. As a material part of the consideration to Silicon to enter into this
Agreement, Borrower (i) agrees that all actions and proceedings relating directly or indirectly to
this Agreement shall, at Silicon’s option, be litigated in courts located within California, and
that the exclusive venue therefor shall be Santa Clara County; (ii) consents to the jurisdiction
and venue of any such court and consents to service of process in any such action or proceeding by
personal delivery or any other method permitted by law; and (iii) waives any and all rights
Borrower may have to object to the jurisdiction of any such court, or to transfer or change the
venue of any such action or proceeding.

     9.18 Mutual Waiver of Jury Trial. BORROWER AND SILICON EACH HEREBY WAIVE THE RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS
AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR
ANY CONDUCT, ACTS OR OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN ALL OF
THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

	 	 	 	 	 	 	 	 	 
	Borrower:	 	 	 	Silicon:
	 
	 	 	 	 	 	 	 	 
	THERMA-WAVE, INC.	 	 	 	SILICON VALLEY BANK
	 
	 	 	 	 	 	 	 	 
	By

	 	     /s/ Joseph Passarello
	 	 	 	By
	 	     /s/ Tim Walsh
	 

	 	 
	 	 	 	 	 	 
	Title

	 	     Vice President of Finance
	 	 	 	Title
	 	     Senior V.P.

23

 

 

Silicon Valley Bank

Schedule to

Loan and Security Agreement

	 	 	 
	Borrower:

	 	Therma-Wave, Inc.
	Address:
	 	 
	 
	 	 
	Date:

	 	June 10, 2005

This Schedule forms an integral part of the Loan and Security Agreement between Silicon Valley
Bank and the above-borrower of even date.

	 	 	 	 	 
	 
	 
	 	 	 	 
	1.

	 	CREDIT LIMIT	 	 
	 

	 	(Section 1.1):	 	 
	 
	 	 	 	 
	 

	 	1.1 Domestic Credit Limit
	 	An amount not to exceed the lesser of: (i) $5,000,000 at
any one time outstanding (the “Domestic Credit Limit”) minus the sum of (w) the
aggregate amounts deemed outstanding under the Cash Management Services sublimit
described below, plus, (x) the amount of all outstanding Letters of
Credit (including such drawn but unreimbursed Letters of Credit) booked under the
Domestic Credit Limit, plus (y) the FX Reserve (arising from FX Forward
Contracts booked under the Domestic Credit Limit), and plus (z) Reserves or
(ii) the Domestic Borrowing Base minus the sum of (w) the aggregate amounts
deemed outstanding under the Cash Management Services sublimit described in
below, plus, (x) the amount of all outstanding domestic Letters of
Credit (including such drawn but unreimbursed Letters of Credit) booked under the
Domestic Credit Limit, plus (y) the FX Reserve (arising from FX Forward
Contracts booked under the Domestic Credit Limit), and plus (z) Reserves.
	 
	 	 	 	 
	 

	 	1.2 EXIM Credit Limit
	 	An amount not to exceed the lesser of: (i) $10,000,000 at any
one time outstanding (the “EXIM Credit Limit”) minus the sum of (w) the FX
Reserve (arising from FX Forward Contracts booked under the Exim Credit Limit),
plus, (x) the amount of all outstanding export related Letters of Credit
(including such drawn but unreimbursed Letters of Credit) booked under the Exim Credit
Limit, plus, (y) the Domestic Standby Letter of Credit Reserve and,
plus, (z) Reserves or (ii) the EXIM Borrowing Base minus the sum of (w)
the FX Reserve (arising from FX Forward Contracts under the Exim Credit Limit),
plus, (x) the amount of all outstanding export related Letters of Credit
(including such drawn but unreimbursed Letters of Credit) booked under the Exim Credit
Limit, plus, (y) the Domestic Standby Letter of Credit Reserve and,
plus, (z) Reserves.

24

 

			
	Silicon Valley Bank
	 	Schedule to Loan and Security Agreement
	 

	 	 	 	 	 
	 

	 	1.3 Advance Rates
	 	Silicon may, from time to time, modify the rates above, in its
good faith business judgment, upon notice to the Borrower, based on changes in
collection experience with respect to Accounts or other issues or factors relating to
the Accounts or other Collateral.
	 
	 	 	 	 
	 

	 	1.4 Letter of Credit Sublimit	 	 
	 

	 	     (Section 1.6):	 	 
	 

	 	 	 	Silicon may, in its good faith business judgment, issue or
have issued letters of credit (the “Letters of Credit”) as
follows: (1) Letters of Credit booked under the Domestic
Credit Limit for Borrower’s account not exceeding the lesser
of: (i) $5,000,000 and (ii) Availability under the Domestic
Borrowing Base; (2) export related Letters of Credit booked
under the Exim Credit Limit for Borrower’s account not exceed
the lesser of (i) $10,000,000 and (ii) Availability under the
Exim Borrowing Base; and (3) Excess Standby Letters of
Credit.
	 
	 	 	 	 
	 

	 	1.5 Cash Management	 	 
	 

	 	      Services and Reserves:
	 	Borrower may utilize Silicon’s Cash Management Services up to an
amount equal to the lesser of: (i) $5,000,000 and (ii) Availability under the
Domestic Credit Limit (“Cash Management Services Sublimit”). Such services may
include merchant services, direct deposit of payroll, business credit card, and
check cashing services identified in various cash management services agreements
related to such services (the “Cash Management Services”). The aggregate amount of
the credit limits under all such agreements with respect to the Cash Management
Services shall be deemed to be the amount of the Cash Management Services for the
purposes of calculating the Cash Management Services Sublimit. Silicon will advise
Borrower of any amounts that would affect the Cash Management Services Sublimit.
	 
	 	 	 	 
	 

	 	1.6 Foreign Exchange	 	 
	 

	 	      Contract Sublimit:	 	 
	 

	 	 	 	Borrower may enter into foreign exchange forward contracts
with Silicon under which Borrower commits to purchase from or
sell to Silicon a set amount of foreign currency more than
one business day after the contract date (the “FX Forward
Contract”) (the amount equal to 10% of the aggregate
outstanding FX Forward Contracts is hereinafter referred to
as the “FX Reserve”). The FX Reserve may not exceed the
lesser of: (i) $15,000,000 and (ii) Availability under the
Domestic Borrowing Base plus Exim Borrowing Base. The total
FX Forward Contracts at any one time may not exceed the
amount calculated as 10 multiplied by the FX Reserve.
Silicon may terminate the FX Forward Contracts if an Event of
Default occurs and is continuing.
	 
	 	 	 	 
	 
	 
	 	 	 	 
	2.

	 	INTEREST.	 	 
	 
	 	 	 	 
	 

	 	2.1 Interest Rate
for Domestic Loans:
	 	A rate equal to the “Prime Rate” in effect from time to time,
plus 1.50% per annum.

25

 

			
	Silicon Valley Bank
	 	Schedule to Loan and Security Agreement
	 

	 	 	 	 	 
	 

	 	2.2 Interest Rate for
Exim Loans
	 	A rate equal to the “Prime Rate” in effect from
time to time, plus 1.75% per annum.
	 
	 	 	 	 
	 

	 	2.3 Calculation
	 	Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. “Prime Rate” means the rate announced from time to time
by Silicon as its “prime rate;” it is a base rate upon which other rates charged by
Silicon are based, and it is not necessarily the best rate available at Silicon. The
interest rate applicable to the Obligations shall change on each date there is a change
in the Prime Rate.
	 
	 	 	 	 
	 
	 
	 	 	 	 
	3.

	 	FEES (Section 1.4):	 	 
	 
	 	 	 	 
	 

	 	3.1 Amendment Fee
	 	$12,000 payable on the date hereof, which shall be fully earned and
nonrefundable.
	 
	 	 	 	 
	 

	 	3.2 Domestic Loan Fee:
	 	$100,000, which shall be fully earned as of the date hereof, payable as
follows: (i) $50,000 on the date hereof and (ii) $50,000 on the first anniversary date of the date
hereof (the “Anniversary Date”); provided, that, if Borrower’s Tangible Net Worth is greater than
$35,000,000 on the Anniversary Date, such amount shall be reduced to $37,500. The Domestic Loan
Fee shall be nonrefundable.
	 
	 	 	 	 
	 

	 	3.3 EXIM Loan Fee:
	 	$300,000, which shall be fully earned as of the date hereof, payable as
follows: (i) $150,000 on the date hereof and (ii) $150,000 on the Anniversary Date; provided, that,
if Borrower’s Tangible Net Worth is greater than $35,000,000 on the Anniversary Date, such amount
shall be reduced to $125,000. The EXIM Loan Fee shall be nonrefundable.
	 
	 	 	 	 
	 
	 
	 	 	 	 
	4.

	 	MATURITY DATE	 	 
	 

	 	(Section 6.1):
	 	June 11, 2007.
	 
	 	 	 	 
	 
	 
	 	 	 	 
	5.

	 	FINANCIAL COVENANTS	 	 
	 

	 	(Section 5.1):
	 	Borrower shall comply with each of the following covenants. Compliance shall
be determined as of the end of each month, except as otherwise specifically provided
below:
	 
	 	 	 	 
	 

	 	5.1 Quick Ratio (Adjusted):
	 	As of the last day of each month, a ratio of Quick
Assets to Current Liabilities minus current portions of Deferred Revenue of at least
0.75 to 1.00.
	 
	 	 	 	 
	 

	 	5.2 Minimum Tangible

      Net Worth:
	 	Borrower shall maintain a Tangible Net Worth of not less than
(1) $18,000,000 from the date hereof to June 30, 2005 and (2) $16,000,000
thereafter, plus (i) 50% of all consideration received after the date hereof for
equity securities and subordinated debt of the Borrower, plus (ii) 25% of the
Borrower’s net income in each fiscal quarter ending after the date hereof.
Increases in the Minimum Tangible Net Worth covenant based on consideration
received for equity securities and subordinated debt of the Borrower shall be
effective as of the end of the

26

 

			
	Silicon Valley Bank
	 	Schedule to Loan and Security Agreement
	 

	 	 	 	 	 
	 

	 	 	 	month in which such consideration is received, and shall
continue effective thereafter. Increases in the Minimum
Tangible Net Worth covenant based on net income shall be
effective on the last day of the fiscal quarter in which said
net income is realized, and shall continue effective
thereafter. In no event shall the Minimum Tangible Net Worth
covenant be decreased.
	 
	 	 	 	 
	 

	 	5.3 Definitions.
	 	For purposes of the foregoing financial covenants, the following
term shall have the following meaning:
	 
	 	 	 	 
	 

	 	 	 	“Current Liabilities” are the aggregate amount of Borrower’s
total liabilities that mature within one (1) year, which
Current Liabilities include the Obligations, minus
Letters of Credit issued to secure pre-paid customer deposits
that are classified as Current Liabilities.
	 
	 	 	 	 
	 

	 	 	 	“Deferred Revenue” is all amounts received in advance of
performance under a contract and not yet recognized as
revenue.
	 
	 	 	 	 
	 

	 	 	 	“Quick Assets” is, on any date, the sum of Borrower’s
consolidated, unrestricted cash, cash equivalents, and net
billed accounts receivable, and investments with maturities
of less than twelve months, determined according to GAAP.
	 
	 	 	 	 
	 

	 	 	 	“Tangible Net Worth” shall mean the excess of total assets
over total liabilities, determined in accordance with GAAP,
with the following adjustments:
	 
	 	 	 	 
	 

	 	 	 	(A) there shall be excluded from assets: (i) notes,
accounts receivable and other obligations owing to
Borrower from its officers or other Affiliates, and (ii)
all assets which would be classified as intangible assets
under GAAP, including without limitation goodwill,
licenses, patents, trademarks, trade names, copyrights,
capitalized software and organizational costs, licenses
and franchises

	 
	 	 	 	 
	 

	 	 	 	(B) there shall be excluded from liabilities: all
indebtedness which is subordinated to the Obligations
under a subordination agreement in form specified by
Silicon or by language in the instrument evidencing the
indebtedness which Silicon agrees in writing is
acceptable to Silicon in its good faith business
judgment.

	 
	 	 	 	 
	 
	 
	 	 	 	 
	6.

	 	REPORTING.	 	 
	 

	 	(Section 5.3):
	 	Borrower shall provide Silicon with the following:
	 
	 	 	 	 
	 

	 	 	 	1. Weekly transaction reports and schedules of collections,
on Silicon’s standard form.
	 
	 	 	 	 
	 

	 	 	 	2. Monthly Borrowing Base Certificates, together with
accounts receivable agings, aged by invoice date, within
thirty days after the end of each month.

27

 

			
	Silicon Valley Bank
	 	Schedule to Loan and Security Agreement
	 

	 	 	 	 	 
	 

	 	 	 	3. Monthly accounts payable agings, aged by invoice date, and
outstanding or held check registers, if any, within thirty
days after the end of each month.
	 
	 	 	 	 
	 

	 	 	 	4. Monthly reconciliations of accounts receivable agings
(aged by invoice date), transaction reports, and general
ledger, within fifteen days after the end of each month.
	 
	 	 	 	 
	 

	 	 	 	5. Monthly perpetual inventory reports for the Inventory
valued on a first-in, first-out basis at the lower of cost or
market (in accordance with GAAP) or such other inventory
reports as are requested by Silicon in its good faith
business judgment, all within thirty days after the end of
each month.
	 
	 	 	 	 
	 

	 	 	 	6. Monthly unaudited financial statements, as soon as
available, and in any event within thirty days after the end
of each month.
	 
	 	 	 	 
	 

	 	 	 	7. Monthly Compliance Certificates, within thirty days after
the end of each month, in such form as Silicon shall
reasonably specify, signed by the Chief Financial Officer of
Borrower, certifying that as of the end of such month
Borrower was in full compliance with all of the terms and
conditions of this Agreement, and setting forth calculations
showing compliance with the financial covenants set forth in
this Agreement and such other information as Silicon shall
reasonably request, including, without limitation, a
statement that at the end of such month there were no held
checks.
	 
	 	 	 	 
	 

	 	 	 	8. Quarterly reviewed financial statements, as soon as
available, and in any event within forty-five days after the
end of each fiscal quarter of Borrower.
	 
	 	 	 	 
	 

	 	 	 	9. Annual operating budgets (including income statements,
balance sheets and cash flow statements, by month) for the
upcoming fiscal year of Borrower within thirty days prior to
the end of each fiscal year of Borrower.
	 
	 	 	 	 
	 

	 	 	 	10. Annual financial statements, as soon as available, and in
any event within 120 days following the end of Borrower’s
fiscal year, certified by, and with an unqualified opinion
of, independent certified public accountants acceptable to
Silicon.
	 
	 	 	 	 
	 

	 	 	 	11. Within 5 days of filing, copies of all statements,
reports and notices made available to Borrower’s security
holders or to any holders of Subordinated Debt and all
reports on Form 10-K, 10-Q and 8-K filed with the Securities
and Exchange Commission
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 	 	 	 
	7.

	 	BORROWER

INFORMATION:
	 	Borrower represents and warrants that the information set forth in the
Representations and Warranties of the Borrower dated June 10, 2005, previously
submitted to Silicon (the “Representations”) is true and correct as of the date hereof.

28

 

			
	Silicon Valley Bank
	 	Schedule to Loan and Security Agreement
	 

	 	 	 	 	 
	 
	 
	 	 	 	 
	8.

	 	ADDITIONAL

PROVISIONS:
	 	(1) Bank Relationship. Borrower shall at all times maintain its primary banking
relationship with Silicon. Without limiting the generality of the foregoing, Borrower
shall, at all times, maintain not less than 60% of its total cash and investments on
deposit with Silicon. As to any Deposit Accounts and investment accounts maintained
with another institution, Borrower shall cause such institution, within 30 days after
the date of this Agreement, to enter into a control agreement in form reasonably
acceptable to Silicon in its good faith business judgment in order to perfect Silicon’s
first-priority security interest in said Deposit Accounts and investment accounts.
	 
	 	 	 	 
	 

	 	 	 	(2) Subordination of Inside Debt. All present and future
indebtedness of Borrower to its officers, directors and
shareholders (“Inside Debt”) shall, at all times, be
subordinated to the Obligations pursuant to a subordination
agreement on Silicon’s standard form. Borrower represents
and warrants that there is no Inside Debt presently
outstanding. Prior to incurring any Inside Debt in the
future, Borrower shall cause the person to whom such Inside
Debt will be owed to execute and deliver to Silicon a
subordination agreement on Silicon’s standard form.

	 	 	 	 	 	 	 	 	 
	Borrower:	 	 	 	Silicon:
	 
	 	 	 	 	 	 	 	 
	THERMA-WAVE, INC.	 	 	 	SILICON VALLEY BANK
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ Joseph Passarello
	 	 	 	By
	 	/s/ Tim Walsh
	 

	 	 
	 	 	 	 	 	 
	Title

	 	Vice President of Finance
	 	 	 	Title
	 	Senior V.P.

29

 

COMPLIANCE CERTIFICATE

	 	 	 
	TO:

	 	SILICON VALLEY BANK
	 

	 	3003 Tasman Drive
	 

	 	Santa Clara, CA 95054
	 
	 	 
	FROM:

	 	THERMA-WAVE, INC.
	 

	 	1250 Reliance Way
	 

	 	Fremont, CA 94539

The undersigned authorized officer of THERMA-WAVE, INC. (“Borrower”) certifies that under the
terms and conditions of the Loan and Security Agreement between Borrower and Silicon (the
“Agreement”), (i) Borrower is in complete compliance for the period ending _______________ with all
required covenants except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. In addition, the undersigned
certifies that (i) Borrower [and each Subsidiary] has timely filed all required tax returns and
paid, or made adequate provision to pay, all material taxes, except those being contested in good
faith with adequate reserves under GAAP [(ii) no liens has been levied or claims made against
Borrower [or any of its Subsidiaries] relating to unpaid employee payroll or benefits which
Borrower has not previously notified in writing to Silicon, and (iii) there are no legal actions
pending or threatened against Borrower or any Subsidiary which Borrower has not previously notified
in writing to Silicon.] Attached are the required documents supporting the certification. The
Officer certifies that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer acknowledges that no borrowings may be requested at
any time or date of determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this certificate is delivered.

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

	 	 	 	 	 	 	 
	Reporting Covenant	 	Required	 	Complies
	Monthly financial statements + CC

	 	Monthly within 30 days
	 	Yes
	 	No
	Annual (Audited)

	 	FYE within 120 days
	 	Yes
	 	No
	A/R & A/P Agings

	 	Monthly within 30 days
	 	Yes
	 	No
	A/R Audit

	 	Initial and Annual
	 	Yes
	 	No
	Borrowing Base Certificate

	 	Monthly within 30 days
	 	Yes
	 	No

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financial Covenant	 	Required	 	 	Actual	 	 	Complies	 
	Maintain on a Monthly Basis:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minimum Quick Ratio (Adjusted)
	 	 	0.75:1.00	 	 	 	_____:1.00	 	 	Yes	 	No
	Minimum Tangible Net Worth
	 	$	16,000,000	*	 	$	————	 	 	Yes	 	No

 

	*	$18,000,000 until June 30, 2005

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

Compliance Certificate

 

Has Borrower filed any new Trademark, Patent or Copyright applications?           Yes / No

(If “yes”, please
list below and complete the attached Addendum to Intellectual
Property Security Agreement)

	 	 	 	 	 
	Trademarks:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Patents:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	Copyrights:	 	 	 

	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 

	 	 	 	 	 
	 	 	 
	 1
	 	 	 	 
	 	 	 
	Comments Regarding Exceptions: See Attached.

	 	 
	 	 
	Sincerely,
	 	 	 	 
	xx
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Signature
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Title
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Date
	 	 	 	 

	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 

	BANK USE ONLY	 	 	 
	 	Received by:

	 	 	 	 
	 	 	 	 	 	 	 
	 	 

	 	authorized signer
	 	 	 
	 	Date:

	 	 
	 	 	 
	 	 	 	 	 	 	 
	 	Verified:
	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 

	 	authorized signer	 	 	 
	 	 
	 	 	 	 	 
	 	Date:
	 	 	 	 	 
	 	 	 	 	 	 	 
	 	Compliance Status:

	Yes      No	 	 	 
	 	 

	 	 	 	 
	 	 

	 	 	 	 
	 	 

	 	 	 	 
	 	 	 	 	 

Compliance Certificateexv10w2

 

Exhibit 10.2

Streamline Facility Agreement

June 10, 2005

Therma-Wave, Inc.

1250 Reliance Way

Fremont, CA 94539

Ladies and Gentlemen:

     Reference is made to the Loan and Security Agreement between you (“Borrower”) and us
(“Silicon”) dated as of even date herewith (as amended, restated, supplemented, or otherwise
modified from time to time, the “Loan Agreement”). This Streamline Facility Agreement (this
“Agreement”), the Loan Agreement and all other written documents and agreements between us are
referred to herein collectively as the “Loan Documents”. Capitalized terms used, but not defined,
in this Agreement shall have the meanings set forth in the Loan Agreement.

     This will confirm the agreement of Silicon and Borrower that the following provisions shall
apply, effective from and after the date hereof, so long as: (i) no Default or Event of Default has
occurred and is continuing; (ii) Borrower is not in breach of its obligations under this Agreement;
and (iii)(1) Borrower’s Quick Ratio is greater than 1.25:1.00 or (2) outstanding Letters
of Credit do not exceed $3,500,000 in the aggregate (such application of the following provisions
is referred to as the “Streamline Option”):

     1. Monthly Borrowing Base. Within 30 days after the end of each month, Borrower shall
deliver to Silicon a Borrowing Base Certificate signed by the Chief Executive Officer, President,
Chief Financial Officer or Controller of Borrower on Silicon’s standard form, together with aged
listings of accounts receivable and accounts payable, and transaction reports including sales,
credit memoranda and collection journals and all other monthly reporting requirements set forth in
the Loan Agreement.

     2. Daily Delivery of Proceeds of Accounts Not Required. Borrower shall not be
required to deliver the proceeds of Accounts to Silicon upon receipt as provided in Section 4.4 of
the Loan Agreement; provided that if any Event of Default has occurred and is continuing, without
limiting its other rights and remedies, Silicon shall have the right to require that all proceeds
of all Accounts be delivered to Silicon upon receipt and in the form received.

     3. Changes to Reporting Requirements. Weekly delivery to Silicon of transaction
reports, schedules and assignments of Accounts, and schedules of collections, as called for by
Section 4.3 of the Loan Agreement, will not be required, but rather shall be provided as set forth
in Paragraph 1 above.

     4. Standard Terms and Conditions Apply. Upon the earliest to occur of (a) the request
by Borrower for a Loan after the date hereof, (b) the occurrence of a Default or Event of Default
under the Loan Documents, or (c) a breach of Borrower’s obligations under this

1

 

Agreement, all of the respective terms and conditions of the Loan Agreement that have been
modified by this Agreement will immediately revert to the respective standard terms and conditions
as provided for in the Loan Agreement (without giving effect to this Agreement), which standard
terms will immediately go back into effect without any further action on the part of Silicon or
Borrower.

     This Agreement, the Loan Agreement, and the other Loan Documents set forth in full all of the
representations and agreements of the parties with respect to the subject matter hereof and
supersede all prior discussions, oral representations, oral agreements and oral understandings
between the parties with respect to the subject hereof. Except as herein expressly amended, all of
the respective terms and provisions of the Loan Agreement, and all other Loan Documents shall
continue in full force and effect and the same are hereby ratified and confirmed.

     If the foregoing correctly sets forth our agreement, please sign the enclosed copy of this
Agreement and return it to us.

	 	 	 	 	 
	 

	 	Sincerely yours,
	 
	 
	 	 	 	 
	 

	 	Silicon Valley Bank
	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Tim Walsh
	 

	 	 	 	 
	 

	 	Title:
	 	Senior V.P.
	 
	 	 	 	 
	Accepted and agreed:
	 	 	 	 

Borrower:

Therma-Wave, Inc.

	 	 	 	 	 
	By:

	 	/s/ Joseph Passarello
	 	 
	 	 	 	 	 
	Title:

	 	Vice President of Finance	 	 

2

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