Document:

Loan and Security Agreement dated December 21,2010

 Exhibit 10.26 
 LOAN AND SECURITY AGREEMENT 
 THIS LOAN AND SECURITY AGREEMENT (this
“Agreement”) dated as of December 21, 2010 (the “Effective Date”) between SILICON VALLEY BANK, a California corporation (“Bank”), and Pixelworks, Inc., an Oregon corporation
(“Borrower”) which does business in California as Oregon Pixelworks, Inc., provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows: 

1 ACCOUNTING AND OTHER TERMS 
 Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in this Agreement
shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein. 

2 LOAN AND TERMS OF PAYMENT 
 2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in
accordance with this Agreement. 
 2.1.1 Revolving Advances. 

(a) Availability. Subject to the terms and conditions of this Agreement, Bank shall make Advances not exceeding the Availability
Amount. Amounts borrowed hereunder may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent herein. 
 Notwithstanding anything to the contrary contained in this Section 2.1.1(a), Advances may be made in excess of the Availability Amount (but not in excess of the Revolving Line then in effect) (such
Advances referred to herein as “Nonformula Advances”) subject to the following terms and conditions: (i) such Nonformula Advances may be made solely during the last five (5) Business Days of any fiscal month or quarter, as
the case may be, commencing with the month ending December 31, 2010; (ii) prior to any Nonformula Advance, the Borrower must provide (A) evidence satisfactory to Bank that it is in pro forma compliance in all respects with the
financial covenants set forth in Section 6.7(a) of this Agreement and (B) a duly completed and executed Payment/Advance Form which requests such Nonformula Advance and directs the repayment of such Nonformula Advance within the time frame
provided in clause (iv) herein, (iii) on the day of such Nonformula Advance, but no later than five (5) Business Days thereafter, the Borrower must provide a duly completed Borrowing Base Report, Deferred Revenue Report and a duly
completed and executed Borrowing Base Certificate; provided, however, that the Borrower shall not be required to deliver the documentation required pursuant to this clause (iii) if the Borrower has repaid such Nonformula Advance
within the time frame provided in clause (iv) herein; and (iv) the Borrower shall repay any and all Nonformula Advances on or before the fifth (5th) Business Day after the applicable fiscal month or quarter end. In the event that the
Borrower shall fail to repay the principal amount of any Nonformula Advance as provided in this Section 2.1.1(a)(iii), such Advance shall be deemed an Advance that is not a Nonformula Advance and shall be subject to the terms and conditions of
this Agreement, including, without limitation, the Availability Amount and the provisions set forth in Section 2.2. 
 (b)
Termination; Repayment. The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately
due and payable. Borrower shall have the right to terminate the Revolving Line at any time by delivering written notice to Bank at least 10 days prior to the effective date of termination specified in such notice (the “Early Termination
Date” ), provided that on such Early Termination Date, the principal amount of all outstanding Advances, all unpaid interest thereon, and all other Obligations relating to the Revolving Line (including, without limitation, Bank Expenses and
the prorated portion of any Unused Revolving Line Facility Fee for the quarter in which termination occurs) shall be immediately due and payable. 

 2.1.2 Letters of Credit Sublimit. 

(a) As part of the Revolving Line, Bank shall issue or have issued Letters of Credit denominated in Dollars or a Foreign Currency for
Borrower’s account. The aggregate Dollar Equivalent amount utilized for the issuance of Letters of Credit shall at all times reduce the amount otherwise available for Advances under the Revolving Line. The aggregate Dollar Equivalent amount
available to be used for the issuance of Letters of Credit may not exceed (i) the lesser of (A) the Revolving Line or (B) the Borrowing Base, minus (ii) the sum of all outstanding principal amounts of any Advances (including any
amounts used for Cash Management Services and the Dollar Equivalent of the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) and minus (iii) the FX Reduction
Amount. 
 (b) If, on the Revolving Line Maturity Date (or the effective date of any termination of this Agreement), there are
any outstanding Letters of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to 105% of the Dollar Equivalent of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to
become due in connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to such Letters of Credit. All Letters of Credit shall be in form and substance acceptable to Bank in its sole
discretion and shall be subject to the terms and conditions of Bank’s standard Application and Letter of Credit Agreement (the “Letter of Credit Application”). Borrower agrees to execute any further documentation in connection
with the Letters of Credit as Bank may reasonably request. Borrower further agrees to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Bank and opened for Borrower’s account or by Bank’s
interpretations of any Letter of Credit issued by Bank for Borrower’s account, and Borrower understands and agrees that Bank 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. 
 (c) The obligation of Borrower to immediately reimburse Bank for drawings made under Letters of Credit shall be absolute, unconditional, and irrevocable, and shall be performed strictly in accordance with
the terms of this Agreement, such Letters of Credit, and the Letter of Credit Application. 
 (d) Borrower may request that Bank
issue a Letter of Credit payable in a Foreign Currency. If a demand for payment is made under any such Letter of Credit, Bank shall treat such demand as an Advance to Borrower of the Dollar Equivalent of the amount thereof (plus fees and charges in
connection therewith such as wire, cable, SWIFT or similar charges). 
 (e) To guard against fluctuations in currency exchange
rates, upon the issuance of any Letter of Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit Reserve”) under the Revolving Line in an amount equal to ten percent (10%) of the face amount of
such Letter of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from time to time to account for fluctuations in the exchange rate. The availability of funds under the Revolving Line shall be reduced by the amount of such
Letter of Credit Reserve for as long as such Letter of Credit remains outstanding. 
 2.1.3 Foreign Exchange Sublimit. As
part of the Revolving Line, Borrower may enter into foreign exchange contracts with Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency (each, a “FX Forward Contract”) on a
specified date (the “Settlement Date”). FX Forward Contracts shall have a Settlement Date of at least one (1) FX Business Day after the contract date and shall be subject to a reserve of ten percent (10%) of each
outstanding FX Forward Contract (the “FX Reserve”). The aggregate amount of FX Forward Contracts at any one time may not exceed ten (10) times the lesser of the Revolving Line or the Borrowing Base, minus (i) the sum of
all outstanding principal amounts of any Advances (including any amounts used for Cash Management Services), and minus (ii) the Dollar Equivalent of the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit and any Letter of Credit Reserve). The amount otherwise available for Credit Extensions under the Revolving Line shall be reduced by an amount equal to ten percent (10%) of each outstanding FX Forward Contract (the “FX
Reduction Amount”). Any amounts needed to fully reimburse Bank for any amounts not paid by Borrower in connection with FX Forward Contracts will be treated as Advances under the Revolving Line and will accrue interest at the interest rate
applicable to Advances. 
 2.1.4 Cash Management Services Sublimit. Borrower may use the Revolving Line for Bank’s
cash management services, which may include merchant services, direct deposit of payroll, business credit card, and check cashing services identified in Bank’s various cash management services agreements (collectively, the “Cash
Management Services”), in an aggregate amount not to exceed the lesser of the Revolving Line or the Borrowing Base, minus (i) the sum of all outstanding principal amounts of any Advances, minus (ii) the Dollar Equivalent of the
face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve), and minus (iii) the FX Reduction Amount. Any amounts Bank pays on behalf of Borrower for any Cash Management
Services will be treated as Advances under the Revolving Line and will accrue interest at the interest rate applicable to Advances. 

  
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 2.2 Overadvances. If, at any time, the sum of (a) the outstanding principal
amount of any Advances (including any amounts used for Cash Management Services, but excluding Nonformula Advances), plus (b) the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any
Letter of Credit Reserve), plus (c) the FX Reduction Amount exceeds the lesser of either the Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank in cash such excess. 

2.3 Payment of Interest on the Credit Extensions. 
 (a) Interest Rate on Advances. Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to one-quarter of
one percentage point (0.25%) above the Prime Rate, which interest shall be payable monthly in accordance with Section 2.3(f) below. 
 (b) Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is five percentage points
(5.00%) above the rate that is otherwise applicable thereto (the “Default Rate”) unless Bank otherwise elects from time to time in its sole discretion to impose a smaller increase. Fees and expenses which are required to be
paid by Borrower pursuant to the Loan Documents (including, without limitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations. Payment or acceptance of the
increased interest rate provided in this Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank. 

(c) Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be
effective on the effective date of any change to the Prime Rate and to the extent of any such change. 
 (d) Computation;
360-Day Year. In computing interest, the date of the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is
made, such day shall be included in computing interest on such Credit Extension. Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed. 

(e) Debit of Accounts. Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for
principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off. 

(f) Interest Payment Date. Unless otherwise provided, interest is payable monthly on the last calendar day of each month.

 2.4 Fees. Borrower shall pay to Bank: 
 (a) Commitment Fee. A fully earned, non-refundable commitment fee of $25,000.00, on the Effective Date; 
 (b) Letter of Credit Fee. Bank’s customary fees and expenses for the issuance or renewal of Letters of Credit, including, without limitation, a letter of credit fee of one and one-quarter
percent (1.25%) per annum of the Dollar Equivalent of the face amount of each Letter of Credit issued, upon the issuance of such Letter of Credit, each anniversary of the issuance during the term of such Letter of Credit, and upon the renewal
of such Letter of Credit by Bank; and 
 (c) Unused Revolving Line Facility Fee. A fee (the “Unused Revolving
Line Facility Fee”), payable monthly, in arrears, on a calendar year basis, in an amount equal to one-quarter of one percent (0.25%) per annum of the average unused portion of the Revolving Line. The unused portion of the Revolving Line,
for purposes of this calculation, shall equal the difference between (x) $10,000,000.00 and (y) the average for the period of the daily closing balance of the Revolving Line outstanding plus the sum of the aggregate amount of outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit). Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section notwithstanding
any termination of the Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder; and 

  
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 (d) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and
expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due. 
 2.5
Payments; Application of Payments. 
 (a) All payments (including prepayments) to be made by Borrower under any Loan Document
shall be made in immediately available funds in U.S. Dollars, without setoff or counterclaim, before 12:00 p.m. Pacific time on the date when due. Payments of principal and/or interest received after 12:00 p.m. Pacific time are considered received
at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.

 (b) Bank shall apply the whole or any part of collected funds against the Revolving Line or credit such collected funds to a
depository account of Borrower with Bank (or an account maintained by an Affiliate of Bank), the order and method of such application to be in the sole discretion of Bank. Borrower shall have no right to specify the order or the accounts to which
Bank shall allocate or apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this Agreement. 

3 CONDITIONS OF LOANS 
 3.1 Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and
substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation: 
 (a) duly executed original signatures to the Loan Documents; 
 (b) duly executed
original signatures to the Control Agreements of (i) Wells Fargo Bank, National Association and (ii) SVB Asset Management; 
 (c) (i) Borrower’s Operating Documents, (ii) a good standing certificate of Borrower certified by the Secretary of State of the State of Oregon and (iii) a good standing certificate of the
Borrower in any applicable jurisdiction of the United States in which it is qualified to transact business, in each case, as of a date no earlier than thirty (30) days prior to the Effective Date; 

(d) duly executed original signatures to the completed Borrowing Resolutions for Borrower; 

(e) certified copies, dated as of a recent date, of financing statement searches, as Bank shall request, accompanied by written evidence
(including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be terminated or released; 

(f) the Perfection Certificate of Borrower, together with the duly executed original signature thereto; 

(g) evidence satisfactory to Bank that the insurance policies required by Section 6.5 hereof are in full force and effect, together
with appropriate evidence showing lender loss payable and/or additional insured clauses and cancellation notice to Bank (or endorsements reflecting the same) in favor of Bank; and 

(h) payment of the fees and Bank Expenses then due as specified in Section 2.4 hereof. 

  
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 3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make
each Credit Extension, including the initial Credit Extension, is subject to the following conditions precedent: 
 (a) except
as otherwise provided in Section 3.5(a) and, with respect to Nonformula Advances, Section 2.1.1(a), timely receipt of an executed Payment/Advance Form; 
 (b) the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the Payment/Advance Form and on the Funding Date of each Credit
Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the
Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided,
however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations
and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and 
 (c) as determined in Bank’s reasonable discretion, there shall not have occurred a Material Adverse Change. 
 3.3 Post-Closing Condition. Unless otherwise provided in writing, not later than January 4, 2011 Bank shall have received, in form and substance satisfactory to Bank, the duly executed
original signatures to the Control Agreement of RBC Wealth Management. 
 3.4 Covenant to Deliver. Borrower agrees to
deliver to Bank each item required to be delivered to Bank under this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not
constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit Extension in the absence of a required item shall be in Bank’s sole discretion. 

3.5 Procedures for Borrowing. 
 (a) Advances. Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement (including, without limitation, the conditions to the
making of a Nonformula Advance set forth in Section 2.1.1(a)), to obtain an Advance (other than Advances under Sections 2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone
by 12:00 p.m. Pacific time on the Funding Date of the Advance. Together with any such electronic or facsimile notification, Borrower shall deliver to Bank by electronic mail or facsimile a completed Payment/Advance Form executed by a Responsible
Officer or his or her designee. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Bank shall credit Advances to the Designated Deposit Account. Bank may make Advances under this
Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due. 

4 CREATION OF SECURITY INTEREST 
 4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the
Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof. 

4.2 Priority of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein is and
shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that may have superior priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial tort
claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to Bank. 
 If this Agreement is terminated, Bank’s Lien in the
Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations and at such time as Bank’s obligation to make Credit Extensions has
terminated, Bank shall, at Borrower’s sole cost and expense, release its Liens in the Collateral and all rights therein shall revert to Borrower. 

  
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 4.3 Authorization to File Financing Statements. Borrower hereby authorizes Bank to
file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other
Person, shall be deemed to violate the rights of Bank under the Code. Such financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater
detail, all in Bank’s discretion. 
 5 REPRESENTATIONS AND WARRANTIES 

Borrower represents and warrants as follows: 
 5.1 Due Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing in its jurisdiction of formation and is qualified and licensed to do business and is in good
standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s
business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by Borrower, entitled “Perfection Certificate”. Borrower represents and warrants to Bank that (a) Borrower’s exact legal
name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate
accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than one, its chief
executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation,
organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete (it
being understood and agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Effective Date to the extent permitted by one or more specific provisions in this Agreement). 

The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not
(i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order,
writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration,
or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect or except for filings necessary for the perfection of the Liens
granted pursuant to this Agreement) or (v) constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound in which the
default could reasonably be expected to have a material adverse effect on Borrower’s business. 
 5.2 Collateral.
Borrower has good title to, has rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Except as permitted by
Section 6.6(b), Borrower has no domestic deposit accounts other than the deposit accounts with Bank, the deposit accounts, if any, described in the Perfection Certificate delivered to Bank in connection herewith, or of which Borrower has given
Bank notice and taken such actions as are necessary to give Bank a perfected security interest therein. The Accounts are bona fide, existing obligations of the Account Debtors. 

The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection
Certificate or except as permitted by Section 7.2. None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as permitted pursuant to Section 7.2. 

All Inventory is in all material respects of good and marketable quality, free from material defects, except for any Inventory for which
reserves have been established in the ordinary course of business in accordance with GAAP. 

  
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 Borrower is the sole owner of the Intellectual Property which it owns or purports to own
except for (a) non-exclusive licenses granted to its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual Property licensed to Borrower
and noted on the Perfection Certificate. Each Patent which it owns or purports to own and which is material to Borrower’s business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and
which is material to Borrower’s business has been judged invalid or unenforceable, in whole or in part. To the best of Borrower’s knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third
party except to the extent such claim would not reasonably be expected to have a material adverse effect on Borrower’s business. 
 5.3 Accounts Receivable. For any Eligible Account in any Borrowing Base Certificate, all statements made and all unpaid balances appearing in all invoices, instruments and other documents
evidencing such Eligible Accounts are and shall be true and correct and all such invoices, instruments and other documents, and all of Borrower’s Books are genuine and in all respects what they purport to be. Borrower has no knowledge of any
actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Borrowing Base Certificate. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and
agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance with their terms. 
 5.4 Litigation. There are no actions or proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries involving more
than, individually or in the aggregate, Seven Hundred Fifty Thousand Dollars ($750,000). 
 5.5 Financial Statements;
Financial Condition. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated
results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Bank. 

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

5.7 Regulatory Compliance. Borrower is not an “investment company” or a company “controlled” by an
“investment company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of
Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or a
“subsidiary company” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be
expected to have a material adverse effect on its business. None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons,
in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and
given all notices to, all Government Authorities that are necessary to continue their respective businesses as currently conducted. 
 5.8 Subsidiaries; Investments. Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments. Borrower’s membership interests in its current
Subsidiaries are not represented by any certificate and are “general intangibles” as defined by the Uniform Commercial Code (the “UCC”). 
 5.9 Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal and state income and payroll
taxes and any other material assessments, deposits and contributions owed by Borrower. Borrower may defer payment of any contested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxes by appropriate
proceedings promptly and diligently instituted and conducted, (b) notifies Bank in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to prevent the
governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other 

  
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than a “Permitted Lien”. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due and
payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted
partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency. 
 5.10 Use of Proceeds. Borrower shall use the proceeds
of the Credit Extensions solely as working capital and to fund its general business requirements and not for personal, family, household or agricultural purposes. 
 5.11 Designation of Indebtedness under this Agreement as Senior Indebtedness. All principal of, interest (including all interest accruing after the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is allowable as a claim in any such proceeding), and all fees, costs, expenses and other amounts accrued or due under this Agreement shall constitute “Designated Senior
Indebtedness” under the terms of the Indenture. 
 5.12 Full Disclosure. No written representation, warranty or
other statement of Borrower in any certificate or written statement given to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank,
contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided
by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results). 

5.13 Definition of “Knowledge.” For purposes of the Loan Documents, whenever a representation or warranty is made
to Borrower’s knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of the Responsible Officers.

 6 AFFIRMATIVE COVENANTS 
 Borrower shall do all of the following: 
 6.1 Government Compliance.
Maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a
material adverse effect on Borrower’s business or operations. Borrower shall comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse
effect on Borrower’s business. All sales and other transactions underlying or giving rise to each Eligible Account shall comply in all material respects with all applicable laws and governmental rules and regulations. 

6.2 Financial Statements, Reports, Certificates. Deliver to Bank: 

(a) Advances other than Nonformula Advances. Written notice of the Borrower’s intention to request (the “Initial
Regular Advance Request”) an initial Advance that is not a Nonformula Advance (the “Initial Regular Advance”) no later than thirty (30) days prior to such request; 

(b) Borrowing Base Reports. To the extent Borrower has received an Initial Regular Advance pursuant to the terms of this
Agreement, within thirty (30) days after the last day of each month, aged listings of accounts receivable and accounts payable (by invoice date) (the “Borrowing Base Reports”); 

(c) Deferred Revenue Reports. To the extent Borrower has received an Initial Regular Advance pursuant to the terms of this
Agreement, within thirty (30) days after the last day of each month and together with the Borrowing Base Reports, a duly completed deferred revenue report (the “Deferred Revenue Report”); 

  
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 (d) Borrowing Base Certificate. To the extent Borrower has received an Initial
Regular Advance pursuant to the terms of this Agreement, within thirty (30) days after the last day of each month and together with the Borrowing Base Reports, a duly completed Borrowing Base Certificate signed by a Responsible Officer;

 (e) Monthly Financial Statements. As soon as available, but no later than thirty (30) days after the last day of
each month, company prepared consolidated and consolidating balance sheets and income statements covering Borrower’s consolidated and Borrower’s and each of its Subsidiary’s operations for such month certified by a Responsible Officer
and in a form acceptable to Bank (the “Monthly Financial Statements”); 
 (f) Monthly Compliance
Certificate. Within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a duly completed Compliance Certificate signed by a Responsible Officer, 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 Bank shall reasonably
request; 
 (g) Annual Audited Financial Statements. As soon as available, but no later than ninety (90) days after
the last day of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm
acceptable to Bank in its reasonable discretion; 
 (h) Budgets and Projections. As soon as available, but no later than
forty-five (45) days after the last day of Borrower’s fiscal year, annual operating budgets (including quarterly income statements, balance sheets and cash flow statements) for the upcoming fiscal year of Borrower; 

(i) Other Statements. Within five (5) days of delivery, copies of all statements, reports and notices made available to
Borrower’s security holders or to any holders of Subordinated Debt; 
 (j) SEC Filings. In the event that Borrower
becomes subject to the reporting requirements under the Exchange Act within five (5) days of filing (and, in no event, later than (i) fifty (50) days of the end of each fiscal quarter with respect to each Form 10Q filed by the
Borrower and (ii) ninety (90) days of the end of each fiscal year with respect to each Form 10K filed by the Borrower), copies of all periodic and other reports, proxy statements and other materials filed by Borrower with the SEC, any
Governmental Authority succeeding to any or all of the functions of the SEC or with any national securities exchange, or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the terms hereof (to the
extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link
thereto, on Borrower’s website on the Internet at Borrower’s website address; 
 (k) Legal Action Notice. A
prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Seven Hundred Fifty
Thousand Dollars ($750,000) or more; 
 (l) Intellectual Property Notice. Together with delivery of the Compliance
Certificate delivered at the end of each fiscal quarter, written notice of (i) any material change in the composition of the Intellectual Property, (ii) the registration of any copyright, patent or trademark, including any subsequent
ownership right of Borrower in or to any copyright, patent or trademark not previously disclosed in writing to Bank, and (iii) Borrower’s knowledge of an event that could reasonably be expected to materially and adversely affect the value
of the Intellectual Property; and 
 (m) Other Financial Information. Budgets, sales projections, operating plans and
other financial information reasonably requested by Bank. 
 6.3 Inventory; Returns. Keep all Inventory in good and
marketable condition, free from material defects, except for any Inventory for which reserves have been established in the ordinary course of business in accordance with GAAP. Returns and allowances between Borrower and its Account Debtors shall
follow Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims that involve more than Five Hundred Thousand Dollars ($500,000). 

  
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 6.4 Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely
file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay, all foreign, federal and state income and payroll taxes and any other material assessments, deposits and contributions owed by Borrower
and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and except for any failure to file or pay that does not result in any Lien attaching to the Collateral, and shall
deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms. 

6.5 Insurance. Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s
industry and location and as Bank may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to Bank. All property policies shall have a lender’s loss payable endorsement showing Bank as
a lender loss payee and waive subrogation against Bank. All liability policies shall show, or have endorsements showing, Bank as an additional insured. All policies (or their respective endorsements) shall provide that the insurer shall give Bank at
least twenty (20) days notice before canceling, amending, or declining to renew its policy. At Bank’s request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy
shall, at Bank’s option, be payable to Bank on account of the Obligations. Notwithstanding the foregoing, (a) so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any
casualty policy up to Fifty Thousand Dollars ($50,000) with respect to any loss, but not exceeding One Hundred Thousand Dollars ($100,000) in the aggregate for all losses under all casualty policies in any one year, toward the replacement or repair
of destroyed or damaged property; provided that any such replaced or repaired property (i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be deemed Collateral in which Bank has been granted a
first priority security interest, and (b) after the occurrence and during the continuance of an Event of Default, all proceeds payable under such casualty policy shall, at the option of Bank, be payable to Bank on account of the Obligations. If
Borrower fails to obtain insurance as required under this Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required
in this Section 6.5, and take any action under the policies Bank deems prudent. 
 6.6 Operating Accounts.

 (a) With ninety (90) days of the Effective Date, maintain its primary domestic operating and other deposit accounts
with Bank and Bank’s Affiliates. 
 (b) Provide Bank five (5) days prior written notice before establishing any
Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than
Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with
the terms hereunder which Control Agreement may not be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such or to deposit accounts located outside of the United States. 

6.7 Financial Covenants. Maintain as of the last day of each month, unless otherwise noted, on a consolidated basis with respect
to Borrower and its Subsidiaries: 
 (a) Liquidity Coverage. A ratio of unrestricted cash and Cash Equivalents held at
Bank and its Affiliates plus net Accounts to all Obligations of Borrower to Bank plus the principal amount of the Borrower Debenture of not less than (i) for each month ending on or prior to April 30, 2011, 1.25:1.00,
and (ii) for each month ending on May 31, 2011 and thereafter, 1.50:1.00. 
 6.8 Protection of Intellectual
Property Rights. (a) Protect, defend and maintain the validity and enforceability of its Intellectual Property; (b) promptly advise Bank in writing of material infringements of its Intellectual Property; and (c) not allow any
Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent. 
 6.9 Litigation Cooperation. From the date hereof and continuing through the termination of this Agreement, make available to Bank, without expense to Bank, Borrower and its officers, employees and
agents and Borrower’s books and records, to the extent that Bank may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower.

  
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 6.10 [reserved.] 

6.11 Designated Senior Indebtedness. Borrower shall designate all principal of, interest (including all interest accruing after
the commencement of any bankruptcy or similar proceeding, whether or not a claim for post-petition interest is allowable as a claim in any such proceeding), and all fees, costs, expenses and other amounts accrued or due under this Agreement as
“Designated Senior Indebtedness”, or such similar term, in any future Subordinated Debt incurred by Borrower after the date hereof, if such Subordinated Debt contains such term or similar term and if the effect of such designation is to
grant to Bank the same or similar rights as granted to Bank as a holder of “Designated Senior Indebtedness” under the Indenture. 
 6.12 Access to Collateral; Books and Records. Allow Bank, or its agents, at reasonable times, on five (5) Business Days’ notice (provided no notice is required if an Event of Default has
occurred and is continuing), to inspect the Collateral and audit and copy Borrower’s Books. Such inspections or audits outlined in this Section 6.12 shall be conducted at the expense of the Borrower no more often than once every twelve
(12) months unless an Event of Default has occurred and is continuing. The foregoing inspections and audits shall be at Borrower’s expense, and the charge therefor shall be $850 per person per day (or such higher amount as shall represent
Bank’s then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or seeks to reschedule the audit with less
than ten (10) days written notice to Bank, then (without limiting any of Bank’s rights or remedies), Borrower shall pay Bank a fee of $1,000 plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and
expenses of the cancellation or rescheduling. Whether or not an Event of Default has occurred and is continuing, Bank may contact any Account Debtor owing Borrower money to verify the amount of such Eligible Account and, if an Event of Default has
occurred and is continuing, notify such Account Debtor of Bank’s security interest in such funds. In the event that Borrower submits an Initial Regular Advance Request to Bank, Borrower hereby acknowledges that Bank shall conduct an audit of
the Borrower’s Eligible Accounts pursuant to the terms of this Section 6.12 prior to the Borrower’s receipt of the Initial Regular Advance and the results of such audit shall be in form and substance satisfactory to Bank in its
discretion. Borrower hereby acknowledges and agrees that, once Borrower requests the Initial Regular Advance, Bank shall conduct an annual audit of the Borrower’s Eligible Accounts for purposes of all future Advances that are not Nonformula
Advances. 
 6.13 Formation or Acquisition of Subsidiaries. At the time that Borrower forms any direct or indirect
Subsidiary or acquires any direct or indirect Subsidiary after the Effective Date, Borrower shall provide to Bank appropriate certificates and powers and financing statements, pledging (i) all of the direct or beneficial ownership interest in
such new Subsidiary if such Subsidiary is a Domestic Subsidiary and (ii) not greater than 65% of all voting equity interests and all nonvoting equity interests in such new Subsidiary if such Subsidiary is a Foreign Subsidiary, in each case in
form and substance reasonably satisfactory to Bank. Upon the reasonable request of Bank, Borrower shall cause such new Subsidiary to provide to Bank a joinder to the Loan Agreement to cause such Subsidiary to become a co-borrower hereunder or
execute a guaranty, together with such appropriate financing statements and/or Control Agreements, all in form and substance satisfactory to Bank (including being sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in and to
the assets of such newly formed or acquired Subsidiary). Borrower shall provide to Bank all other documentation in form and substance satisfactory to Bank, including one or more opinions of counsel satisfactory to Bank, which in its opinion is
appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to this Section 6.13 shall be a Loan Document. 

6.14 Further Assurances. Execute any further instruments and take further action as Bank reasonably requests to perfect or
continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Bank, within five (5) days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any
Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law or that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on the operations of
Borrower or any of its Subsidiaries. 

  
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 7 NEGATIVE COVENANTS 

Borrower shall not do any of the following without Bank’s prior written consent: 

7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or
permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete Equipment; (c) in connection with Permitted
Liens and Permitted Investments; (d) of non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business and licenses that could not result in a legal transfer of title of the licensed
property but that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discreet geographical areas outside of the United States; (e) by the Borrower of all of its Investments in SMIC, provided
that such Transfer is completed on or before December 31, 2011 and (f) by the Borrower and its Subsidiary, Equator Technologies, Inc., of the Saleable Patents to [***]. 

7.2 Changes in Business, Ownership, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any
business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) except for the dissolution of its Subsidiary, Jaldi Semiconductor, liquidate or dissolve; or
(c) enter into any transaction or series of related transactions in which the stockholders of Borrower who were not stockholders immediately prior to the first such transaction own more than 40% of the voting stock of Borrower immediately after
giving effect to such transaction or related series of such transactions (other than by the sale of Borrower’s equity securities in a public offering or to venture capital investors so long as Borrower identifies to Bank the venture capital
investors prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction). 

Borrower shall not, without at least thirty (30) days prior written notice to Bank: (1) add any new offices or business
locations, including warehouses (unless such new offices or business locations contain less than One Hundred Thousand Dollars ($100,000) in Borrower’s assets or property) or deliver any portion of the Collateral valued, individually or in the
aggregate, in excess of One Hundred Thousand Dollars ($100,000) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3) change its
organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. If Borrower intends to deliver any portion of the Collateral valued, individually
or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000) to a bailee, and Bank and such bailee is not already party to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the
Collateral, then Borrower will first receive the written consent of Bank, and such bailee shall execute and deliver a bailee agreement in form and substance satisfactory to Bank in its sole discretion. 

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

7.4 Subsidiaries. Permit its membership interests in any Subsidiary, without the prior written consent of Bank, (i) to be
represented by any certificate, or (ii) cease to be “general intangibles” as defined by the UCC. 
 7.5
Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 
 7.6 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its
Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein, or enter into any agreement, document, instrument or other arrangement (except with or in favor of
Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any
Subsidiary’s Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Liens” herein. 
 7.7 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.6(b) hereof. 

  
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 7.8 Distributions; Investments. (a) Pay any dividends or make any distribution
or payment or redeem, retire or purchase any capital stock provided that (i) Borrower may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof,
(ii) Borrower may pay dividends solely in common stock; and (iii) Borrower may repurchase the stock of former employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of
such repurchase and would not exist after giving effect to such repurchase, provided such repurchase does not exceed in the aggregate of Five Hundred Thousand Dollars ($500,000) per fiscal year; or (b) directly or indirectly make any Investment
other than Permitted Investments, or permit any of its Subsidiaries to do so. 
 7.9 Transactions with Affiliates.
Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less
favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person, other than the transfer of certain of the Saleable Patents to its Subsidiary, Equator Technologies, Inc., pursuant to the subsequent sale
of the Saleable Patents to [***]. 
 7.10 Subordinated Debt. (a) Make or permit any payment on any Subordinated
Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the
amount thereof or adversely affect the subordination thereof to Obligations owed to Bank. 
 7.11 Compliance. Become an
“investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business,
or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit
sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 

8 EVENTS OF DEFAULT 
 Any one of the following shall constitute an event of default (an “Event of Default”) under this Agreement: 
 8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension on its due date, or (b) pay any other Obligations within three
(3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Revolving Line Maturity Date). During the cure period, the failure to make or pay any payment
specified under clause (a) or (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period); 
 8.2 Covenant Default. 
 (a) Borrower fails or neglects to perform any
obligation in Sections 3.3, 6.2, 6.4, 6.5, 6.6, 6.7, 6.12 or violates any covenant in Section 7; or 
 (b) Borrower fails
or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term,
provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after a Responsible Officer knew or should have known, in the exercise of reasonable diligence required by applicable law, of the
occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall
not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Cure periods provided under this section shall not apply, among other things, to financial covenants or any other covenants set forth in clause
(a) above; 

  
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 8.3 Material Adverse Change. A Material Adverse Change occurs; 

8.4 Attachment; Levy; Restraint on Business. 
 (a) (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control of Borrower (including a Subsidiary) on deposit or otherwise
maintained with Bank or any Bank Affiliate, or (ii) a notice of lien or levy is filed against any of Borrower’s assets by any government agency, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days
after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; or 

(b) (i) any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or
receiver, or (ii) any court order enjoins, restrains, or prevents Borrower from conducting any material part of its business; 
 8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or
(c) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within thirty (30) days (but no Credit Extensions shall be made while of any of the conditions described in clause (a) exist and/or until any
Insolvency Proceeding is dismissed); 
 8.6 Other Agreements. There is, under any agreement to which Borrower is a party
with a third party or parties, (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of Two Hundred
Thousand Dollars ($200,000); or (b) any default by Borrower, the result of which could be reasonably expected to have a material adverse effect on Borrower’s business; provided, however, that the Event of Default under this
Section 8.6 caused by the occurrence of a default under such other agreement shall be cured or waived for purposes of this Agreement upon Bank receiving written notice from the party asserting such default of such cure or waiver of the default
under such other agreement, if at the time of such cure or waiver under such other agreement (x) Bank has not declared an Event of Default under this Agreement and/or exercised any rights with respect thereto; (y) any such cure or waiver
does not result in an Event of Default under any other provision of this Agreement or any Loan Document; and (z) in connection with any such cure or waiver under such other agreement, the terms of any agreement with such third party are not
modified or amended in any manner which could adversely affect Bank; 
 8.7 Judgments. One or more final judgments,
orders, or decrees for the payment of money in an amount, individually or in the aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000) (not covered by independent third-party insurance as to which liability has been accepted by such
insurance carrier) shall be rendered against Borrower and the same are not, within ten (10) days after the entry thereof, discharged or execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the
expiration of any such stay (provided that no Credit Extensions will be made prior to the discharge, stay, or bonding of such judgment, order, or decree); and 
 8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing
delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect when made. 

9 BANK’S RIGHTS AND REMEDIES 
 9.1 Rights and Remedies. While an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following: 

(a) declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations
are immediately due and payable without any action by Bank); 
 (b) stop advancing money or extending credit for Borrower’s
benefit under this Agreement or under any other agreement between Borrower and Bank; 

  
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 (c) demand that Borrower (i) deposit cash with Bank in an amount equal to 105% of the
Dollar Equivalent of the aggregate face amount of all Letters of Credit remaining undrawn (plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of
the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of
credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit; 
 (d) terminate any FX Forward
Contracts; 
 (e) settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that
Bank considers advisable, notify any Person owing Borrower money of Bank’s security interest in such funds, and verify the amount of such account; 
 (f) make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral if Bank requests
and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies; 

(g) apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or
for the credit or the account of Borrower; 
 (h) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets, trade
names, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this
Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit; 
 (i) place a
“hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any
Collateral; 
 (j) demand and receive possession of Borrower’s Books; and 

(k) exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided
under the Code (including disposal of the Collateral pursuant to the terms thereof). 
 9.2 Power of Attorney. Borrower
hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security;
(b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank
determines reasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any
judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to
sign Borrower’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full
and Bank is under no further obligation to make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all
Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates. 

  
 -15-

 9.3 Protective Payments. If Borrower fails to obtain the insurance called for by
Section 6.5 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document, Bank may obtain such insurance or make such payment, and all amounts so paid by
Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the Obligations, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower with notice of Bank obtaining such
insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default. 

9.4 Application of Payments and Proceeds Upon Default. If an Event of Default has occurred and is continuing, Bank may apply any
funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations in such order as Bank shall determine
in its sole discretion. Any surplus shall be paid to Borrower or other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, 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, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the
reduction of the Obligations until the actual receipt by Bank of cash therefor. 
 9.5 Bank’s Liability for
Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or
destruction of the Collateral. 
 9.6 No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to
require strict performance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or therewith. No waiver
hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specific instance and purpose for which it is given. Bank’s rights and remedies under this Agreement and the other Loan Documents are
cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election and shall not preclude Bank from exercising any other remedy under this Agreement or other
remedy available at law or in equity, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence. 

9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable. 

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

			
	If to Borrower:	  	Pixelworks, Inc.
		  	224 Airport Parkway, Suite 400
		  	San Jose, California 95110
		  	Attn: Steven Moore, CFO
		  	Fax: 408 200 9299
		  	Email: smoore@pixelworks.com

  
 -16-

			
	If to Bank:	  	Silicon Valley Bank
		  	2400 Hanover St.
		  	Palo Alto, California 94304
		  	Attn: Justin Mauch, Relationship Manager
		  	Fax: 650 320 0016
		  	Email: jmauch@svb.com

 11 CHOICE OF
LAW, VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE 
 California law governs the Loan Documents without regard to
principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and
consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such
summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made
shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid. 
 TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN
DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the
above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a private judge, mutually selected
by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal
law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the jurisdiction of such court. The reference proceedings shall be
conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without
limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently
sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the Santa Clara County, California
Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery
which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and orders applicable to
judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a
statement of decision thereon pursuant to California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against collateral, or obtain provisional
remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph. 

  
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 12 GENERAL PROVISIONS 

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

12.2 Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents,
attorneys, or any other Person affiliated with or representing Bank (each, an “Indemnified Person”) harmless against: (a) all obligations, demands, claims, and liabilities (collectively, “Claims”) claimed or asserted by any
other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or expenses (including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from,
consequential to, or arising from transactions between Bank and Borrower contemplated by the Loan Documents (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s
gross negligence or willful misconduct. 
 12.3 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement. 
 12.4 Severability of Provisions. Each provision of this Agreement is severable from
every other provision in determining the enforceability of any provision. 
 12.5 Correction of Loan Documents. Bank may
correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement of the parties. 
 12.6
Amendments in Writing; Waiver; Integration. No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the
extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require
performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall
not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents. 

12.7 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement. 
 12.8
Survival. All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other
obligations which, by their terms, are to survive the termination of this Agreement) have been paid in full and satisfied. The obligation of Borrower in Section 12.2 to indemnify Bank shall survive until the statute of limitations with respect
to such claim or cause of action shall have run. 
 12.9 Confidentiality. In handling any confidential information, Bank
shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Bank,
collectively, “Bank Entities”); (b) to prospective transferees or purchasers of any interest in the Credit Extensions; (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators or as
otherwise required in connection with Bank’s examination or audit; (e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers of Bank so long as such service providers
have executed a confidentiality agreement with Bank with terms no less restrictive than those contained herein. Confidential information does not include information that is either: (i) in the public domain or in Bank’s possession when
disclosed to Bank, or becomes part of the public domain after disclosure to Bank; or (ii) disclosed to Bank by a third party if Bank does not know that the third party is prohibited from disclosing the information. 

  
 -18-

 Bank Entities may use the confidential information for reporting purposes and the
development and distribution of databases and market analyses so long as such confidential information is aggregated and anonymized prior to distribution unless otherwise expressly prohibited by Borrower. The provisions of the immediately preceding
sentence shall survive the termination of this Agreement. 
 12.10 Attorneys’ Fees, Costs and Expenses. In any
action or proceeding between Borrower and Bank arising out of or relating to the Loan Documents, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other
relief to which it may be entitled. 
 12.11 Electronic Execution of Documents. The words “execution,”
“signed,” “signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and
enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform
Electronic Transactions Act. 
 12.12 Captions. The headings used in this Agreement are for convenience only and shall
not affect the interpretation of this Agreement. 
 12.13 Construction of Agreement. The parties mutually acknowledge
that they and their attorneys have participated in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist. 

12.14 Relationship. The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement.
The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract. 

12.15 Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights
or remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express party
to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement. 
 13 DEFINITIONS 
 13.1 Definitions. As used in the Loan
Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural, and
numbers denoting amounts that are set off in brackets are negative. As used in this Agreement, the following capitalized terms have the following meanings: 
 “Account” is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other
sums owing to Borrower. 
 “Account Debtor” is any “account debtor” as defined in the Code
with such additions to such term as may hereafter be made. 
 “Advance” or “Advances”
means an advance (or advances) under the Revolving Line, including, without limitation, the Initial Regular Advance and any Nonformula Advance. 
 “Affiliate” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common
control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members. 

“Agreement” is defined in the preamble hereof. 
 “Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b) the Dollar Equivalent amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit Reserve, minus (c) the FX Reduction Amount, minus (d) any amounts used for Cash Management Services, and minus
(e) the outstanding principal balance of any Advances. 

  
 -19-

 “Bank” is defined in the preamble hereof. 

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

“Borrower Debenture” means that certain 1.75% Convertible Subordinated Debenture due 2024 in an aggregate principal
amount of $125,000,000, dated as of May 18, 2004, as increased to an aggregate principal amount of $150,000,000, executed by the Borrower, as issuer, and authenticated by Wells Fargo Bank, National Association, as trustee. 

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

“Borrowing Base” is 80% of Eligible Accounts, as determined by Bank from Borrower’s most recent Borrowing Base
Certificate; provided, however, that Bank may decrease the foregoing percentages in its good faith business judgment based on events, conditions, contingencies, or risks which, as determined by Bank, may adversely affect Collateral.

 “Borrowing Base Certificate” is that certain certificate in the form attached hereto as Exhibit C.

 “Borrowing Base Report” is defined in Section 6.2(a). 

“Borrowing Resolutions” are, with respect to any Person, those resolutions substantially in the form attached
hereto as Exhibit F. 
 “Business Day” is any day that is not a Saturday, Sunday or a day on
which Bank is closed. 
 “Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue; and
(d) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition. 

“Cash Management Services” is defined in Section 2.1.4. 

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

  
 -20-

 “Commodity Account” is any “commodity account” as defined in the
Code with such additions to such term as may hereafter be made. 
 “Compliance Certificate” is that certain
certificate in the form attached hereto as Exhibit D. 
 “Contingent Obligation” is, for any Person, any
direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed,
co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any
interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but
“Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if
not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement. 

“Control Agreement” is any control agreement entered into among the depository institution at which Borrower maintains a
Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank pursuant to which Bank obtains control (within the meaning of the Code) over such
Deposit Account, Securities Account, or Commodity Account. 
 “Copyrights” are any and all copyright rights,
copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret. 

“Credit Extension” is any Advance, Letter of Credit, FX Forward Contract, amount utilized for Cash Management Services,
or any other extension of credit by Bank for Borrower’s benefit. 
 “Default Rate” is defined in
Section 2.3(b). 
 “Deferred Revenue” is all amounts received or invoiced in advance of performance under
contracts and not yet recognized as revenue. 
 “Deferred Revenue Report” is defined in Section 6.2(c).

 “Deposit Account” is any “deposit account” as defined in the Code with such additions to such term
as may hereafter be made. 
 “Designated Deposit Account” is Borrower’s deposit account, account number
3300717221, maintained with Bank. 
 “Dollars,” “dollars” or use of the
sign “$” means only lawful money of the United States and not any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United
States. 
 “Dollar Equivalent” is, at any time, (a) with respect to any amount denominated in
Dollars, such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing rate of exchange in San Francisco,
California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency. 
 “Domestic
Subsidiary” means a Subsidiary organized under the laws of the United States or any state or territory thereof or the District of Columbia. 
 “Early Termination Date” is defined in Section 2.1.1(b). 

“Effective Date” is defined in the preamble hereof. 

  
 -21-

 “Eligible Accounts” means Accounts which arise in the ordinary course of
Borrower’s business that meet all Borrower’s representations and warranties in Section 5.3. Bank reserves the right at any time after the Effective Date to adjust any of the criteria set forth below and to establish new criteria in
its sole discretion. Unless Bank otherwise agrees in writing, Eligible Accounts shall not include: 
 (a) Accounts for which the
Account Debtor is Borrower’s Affiliate, officer, employee, or agent; 
 (b) Accounts that the Account Debtor has not paid
within ninety (90) days of invoice date regardless of invoice payment period terms; 
 (c) Accounts with credit balances
over ninety (90) days from invoice date; 
 (d) Accounts owing from an Account Debtor, in which thirty-five percent
(35%) or more of the Accounts have not been paid within ninety (90) days of invoice date; 
 (e) Accounts owing from
an Account Debtor which does not have its principal place of business in the United States (except for Tokyo Electron Device Ltd., Epson Precision (H.K.) Ltd., AECO Technology Co., Ltd. and Qisda Optronics (Suzhou) Corporation) unless such Accounts
are otherwise Eligible Accounts and (i) covered in full by credit insurance satisfactory to Bank, less any deductible, (ii) supported by letter(s) of credit acceptable to Bank, (iii) supported by a guaranty from the Export-Import Bank
of the United States, or (iv) that Bank otherwise approves of in writing; 
 (f) Accounts billed and/or payable outside of
the United States (sometimes called foreign invoiced accounts); 
 (g) Accounts owing from an Account Debtor to the extent that
Borrower is indebted or obligated in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise - sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts); 

(h) Accounts owing from an Account Debtor, whose total obligations to Borrower exceed twenty-five percent (25%) of all Accounts,
except for Tokyo Electron Device Ltd, for which such percentage is forty-five percent (45%) for the amounts that exceed that percentage, unless Bank approves in writing; 
 (i) Accounts owing from an Account Debtor which is a United States government entity or any department, agency, or instrumentality thereof unless Borrower has assigned its payment rights to Bank and the
assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended; 
 (j) Accounts for
demonstration or promotional equipment, or in which goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other terms if Account Debtor’s payment may be conditional;

 (k) Accounts owing from an Account Debtor that has not been invoiced or where goods or services have not yet been rendered to
the Account Debtor (sometimes called memo billings or pre-billings); 
 (l) Accounts subject to contractual arrangements between
Borrower and an Account Debtor where payments shall be scheduled or due according to completion or fulfillment requirements where the Account Debtor has a right of offset for damages suffered as a result of Borrower’s failure to perform in
accordance with the contract (sometimes called contracts accounts receivable, progress billings, milestone billings, or fulfillment contracts); 
 (m) Accounts owing from an Account Debtor the amount of which may be subject to withholding based on the Account Debtor’s satisfaction of Borrower’s complete performance (but only to the extent
of the amount withheld; sometimes called retainage billings); 
 (n) Accounts subject to trust provisions, subrogation rights of
a bonding company, or a statutory trust; 
 (o) Accounts owing from an Account Debtor that has been invoiced for goods that have
not been shipped to the Account Debtor unless Bank, Borrower, and the Account Debtor have entered into an agreement acceptable to Bank in its sole discretion wherein the Account Debtor acknowledges that (i) it has title to and has ownership of
the goods wherever located, (ii) a bona fide sale of the goods has occurred, and (iii) it owes payment for such goods in accordance with invoices from Borrower (sometimes called “bill and hold” accounts); 

  
 -22-

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

(q) Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’s
business; 
 (r) Accounts for which Borrower has permitted Account Debtor’s payment to extend beyond 90 days; 

(s) Accounts arising from chargebacks, debit memos or others payment deductions taken by an Account Debtor (but only to the extent the
chargeback is determined invalid and subsequently collected by Borrower); 
 (t) Accounts arising from product returns and/or
exchanges (sometimes called “warranty” or “RMA” accounts); 
 (u) Accounts owing from an Account Debtor with
respect to which Borrower has received Deferred Revenue (but only to the extent of such Deferred Revenue); 
 (v) Accounts in
which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business; and 

(w) Accounts for which Bank in its good faith business judgment determines collection to be doubtful, including, without limitation,
accounts represented by “refreshed” or “recycled” invoices. 
 “Equipment” is all
“equipment” as defined in the Code 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. 
 “ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations. 

“Event of Default” is defined in Section 8. 

“Exchange Act” is the Securities Exchange Act of 1934, as amended. 

“Foreign Currency” means lawful money of a country other than the United States. 

“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary. 

“Funding Date” is any date on which a Credit Extension is made to or for the account of Borrower which shall be a
Business Day. 
 “FX Business Day” is any day when (a) Bank’s Foreign Exchange
Department is conducting its normal business and (b) the Foreign Currency being purchased or sold by Borrower is available to Bank from the entity from which Bank shall buy or sell such Foreign Currency. 

“FX Forward Contract” is defined in Section 2.1.3. 

“FX Reduction Amount” is defined in Section 2.1.3. 

“FX Reserve” is defined in Section 2.1.3. 
 “GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the
circumstances as of the date of determination. 

  
 -23-

 “General Intangibles” is all “general intangibles” as defined in
the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles,
contract rights, 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. 
 “Governmental
Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

 “Governmental Authority” is any nation or government, any state or other political subdivision thereof, any
agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any
self-regulatory organization. 
 “Indebtedness” is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and
(d) Contingent Obligations. 
 “Indenture” is that certain Indenture dated as of May 18, 2004,
executed by and between Borrower, as issuer, and Wells Fargo Bank, National Association, as trustee, relating to 1.75% Convertible Subordinated Debentures due 2024, as supplemented from time to time. 

“Indemnified Person” is defined in Section 12.2. 

“Initial Regular Advance” is defined in Section 6.2(a). 

“Initial Regular Advance Request” is defined in Section 6.2(a). 

“Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other
bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. 

“Intellectual Property” means all of Borrower’s right, title, and interest in and to the following: 

(a) its Copyrights, Trademarks and Patents; 
 (b) any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating manuals; 

(c) any and all source code; 
 (d) any and all design rights which may be available to a Borrower; 
 (e) any and
all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified
above; and 
 (f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents. 

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

  
 -24-

 “Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or capital contribution to any Person. 

“Letter of Credit” means a standby letter of credit issued by Bank or another institution based upon an application,
guarantee, indemnity or similar agreement on the part of Bank as set forth in Section 2.1.2. 
 “Letter of Credit
Application” is defined in Section 2.1.2(b). 
 “Letter of Credit Reserve” has the meaning set
forth in Section 2.1.2(e). 
 “Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property. 
 “Loan Documents” are, collectively, this Agreement, the Perfection Certificate, any note, or notes or guaranties executed by Borrower, and any other present or future agreement between
Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, restated, or otherwise modified. 

“Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the
Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; (c) a material impairment of the prospect of repayment of any portion of the
Obligations or (d) Bank determines, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall fail to comply with one or more of the financial covenants in Section 6
during the next succeeding financial reporting period. 
 “Monthly Financial Statements” is defined in
Section 6.2(e). 
 “Nonformula Advances” is defined in Section 2.1.1(a). 

“Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, all obligations relating to letters of credit (including reimbursement obligations for drawn and undrawn letters
of credit), cash management services, and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s
duties under the Loan Documents. 
 “Operating Documents” are, for any Person, such Person’s formation
documents, as certified with the Secretary of State of such Person’s state of formation on a date that is no earlier than 30 days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form,
(b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all
current amendments or modifications thereto. 
 “Patents” means all patents, patent applications and like
protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same. 
 “Payment/Advance Form” is that certain form attached hereto as Exhibit B. 
 “Perfection Certificate” is defined in Section 5.1. 

“Permitted Indebtedness” is: 
 (a) Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents; 
 (b) Indebtedness existing on the Effective Date and shown on the Perfection Certificate; 

  
 -25-

 (c) Subordinated Debt; 

(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business, including without limitation Indebtedness
between or among the Borrower and its Subsidiaries consisting of payables for goods or services extended in the ordinary course of business consistent with past practice; 
 (e) Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business; 
 (f) Indebtedness secured by Liens permitted under clauses (a) and (c) of the definition of “Permitted Liens” hereunder; 

(g) other Indebtedness not otherwise permitted by Section 7.5 not exceeding $50,000.00 in the aggregate outstanding at any time; and

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

“Permitted Investments” are: 
 (a) Investments (including, without limitation, Subsidiaries) existing on the Effective Date and shown on the Perfection Certificate; 

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

(d) Investments consisting of deposit accounts in which Bank has a perfected security interest; 

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

(f) Investments (i) by Borrower in Subsidiaries not to exceed Seven Hundred Fifty Thousand Dollars ($750,000) in the aggregate in
any fiscal year, (ii) by Subsidiaries in other Subsidiaries not to exceed Seven Hundred Fifty Thousand Dollars ($750,000) in the aggregate in any fiscal year or in Borrower and (iii) Investments between or among the Borrower and its
Subsidiaries consisting of payables for goods or services extended in the ordinary course of business consistent with past practice; 
 (g) Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or
directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of Directors; 

(h) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; 
 (i) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business; 

(j) joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of
technology, the development of technology or the providing of technical support, provided that any cash investments by Borrower do not exceed Five Hundred Thousand Dollars ($500,000) in the aggregate in any fiscal year; and 

(k) other Investments not otherwise permitted by Section 7.8 not exceeding Two Hundred Thousand Dollars ($200,000) in the aggregate
outstanding at any time. 

  
 -26-

 “Permitted Liens” are: 

(a) Liens existing on the Effective Date and shown on the Perfection Certificate or arising under this Agreement and the other Loan
Documents, including, so long as such lien is terminated in its entirety by March 31, 2011, the lien in favor of NetApp, Inc. dba NetApp Financial Solutions; 
 (b) Liens for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested in good faith and for which Borrower maintains adequate
reserves on its Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder; 

(c) purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment
securing no more than Seven Hundred Fifty Thousand Dollars ($750,000) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the
Equipment; 
 (d) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the
ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000) and which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; 
 (e) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens
imposed by ERISA); 
 (f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described
in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase; 

(g) leases or subleases of real property granted in the ordinary course of Borrower’s business (or, if referring to another Person,
in the ordinary course of such Person’s business), and leases, subleases, non-exclusive licenses or sublicenses of personal property (other than Intellectual Property) granted in the ordinary course of Borrower’s business (or, if referring
to another Person, in the ordinary course of such Person’s business), if the leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest therein; 

(h) non-exclusive license of Intellectual Property granted to third parties in the ordinary course of business; 

(i) Liens arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default under Sections
8.4 and 8.7; 
 (j) Liens in favor of other financial institutions arising in connection with Borrower’s securities
accounts held at such institutions, provided that Bank has a perfected security interest in the amounts held in such deposit and/or securities accounts; 
 (k) deposits to secure the performance of bids, trade contracts and leases, statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other
obligations of a like nature incurred in the ordinary course of business; and 
 (l) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods. 

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

  
 -27-

 “Prime Rate” is, as of any date of determination, equal to the rate as of
such date published in the “Money Rates” section of The Wall Street Journal as being the “Prime Rate” (or, if more than one rate is published as the Prime Rate, then the highest of such rates). The Prime Rate will change as of
the date of publication in The Wall Street Journal of a Prime Rate that is different from that published on the preceding Business Day. In the event that The Wall Street Journal shall, for any reason, fail or cease to publish the Prime Rate, the
Bank shall choose a reasonably comparable index or source to use as the basis for the Prime Rate. 
 “Requirement of
Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. 

“Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of
Borrower.  
 “Restricted License” is any material license or other agreement with respect to which
Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination
of could interfere with the Bank’s right to sell any Collateral. 
 “Revolving Line” is an Advance or
Advances in an amount equal to Ten Million Dollars ($10,000,000.00). 
 “Revolving Line Maturity Date” is
December 21, 2012. 
 “Saleable Patents” are those patents and related materials to be sold by
Borrower’s Subsidiary, Equator Technologies, Inc., to [***] within ninety (90) days of the Effective Date and that are listed in Exhibit G. 
 “SEC” shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority. 

“Securities Account” is any “securities account” as defined in the Code with such additions to such term as
may hereafter be made. 
 “SMIC” means Semiconductor Manufacturing International Corporation, a Cayman Islands
corporation. 
 “Settlement Date” is defined in Section 2.1.3. 

“Subordinated Debt” is (a) indebtedness incurred by Borrower subordinated to all of Borrower’s now or
hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into between Bank and the other creditor), on terms acceptable to Bank, and (b) all
Indebtedness under the Indenture and the Borrower Debenture. 
 “Subsidiary” is, as to any Person, a
corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower. 

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

“Trademarks” means any trademark and servicemark rights, whether registered or not, 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 such trademarks. 

  
 -28-

 “Transfer” is defined in Section 7.1. 

“Unused Revolving Line Facility Fee” is defined in Section 2.4(c). 

“[***]” means the entity formed by [***], pursuant to the transfer of the Saleable Patents, as noted on the Patent
Purchase Agreement to be entered into by Borrower and the other parties thereto. 
 [Signature page follows.]

  
 -29-

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

			
	BORROWER:
	
	PIXELWORKS, INC., an Oregon corporation
		
	By:	 	/s/ Steven L. Moore
	Name:	 	Steven L. Moore
	Title:	 	VP & CFO
	
	BANK:
	
	SILICON VALLEY BANK
		
	By:	 	/s/ Tom Smith
	Name:	 	Tom Smith
	Title:	 	Managing DirectorFirst Loan Modification Agreement

 Exhibit 10.1 
 FIRST LOAN MODIFICATION AGREEMENT 
 This First Loan Modification Agreement
(this “Loan Modification Agreement”) is entered into as of March 7, 2011, by and between (i) SILICON VALLEY BANK, a California corporation with a loan production office located at 275 Grove Street, Suite 2-200,
Newton, Massachusetts 02466 (“Bank”), and (ii) LUNA INNOVATIONS INCORPORATED, a Delaware corporation and LUNA TECHNOLOGIES, INC., a Delaware corporation, each with offices located at 1 Riverside Circle, Suite 400,
Roanoke, Virginia 24016 (individually and collectively, jointly and severally, the “Borrower”). 
 1. DESCRIPTION OF
EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of February 18, 2010, evidenced by, among other
documents, a certain Loan and Security Agreement dated as of February 18, 2010, between Borrower and Bank (as amended, the “Loan Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning
as in the Loan Agreement. 
 2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as described in the
Loan Agreement and in certain Intellectual Property Security Agreements executed by each Borrower in favor of Bank (collectively, the “IP Agreements”, and together with any other collateral security granted to Bank, the
“Security Documents”). 
 Hereinafter, the Security Documents, together with all other documents evidencing or securing the
Obligations shall be referred to as the “Existing Loan Documents”. 
 3. DESCRIPTION OF CHANGE IN TERMS. 

 

	 	A.	Modifications to Loan Agreement. 

  

	 	1	The Loan Agreement shall be amended by deleting the following text appearing in Section 6.9(b) thereof: 

“(b) Adjusted EBITDA. Maintain, measured as of the end of each fiscal quarter during the following periods on a trailing
three month basis, Adjusted EBITDA of at least the following: 
  

					
	Trailing Three Month Period Ended	  	Minimum Adjusted EBITDA	 
		
	 December 31, 2009
	  	($	1,000,000	) 
		
	 March 31, 2010
	  	($	250,000	) 
		
	 June 30, 2010
	  	$	1.00	  
		
	 September 30, 2010
	  	$	250,000	  
		
	 December 31, 2010, and each fiscal quarter ending thereafter
	  	$	500,000	” 

 and inserting in lieu thereof the following: 

“(b) Adjusted EBITDA. Maintain, measured as of the end of each fiscal quarter during the following periods on a trailing
three month basis, Adjusted EBITDA of at least the following: 
  

					
	Trailing Three Month Period Ended	  	Minimum Adjusted EBITDA	 
		
	 December 31, 2009
	  	($	1,000,000	) 
		
	 March 31, 2010
	  	($	250,000	) 
		
	 June 30, 2010
	  	$	1.00	  
		
	 September 30, 2010
	  	$	250,000	  
		
	 December 31, 2010
	  	$	500,000	  
		
	 March 31, 2011
	  	($	300,000	)” 

  

	 	2	The Loan Agreement shall be amended by deleting the following text from Section 10 thereof: 

 

			
	“If to Bank:	    	 Silicon Valley Bank
 One
Newton Executive Park,
 Suite 200
 2221
Washington Street
 Newton, Massachusetts 02462
 Attn: Mr. Ryan Ravenscroft
 Fax: (617) 527-0177

Email: rravenscroft@svb.com”

	
	and inserting in lieu thereof the following:
		
	“If to Bank:	    	 Silicon Valley Bank
 275
Grove Street, Suite 2-200
 Newton, Massachusetts 02466
 Attn: Mr. Christopher Leary
 Fax: (617) 527-0177

Email: cleary@svb.com”

  

	 	3	The Loan Agreement shall be amended by inserting the following definition in its appropriate alphabetical order, in Section 13.1 thereof: 

““Eligible Governmental Accounts” are, so long as Borrower’s unrestricted cash at Bank minus all
outstanding Obligations of Borrower owed to Bank is equal to or greater than $2,500,000 (the “Eligible Governmental Accounts Threshold”), Accounts that are otherwise Eligible Accounts which are owing from an Account Debtor which is
a United States government entity or any department, agency or instrumentality thereof, for which Bank determines, in its sole discretion, that Borrower and the Account Debtors of such Eligible Governmental Accounts are using best efforts to obtain
an assignment under the Federal Assignment of Claims Act of 1940 in favor of Bank. For the avoidance of doubt, at any time the Borrower fails to maintain the Eligible Governmental Accounts Threshold, no Accounts will be considered “Eligible
Governmental Accounts” until such time as Bank determines, in its sole discretion, that Borrower has 

 
achieved the Eligible Governmental Accounts Threshold. Any Overadvance created by Borrower failing to maintain the Eligible Governmental Accounts Threshold shall immediately be repaid in
accordance with Section 2.2.” 
  

	 	4	The Loan Agreement shall be amended by deleting the following clause (j) from the definition of “Eligible Accounts” in Section 13.1 thereof:

 “(j) Accounts owing from the United States or any department, agency, or instrumentality thereof except
for Accounts of the United States if Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended;” 

and inserting in lieu thereof the following: 
 “(j) Accounts owing from the United States or any department, agency, or instrumentality thereof except for Accounts of the United States if Borrower has assigned its payment rights to Bank and the
assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended, except for Eligible Governmental Accounts;” 
  

	 	5	The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof: 

““Borrowing Base” is (a) eighty percent (80%) of Eligible Accounts, as determined by Bank from
Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank may decrease the foregoing percentage in its good faith business judgment based on events, conditions, contingencies, or risks which, as determined by
Bank, may adversely affect the Collateral.” 
 “Eligible Foreign Accounts” are Accounts for which the
Account Debtor does not have its principal place of business in the United States but are otherwise Eligible Accounts that Bank pre-approves in writing, on a case-by-case basis. 

“Revolving Line Maturity Date” is February 17, 2011.” 

and inserting in lieu thereof the following: 
 ““Borrowing Base” is (a) eighty percent (80%) of Eligible Accounts plus (b) the lesser of (i) eighty percent (80%) of Eligible Governmental Accounts or
(ii) Two Million Five Hundred Thousand Dollars ($2,500,000), in each case as determined by Bank from Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank may decrease the foregoing percentage in its
good faith business judgment based on events, conditions, contingencies, or risks which, as determined by Bank, may adversely affect the Collateral.” 
 “Eligible Foreign Accounts” are Accounts for which the Account Debtor does not have its principal place of business in the United States but are otherwise Eligible Accounts that
(i) are until such time as Bank determines otherwise, in its sole discretion, Accounts which are billed and collected in the United States, the Account Debtor for which is Alfa Photonics, Aragon Photonics, Bombardier and/or Polytec GmbH; or
(ii) Bank pre-approves in writing, on a case-by-case basis. 
 “Revolving Line Maturity Date” is
May 18, 2011.” 

	 	6	The Compliance Certificate appearing as Exhibit B to the Loan Agreement is hereby replaced with the Compliance Certificate attached as Exhibit A hereto.

 4. FEES. Borrower shall pay to Bank a modification fee equal to Nine Thousand Three Hundred Seventy Five Dollars
($9,375.00), which fee shall be due on the date hereof and shall be deemed fully earned as of the date hereof. Borrower shall also reimburse Bank for all legal fees and expenses incurred in connection with this amendment to the Existing Loan
Documents. 
 5. RATIFICATION OF IP AGREEMENTS. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and
conditions of the IP Agreements, and acknowledges, confirms and agrees that said IP Agreements, as modified by certain disclosures made by Borrower to Bank through and including the date hereof, contain an accurate and complete listing of all
Intellectual Property Collateral as defined in each respective IP Agreement, and each remains in full force and effect. Notwithstanding the terms and conditions of any of the IP Agreements, Borrower shall not register any Copyrights or Mask Works in
the United States Copyright Office unless it: (i) has given at least fifteen (15) days’ prior written notice to Bank of its intent to register such Copyrights or Mask Works and has provided Bank with a copy of the application it
intends to file with the United States Copyright Office (excluding exhibits thereto); (ii) executes a security agreement or such other documents as Bank may reasonably request in order to maintain the perfection and priority of Bank’s
security interest in the Copyrights proposed to be registered with the United States Copyright Office; and (iii) records such security documents with the United States Copyright Office contemporaneously with filing the Copyright application(s)
with the United States Copyright Office. Borrower shall promptly provide to Bank a copy of the Copyright application(s) filed with the United States Copyright Office, together with evidence of the recording of the security documents necessary for
Bank to maintain the perfection and priority of its security interest in such Copyrights or Mask Works. Borrower shall provide written notice to Bank of any application filed by Borrower in the United States Patent Trademark Office for a patent or
to register a trademark or service mark within thirty (30) days of any such filing. 
 6. RATIFICATION OF PERFECTION CERTIFICATE.
Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in certain Perfection Certificates, each dated as of February 18, 2010, each as modified by written disclosures made by Borrower to Bank
through and including the date hereof, and acknowledges, confirms and agrees the disclosures and information above Borrower provided to Bank in each such Perfection Certificate, as modified through the date hereof, remains true and correct in all
material respects as of the date hereof. 
 7. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file UCC financing statements
without notice to Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order to further perfect or protect Bank’s interest in the Collateral, including a notice that any disposition of the Collateral, by either the
Borrower or any other Person, shall be deemed to violate the rights of the Bank under the Code. 
 8. CONSISTENT CHANGES. The Existing
Loan Documents are hereby amended wherever necessary to reflect the changes described above. 
 9. RATIFICATION OF LOAN DOCUMENTS.
Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of the Loan Agreement (as modified by this Loan Modification Agreement), and all security or other collateral granted to the Bank, and confirms that the indebtedness secured
thereby includes, without limitation, the Obligations. 
 10. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or
unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder. 
 11.
CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as
expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Bank’s agreement to modifications to the existing

 
Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Obligations. Nothing in this Loan Modification Agreement shall
constitute a satisfaction of the Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue
of this Loan Modification Agreement. 
 12. JURISDICTION/VENUE. Section 11 of the Loan Agreement is hereby incorporated by reference
in its entirety. 
 13. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it shall have been executed
by Borrower and Bank. 
 [The remainder of this page is intentionally left blank] 

 IN WITNESS WHEREOF, the parties hereto have caused this Loan Modification Agreement
to be executed as a sealed instrument under the laws of the Commonwealth of Massachusetts as of the date first above written. 
  

			
	BORROWER:
	
	LUNA INNOVATIONS INCORPORATED
		
	By:	 	 /s/ Dale E. Messick

	Name:	 	Dale E. Messick
	Title:	 	Interim President and COO
	
	LUNA TECHNOLOGIES, INC.
		
	By:	 	 /s/ Scott A. Graeff

	Name:	 	Scott A. Graeff
	Title:	 	President
	
	BANK:
	
	SILICON VALLEY BANK
		
	By:	 	 /s/ Christopher Leary

	Name:	 	Christopher Leary
	Title:	 	Vice President

 Exhibit A to First Loan Modification Agreement 

EXHIBIT B 

COMPLIANCE CERTIFICATE 
  

									
	TO:	  	SILICON VALLEY BANK	  		 	Date:	  	  

	FROM:	  	LUNA INNOVATIONS INCORPORATED	  		 		  	
		  	LUNA TECHNOLOGIES, INC.	  		 		  	

 The undersigned authorized officer of Luna Innovations Incorporated, a Delaware corporation, and Luna Technologies,
Inc., a Delaware corporation (individually and collectively, jointly and severally, the “Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the
“Agreement”), (1) Borrower is in complete compliance for the period ending
                             with all required covenants except as noted below, (2) there are no
Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries, if
any, relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in
accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned 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. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the
Agreement. 
 Please indicate compliance status by circling Yes/No under “Complies” column. 

 

					
	 Reporting Covenant
	 	 Required
	 	 Complies

			
	Monthly financial statements with Compliance Certificate	 	Monthly within 30 days	 	Yes    No
			
	Annual financial statement (CPA Audited) + CC	 	FYE within 120 days	 	Yes    No
			
	10-Q, 10-K and 8-K	 	Within 5 days after filing with SEC	 	Yes    No
			
	A/R & A/P Agings, Deferred Revenue/billings in excess of cost report	 	Monthly within 15 days	 	Yes    No
			
	Transaction Reports	 	Bi-weekly (monthly with 30 days during a Streamline Period) and with each request for an advance	 	Yes    No
			
	Projections	 	As amended and within 30 days following approval by Borrower’s board	 	Yes    No

 The following
Intellectual Property was registered after the Effective Date (if no registrations, state “None”) 

			
	  
	 	

  

													
	 Financial Covenant
	  	 Required
	 	  	 Actual
	 	  	 Complies
	 
				
	 Maintain as indicated:
	  				  				  			
	 Minimum Adjusted Quick Ratio
	  	 	1.25:1.00	  	  	 	             :1.0	  	  	 	Yes    No	  
	 Minimum Adjusted EBITDA
	  	 	*	  	  	$	            	  	  	 	Yes    No	  

  

	*	See Section 6.9(b) of the Loan and Security Agreement 

  
 1 

 The following financial covenant analyses and information set forth in Schedule 1 attached
hereto are true and accurate as of the date of this Certificate. 
 The following are the exceptions with respect to the
certification above: (If no exceptions exist, state “No exceptions to note.”) 
  

 
  

 
  

 
  

									
	LUNA INNOVATIONS INCORPORATED	 		 	BANK USE ONLY
	LUNA TECHNOLOGIES, INC.	 		 	
					
		 		 		 	Received by:	 	  

		 		 		 		 	AUTHORIZED SIGNER
					
	By:	 	  
	 		 	Date:	 	  

	Name:	 	  
	 		 		 	
	Title:	 	  
	 		 	Verified:	 	  

		 		 		 		 	AUTHORIZED SIGNER
					
		 		 		 	Date:	 	  

				
		 		 		 	Compliance Status:            Yes    No

  
 2 

 Schedule 1 to Compliance Certificate 

Financial Covenants of Borrower 
 Dated:                              

 

	I.	Adjusted Quick Ratio (Section 6.9(a)) 

	Required:	1.25:1.00 

 Actual: 

 

									
	 A.
	 	 Aggregate value of Borrower’s unrestricted cash at Bank and Borrower’s Cash Equivalents at
Bank
	  	$	            	  
			
	 B.
	 	 Aggregate value of the net billed accounts receivable of Borrower and its Subsidiaries
	  	$	            	  
			
	 C.
	 	 Quick Assets (the sum of line A plus line B)
	  	$	            	  
			
	 D.
	 	 Current Liabilities of Borrower and its Subsidiaries
	  	$	            	  
			
	 E.
	 	 Current portion of Deferred Revenue
	  	$	            	  
			
	 F.
	 	 Adjusted Current Liabilities (line D minus line E)
	  	$	            	  
			
	 G.
	 	 Adjusted Quick Ratio (line D divided by line F)
	  	 	_______	  
	
	 Is line G equal to or greater than 1.25:1:00?
  
	   

													
		 	  
	  	No, not in compliance	  		 	  
	  	Yes, in compliance	 	

  
 3 

	II.	Adjusted EBITDA (Section 6.9(b)) 

Required: Maintain, measured as of the end of each fiscal quarter during the following periods on a trailing three month basis, Adjusted EBITDA of at
least the following: 
  

					
	Trailing Three Month Period Ended	  	Minimum Adjusted EBITDA	 
		
	 December 31, 2009
	  	($	1,000,000	) 
		
	 March 31, 2010
	  	($	250,000	) 
		
	 June 30, 2010
	  	$	1.00	  
		
	 September 30, 2010
	  	$	250,000	  
		
	 December 31, 2010
	  	$	500,000	  
		
	 March 31, 2011
	  	($	300,000	) 

 Actual: All amounts calculated on a
trailing three month basis: 
  

							
	 A.
	  	Net Income	  	$	            	  
			
	 B.
	  	To the extent included in the determination of Net Income	  			
			
		  	1.        The provision for income taxes	  	$	            	  
			
		  	2.        Depreciation expense	  	$	            	  
			
		  	3.        Amortization expense	  	$	            	  
			
		  	4.        Net Interest Expense	  	$	            	  
			
		  	5.        Non-cash stock compensation expense	  	$	            	  
			
		  	6.        The one-time reversal of the Litigation Accrual (as applicable)	  	$	            	  
			
		  	7.        The sum of lines 1 through 5 minus line 6	  	$	            	  
			
	 C.
	  	Adjusted EBITDA (line A plus line B.7)	  	 	_______	  

 Is line C equal to or greater than $
[                            ]? 

 

													
		 	  
	  	No, not in compliance	  		 	  
	  	Yes, in compliance	 	

  
 1

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