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Exhibit 4.3    
  

        EXECUTION COPY  

 REGISTRATION RIGHTS AGREEMENT  

 Dated September 10, 2002  

 among  

 JEFFERSON SMURFIT CORPORATION (U.S.),  

 JSCE, INC.  

 and  

 MORGAN STANLEY & CO. INCORPORATED  

 BANC OF AMERICA SECURITIES LLC

DEUTSCHE BANK SECURITIES INC.

J.P. MORGAN SECURITIES INC.

SALOMON SMITH BARNEY INC.

BANC ONE CAPITAL MARKETS, INC.

BNY CAPITAL MARKETS, INC.

CREDIT LYONNAIS SECURITIES (USA) INC.

CREDIT SUISSE FIRST BOSTON CORPORATION

DRESDNER KLEINWORT WASSERSTEIN—GRANTCHESTER, INC.

SCOTIA CAPITAL (USA) INC.

SG COWEN SECURITIES CORPORATION

WACHOVIA SECURITIES, INC.  

 
 

REGISTRATION RIGHTS AGREEMENT    
  

        THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into on September 10, 2002, among Jefferson Smurfit Corporation (U.S.), a
Delaware corporation (the "Company"), JSCE, Inc., a Delaware corporation and the sole stockholder of the Company (the "Guarantor"), and Morgan Stanley & Co. Incorporated, Banc of America
Securities LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Salomon Smith Barney Inc., Banc One Capital Markets, Inc., BNY Capital Markets, Inc.,
Credit Lyonnais Securities (USA) Inc., Credit Suisse First Boston Corporation, Dresdner Kleinwort Wasserstein—Grantchester, Inc., Scotia Capital (USA) Inc., SG Cowen
Securities Corporation and Wachovia Securities, Inc. (each a "Placement Agent" and, collectively, the "Placement Agents"). 

        This
Agreement is made pursuant to the Placement Agreement dated September 10, 2002, among the Company, the Guarantor and the Placement Agents (the "Placement Agreement"), which
provides for the sale by the Company to the Placement Agents of an aggregate of $700,000,000 principal amount of the Company's 8.25% Senior Notes due 2012 (the "Securities"). The obligations of the
Company under the Securities and the Indenture will be fully and unconditionally guaranteed on a senior unsecured basis by the Guarantor pursuant to the terms of the Indenture (the "Guarantee"). In
order to induce the Placement Agents to enter into the Placement Agreement, the Company and the Guarantor have agreed to provide to the Placement Agents and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the Placement Agreement. 

        In
consideration of the foregoing, the parties hereto agree as follows: 

        1.    Definitions.    

        As
used in this Agreement, the following capitalized defined terms shall have the following meanings: 

        "1933 Act" shall mean the Securities Act of 1933, as amended from time to time. 

        "1934 Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. 

        "Closing Date" shall mean the Closing Date as defined in the Placement Agreement. 

        "Company" shall have the meaning set forth in the preamble and shall also include the Company's successors. 

        "Exchange Dates" shall have the meaning set forth in Section 2(a)(ii) hereof. 

        "Exchange Offer" shall mean the exchange offer by the Company of Exchange Securities for Registrable Securities pursuant to
Section 2(a) hereof. 

        "Exchange Offer Registration" shall mean a registration under the 1933 Act effected pursuant to Section 2(a) hereof. 

        "Exchange Offer Registration Statement" shall mean an exchange offer registration statement on Form S-4 (or, if
applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein. 

        "Exchange Securities" shall mean securities issued by the Company which are fully and unconditionally guaranteed on a senior unsecured
basis by the Guarantor under the Indenture (as defined below) containing terms identical to the Securities, including the Guarantee (except that (i) interest thereon shall accrue from the last
day on which interest was paid on the Securities, or if no such interest has been paid, from September 26, 2002; and (ii) the Exchange Securities will not contain restrictions on
transfer), and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer. 

        "Guarantee" shall have the meaning set forth in the preamble. 

        "Guarantor" shall have the meaning set forth in the preamble and shall also include the Guarantor's successors. 

        "Holder" shall mean any Placement Agent, for so long as it owns any Registrable Securities, and each of its successors, assigns and direct
and indirect transferees who become registered owners of
Registrable Securities under the Indenture; provided that for purposes of Sections 4 and 5 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a)). 

        "Indenture" shall mean the Indenture relating to the Securities to be dated as of September 26, 2002 among the Company, the
Guarantor and The Bank of New York, as trustee, and as the same may be amended from time to time in accordance with the terms thereof. 

        "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of outstanding Registrable Securities;  provided that whenever the consent or
approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or any of its affiliates (as such term is defined in Rule 405 under the 1933 Act) (other than the Placement Agents or subsequent Holders of Registrable Securities
if such subsequent holders are deemed to be such affiliates solely by reason of their holding of such Registrable Securities) shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage or amount. 

        "Person" shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof. 

        "Placement Agent(s)" shall have the meaning set forth in the preamble. 

        "Placement Agreement" shall have the meaning set forth in the preamble. 

        "Prospectus" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including all material incorporated by reference therein. 

        "Registrable Securities" shall mean the Securities and the Guarantee; provided,  however, that the Securities and the
Guarantee shall cease to be Registrable Securities (i) when a Registration Statement with respect to such
Securities and Guarantee shall have been declared effective under the 1933 Act and such Securities and Guarantee shall have been disposed of pursuant to such Registration Statement, (ii) when
such Securities and Guarantee have been sold to the public pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the 1933 Act or (iii) when
such Securities and Guarantee shall have ceased to be outstanding. 

        "Registration Expenses" shall mean any and all expenses incident to performance of or compliance by the Company and the Guarantor with
this Agreement, including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with blue
sky qualification of any of the Exchange Securities or Registrable Securities), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sales agreements and other documents relating to the performance
of and compliance with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws,
(vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees and disbursements of counsel for the Company and the Guarantor and, in the case of a Shelf Registration
Statement, the fees and disbursements of one counsel for the Holders (which counsel 

shall be selected by the Majority Holders and which counsel may also be counsel for the Placement Agents) and (viii) the fees and disbursements of the independent public accountants of the
Company and the Guarantor, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, but excluding fees and expenses of counsel
to the underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by a Holder. 

        "Registration Statement" shall mean any registration statement of the Company and the Guarantor that covers any of the Exchange Securities
or Registrable Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. 

        "SEC" shall mean the Securities and Exchange Commission. 

        "Shelf Registration" shall mean a registration effected pursuant to Section 2(b) hereof. 

        "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company and the Guarantor pursuant to the provisions of
Section 2(b) of this Agreement which covers all of the Registrable Securities (but no other securities unless approved by the Holders whose Registrable Securities are covered by such Shelf
Registration Statement) on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. 

        "Trustee" shall mean the trustee with respect to the Securities under the Indenture. 

        "Underwriter" shall have the meaning set forth in Section 3 hereof. 

        "Underwritten Registration" or "Underwritten Offering" shall mean a registration in which
Registrable Securities are sold to an Underwriter for reoffering to the public. 

        2.    Registration Under the 1933 Act.    

        (a)  To
the extent not prohibited by any applicable law or applicable interpretation of the Staff of the SEC, the Company and the Guarantor shall use their best efforts to
cause to be filed an Exchange Offer Registration Statement covering the offer by the Company and the Guarantor to the Holders to exchange all of the Registrable Securities for Exchange Securities and
to have such Registration Statement remain effective until the closing of the Exchange Offer. The Company and the Guarantor shall commence the Exchange Offer promptly after the Exchange Offer
Registration Statement has been declared effective by the SEC and use their best efforts to have the Exchange Offer consummated not later than 60 days after such effective date. The Company and
the Guarantor shall commence the Exchange Offer by mailing the related exchange offer Prospectus and accompanying documents to each Holder stating, in addition to such other disclosures as are
required by applicable law: 

          (i)  that
the Exchange Offer is being made pursuant to this Registration Rights Agreement and that all Registrable Securities validly tendered will be accepted for exchange; 

        (ii)  the
dates of acceptance for exchange (which shall be a period of at least 20 business days from the date such notice is mailed) (the "Exchange Dates"); 

        (iii)  that
any Registrable Security not tendered will remain outstanding and continue to accrue interest, but will not retain any rights under this Registration Rights
Agreement; 

        (iv)  that
Holders electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to surrender such Registrable Security, together with the
enclosed letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice prior to the close of business on the last
Exchange Date; and 

        (v)  that
Holders will be entitled to withdraw their election, not later than the close of business on the last Exchange Date, by sending to the institution and at the
address (located in the Borough of Manhattan, The City of New York) specified in the notice a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Securities delivered for exchange and a statement that such Holder is withdrawing his election to have such Securities exchanged. 

        As
soon as practicable after the last Exchange Date, the Company and the Guarantor shall: 

          (i)  accept
for exchange Registrable Securities or portions thereof tendered and not validly withdrawn pursuant to the Exchange Offer; and 

        (ii)  deliver,
or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and the
Guarantor and issue, and cause the Trustee to promptly authenticate and mail to each Holder, an Exchange Security equal in principal amount to the principal amount of the Registrable Securities
surrendered by such Holder. 

The
Company and the Guarantor shall use their best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the 1933 Act, the 1934 Act and other
applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate applicable law or
any applicable interpretation of the Staff of the SEC. The Company and the Guarantor shall inform the Placement Agents of the names and addresses of the Holders to whom the Exchange Offer is made, and
the Placement Agents shall have the right, subject to applicable law, to contact such Holders and otherwise facilitate the tender of Registrable Securities in the Exchange Offer. 

        (b)  In
the event that (i) the Company and the Guarantor determine that the Exchange Offer Registration provided for in Section 2(a) above is not available or
may not be consummated as soon as practicable after the last Exchange Date because it would violate applicable law or the applicable interpretations of the Staff of the SEC, (ii) the Exchange
Offer is not for any other reason consummated by March 25, 2003 or (iii) the Exchange Offer has been completed and in the opinion of counsel for the Placement Agents a Registration
Statement must be filed and a Prospectus must be delivered by the Placement Agents in connection with any offering or sale of Registrable Securities, the Company and the Guarantor shall use their best
efforts to cause to be filed as soon as practicable after such determination, date or notice of such opinion of counsel is given to the Company, a Shelf Registration Statement providing for the sale
by the Holders of all of the Registrable Securities and to have such Shelf Registration Statement declared effective by the SEC. In the event the Company and the Guarantor are required to
file a Shelf Registration Statement solely as a result of the matters referred to in clause (iii) of the preceding sentence, the Company and the Guarantor shall use their best efforts to
file and have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement
(which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Placement Agents after completion
of the Exchange Offer. The Company and the Guarantor agree to use their best efforts to keep the
Shelf Registration Statement continuously effective until the expiration of the period referred to in Rule 144(k) with respect to the Registrable Securities or such shorter period that will
terminate when all of the Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement. The Company and the Guarantor further agree to
supplement or amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company and the Guarantor for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations thereunder for shelf registration or if reasonably requested by a Holder with respect to information relating to such
Holder, and to use their best efforts to cause any such amendment to become effective and such Shelf Registration Statement to become usable as soon as thereafter practicable. The Company and the 

Guarantor agree to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. 

        (c)  The
Company and the Guarantor shall pay all Registration Expenses in connection with the registration pursuant to Section 2(a) or Section 2(b). Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Shelf Registration
Statement. 

        (d)  An
Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be
deemed to have become effective unless it has been declared effective by the SEC; provided, however, that, if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency
or court, such Registration Statement will be deemed not to have become effective during the period of such interference until the offering of Registrable Securities pursuant to such Registration
Statement may legally resume. As provided for in the Indenture, in the event the Exchange Offer is not consummated and the Shelf Registration Statement is not declared effective on or prior to
March 25, 2003, the interest rate on the Securities will be increased by 0.5% per annum until the Exchange Offer is consummated or the Shelf Registration Statement is declared effective by the
SEC. 

        (e)  Without
limiting the remedies available to the Placement Agents and the Holders, the Company and the Guarantor acknowledge that any failure by the Company or the
Guarantor to comply with its respective obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Placement Agents or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Placement Agents or any Holder may
obtain such relief as may be required to specifically enforce the Company's and the Guarantor's obligations under Section 2(a) and Section 2(b) hereof. 

        3.    Registration Procedures.    

        In
connection with the obligations of the Company and the Guarantor with respect to the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the
Company and the Guarantor shall as expeditiously as possible: 

        (a)  prepare
and file with the SEC a Registration Statement on the appropriate form under the 1933 Act, which form (x) shall be selected by the Company and the
Guarantor and (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof and (z) shall comply as to form in
all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and use their best efforts to cause such Registration
Statement to become effective and remain effective in accordance with Section 2 hereof; 

        (b)  prepare
and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration
Statement effective for the applicable period and cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424 under
the 1933 Act; to keep each Prospectus current during the period described under Section 4(3) and Rule 174 under the 1933 Act that is applicable to transactions by brokers or dealers with
respect to the Registrable Securities or Exchange Securities; 

        (c)  in
the case of a Shelf Registration, furnish to each Holder of Registrable Securities, to counsel for the Placement Agents, to counsel for the Holders and to each
Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement
thereto and such other documents as such Holder or Underwriter may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Securities; and the Company and
the Guarantor consent to the use of such Prospectus and any amendment or supplement thereto in 

accordance with applicable law by each of the selling Holders of Registrable Securities and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and
in the manner described in such Prospectus or any amendment or supplement thereto in accordance with applicable law; 

        (d)  use
their best efforts to register or qualify the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions as any Holder of
Registrable Securities covered by a Registration Statement shall reasonably request in writing by the time the applicable Registration Statement is declared effective by the SEC, to cooperate with
such Holders in connection with any filings required to be made with the National Association of Securities Dealers, Inc. and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided,
however, that neither the Company nor the Guarantor shall be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (ii) file any general consent to service of process or (iii) subject itself to taxation in any such
jurisdiction if it is not so subject; 

        (e)  in
the case of a Shelf Registration, notify each Holder of Registrable Securities, counsel for the Holders and counsel for the Placement Agents promptly and, if
requested by any such Holder or counsel, confirm such advice in writing (i) when a Registration Statement has become effective and when any post-effective amendment thereto has been
filed and becomes effective, (ii) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose, (iv) if, between the effective date of a Registration Statement and the closing of any sale of Registrable
Securities covered thereby, the representations and warranties of the Company or the Guarantor contained in any underwriting agreement, securities sales agreement or other similar agreement, if any,
relating to the offering cease to be true and correct in all material respects or if the Company or the Guarantor receives any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (v) of the happening of any event during the period a Shelf Registration Statement is
effective which makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or which requires the making of any changes in such Registration
Statement or Prospectus in order to make the statements therein not misleading and (vi) of any determination by the Company or the Guarantor that a post-effective amendment to a
Registration Statement would be appropriate; 

        (f)    make
every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment and provide
immediate notice to each Holder of the withdrawal of any such order; 

        (g)  in
the case of a Shelf Registration, furnish to each Holder of Registrable Securities, without charge, at least one conformed copy of each Registration Statement and any
post-effective amendment thereto (without documents incorporated therein by reference or exhibits thereto, unless requested); 

        (h)  in
the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be in such denominations (consistent with the provisions of the
Indenture) and registered in such names as the selling Holders may reasonably request at least one business day prior to the closing of any sale of Registrable Securities; 

        (i)    in
the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 3(e)(v) hereof, use their best efforts to prepare and file
with the SEC a supplement or 

post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company and the Guarantor
agree to notify the Holders to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and the Holders hereby agree to suspend use of the Prospectus until the
Company and the Guarantor have amended or supplemented the Prospectus to correct such misstatement or omission; 

        (j)    a
reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus
or any document which is to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement, provide copies of such document to the
Placement Agents and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their counsel) and make such of the representatives of the Company and the Guarantor as shall be
reasonably requested by the Placement Agents or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) available for discussion of such document, and shall
not at any time file or make any amendment to the Registration Statement, any Prospectus or any amendment of or supplement to a Registration Statement or a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus, of which the Placement Agents and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their
counsel) shall not have previously been advised and furnished a copy or to which the Placement Agents or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their
counsel) shall object; 

        (k)  obtain
a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a Registration Statement; 

        (l)    cause
the Indenture to be qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), in connection with the registration of the Exchange Securities or
Registrable Securities, as the case may be, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the TIA and execute, and use its best efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to
be filed with the SEC to enable the Indenture to be so qualified in a timely manner; 

        (m)  in
the case of a Shelf Registration, make available for inspection by a representative of the Holders of the Registrable Securities, any Underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and attorneys and accountants designated by the Holders, at reasonable times and in a reasonable manner, all financial and other records,
pertinent documents and properties of the Company and the Guarantor, and cause the respective officers, directors and employees of the Company and the Guarantor to supply all information reasonably
requested by any such representative, Underwriter, attorney or accountant in connection with a Shelf Registration Statement, all in a manner as is necessary and customary to provide the Holders a due
diligence; 

        (n)  in
the case of a Shelf Registration, use their best efforts to cause all Registrable Securities to be listed on any securities exchange or any automated quotation system
on which similar securities issued by the Company or the Guarantor are then listed if requested by the Majority Holders, to the extent such Registrable Securities satisfy applicable listing
requirements; 

        (o)  use
their best efforts to cause the Exchange Securities to continue to be rated by two nationally recognized statistical rating organizations (as such term is used in
Rule 436(g)(2) under the 1933 Act), if the Registrable Securities have been rated; 

        (p)  if
reasonably requested by any Holder of Registrable Securities covered by a Registration Statement, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as the Company or the Guarantor has received notification of the matters to be incorporated in such filing; and 

        (q)  in
the case of a Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith (including those requested by the
Holders of a majority of the Registrable Securities being sold) in order to expedite or facilitate the disposition of such Registrable Securities including, but not limited to, an Underwritten
Offering and in such connection, (i) to the extent possible, make such representations and warranties to the Holders and any Underwriters of such Registrable Securities with respect to the
business of the Company and its subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (ii) obtain opinions of counsel to the Company and
the Guarantor (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders and such Underwriters and their respective counsel) addressed to each selling
Holder and Underwriter of Registrable Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (iii) obtain "cold comfort" letters from the
independent certified public accountants of the Company and the Guarantor (and, if necessary, any other certified public accountant of any subsidiary of the Company or the Guarantor, or of any
business acquired by the Company or the Guarantor for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each selling Holder
and Underwriter of Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten
offerings, and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Securities being sold or the
Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company and the Guarantor made pursuant to
clause (i) above and to evidence compliance with any customary conditions contained in an underwriting agreement. 

        In
the case of a Shelf Registration Statement, the Company and the Guarantor may require each Holder of Registrable Securities to furnish to the Company such information regarding the
Holder and
the proposed distribution by such Holder of such Registrable Securities as the Company or the Guarantor may from time to time reasonably request in writing. 

        In
the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any notice from the Company or the Guarantor of the happening of any event of the kind described
in Section 3(e)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by the Company, such Holder will deliver to the Company (at its expense) all copies in its
possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. If the Company or
the Guarantor shall give any such 

notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company and the Guarantor shall extend the period during which the Registration Statement shall
be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders shall
have received copies of the supplemented or amended Prospectus necessary to resume such dispositions. The Company and the Guarantor may give any such notice only twice during any 365 day period
and any such suspensions may not exceed 45 days for each suspension and there may not be more than two suspensions in effect during any 365 day period. 

        The
Holders of Registrable Securities covered by a Shelf Registration Statement who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such
Underwritten Offering, the investment banker or investment bankers and manager or managers (the "Underwriters") that will administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering. 

        4.    Participation of Broker-Dealers in Exchange Offer.    

        (a)  The
Staff of the SEC has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities
that were acquired by such broker-dealer as a result of market-making or other trading activities (a "Participating Broker-Dealer"), may be deemed to be an "underwriter" within the meaning of the 1933
Act and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities. 

        The
Company and the Guarantor understand that it is the Staff's position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution
containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the
amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligation under the 1933 Act in connection with
resales of
Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the 1933 Act. 

        (b)  In
light of the above, notwithstanding the other provisions of this Agreement, the Company and the Guarantor agree that the provisions of this Agreement as they relate
to a Shelf Registration shall also apply to an Exchange Offer Registration to the extent, and with such reasonable modifications thereto as may be, reasonably requested by the Placement Agents or by
one or more Participating Broker-Dealers, in each case as provided in clause (ii) below, in order to expedite or facilitate the disposition of any Exchange Securities by Participating
Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above; provided that: 

          (i)  neither
the Company nor the Guarantor shall be required to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement, as would otherwise
be contemplated by Section 3(i), for a period exceeding 180 days after the last Exchange Date (as such period may be extended pursuant to the penultimate paragraph of Section 3 of
this Agreement) and Participating Broker-Dealers shall not be authorized by the Company or the Guarantor to deliver and shall not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 4; and 

        (ii)  the
application of the Shelf Registration procedures set forth in Section 3 of this Agreement to an Exchange Offer Registration, to the extent not required by
the positions of the Staff of the SEC or the 1933 Act and the rules and regulations thereunder, will be in conformity with the reasonable request to the Company and the Guarantor by the Placement
Agents or with the reasonable request in writing to the Company and the Guarantor by one or more broker-dealers who certify to the Placement Agents, the Company and the Guarantor in writing that they
anticipate that they will be Participating Broker-Dealers; and provided further that, in connection with such application of the Shelf Registration
procedures set forth in Section 3 to an Exchange 

Offer Registration, the Company and the Guarantor shall be obligated (x) to deal only with one entity representing the Participating Broker-Dealers, which shall be Morgan Stanley & Co.
Incorporated unless it elects not to act as such representative, (y) to pay the fees and expenses of only one counsel representing the Participating Broker-Dealers, which shall be counsel to
the Placement Agents unless such counsel elects not to so act and (z) to cause to be delivered only one, if any, "cold comfort" letter with respect to the Prospectus in the form existing on the
last Exchange Date and with respect to each subsequent amendment or supplement, if any, effected during the period specified in clause (i) above. 

        (c)  The
Placement Agents shall have no liability to the Company, the Guarantor or any Holder with respect to any request that it may make pursuant to Section 4(b)
above. 

        5.    Indemnification and Contribution.    

        (a)  Each
of the Company and the Guarantor agrees, jointly and severally, to indemnify and hold harmless the Placement Agents, each Holder and each Person, if any, who
controls any Placement Agent or any Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under common control with, or is controlled by,
any Placement Agent or any Holder, from and against all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by any Placement Agent,
any Holder or any such controlling or affiliated Person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment thereto) pursuant to which Exchange Securities or Registrable Securities were registered under the 1933 Act, including all documents
incorporated therein by reference, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not
misleading, or caused by any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (as amended or supplemented if the Company or the Guarantor shall have
furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in light of the circumstances
under which they were made not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to the Placement Agents or any Holder furnished to the Company in writing through Morgan Stanley & Co. Incorporated or any selling Holder expressly for use
therein. In connection with any Underwritten Offering permitted by Section 3, the Company and the Guarantor will also indemnify the Underwriters, if any, selling brokers, dealers and similar
securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the 1933 Act and the 1934 Act) to the
same extent as provided above with respect to the indemnification of the Holders, if requested in connection with any Registration Statement. 

        (b)  Each
Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantor, the Placement Agents and the other selling Holders, and each of
their respective directors and officers who sign the Registration Statement and each Person, if any, who controls the Company, the Guarantor, any Placement Agent and any other selling Holder within
the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from the Company and the Guarantor to the Placement Agents
and the Holders, but only with reference to information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto). 

        (c)  In
case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to either
paragraph (a) or paragraph (b) above, such Person (the "indemnified party") shall promptly notify the Person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such 

proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Placement Agents and all Persons, if any, who control any
Placement Agent within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and expenses of more than one separate firm (in addition to any
local counsel) for the Company, the Guarantor, their respective directors and officers who sign the Registration Statement and each Person, if any, who controls the Company and the Guarantor within
the meaning of either such Section and (c) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Holders and all Persons, if any, who control any
Holders within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In such case involving the Placement Agents and Persons who control the
Placement Agents, such firm shall be designated in writing by Morgan Stanley & Co. Incorporated. In such case involving the Holders and such Persons who control Holders, such firm shall be
designated in writing by the Majority Holders. In all other cases, such firm shall be designated by the Company. The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the indemnified party for such fees and expenses of counsel in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which such indemnified
party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding. 

        (d)  If
the indemnification provided for in paragraph (a) or paragraph (b) of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of the Company, the Guarantor and the Holders shall be determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Guarantor on the one hand, or by the Holders on the
other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Holders' respective obligations to contribute
pursuant to this Section 5(d) are several in proportion to the respective principal amount of Registrable Securities of such Holder that were registered pursuant to a Registration Statement. 

        (e)  The
Company, the Guarantor and each Holder agree that it would not be just or equitable if contribution pursuant to this Section 5 were determined by  pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or contribute any amount in excess of the amount by which the total price at which Registrable Securities were sold by
such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. 

        The
indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of the Placement Agents, any Holder or any Person controlling the Placement Agents or any Holder, or by or on behalf of the Company or the
Guarantor, their respective officers or directors or any Person controlling the Company or the Guarantor, (iii) acceptance of any of the Exchange Securities and (iv) any sale of
Registrable Securities pursuant to a Shelf Registration Statement. 

        6.    Miscellaneous.    

        (a)    No Inconsistent Agreements.    Neither the Company nor the Guarantor has entered into, and on or after the date
of this Agreement will not enter into, any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions
hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's or the Guarantor's other issued and
outstanding securities under any such agreements. 

        (b)    Amendments and Waivers.    The provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company and the Guarantor have obtained the written consent of
Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent;  provided, however, that no amendment, modification, supplement, waiver or consent to any departure from
the provisions of Section 5 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. 

        (c)    Notices.    All notices and other communications provided for or permitted hereunder shall be made in writing
by hand-delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder
to the Company by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Placement Agents, the address set forth in the
Placement Agreement; and (ii) if to the Company or the Guarantor, initially at the Company's or the Guarantor's address set forth in the Placement Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this Section 6(c). 

        All
such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next business day if timely delivered to an air courier guaranteeing overnight
delivery. 

        Copies
of all such notices, demands, or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture. 

        (d)    Successors and Assigns.    This Agreement shall inure to the benefit of and be binding upon the successors,
assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit
any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Placement Agreement. If any transferee of any Holder shall acquire Registrable Securities, in
any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities
such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits
hereof. Each Placement Agent (in its capacity as Placement Agent) shall have no liability or obligation to the Company or the Guarantor with respect to any failure by a Holder to comply with, or any
breach by any Holder of, any of the obligations of such Holder under this Agreement. 

        (e)    Purchases and Sales of Securities.    Neither the Company nor the Guarantor shall, and the Company and the
Guarantor shall use their best efforts to cause their respective affiliates (as defined in Rule 405 under the 1933 Act) not to, purchase and then resell or otherwise transfer any Securities. 

        (f)    Third Party Beneficiary.    The Holders shall be third party beneficiaries to the agreements made hereunder
among the Company and the Guarantor, on the one hand, and the Placement Agents, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder. 

        (g)    Counterparts.    This Agreement may be executed in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 

        (h)    Headings.    The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. 

        (i)    Governing Law.    This Agreement shall be governed by the laws of the State of New York. 

        (j)    Severability.    In the event that any one or more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby. 

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 

	 	 	JEFFERSON SMURFIT CORPORATION (U.S.)
	

 	
 	

By	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
	

 	
 	

JSCE, INC.
	

 	
 	

By	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 

Confirmed
and accepted as of

the date first above written: 

MORGAN
STANLEY & CO. INCORPORATED

BANC OF AMERICA SECURITIES LLC

DEUTSCHE BANK SECURITIES INC.

J.P. MORGAN SECURITIES INC.

SALOMON SMITH BARNEY INC.

BANC ONE CAPITAL MARKETS, INC.

BNY CAPITAL MARKETS, INC.

CREDIT LYONNAIS SECURITIES (USA) INC.

CREDIT SUISSE FIRST BOSTON CORPORATION

DRESDNER KLEINWORT WASSERSTEIN—GRANTCHESTER, INC.

SCOTIA CAPITAL (USA) INC.

SG COWEN SECURITIES CORPORATION

WACHOVIA SECURITIES, INC. 

	By:	 	MORGAN STANLEY & CO. INCORPORATED
	

By	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	 	 	Name:	 	 	 	 
	 	 	Title:	 	 	 	 

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Exhibit 4.3

REGISTRATION RIGHTS AGREEMENTQuickLinks
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Exhibit 10.44    
  

SILICON IMAGE, INC.  

 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT  

 

        This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into as of September 27, 2002, by and between COMERICA BANK—CALIFORNIA
("Bank") and SILICON IMAGE, INC. ("Borrower"). 

RECITALS  

        A.    Bank
and Borrower are parties to that certain Revolving Credit Loan and Security Agreement (Accounts and Inventory) dated as of December 17, 1998, that certain
Security Agreement dated as of October 18, 2000, that certain Variable Rate- Installment Note dated as of October 18, 2000, and all other agreements entered into in
connection therewith, each as amended (collectively, the "Original Agreement"). 

        B.    Borrower
and Bank wish to amend and restate the terms of the Original Agreement. This Agreement sets forth the terms on which Bank will advance credit to Borrower, and
Borrower will repay the amounts owing to Bank. 

AGREEMENT  

        The parties agree as follows: 

        1.    DEFINITIONS AND CONSTRUCTION.    

        1.1    Definitions.    As used in this Agreement, the following terms shall have the following definitions: 

        "Accounts"
means all presently existing and hereafter arising accounts, contract rights, and all other forms of obligations owing to Borrower arising out of the sale or lease of goods
(including, without limitation, the licensing of software and other technology) or the rendering of services by Borrower, whether or not earned by performance, and any and all credit insurance,
guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower's Books relating to any of the foregoing. 

        "Affiliate"
means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common
control with such Person, and each of such Person's senior executive officers, directors, and partners. 

        "Bank
Expenses" means all: reasonable costs or expenses (including reasonable attorneys' fees and expenses) incurred in connection with the preparation, negotiation, administration, and
enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank's reasonable attorneys' fees and expenses incurred in amending, enforcing or defending the Loan Documents (including fees
and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought. 

        "Borrower's
Books" means all of Borrower's books and records including: ledgers; records concerning Borrower's assets or liabilities, the Collateral, business operations or financial
condition; and all computer programs, or tape files, and the equipment, containing such information. 

        "Borrowing
Base" means an amount equal to eighty percent (80%) of Eligible Accounts, as determined by Bank with reference to the most recent Borrowing Base Certificate delivered by
Borrower. 

        "Business
Day" means any day that is not a Saturday, Sunday, or other day on which banks in the State of California are authorized or required to close. 

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        "Change
in Control" shall mean a transaction in which any "person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then
outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such "person" or "group" to elect a majority of the Board of Directors of Borrower, who did not have such
power before such transaction. 

        "Closing
Date" means the date of this Agreement. 

        "Code"
means the California Uniform Commercial Code. 

        "Collateral"
means the property described on Exhibit A attached hereto. 

        "Contingent
Obligation" means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold
with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit
cards, or merchant services issued or provided for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement designed to protect such Person against fluctuation in interest rates, currency exchange rates or commodity prices;
provided, however, that the term "Contingent Obligation" shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations
under the guarantee or other support arrangement. 

        "Credit
Extension" means each Advance, Equipment Advance, Letter of Credit, Term Advance or any other extension of credit by Bank for the benefit of Borrower hereunder. 

        "Current
Liabilities" means, as of any applicable date, all amounts that should, in accordance with GAAP, be included as current liabilities on the consolidated balance sheet of Borrower
and its Subsidiaries, as at such date, plus, to the extent not already included therein, all outstanding Credit Extensions made under this Agreement, including all Indebtedness that is payable upon
demand or within one year from the date of determination thereof unless such Indebtedness is renewable or extendible at the option of Borrower or any Subsidiary to a date more than one year from the
date of determination. 

        "Daily
Balance" means the amount of the Obligations owed at the end of a given day. 

        "Eligible
Accounts" means those Accounts that arise in the ordinary course of Borrower's business that comply with all of Borrower's representations and warranties to Bank set forth in
Section 5.4; provided, that standards of eligibility may be fixed and revised from time to time by Bank in Bank's reasonable judgment and upon notification thereof to Borrower in accordance
with the provisions hereof. Unless otherwise agreed to by Bank, Eligible Accounts shall not include the following: 

        (a)  Accounts
that the account debtor has failed to pay within ninety (90) days of invoice date; 

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        (b)  Accounts
with respect to an account debtor, twenty-five percent (25%) of whose Accounts the account debtor has failed to pay within ninety (90) days
of invoice date; 

        (c)  Accounts
with respect to which the account debtor is an officer, employee, or agent of Borrower; 

        (d)  Accounts
with respect to which goods are placed on consignment, guaranteed sale, sale or return, sale on approval, bill and hold, or other terms by reason of which the
payment by the account debtor may be conditional; 

        (e)  Accounts
with respect to which the account debtor is an Affiliate of Borrower; 

        (f)    Accounts
with respect to which the account debtor does not have its principal place of business in the United States, except for Eligible Foreign Accounts; 

        (g)  Accounts
with respect to which the account debtor is the United States or any department, agency, or instrumentality of the United States; 

        (h)  Accounts
with respect to which Borrower is liable to the account debtor for goods sold or services rendered by the account debtor to Borrower or for deposits or other
property of the account debtor held by Borrower, but only to the extent of any amounts owing to the account debtor against amounts owed to Borrower; 

        (i)    Accounts
with respect to an account debtor, including Subsidiaries and Affiliates, whose total obligations to Borrower exceed twenty percent (20%) of all Accounts, to
the extent such obligations exceed the aforementioned percentage, except as approved in writing by Bank; 

        (j)    Accounts
with respect to which the account debtor disputes liability or makes any claim with respect thereto as to which Bank believes, in its sole discretion, that
there may be a basis for dispute (but only to the extent of the amount subject to such dispute or claim), or is subject to any Insolvency Proceeding, or becomes insolvent, or goes out of business; and 

        (k)  Accounts
the collection of which Bank reasonably determines to be doubtful. 

        "Eligible
Foreign Accounts" means Accounts with respect to which the account debtor does not have its principal place of business in the United States and that (i) are supported
by one or more letters of credit or credit insurance in an amount and of a tenor, and issued by a financial institution, acceptable to Bank, or (ii) that Bank approves on a
case-by-case basis. 

        "Equipment"
means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest. 

        "Equipment
Advance" has the meaning set forth in Section 2.1(b). 

        "Equipment
Line" means a credit extension of up to One Million Dollars ($1,000,000). 

        "Equipment
Maturity Date" means October 1, 2005. 

        "ERISA"
means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder. 

        "Event
of Default" has the meaning assigned in Article 8. 

        "GAAP"
means generally accepted accounting principles as in effect from time to time. 

        "Indebtedness"
means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement and other
obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, 

3

 

bonds, debentures or similar instruments, (c) all capital lease obligations and (d) all Contingent Obligations. 

        "Insolvency
Proceeding" means any proceeding commenced by or against any person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief. 

        "Inventory"
means all present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in
process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or at any time hereafter owned by or in the custody or
possession, actual or constructive, of Borrower, including such inventory as is temporarily out of its custody or possession or in transit and including any returns upon any accounts or other
proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower's Books relating to any of
the foregoing. 

        "Investment"
means any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person. 

        "IRC"
means the Internal Revenue Code of 1986, as amended, and the regulations thereunder. 

        "Lien"
means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. 

        "Loan
Documents" means, collectively, this Agreement, any note or notes executed by Borrower, and any other agreement entered into between Borrower and Bank in connection with this
Agreement, all as amended or extended from time to time. 

        "Material
Adverse Effect" means a material adverse effect on (i) the business operations, condition (financial or otherwise) or prospects of Borrower and its Subsidiaries taken as
a whole or (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents or (iii) the value or priority of Bank's security interests
in the Collateral. 

        "Negotiable
Collateral" means all of Borrower's present and future letters of credit of which it is a beneficiary, notes, drafts, instruments, securities, documents of title, and chattel
paper, and Borrower's Books relating to any of the foregoing. 

        "Obligations"
means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any other agreement, whether absolute or
contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Bank may have obtained by assignment or otherwise. 

        "Periodic
Payments" means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any
instrument, or agreement now or hereafter in existence between Borrower and Bank. 

        "Permitted
Indebtedness" means: 

        (a)  Indebtedness
of Borrower in favor of Bank arising under this Agreement or any other Loan Document; 

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        (b)  Indebtedness
existing on the Closing Date and disclosed in the Schedule; 

        (c)  Indebtedness
secured by a lien described in clause (c) of the defined term "Permitted Liens," provided (i) such Indebtedness does not exceed the lesser of
the cost or fair market value of the
equipment financed with such Indebtedness and (ii) such Indebtedness does not exceed $1,000,000 in the aggregate at any given time; and 

        (d)  Subordinated
Debt. 

        "Permitted
Investment" means: 

        (a)  Investments
existing on the Closing Date disclosed in the Schedule; 

        (b)  (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof, (ii) commercial
paper currently having rating of at least A-2 or P-2 from either Standard & Poor's Corporation or Moody's Investors Service, (iii) certificates of deposit and
(iv) Bank's money market accounts, provided in each case that such investments are considered "Available for Sale" or "Held-to-Maturity" Investments" under GAAP and
Financial Accounting Standards Board 115; 

        (c)  Investments
made in accordance with Borrower's investment policy, as approved by its Board of Directors; and 

        (d)  Investments
in Subsidiaries during the period between the Closing Date and the date that is 364 days from the Closing Date, provided such Investments do not
exceed $2,250,000 in the aggregate. 

        "Permitted
Liens" means the following: 

        (a)  Any
Liens existing on the Closing Date and disclosed in the Schedule or arising under this Agreement or the other Loan Documents; 

        (b)  Liens
for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided
the same have no priority over any of Bank's security interests; 

        (c)  Liens
(i) upon or in any equipment which was not financed by Bank acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the acquisition of such equipment, or (ii) existing on such equipment at the
time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment; 

        (d)  Liens
incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through
(c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase. 

        "Person"
means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution,
public benefit corporation, firm, joint stock company, estate, entity or governmental agency. 

        "Prime
Rate" means the variable rate of interest, per annum, most recently announced by Bank, as its "prime rate," whether or not such announced rate is the lowest rate available from
Bank. 

5

 

        "Quick
Assets" means, at any date as of which the amount thereof shall be determined, the unrestricted cash plus Eligible Accounts  plus short term investments of
Borrower as described in subsection (b) of the definition of "Permitted Investment" above. 

        "Responsible
Officer" means each of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and the Controller of Borrower. 

        "Revolving
Facility" means the facility under which Borrower may request Bank to issue Advances, as specified in Section 2.1(a) hereof. 

        "Revolving
Line" means a credit extension of up to Seven Million Five Hundred Thousand Dollars ($7,500,000). 

        "Revolving
Maturity Date" means September 26, 2003. 

        "Schedule"
means the schedule of exceptions attached hereto and approved by Bank, if any. 

        "Subordinated
Debt" means any debt incurred by Borrower that is subordinated to the debt owing by Borrower to Bank on terms acceptable to Bank (and identified as being such by Borrower
and Bank). 

        "Subsidiary"
means any corporation, company or partnership in which (i) any general partnership interest or (ii) more than 50% of the stock or other units of ownership
which by the terms thereof has the ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by
Borrower, either directly or through an Affiliate. 

        "Tangible
Net Worth" means at any date as of which the amount thereof shall be determined, the sum of the capital stock and additional paid-in capital plus retained earnings
(or minus accumulated deficit) of Borrower and its Subsidiaries minus intangible assets, plus Subordinated Debt, on a consolidated basis determined in accordance with GAAP. 

        "Term
Advance" has the meaning set forth in Section 2.1(d). 

        "Term
Line" means a credit extension of up to Four Million Dollars ($4,000,000). 

        "Term
Maturity Date" means October 1, 2004. 

        1.2    Accounting Terms.    All accounting terms not specifically defined herein shall be construed in accordance with
GAAP and all calculations made hereunder shall be made in accordance with GAAP. When used herein, the terms "financial statements" shall include the notes and schedules thereto. 

        2.    LOAN AND TERMS OF PAYMENT.    

        2.1    Credit Extensions.    

        Borrower
promises to pay to the order of Bank, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrower
hereunder. Borrower shall also pay interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof. 

        (a)    Revolving Advances.    

          (i)  Subject
to and upon the terms and conditions of this Agreement, Borrower may request Advances in an aggregate outstanding amount not to exceed the lesser of
(i) the Revolving Line or (ii) the Borrowing Base, minus, in each case, the aggregate face amount of all outstanding Letters of Credit.
Subject to the terms and conditions of this 

6

 

Agreement, amounts borrowed pursuant to this Section 2.1(a) may be repaid and reborrowed at any time prior to the Revolving Maturity Date, at which time all Advances under this
Section 2.1(a) shall be immediately due and payable. Borrower may prepay any Advances without penalty or premium. 

        (ii)  Whenever
Borrower desires an Advance, Borrower will notify Bank by facsimile transmission or telephone no later than 3:00 p.m. Pacific time, on the Business Day
that the Advance is to be made. Each such notification shall be promptly confirmed by a Payment/Advance Form in substantially the form of Exhibit B  hereto. Bank is authorized to make Advances under
this Agreement, based upon instructions received from a Responsible Officer or a designee of a Responsible Officer, or without
instructions if in Bank's discretion such Advances are necessary to meet Obligations which have become due and remain unpaid. Bank shall be entitled to rely on any telephonic notice given by a person
who Bank reasonably believes to be a Responsible Officer or a designee thereof, and Borrower shall indemnify and hold Bank harmless for any damages or loss suffered by Bank as a result of such
reliance. Bank will credit the amount of Advances made under this Section 2.1(a) to Borrower's deposit account. 

        (b)    Equipment Advances.    

          (i)  Subject
to and upon the terms and conditions of this Agreement, at any time from the date hereof through March 31, 2003, Bank agrees to make advances (each an
"Equipment Advance" and, collectively, the "Equipment Advances") to Borrower in an aggregate amount not to exceed the Equipment Line. Each Equipment Advance shall not exceed one hundred percent (100%)
of the invoice amount of equipment approved by Bank from time to time (which Borrower shall, in any case, have purchased within 90 days of the date of the corresponding Equipment Advance),
excluding taxes, shipping, warranty charges, freight discounts, installation, and maintenance expense. Notwithstanding the foregoing, (i) no more than 20% of the Equipment Line may be used to
finance software and other soft costs, (ii) no Equipment Advance shall be in an amount of less than $250,000, and (iii) Bank will finance equipment purchased up to 90 days prior
to the Closing Date in the initial Equipment Advance. 

        (ii)  Interest
shall accrue from the date of each Equipment Advance at the rate specified in Section 2.3, and shall be payable monthly on the last day of each month so
long as any Equipment Advances are outstanding. Any Equipment Advances that are outstanding on April 1, 2003 shall be payable in thirty (30) equal monthly installments of principal, plus
all accrued interest, beginning on April 1, 2003, and continuing on the last day of each month thereafter through the Equipment Maturity Date, at which
time all amounts owing under this Section 2.1(b) and any other amounts owing under this Agreement shall be immediately due and payable. Equipment Advances, once repaid, may not be reborrowed.
Borrower may prepay any Equipment Advances without penalty or premium. 

        (iii)  When
Borrower desires to obtain an Equipment Advance, Borrower shall notify Bank (which notice shall be irrevocable) by facsimile transmission to be received no later
than 3:00 p.m. Pacific time one (1) Business Day before the day on which the Equipment Advance is to be made. Such notice shall be substantially in the form of  Exhibit B. The notice shall
be signed by a Responsible Officer or its designee and include a copy of the invoice for any Equipment to be
financed. 

7

 

        (c)    Letters of Credit.    

          (i)  Subject
to the terms and conditions of this Agreement, at any time prior to the Revolving Maturity Date, Bank agrees to issue or cause to be issued letters of credit
for the account of Borrower (each, a "Letter of Credit" and collectively, the "Letters of Credit") in an aggregate outstanding face amount not to exceed the lesser of the Revolving Line or the
Borrowing Base minus, in each case, the aggregate amount of the outstanding Advances at any time, provided that the aggregate face amount of all
outstanding Letters of Credit shall not exceed $500,000. 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 form of standard application and letter of credit agreement (the "Application"), which Borrower hereby agrees to execute, including Bank's standard fee equal to 1.0% per annum of
the face amount of each Letter of Credit. On any drawn but unreimbursed Letter of Credit, the unreimbursed amount shall be deemed an Advance under Section 2.1(a). Prior to the Revolving
Maturity Date, Borrower shall secure in cash all obligations under any outstanding Letters of Credit on terms acceptable to Bank. 

        (ii)  The
obligation of Borrower to 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, the Application, and such Letters of Credit, under all circumstances whatsoever. Borrower shall indemnify, defend, protect, and hold Bank harmless from
any loss, cost, expense or liability, including, without limitation, reasonable attorneys' fees, arising out of or in connection with any Letters of Credit, except for expenses caused by Bank's gross
negligence or willful misconduct. 

        (d)    Term Advances.    As of the Closing Date, (i) Borrower owes Bank an amount equal to $502,536.30
(estimated amount as of October 4, 2002) under the Original Agreement and (ii) Borrower owes City National Bank an amount equal to
$                                         
 pursuant to term debt
outstanding on the Closing Date. Borrower shall request an advance (collectively, with all amounts outstanding under the Original Agreement, the "Term Advance") on or within a week of the Closing Date
for the purpose of refinancing all amounts owing to City National Bank, in an amount which, in the aggregate with any amounts outstanding under the Original Agreement, shall not exceed the Term Line.
Thereafter, Borrower shall not request nor receive any further Term Advances. Interest shall accrue on the Term
Advances at the rate specified in Section 2.3. The Term Advance shall be payable in twenty four (24) equal monthly installments of principal, plus all accrued interest, beginning on
November 1, 2002, and continuing on the last day of each month thereafter through the Term Maturity Date, at which time all amounts owing under this Section 2.1(d) shall be immediately
due and payable. The Term Advance, once repaid, may not be reborrowed. Borrower may prepay the Term Advance without penalty or premium. 

        2.2    Overadvances.    If the aggregate amount of the outstanding Advances plus  the aggregate face amount of all outstanding
Letters of Credit exceeds the lesser of the Revolving Line or the Borrowing Base at any time, Borrower shall immediately pay to
Bank, in cash, the amount of such excess. 

        2.3    Interest Rates, Payments, and Calculations.    

        (a)    Interest Rates.    

        (i)    Advances.    Except as set forth in Section 2.3(b), the Advances shall bear interest, on the outstanding
Daily Balance thereof, at a rate equal to the Prime Rate. 

8

 

        (ii)    Equipment Advances.    Except as set forth in Section 2.3(b), each Equipment Advance, which shall be a
Prime Rate Option Advance or a LIBOR Option Advance as elected by Borrower pursuant to the terms set forth in the LIBOR Addendum to Loan and Security Agreement executed by Borrower in connection with
this Agreement, shall bear interest, on the outstanding Daily Balance thereof, at the applicable rate set forth in such LIBOR Addendum to Loan and Security Agreement; 

        (iii)    Term Advances.    Except as set forth in Section 2.3(b), each Term Advance, which shall be a Prime
Rate Option Advance or a LIBOR Option Advance as elected by Borrower pursuant to the terms set forth in the LIBOR Addendum to Loan and Security Agreement executed by Borrower in connection with this
Agreement, shall bear interest, on the outstanding Daily Balance thereof, at the applicable rate set forth in such LIBOR Addendum to Loan and Security Agreement; 

        (b)    Late Fee; Default Rate.    If any payment is not made within ten (10) days after the date such payment
is due, Borrower shall pay Bank a late fee equal to the lesser of (i) five percent (5%) of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under
applicable law. All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to five (5) percentage points above the
interest rate applicable immediately prior to the occurrence of the Event of Default. 

        (c)    Payments.    Interest hereunder shall be due and payable on the last calendar day of each month during the term
hereof. Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrower's deposit accounts or against the Revolving Line, in which case those
amounts shall thereafter accrue interest at the rate then applicable hereunder. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder. All payments shall be free and clear of any taxes, withholdings, duties, impositions or other charges, to the end that Bank will
receive the entire amount of any Obligations payable hereunder, regardless of source of payment. 

        (d)    Computation.    In the event the Prime Rate is changed from time to time hereafter, the applicable rate of
interest hereunder shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in the Prime Rate. All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year for the actual number of days elapsed. 

9

  

        2.4    Crediting Payments.    Prior to the occurrence of an Event of Default, Bank shall credit a wire transfer of
funds, check or other item of payment to such deposit account or Obligation as Borrower specifies. After the occurrence of an Event of Default, the receipt by Bank of any wire transfer of funds,
check, or other item of payment shall be immediately applied to conditionally reduce Obligations, but shall not be considered a payment on account unless such payment is of immediately available
federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment
received by Bank after 12:00 noon Pacific time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under
the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such extension. 

        2.5    Fees.    Borrower shall pay to Bank the following: 

        (a)    Facility Fee.    On or before the Closing Date, a Facility Fee equal to $29,250, which shall be nonrefundable
as of the Closing Date; 

        (b)    Bank Expenses.    On the Closing Date, all Bank Expenses incurred through the Closing Date, including
reasonable attorneys' fees and expenses and, after the Closing Date, all Bank Expenses, including reasonable attorneys' fees and expenses, as and when they become due; and 

        (c)    Commitment Fee.    A Commitment Fee equal to one tenth of one percent (0.10%) per annum of the average unused
portion of the availability under the Revolving Line. Such fee shall be payable in quarterly installments on the last day of each fiscal quarter or, in the case of the quarter in which the Revolving
Maturity Date falls, on the Revolving Maturity Date. Each quarterly installment shall be calculated on the average unused portion of the Revolving Line during such fiscal quarter; 

        2.6    Additional Costs.    In case any law, regulation, treaty or official directive or the interpretation or
application thereof by any court or any governmental authority charged with the administration thereof or the compliance with any guideline or request of any central bank or other governmental
authority (whether or not having the force of law): 

        (a)  subjects
Bank to any tax with respect to payments of principal or interest or any other amounts payable hereunder by Borrower or otherwise with respect to the
transactions contemplated hereby (except for taxes on the net income of Bank imposed by the United States of America or any political subdivision thereof); 

        (b)  imposes,
modifies or deems applicable any deposit insurance, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account
of, or loans by, Bank; or 

        (c)  imposes
upon Bank any other condition with respect to its performance under this Agreement, 

        and
the result of any of the foregoing is to increase the cost to Bank, reduce the income receivable by Bank or impose any expense upon Bank with respect to the Obligations, Bank shall
notify Borrower thereof. Borrower agrees to pay to Bank the amount of such increase in cost, reduction in income or additional expense as and when such cost, reduction or expense is incurred or
determined, upon presentation by Bank of a statement of the amount and setting forth Bank's calculation thereof, all in reasonable detail, which statement shall be deemed true and correct absent
manifest error. Notwithstanding the foregoing, Borrower shall not be required to make any payment required under 

10

 

this Section 2.6 if, upon receipt of Bank's notification hereunder, it instead chooses to terminate this Agreement pursuant to Section 2.7. 

        2.7    Term.    This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall
continue in full force and effect for so long as any Obligations remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement. Notwithstanding the foregoing, Bank shall
have the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default.
Notwithstanding termination, Bank's Lien on the Collateral shall remain in effect for so long as any Obligations are outstanding. Notwithstanding any of the foregoing or anything to the contrary in
this Agreement, Borrower shall have the right to terminate this Agreement at any time with notice to Bank, provided that all Obligations have been repaid in full, any outstanding Letters of Credit
have been cash secured to the satisfaction of Bank, and Bank has no obligation to make Credit Extensions to Borrower thereafter. 

        3.    CONDITIONS OF LOANS.    

        3.1    Conditions Precedent to Initial Credit Extension.    The obligation of Bank to make the initial Credit
Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, the following: 

        (a)  this
Agreement and a LIBOR Addendum; 

        (b)  a
certificate of the Secretary of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement; 

        (c)  a
financing statement (Form UCC-1); 

        (d)  agreement
to provide insurance (in the form previously provided by Bank to Borrower); 

        (e)  payment
of the fees and Bank Expenses then due specified in Section 2.5 hereof; 

        (f)    current
financial statements of Borrower; 

        (g)  a
pay-off letter from City National Bank; 

        (h)  an
audit of the Collateral, the results of which shall be satisfactory to Bank; and 

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

        3.2    Conditions Precedent to all Credit Extensions.    The obligation of Bank to make each Credit Extension,
including the initial Credit Extension, is further subject to the following conditions: 

        (a)  timely
receipt by Bank of the Payment/Advance Form as provided in Section 2.1; and 

        (b)  the
representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of the date of such Payment/Advance Form
and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be continuing, or would exist after giving effect to such
Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date). The
making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this
Section 3.2. 

11

 

        3.3    Conditions Precedent to all Advances and the issuance of all Letters of Credit.    The obligation of Bank to
make each Advance and to issue each Letter of Credit is further subject to the following condition: Borrower shall deliver to Bank a current Borrowing Base Certificate signed by a Responsible Officer
in substantially the form of Exhibit C hereto, together with aged listings of accounts receivable and accounts payable 

        4.    CREATION OF SECURITY INTEREST.    

        4.1    Grant of Security Interest.    Borrower grants and pledges to Bank a continuing security interest in all
presently existing and hereafter acquired or arising Collateral (as described on Exhibit A attached hereto) in order to secure prompt repayment
of any and all Obligations and in order to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. Except as set forth in the Schedule, such security
interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in Collateral acquired after the date
hereof. Borrower also hereby agrees not to sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its intellectual property, provided that Borrower may enter
into non-exclusive licenses. The Collateral shall not include any copyrights, patents, trademarks, servicemarks and applications therefor, now owned or hereafter acquired, or any claims
for damages by way of any past, present and future infringement of any of the foregoing (collectively, the "Intellectual Property"); provided, however, that the Collateral shall include all accounts
and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the "Rights to Payment").
Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security
interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the Closing Date, include the Intellectual Property to the extent necessary to permit perfection of
Bank's security interest in the Rights to Payment. 

        4.2    Delivery of Additional Documentation Required.    Borrower shall from time to time execute and deliver to Bank,
at the request of Bank, all Negotiable Collateral, all financing statements and other documents that Bank may reasonably request, in form satisfactory to Bank, to perfect and continue the perfection
of Bank's security interests in the Collateral and in order to fully consummate all of the transactions contemplated under the Loan Documents. 

        4.3    Right to Inspect.    Bank (through any of its officers, employees, or agents) shall have the right, upon
reasonable prior notice, from time to time during Borrower's usual business hours but no more than twice a year (unless an Event of Default has occurred and is continuing), to inspect Borrower's Books
and to make copies thereof and to check, test, and appraise the Collateral in order to verify Borrower's financial condition or the amount, condition of, or any other matter relating to, the
Collateral. 

        5.    REPRESENTATIONS AND WARRANTIES.    

        Borrower
represents and warrants as follows: 

        5.1    Due Organization and Qualification.    Borrower and each Subsidiary is a corporation duly existing under the
laws of its state of incorporation and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified. 

        5.2    Due Authorization; No Conflict.    The execution, delivery, and performance of the Loan Documents are within
Borrower's powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower's Certificate of Incorporation or Bylaws, nor will they
constitute an event of default under any material agreement to which 

12

 

Borrower is a party or 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. 

        5.3    No Prior Encumbrances.    Borrower has good and marketable title to its property, free and clear of Liens,
except for Permitted Liens. 

        5.4    Bona Fide Eligible Accounts.    The Eligible Accounts are bona fide existing obligations. The property and
services giving rise to such Eligible Accounts has been delivered or rendered to the account debtor or to the account debtor's agent for immediate and unconditional acceptance by the account debtor.
Borrower has not received notice of actual or imminent Insolvency Proceeding of any account debtor that is included in any Borrowing Base Certificate as an Eligible Account. 

        5.5    Merchantable Inventory.    All Inventory is in all material respects of good and marketable quality, free from
all material defects, except for Inventory for which adequate reserves have been made. 

        5.6    Intellectual Property.    Borrower is the sole owner of its patents, trademarks, copyrights, and other
intellectual property, except for licenses granted by Borrower to its customers in the ordinary course of business. To Borrower's knowledge, each of Borrower's patents is valid and enforceable, and no
part of its intellectual property has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of its intellectual property violates the rights of any third
party. 

        5.7    Name; Location of Chief Executive Office.    Except as disclosed in the Schedule, Borrower has not done
business under any name other than that specified on the signature page hereof. The chief executive office of Borrower is located at the address indicated in Section 10 hereof. All Borrower's
Inventory and Equipment is located only at the location set forth in Section 10 hereof. 

        5.8    Litigation.    Except as set forth in the Schedule, there are no actions or proceedings pending by or against
Borrower or any Subsidiary before any court or administrative agency in which an adverse decision could have a Material Adverse Effect, or a material adverse effect on Borrower's interest or Bank's
security interest in the Collateral. 

        5.9    No Material Adverse Change in Financial Statements.    All consolidated and consolidating financial statements
related to Borrower and any Subsidiary that Bank has received from Borrower fairly present in all material respects Borrower's financial condition as of the date thereof and Borrower's consolidated
and consolidating results of operations for the period then ended. There has not been a material adverse change in the consolidated or the consolidating financial condition of Borrower since the date
of the most recent of such financial statements submitted to Bank. 

        5.10    Solvency, Payment of Debts.    Borrower is solvent and able to pay its debts (including trade debts) as they
mature. 

        5.11    Regulatory Compliance.    Borrower is not an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of the important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock. Borrower has not violated any statutes, laws, ordinances or rules applicable to it, violation of which could have a Material Adverse Effect. 

        5.12    Environmental Condition.    Except as disclosed in the Schedule, none of Borrower's or any Subsidiary's
properties or assets has ever been used by Borrower or any Subsidiary or, to Borrower's knowledge, by previous owners or operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance with applicable law; to Borrower's knowledge, none of Borrower's properties or assets 

13

 

has ever been designated or identified in any manner pursuant to any environmental protection statute as a hazardous waste or hazardous substance disposal site, or a candidate for closure pursuant to
any
environmental protection statute; no lien arising under any environmental protection statute has attached to any revenues or to any real or personal property owned by Borrower or any Subsidiary; and
neither Borrower nor any Subsidiary has received a summons, citation, notice, or directive from the Environmental Protection Agency or any other federal, state or other governmental agency concerning
any action or omission by Borrower or any Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste or hazardous substances into the environment. 

        5.13    Taxes.    Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed,
and have paid, or have made adequate provision for the payment of, all taxes reflected therein. 

        5.14    Subsidiaries.    Except as set forth in the Schedule, Borrower does not own any stock, partnership interest or
other equity securities of any Person, except for Permitted Investments. 

        5.15    Government Consents.    Borrower and each Subsidiary have obtained all consents, approvals and authorizations
of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower's business as currently conducted, the
failure to obtain which could have a Material Adverse Effect. 

        5.16    Accounts.    Except as set forth in the Schedule, none of Borrower's nor any Subsidiary's property is
maintained or invested with a Person other than Bank. 

        5.17    Full Disclosure.    No representation, warranty or other statement made by Borrower in any certificate or
written statement furnished to Bank contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or
statements not misleading. 

        6.    AFFIRMATIVE COVENANTS.    

        Borrower
covenants and agrees that, until payment in full of all outstanding Obligations, and for so long as Bank may have any commitment to make a Credit Extension hereunder, Borrower
shall do all of the following: 

        6.1    Good Standing.    Borrower shall maintain its and each of its Subsidiaries' corporate existence and good
standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which it is required under applicable law, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect. Borrower shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which could have
a Material Adverse Effect. 

        6.2    Government Compliance.    Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding
requirements of ERISA with respect to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government
rules and regulations to which it is subject, noncompliance with which could have a Material Adverse Effect. 

        6.3    Financial Statements, Reports, Certificates.    Borrower shall deliver the following to Bank: (a) as
soon as available, but in any event within forty five (45) days after the end of each quarter, a company prepared consolidated balance sheet, income, and cash flow statement covering Borrower's
consolidated operations during such period, prepared in accordance with GAAP, consistently applied, in a form acceptable to Bank and certified by a Responsible Officer; (b) as soon as
available, but in any event within ninety (90) days after the end of Borrower's fiscal year, audited consolidated financial statements of Borrower prepared in accordance with GAAP, 

14

 

consistently applied, together with an unqualified opinion on such financial statements of an independent certified public accounting firm reasonably acceptable to Bank; (c) if applicable,
copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and all reports on Forms 10-K and
10-Q filed with the Securities and Exchange Commission; (d) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary of Two Hundred Fifty Thousand Dollars ($250,000) or more; and (e) such budgets, sales projections, operating plans
or other financial information as Bank may reasonably request from time to time generally prepared by Borrower in the ordinary course of business. 

        When
Borrower requests the initial Advance under the Revolving Line and thereafter at all times during which any Advances are outstanding under the Revolving Line, within twenty
(20) days after the last day of each month, Borrower shall deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in substantially the form of  Exhibit C hereto, together
with aged listings of accounts receivable and accounts payable. 

        Borrower
shall deliver to Bank with the quarterly financial statements a Compliance Certificate signed by a Responsible Officer in substantially the form of  Exhibit D hereto. 

        Bank
shall have a right from time to time hereafter to audit Borrower's Accounts at Borrower's expense, provided that such audits will be conducted no more often than every six
(6) months unless an Event of Default has occurred and is continuing. 

        6.4    Accounts Receivable.    On a consolidated basis, Borrower shall book all Accounts on which the account debtor
is located in the United States out of Borrower itself at the parent company level. 

        6.5    Inventory; Returns.    Borrower shall keep all Inventory in good and marketable condition, free from all
material defects except for Inventory for which adequate reserves have been made. Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in
accordance with the usual customary practices of Borrower, as they exist at the time of the execution and delivery of this Agreement. Borrower shall promptly notify Bank of all returns and recoveries
and of all disputes and claims, where the return, recovery, dispute or claim involves more than Two Hundred Fifty Thousand Dollars ($250,000). 

        6.6    Taxes.    Borrower shall make, and shall cause each Subsidiary to make, due and timely payment or deposit of
all material federal, state, and local taxes, assessments, or contributions required of it by law, and will execute and deliver to Bank, on demand, appropriate certificates attesting to the payment or
deposit thereof; and Borrower will make, and will cause each Subsidiary to make, timely payment or deposit of all material tax payments and withholding taxes required of it by applicable laws,
including, but not limited to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Bank with proof satisfactory to
Bank indicating that Borrower or a Subsidiary has made such payments or deposits; provided that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is
contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower. 

        6.7    Insurance.    

        (a)  Borrower,
at its expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other hazards and risks, and in such
amounts, as ordinarily insured against by other owners in similar businesses conducted in the locations where Borrower's business is conducted on the date hereof. Borrower shall also maintain 

15

 

insurance relating to Borrower's business, ownership and use of the Collateral in amounts and of a type that are customary to businesses similar to Borrower's. 

        (b)  All
such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank. All such policies of property
insurance shall contain a lender's loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee thereof, and all liability insurance policies shall show the Bank
as an additional insured and shall specify that the insurer must give at least twenty (20) days notice to Bank before canceling its policy for any reason. Upon Bank's request, Borrower shall
deliver to Bank certified copies of such policies of insurance and evidence of the payments of all premiums therefor. All proceeds payable under any such policy shall, at the option of Bank, be
payable to Bank to be applied on account of the Obligations. 

        6.8    Accounts.    Borrower shall maintain and shall cause each of its Subsidiaries to maintain its primary
depository and operating accounts with Bank. At least 85% of all cash and cash equivalents of
Borrower and its Subsidiaries, measured on a consolidated basis, shall be held by Borrower itself at the parent company level. 

        6.9    Quick Ratio.    Borrower shall maintain at all times, measured as of the last day of each quarter, a ratio of
Quick Assets to Current Liabilities plus, to the extent not already included therein, all Indebtedness (including without limitation any Contingent
Obligations) owing from Borrower to Bank plus, to the extent not already included therein, any deferred margin, of at least 1.50 to 1.00. 

        6.10    Tangible Net Worth.    Borrower shall maintain at all times, measured as of the last day of each quarter, a
Tangible Net Worth of not less than Thirty Million Dollars ($30,000,000). 

        6.11    Maximum Quarterly Net Loss.    Borrower's net loss for the quarter ending on June 30, 2002 shall not
exceed $4,000,000. Borrower's net loss for the quarter ending on September 30, 2002 shall not exceed $2,000,000. Borrower's net loss for the quarter ending on December 31, 2002 shall not
exceed $500,000. Thereafter, Borrower's net income for each quarter shall be at least $1.00. For purposes of this Section 6.10, net loss and net income shall be calculated on standard GAAP
principles for net income and net loss, adding back any non-cash, non-recurring expenses such as non-cash stock compensation expenses, cash and non-cash
restructuring charges (maximum cumulative cash expense for the last three quarters of 2002 of $500,000; all expenses in excess of $500,000 will not be added back to GAAP net loss), cash patent expense
costs (capped at $1,800,000 for the quarter ending September 30, 2002, and $900,000 per quarter in each quarter thereafter; all expenses in excess of $1,800,000 for the quarter ending on
September 30, 2002 and $900,000 in each quarter thereafter will not be added back to GAAP net loss), and amortization and impairment of intangible assets. 

        6.12    Intellectual Property.    Borrower shall use commercially reasonable efforts to (i) protect, defend and
maintain the validity and enforceability of its trademarks, patents and copyrights, (ii) detect infringements of its trademarks, patents and copyrights and promptly advise Bank in writing of
material infringements detected and (iii) not allow any of its material trademarks, Patents or copyrights to be abandoned, forfeited or dedicated to the public without the written consent of
Bank, which shall not be unreasonably withheld. 

        6.13    Further Assurances.    At any time and from time to time Borrower shall execute and deliver such further
instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement. 

16

 

        7.    NEGATIVE COVENANTS.    

        Borrower
covenants and agrees that, so long as any credit hereunder shall be available and until payment in full of the outstanding Obligations or for so long as Bank may have any
commitment to make any Credit Extensions, Borrower will not do any of the following: 

        7.1    Dispositions.    Convey, sell, lease, transfer or otherwise dispose of (collectively, a "Transfer"), or permit
any of its Subsidiaries to Transfer, all or any part of its business or property other than: (i) Transfers of Inventory in the ordinary course of business; (ii) Transfers of
non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; or (iii) Transfers of
worn-out or obsolete Equipment which was not financed by Bank. 

        7.2    Change in Business; Change in Control or Executive Office.    Engage in any business, or permit any of its
Subsidiaries to engage in any business, other than the businesses currently engaged in by Borrower and any business substantially similar or related thereto (or incidental thereto); or cease to
conduct business in the manner conducted by Borrower as of the Closing Date; or suffer or permit a Change in Control; or without thirty (30) days prior written notification to Bank, relocate
its chief executive office or state of incorporation; or without Bank's prior written consent, change the date on which its fiscal year ends. 

        7.3    Mergers or Acquisitions.    Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate,
with or into any other business organization, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person. Notwithstanding the
foregoing, this Section 7.3 shall not apply to acquisitions in which the sole consideration is Borrower's stock or cash (provided that the aggregate amount of all cash used by Borrower for
acquisitions shall not exceed $10,000,000 in the aggregate during the term of this Agreement), Borrower is the surviving entity, and, after giving effect to such transaction, there is no Change in
Control, provided that (i) the acquired entity is in a line of business directly related to Borrower's line of business and (ii) at the time of any such transaction an Event of Default
has not occurred which is continuing and no Event of Default would exist after giving effect to any such transaction. 

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

        7.5    Encumbrances.    Create, incur, assume or suffer to exist any Lien with respect to any of its property,
including its intellectual property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted
Liens. Agree with any Person other than Bank not to grant a security interest in, or otherwise encumber, any of its property, or permit any Subsidiary to do so. 

        7.6    Distributions.    Pay any dividends or make any other distribution or payment on account of or in redemption,
retirement or purchase of any capital stock, or permit any of its Subsidiaries to do so, except that Borrower may repurchase the stock of former employees pursuant to stock repurchase
agreements as long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase. 

17

  

        7.7    Investments.    Directly or indirectly acquire or own, or make any Investment in or to any Person, or permit
any of its Subsidiaries so to do, other than Permitted Investments; or maintain or invest any of its property with a Person other than Bank or permit any of its Subsidiaries to do so unless such
Person has entered into an account control agreement with Bank in form and substance satisfactory to Bank; or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that
restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower. 

        7.8    Transactions with Affiliates.    Directly or indirectly enter into or permit to exist any transaction with any
Affiliate of Borrower in excess of $250,000, 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. 

        7.9    Subordinated Debt.    Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries
to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision contained in any documentation relating to the Subordinated Debt without Bank's prior
written consent. 

        7.10    Inventory and Equipment.    Store the Inventory or the Equipment with a bailee, warehouseman, or other third
party unless the third party has been notified of Bank's security interest and Bank (a) has received an acknowledgment from the third party that it is holding or will hold the Inventory or
Equipment for Bank's benefit or (b) is in pledge possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment, provided that Borrower may maintain inventory with
its subcontractors. Except as set forth on the Schedule, store or maintain any material amount of Equipment or Inventory at a location other than the location set forth in Section 10 of this
Agreement. 

        7.11    Compliance.    Become an "investment company" or be controlled by an "investment company," within the meaning
of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying
margin stock, or use the proceeds of any Credit Extension for such 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 law or regulation, which violation could have a Material Adverse Effect, or a material adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral, or permit any of its Subsidiaries to do any of the foregoing. 

        7.12    Negative Pledge Agreements.    Permit the inclusion in any contract to which it or a Subsidiary becomes a
party of any provisions that could restrict or invalidate the creation of a security interest in any of Borrower's or such Subsidiary's property. 

        7.13    Capital Expenditures.    On a consolidated basis, Borrower's capital expenditures and payments on equipment
leases (including all purchase money transactions) shall not exceed $5,000,000 in the aggregate in any given year. 

        8.    EVENTS OF DEFAULT.    

        Any
one or more of the following events shall constitute an Event of Default by Borrower under this Agreement: 

        8.1    Payment Default.    If Borrower fails to pay, when due, any of the Obligations; 

        8.2    Covenant Default.    If Borrower fails to perform any obligation under Article 6 or violates any of the
covenants contained in Article 7 of this Agreement, or fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained 

18

 

in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition, covenant or
agreement that can be cured, has failed to cure such default within ten (10) days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however,
that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default
is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed thirty (30) days) to attempt to cure such default,
and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default (provided that no Credit Extensions will be required to be made during such cure
period); 

        8.3    Material Adverse Effect.    If there occurs any circumstance or circumstances that could have a Material
Adverse Effect; 

        8.4    Attachment.    If any portion of Borrower's assets with a value in excess of $250,000 is attached, seized,
subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress
warrant or levy has not been removed, discharged or rescinded within ten (10) days, or if Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any
material portion of Borrower's assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower's assets by the United States Government, or any department,
agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10) days after Borrower receives notice thereof, provided
that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no
Credit Extensions will be required to be made during such cure period); 

        8.5    Insolvency.    If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an
Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within thirty (30) days (provided that no Credit Extensions will be made prior to the dismissal of such
Insolvency Proceeding); 

        8.6    Other Agreements.    If there is a default or other failure to perform in any agreement to which Borrower is a
party or by which it is bound resulting in a right by a third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Two Hundred Fifty
Thousand Dollars ($250,000); or which could have a Material Adverse Effect; 

        8.7    Subordinated Debt.    If Borrower makes any payment or payments which exceed $250,000 in the aggregate during
the term of this Agreement on account of Subordinated Debt, except to the extent such payment is allowed under any subordination agreement entered into with Bank; 

        8.8    Judgments.    If a judgment or judgments for the payment of money in an amount, individually or in the
aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days (provided that no
Credit Extensions will be made prior to the satisfaction or stay of such judgment); or 

        8.9    Misrepresentations.    If any material misrepresentation or material misstatement exists in any warranty or
representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document,
whether such warranty or representation is given now or hereafter. 

19

 

        9.    BANK'S RIGHTS AND REMEDIES.    If Borrower has repaid all Obligations and terminated this Agreement pursuant to
Section 2.7 hereof, Bank shall have no further right to exercise any rights and remedies set forth herein. 

        9.1    Rights and Remedies.    Upon the occurrence and during the continuance of an Event of Default, Bank may, at its
election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower: 

        (a)  Declare
all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that upon the
occurrence of an Event of Default described in Section 8.5, all Obligations shall become immediately due and payable without any action by Bank); 

        (b)  Cease
advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Bank; 

        (c)  Settle
or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable; 

        (d)  Make
such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank's determination appears to be prior or superior to its
security interest in Bank's reasonable determination and to pay all expenses incurred in connection therewith. With respect to any of Borrower's owned premises, Borrower hereby grants Bank a license
to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of Bank's rights or remedies provided herein, at law, in equity, or otherwise; 

        (e)  Set
off and apply to the Obligations any and all (i) balances and deposits of Borrower held by Bank, or (ii) indebtedness at any time owing to or for the
credit or the account of Borrower held by Bank; 

        (f)    Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Bank is
hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, 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 9.1, Borrower's rights under all licenses and all franchise agreements shall inure to Bank's
benefit; 

        (g)  Dispose
of the Collateral by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as
Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate; 

        (h)  Bank
may credit bid and purchase at any public sale; and 

        (i)    Any
deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower. 

        9.2    Power of Attorney.    Effective only upon the occurrence and during the continuance of an Event of Default,
Borrower hereby irrevocably appoints Bank (and any of Bank's designated 

20

 

officers, or employees) as Borrower's true and lawful attorney to: (a) send requests for verification of Accounts or notify account debtors of Bank's security interest in the Accounts;
(b) endorse Borrower's name on any checks or other forms of payment or security that may come into Bank's possession; (c) sign Borrower's name on any invoice or bill of lading relating
to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make,
settle, and adjust all claims under and decisions with respect to Borrower's policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Bank determines to be reasonable; and (g) to file, in its sole discretion, one or more financing or continuation statements and amendments thereto,
relative to any of the Collateral; provided Bank may exercise such power of attorney to sign the name of Borrower on any of the documents described in Section 4.2 regardless of whether an Event
of Default has occurred. The appointment of Bank as Borrower's attorney in fact, and each and every one of Bank's rights and powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully repaid and performed and Bank's obligation to provide Credit Extensions hereunder is terminated. 

        9.3    Accounts Collection.    Upon the occurrence and during the continuance of an Event of Default, at any time
during the term of this Agreement, Bank may notify any Person owing funds to Borrower of Bank's security interest in such funds and verify the amount of such Account. Borrower shall collect all
amounts owing to Borrower for Bank, receive in trust all payments as Bank's trustee, and immediately deliver such payments to Bank in their original form as received from the account debtor, with
proper endorsements for deposit. 

        9.4    Bank Expenses.    During the continuance of an Event of Default (assuming Borrower has not repaid all
outstanding Obligations pursuant to Section 2.7 hereof), if Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the
terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make payment of the same or any part thereof; (b) set up such reserves
under a facility in Section 2.1 as Bank deems necessary to protect Bank from the exposure created by such failure; or (c) obtain and maintain
insurance policies of the type discussed in Section 6.7 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank
shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments
made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement. 

        9.5    Bank's Liability for Collateral.    So long as Bank complies with reasonable banking practices, Bank shall not
in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause;
(c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of loss, damage or
destruction of the Collateral shall be borne by Borrower. 

        9.6    Remedies Cumulative.    Bank's rights and remedies under this Agreement, the Loan Documents, and all other
agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy
shall be deemed an election, and no waiver by Bank of any Event of Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence
by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which
it was given. 

21

 

        9.7    Demand; Protest.    Borrower waives demand, protest, notice of protest, 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 at
any time held by Bank on which Borrower may in any way be liable. 

        10.    NOTICES.    

        Unless
otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing
and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Borrower or to Bank, as the case may be, at its addresses set forth below: 

	If to Borrower:	 	SILICON IMAGE, INC.

1060 East Arques Avenue

Sunnyvale, CA 94085

Attn: Chief Financial Officer

FAX: (408) 830-9531
	

If to Bank:	
 	

COMERICA BANK—CALIFORNIA

333 W. Santa Clara St.

San Jose, CA 95113

Attn: Corporate Banking Center
	

with a copy to:	
 	

COMERICA BANK—CALIFORNIA

226 Airport Blvd., Suite 100

San Jose, CA 95110

Attn: Guy Simpson

FAX: (408) 451-8568

        The
parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other. 

        11.    CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.    

        This
Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts of law. Each of Borrower
and Bank hereby submits to the exclusive jurisdiction of the state and Federal courts located in the County of Santa Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT.
EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 

        12.    GENERAL PROVISIONS.    

        12.1    Successors and Assigns.    This Agreement shall bind and inure to the benefit of the respective successors and
permitted assigns of each of the parties; provided, however, that neither 

22

 

this Agreement nor any rights hereunder may be assigned by Borrower without Bank's prior written consent, which consent may be granted or withheld in Bank's sole discretion. Bank shall have the right
without the consent of or notice to Borrower to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank's obligations, rights and benefits hereunder. 

        12.2    Indemnification.    Borrower shall defend, indemnify and hold harmless Bank and its officers, employees, and
agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrower
whether under this Agreement, or otherwise (including without limitation reasonable attorneys' fees and expenses), except for losses caused by Bank's gross negligence or willful misconduct. 

        12.3    Time of Essence.    Time is of the essence for the performance of all obligations set forth in this Agreement. 

        12.4    Severability of Provisions.    Each provision of this Agreement shall be severable from every other provision
of this Agreement for the purpose of determining the legal enforceability of any specific provision. 

        12.5    Amendments in Writing, Integration.    Neither this Agreement nor the Loan Documents can be amended or
terminated orally. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the Loan
Documents, if any, are merged into this Agreement and the Loan Documents. 

        12.6    Counterparts.    This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. 

        12.7    Survival.    All covenants, representations and warranties made in this Agreement shall continue in full force
and effect so long as any Obligations remain outstanding. The obligations of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run. 

        12.8    Effect of Amendment and Restatement.    This Agreement is intended to and does completely amend and restate,
without novation, the Original Agreement. All security interests granted under the Original Agreement are hereby confirmed and ratified and shall continue to secure all Obligations under this
Agreement. 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. 

	 	 	SILICON IMAGE, INC.
	

 	
 	

By:	
 	

    

	 	 	Title:	 	    

	

 	
 	

COMERICA BANK—CALIFORNIA
	

 	
 	

By:	
 	

    

	 	 	Title:	 	    

23

  

	DEBTOR	SILICON IMAGE, INC.
	

SECURED PARTY:	

COMERICA BANK—CALIFORNIA

EXHIBIT A  

COLLATERAL
DESCRIPTION ATTACHMENT

TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT 

        All
personal property of Borrower (herein referred to as "Borrower" or "Debtor") whether presently existing or hereafter created or acquired, and wherever located, including, but not
limited to: 

        (a)  all
accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts,
documents (including negotiable documents), equipment (including all accessions and additions thereto), general intangibles (including payment intangibles and software), goods (including fixtures),
instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor's books and records with respect to any of the foregoing, and the computers and equipment
containing said books and records; and 

        (b)  any
and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the
security therefor or for any right to payment. All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time, including
revised Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35, operative July 1, 2001. 

        Notwithstanding
the foregoing, the Collateral shall not include any copyrights, patents, trademarks, servicemarks and applications therefor, now owned or hereafter acquired, or any
claims for damages by way of any past, present and future infringement of any of the foregoing (collectively, the "Intellectual Property"); provided, however, that the Collateral shall include all
accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the "Rights to Payment").
Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security
interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the Closing Date, include the Intellectual Property to the extent necessary to permit perfection of
Bank's security interest in the Rights to Payment. 

24

 
EXHIBIT B  

FOR
WORKING CAPITAL ADVANCES: DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M. PACIFIC TIME 

FOR
EQUIPMENT / TERM ADVANCES: DEADLINE FOR PROCESSING IS 3:00 P.M. PACIFIC TIME THREE (3) BUSINESS DAYS PRIOR TO ADVANCE DATE 

	TO: TECHNOLOGY AND LIFE SCIENCES DIVISION	 	DATE:	 	    

	

FAX #: 650-846-6840	
 	

TIME:	
 	

    

	

	FROM:	SILICON IMAGE, INC.

	 	CLIENT NAME (BORROWER)
	

REQUESTED BY:	

    

	 	AUTHORIZED SIGNER'S NAME
	

AUTHORIZED SIGNATURE:	

    

	

PHONE NUMBER:	

    

	

FROM ACCOUNT #	

    
	
 	

TO ACCOUNT #	

    

	
REQUESTED TRANSACTION TYPE	
 	
REQUEST DOLLAR AMOUNT
	 	 	 	$

	PRINCIPAL INCREASE (ADVANCE)	 	$

	PRINCIPAL PAYMENT (ONLY)	 	$

	INTEREST PAYMENT (ONLY)	 	$

	PRINCIPAL AND INTEREST (PAYMENT)	 	$

	

OTHER INSTRUCTIONS:	

    

	

        All
representations and warranties of Borrower stated in the Amended and Restated Loan and Security Agreement are true, correct and complete in all material respects as of the date of
the telephone request for an Advance confirmed by this Borrowing Certificate; provided, however, that those representations and warranties expressly referring to another date shall be true, correct
and complete in all material respects as of such date. 

	

	 	 	BANK USE ONLY	 	 
	TELEPHONE REQUEST:	 	 	 	 	 	 
	

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

 Authorized Requester	
 	

 Phone #
	

 Received By (Bank)	
 	

 Phone #
	

 	
 	

 Authorized Signature (Bank)	
 	

 

25

   EXHIBIT C  

BORROWING
BASE CERTIFICATE 

	

	Borrower: SILICON IMAGE, INC.	 	Lender: Comerica Bank-California
	

Commitment Amount: $7,500,000	
 	

 
	

	ACCOUNTS RECEIVABLE	 	 	 	 	 	 
	1.	 	Accounts Receivable Book Value as of             	 	 	 	 	$	 
	 	 	 	 	 	 	 	

	2.	 	Additions (please explain on reverse)	 	 	 	 	$	 
	 	 	 	 	 	 	 	

	3.	 	TOTAL ACCOUNTS RECEIVABLE	 	 	 	 	$	 
	 	 	 	 	 	 	 	

	ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)	 	 	 	 	 	 
	4.	 	Amounts over 90 days due	 	$	 	 	 	 
	 	 	 	 	
	 	 	 
	5.	 	Balance of 25% over 90 day accounts	 	$	 	 	 	 
	 	 	 	 	
	 	 	 
	6.	 	Concentration Limits	 	 	 	 	 	 
	7.	 	Foreign Accounts	 	$	 	 	 	 
	 	 	 	 	
	 	 	 
	8.	 	Governmental Accounts	 	$	 	 	 	 
	 	 	 	 	
	 	 	 
	9.	 	Contra Accounts	 	$	 	 	 	 
	 	 	 	 	
	 	 	 
	10.	 	Demo Accounts	 	$	 	 	 	 
	 	 	 	 	
	 	 	 
	11.	 	Intercompany/Employee Accounts	 	$	 	 	 	 
	 	 	 	 	
	 	 	 
	12.	 	Other (please explain on reverse)	 	$	 	 	 	 
	 	 	 	 	
	 	 	 
	13.	 	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS	 	 	 	 	$	 
	 	 	 	 	 	 	 	

	14.	 	Eligible Accounts (#3 minus #13)	 	 	 	 	$	 
	 	 	 	 	 	 	 	

	15.	 	LOAN VALUE OF ACCOUNTS (80% of #14)	 	 	 	 	$	 
	 	 	 	 	 	 	 	

	BALANCES	 	 	 	 	 	 
	16.	 	Maximum Loan Amount	 	 	 	 	$	7,500,000
	17.	 	Total Funds Available [Lesser of #16 or #15]	 	 	 	 	$	 
	 	 	 	 	 	 	 	

	18.	 	Present balance owing on Line of Credit	 	 	 	 	$	 
	 	 	 	 	 	 	 	

	19.	 	Outstanding under Sublimits (Letters of Credit)	 	 	 	 	$	 
	 	 	 	 	 	 	 	

	20.	 	RESERVE POSITION (#17 minus #18 and #19)	 	 	 	 	$	 
	 	 	 	 	 	 	 	

The undersigned represents and warrants that the foregoing is true, complete and correct, and that the information reflected in this Borrowing Base Certificate complies with
the representations and warranties set forth in the Loan and Security Agreement between the undersigned and Comerica Bank-California.

	SILICON IMAGE, INC.	 	 
	

By:	
 	

    
 Authorized Signer	
 	

 

26

 
Exhibit D  

COMPLIANCE
CERTIFICATE 

	TO:	COMERICA BANK—CALIFORNIA
	

FROM:	

SILICON IMAGE, INC.

        The
undersigned authorized officer of SILICON IMAGE, INC. hereby certifies that in accordance with the terms and conditions of the Amended and Restated Loan and Security Agreement
between
Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for the period ending
                         with all required covenants except as noted below
and (ii) all representations and warranties of Borrower stated in the Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except
as explained in an accompanying letter or footnotes. 

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

	Reporting Covenant
 
	 	Required
	 	Complies

	Quarterly financial statements	 	Quarterly within 45 days	 	Yes	 	No
	Annual (CPA Audited)	 	FYE within 90 days	 	Yes	 	No
	10K and 10Q	 	(as applicable)	 	Yes	 	No
	A/R & A/P Agings, Borrowing Base Cert.	 	Monthly within 20 days when borrowing	 	Yes	 	No
	Total amount of Borrower's cash and investments	 	Amount: $            	 	Yes	 	No
	Total amount of Borrower's cash and investments maintained with Bank	 	Amount: $            	 	Yes	 	No

	Financial Covenant
 
	 	Required
	 	Actual
	 	Complies

	On a quarterly basis:	 	 	 	 	 	 	 	 	 	 
	 	Adjusted Quick Ratio	 	 	1.50:1.00	 	 	      :1.00	 	Yes	 	No
	 	Tangible Net Worth	 	$	30,000,000	 	$	            	 	Yes	 	No
	 	Net Loss / Net Income	 	 	*	 	 	 	 	 	 	 
	Maximum Annual Capital & Lease Expenditures	 	$	5,000,000	 	$	            	 	Yes	 	No

	*
	Borrower's
net loss for the quarter ending on June 30, 2002 shall not exceed $4,000,000. Borrower's net loss for the quarter ending on September 30, 2002 shall not exceed
$2,000,000. Borrower's net loss for the quarter ending on December 31, 2002 shall not exceed $500,000. Thereafter, Borrower's net income for each quarter shall be at least $1.00. For purposes
of this Section 6.10, net loss and net income shall be calculated on standard GAAP principles for net income and net loss, adding back any non-cash, non-recurring expenses such as non-cash
stock compensation expenses, cash and non-cash restructuring charges (maximum cumulative cash expense for the last three quarters of 2002 of $500,000; all expenses in excess of $500,000 will not be
added back to GAAP net loss), cash patent expense costs (capped at $900,000 per 

27

 

quarter;
all expenses in excess of $900,000 will not be added back to GAAP net loss), and amortization of intangible assets. 

	Comments Regarding Exceptions: See Attached.	 	

	 	 	No	 	 
	 	 	Received by:	 	    
 AUTHORIZED SIGNER
	Sincerely,	 	 	 	 
	 	 	Date:	 	    

	    
 SIGNATURE	 	Verified:	 	    
 AUTHORIZED SIGNER
	    
 TITLE	 	Date:	 	    

	

 	
 	

Compliance Status                                    Yes
	    
 DATE	 	 	 	 
	 	 	

28

   SCHEDULE OF EXCEPTIONS  

Permitted Indebtedness (Section 1.1) 

None 

Permitted Investments (Section 1.1) 

All
non-Comerica cash and investment accounts are summarized below: 

Barclay's
Bank: Checking account

Trust Account in Taiwan (through local accountants):

Morgan Stanley 

Permitted Liens (Section 1.1) 

None. 

Prior Names (Section 5.7) 

        None.

Litigation (Section 5.8) 

        patent
infringement suit against Genesis (as described in Borrower's 10-Q) 

        laddering
case (as described in Borrower's 10-Q) 

Subsidiaries (Section 5.14) 

DVDO, Inc.-    California
corporation; wholly-owned subsidiary of Silicon Image; 

Zillion
Technologies LLC-    California limited liability company; wholly-owned subsidiary of Silicon Image 

CMD
Technologies Inc.-    California corporation; wholly-owned subsidiary of Silicon Image; 

Slice
Acquisition Corp.-    Delaware corporation; wholly-owned subsidiary of Silicon Image; 

HDMI
Licensing, LLC Delaware corporation; Wholly-owned subsidiary of Silicon Image 

Duke
Acquisition Corp. dissolved upon merger into CMD Technologies on June 15, 2000. 

Silicon
Communication Lab, Inc.    California corporation; dissolved upon merger into Slice Acquisition on July 7, 2001. 

Video
Acquisition Corp. Delaware corporation; dissolved upon merger into DVDO on July 6, 2000. 

Accounts (Section 5.16) 

Accounts
at City National Bank (to be closed within 90 days after the Closing Date) 

Inventory (Section 7.10) 

CTI
Facility (7401 Security Way; Houston, TX 77040) 

ECF
Facility (Scotland) 

29

 
CORPORATE RESOLUTIONS TO BORROW  

	

	Borrower:	 	SILICON IMAGE, INC.
	

        I,
the undersigned Secretary or Assistant Secretary of SILICON IMAGE, INC. (the "Corporation"), HEREBY CERTIFY that the Corporation is organized and existing under and by virtue
of the laws of the State of Delaware. 

        I
FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and complete copies of the Certificate of Incorporation, as amended, and the Restated Bylaws of the Corporation,
each of which is in full force and effect on the date hereof. 

        I
FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly called and held, at which a quorum was present and voting (or by other duly authorized corporate action in
lieu of a meeting), the following resolutions were adopted. 

        BE
IT RESOLVED, that any one (1) of the following named officers, employees, or agents of this Corporation, whose actual signatures are shown below: 

	NAMES
	 	POSITION
	 	ACTUAL SIGNATURES

	

    	
 	

 	
 	

 
	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

acting
for and on behalf of this Corporation and as its act and deed be, and they hereby are, authorized and empowered: 

        Borrow Money.    To borrow from time to time from COMERICA BANK—CALIFORNIA ("Bank"), on such terms as may be agreed
upon between the officers, employees, or agents of the Corporation and Bank, such sum or sums of money as in their judgment should be borrowed, without limitation. 

        Execute Loan Documents.    To execute and deliver to Bank that certain Amended and Restated Loan and Security Agreement dated as
of September 27, 2002 (the "Loan Agreement") and any other agreement
entered into between Corporation and Bank in connection with the Loan Agreement, including any amendments, all as amended or extended from time to time (collectively, with the Loan Agreement, the
"Loan Documents"), and also to execute and deliver to Bank one or more renewals, extensions, modifications, refinancings, consolidations, or substitutions for the Loan Documents, or any portion
thereof. 

        Grant Security.    To grant a security interest to Bank in the Collateral described in the Loan Documents, which security
interest shall secure all of the Corporation's Obligations, as described in the Loan Documents. 

        Negotiate Items.    To draw, endorse, and discount with Bank all drafts, trade acceptances, promissory notes, or other evidences
of indebtedness payable to or belonging to the Corporation or in which the Corporation may have an interest, and either to receive cash for the same or to cause such proceeds to be credited to the
account of the Corporation with Bank, or to cause such other disposition of the proceeds derived therefrom as they may deem advisable. 

        Letters of Credit.    To execute letter of credit applications and other related documents pertaining to Bank's issuance of
letters of credit. 

30

 

        Further Acts.    In the case of lines of credit, to designate additional or alternate individuals as being authorized to request
advances thereunder, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as they may in
their discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions. 

        BE
IT FURTHER RESOLVED, that any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, that
these Resolutions shall remain in full force and effect and Bank may rely on these Resolutions until written notice of their revocation shall have been delivered to and received by Bank. Any such
notice shall not affect any of the Corporation's agreements or commitments in effect at the time notice is given. 

        I
FURTHER CERTIFY that the officers, employees, and agents named above are duly elected, appointed, or employed by or for the Corporation, as the case may be, and occupy the positions
set forth opposite their respective names; that the foregoing Resolutions now stand of record on the books of the Corporation; and that the Resolutions are in full force and effect and have not been
modified or revoked in any manner whatsoever. 

        IN
WITNESS WHEREOF, I have hereunto set my hand on September 27, 2002 and attest that the signatures set opposite the names listed above are their genuine signatures. 

	 	 	CERTIFIED AND ATTESTED BY:
	

 	
 	

X

31

COMERICA BANK—CALIFORNIA

Member FDIC  

ITEMIZATION OF AMOUNT FINANCED

DISBURSEMENT INSTRUCTIONS  

	Name(s): SILICON IMAGE, INC.	Date: September 27, 2002
	 	

$	

credited to deposit account No.              when Credit Extensions are requested by Borrower
	

Amounts paid to others on your behalf:	

 
	 	$	to COMERICA BANK—CALIFORNIA for Loan Fee
	 	$	to Bank counsel fees and expenses
	 	$	to             
	 	$	to             
	 	$12,500,000	TOTAL (AMOUNT FINANCED)

Upon
consummation of this transaction, this document will also serve as the authorization for COMERICA BANK—CALIFORNIA to disburse the loan proceeds as stated above. 

	    
 Signature	 	    
 Signature

AGREEMENT TO PROVIDE INSURANCE  

	TO:	 	COMERICA BANK—CALIFORNIA

attn: Collateral Operations, M/C 4604

9920 South La Cienega Blvd, 14th Floor

Inglewood, CA 90301	 	Date: September 27, 2002
	 	 	 	 	Borrower: SILICON IMAGE, INC.

        In
consideration of a loan in the amount of $12,500,000, secured by all tangible personal property including inventory and equipment. 

        I/We
agree to obtain adequate insurance coverage to remain in force during the term of the loan. 

        I/We
also agree to advise the below named agent to add COMERICA BANK—CALIFORNIA as lender's loss payable on the new or existing insurance policy, and to furnish Bank at above
address with a copy of said policy/endorsements and any subsequent renewal policies. 

        I/We
understand that the policy must contain: 

        1.    Fire
and extended coverage in an amount sufficient to comply with Section 6.6 of the Loan Agreement executed by Borrower as of the date hereof. 

        2.    Lender's
"Loss Payable" Endorsement Form 438 BFU in favor of COMERICA BANK—CALIFORNIA, or any other form acceptable to Bank. 

INSURANCE INFORMATION  

	Insurance Co./Agent	 	Telephone No.:	 
	

Agent's Address:	

 	

 	

 
	

 	

Signature of Obligor:	

    
	

 
	

 	

Signature of Obligor:	

    
	

 
	

	
	 	 
	FOR BANK USE ONLY	 	 
	

INSURANCE VERIFICATION: Date:	
 	

    
	
 	

 
	

Person Spoken to:	
 	

    
	
 	

 
	

Policy Number:	
 	

    
	
 	

 
	

Effective From:	
 	

    
	
 	

To:	
 	

    
	
 	

 
	

Verified by:	
 	

    
	
 	

 
	

	
 	

 

	

	COMERICA BANK—

CALIFORNIA	 	 
	 	California's Business Banks	 	AUTOMATIC DEBIT AUTHORIZATION
	 	 	Member FDIC	 	 
	

	

	To:	 	COMERICA BANK—CALIFORNIA	 	 
	

Re:	
 	
Loan #	
 	

    
	
 	

 
	

You are hereby authorized and instructed to charge account No.                          in the name of

SILICON IMAGE, INC.
	

	for principal and interest payments due on above referenced loan as set forth below and credit the loan referenced above.
	

 	
 	

 	
 	

ý Debit each interest payment as it becomes due according to the terms of the note and any renewals or amendments thereof.
	

 	
 	

 	
 	

ý Debit each principal payment as it becomes due according to the terms of the note and any renewals or amendments thereof.
	

This Authorization is to remain in full force and effect until revoked in writing.
	

	

	 	 	 	 	Borrower Signature	 	Date
	

	 	 	 	 	 	 	September 27, 2002
	

	DEBTOR:	SILICON IMAGE, INC.
	

SECURED PARTY:	

COMERICA BANK—CALIFORNIA

EXHIBIT A  

COLLATERAL
DESCRIPTION ATTACHMENT

TO UCC-1 FINANCING STATEMENT 

        All
personal property of Borrower (herein referred to as "Borrower" or "Debtor") whether presently existing or hereafter created or acquired, and wherever located, including, but not
limited to: 

        (a)  all
accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts,
documents (including negotiable documents), equipment (including all accessions and additions thereto), general intangibles (including payment intangibles and software), goods (including fixtures),
instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor's books and records with respect to any of the foregoing, and the computers and equipment
containing said books and records; and 

        (b)  any
and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the
security therefor or for any right to payment. All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time, including
revised Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35, operative July 1, 2001. 

        Notwithstanding
the foregoing, the Collateral shall not include any copyrights, patents, trademarks, servicemarks and applications therefor, now owned or hereafter acquired, or any
claims for damages by way of any past, present and future infringement of any of the foregoing (collectively, the "Intellectual Property"); provided, however, that the Collateral shall include all
accounts and general intangibles that
consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the "Rights to Payment"). Notwithstanding the foregoing, if a
judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then
the Collateral shall automatically, and effective as of the Closing Date, include the Intellectual Property to the extent necessary to permit perfection of Bank's security interest in the Rights to
Payment. 

   LIBOR
  Addendum To Loan and Security Agreement  

        This Addendum to Loan and Security Agreement (this "Addendum") is entered into as of this 27th day of September, 2002, by and between Comerica
Bank-California ("Bank") and SILICON IMAGE, INC. ("Borrower"). This Addendum supplements the terms of the Amended and Restated Loan and Security Agreement entered into by and
between Borrower and Bank as of the date hereof, as amended from time to time (the "Loan Agreement"). 

        1.    Definitions.    Unless otherwise defined herein, all initially capitalized terms in this Addendum shall be as
defined in the Loan Agreement. 

        (a)    Term Advance.    As used herein, "Term Advance" means a
borrowing requested by Borrower and made by Bank under Section 2.1(d) of the Loan Agreement, including a LIBOR Option Advance and/or a Prime Rate Option Advance. 

        (b)    Equipment Advance.    As used herein, "Equipment Advance" means
a borrowing requested by Borrower and made by Bank under the Equipment Line of the Loan Agreement, including a LIBOR Option Advance and/or a Prime Rate Option Advance. 

        (c)    LIBOR.    As used herein, "LIBOR" means the rate per annum
(rounded upward if necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the following formula: 

	LIBOR =	Base LIBOR
 100% - LIBOR Reserve Percentage	 	 

	(1)
	"Base
LIBOR" means the rate per annum determined by Bank at which deposits for the relevant LIBOR Period would be offered to Bank in the approximate amount of the relevant LIBOR
Option Advance in the inter-bank LIBOR market selected by Bank, upon request of Bank at 10:00 a.m. Pacific time, on the day that is the first day of such LIBOR Period.

	(2)
	"LIBOR
Reserve Percentage" means the reserve percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor) for "Eurocurrency Liabilities" (as
defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected changes in such reserve percentage during the applicable LIBOR Period. 

        (d)    LIBOR Business Day.    As used herein, "LIBOR Business Day" means a Business Day on which dealings in dollar
deposits may be carried out in the interbank LIBOR market. 

        (e)    LIBOR Period.    As used herein, "LIBOR Period" means, with
respect to a LIBOR Option Advance: 

	(1)
	initially,
the period commencing on, as the case may be, the date the Term Advance or Equipment Advance, as applicable, is made or the date on which the Term Advance or Equipment
Advance is converted to a LIBOR Option Advance, and continuing for, in every case, 30, 60, or 90 days thereafter so long as the LIBOR Option is quoted for such period in the applicable interbank LIBOR
market, as such period is selected by Borrower in the notice of Term Advance or Equipment Advance as provided in this Addendum; and

	(2)
	thereafter,
each period commencing on the last day of the next preceding LIBOR Period applicable to such LIBOR Option Advance and continuing for, in every case, 30, 60, or 90 days
thereafter so long as the LIBOR Option is quoted for such period in the 

1

 

applicable
interbank LIBOR market, as such period is selected by Borrower in the notice of continuation as provided in this Addendum. 

        (f)    Regulation D.    As used herein, "Regulation D" means
Regulation D of the Board of Governors of the Federal Reserve System as amended or supplemented from time to time. 

        (g)    Regulatory Development.    As used herein, "Regulatory
Development" means any or all of the following: (i) any change in any law, regulation or interpretation thereof by any public authority (whether or not
having the force of law); (ii) the application of any existing law, regulation or the interpretation thereof by any public authority (whether or not having the force of law); and
(iii) compliance by Bank with any request or directive (whether or not having the force of law) of any public authority. 

        2.    Interest Rate Options.    Borrower shall have the following options regarding the interest rate to be paid by
Borrower on Term Advances and Equipment Advances under the Loan Agreement: 

        (a)  A
rate equal to two and three quarters percent (2.75%) above Bank's LIBOR, (the "LIBOR Option"), which LIBOR Option shall
be in effect during the relevant LIBOR Period; or 

        (b)  A
rate equal to one quarter percent (0.25%) above the "Prime Rate" as defined in the Loan Agreement and quoted from time
to time by Bank as such rate may change from time to time (the "Prime Rate Option"). 

        3.    LIBOR Option Advance.    Each LIBOR Option Advance will not be less than Two Hundred Fifty Thousand Dollars
($250,000). No more than two LIBOR Option Advances may be outstanding at any time. 

        4.    Payment of Interest.    Interest on all Term Advances and Equipment Advances shall be payable pursuant to the
terms of the Loan Agreement. Interest on LIBOR Option Advance shall be computed on the basis of a 360-day year and shall be assessed for the actual number of days elapsed from the first
day of the LIBOR Period applicable thereto but not including the last day thereof. 

        5.    Bank's Records Re: LIBOR Option Advances.    With respect to each LIBOR Option Advance, Bank is hereby
authorized to note the date, principal amount, interest rate and LIBOR Period applicable thereto and any payments made thereon on Bank's books and records (either manually or by electronic entry)
and/or on any schedule attached to the Loan Agreement, which notations shall be prima facie evidence of the accuracy of the information noted. 

        6.    Selection/Conversion of Interest Rate Options.    At the time any Term Advance or Equipment Advance is requested
under the Loan Agreement and/or Borrower wishes to select the LIBOR Option Advance for all or a portion of the outstanding principal balance of the Loan Agreement, and at the end of each LIBOR Period,
Borrower shall give Bank notice specifying (a) the interest rate option selected by Borrower; (b) the principal amount subject thereto; and (c) if the LIBOR Option is selected,
the length of the applicable LIBOR Period. Any such notice may be given by telephone so long as, with respect to each LIBOR Option Advance selected by Borrower, (i) Bank receives written
confirmation from Borrower not later than three (3) Business Days after such telephone notice is given; and (ii) such notice is given to Bank prior to 10:00 a.m., Pacific time,
three Business Days before the first day of the LIBOR Period. For each LIBOR Option requested hereunder, Bank will quote the applicable fixed LIBOR Rate to Borrower at approximately 10:00 a.m.,
Pacific time, on the first day of the LIBOR Period. If
Borrower does not immediately accept the rate quoted by Bank, any subsequent acceptance by Borrower shall be subject to a redetermination of the rate by Bank; provided, however, that if Borrower fails
to accept any such quotation given, then the quoted rate shall expire and Bank shall have no obligation to permit a LIBOR Option to be selected on such day. If no specific designation of interest is
made at the time any Term Advance or Equipment Advance is requested under the Loan Agreement or at the end of any LIBOR Period, Borrower shall be deemed to have 

2

 

selected the Prime Rate Option for such Term Advance or Equipment Advance, as applicable, or the principal amount to which such LIBOR Period applied. At any time the LIBOR Option is in effect,
Borrower may, at the end of the applicable LIBOR Period, convert to the Prime Rate Option. At any time the Prime Rate Option is in effect, Borrower may convert to the LIBOR Option, and shall designate
a LIBOR Period. 

        7.    Prepayment.    Bank is not under any obligation to accept any prepayment of any LIBOR Option Advance except as
described below or as required under applicable law. Borrower may prepay a Prime Rate Option Advance at any time, without paying any Prepayment Amount (as defined below). Borrower may prepay an LIBOR
Option Advance in increments of Five Hundred Dollars ($500.00) prior to the end of the LIBOR Period, as long as (i) Bank is provided written notice of such prepayment at least five
(5) LIBOR Business Days prior to the date thereof (the "Prepayment Date"); and (ii) Borrower pays the Prepayment Amount. The notice of prepayment shall contain the following information:
(a) the Prepayment Date; and (b) the LIBOR Option Advance which will be prepaid. On the Prepayment Date, Borrower shall pay to Bank the Prepayment Amount. Bank, in its sole discretion,
may accept any prepayment of a LIBOR Option Advance even if not required to do so under the Loan Agreement and may deduct from the amount to be applied against the LIBOR Option Advance any other
amounts required to be paid as part of the Prepayment Amount. 

        The
Prepaid Principal Amount will be applied to the LIBOR Option Advance being prepaid as Bank shall determine in its sole discretion. The "Prepayment Principal Amount" means the amount
of the principal balance of the LIBOR Option Advance which Borrower has elected to prepay or the amount of the principal balance of the LIBOR Option Advance which Bank has required Borrower to prepay
because of acceleration, as the case may be. 

        If
Bank exercises its right to accelerate the payment of the Loan Agreement prior to maturity based upon an Event of Default under the Loan Agreement, Borrower shall pay to Bank, in
addition to any other amounts that may then be owing under the Loan Agreement, on the date specified by Bank as the Prepayment Date, the Prepayment Amount. 

        Bank's
determination of the Prepayment Amount shall be conclusive in the absence of obvious error or fraud. If requested in writing by Borrower, Bank shall provide Borrower a written
statement specifying the Prepayment Amount. 

        The
Prepayment Amount shall be due and payable in full on the Prepayment Date. As used herein, "Prepayment Amount" means the sum of: (i) the Prepayment Principal Amount;
(ii) interest accruing on the Prepaid Principal Amount through the Prepayment Date; and (iii) the amount (if any) by which (A) the additional interest which would have been
payable on the amount so received had it not been received until the last day of such LIBOR Period or term exceeds (B) the interest which would have been recoverable by Bank by placing the
amount so received on deposit in the certificate of deposit markets or the offshore currency interbank markets or United States Treasury investment products, as the case may be, for a period starting
on the date on which it was so received and ending on the last day of such LIBOR Period or term at the interest rate determined by Bank. Bank's determination as to such amount shall be conclusive
absent manifest error. 

        BY
INITIALING BELOW, BORROWER ACKNOWLEDGE(S) AND AGREE(S) THAT: (A) THERE IS NO RIGHT TO PREPAY ANY LIBOR OPTION ADVANCE, IN WHOLE OR IN PART, WITHOUT PAYING THE PREPAYMENT
AMOUNT, EXCEPT AS OTHERWISE REQUIRED UNDER APPLICABLE LAW; (B) BORROWER SHALL BE LIABLE FOR PAYMENT OF THE PREPAYMENT AMOUNT IF BANK EXERCISES ITS RIGHT TO ACCELERATE PAYMENT OF ANY LIBOR
OPTION ADVANCE AS PART OR ALL OF THE OBLIGATIONS OWING UNDER THE LOAN AGREEMENT, INCLUDING WITHOUT LIMITATION, ACCELERATION UNDER A DUE-ON-SALE PROVISION; (C) BORROWER
WAIVES ANY RIGHTS UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR 

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ANY SUCCESSOR STATUTE; AND (D) BANK HAS MADE EACH LIBOR OPTION ADVANCE PURSUANT TO THE LOAN AGREEMENT IN RELIANCE ON THESE AGREEMENTS. 

	    
 BORROWER'S INITIALS	 	 

        8.    Hold Harmless and Indemnification.    Borrower agrees to indemnify Bank and to hold Bank harmless from, and to
reimburse Bank on demand for, all losses and expenses which Bank sustains or incurs as a result of (i) any payment of a LIBOR Option Advance prior to the last day of the applicable LIBOR Period
for any reason, including, without limitation, termination of the Loan Agreement, whether pursuant to this Addendum or the occurrence of an Event of Default; (ii) any termination of a LIBOR
Period prior to the date it would otherwise end in accordance with this Addendum; or (iii) any failure by Borrower, for any reason, to borrow any portion of a LIBOR Option Advance. 

        9.    Funding Losses.    The indemnification and hold harmless provisions set forth in this Addendum shall include,
without limitation, all losses and expenses arising from interest and fees that Bank pays to lenders of funds it obtains in order to fund the loans to Borrower on the basis of the LIBOR Option(s) and
all losses incurred in liquidating or re-deploying deposits from which such funds were obtained and
loss of profit for the period after termination. A written statement by Bank to Borrower of such losses and expenses shall be conclusive and binding, absent manifest error, for all purposes. This
obligation shall survive the termination of this Addendum and the payment of the Loan Agreement. 

        10.    Regulatory Developments Or Other Circumstances Relating To Illegality or Impracticality of LIBOR.    If any
Regulatory Development or other circumstances relating to the interbank Euro-dollar markets shall, at any time, in Bank's reasonable determination, make it unlawful or impractical for Bank
to fund or maintain, during any LIBOR Period, to determine or charge interest rates based upon LIBOR, Bank shall give notice of such circumstances to Borrower and: 

	(i)
	In
the case of a LIBOR Period in progress, Borrower shall, if requested by Bank, promptly pay any interest which had accrued prior to such request and
the date of such request shall be deemed to be the last day of the term of the LIBOR Period; and

	(ii)
	No
LIBOR Period may be designated thereafter until Bank determines that such would be practical. 

        11.    Additional Costs.    Borrower shall pay to Bank from time to time, upon Bank's request, such amounts as Bank
determines are needed to compensate Bank for any costs it incurred which are attributable to Bank having made or maintained a LIBOR Option Advance or to Bank's obligation to make a LIBOR Option
Advance, or any reduction in any amount receivable by Bank hereunder with respect to any LIBOR Option or such obligation (such increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Developments, which (i) change the basis of taxation of any amounts payable to Bank
hereunder with respect to taxation of any amounts payable to Bank hereunder with respect to any LIBOR Option Advance (other than taxes imposed on the overall net income of Bank for any LIBOR Option
Advance by the jurisdiction where Bank is headquartered or the jurisdiction where Bank extends the LIBOR Option Advance; (ii) impose or modify any reserve, special deposit, or similar
requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, Bank (including any LIBOR Option Advance or any deposits referred to in the
definition of LIBOR); or (iii) impose any other condition affecting this Addendum (or any of such extension of credit or liabilities). Bank shall notify Borrower of any event occurring after
the date hereof which entitles Bank to compensation pursuant to this paragraph as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. Determinations
by Bank for purposes of this paragraph, shall be conclusive, provided that such determinations are made on a reasonable basis. 

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        12.    Legal Effect.    Except as specifically modified hereby, all of the terms and conditions of the Loan Agreement
remain in full force and effect. 

        IN
WITNESS WHEREOF, the parties have agreed to the foregoing as of the date first set forth above. 

	SILICON IMAGE, INC.	 	COMERICA BANK-CALIFORNIA
	

By:	
 	

    
	
 	

By:	
 	

    

	Title:	 	    
	 	Title:	 	    

	

By:	
 	

    
	
 	

 	
 	

 
	Title:	 	    
	 	 	 	 

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Exhibit 10.44

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}]]