Document:

Prepared by R.R. Donnelley Financial -- Amended and Restated Loan and Security Agreement

 EXHIBIT 10.1 
  
 AMENDED AND RESTATED 
 LOAN AND SECURITY AGREEMENT 
  
 by and between 
  
 Stratex Networks, Inc., as Borrower

  
 and 
  
 Silicon Valley Bank, as Lender 
  
 January 21, 2004 

 TABLE OF CONTENTS 
  

	 	 	 	 	 	  	PAGE

			
	 1.
	 	ACCOUNTING AND OTHER TERMS	  	1
			
	 2.
	 	LOAN AND TERMS OF PAYMENT	  	1
				
	 	 	 2.1
	 	Promise to Pay	  	1
				
	 	 	 2.2
	 	Overadvances	  	3
				
	 	 	 2.3
	 	General Provisions Relating to the Advances and Term Advances	  	3
				
	 	 	 2.4
	 	Permitted Uses of Advance and Term Advance Proceeds	  	3
				
	 	 	 2.5
	 	Interest Rate, Payments (Advances)	  	3
				
	 	 	 2.6
	 	Interest Rate; Payments (Term Advances)	  	4
				
	 	 	 2.7
	 	General Provisions	  	4
				
	 	 	 2.8
	 	Fees	  	5
			
	 3.
	 	CONDITIONS OF ADVANCES	  	5
				
	 	 	 3.1
	 	Conditions Precedent to Initial Credit Extension	  	5
				
	 	 	 3.2
	 	Conditions Precedent to all Credit Extensions	  	5
				
	 	 	 3.3
	 	Procedure for the Borrowing of Advances and Term Advances	  	6
				
	 	 	 3.4
	 	Conversion and Continuation Elections	  	7
				
	 	 	 3.5
	 	Special Provisions Governing LIBOR Advances	  	8
				
	 	 	 3.6
	 	Additional Requirements/Provisions Regarding LIBOR Advances	  	9
				
	 	 	 3.7
	 	Calculation of Interest and Fees	  	11
			
	 4.
	 	CREATION OF SECURITY INTEREST	  	12
				
	 	 	 4.1
	 	Grant of Security Interest	  	12
				
	 	 	 4.2
	 	Authorization to File Financing Statements	  	12
			
	 5.
	 	REPRESENTATIONS AND WARRANTIES	  	12
				
	 	 	 5.1
	 	Due Organization and Authorization	  	12
				
	 	 	 5.2
	 	Collateral	  	12
				
	 	 	 5.3
	 	Litigation	  	12
				
	 	 	 5.4
	 	No Material Adverse Change in Financial Statements	  	13
				
	 	 	 5.5
	 	Solvency	  	13
				
	 	 	 5.6
	 	Regulatory Compliance	  	13
				
	 	 	 5.7
	 	Subsidiaries; Investments	  	13
				
	 	 	 5.8
	 	Full Disclosure	  	13

  

 i. 

 TABLE OF CONTENTS 
 (CONTINUED) 
  

	 	 	 	 	 	  	PAGE

			
	 6.
	 	AFFIRMATIVE COVENANTS	  	14
				
	 	 	 6.1
	 	Government Compliance	  	14
				
	 	 	 6.2
	 	Financial Statements, Reports, Certificates	  	14
				
	 	 	 6.3
	 	Inventory	  	14
				
	 	 	 6.4
	 	Taxes	  	15
				
	 	 	 6.5
	 	Insurance	  	15
				
	 	 	 6.6
	 	Depository Accounts	  	15
				
	 	 	 6.7
	 	Financial Covenants	  	15
				
	 	 	 6.8
	 	Further Assurances	  	15
			
	 7.
	 	NEGATIVE COVENANTS	  	16
				
	 	 	 7.1
	 	Dispositions	  	16
				
	 	 	 7.2
	 	Changes in Control, Business	  	16
				
	 	 	 7.3
	 	Mergers or Acquisitions	  	16
				
	 	 	 7.4
	 	Indebtedness	  	16
				
	 	 	 7.5
	 	Encumbrance	  	16
				
	 	 	 7.6
	 	Subordinated Debt	  	16
				
	 	 	 7.7
	 	Compliance	  	17
			
	 8.
	 	EVENTS OF DEFAULT	  	17
				
	 	 	 8.1
	 	Payment Default	  	17
				
	 	 	 8.2
	 	Covenant Default	  	17
				
	 	 	 8.3
	 	Material Adverse Change	  	17
				
	 	 	 8.4
	 	Attachment	  	17
				
	 	 	 8.5
	 	Insolvency	  	18
				
	 	 	 8.6
	 	Other Agreements	  	18
				
	 	 	 8.7
	 	Judgments	  	18
				
	 	 	 8.8
	 	Misrepresentations	  	18
			
	 9.
	 	BANK’S RIGHTS AND REMEDIES	  	18
				
	 	 	 9.1
	 	Rights and Remedies	  	18
				
	 	 	 9.2
	 	Power of Attorney	  	19
				
	 	 	 9.3
	 	Bank Expenses	  	19

  

 ii. 

 TABLE OF CONTENTS 
 (CONTINUED) 
  

	 	 	 	 	 	  	PAGE

				
	 	 	 9.4
	 	Bank’s Liability for Collateral	  	20
				
	 	 	 9.5
	 	Remedies Cumulative	  	20
				
	 	 	 9.6
	 	Demand Waiver	  	20
			
	 10.
	 	NOTICES	  	20
			
	 11.
	 	CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER	  	20
			
	 12.
	 	GENERAL PROVISIONS	  	21
				
	 	 	 12.1
	 	Successors and Assigns	  	21
				
	 	 	 12.2
	 	Indemnification	  	21
				
	 	 	 12.3
	 	Time of Essence	  	21
				
	 	 	 12.4
	 	Severability of Provision	  	21
				
	 	 	 12.5
	 	Amendments in Writing, Integration	  	21
				
	 	 	 12.6
	 	Counterparts	  	21
				
	 	 	 12.7
	 	Survival	  	21
				
	 	 	 12.8
	 	Confidentiality	  	22
				
	 	 	 12.9
	 	Attorneys’ Fees, Costs and Expenses	  	22
			
	 13.
	 	DEFINITIONS	  	22
				
	 	 	 13.1
	 	Definitions	  	22

  
  

 iii. 

 THIS AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT dated January 21, 2004 (this “Agreement”), between SILICON VALLEY
BANK (“Bank”), whose address is 3003 Tasman Drive, Santa Clara, California 95054, and STRATEX NETWORKS, INC., a Delaware corporation
(“Borrower”), whose address is 120 Rose Orchard Way, San Jose, California 95134, provides the terms on which Bank will lend to Borrower and Borrower will repay Bank. The parties agree as follows: 
  
 1. ACCOUNTING AND OTHER TERMS

  
 Accounting terms not defined in this Agreement will be
construed following GAAP. Calculations and determinations must be made following GAAP. The term “financial statements” includes the notes and schedules. The terms “including” and “includes” always mean “including
(or includes) without limitation,” in this or any Loan Document. 
  
 2.
LOAN AND TERMS OF PAYMENT 
  
 2.1 Promise to Pay. 
  
 Borrower promises to pay Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid principal amount of the Credit Extensions.

  
 2.1.1 Revolving Advances. 
  
 (a) Bank will make Advances not exceeding the Committed Revolving
Line minus the sum of (i) all amounts for services utilized under the Cash Management Services Sublimit (as defined in Section 2.1.4), and (ii) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit). 
  
 (b) To obtain an Advance, Borrower must
follow the procedures set forth in Section 3.3(a). 
  
 (c) The Bank’s obligation to make Credit Extensions (excluding the Term Advances) terminates on the Revolving Maturity Date, when all Advances are immediately payable. 
  
 (d) Bank’s obligation to make Credit Extensions will terminate
if an Event of Default (as herein defined) has occurred or there exists any event, condition, or act which with notice or lapse of time, or both, would constitute an Event of Default. 
  
 2.1.2 Letters of Credit Sublimit. 
  
 Bank will issue or have issued Letters of Credit for Borrower’s account not exceeding the Committed Revolving Line
minus the sum of (a) the outstanding principal balance of the Advances, and (b) the Cash Management Services Sublimit. Each Letter of Credit will have an expiry date of no later than eighteen (18) months after the Revolving Maturity Date, and
Borrower’s reimbursement obligation will be fully secured by cash on terms acceptable to Bank at any time after the Revolving Maturity Date if the term of this Agreement is not extended by Bank. Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably request. 
  

 1. 

 2.1.3 FX Forward Contracts. 
  
 Borrower may enter into foreign exchange contracts with the Bank under which Borrower commits to purchase from or sell to
Bank a set amount of foreign currency on a specified date (the “Settlement Date”). Foreign exchange contracts with a Settlement Date of two (2) or more business days (as applicable in the country of the contract foreign
currency) after the contract date (each, a “FX Forward Contract”) are subject to a reserve of ten percent (10%) of each outstanding FX Forward Contract in a maximum aggregate amount equal to $2,000,000 (the “FX
Reserve”). The aggregate amount of FX Forward Contracts at any one time may not exceed ten (10) times the amount of the FX Reserve. 
  
 2.1.4 Cash Management Services Sublimit. 
  
 Borrower may use amounts not to exceed the Committed Revolving Line minus the sum of (a) the face amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit), and (b) the outstanding principal balance of the Advances (without duplication for any drawn but unreimbursed Letters of Credit) for Bank’s cash management services, which may include
merchant services, direct deposit of payroll, business credit card, and check cashing services identified in various cash management services agreements related to such services (collectively, the “Cash Management Services”).
The aggregate amount utilized for Cash Management Services (the “Cash Management Services Sublimit”) will at all times reduce the amounts available to be borrowed under the Committed Revolving Line or otherwise available for
Letters of Credit under the Committed Revolving Line. Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for any Cash Management Services will be treated as Advances under the Committed Revolving Line and will
accrue interest at the rate for Advances. 
  
 2.1.5 Term
Loan. 
  
 (a) From the Closing Date through June 30,
2004 (the “Term Loan End Date”), Bank shall make up to two (2) advances (each, a “Term Advance” and, collectively, “Term Advances”) in an aggregate amount not to exceed the Term
Loan Amount. 
  
 (b) Interest accrues from the date of
each Term Advance at the rate set forth in Section 2.6(a). Term Advances are payable in forty-eight (48) equal monthly installments of principal plus interest, beginning one month following the Funding Date and ending on the Term Loan
Maturity Date for such Term Advance (each payment date, a “Term Advance Payment Date”). Term Advances when repaid may not be reborrowed. 
  

(c) Borrower shall have the option to prepay all or any portion of the outstanding principal amount of any Term Advance prior to its maturity,
provided Borrower (i) provides written notice to Bank of its election to prepay such Term Advance at least ten (10) calendar days prior to such prepayment, and (ii) pays, on the date of the prepayment, a prepayment fee equal to the principal
amount being prepaid multiplied by (A) one and one-half percent (1.50%), if the prepayment occurs prior to the first anniversary of the Funding Date for 
  

 2. 

 
such Term Advance, (B) one percent (1.00%), if the prepayment occurs on or after the first anniversary of the Funding Date for such Term Advance but prior to
the second anniversary of the Funding Date for such Term Advance, or (C) one-half percent (.50%), if the prepayment occurs on or after the second anniversary of the Funding Date for such Term Advance but prior to the third anniversary of the Funding
Date for such Term Advance. 
  
 2.2 Overadvances.

  
 If the Borrower’s aggregate obligations under (a)
Sections 2.1.1, 2.1.2, and 2.1.4 plus the FX Reserve under Section 2.1.3 exceed the Committed Revolving Line, or (b) Sections 2.1.1, 2.1.2, and 2.1.4 plus the FX Reserve under Section
2.1.3 and Term Advances under Section 2.1.5 exceed $35,000,000, then, in either case, Borrower must immediately pay Bank the excess. 
  
 2.3 General Provisions Relating to the Advances and Term Advances. 
  
 (a) Each Advance shall, at Borrower’s option in accordance with the terms of this Agreement, be either in the
form of a Prime Rate Advance or a LIBOR Advance; provided that in no event shall Borrower maintain at any time LIBOR Advances having more than two (2) different Interest Periods. Borrower shall pay interest accrued on the Advances at the
rates and in the manner set forth in Section 2.5(a). Amounts borrowed by Borrower under the Committed Revolving Line may be repaid and, prior to the Revolving Maturity Date, and subject to the applicable terms and conditions precedent in
Sections 3.1, 3.2, and 3.3, reborrowed. 
  
 (b)
Each Term Advance shall, at Borrower’s option in accordance with the terms of this Agreement, be either in the form of a Fixed Rate Advance or a Floating Rate Advance. Borrower shall pay interest accrued on the Term Advances at the rates
and in the manner set forth in Section 2.6(a). 
  
 2.4
Permitted Uses of Advance and Term Advance Proceeds. 
  
 The
Advances and Term Advances shall be used solely for working capital and other general business requirements of Borrower. 
  
 2.5 Interest Rate, Payments (Advances). 
  
 (a) Interest Rate. Each Advance shall bear interest on the outstanding principal amount thereof from the date when made, continued or converted
until paid in full at a rate per annum equal to the Prime Rate or Adjusted LIBOR, as the case may be. After an Event of Default occurs and so long as such Event of Default continues, including after an acceleration of the Obligations pursuant
to Section 9.1(a) (whether before or after entry of judgment to the extent permitted by law), Obligations shall accrue interest at five (5) percent above the rate effective immediately before the Event of Default; provided, however,
that on and after the expiration of any Interest Period applicable to any LIBOR Advance outstanding on the date of occurrence of such Event of Default or acceleration, the Effective Amount of such LIBOR Advance shall, during the continuance of such
Event of Default or after acceleration, bear interest at a rate per annum equal to the Prime Rate plus five (5) percent. Payment or acceptance of the increased interest provided in this Section 2.5(a) is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank. 
  

 3. 

 (b) Payments. Pursuant to the terms of Section 3.7, interest on each Advance shall be paid
in arrears on each Interest Payment Date. Interest shall also be paid on the date of any prepayment of any Advance pursuant to this Agreement for the portion of any Advance so prepaid and upon payment (including prepayment) in full thereof. All
accrued but unpaid interest on the Advances shall be due and payable on the Revolving Maturity Date. 
  
 (c) Limitations on Interest Rates. Notwithstanding any provision in this Agreement or any of the other Loan Documents, the total liability for
payments in the nature of interest shall not exceed the applicable limits imposed by any applicable federal or state interest rate laws. If any payments in the nature of interest, additional interest and other charges made hereunder or under any of
the Loan Documents are held to be in excess of the applicable limits imposed by any applicable federal or state law, the amount held to be in excess shall be considered payment of principal under the Advances and the indebtedness evidenced thereby
shall be reduced by such amount in the inverse order of maturity so that the total liability for payments in the nature of interest, additional interest and other charges shall not exceed the applicable limits imposed by any applicable federal or
state interest rate laws. 
  
 2.6 Interest Rate; Payments (Term
Advances). 
  
 (a) Interest Rate. Each Term Advance
shall bear interest on the outstanding principal amount thereof from the Funding Date until paid in full at a rate per annum equal to the Fixed Rate or Floating Rate, as the case may be. After an Event of Default occurs and so long as such
Event of Default continues, including after an acceleration of the Obligations pursuant to Section 9.1(a) (whether before or after entry of judgment to the extent permitted by law), Obligations shall accrue interest at five (5) percent above
the rate effective immediately before the Event of Default. 
  
 (b) Payments. Pursuant to the terms of Section 3.7, interest on each Term Advance shall be paid in arrears on each Term Advance Payment Date. Interest shall also be paid on the date of any prepayment of any Term Advance
pursuant to this Agreement for the portion of any Term Advance so prepaid and upon payment (including prepayment) in full thereof. All accrued but unpaid interest, if any, on each Term Advance shall be due and payable on the Term Loan Maturity Date.

  
 2.7 General Provisions. Bank may debit any of
Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments owing or any amounts Borrower owes Bank. Bank will promptly notify Borrower when it debits Borrower’s accounts. These debits are not
a set-off. Payments received after 12:00 p.m. (Pacific time) are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and
additional fees or interest accrue. 
  

 4. 

 2.8 Fees. 
  
 Borrower will pay: 
  
 (a) Set-up Fee. On the Closing Date, a fully earned, non-refundable fee equal to $170,000 (the “Set-up Fee”).

  
 (b) Letter of Credit Fee. Upon the issuance of a
Letter of Credit, a fully earned, non-refundable Letter of Credit fee equal to .75% per annum of the face amount of the issued Letter of Credit. 
  
 (c) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and reasonable expenses) incurred through and after the date of
this Agreement when due. 
  
 3. CONDITIONS OF
ADVANCES 
  
 3.1 Conditions Precedent to
Initial Credit Extension. 
  
 Bank’s obligation to make
the initial Credit Extension is subject to the condition precedent that the following have been satisfied, all in form and substance satisfactory to Bank: 
  
 (a) Borrower shall have executed and delivered the Loan Documents; 
  
 (b) Borrower shall have executed and delivered one or more Control Agreements by and among Borrower, Bank, and
securities intermediary(y)(ies) as is necessary for Bank to obtain control (within the meaning of the applicable provision of the Code) over any Collateral Accounts (as defined in Section 6.8 hereof) that hold, in the aggregate, assets valued
in an amount equal to the greater of (i) 85.7% times the outstanding Obligations or (ii) $10,000,000; 
  
 (c) Borrower shall have delivered the Operating Documents, a good standing certificate of Borrower from the State of Delaware and a certificate of
status/foreign corporation of Borrower from the State of California; 
  
 (d) Borrower shall have paid all costs and fees, including the Set-up Fee and Bank Expenses, then due; and 
  
 (e) Borrower shall have delivered to Bank, in addition to the documents required in Section 3.2, all documents, certificates, and other
assurances that Bank or its counsel may reasonably request. 
  
 3.2 Conditions Precedent to all Credit Extensions. 
  
 Bank’s obligation to make each Credit Extension, including the initial Credit Extension, is subject to the condition precedent that the following shall have been satisfied, all in form and substance satisfactory to Bank: 
  
 (a) timely receipt of a Notice of Borrowing; 
  

 5. 

 (b) unless otherwise waived by Bank, the Control Agreements shall be in full force and effect;
and 
  
 (c) the representations and warranties in
Section 5 must be true on the date of the Notice of Borrowing and on the Funding Date or the date any other Credit Extension is made, and no Event of Default may have occurred and be continuing or result from the Credit Extension. Each Credit
Extension is Borrower’s representation and warranty on that date that the representations and warranties of Section 5 remain true. 
  
 3.3 Procedure for the Borrowing of Advances and Term Advances. 
  
 (a) Subject to the prior satisfaction of all other applicable conditions to the making of an Advance and/or Term
Advance set forth in this Agreement, including Section 3.1 and Section 3.2 for Advances and/or Term Advances made on the Closing Date and Section 3.2 for all Advances and/or Term Advances, each Advance and/or Term Advances shall
be made upon Borrower’s irrevocable written notice delivered to Bank in the form of a Notice of Borrowing, each executed by a Responsible Officer of Borrower or his or her designee or without instructions if the Advances and/or Term Advances
are necessary to meet Obligations which have become due. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due to such reliance.
Such Notice of Borrowing must be received by Bank prior to 11:00 a.m. (Pacific time), (i) at least three (3) Business Days prior to the requested Funding Date, in the case of LIBOR Advances, and (ii) at least one (1) Business Day prior to the
requested Funding Date, in the case of Prime Rate Advances, Fixed Rate Advances, or Floating Rate Advances, specifying: 
  
 (i) the amount of the Advance or Term Advance, which, if a LIBOR Advance is requested, shall be in an aggregate minimum principal amount of
$1,000,000 or in any integral multiple of $1,000,000 in excess thereof; 
  
 (ii) the requested Funding Date, which shall be a Business Day; 
  
 (iii) whether the Advance is to be comprised of LIBOR Advances or Prime Rate Advances; 
  
 (iv) whether the Term Advance is to be comprised of Fixed Rate
Advances or Floating Rate Advances; and 
  
 (v) the
duration of the Interest Period applicable to any such LIBOR Advances included in such notice; provided that if the Notice of Borrowing shall fail to specify the duration of the Interest Period for any Advance comprised of LIBOR Advances,
such Interest Period shall be one (1) month. 
  
 (b) The
proceeds of all such Advances and/or Term Advances will then be made available to Borrower on the Funding Date by Bank by transfer to the Designated Deposit Account and, subsequently, by wire transfer to such other account as Borrower may

  

 6. 

 
instruct in the Notice of Borrowing. No Advances and/or Term Advances shall be deemed made to Borrower, and no interest shall accrue on any such Advance
and/or Term Advance, until the related funds have been deposited in the Designated Deposit Account. 
  
 3.4 Conversion and Continuation Elections. 
  
 (a) So long as (1) no Event of Default or event which with notice, passage of time, or both would constitute an Event of Default exists; (2) no
party hereto shall have sent any notice of termination of this Agreement; and (3) Borrower shall have complied with such customary procedures as Bank has established from time to time for Borrower’s requests for LIBOR Advances, Borrower may,
upon irrevocable written notice to Bank: 
  
 (i) elect to
convert on any Business Day, Prime Rate Advances in an amount equal to $1,000,000 or any integral multiple of $1,000,000 in excess thereof into LIBOR Advances; 
  

(ii) elect to continue on any Interest Payment Date any LIBOR Advances maturing on such Interest Payment Date (or any part thereof in an amount
equal to $1,000,000 or any integral multiple of $1,000,000 in excess thereof); provided, that if the aggregate amount of LIBOR Advances shall have been reduced, by payment, prepayment, or conversion of part thereof, to be less than
$1,000,000, such LIBOR Advances shall automatically convert into Prime Rate Advances, and on and after such date the right of Borrower to continue such Advances as, and convert such Advances into, LIBOR Advances shall terminate; or 
  
 (iii) elect to convert on any Interest Payment Date any LIBOR
Advances maturing on such Interest Payment Date (or any part thereof in an amount equal to $1,000,000 or any integral multiple of $1,000,000 in excess thereof) into Prime Rate Advances. 
  
 (b) Borrower shall deliver a Notice of Conversion/Continuation in accordance with Section 10 to be received
by Bank prior to 11:00 a.m. (Pacific time) at least (i) three (3) Business Days in advance of the Conversion Date or Continuation Date, if any Advances are to be converted into or continued as LIBOR Advances; and (ii) one (1) Business Day in advance
of the Conversion Date, if any Advances are to be converted into Prime Rate Advances, in each case specifying: 
  
 (i) the proposed Conversion Date or Continuation Date; 
  
 (ii) the aggregate amount of the Advances to be converted or continued which, if any Advances are to be converted into or continued as LIBOR
Advances, shall be in an aggregate minimum principal amount of $1,000,000 or in any integral multiple of $1,000,000 in excess thereof; 
  
 (iii) the nature of the proposed conversion or continuation; and 
  
 (iv) the duration of the requested Interest Period. 
  
 (c) If upon the expiration of any Interest Period applicable to any LIBOR Advances, Borrower shall have timely
failed to select a new Interest Period to be applicable to such LIBOR Advances, Borrower shall be deemed to have elected to convert such LIBOR Advances into Prime Rate Advances. 
  

 7. 

 (d) Any LIBOR Advances shall, at Bank’s option, convert into Prime Rate Advances in the
event that (i) an Event of Default, or event which with notice, the passage of time, or both would constitute an Event of Default, shall exist, (ii) the Agreement shall terminate, or (iii) the aggregate principal amount of the Prime Rate Advances
which have been previously converted to LIBOR Advances, or the aggregate principal amount of existing LIBOR Advances continued, as the case may be, at the beginning of an Interest Period shall at any time during such Interest Period exceed the
Committed Revolving Line. Borrower agrees to pay Bank, upon demand by Bank (or Bank may, at its option, charge the Designated Deposit Account or any other account Borrower maintains with Bank) any amounts required to compensate Bank for any loss
(including loss of anticipated profits), cost, or expense incurred by Bank, as a result of the conversion of LIBOR Advances to Prime Rate Advances pursuant to any of the foregoing. 
  
 (e) Notwithstanding anything to the contrary contained herein, Bank shall not be required to purchase United States
Dollar deposits in the London interbank market or other applicable LIBOR market to fund any LIBOR Advances, but the provisions hereof shall be deemed to apply as if Bank had purchased such deposits to fund the LIBOR Advances. 
  
 3.5 Special Provisions Governing LIBOR Advances. 
  
 Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to LIBOR Advances as to the matters covered: 
  
 (a) Determination of Applicable Interest Rate. As soon as practicable on each Interest Rate Determination Date, Bank shall determine (which determination shall, absent manifest error in calculation, be final,
conclusive and binding upon all parties) the interest rate that shall apply to the LIBOR Advances for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by
telephone confirmed in writing) to Borrower. 
  
 (b) Inability
to Determine Applicable Interest Rate. In the event that Bank shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any LIBOR
Advance, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to such Advance on the basis provided for in the definition of LIBOR, Bank shall on
such date give notice (by telefacsimile or by telephone confirmed in writing) to Borrower of such determination, whereupon (i) no Advances may be made as, or converted to, LIBOR Advances until such time as Bank notifies Borrower that the
circumstances giving rise to such notice no longer exist, and (ii) any Notice of Borrowing or Notice of Conversion/Continuation given by Borrower with respect to Advances in respect of which such determination was made shall be deemed to be
rescinded by Borrower. 
  
 (c) Compensation for Breakage or
Non-Commencement of Interest Periods. Borrower shall compensate Bank, upon written request by Bank (which request shall set forth the manner and method of computing such compensation), for all 

  

 8. 

 
reasonable losses, expenses and liabilities, if any (including any interest paid by Bank to lenders of funds borrowed by it to make or carry its LIBOR
Advances and any loss, expense or liability incurred by Bank in connection with the liquidation or re-employment of such funds) such that Bank may incur: (i) if for any reason (other than a default by Bank or due to any failure of Bank to fund LIBOR
Advances due to illegality or impracticability under Section 3.6(d)) a borrowing or a conversion to or continuation of any LIBOR Advance does not occur on a date specified in a Notice of Borrowing or a Notice of Conversion/Continuation, as
the case may be, or (ii) if any principal payment or any conversion of any of its LIBOR Advances occurs on a date prior to the last day of an Interest Period applicable to that Advance. 
  
 (d) Assumptions Concerning Funding of LIBOR Advances. Calculation of all amounts payable to Bank under this
Section 3.5 and under Section 3.3 shall be made as though Bank had actually funded each of its relevant LIBOR Advances through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to the definition of
LIBOR Rate in an amount equal to the amount of such LIBOR Advance and having a maturity comparable to the relevant Interest Period; provided, however, that Bank may fund each of its LIBOR Advances in any manner it sees fit and the foregoing
assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 3.5 and under Section 3.3. 
  
 (e) LIBOR Advances After Default. After the occurrence of and during the continuation of an Event of Default, (i) Borrower may not elect to have
an Advance be made or continued as, or converted to, a LIBOR Advance after the expiration of any Interest Period then in effect for such Advance and (ii) subject to the provisions of Section 3.5(c), any Notice of Conversion/Continuation given
by Borrower with respect to a requested conversion/continuation that has not yet occurred shall be deemed to be rescinded by Borrower and be deemed a request to convert or continue Advances referred to therein as Prime Rate Advances. 
  
 3.6 Additional Requirements/Provisions Regarding LIBOR Advances.

  
 (a) If for any reason (including voluntary or
mandatory prepayment or acceleration), Bank receives all or part of the principal amount of a LIBOR Advance prior to the last day of the Interest Period for such Advance, Borrower shall immediately notify Borrower’s account officer at Bank and,
on demand by Bank, pay Bank the amount (if any) by which (i) the additional interest which would have been payable on the amount so received had it not been received until the last day of such Interest Period exceeds (ii) the interest which would
have been recoverable by Bank by placing the amount so received on deposit in the certificate of deposit markets, the offshore currency 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 Interest Period at the interest rate determined by Bank in its reasonable discretion. Bank’s determination as to such amount shall be conclusive absent manifest error. 
  
 (b) Borrower shall pay Bank, upon demand by Bank, from time to time
such amounts as Bank may determine to be necessary to compensate it for any costs incurred by Bank that Bank determines are attributable to its making or maintaining of any amount receivable by Bank hereunder in respect of any Advances relating
thereto (such increases in costs and reductions in amounts receivable being herein called “Additional Costs”), in each case resulting from any Regulatory Change which: 
  
 (i) changes the basis of taxation of any amounts payable to Bank
under this Agreement in respect of any Advances (other than changes which affect taxes measured by or imposed on the overall net income of Bank by the jurisdiction in which Bank has its principal office); 
  

 9. 

 (ii) imposes or modifies 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 Advances or any deposits referred to in the definition of LIBOR); or 
  
 (iii) imposes any other condition affecting this Agreement (or any of such extensions of credit or liabilities).

  
 Bank will notify Borrower of any event occurring after the
Closing Date which will entitle Bank to compensation pursuant to this Section 3.6 as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. Bank will furnish Borrower with a statement setting
forth the basis and amount of each request by Bank for compensation under this Section 3.6. Determinations and allocations by Bank for purposes of this Section 3.6 of the effect of any Regulatory Change on its costs of maintaining its
obligations to make Advances, of making or maintaining Advances, or on amounts receivable by it in respect of Advances, and of the additional amounts required to compensate Bank in respect of any Additional Costs, shall be conclusive absent manifest
error. 
  
 (c) If Bank shall determine that the adoption or
implementation of any applicable law, rule, regulation, or treaty regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or compliance by Bank (or its applicable lending office) with any respect or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central
bank, or comparable agency, has or would have the effect of reducing the rate of return on capital of Bank or any person or entity controlling Bank (a “Parent”) as a consequence of its obligations hereunder to a level below
that which Bank (or its Parent) could have achieved but for such adoption, change, or compliance (taking into consideration policies with respect to capital adequacy) by an amount deemed by Bank to be material, then from time to time, within fifteen
(15) days after demand by Bank, Borrower shall pay to Bank such additional amount or amounts as will compensate Bank for such reduction. A statement of Bank claiming compensation under this Section 3.6(c) and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive absent manifest error. 
  
 (d) If, at any time, Bank, in its sole and absolute discretion, determines that (i) the amount of LIBOR Advances for periods equal to the corresponding Interest Periods are not available to Bank in the offshore
currency interbank markets, or (ii) LIBOR does not accurately reflect the cost to Bank of lending the LIBOR Advances, then Bank shall promptly give notice thereof to Borrower. Upon the giving of such notice, Bank’s obligation to make the LIBOR
Advances shall terminate; provided, however, Advances shall not terminate if Bank and Borrower agree in writing to a different interest rate applicable to LIBOR Advances. 
  

 10. 

 (e) If it shall become unlawful for Bank to continue to fund or maintain any LIBOR Advances, or to
perform its obligations hereunder, upon demand by Bank, Borrower shall prepay the Advances in full with accrued interest thereon and all other amounts payable by Borrower hereunder (including, without limitation, any amount payable in connection
with such prepayment pursuant to Section 3.6(a)). Notwithstanding the foregoing, to the extent a determination by Bank as described above relates to a LIBOR Advance then being requested by Borrower pursuant to a Notice of Borrowing or a
Notice of Conversion/Continuation, Borrower shall have the option, subject to the provisions of Section 3.5(c), to (i) rescind such Notice of Borrowing or Notice of Conversion/Continuation by giving notice (by telefacsimile or by telephone
confirmed in writing) to Bank of such rescission on the date on which Bank gives notice of its determination as described above, or (ii) modify such Notice of Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate Advance or to have
outstanding Advances converted into or continued as Prime Rate Advances by giving notice (by telefacsimile or by telephone confirmed in writing) to Bank of such modification on the date on which Bank gives notice of its determination as described
above. 
  
 3.7 Calculation of Interest and Fees.

  
 Interest on the Advances, Term Advances, and all fees payable
hereunder shall be computed on the basis of a 365-day year and the actual number of days elapsed in the period during which such interest accrues. In computing interest on any Advance and/or Term Advance, the date of the making of such Advance
and/or Term Advance shall be included and the date of payment shall be excluded; provided, however, that if any Advance is repaid, and/or Term Advance is prepaid, on the same day on which it is made, such day shall be included in computing
interest on such Advance and/or Term Advance. 
  
 (a) Prime
Rate Advances; Floating Rate Advances. Each change in the interest rate of the Prime Rate Advances or Floating Rate Advances based on changes in the Prime Rate shall be effective on the effective date of such change and to the extent of such
change. Bank shall give Borrower prompt notice of any such change in the Prime Rate; provided, however, that any failure by Bank to provide Borrower with notice hereunder shall not affect Bank’s right to make changes in the interest rate
of the Prime Rate Advances or Floating Rate Advances based on changes in the Prime Rate. Interest on Prime Rate Advances is payable monthly by debit to the Designated Deposit Account on each Interest Payment Date. Interest on Floating Rate Advances
is payable monthly by debit to the Designated Deposit Account on each Term Advance Payment Date. Bank shall provide Borrower a statement of interest four (4) days prior to each (i) Interest Payment Date applicable to Prime Rate Advances and (ii)
Term Advance Payment Date applicable to Floating Rate Advances. 
  
 (b) LIBOR Advances. The interest rate applicable to each LIBOR Advance shall be determined in accordance with Section 3.5(a) hereunder. Subject to Sections 3.5 and 3.6, such rate shall apply during the
entire Interest Period applicable to such LIBOR Advance, and interest calculated thereon shall be payable on the Interest Payment Date applicable to such LIBOR Advance. 
  

 11. 

 (c) Fixed Rate Advances. Fixed Rate Advances accrue interest on the outstanding principal balance
at a rate per annum equal to the 60-month Treasury Rate in effect on the Funding Date plus two and one-half percent (2.50%) (the “Fixed Rate”). Interest on each Fixed Rate Advance is payable monthly by debit to
the Designated Deposit Account on each Term Advance Payment Date applicable to such Fixed Rate Advance. 
  
 4. CREATION OF SECURITY INTEREST 
  
 4.1 Grant of Security Interest. 
  
 Borrower grants Bank a continuing security interest in all presently existing and later acquired Collateral to secure all Obligations and performance of
each of Borrower’s duties under the Loan Documents. Except for Permitted Liens, any security interest will be a first priority security interest in the Collateral. If this Agreement is terminated, Bank’s lien and security interest in the
Collateral will continue until Borrower fully satisfies its Obligations. 
  
 4.2 Authorization to File Financing Statements. 
  
 Borrower authorizes Bank to file financing statements, without notice to Borrower, with all appropriate jurisdictions, as Bank deems necessary, in order to protect or perfect Bank’s security interest in the
Collateral. 
  
 5. REPRESENTATIONS AND
WARRANTIES 
  
 Borrower
represents and warrants as follows: 
  
 5.1 Due Organization
and Authorization. 
  
 Borrower and each Subsidiary is duly
existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified, except where
the failure to do so could not reasonably be expected to cause a Material Adverse Change. 
  
 The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower’s formation documents, nor constitute an event of default under any material agreement by
which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound in which the default could reasonably be expected to cause a Material Adverse Change. 
  
 5.2 Collateral. 
  
 Borrower has good title to the Collateral, free of Liens except Permitted
Liens. All Inventory is in all material respects of good and marketable quality, free from material defects. 
  
 5.3 Litigation. 
  
 Except as shown in the Disclosure Schedule, there are no actions or proceedings pending or, to the knowledge of Borrower’s Responsible Officers,
threatened by or against Borrower or any Subsidiary in which an adverse decision could reasonably be expected to cause a Material Adverse Change. 
  

 12. 

 5.4 No Material Adverse Change in Financial Statements. 
  
 All consolidated financial statements for Borrower delivered to Bank fairly
present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since the
date of the most recent financial statements submitted to Bank. 
  
 5.5 Solvency. 
  
 The fair salable value of
Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; the Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts
(including trade debts) as they mature. 
  
 5.6 Regulatory
Compliance. 
  
 Borrower is not an “investment
company” or a company “controlled” by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of
the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause
a Material Adverse Change. None of Borrower’s or any Subsidiary’s properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than legally. Borrower and each Subsidiary has generally timely filed all (a) required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested
in good faith with adequate reserves under GAAP and where failure to do so could cause an Event of Default, and (b) filings required by the Securities and Exchange Commission. Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted, except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change. 
  
 5.7 Subsidiaries;
Investments. 
  
 Borrower does not own any stock, partnership
interest or other equity securities except as disclosed in the Disclosure Schedule. 
  
 5.8 Full Disclosure. 
  
 No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank (taken together with all such written certificates and written statements to Bank) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading. Bank recognizes that the projections and forecasts provided by Borrower in good faith and based 

  

 13. 

 
upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ
from the projected and forecasted results. 
  
 6. AFFIRMATIVE
COVENANTS 
  
 Borrower will do all of the
following for so long as Bank has an obligation to lend or there are outstanding Obligations: 
  
 6.1 Government Compliance. 
  
 Borrower will maintain its and all Subsidiaries’ legal existence and good standing in their jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to
cause a material adverse effect on Borrower’s business or operations. Borrower will comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, for which noncompliance could have a material adverse
effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change. 
  
 6.2 Financial Statements, Reports, Certificates. 
  
 (a) Borrower will deliver to Bank: (i) within five (5) Business Days of filing, copies of all reports on Forms 10-K and 10-Q filed with the
Securities and Exchange Commission; (ii) as soon as available, but no later than thirty (30) days after the end of each month, a cash holding report in form and substance satisfactory to Bank; (iii) as soon as available, but no later than forty-five
(45) days after the end of each fiscal year, a one (1) year (prepared on a quarterly basis) financial projections of Borrower on a Consolidated basis, including a pro forma balance sheet and statements of income and cash flows and showing
projected operating revenues, expenses and debt service of Borrower on a Consolidated basis; (iv) a prompt report of any material infringements to its Intellectual Property (collectively, “IP Infringements”); (v) a prompt
report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of $2,000,000 or more, or in which an adverse decision could reasonably be expected to cause a
Material Adverse Change (collectively, “Material Litigation”); and (vi) other financial information Bank reasonably requests. 
  
 (b) Borrower will deliver to Bank with its Forms 10-K and 10-Q a Compliance Certificate signed by a Responsible Officer in the form of Exhibit
D. 
  
 6.3 Inventory. 
  
 Borrower will keep all Inventory in good and marketable condition, and free
from material defects. Returns and allowances between Borrower and its account debtors will follow Borrower’s customary practices as they exist at execution of this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims, that involve more than $2,000,000. 
  

 14. 

 6.4 Taxes. 
  
 Borrower will make, and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or
assessments (other than taxes and assessments which Borrower is contesting in good faith, with adequate reserves maintained in accordance with GAAP) and will deliver to Bank, on demand, appropriate certificates attesting to the payment. 

 
 6.5 Insurance. 
  
 Borrower will keep its business and the Collateral insured for risks and in
amounts standard for Borrower’s industry, and as Bank may reasonably request. Insurance policies will be in a form, with companies, and in amounts that are satisfactory to Bank in Bank’s reasonable discretion. At Bank’s request,
Borrower will deliver certificates of insurance showing the Bank as an additional insured, as applicable, and that the Bank will be provided at least twenty (20) days notice of cancellation of any policy. If an Event of Default has occurred and is
continuing, proceeds payable under any policy will, at Bank’s option, be payable to Bank on account of the Obligations. 
  
 6.6 Depository Accounts. 
  
 Borrower will maintain a depository account or accounts with Bank, one of which shall be the Designated Deposit Account for purposes of debiting amounts
owed to Bank hereunder. 
  
 6.7 Financial Covenants.

  
 Borrower will maintain: 
  
 (a) Tangible Net Worth. As measured at the last day of each fiscal
quarter of Borrower, Tangible Net Worth of at least $60,000,000 plus twenty-five percent (25%) of net income, as determined in accordance with GAAP, for such quarter and all preceding quarters since December 31, 2003 (exclusive of losses).

  
 (b) Liquidity Coverage. As measured at the last day of
each calendar month, a ratio of (1) unrestricted cash and Cash Equivalents plus (i) short-term, marketable securities of Borrower, minus (ii) outstanding Cash Management Services, and minus (iii) the FX Reserve divided by
(2) the aggregate amount of the Obligations, of not less than 1.00 to 1.00. 
  
 6.8 Further Assurances. 
  
 Borrower will execute any further instruments and take further action as Bank reasonably requests to effect the purposes of this Agreement, including executing and delivering and causing any applicable depositary bank, securities
intermediary or commodity intermediary at or with which any Deposit Account, Securities Account, or Commodity Account (collectively, the “Collateral Accounts”) is maintained to execute and deliver a Control Agreement with
respect to such Collateral Accounts as is necessary for Bank to obtain control (within the meaning of the applicable provision of the Code) over such Collateral Accounts that hold, in the aggregate, assets valued in an amount equal to the greater of
(a) 85.7% times the outstanding Obligations or (b) $10,000,000. 
  

 15. 

 7. NEGATIVE COVENANTS 
  
 Borrower will not do any of the following without Bank’s prior written consent, which will not be unreasonably
withheld, for so long as Bank has an obligation to lend or there are any outstanding Obligations: 
  
 7.1 Dispositions. 
  
 Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”), or permit any of its Subsidiaries to Transfer,
all or any material part of its business or property, except for Transfers of (a) assets in the ordinary course of business; (b) licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of
business; or (c) worn-out or obsolete assets. 
  
 7.2 Changes
in Control, Business. 
  
 Permit or suffer any Change in
Control or engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto. 
  
 7.3 Mergers or Acquisitions. 
  
 Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another Person (collectively, “Mergers or Acquisitions”), except that Borrower may enter into Mergers or Acquisitions so long as no Event of Default has
occurred and is continuing or would result from any such Mergers or Acquisitions. A Subsidiary may merge or consolidate into another Subsidiary or into Borrower. 
  
 7.4 Indebtedness. 
  
 Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 
  
 7.5 Encumbrance. 
  
 Create, incur, or allow any Lien on any of the Collateral, or assign or
convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for (a) Permitted Liens, or (b) Transfers of Accounts in the ordinary course of Borrower’s business in exchange for cash
or other unencumbered Property to an entity or entities regularly engaged in the purchase of such Accounts, or permit any Collateral not to be subject to the first priority security interest granted here, subject to Permitted Liens. 
  
 7.6 Subordinated Debt. 
  
 Make or permit any payment on any Subordinated Debt, except under the terms
of the Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt without Bank’s prior written consent. 
  

 16. 

 7.7 Compliance. 
  
 Become an “investment company” or a company controlled by an “investment company,” under the Investment
Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse
effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so. 
  

8. EVENTS OF DEFAULT 
  
 Any one of the following is an Event of Default: 
  
 8.1 Payment Default. 
  
 If Borrower fails to pay (a) the principal or interest portion of any Advance within three (3) Business Days after their due date, or (b) any other
Obligations within three (3) Business Days after being notified by Bank that such Obligations are due and payable. During any cure period, the failure to cure the payment default is not an Event of Default (but no Credit Extension will be made
during the cure period); 
  
 8.2 Covenant Default.

  
 If Borrower does not perform any obligation in Section
6 (other than any obligation under Sections 6.2 or 6.5) or violates any covenant in Section 7; or 
  
 If Borrower does not perform or observe any other material term, condition or covenant in this Agreement, any Loan Documents, or in any agreement between
Borrower and Bank and as to any default under a term, condition or covenant that can be cured, has not cured the default within ten (10) days after it occurs, or if the default cannot be cured within ten (10) days or cannot be cured after
Borrower’s attempts to cure such default within the ten (10) day period, and the default may be cured within a reasonable time, then Borrower has an additional period (of not more than thirty (30) days) to attempt to cure the default. During
the additional cure period, the failure to cure the default is not an Event of Default (but no Credit Extensions will be made during any cure period); 
  
 8.3 Material Adverse Change. 
  
 If a Material Adverse Change occurs; 
  
 8.4 Attachment. 
  
 If any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in ten (10) days, or if Borrower is enjoined, restrained, or prevented by court order from conducting a 

  

 17. 

 
material part of its business or if a judgment or other claim becomes a Lien on a material portion of Borrower’s assets, or if a notice of lien, levy,
or assessment is filed against any material portion of Borrower’s assets by any government agency and is not paid within ten (10) days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower (but no Credit Extensions will be made while (a) the stay is in effect, or (b) Borrower contests the action, whichever is applicable); 
  
 8.5 Insolvency. 
  
 If Borrower becomes insolvent or if Borrower begins an Insolvency Proceeding or an Insolvency Proceeding is begun against Borrower and is not dismissed or
stayed within thirty (30) days (but no Credit Extensions will be made before any Insolvency Proceeding is dismissed); 
  
 8.6 Other Agreements. 
  
 If there is a default in any agreement between Borrower and a third party that gives the third party the right to accelerate any Indebtedness exceeding
$2,000,000 or that could cause a Material Adverse Change; 
  
 8.7 Judgments. 
  
 If a money judgment(s) in the
aggregate of at least $2,000,000 is rendered against Borrower, is not covered by insurance, and is unsatisfied and unstayed for ten (10) days (but no Credit Extensions will be made before the judgment is stayed or satisfied); or 
  
 8.8 Misrepresentations. 
  
 If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement at the time made now or later in any warranty or representation in this Agreement or in any writing delivered to Bank to induce Bank to enter this Agreement or any Loan Document. 
  
 9. BANK’S RIGHTS AND
REMEDIES 
  
 9.1 Rights and Remedies.

  
 When an Event of Default occurs and continues Bank may,
without notice or demand, do any or all of the following: 
  
 (a) Declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs, all Obligations are immediately due and payable without any action by Bank); 
  
 (b) Stop advancing money or extending credit for Borrower’s
benefit under this Agreement or under any other agreement between Borrower and Bank; 
  

 18. 

 (c) Make any payments and do any acts it considers necessary or reasonable to protect its
security interest in the Collateral. Borrower will assemble the Collateral if Bank requires and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the
Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to
exercise any of Bank’s rights or remedies; 
  
 (d)
Request that Borrower provide cash in an amount equal to the amount of the outstanding Letters of Credit to serve as collateral for such Letters of Credit; 
  

(e) Apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or
the account of Borrower; 
  
 (f) Terminate any FX Forward
Contracts; 
  
 (g) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, patents, copyrights, mask works, rights of use of
any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with
Bank’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit; and 
  

(h) Dispose of the Collateral according to the Code. 
  

9.2 Power of Attorney. 
  
 Effective only when an Event of Default occurs and continues, Borrower irrevocably appoints Bank as its lawful attorney to: (a) endorse Borrower’s
name on any checks or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against account debtors, (c) make, settle, and adjust all claims under Borrower’s insurance
policies; (d) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts and on terms Bank determines reasonable; and (e) transfer the Collateral into the name of Bank or a third party as the Code permits.
Bank may exercise the power of attorney to sign Borrower’s name on any documents necessary to perfect or continue the perfection of any security interest in the Collateral regardless of whether an Event of Default has occurred. Bank’s
appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions
terminates. 
  
 9.3 Bank Expenses. 
  
 If Borrower fails to pay any amount or furnish any required proof of payment
to third persons, Bank may make all or part of the payment or obtain insurance policies required in Section 6.5 and take any action under the policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and immediately due and
payable, bearing interest at the then applicable Prime Rate. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default. 
  

 19. 

 9.4 Bank’s Liability for Collateral. 
  
 If Bank complies with reasonable banking practices and the Code, it is not
liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other person. Borrower bears all risk
of loss, damage or destruction of the Collateral. 
  
 9.5
Remedies Cumulative. 
  
 Bank’s rights and remedies
under this Agreement, the Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election, and Bank’s waiver
of any Event of Default is not a continuing waiver. Bank’s delay is not a waiver, election, or acquiescence. No waiver is effective unless signed by Bank and then is only effective for the specific instance and purpose for which it was given.

  
 9.6 Demand Waiver. 
  
 Borrower waives demand, notice of default or dishonor, notice of payment and
nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable. 
  
 10. NOTICES 
  
 All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an overnight delivery service, by certified mail, postage prepaid, return receipt requested, or by telefacsimile to the addresses set forth at the beginning of this
Agreement. A party may change its notice address by giving the other party written notice. 
  
 11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER 
  
 California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California. 
  
 BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 
  

 20. 

 12. GENERAL PROVISIONS 
  
 12.1 Successors and Assigns. 
  
 This Agreement binds and is for the benefit of the successors and permitted
assigns of each party. Borrower may not assign this Agreement or any rights under it without Bank’s prior written consent which may be granted or withheld in Bank’s discretion. Bank has the right, without the consent of or notice to
Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits under this Agreement. 
  
 12.2 Indemnification. 
  
 Borrower will indemnify, defend and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank and Borrower
(including reasonable attorneys’ fees and expenses), except for losses caused by Bank’s gross negligence or willful misconduct. 
  
 12.3 Time of Essence. 
  
 Time is of the essence for the performance of all obligations in this Agreement. 
  
 12.4 Severability of Provision. 
  
 Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

  
 12.5 Amendments in Writing, Integration. 
  
 All amendments to this Agreement must be in writing and signed by Borrower
and Bank. This Agreement represents the entire agreement about this subject matter, and supersedes prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the
subject matter of this Agreement merge into this Agreement and the Loan Documents. 
  
 12.6 Counterparts. 
  
 This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement. 
  
 12.7 Survival. 
  
 All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought against Bank have run. 

 

 21. 

 12.8 Confidentiality. 
  
 In handling any confidential information, Bank will exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made (a) to Bank’s subsidiaries or affiliates in connection with their business with Borrower, (b) to prospective transferees or purchasers of any interest in the loans (provided,
however, Bank shall use commercially reasonable efforts in obtaining such prospective transferee or purchasers agreement of the terms of this provision), (c) as required by law, regulation, subpoena, or other order, (d) as required in connection
with Bank’s examination or audit, and (e) as Bank considers appropriate exercising remedies under this Agreement. Confidential information does not include information that either: (x) is in the public domain or in Bank’s possession when
disclosed to Bank, or becomes part of the public domain after disclosure to Bank, or (y) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information. 
  
 12.9 Attorneys’ Fees, Costs and Expenses. 
  
 In any action or proceeding between Borrower and Bank arising out of the
Loan Documents, the prevailing party will be entitled to recover its reasonable attorneys’ fees and other reasonable costs and expenses incurred, in addition to any other relief to which it may be entitled. 
  
 13. DEFINITIONS 
  
 13.1 Definitions. 
  
 In this Agreement: 
  
 “Accounts” is defined on Exhibit A hereto.

  
 “Adjusted LIBOR” means, for each
Interest Period in respect of LIBOR Advances comprising part of the same Advances, an interest rate per annum (rounded upward to the nearest 1/16th of one percent (0.0625%)) equal to the sum of (a) LIBOR for such Interest Period divided
by one (1) minus the Reserve Requirement for such Interest Period plus (b) two percent (2%). 
  
 “Advance” or “Advances” is a loan advance (or advances) under the Committed Revolving Line. 
  
 “Affiliate” of a Person is a Person that owns or
controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited
liability company, that Person’s managers and members. 
  
 “Bank Expenses” are all audit fees and expenses and reasonable costs and expenses (including reasonable attorneys’ fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan
Documents (including appeals or Insolvency Proceedings). 
  

 22. 

 “Borrower’s Books” are all Borrower’s books and records including
ledgers, records regarding Borrower’s assets or liabilities, business operations or financial condition and all computer programs or discs or any equipment containing the information. 
  
 “Business Day” is any day other than a Saturday,
Sunday or other day on which banking institutions in the State of California are authorized or required by law or other governmental action to close, except that if any determination of a “Business Day” shall relate to a LIBOR Advance, the
term “Business Day” shall also mean a day on which dealings are carried on in the London interbank market, and if any determination of a “Business Day” shall relate to an FX Forward Contract, the term “Business Day”
shall mean a day on which dealings are carried on in the country of settlement of the foreign (i.e., non-Dollar) currency. 
  
 “Cash Equivalents” means highly liquid marketable securities held by Borrower with a remaining maturity of three (3) months or
less in accordance with GAAP. 
  
 “Cash
Management Services” are defined in Section 2.1.4. 
  
 “Change in Control” means any change, whether by a single transaction or a series of transactions, in the Person or Persons who control sufficient voting rights accorded to the owners of
Borrower’s stock (directly or indirectly, whether by stock ownership, contract, or otherwise) to direct the management of Borrower; provided, however, this provision shall not be violated by any sale of the stock (and related voting rights) of
Borrower by Borrower through the New York Stock Exchange, the American Stock Exchange, NASDAQ or other public securities markets in which stocks of companies are regularly traded in the United States. 
  
 “Closing Date” is the date of this Agreement.

  
 “Code” is the Uniform Commercial Code,
as applicable. 
  
 “Collateral” is the
property described on Exhibit A hereto. 
  
 “Committed Revolving Line” is the lesser of (a) $25,000,000 and (b) $35,000,000 minus the aggregate outstanding principal amount of all Term Advances. 
  
 “Commodity Account” has the meaning ascribed to it in
the Code. 
  
 “Consolidated” refers, with
respect to any Person, to the consolidation of accounts of such Person and its Subsidiaries in accordance with GAAP. 
  
 “Consolidated Total Assets” means, at any date of determination, the total Consolidated assets of Borrower, except goodwill, trade
names, copyrights, trademarks, service marks, and other intangible items such as unamortized debt discount and expenses and research and development expenses except pre-paid expenses. 
  
 “Consolidated Total Liabilities” is on any date of determination, obligations that
should, under GAAP, be classified as liabilities on Borrower’s Consolidated balance sheet, including all Indebtedness, but excluding all Subordinated Debt. 
  

 23. 

 “Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person,
or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices, but “Contingent Obligation” does not include endorsements
in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability
for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under the guarantee or other support arrangement. 
  
 “Continuation Date” means any date on which Borrower elects to continue a LIBOR Advance into another Interest Period. 

 
 “Control Agreements” means, collectively, the
separate control agreements entered into among Borrower, Bank and the depositary bank, securities intermediary, or commodity intermediary at which Borrower maintains a deposit account, securities account, or a commodity account, pursuant to which
Bank obtains control (within the meaning of the applicable provision of the Code) over such deposit account, securities account, or commodity account. 
  
 “Conversion Date” means any date on which Borrower elects to convert a Prime Rate Advance to a LIBOR Advance or a LIBOR Advance to
a Prime Rate Advance. 
  
 “Credit
Extension” is each Advance, Term Advance, Letter of Credit, FX Forward Contract, Cash Management Services, or any other extension of credit by Bank for Borrower’s benefit. 
  
 “Deposit Accounts” is defined on Exhibit A
hereto. 
  
 “Designated Deposit Account”
shall mean Borrower’s deposit account, account number 3300389009, maintained with Bank. 
  
 “Disclosure Schedule” means the Disclosure Schedule attached hereto as Schedule A. 
  

“Dollars,” “dollars” and “$” each mean lawful money of the United
States. 
  
 “Effective Amount” means with
respect to any Advances on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowing and prepayments or repayments thereof occurring on such date. 
  
 “Equipment” is defined on Exhibit A hereto. 
  
 “ERISA” is the Employment Retirement Income Security
Act of 1974, and its regulations. 
  

 24. 

 “Fixed Rate” is defined in Section 3.7(c). 
  
 “Fixed Rate Advance” means a Term Advance that bears
interest at the Fixed Rate. 
  
 “Floating
Rate” is a rate per annum equal to the greater of (a) the Prime Rate plus two percent (2.00%) and (b) six percent (6.00%). 
  
 “Floating Rate Advance” means a Term Advance that bears interest at the Floating Rate. 
  
 “FX Forward Contract” is defined in Section
2.1.3. 
  
 “FX Reserve” is defined in
Section 2.1.3. 
  
 “Funding Date”
means the date funds are advanced to Borrower for any Advance or Term Advance. 
  
 “GAAP” is generally accepted accounting principles. 
  
 “Governmental Authority” means (a) any foreign, federal, state, county, or municipal government, or political subdivision thereof,
(b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, (c) any court or administrative tribunal or (d) with respect to any Person, any arbitration tribunal or other
non-governmental authority to whose jurisdiction that Person has consented. 
  
 “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services (such as reimbursement and other obligations for surety bonds and letters of credit that are
carried as liabilities on Borrower’s balance sheet) other than Contingent Obligations, (b) obligations evidenced by notes, bonds, debentures or similar instruments, and (c) capital lease obligations. 
  
 “Insolvency Proceeding” are proceedings by or against
any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief. 
  
 “Intellectual
Property” is defined on Exhibit A hereto. 
  
 “Interest Payment Date” means, (a) with respect to any LIBOR Advance, the last day of each Interest Period applicable to such LIBOR Advance, and (b) with respect to Prime Rate Advances, the twentieth (20th) day of each month (or, if the twentieth day of the month does not fall on a Business Day, then on the first Business Day
following such date), and each date a Prime Rate Advance is converted into a LIBOR Advance to the extent of the amount converted to a LIBOR Advance. 
  
 “Interest Period” means, as to any LIBOR Advance, the period commencing on the date of such LIBOR Advance, or on the
conversion/continuation date on which the LIBOR Advance is converted into or continued as a LIBOR Advance, and ending on the date that is one (1), two (2), or three (3), months thereafter, in each case as Borrower may elect in the applicable Notice

  

 25. 

 
of Borrowing or Notice of Conversion/Continuation; provided, however, that (a) no Interest Period with respect to any LIBOR Advance shall end later
than the Revolving Maturity Date, (b) the last day of an Interest Period shall be determined in accordance with the practices of the LIBOR interbank market as from time to time in effect, (c) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the following Business Day unless, in the case of a LIBOR Advance, the result of such extension would be to carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the preceding Business Day, (d) any Interest Period pertaining to a LIBOR Advance that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period, and (e) interest shall accrue from and include the first Business Day of an Interest Period but exclude the last
Business Day of such Interest Period. 
  
 “Interest
Rate Determination Date” means each date for calculating the LIBOR for purposes of determining the interest rate in respect of an Interest Period. The Interest Rate Determination Date shall be the second Business Day prior to the first
day of the related Interest Period for a LIBOR Advance. 
  
 “Inventory” is defined on Exhibit A hereto. 
  
 “Investment” is any beneficial ownership (including stock, partnership interest or other securities) of any Person, or any loan, advance or capital contribution to any Person. 
  
 “Letter of Credit” is defined in Section
2.1.2. 
  
 “LIBOR” means, for any
Interest Rate Determination Date with respect to an Interest Period for any Advance to be made, continued as or converted into a LIBOR Advance, the rate of interest per annum determined by Bank to be the per annum rate of interest at which deposits
in United States Dollars are offered to Bank in the London interbank market in which Bank customarily participates at 11:00 a.m. (local time in such interbank market) two (2) Business Days prior to the first day of such Interest Period for a period
approximately equal to such Interest Period and in an amount approximately equal to the amount of such Advance. 
  
 “LIBOR Advance” means an Advance that bears interest based on Adjusted LIBOR. 
  
 “Lien” is a mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance. 
  
 “Loan Documents” are, collectively, this Agreement, the Control Agreements, any note, or notes or guaranties executed by Borrower, and any other present or future agreement between Borrower and/or for the benefit of
Bank in connection with this Agreement, all as amended, extended or restated. 
  
 “Material Adverse Change” is any of the following: (a) a material adverse change in the business, operations, or condition (financial or otherwise) of the Borrower, or (b) a material impairment
of the prospect of repayment of any portion of the Obligations; or (c) a material impairment of the value or priority of Bank’s security interests in the Collateral. 
  

 26. 

 “Notice of Borrowing” means a notice given by Borrower to Bank in accordance with
Section 3.2(a), substantially in the form of Exhibit B, with appropriate insertions. 
  
 “Notice of Conversion/Continuation” means a notice given by Borrower to Bank in accordance with Section 3.4, substantially
in the form of Exhibit C, with appropriate insertions. 
  
 “Obligations” are all debts, principal, interest, Bank Expenses and other amounts Borrower owes to Bank now or hereafter arising, including Cash Management Services, Letters of Credit, and the FX Reserve, if any, and
including interest accruing after Insolvency Proceedings begin and all debts, liabilities, or obligations of Borrower assigned to Bank. 
  
 “Operating Documents” shall mean the Borrower’s certificate of incorporation, as currently filed with the State of Delaware,
and its bylaws in current form, each with all current modifications and amendments thereto. 
  
 “Permitted Indebtedness” is: 
  
 (a) Borrower’s indebtedness to Bank under this Agreement or any other Loan Document; 
  
 (b) Indebtedness existing on the Closing Date and shown on the Disclosure Schedule; 
  
 (c) Subordinated Debt; 
  
 (d) Indebtedness to trade creditors incurred in the ordinary course of business; 
  
 (e) Indebtedness secured by Permitted Liens; and 
  
 (f) Any other Indebtedness not to exceed $5,000,000 in the aggregate outstanding at any time. 
  
 “Permitted Liens” are: 
  
 (a) Liens existing on the Closing Date and shown on the Disclosure
Schedule or arising under this Agreement or other Loan Documents; 
  
 (b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any
of Bank’s security interests; 
  
 (c) Purchase money
Liens (i) on Equipment acquired or held by Borrower or its Subsidiaries incurred for financing the acquisition of the Equipment, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds
of the equipment; 
  

 27. 

 (d) Licenses or sublicenses granted in the ordinary course of Borrower’s business and any
interest or title of a licensor or under any license or sublicense, if the licenses and sublicenses permit granting Bank a security interest; 
  
 (e) Leases or subleases granted in the ordinary course of Borrower’s business, including in connection with Borrower’s leased premises
or leased property; 
  
 (f) Liens incurred in the
extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the
indebtedness may not increase; 
  
 (g) Liens securing (i)
the non-delinquent performance of bids, trade contracts (other than for borrowed money) or statutory obligations, (ii) Contingent Obligations in respect of surety and appeal bonds, and (iii) other non-delinquent obligations of a like nature, in each
case incurred in the ordinary course of business; provided all such Liens in the aggregate could not (even if enforced), with reasonable likelihood, cause or result in a Material Adverse Change; and 
  
 (h) Liens on cash collateral securing reimbursement obligations to
issuing banks under standby letters of credit, foreign exchange contracts, or other transactions in the ordinary course of business. 
  
 “Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company association,
trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency. 
  
 “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not
Bank’s lowest rate. 
  
 “Prime Rate
Advance” means an Advance that bears interest based on the Prime Rate. 
  
 “Property” means any interest in any kind of property or asset, whether real, personal or mixed, whether tangible or intangible. 
  
 “Regulatory Change” means, with respect to Bank, any change on or after the date of this Agreement
in United States federal, state, or foreign laws or regulations, including Regulation D, or the adoption or making on or after such date of any interpretations, directives, or requests applying to a class of lenders including Bank, of or under any
United States federal or state, or any foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof. 
  
 “Repayment Period” as to the Term Advances, is 48
months. 
  
 “Requirement of Law” means, as
to any Person, any law (statutory or common), treaty, rule, regulation, guideline or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its Property or to which the Person
or any of its Property is subject. 
  

 28. 

 “Reserve Requirement” means, for any Interest Period, the average maximum rate at
which reserves (including any marginal, supplemental, or emergency reserves) are required to be maintained during such Interest Period under Regulation D against “Eurocurrency liabilities” (as such term is used in Regulation D) by member
banks of the Federal Reserve System. Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by Bank by reason of any Regulatory Change against (a) any category of liabilities
which includes deposits by reference to which Adjusted LIBOR is to be determined as provided in the definition of LIBOR or (b) any category of extensions of credit or other assets which include Advances. 
  
 “Responsible Officer” is each of the Chief Executive
Officer, the President, the Chief Financial Officer, the Controller, and the Treasurer of Borrower. 
  
 “Revolving Maturity Date” is January 20, 2006. 
  
 “Securities Account” is an account to which a financial asset is or may be credited in accordance
with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset. 
  
 “Subordinated Debt” is debt incurred by Borrower
subordinated to Borrower’s indebtedness owed to Bank and which is reflected in a written agreement in a manner and form acceptable to Bank and approved by Bank in writing. 
  
 “Subsidiary” is for any Person, or any other business entity of which more than 50% of the voting
stock or other equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person. 
  
 “Tangible Net Worth” is, on any date, the Consolidated Total Assets of Borrower and its Subsidiaries minus (a) any amounts
attributable to reserves not already deducted from assets; (b) restricted cash; and (c) Consolidated Total Liabilities and plus non-cash related restructuring charges with respect to vacated building lease obligations occurring after December
1, 2003. 
  
 “Term Advance” or
“Term Advances” is defined in Section 2.1.5(a). 
  
 “Term Advance Payment Date” is defined in Section 2.1.5(b). 
  
 “Term Loan Amount” is the lesser of (a) $25,000,000 and (b) $35,000,000 minus the aggregate outstanding principal amount of
the Credit Extensions (excluding Term Advances and FX Forward Contracts) and the FX Reserve. 
  
 “Term Loan Maturity Date” is with respect to each Term Advance, the last day of the Repayment Period for such Term Advance, or if earlier, the date of acceleration of such Term Advance by Bank
following an Event of Default. 
  

 29. 

 “Treasury Rate” is the Treasury Yield Percentage. 
  
 “Treasury Yield Percentage” is the average weekly
yield (of the week ending figures) in the most recent Federal Reserve Statistical Release on actively traded U.S. Treasury obligations of similar maturity to the principal being repaid or if a Statistical Release is not published, the arithmetic
average (to the nearest .01%) of the per annum yields to maturity for each Business Day during the previous week before the determination is made of all actively traded marketable U.S. Treasury fixed interest rate securities with a constant maturity
or, or not more than 30 days longer or shorter than the average life of the principal and interest payments that are being prepaid (excluding securities that can be surrendered at face value to pay Federal estate tax, or which provide for tax
benefits to the holder.) 
  
 [Signature page follows.] 

 

 30. 

 IN WITNESS WHEREOF, the parties have
duly authorized and caused this Agreement to be executed as of the date first written above. 
  
 BORROWER: 
  

	STRATEX NETWORKS, INC.	 	 	 	 
				
	 By:
	 	 /s/  Carl A. Thomsen

	 	 By:
	 	 /s/  Carol A. Goudey

				
	 Title:
	 	 S.V.P. and C.F.O.

	 	 Title:
	 	 Treasurer

  

	BANK:
	
	SILICON VALLEY BANK
		
	 By:
	 	 /s/  Tom Smith

		
	 Title:
	 	 S.V.P. and Senior Relationship Manager

  
 [Signature page to
Amended and Restated Loan and Security Agreement] 

 Schedule A 
  

Disclosure Schedule 
  
 The exact and correct corporate name of Borrower is:     Stratex Networks, Inc. 
  

	 Borrower’s state of formation:
	 	California – January 4, 1984
	 Reincorporated:
	 	Delaware – February 13, 1987

  
 Borrower has operated under only the
following other names (if none, so state): 
  
 Dyna Lynx
Corporation, Digital Microwave Corporation, DMC Stratex Networks, Inc. 
  
 All
addresses at which the Borrower does business in the United States with total assets in excess of $100,000 are as follows (attach additional sheets if necessary and include all warehouse addresses): 
  
 1. 120 Rose Orchard Way, San Jose, CA 95134 (principal offices) 

2. 170 Rose Orchard Way, San Jose, CA 95134 (vacated – to be subleased) 
 3. 482 South Abbott Avenue, Milpitas, CA 95035 (stockroom) 
 4. 472 South Abbott Avenue, Milpitas, CA 95035 (warehouse) 
  
 Borrower has deposit accounts and/or investment accounts located only at the following institutions in the United States (include account numbers): 
  

	 Union Bank of California:
	 	1. Concentration/SWEEP Account No. 64501-54545
	 	 	2. LC Collateral Account No. 64501-54529 (Restricted)
	 	 	3. FX Collateral Account No. 64501-54537 (Restricted)
	 	 	4. Controlled Disbursement Account No. 90800-08462 (zero balance account “ZBA”)
	 	 	5. Payroll Account No. 64501-54596 (ZBA)
	 	 	6. Medical Payments Account No. 64501-54553 (ZBA)
	 	 	7. Disability Payments Account No. 64501-54561
		
	 Bank of America:
	 	1. Concentration/SWEEP Account No. 12334-25035
		
	 Silicon Valley Bank:
	 	1. Business Deposit Account No. 3300389009

  
 Liens existing on the Closing Date:

  
 1. Security interest on restricted cash accounts indicated
above 
 2. Liens on leasehold improvements under facility leases 

	 	3.	Debenture dated June 15, 1990, as amended, in favor of National Bank of New Zealand for NZ$15,000,000 covering all of the assets of Stratex Networks (NZ) Limited, a wholly owned
subsidiary of Stratex Networks, Inc., to support obligations of the subsidiary to the bank 

  
 Investments (including Securities Accounts) existing on the Closing Date: 
  
 1. Lehman Brothers, Inc.: Investment Account No. 833-79289-18-265 
  
 2. Bear Stearns: Investment Account No. 220-12022 
  

 1 

 3. Bear Stearns: Investment Account No. 220-12106 (subject to Account Control Agreement
FBO Silicon Valley Bank dated September 2, 2003) 
  
 4. Silicon Valley Bank: Investment Account No. 887-00003 (subject to Account Control Agreement FBO Silicon Valley Bank dated June 3, 2003) 
  
 5. Granger Telecom UK Ltd.: 214,950 Ordinary Shares (zero book value) 
  
 6. Interwave Communications International Ltd.: 17,076 Common Shares (zero book value) 
  
 7. fSona Corporation: 227,272 Shares Series C Pref. Stock
(zero book value) 
  
 8. Aperto Networks, Inc.:
638,297 Shares Series B Pref. Stock (zero book value) 
  
 9. Ensemble Communications, Inc.: 772,210 Shares Special Common Series C and 81,833 Shares Special Common Series D (zero book value) 
  
 Indebtedness (including Subordinated Debt): None 
  
 Borrower is not currently subject to litigation that would have a material adverse effect on the Borrower’s financial condition, except the following (attach
additional comments, if needed): 
  
 None material 
  
 Federal Tax ID Number: 77-0016028 
  
 Organizational Numbers: 
  
 1. Delaware ID No. 21177-84 
 2. California ID No. C-1584093 
  

 2 

 EXHIBIT A 
  
 “Collateral” means of all of Borrower’s right, title and interest in and to the following whether owned now
or hereafter acquired or arising, and wherever located: all Accounts; all Inventory; all Equipment; all Deposit Accounts; all General Intangibles; all Investment Property; all Other Property; and any and all claims, rights and interests in any of
the foregoing, and all guaranties and security for any of the foregoing, and all substitutions and replacements for, additions, accessions, attachments, accessories, and improvements to, and proceeds (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties) of, all of the foregoing, and all Borrower’s Books relating to any of the foregoing. 
  
 Notwithstanding the foregoing, “Collateral” shall not be deemed to include: 
  

	 	A.	Borrower’s Intellectual Property; provided, however, the Collateral shall include the proceeds of all the Intellectual Property that are accounts, (i.e. accounts
receivable) of Borrower, or general intangibles consisting of rights to payment, 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 such accounts and general intangibles of Borrower that are proceeds of the Intellectual Property, 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 such accounts and general intangibles of Borrower that are proceeds of the Intellectual Property. 

  

	 	B.	The following Deposit Accounts of Borrower: 

  

	 	1.	Union Bank of California LC Collateral Account No. 64501-54529 (Restricted cash used to support standby letters of credit issued by Union Bank of California)

  

	 	2.	Union Bank of California FX Collateral Account No. 64501-54537 (Restricted cash used to support foreign currency contracts transacted with Union Bank of California)

  

	 	C.	Other assets of Borrower subject to existing Liens: 

  

	 	1.	All tangible and intangible assets of Stratex Networks (NZ) Limited, a wholly owned subsidiary of Borrower located in Wellington, New Zealand under a debenture dated June 15, 1990,
as amended, in favor of National Bank of New Zealand in the amount of NZ$15,000,000 supporting general obligations of the subsidiary to the bank. 

  

	 	2.	Leasehold improvements under various facility leases. 

 As used in this Agreement and in this Exhibit, the following terms have the following meanings: 
  
 “Accounts” means all present and future “accounts” as
defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all accounts receivable and other sums owing to Borrower. 
  
 “Deposit Accounts” means all present and future “deposit
accounts” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all general and special bank accounts, demand accounts, checking accounts, savings accounts
and certificates of deposit, whether maintained with Bank or other institutions. 
  
 “Equipment” means all present and future “equipment” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation
all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing. 
  
 “General Intangibles” means all present and future “general intangibles” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation all payment intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names,
claims, income tax refunds, security and other deposits, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind. 
  
 “Intellectual Property” means all present and future (a) copyrights, copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether published or unpublished, (b) trade secret rights, including all rights to unpatented inventions and know-how, and confidential information; (c) mask work or similar rights
available for the protection of semiconductor chips; (d) patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same; (e)
trademarks, servicemarks, trade styles, and trade names, whether or not any of the foregoing are registered, and all applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower
connected with and symbolized by any such trademarks; (f) computer software and computer software products; (g) designs and design rights; (h) technology; (i) all claims for damages by way of past, present and future infringement of any of the
rights included above; (j) all licenses or other rights to use any property or rights of a type described above. 
  
 “Inventory” means all present and future “inventory” as defined in the Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is out of
Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above. 
  

 2 

 “Investment Property” means all present and future investment property, securities, stocks,
bonds, debentures, debt securities, partnership interests, limited liability company interests, options, security entitlements, securities accounts, commodity contracts, commodity accounts, and all financial assets held in any securities account or
otherwise, wherever located, and all other securities of every kind, whether certificated or uncertificated, 
  
 “Other Property” means (a) the following as defined in the Code in effect on the date hereof with such additions to such term as may hereafter
be made, and all rights relating thereto: all present and future “commercial tort claims”, “documents”, “instruments”, “promissory notes”, “chattel paper”, “letters of credit”,
“letter-of-credit rights”, “fixtures”, “farm products” and “money”; and (b) all other goods and personal property of every kind, tangible and intangible, whether or not governed by the Code. 
  

 3 

 Exhibit B 
  

FORM OF NOTICE OF BORROWING 
  
 Stratex Networks, Inc. 
  
 Date:                      
  

	 TO:
	  	SILICON VALLEY BANK
	 	  	3003 Tasman Drive
	 	  	Santa Clara, CA 95054
	 	  	Attention: Corporate Services Department

  

	RE:	 	Amended and Restated Loan and Security Agreement dated as of January 21, 2004 (as amended, modified, supplemented or restated from time to time, the “Loan
Agreement”), by and between STRATEX NETWORKS, INC. as the borrower thereunder, and SILICON VALLEY BANK, as the lender
(the “Bank”).

  
 Ladies and Gentlemen: 
  
 The undersigned refers to the
Loan Agreement, the terms defined therein and used herein as so defined, and hereby gives you notice irrevocably, pursuant to Section 3.3(a) of the Loan Agreement, of the borrowing of [an Advance] [[and] a Term Advance]. 
  
 1. The Funding Date, which shall be a Business Day, of the requested
Borrowing is                     . 
  
 2. The aggregate amount of the requested Borrowing is
$                    . 
  
 3. The requested Advance and/or Term Advance shall consist of
$                     of Prime Rate Advances,
$                     of LIBOR Advances,
$                     of Fixed Rate Advances, and
$                     of Floating Rate Advances. 
  
 4. The duration of the Interest Period for the LIBOR Advances included in the requested Advance shall be
                     months. 
  
 The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Advance before
and after giving effect thereto, and to the application of the proceeds therefrom, as applicable: 
  
 (a) all representations and warranties of Borrower contained in the Loan Agreement are true, accurate and complete in all material
respects as of the date hereof; provided, however, that those representations and warranties expressly referring to another date are true, accurate and complete in all material respects as of such date; and provided, further, that the
representations and warranties set forth in Section 5 of the Loan Agreement shall be deemed to be made with respect to the financial statements most recently delivered to the Bank pursuant to Section 6.2 of the Loan Agreement;

  
 (b) no Event of Default has occurred
and is continuing, or would result from such proposed Advance and/or Term Advance; [and] 

 [(c) the requested Advance will not cause the aggregate principal amount of the
outstanding Advances to exceed, as of the designated Funding Date, the Committed Revolving Line, minus the sum of (i) the FX Reserves, (ii) all amounts for services utilized under the Cash Management Services Sublimit, and (iii) the amount of
all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit); and] 
  
 [Insert the following as (c) if no Advances are requested or as (d) if Advances and Term Advances are requested.] 
  
 [the requested Term Advance will not cause the aggregate
principal amount of the outstanding Term Advances to exceed, as of the designated Funding Date, the Term Loan Amount.] 
  

	BORROWER	 	STRATEX NETWORKS, INC.
			
	 	 	 By:
	 	  

	 	 	 Name:
	 	  

	 	 	 Title:
	 	  

  
 For internal Bank use only

  

	 LIBOR Pricing Date

	 	 LIBOR

	 	 LIBOR Variance

	 	 Maturity Date

	 	 	 	 	        %	 	 

  
 [See attached for
additional wire instructions, if any] 
  

 2 

 LOAN PAYMENT/ADVANCE REQUEST FORM

 Deadline for same day processing is 3:00pm PST 
  
 Fax To:                         

  

	 Client Name:
                                        
                    
	  	Date:                     

  
 • LOAN
PAYMENT: 
  

	 From Account #
                                    
	 	To Account #
                                
	                             (Deposit Account #)
	 	                         (Loan Account #)

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

 

	 Authorized Signature:
                                    
	 	 Phone Number:
                                    

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

	 From Account #
                                
	  	 To Account #
                                    

	                             (Loan Account #)
	  	                         (Deposit Account #)

  
 Amount of Advance $
                                        

  
 All Borrower’s representation and warranties in the
Amended and Restated Loan and Security Agreement are true, correct and complete in all material respects to on the date of the telephone transfer request for and advance, but those representations and warranties expressly referring to another date
shall be true, correct and complete in all material respects as of the date: 
  

	 Authorized Signature:
                                    
	 	 Phone Number:
                                    

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

	 Beneficiary Name:
                                        
                    
	  	Amount of Wire:
$                                        
            
		
	 Beneficiary Bank:
                                        
                    
	  	Account Number:
                                        
              
		
	 City and State:
                                        
                        
	  	 
	
	 Beneficiary Bank Transit (ABA) #:
                                        
                        

	
	Beneficiary Bank Code (Swift, Sort, Chip, etc.):
                                        
        
	 	  	 (For International Wire Only)

		
	 Intermediary Bank:
                                        
            
	  	Transit (ABA) #:
                                        
            
	
	 For Further Credit to:
                                        
                                        
                                        
                                        
        

	
	 Special Instruction:
                                        
                                        
                                        
                                        
            

  

 3 

 By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed
in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us). 
  

	 Authorized Signature:
                                        
        
	  	 2nd Signature (If Required):
                                     
 

		
	 Print Name/Title:
                                        
                
	  	 Print Name/Title:
                                        
                

		
	 Telephone #
                                        
                        
	  	 Telephone #
                                        
                        

  
  

 4 

 EXHIBIT C 
  
 FORM OF NOTICE OF CONVERSION/CONTINUATION 
  
 Stratex Networks, Inc. 
  
 Date:                      
  

	 To:
	  	 SILICON VALLEY BANK

	 	  	 3003 Tasman Drive

	 	  	 Santa Clara, CA 95054

	 	  	 Attention:

		
	 RE:
	  	Amended and Restated Loan and Security Agreement dated as of January 21, 2004 (as amended, modified, supplemented or restated from time to time, the “Loan
Agreement”), by and between STRATEX NETWORKS, INC. as the borrower thereunder, and SILICON VALLEY BANK, as
the lender (the “Bank”).

  
 Ladies and Gentlemen: 
  
 The undersigned refers to the
Loan Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 3.4 of the Loan Agreement, of the [conversion] [continuation] of the Advances specified herein, that:

  
 1. The date of the [conversion] [continuation] is
                    , 200    . 
  
 2. The aggregate amount of the proposed Advances to be [converted] is
$             or [continued] is $            . 
  
 3. The Advances are to be [converted into] [continued as] [LIBOR] [Prime Rate] Advances. 
  
 4. The duration of the Interest Period for the LIBOR Advances
included in the [conversion] [continuation] shall be      months. 
  
 The undersigned, on behalf of Borrower, hereby certifies that the following statements are true on the date hereof, and will be true on the date of the
proposed [conversion] [continuation], before and after giving effect thereto and to the application of the proceeds therefrom: 
  
 (a) All representations and warranties of Borrower stated in the Loan Agreement are true, accurate and complete in all material
respects as of the date hereof; provided, however, that those representations and warranties expressly referring to another date are true, accurate and complete in all material respects as of such date; and provided, further, that the
representations and warranties set forth in Section 5 of the Loan Agreement shall be deemed to be made with respect to the financial statements most recently delivered to Bank pursuant to Section 6.2 of the Loan Agreement. 

 (b) No Default or Event of Default has occurred and is continuing, or would result
from such proposed [conversion] [continuation]. 
  

	 BORROWER
	 	STRATEX NETWORKS, INC.
			
	 	 	By:	 	  

			
	 	 	Name:	 	  

			
	 	 	Title:	 	  

  
 For internal Bank use only

  

	 LIBOR Pricing Date

	 	 LIBOR

	 	 LIBOR Variance

	 	 Maturity Date

	 	 	 	 	        %	 	 

  

 2 

 EXHIBIT D 
  
 COMPLIANCE CERTIFICATE 
  

	 TO:
	  	SILICON VALLEY BANK	  	Date:
	 	  	3003 Tasman Drive	  	 
	 	  	Santa Clara, CA 95054	  	 
			
	 FROM:
	  	STRATEX NETWORKS, INC.	  	 

  
 The undersigned
Responsible Officer of Stratex Networks, Inc. (“Borrower”) certifies that under the terms and conditions of the Amended and Restated Loan and Security Agreement dated January 21, 2004, between Borrower and Bank (the “Agreement”),
(i) Borrower is in complete compliance for the period ending                          with all required covenants except
as noted below and (ii) all representations and warranties in the Agreement are true and correct in all material respects on this date. In addition, the undersigned Responsible Officer certifies that Borrower (x) has complied with Section 6.4 of the
Agreement with respect to payment of taxes of Borrower and its Subsidiaries and (y) does not have any legal actions pending or threatened against Borrower or any of its Subsidiaries which Borrower has not previously notified in writing to Bank
pursuant to Section 6.2 of the Agreement. Attached are the required financial reports and calculation of financial covenants supporting the certification. The undersigned acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. 
  
 Please indicate compliance status by circling Yes/No under “Complies” or “Occurrences” columns. 
  

	 Reporting Covenant

	  	 Required

	    	 Complies

	 Form 10-Q + CC
	  	Quarterly within 5 days of filing with SEC	    	                        Yes
        No
	 Form 10-K + CC
	  	Annually within 5 days of filing with SEC	    	                        Yes
        No
			
	 	  	 	    	 Occurrences*

	 IP Infringements
	  	Prompt	    	                        Yes
        No
	 Material Litigation
	  	Prompt	    	                        Yes
        No

  

	 Financial Covenant

	  	 Required

	  	Actual

	  	Complies

	 Minimum Tangible Net Worth (Quarterly)
	  	$60,000,000 plus 25% of net income, as determined in accordance with GAAP, for such quarter and all preceding quarters since December 31, 2003 (exclusive of
losses)	  	$	                	  	Yes         No
				
	 Minimum Liquidity Ratio (Monthly)
	  	1.00:1.00	  	 	            :1.00	  	Yes         No

	*	If yes, attached is a summary of the Material Litigation or IP Infringements not previously disclosed by Borrower. 

	 Sincerely,
	 	BANK USE ONLY
		
	 	 	 Received
by:                                       
                                 

	 Stratex Networks, Inc.
	 	 AUTHORIZED SIGNER

			
	 By:
	 	  

	 	 Date:
                                        
                                    

			
	 Name:
	 	  

	 	 Verified:                                     
                                        
   

	 Title:
	 	  

	 	 AUTHORIZED SIGNER

			
	 	 	 	 	 Date:                                     
                                        
       

			
	 	 	 	 	 Compliance
Status:                                Yes       
 No

  
 [Signature page to
Compliance Certificate] 
  

 2Convertible Note Purchase Agreement dated 1/8/04

 EXHIBIT 10.1 
  
 AXESSTEL, INC. 
 CONVERTIBLE NOTE PURCHASE AGREEMENT 
  
 THIS
CONVERTIBLE NOTE PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of January 8, 2004 by and among Axesstel, Inc., a Nevada corporation (the “Company”), North America Venture Fund II,
L.P. (the “Investor”), and for purposes of Section 7.2 only, Mike HP Kwon (“Kwon”) and Satoru Yukie (“Yukie”). 
  
 1. AGREEMENT TO PURCHASE AND SELL STOCK. 
  
 1.1 Authorization. As of the Closing (as defined below) the Company will have authorized the sale and
issuance, pursuant to the terms and conditions of this Agreement, of a convertible promissory note of the Company in the form attached hereto as Exhibit A (the “Note”) in the principal amount of One Million Dollars
($1,000,000), convertible into shares of the Company’s Common Stock at the price of Two Dollars ($2.00) per share, as may be adjusted pursuant to Section 2.4 of the Note. The shares of Common Stock issuable upon conversion of the Note are
hereinafter referred to as the “Conversion Shares”. 
  
 1.2 Agreement to Purchase and Sell. Subject to the terms and conditions set forth herein, the Company agrees to sell to the Investor at the Closing, and the Investor agrees to purchase from the Company at the
Closing, the Note. 
  
 2. CLOSING. 
  
 2.1 The Closing. The purchase and sale of the Note
will take place at the offices of Gray Cary Ware & Freidenrich LLP, 4365 Executive Drive, Suite 1100, San Diego, CA 92121, at 10:00 AM local San Diego time on January 8, 2004 (the “Closing Date”), or at such other time and place as the
Company and the Investor mutually agree upon (which time and place are referred to in this Agreement as the “Closing”). At the Closing, the Company will deliver to the Investor the Note against delivery to the Company by the
Investor of $1,000,000, paid by (a) check payable to the Company’s order, (b) wire transfer of funds to the Company or (c) any combination of the foregoing. 
  
 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to the Investor
that, except as set forth in the Disclosure Schedule (the “Disclosure Schedule”) attached hereto (which Disclosure Schedule shall be deemed to be representations and warranties to the Investor by the Company under this
Section and to qualify each of the representations and warranties set forth herein), the statements in the following paragraphs of this Section 3 are all true and correct: 
  
 3.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada, and has all requisite corporate power and authority to own its properties and conduct its business as currently conducted. The Company is qualified to do business as a
foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a material adverse effect on the condition, financial or otherwise, or the earnings, business 

  

 1 

 
affairs or business prospects, condition or results of operations of the Company and its subsidiaries, considered as one enterprise, whether or not arising
in the ordinary course of business (the “Business”) (such effect referred to as a “Material Adverse Effect”). 
  

3.2 Capitalization. Immediately before the Closing the capitalization of the Company will consist of the following: 

 
 (a) Common Stock. A total of Fifty Million
(50,000,000) authorized shares of Common Stock, of which approximately Six Million Five Hundred Thirty Two Thousand (6,532,000) shares are issued and outstanding. There are no shareholder agreements, voting agreements or other similar agreements
with respect to the Common Stock to which the Company is a party, or to the knowledge of the Company, between or among any of the Company’s shareholders. 
  

(b) Options, Warrants, Reserved Shares. Except for: (i) Three Million Three Hundred Sixty Nine Thousand Seventy-Six (3,369,076)
shares of Common Stock issuable upon exercise of options outstanding as of October 31, 2003, (ii) One Million Five Hundred Fifty One Thousand One Hundred Seventy-One (1,551,171) additional shares of Common Stock reserved for issuance under the
Company’s Stock Option Plans, and (iii) warrants to purchase an aggregate of Four Million Four Hundred Forty Five Thousand Thirty-Eight (4,445,038) shares of Common Stock, there are not outstanding any options, warrants, rights or agreements
for the purchase or acquisition from the Company of any shares of its capital stock or any securities convertible into or ultimately exchangeable or exercisable for any shares of the Company’s capital stock. Except as set forth in the
Disclosure Schedule, the Company has not entered into any discussion with respect to entering into any arrangement to purchase or acquire from the Company any shares of its capital stock or securities convertible or exercisable into its capital
stock. 
  
 3.3 Subsidiaries. 

 
 (a) Except for the subsidiaries of the Company listed on
the Disclosure Schedule, the Company does not presently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, association, or other entity. 
  
 (b) Each subsidiary of the Company has been duly
incorporated and is an existing corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Filings (as
defined below), and each subsidiary of the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such
qualification; all of the issued and outstanding capital stock of each subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; and the capital stock of each subsidiary owned by the Company, directly
or through subsidiaries, is owned free from liens, encumbrances and defects. 
  
 3.4 Due Authorization; No Violation. All corporate action on the part of the Company and its officers, directors and shareholders necessary for the authorization, execution 

  

 2 

 
and delivery of, and the performance of all obligations of the Company under, this Agreement, and the authorization, issuance, reservation for issuance and
delivery of the Note and the Conversion Shares issuable upon conversion of the Note, has been taken or will be taken prior to the Closing, and this Agreement constitutes a valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally
and (b) the effect of rules of law governing the availability of equitable remedies. Neither the execution, delivery or performance by the Company of this Agreement nor the consummation by the Company of the transactions contemplated hereby will (a)
conflict with or result in a breach of any provision of the Articles of Incorporation or the Bylaws of the Company or any of its subsidiaries, (b) conflict with, result in a violation or breach of, or cause a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or provisions of any agreement, instrument or obligation to which the Company is a party, which default could reasonably be expected to have a Material Adverse Effect or
(c) violate any law, statute, rule or regulation or judgment, order, writ, injunction or decree of any governmental authority, in each case applicable to the Company or its properties or assets. 
  
 3.5 Valid Issuance. The Note, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration provided for herein and the Conversion Shares when issued upon conversion of the Note, will be duly executed and delivered and validly issued, fully paid and
nonassessable and are not subject to preemptive or other similar rights of any third party or shareholder of the Company. 
  
 3.6 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local governmental authority or any court on the part of the Company is required in connection with the valid execution and delivery of this Agreement, the offer, sale and issuance of the Note, or
the consummation of the transactions contemplated by this Agreement, except for qualifications or filings under the Securities Act of 1933, as amended (the “Act”) and the applicable rules and regulations (the
“Rules and Regulations”) of the Securities and Exchange Commission (the “Commission”) under the Act, and all other applicable securities laws as may be required in connection with the transactions
contemplated by Section 8 of this Agreement. All such qualifications, other than the Shelf Registration Statement, will be effective at the Closing, and all such filings will be made within the time prescribed by law. 
  
 3.7 Absence of Changes. After the respective dates as
of which information is given in the Company’s Proxy Statement for the annual meeting of shareholders held on September 30, 2003, the Company’s Annual Report on Form 10-KSB for the period ended December 31, 2002, and the Company’s
Quarterly Report on Form 10-QSB for the quarter ended September 30, 2003, respectively (such documents, together with the Disclosure Schedule, referred to collectively as the “Disclosure Documents”), there has not been (a)
any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of
business (a “Material Adverse Change”), (b) any transaction or event that is material to the Company, (c) any obligation, direct or contingent, that is material to the Company, incurred by the Company, (d) any change in the
outstanding 

  

 3 

 
indebtedness of the Company that is material to the Company, (e) any dividend declared, paid or made on the capital stock of the Company, (f) any loss or
damage (whether or not insured) to the property of the Company which has been sustained which could reasonably be expected to have a Material Adverse Effect, or (g) any material change in the accounting methods or practices followed by the Company.

  
 3.8 Litigation. There is no action,
suit, proceeding, claim, arbitration or investigation (“Action”) pending (or, to the best of the Company’s knowledge, currently threatened) against the Company or any of its subsidiaries or any of their respective
activities, properties or assets, which (a) might prevent the consummation of the transactions contemplated hereby or (b) if adversely resolved against the Company, could reasonably be expected to have a Material Adverse Effect. 
  
 3.9 Listing. The Company’s Common Stock is
listed on the OTC Bulletin Board System (the “OTCBB”). The Company has not received any notification that the Commission or the OTCBB is contemplating the termination of such registration or listing. Before the Shelf
Registration Statement (as defined in Section 8.2) is declared effective by the Commission, the Conversion Shares will, if required by the listing rules of the OTCBB, have been approved for quotation on the OTCBB, subject to notice of issuance.

  
 3.10 Exchange Act Filings. The Company
has filed in a timely manner all reports and other information required to be filed (“Filings”) with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
during the preceding twelve calendar months. On their respective dates of filing, the Filings complied as to form in all material respects with the requirements of the Exchange Act, and the published Rules and Regulations of the Commission
promulgated thereunder. On their respective dates of filing, the Filings did not include any untrue statement of a material fact required to be stated therein or necessary to make the statements therein, not misleading, and all financial statements
contained in the Filings fairly present the financial position of the Company and its consolidated subsidiaries on the dates of such statements and the results of operations, stockholders’ equity and cash flows of the Company and its
consolidated subsidiaries for the periods covered thereby in accordance with generally accepted accounting principles in the United States consistently applied throughout the periods involved and prior periods. 
  
 3.11 Disclosure. The representations and warranties
made by the Company in this Agreement (including the Disclosure Schedule) and the Filings when read together do not contain any untrue statement of a material fact and do not omit to state a material fact necessary to make the statements herein as a
whole not misleading. 
  
 3.12 Governmental
Permits, Etc. The Company and its subsidiaries possess all licenses, franchises, governmental approvals, permits or other governmental authorizations (collectively, “Authorizations”) necessary to conduct the business now
operated by them, except for those Authorizations the failure of which to possess would not, separately or in the aggregate, have a Material Adverse Effect. To the best of the Company’s knowledge, the Company and its subsidiaries are in
compliance with the terms of all Authorizations and all laws, ordinances, regulations and decrees applicable to their business, except for such non-compliance which does not, separately or in the aggregate, have a Material Adverse Effect.

  

 4 

 3.13 Insurance. The Company is covered by insurance with companies that are
reputable and in such amounts and covering such risks as it believes to be adequate for the conduct of its business and the value of its properties and which, it believes, is customary for companies engaged in similar businesses in similar
industries. The Company has no knowledge that any such carrier has grounds or intends to cancel or fail to renew such policies. 
  
 3.14 Intellectual Property. The Company and its subsidiaries own or possess the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) and other rights or interests in items of intellectual property as are necessary for the operation
of the business operated by the Company and its subsidiaries (the “Patent and Proprietary Rights”), except where the failure to own or possess such rights would not have a Material Adverse Effect; the Company has not received
notice of any asserted rights with respect to any of the Patent and Proprietary Rights which, if determined unfavorably with respect to the interests of the Company would have a Material Adverse Effect; and the Company has not received notice or is
otherwise aware of any infringement of or conflict with asserted rights of others with respect to any of the Patent or Proprietary Rights, which infringement or conflict (if the subject of any unfavorable decision, ruling or finding), individually
or in the aggregate, would result in a Material Adverse Effect. 
  
 3.15 Employees. The Company is not aware that any officer or key employee, or that any group of key employees, intends to terminate his or their employment with the Company, nor does the Company have any
present intention to terminate the employment of any officer, key employee or group of key employees. 
  
 3.16 Title to Assets. The Company and its subsidiaries have good and marketable title to all personal property owned by them that
is material to their respective businesses, in each case free and clear of all liens, except for liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries. Any real property and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and its subsidiaries are in material
compliance. 
  
 3.17 Solvency. Based on
the financial condition of the Company on a consolidated basis as of the Closing Date and assuming the Closing has occurred, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in
respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature; (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal
year as now conducted and as proposed to be conducted as disclosed in the Company’s Annual Report on Form 10-KSB for the period ending December 31, 2002 including its capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and capital availability thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. The Company does not intend to incur debts 

  

 5 

 
beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).

  
 3.18 Certain Registration Matters.
Assuming the accuracy of the Investor’s representations and warranties set forth in Section 4, no registration under the Act is required for the offer and sale of the Note by the Company to the Investor. 
  
 3.19 Investment Company. The Company is not, and is
not an affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. 
  
 3.20 No General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf (i) has,
within the six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as such terms are defined in Regulation S under the Act) the Note or any security of the same class or series as the Note or (ii) has
offered or will offer or sell the Note in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Act. The Company has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Note except for this Agreement. 
  
 4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE INVESTOR. The Investor hereby represents and warrants, severally and not jointly, to, and agrees with, the Company, that: 
  
 4.1 Authorization. All corporate action on the part
of the Investor and its officers, directors and shareholders necessary for the authorization, execution and delivery of, and the performance of all obligations of the Investor under, this Agreement has been taken or will be taken prior to the
Closing, and this Agreement constitutes a valid and legally binding obligation of the Investor, enforceable against the Investor in accordance with its terms, except as enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) the effect of rules of law governing the availability of equitable remedies. 
  
 4.2 Purchase for Own Account. The Note to be
purchased by the Investor hereunder will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the public resale or distribution thereof within the meaning of the Act, and such Investor
has no present intention of selling, granting any participation in, or otherwise distributing the same. The Investor also represents that it has not been formed for the specific purpose of acquiring the Note. 
  
 4.3 Disclosure of Information. The Investor has
received a copy of the Disclosure Documents and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the Note. The Investor further has had an
opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Note and to obtain additional information (to the extent the Company possessed such information or could acquire it without

  

 6 

 
unreasonable effort or expense) necessary to verify any information furnished to the Investor or to which the Investor had access. 
  
 4.4 Investment Experience. The Investor understands
that the purchase of the Note involves substantial risk. The Investor has experience as an investor in securities of companies in the development stage and has such knowledge and experience in financial or business matters that the Investor is
capable of evaluating the merits and risks of this investment in the Note and protecting its own interests in connection with this investment. 
  
 4.5 Accredited Investor Status. The Investor is an “accredited investor” within the meaning of Regulation D promulgated
under the Act. 
  
 4.6 Restricted
Securities. The Investor understands that the Note and the Conversion Shares are characterized as “restricted securities” under the Act inasmuch as they are being acquired from the Company in a transaction not involving a public
offering and that under the Act and the Rules and Regulations such securities may be resold without registration under the Act only in certain limited circumstances. The Investor represents that it is familiar with Rule 144 of the Act and
understands the resale limitations imposed thereby and by the Act. The Investor understands that the Company is under no obligation to register the Conversion Shares except as provided in Section 8 below. 
  
 4.7 Further Limitations on Disposition. Without in
any way limiting the representations set forth above, the Investor further agrees not to make any disposition of all or any portion of the Conversion Shares unless and until: 
  
 (a) there is then in effect a registration statement under the Act covering such proposed disposition and
such disposition is made in accordance with such registration statement and the provisions of Section 8 of this Agreement; or 
  
 (b) such disposition will not require registration of such securities under the Act and (i) the Investor shall have notified the Company
of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the proposed disposition, and (ii) the Investor shall have furnished the Company, at the expense of the Company, with an opinion of
counsel, reasonably satisfactory to the Company. 
  
 Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be required: (i) for any routine transfer of any Conversion Shares in compliance with Rule 144 or Rule 144A, or (ii)
for any transfer of Conversion Shares by the Investor to (A) a partner of such partnership or shareholder of such corporation, or (B) the estate of any such partner or shareholder, provided, that in each of the foregoing cases the transferee agrees
in writing to be subject to the terms of this Section 4 (other than Section 4.5) to the same extent as if the transferee were an original Investor hereunder. 
  

4.8 Legends. It is understood that the certificates evidencing the Conversion Shares will bear the legends set forth below:

  
 (a) THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 

  

 7 

 
“ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS. 
  
 (b) THE
SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF, AND MAY HAVE CERTAIN REGISTRATION RIGHTS PURSUANT TO, THE PROVISIONS OF A PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE HOLDER, WHICH MAY RESTRICT THE TRANSFER OF SUCH SHARES IN
CERTAIN CIRCUMSTANCES. A COPY OF SUCH AGREEMENT MAY BE OBTAINED, WITHOUT CHARGE, AT THE COMPANY’S PRINCIPAL OFFICE. 
  
 (c) Any legend that counsel to the Company reasonably deems appropriate under the laws of the State of Nevada. 
  
 The legends set forth in (a) and (b) above shall, upon the request of the
Investor, be promptly removed by the Company from any certificate evidencing Conversion Shares upon delivery to the Company of an opinion of counsel to the Company, that the legended security can be freely transferred in a public sale without a
registration statement being in effect under the Act and in compliance with exemption requirements under applicable state securities laws and that such transfer will not jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Conversion Shares; provided, however, that no such opinion shall be required in connection with routine sales of Conversion Shares pursuant to the Shelf Registration Statement (as defined below). In connection with any such
opinion, the Investor shall provide such certifications as may be reasonably be deemed necessary for the delivery of such opinion. 
  
 4.9 No Shorting. Neither the Investor nor any of its affiliates, agents or investment partners has, or caused any person to,
directly or indirectly, engage in “short sales” of the Company’s Common Stock or any other hedging strategies with respect to the Company’s Common Stock. 
  
 5. CONDITIONS TO INVESTOR’S OBLIGATIONS AT CLOSING. The obligations of the Investor under Section 2 of
this Agreement to purchase the Note at the Closing are subject to the fulfillment or waiver, on or before the Closing, of each of the following conditions, and the Company shall use all reasonable efforts to cause such conditions to be satisfied on
or before the Closing: 
  
 5.1 Representations
and Warranties True. Each of the representations and warranties of the Company contained in Section 3 shall be true and correct on and as of the 

  

 8 

 
Closing with the same effect as though such representations and warranties had been made on and as of the Closing. 
  
 5.2 Performance. The Company shall have performed and
complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing and shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein. 
  
 5.3 Compliance Certificate. The Company shall have delivered to the Investor at the Closing a certificate signed on its behalf by its President, Chief Executive Officer, Chief Financial Officer or Secretary certifying that the
conditions specified in Sections 5.1 and 5.2 and 5.7 have been fulfilled. 
  
 5.4 Registration; Securities Exemptions. The offer and sale of the Note to the Investor pursuant to this Agreement shall be exempt from the registration requirements under the Act, as amended, and the rules
thereunder and the registration and/or qualification requirements of all other applicable state securities laws (the “Law”). 
  
 5.5 Nikko and Wistron Investment. Nikko Antfactory K.K. (“Nikko”) and Wistron NeWeb, or their respective
affiliates, shall have purchased a minimum of Two Million Dollars ($2,000,000) of shares of the Company’s Common Stock. 
  
 5.6 Legal Opinion. The Investor shall have received from counsel for the Company the legal opinions, dated as of the Closing,
attached hereto as Exhibit B. 
  
 5.7
No Material Change. There shall have been no Material Adverse Change from the date of this Agreement. 
  
 6. CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING. The obligations of the Company under this Agreement to sell the Note to the
Investor at the Closing are subject to the fulfillment or waiver on or before the Closing of each of the following conditions by the Investor, and the Investor shall use all reasonable efforts to cause such conditions to be satisfied on or before
the Closing: 
  
 6.1 Representations and
Warranties. The representations and warranties of the Investor contained in Section 4 shall be true and correct on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing.

  
 6.2 Payment of Purchase Price. The
Investor shall have delivered to the Company the purchase price for the Note in accordance with the provisions of Section 2. 
  
 7. COVENANTS OF THE PARTIES. 
  
 7.1 Reduction in Number of Outstanding Convertible Securities. Within the first 90 days after the Closing, the Company will use
commercially reasonable efforts to reduce the number of outstanding warrants and options to purchase shares of Common Stock of the Company and the total number of shares subject to outstanding warrants to purchase Common Stock of the Company
together equal 20% of the Company on a fully diluted basis. The 

  

 9 

 
Company shall not be required to take any action in connection with this agreement that would have adverse tax consequences on the Company or any optionee or
warrant holder. 
  
 7.2 Lock-Ups. Yukie
represents and warrants that he currently owns a warrant to purchase One Million Two Hundred Ten Thousand Three Hundred Sixty-Seven (1,210,367) shares of Common Stock of the Company (the “Yukie Warrant”). Yukie agrees that
for a period of one year from the Closing he will not sell or otherwise transfer the Yukie Warrant or the shares issuable upon exercise or conversion of the Yukie Warrant. Kwon represents and warrants that he currently owns a warrant to purchase One
Million One Hundred Twenty-Two Thousand Six Hundred Seventy-One (1,122,671) shares of Common Stock of the Company (the “Kwon Warrant”). Kwon agrees that for a period of one year from the Closing he will not sell or otherwise
transfer the Kwon Warrant or the shares issuable upon exercise or conversion of the Kwon Warrant, without the written consent of the Investor holding a majority of the Shares purchased hereunder. 
  
 7.3 Confidentiality. The Company and the Investor
agree that the terms of that certain Confidentiality Agreement between the parties, dated October 2003, shall remain in full force and effect for a period of one (1) year from the date of the Closing. 
  
 7.4 Board Observer. The Company and the Investor
agree that for so long as Nikko, the Investor and their respective affiliates together own Common Stock or securities convertible into Common Stock in an amount equal to an aggregate of at least 5% of the Company’s capital stock, determined on
a fully diluted basis, the Investor and Nikko shall together have the right to appoint one observer to attend all meetings of the Board of Directors of the Company (the “Board Observer”). The Board Observer shall be entitled
to the same notice, information and materials provided to members of the Board of Directors in connection with such meetings. 
  
 7.5 Periodic Reporting. The Company will use its best efforts to make all future Filings in a timely manner and in accordance with
the requirements of the Exchange Act and the Rules and Regulations of the Commission. 
  
 8. REGISTRATION RIGHTS. 
  
 8.1 Definitions. For purposes of this Agreement: 
  
 (a) Form S-2. The term “Form S-2” means such form under the Act as is in effect on the date hereof or any
successor registration form under the Act subsequently adopted by the Commission which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission. 
  
 (b) Holder. The term
“Holders” shall mean holders of Registrable Securities that have registration rights pursuant to this Agreement. 
  
 (c) Registration. The terms “register,” “registered,” and
“registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement. 
  

 10 

 (d) Registrable Securities. The term “Registrable
Securities” means: (1) all of the Conversion Shares, and (2) any shares of Common Stock of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, any of the Conversion Shares;
provided, however, that the term “Registrable Securities” shall exclude in all events (and such securities shall not constitute “Registrable Securities”) (i) any Registrable Securities sold or transferred by a person in a
transaction in which the registration rights granted under this Agreement are not assigned in accordance with the provisions of this Agreement, (ii) any Registrable Securities sold in a public offering pursuant to a registration statement filed with
the Commission or sold pursuant to Rule 144 promulgated under the Act (“Rule 144”) or (iii) as to any Holder, the Registrable Securities held by such Holder if all of such Registrable Securities can be publicly sold without
volume restriction within a three-month period pursuant to Rule 144. 
  
 (e) Prospectus: The term “Prospectus” shall mean the prospectus included in any Shelf Registration Statement (including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Act), as amended or supplemented by any prospectus supplement (including, without limitation, any prospectus
supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Shelf Registration Statement), and all other amendments and supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in such Prospectus. 
  
 (f) Shelf Registration Statement. See Section 8.2(a). 
  
 8.2 Form S-2 Shelf Registration. 
  
 (a) Registration. The Company shall prepare and file with the Commission within forty-five (45) days
following the Closing and use all reasonable efforts to have declared effective as soon as practicable thereafter, a registration statement on Form S-2 (or, if the Company is not then eligible to use Form S-2, then another appropriate form)
providing for the resale by the Holders of all of the Registrable Securities (the “Shelf Registration Statement”). The Shelf Registration Statement may include securities other than those held by Holders. The Company shall
use its best efforts to keep the Shelf Registration Statement continuously effective (subject to Section 8.2(b)), pursuant to the Act and the Rules and Regulations promulgated thereunder, until (i) the date when such Registrable Securities cease to
meet the definition of Registrable Securities pursuant to Section 8.1, or (ii) the Company’s obligations hereunder terminate (the “Permitted Window”). In the event that the Shelf Registration Statement shall cease to be
effective, the Company shall promptly prepare and file a new registration statement covering the Registrable Securities and shall use its best efforts to have such registration statement declared effective as soon as possible. Any such registration
statement shall be considered a “Shelf Registration Statement” hereunder. The registration rights granted hereunder are not subject or subordinate to any prior registration rights granted to any other securityholder of the Company.

  
 (b) Blackout Notice. In the event (i)
that the Company concludes that it is necessary for the Company to supplement the Prospectus or make an appropriate filing 

  

 11 

 
under the Exchange Act so as to cause the Prospectus to become current, or (ii) that, in the reasonable and good faith judgment of the President, Chief
Executive Officer or the Company’s Board of Directors, it is advisable to suspend the use of the Prospectus for a discrete period of time due to material undisclosed pending corporate developments or pending public filings with the Commission
(which need not be described in detail), the Company shall deliver a written notice (the “Blackout Notice”) to each Holder to the effect of the foregoing and, upon delivery of the Blackout Notice, each Holder shall not sell
any Conversion Shares or any other securities of the Company that are held by such Holder, shall not otherwise engage in any other disposition with respect to the Company’s securities, and shall not disclose to any third party that such a
notice has been given or the contents of the notice. The Permitted Window shall resume upon the Holders’ receipt of copies of the supplemented or amended Prospectus, or at such time as each Holder is advised in writing by the Company that the
Prospectus may be used, and at such time as each Holder has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus and which are required to be delivered as part of the
Prospectus. In any event, such restrictions shall terminate no later than 45 days after the date of delivery of the Blackout Notice. If the Company has delivered a Blackout Notice within 90 days of the date that it delivers another Blackout Notice
pursuant this section, then the 45-day time period set forth in the preceding sentence shall be shortened so that the restrictions imposed by the Blackout Notice shall expire no later than 10 days after delivery of such Blackout Notice. 

 
 (c) Expenses. The registration fees and expenses
incurred by the Company in connection with the Shelf Registration Statement and actions taken by the Company in connection with each Permitted Window shall be borne by the Company. Each Holder shall be responsible for any fees and expenses of its
counsel or other advisers. 
  
 8.3 Obligations
of the Company. Whenever required to effect the registration of any Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably possible: 
  
 (a) Furnish to each Holder such number of copies of a Prospectus, including a preliminary Prospectus, in
conformity with the requirements of the Act, and such other documents as it may reasonably request in order to facilitate the disposition of the Registrable Securities owned by it that are included in such registration. 
  
 (b) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 
  
 (c) Notify each Holder promptly (i) of any request by the Commission or any other federal or state governmental authority during the
period of effectiveness of a registration statement for amendments or supplements to such registration statement or related prospectus or for additional information, (ii) of the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a registration statement or the initiation of any proceedings for that purpose and (iii) of the receipt 

  

 12 

 
by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities
for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. 
  
 (d) Make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the Shelf Registration Statement at
the earliest possible time. 
  
 8.4 Furnish
Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 8.2 that each Holder shall furnish to the Company such information regarding it, the Registrable Securities held by it, and
the intended method of disposition of such securities as shall be required to timely effect the registration of its Registrable Securities. 
  
 8.5 Indemnification. In the event any Registrable Securities are included in a registration statement under this Agreement:

  
 (a) By the Company. To the extent
permitted by law, the Company will indemnify and hold harmless each Holder, the officers and directors of such Holder, each person, if any, who controls a Holder and any underwriter (as defined in the Act) acting on behalf of a Holder (such persons
and entities referred to as “Holder Indemnified Parties”), against any losses, expenses, damages or liabilities to which they may become subject under the Act, the Exchange Act or other federal or state law (a
“Loss”), insofar as such Losses (or actions in respect thereof) arise out of any claim, action or proceeding brought by a third party arising out of or based upon any of the following statements, omissions or violations
(collectively a “Violation”): 
  
 (i) any untrue statement or alleged untrue statement of a material fact contained in a registration statement filed pursuant to this Section 8 or the omission or alleged omission to state in a registration statement filed pursuant to this
Section 8 a material fact required to be stated therein, or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in any preliminary prospectus or the
Prospectus filed pursuant to this Section 8 (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; or 
  
 (ii) any
violation or alleged violation by the Company of the Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Act, the Exchange Act or any federal or state securities law, in each case in connection
with the offering covered by such registration statement; 
  
 and the Company will
reimburse each Holder Indemnified Party for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such Violation; provided, however, that the indemnity agreement contained in this
subsection shall not apply to amounts paid in settlement of any such Loss, if such settlement is effected without the 

  

 13 

 
consent of the Company, nor shall the Company be liable in any such case for any such Loss to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration statement by the Holder Indemnified Party; and provided further, that the Company will not be liable for the
reasonable legal fees and expenses of more than one counsel to the Holder Indemnified Parties. 
  
 (b) By the Holders. To the extent permitted by law, each Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, and each person, if any, who controls the Company within the meaning of the Act (such persons and entities referred to as “Company Indemnified
Parties”) against any Losses to which such Company Indemnified Parties may become subject under the Act, the Exchange Act or other federal or state law, insofar as such Losses (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by the Holders expressly for use in connection with such registration statement;
and the Holders will reimburse any legal or other expenses reasonably incurred by such Company Indemnified Parties in connection with investigating or defending any such Violation; provided, however, that the indemnity agreement contained in this
subsection shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of the Holders; provided further, that the Holders shall not be liable for the reasonable legal fees and expenses of
more than one counsel to the Company Indemnified Parties; and provided further, that the total amounts payable in indemnity by the Holders under this subsection in respect of any Violation shall not exceed the net proceeds received by the
Holders in the registered offering out of which such Violation arises. 
  
 (c) Notice. Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim for
indemnification in respect thereof is to be made against any indemnifying party under this Section, deliver to the indemnifying party a written notice of the commencement of such an action and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel selected by the indemnifying party and reasonably acceptable to a majority
in interest of the indemnified parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if the indemnified party has been
advised in writing by counsel that representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual conflict of interests between such indemnified party and any other party represented
by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of liability to the indemnified party under
this Section to the extent such delay caused material prejudice to the indemnified party, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section. 
  

 14 

 (d) Defect Eliminated in Final Prospectus. The foregoing indemnity agreements of
the Company and the Holders are subject to the condition that, insofar as they relate to any Violation made in a preliminary prospectus but eliminated or remedied in the amended prospectus on file with the Commission at the time the registration
statement in question becomes effective or in the amended prospectus filed with the Commission pursuant to Rule 424(b) of the Commission (the “Final Prospectus”), such indemnity agreements shall not inure to the benefit of
any person if a copy of the Final Prospectus was furnished in a timely manner to the indemnified party and was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Act.

  
 (e) Survival. The obligations of the
Company and the Holder under this Section shall survive the completion of any offering of Registrable Securities in a registration statement, and otherwise. 
  
 8.6 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may
at any time permit the sale of the Registrable Securities to the public without registration, for so long as each Holder owns any Registrable Securities, the Company agrees to: 
  
 (a) Make and keep adequate, current public information available, as those terms are understood and defined
in Rule 144 under the Act, at all times; 
  
 (b)
File with the Commission in a timely manner all reports and other documents required of the Company under the Exchange Act; and 
  
 (c) So long as such Holder owns any Registrable Securities, to furnish to such Holder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as such Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing the Holder to sell any such securities without registration. 
  
 8.7 Termination of the Company’s Obligations. The Company shall have no obligation to register, or maintain, a registration
statement governing Registrable Securities, (i) if all Registrable Securities have been registered and sold pursuant to registrations effected pursuant to this Agreement, or (ii) with respect to any particular Holder, at such time as all Registrable
Securities held by such Holder may be sold without any volume restrictions within a three month period under Rule 144, as it may be amended from time to time, including but not limited to amendments that reduce that period of time that securities
must be held before such securities may be sold pursuant to such rule. 
  
 8.8 Piggyback Registrations. 
  
 (a) The Company shall use its best efforts to notify all Holders of Registrable Securities in writing at least twenty (20) days before filing any registration statement under the Act for purposes of effecting an
underwritten public offering by the Company of securities of the Company (excluding registration statements relating to any employee benefit plan or a corporate merger, acquisition or reorganization, or any Form S-3 or similar shelf 

  

 15 

 
registration statements relating to the non-underwritten offer and sale of securities for the account of persons or entities other than the Company) and will
afford each such Holder an opportunity to include in such registration statement all or any part of the Registrable Securities then held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the
Registrable Securities held by such Holder shall, within ten (10) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable
Securities such Holder wishes to include in such registration statement. If a Holder decides not to include all of its Registrable Securities in any such registration statement filed by the Company, such Holder shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein. The
Holders’ rights to include any Registrable Securities in any offering under this Section are subject in all events to the ability of the managing underwriter for such offering to exclude some or all of the Registrable Securities requested to be
registered on the basis of a good faith determination that inclusion of such securities might adversely affect the success of the offering or otherwise adversely affect the Company. Any such exclusion shall be pro rata among all Holders who have
requested to sell Registrable Securities in such registration. 
  
 (b) Underwriting. If a registration statement under which the Company gives notice under this Section is for an underwritten offering, then the Company shall so advise the Holders of Registrable Securities. In
such event, the right of any such Holder’s Registrable Securities to be included in a registration pursuant to this Section shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the managing
underwriter or underwriters selected for such underwriting and shall furnish such information and documents as the Company or the managing underwriter or underwriters may reasonably request. Notwithstanding any other provision of this Agreement, if
the managing underwriter determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude Registrable Securities from the registration and the
underwriting, pro rata among all Holders who have requested to sell Registrable Securities in such registration. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the
Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the
registration. 
  
 (c) Expenses. The
Holders shall be responsible for their pro rata share of registration fees and underwriters’ and brokers’ discounts and commissions relating to any Registrable Securities included in such registration. Other registration expenses (such as
legal and accounting fees of counsel to the Company, printing fees, road show expenses, and the like) shall be shall be borne by the Company. 
  
 (d) Number of Piggyback Registrations. The piggyback registration rights granted to the Holders under this Section shall apply to
the first three registrations filed by 

  

 16 

 
the Company after the Closing (excluding any registrations filed under Section 8.2 of this Agreement. 
  
 9. ASSIGNMENT. Notwithstanding anything herein to the contrary,
the registration rights of a Holder under Section 8 hereof may be assigned only to a party who acquires from such Holder at least One Hundred Thousand (100,000) shares of Registrable Securities (as such number may be adjusted to reflect
subdivisions, combinations and stock dividends of the Company’s Common Stock), (such party is referred to as an “Assignee”); provided, however, that (i) no party may be assigned any of the foregoing rights until the
Company is given written notice by the assigning party at the time of such assignment stating the name and address of the Assignee and identifying the securities of the Company as to which the rights in question are being assigned; (ii) that any
such Assignee shall receive such assigned rights subject to all the terms and conditions of this Agreement; and (iii) no such assignment or assignments shall increase the obligations of the Company hereunder. 
  
 10. MISCELLANEOUS. 
  
 10.1 Survival of Warranties. The respective
indemnities, agreements, representations, warranties and covenants of the Company and of the Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf of the Investor, its counsel or the Company, as the case may be. 
  
 10.2 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties. 
  
 10.3 Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed under the internal laws of the State of California as applied to agreements among California residents entered into and to be performed
entirely within California, without reference to principles of conflict of laws or choice of laws. 
  
 10.4 Counterparts. This Agreement may be executed in two or more counterparts and by facsimile, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument. 
  
 10.5 Headings. The headings and captions used in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement. All references in this Agreement to sections, paragraphs, exhibits and schedules shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits and schedules attached hereto, all of
which exhibits and schedules are incorporated herein by this reference. 
  
 10.6 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified,
by telecopier or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified in the case of the Company, at 6305 Lusk Boulevard, San Diego, CA 92121 with a copy to Gray
Cary Ware & Freidenrich LLP, 4365 Executive Drive, Suite 1100, San Diego, CA 92121, Attn: Christian Waage, Esq., or in the case of the Investor, at the record address for the 

  

 17 

 
Investor as reflected on the books of the Company, or at such other address as any party may designate by giving ten (10) days advance written notice to the
other party. Notices shall be deemed delivered upon delivery if personally delivered, one business day after transmission with confirmation of receipt if sent by telecopier, or three days after deposit in the mails if mailed. 
  
 10.7 No Finder’s Fees. Each party represents
that it neither is nor will be obligated for any finder’s or broker’s fee or commission in connection with this transaction. The Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or
compensation in the nature of a finder’s or broker’s fee (and any asserted liability) for which the Investor or any of its officers, partners, employees, or representatives is responsible. The Company agrees to indemnify and to hold
harmless the Investor from any liability for any commission or compensation in the nature of a finder’s or broker’s fee (and any asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

  
 10.8 Costs, Expenses. Each
party’s costs in connection with the preparation, execution delivery and performance of this Agreement (including without limitation legal fees) shall be borne by that party; provided that the Company shall pay the fees of one outside counsel
for the Investor. 
  
 10.9 Amendments and
Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the
Company and the Investor. 
  
 10.10
Severability. If one or more provisions of this Agreement are held to be invalid, illegal or unenforceable under applicable law, such provision(s) shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as
if such provision(s) were so excluded and shall be enforceable in accordance with its terms. 
  
 10.11 Entire Agreement. This Agreement, together with any exhibits or schedules hereto, constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings duties or obligations between the parties with respect to the subject matter hereof.

  
 10.12 Further Assurances. From and
after the date of this Agreement, upon the request of the Investor or the Company, the Company and the Investor shall execute and deliver such instruments, documents or other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement. 
  
 [Remainder of this page intentionally left blank] 
  

 18 

 IN WITNESS WHEREOF, the parties hereto have executed this Convertible Promissory Note Purchase Agreement
as of the date first above written. 
  

	THE COMPANY:	 	 	 	INVESTOR:
			
	 Axesstel, Inc.,
 a Nevada corporation
	 	 	 	 
					
	By:	 	 	 	 	 	 By:
	 	 
	 	
	 	 	 	 	

	 Name:
	 	 	 	 	 	 Name:
	 	 
	 	
	 	 	 	 	

	 Title:
	 	 	 	 	 	 Title:
	 	 
	 	
	 	 	 	 	

			
	 	 	 	 	 
	
	 	 	

	 Mike HP Kwon
	 	 	 	 Satoru Yukie

  
 [COUNTERPART
SIGNATURE PAGE 
 CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT] 
  

 19 

 Exhibit A 
  

Form of Convertible Promissory Note 
  
 (see attached) 
  

 Exhibit B 
  

FORM OF OPINION 
  
 The Investor shall have received an opinion, dated the Closing Date, of Gray Cary Ware & Freidenrich or Dieterich & Associates, counsel for the
Company, that: 
  
 (i) The Company has been duly incorporated and
is an existing corporation in good standing under the laws of the State of Nevada, with corporate power and authority to own its properties and conduct its business as described in the Filings; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification. 
  
 (ii) The Note has been duly authorized, executed, authenticated, issued and delivered and the Note constitutes valid and
legally binding obligations of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles. 
  
 (iii)
The Note is convertible into Common Stock of the Company in accordance with its terms, the shares of such Common Stock initially issuable upon conversion of the Note have been duly authorized and reserved for issuance upon such conversion and, when
issued upon such conversion, will be validly issued, fully paid and nonassessable; the outstanding shares of such Common Stock have been duly authorized and validly issued, are fully paid and nonassessable; and to the knowledge of such counsel, the
shareholders of the Company have no preemptive rights with respect to the Note or the Common Stock issuable on conversion of the Note. 
  
 (iv) The Company is not and, after giving effect to the offering and sale of the Note and the application of the proceeds thereof as described herein,
will not be an “investment company” as defined in the Investment Company Act of 1940. 
  
 (v) No consent, approval, authorization or order of, or filing with, any governmental agency or body or any court is required for the consummation of the
transactions contemplated by the Agreement in connection with the issuance or sale of the Note by the Company, except (a) such as may be required under state securities laws (b) for the order of the Securities and Exchange Commission declaring the
Shelf Registration Statement effective and (c) for the filing of a notice of sale on Form D as required by Rule 503 of Regulation D of the Securities Act. 
  
 (vi) To such counsel’s knowledge, there are no pending actions, suits or proceedings against or to the affecting the Company, any of its subsidiaries
or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company
to perform its obligations under this Agreement, or which are otherwise material in the context of the sale of the Note; and no such actions, suits or proceedings are threatened or, to such counsel’s knowledge, contemplated. 
  

 1 

 (vii) The execution, delivery and performance of the Agreement and the issuance and sale of the Note and
compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, any rule, regulation or order of any governmental agency or body or any
court having jurisdiction over the Company or any subsidiary of the Company or any of their properties, or any agreement or instrument to which the Company or any such subsidiary is a party or by which the Company or any such subsidiary is bound or
to which any of the properties of the Company or any such subsidiary is subject, or the charter or by-laws of the Company or any such subsidiary, and the Company has full power and authority to authorize, issue and sell the Note as contemplated by
the Agreement. 
  
 (viii) Such counsel have no reason to believe
that any Filing, as of the date hereof and as of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the
descriptions in the Filings of statutes, legal and governmental proceedings and contracts and other documents are accurate and fairly present the information required to be shown; it being understood that such counsel need express no opinion as to
the financial statements or other financial data contained in the Filings; and the Filings comply as to form in all material respects. 
  
 (ix) The Agreement has been duly authorized, executed and delivered by the Company. 
  
 (x) It is not necessary in connection with (i) the offer, sale and delivery of the Note by the Company to the Investor
pursuant to the Agreement or (ii) the resale of the Note by the Investor in the manner contemplated hereby to register the Note under the Securities Act of 1933, as amended. 
  
 (xi) To the knowledge of such counsel, the Company’s representation and warranty as set forth in Section 3.2 of the
Agreement is true and correct in all material respects. 
  

 2

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