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                                                                   Exhibit 10.21

1. LICENSE AGREEMENT OF INTELLECTUAL PROPERTY

         THIS LICENSE  AGREEMENT OF INTELLECTUAL  PROPERTY (the  "Agreement") on
the date as appears on the Signature  Page of this  Agreement is for the License
of Intellectual Property, by and between

THE PARTIES:

         VMM, LLC a Limited  Liability  Company organized and existing under the
laws of the State of North Carolina; and

         QT 5, INC., a corporation  organized and existing under the laws of the
State of Delaware (hereinafter referred to as the "LICENSEE").

                                    PREMISES:

         WHEREAS, LICENSOR has developed and is the proprietary owner of certain
rights,  titles and interest in and to technology and information which it owns,
or lawfully  possesses for itself or holds valid licenses from others,  which it
considers highly proprietary (the "CONFIDENTIAL  INFORMATION") regarding certain
technology,  and has developed and is the proprietary  owner of certain patented
process along with certain rights, titles and interests in and to the technology
and  information  which it owns,  or  lawfully  possesses.  The list of  Patents
LICENSOR  owns is attached as Exhibit A. the Patent  Pending List is attached as
Exhibit B, the FDA 510K  Numbers  are  attached  as  Exhibit C and the  Approved
Platform Products is attached as Exhibit D.

         WHEREAS,   LICENSOR   has  obtained   from  the  U.S.   Food  and  Drug
Administration  (FDA), under the Trade Name and Devise Name B "DrugStop" FDA No.
K991465 - Regulatory Class II approval for  over-the-counter  (OTC) sales to the
general  public,  together with certain other tests trade named "Target  System"
This License includes all application of the Target System presently utilized or
which may be developed in the future by either Party to this Agreement.

         WHEREAS,  LICENSOR'S  rights  include  the right to utilize  the patent
process in it's manufacturing of a home drug-screening  test. LICENSOR provides,
if necessary,  a confirmation service at an additional cost to the customer. The
FDA approved the device that is a preliminary  screen to detect and identify the
presence of drugs within the body using a urine  sample.  The device is designed
to detect the presence of COC (Cocaine, Crack), THC (Marijuana,  Pot, Cannabis),
MOR (Opiates, Heroin, Morphine), AMP (Amphetamine,  Speed, Metamphetamine),  PCP
(Angel Dust).

         WHEREAS,  LICENSEE is a marketing  company that has the  capability  to
Brand  Develop,  Manage and  provide  sales  Strategy  for all aspects of a full
marketing  program  to  sell  and  distribute  all  of  LICENSOR'S  Intellectual
Properties  as set forth in  Exhibits A, B, C and D under  LICENSEE'S  own Brand
Names and under its trademark "Quick Test 5" or any other Brand Names designated
by LICENSEE.

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         WHEREAS,  LICENSEE desires to obtain the exclusive rights from LICENSOR
to sell and distribute all Products under its own brand name or names  including
all existing Brand names of LICENSOR.

         WHEREAS,  it is the  intent  of the  LICENSEE  to file with the FDA for
clearance to market and sell all the Products under its own Brand Name or Names.
LICENSOR herein agrees to assist, provide documentation, and join in any and all
applications for approval required by the FDA.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants and agreements  contained  herein,  and intending to be legally bound,
LICENSOR and LICENSEE hereby agree as follows:
                                   DEFINITIONS

         1.1 Definitions. Whenever used in this Agreement, the Recital above, or
any Exhibit or Schedule hereto,  unless otherwise required by the subject matter
or the  context,  the  following  terms  shall  have the  meanings  respectively
ascribed to them:

                  (a)  "Affiliate,"  means, in respect to any Person,  any other
Person  that  directly  or  indirectly,  through  one  or  more  intermediaries,
controls, is controlled by, or is under common control with such first Person.

(b) "Ancillary Agreements: None at the present time.

                  (c) "Best  knowledge"  means,  in  respect  of a Person,  that
nothing has come to the  attention of that Person that gives such Person  actual
knowledge  of the  existence  or absence  of any  material  information  or fact
bearing on the matter.

                  (d)  "Claim"  means a written  notice  asserting a breach of a
representation,  warranty or covenant  specified  in the  Agreement  which shall
reasonably set forth, in light of the information then known to the party giving
such notice,  a description  of and an estimate (if then  reasonable to make) of
the amount involved in such breach or for a claim for injunctive relief.

                  (e)  "Confidential  Information"  means  any  confidential  or
secret information or data, whether or not reduced to writing, pertaining to the
license product, including scientific or technical knowledge,  expertise, skill,
practice,  proprietary rights,  copyrights,  patented or un-patented inventions,
formulas,  trade secrets,  manufacturing  techniques and procedures,  analytical
methodology,  processes,  and data and  shall  include  any and all  technology,
pending and existing  intellectual  property matters,  including patenting,  and
copyrighting  of LICENSOR'S  product lines,  technologies  and  inventions,  and
future plans and operations done in support of such future plans and operations.

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         Provided  however,  that in respect of the  obligations of either party
hereunder, the term "Confidential Information" shall not include any information
that (i) is now or  subsequently  enters the public  domain  through means other
than direct or indirect  disclosure by a party in violation of the terms of this
Agreement or (ii) is lawfully  communicated to a party by a third party, free of
any confidentiality obligation, subsequent to the date hereof.

                  "Completion  Date" means the date upon which QT 5, Inc.  shall
have received written notice to the effect that the FDA has issued to QT 5, Inc.
a Regulatory Clearance in the Field of Activity

                  "Competing Person" means any Person a substantial  majority of
whose  business  is in the same or similar  business  of  LICENSEE  and who is a
direct  competitor of LICENSEE or any of its Affiliates  that is an Affiliate of
such Person

                  "Control"  means (i) when used in respect of any  Person,  the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the  management  and policies of such entity,  whether  through the
ownership of voting securities,  by contract or otherwise, and (ii) when used in
respect of any security, the possession, directly or indirectly, of the power to
vote,  or to direct the voting of, such  security or the power to dispose of, or
to direct the disposition of, such security.

                  "Controlling   Person"  means,  in  respect  of  any  business
organization  or other legal entity,  a Person having  control of such business,
organization  or entity,  and any  second  Person  having  Control of such first
Person,  and so on in an  ascending  order up to and  including  the last Person
having Control of the next preceding Person who is not subject to the Control of
any other Person.

                  "Enhancements"  means any  change,  correction,  modification,
improvement, enhancement, addition or revision to the Licensed Products.

                  "FDA  Clearance"  means an application to the FDA for the sale
or other  distribution of FDA 510k small device for  professional use and/or OTC
for the Patent Target  System  process for the HIV I & II immuno assay HIV Phase
III, as well as all other FDA Clearances obtained by either LICENSOR or LICENSEE
pursuant to this Agreement.

                  "Governmental  Authority" means any governmental  body, agency
or official of any county or political subdivision of any country..

                  "Indemnified  Party"  means  the  Person  who is  entitled  to
indemnification  for, and to be held  harmless in respect of, a claim,  cause of
action or any other proceedings,  as provided under the terms and subject to the
conditions of this Agreement.

                  "Indemnifying  Party" means the party hereto that is obligated
to indemnify and to hold harmless another Person in respect of a claim, cause of
action or any other  proceeding,  as provided under the terms and subject to the
conditions of this Agreement.

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                  "Intellectual  Property" means all intellectual and industrial
property and  includes  (i)  inventions  and patents for  inventions,  including
re-issue  thereof and  continuation  and  continuations  in part,  (ii) computer
programs,  (iii)  copyrights,  (iv) designs and  industrial  designs,  (v) trade
marks,  and any word,  symbol,  icon, logo or other indicia or origin adopted or
used in  connection  with the  license or service  and (vi)  trade  secrets  and
confidential information described in (d) above.

                  "Intellectual  Property  Rights"  means all  intellectual  and
industrial  property  and other  proprietary  rights in respect of  Intellectual
Property, and includes all right to Intellectual Property.

                   "Know-How"   means   "The   Confidential   Information"   and
proprietary information,  including any patents, formula, pattern,  compilation,
method,  invention,  technique or process,  used in the creation of the Licensed
Product.

                  "Person" means a human being, partnership,  association, joint
venture,  corporation,  legal  representative,  trustee,  trustee in bankruptcy,
receiver or any other legal entity whatsoever.

                   "Licensed   Product"   means   those   certain   patents  and
proprietary rights of LICENSOR as described in Exhibits A, B, C and D.

                   "LICENSOR"  means  VMM  LLC,  a  Limited   Liability  Company
organized and existing under the laws of the State of North Carolina.

                   "LICENSEE  " means QT 5, Inc.  a  corporation  organized  and
existing under the laws of the State of Delaware.

                   "Regulatory  Clearance"  means  (a)  (i)  in  the  case  of a
product, a clearance by the FDA and (ii) in the case of product clearance by the
FDA for the  sale or other  disposition  of the  patent  target  system  for its
specific and intended  use; or (b) in the event of any change in the  regulatory
process,  a clearance  similar to the foregoing for the sale and distribution of
said product.
                   "Third Party Claim" means,  in respect of the  obligations of
an  Indemnifying  Party  hereunder,  a claim asserted  against,  imposed upon or
incurred by the Indemnified Party by any third party.

                   "Term"  means  the  term of this  Agreement  as set  forth in
paragraph 2.2 (a) Term.

                   "Effective  Date" means the  commencement of the Term of this
Agreement as set forth in paragraph 2.2 (b) below.

                   "Right of First Refusal" means the right given to LICENSEE of
first refusal as set forth in paragraph 2.2 (c).

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                   Additional  Terms. The definitions in Section 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require,  any pronoun  shall  include the  corresponding  masculine,
feminine and neuter forms. The words  "include,"  "includes" and "including" and
shall  be  deemed  to be  followed  by  the  phrase  "without  limitation."  All
references to "party" and "parties" shall be deemed references to the parties to
this  Agreement  and to a party's  successor in title  unless the context  shall
otherwise  require.  All references to Sections and  Paragraphs  shall be deemed
references  to Sections and  Paragraphs  of this  Agreement,  unless the context
shall otherwise  require.  All references herein to Schedules and Exhibits shall
be deemed to be references to the  Schedule(s)  and Exhibit(s)  attached to this
Agreement.  The terms  "this  Agreement",  "hereof",  "hereunder",  and  similar
expressions refer to this Agreement as a whole and not to any particular Article
or Section  or other  portion  hereof and  include  any  agreement  supplemental
hereto.  The  conjunction  "or"  shall  be  understood  in its  inclusive  sense
(and/or).

                   Headings . The division of this  Agreement  into Articles and
Sections and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement.

                   a) ARTICLE 2

         2.1 Granting of License.

         Subject to the terms and conditions of this Agreement,  LICENSOR hereby
grants  LICENSEE a right to utilize,  sell,  or resell all LICENSOR  Products as
specified in EXHIBITS A, B, C and D hereof under the LICENSEE'S own Trade Names,
Brand Names and  Trademark  Worldwide.  All  products  Licensed  herein that are
specifically  designated for the general public  consumption  (over the counter)
are  warranted  by  LICENSOR  to meet any and all  government  requirements  and
clearances for sale in the over-the-counter market.

         2.2 Term

         2.2 (a) The Term of this Agreement shall be for one (1) year commencing
as of the Effective Date (defined  below).  This Agreement shall be extended for
four (4) additional  Terms of one (1) each on condition  that LICENSEE  performs
its sales  projections  after the  Effective  Date.  The Sales  Projections  are
attached to this Agreement as Exhibit "E" and incorporated  herein by reference.
All of the provisions of this Agreement  shall continue in full force and effect
during the extension period and any subsequent extension periods.

This Agreement shall be automatically  extended for an additional five (5) years
period so long as neither party causes a termination of this Agreement  pursuant
to the terms hereof.

Both Parties  recognize  that those certain  Products  that LICENSEE  intends to
first market and sell are presently not being  manufactured nor has the required
governmental authority cleared them. LICENSOR shall have the duty of providing a
manufacturer  for the Products listed in the Exhibits and shall have the duty to
obtain all  necessary  and  required  regulatory  clearances  for the  Products.
LICENSEE agrees to collaborate with LICENSOR in obtaining said clearances.

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         2.2  (b)  Effective  Date:  The  Term of this  Agreement  shall  become
effective  four (4) months after (a) all  regulatory  clearances  required shall
have been obtained for those Products to be manufactured listed in Exhibit A and
shall  remain in full  force and  effect and all  statutory  waiting  periods in
respect of the same shall have expired and no such clearances  shall contain any
conditions,  restrictions or requirements which LICENSEE  reasonably  determines
would either before or after the Effective  Time have a Material  Adverse Effect
on LICESSE in marketing the Products contemplated by this Agreement,  taken as a
whole and (b) LICENSOR has obtained a manufacturer to manufacturer said Products
consistent  with the  Pricing of the  Product as set forth in Sales  Projections
attached as Exhibit "E".

         2.2. (c) Right of First Refusal:  LICENSOR  herein shall have the right
to sell,  assign and transfer its Patent rights to any of the Patents  listed in
this  Agreement.  In the event that LICENSOR  receives an offer to purchase said
Patent  rights and decides to sell said  rights,  LICENOR  shall first offer the
right to purchase to LICENSEE for the price and the terms of the intended  sale.
LICENSEE  shall have  thirty (30) days from the date that  LICENSOR  delivers to
LICENSEE a copy of the offer in which to accept or reject.  Failure by  LICENSEE
to notify  LICENSOR  shall be construed as a refusal of LICENSEE to exercise its
right of first refusal and LICENSOR shall have the right to sell said Patents.

         2.3 Private Label Reseller

         LICENSOR  acknowledges  that it is a PRIVATE LABEL  RESELLER  (PLR) and
that LICENSEE shall purchase the products under this Agreement for resale in the
over the counter  (retail)  market  together with any and all direct or indirect
markets  that  LICENSEE  shall  develop as part of its  marketing  program.  The
LICENSEE shall have the following rights:

                  (a) The right to utilize as a private  label any and all label
approved by the FDA for LICENSOR with  LICENSEE'S  name, logo or any other label
thereafter  selected by LICENSEE  and  approved by the FDA. In that  connection,
LICENSOR shall provide LICENSEE with copies of all documents provided to the FDA
in which it obtained  approval  for any of the  Licensed  Products and join with
LICENSEE,  if necessary,  in any  application  for said approval for  LICENSEE'S
label approval.

                   (b)  Re-market  to  unaffiliated  third  party  users  in the
regular course of business, and/or;

                   (c) LICENSEE may include  LICENSOR  product(s)  as part of an
integrated set of products sold direct (retail outlets) or through third parties
as a comprehensive product service or consumer solution.

         2.4      Use of Trademark

         LICENSOR hereby grants LICENSEE the right to use and display LICENSEE'S
trademarks, service marks, and trademarks and trade names that are applicable to
LICENSOR Product(s) under this private labeling agreement. LICENSEE will not use
any of LICENSOR'S Marks as part of its corporate, trade or other business name.

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(1) ARTICLE 3

         3.1 Products

         LICENSOR'S  Licensed  Products are specified in EXHIBITS A, B, C, and D
attached hereof.

(2) ARTICLE 5

                 REPRESENTATIONS AND WARRANTIES OF THE LICENSOR

         To induce the  LICENSEE  to acquire the License  rights,  the  LICENSOR
hereby makes the following representations and warranties:

         5.1 Organization.  Standing and Qualifications . The LICENSOR, VMM, LLC
is a Limited  Liability  company,  duly organized,  validly existing and in good
standing  under the laws of the State of North  Carolina.  The LICENSOR has full
power and authority to carry on its business as it is now being conducted and to
own the  property and assets it now owns.  The  Individual  LICENSORS  have full
rights to enter into this Agreement.

         5.2  Authorization  . The  LICENSOR  that is a LLC has full  power  and
authority to execute and deliver this Agreement to consummate  the  transactions
contemplated  hereby. The execution,  delivery and performance of this Agreement
and the  consummation  of the  transactions  contemplated  hereby have been duly
authorized by all necessary  action required by law, the LICENSOR'S  Articles or
otherwise to be taken by the LICENSOR to authorize the execution and delivery of
this Agreement and the agreements  specified  herein or the  consummation of the
transactions contemplated hereby and thereby.

         5.3 Binding Agreements. This Agreement constitutes the legal, valid and
binding obligations of the LICENSOR, enforceable in accordance with its terms.

         5.4 No Violation. Neither the execution and delivery by the LICENSOR of
this  Agreement  nor  the  consummation  by the  LICENSOR  of  the  transactions
contemplated  hereby will (a) violate any provision of the Articles of VMM, LLC;
(b) conflict with or violate any statute, law, regulation, rule, order, judgment
or decree of any court or Governmental  Authority  binding upon or applicable to
the  LICENSOR.  The  LICENSOR  is not a party to,  nor is it bound  by,  and the
LICENSOR  Product  Line are not subject to, any  agreement  or  commitment  that
prohibits the  execution  and delivery by the LICENSEE of this  Agreement or the
consummation of the transactions contemplated hereby.

         5.5  Litigation.  No  action,  suit,  inquiry,  audit,  or to the  Best
Knowledge of the LICENSOR no proceeding or investigation, by or before any court
or governmental or other  regulatory or  administrative  agency or commission is
currently pending or, to the Best Knowledge of the LICENSOR threatened, against,
involving  or arising in  connection  with the  LICENSOR'S  Product Line or that
questions or challenges the validity of this Agreement or any action taken or to
be taken by the LICENSOR pursuant to this Agreement.

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         5.6 Right to License LICENSOR'S Product Line. LICENSOR has the right to
license the  intellectual  property as  described in Exhibits A, B, C, and D and
the right to manufacture  Products  utilizing said intellectual  property rights
and patents.

         5.7 Intellectual Property Rights.

                  To the Best Knowledge of the LICENSOR,  the License rights and
the use thereof  will not infringe  upon or violate any Patent and  Intellectual
Property  Right of any Third  Person.  Further,  LICENSOR  herein agrees that it
shall renew any and all patents  required to insure the rights of both  LICENSOR
and LICENSEE under this Agreement.

2. ARTICLE 6

                 REPRESENTATIONS AND WARRANTIES OF THE LICENSEE

To induce the LICENSOR to enter into this License  Agreement  with the LICENSEE,
the LICENSEE hereby represents and warrants to the LICENSOR as follows:

         6.1  Corporate  Organization  and  Good  Standing.  The  LICENSEE  is a
Company, duly organized, validly existing and in good standing under the laws of
the State of Delaware.

         6.2 Authorization.  The LICENSEE has full corporate power and authority
to execute  and  deliver  this  Agreement  and to  consummate  the  transactions
contemplated  hereby. The execution,  delivery and performance of this Agreement
and the  consummation of the transactions  contemplated  hereby and thereby have
been duly  authorized by all  necessary  corporate  action  required by law, the
LICENSEE'S  Articles of Incorporation,  or otherwise to be taken by the LICENSEE
to authorize the execution and delivery of this  Agreement and the  consummation
of the transactions contemplated hereby.

         6.3 Binding Agreements. This Agreement constitutes the legal, valid and
binding agreements of the LICENSEE enforceable in accordance with its terms.

         6.4 No Violation. Neither the execution and delivery by the LICENSEE of
this  Agreement  nor  the  consummation  by the  LICENSEE  of  the  transactions
contemplated  hereby,  will  (a)  violate  any  provisions  of the  Articles  of
Incorporation  of the LICENSEE;  (b) conflict with or violate any statute,  law,
regulation,  rule,  order,  judgment  or  decree  of any  court or  Governmental
Authority binding upon or applicable to the LICENSEE or by which the property or
assets of the LICENSEE are bound or affected.

         6.5  Litigation.  No  action,  suit,  inquiry,  audit,  or to the  Best
Knowledge of the LICENSEE no proceeding or investigation, by or before any court
or governmental or other  regulatory or  administrative  agency or commission is
currently pending or, to the Best Knowledge of the LICENSEE threatened, against,
involving  or  arising  in  connection  with the  LICENSEE  entering  into  this
Agreement or that  questions or challenges the validity of this Agreement or any
action taken or to be taken by the LICENSEE pursuant to this Agreement.

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                                    ARTICLE 7
                            COVENANTS OF THE PARTIES

         7.1 Cooperation.

                   (a) Each party shall  cooperate  reasonably with the other in
preparing and filing all notices,  applications,  reports and other  instruments
and documents  which are required by any statute,  rule,  regulation or order of
any Governmental  Authority in connection with the transactions  contemplated by
this  Agreement,  including the Private  Label of the licensed  Product with the
FDA.

                   (b) LICENSEE agrees not to use or exploit  LICENSOR'S Product
Line in a manner that can be reasonably  foreseen to bring it into  disrepute or
materially diminish the value of exploiting such Product Line in connection with
the marketing, promotion, distribution, sale, licensing or use of the Products.

                                    ARTICLE 8

         3. CONFIDENTIAL INFORMATION

         8.1  Confidentiality of Intellectual  Property of LICENSOR and Customer
Proprietary Marketing Data of LICENSEE

         It is expressly  understood and agreed that all  intellectual  property
and data furnished to LICENSEE by LICENSOR or any  information or data regarding
customers  or data  provided by  LICENSEE  to  LICENSOR  and such data as may be
provided by one to the other  regarding  and  including  that  required  for the
proper  marketing,  sale or re-sale of its products,  all of which constitutes a
valuable  intellectual  proprietary  property and trade secret(s) of LICENSOR or
LICENSEE,  as the respective  party providing such data has divulged.  Providing
such  material,  under any  circumstances,  shall not  constitute a grant of any
right of reproduction, manufacturing, distributing, resale, re-licensing (except
as later set forth) or ownership  in any manner  whatsoever.  Both  LICENSEE and
LICENSOR agree that:

         (a) To observe complete  confidentiality  with regard to all aspects of
such data including,  without limitation,  agreeing not to disclose or otherwise
permit any other person or entity access to, in any manner, any such data in any
form  whatsoever.  Such  disclosure  or access  shall  only be  permitted  to an
employee of LICENSOR  or LICENSEE as the case might be of the  Marketing  Plans,
Business  Relationships,  Automated Customer Service (CRM) Systems and any other
proprietary  business or client  information  as permitted  and on the terms and
conditions defined in this License Agreement;

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         (b) To ensure that both  LICENSOR  and  LICENSEE  and their  respective
employees,  agents,  representatives,  independent  contractors,  customers, sub
contractors or sub  LICENSEE'S and business  invitee's and guests are advised of
the  confidential  nature of such data and to insure by  agreement  or otherwise
that they are prohibited from copying or revealing,  for any purpose whatsoever,
the contents of the data;

         (c) LICENSEE  shall not alter or remove any  copyright  or  proprietary
rights notice of  identification,  which indicates  LICENSOR'S  ownership of the
Product.  LICENSOR shall not alter or remove any proprietary  rights,  notice of
identification, which indicates LICENSEE'S confidential data, including customer
data:

         (d) Each  respective  party agrees to notify the other  promptly and in
writing of the circumstances surrounding any possession, use or knowledge of any
such data of which either  LICENSOR or LICENSEE  has  knowledge by any person or
entity other than those authorized;

         (e) Each respective party agrees to take any and all actions reasonably
necessary or desirable to ensure continued confidentiality and protection of all
such  data and to  prevent  access to such  data by any  person  or  entity  not
authorized by this section.

         Should  this  Agreement  terminate  for any reason  (including  without
limitation,  breach  by  LICENSEE  of  any of its  obligations  hereunder),  the
confidentiality  provisions of this Agreement  shall survive the  termination of
this Agreement and shall continue to be binding upon both LICENSOR and LICENSEE.

         (a) ARTICLE 9

                       PROTECTION OF THE LICENSOR'S RIGHTS

         9.1 Notice of Infringement or Unauthorized Use. LICENSEE shall promptly
inform LICENSOR in writing of any act of infringement,  unauthorized use, piracy
or misappropriation  of, or breach of any confidentiality  agreement  pertaining
to, or in any way affecting, the Licensed Property, or any Enhancements thereto,
that are discovered by LICENSEE or are otherwise brought to its attention.  Each
party shall promptly inform the other party in writing of any notice of claim or
action,  or any  threatened  claim or action,  against either party by any third
Person arising out of in any way related to the Licensed Product.

         9.2 Institution. Prosecution and Defense of Claims.

                  (a) (i)  Promptly  following  the  delivery to the LICENSOR of
notice  from the  LICENSEE  of any act of any  infringement,  unauthorized  use,
piracy or  misappropriation  of, or breach of any  confidentiality  agreement or
affecting  the  Licensed  Property,  or, in the case  where  such  infringement,
unauthorized  use,  piracy  misappropriation  or  breach  is  discovered  by the
LICENSEE or is otherwise  brought to its attention and the LICENSEE  provides to
the LICENSOR  written notice  thereof,  then promptly  following the delivery of
such  notice to the  LICENSOR,  the  LICENSOR  shall take such steps as shall be
necessary  in order to protect  the  LICENSEE  and the  LICENSOR'S  rights  with
respect to the said Licensed Property, respectively,  including, but not limited
to, instituting or authorizing others to institute any claim, suit or proceeding
at law or in equity arising out of or related to the infringement,  unauthorized
use, piracy or misappropriation  of, or breach of any confidentiality  agreement
pertaining to, or in any way affecting the Licensed Property.

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                  (ii) The institution,  prosecution, maintenance and control of
any claim,  suit or proceeding at law or in equity arising out of or related to,
or in any way affecting the Licensed  Property shall be subject to the direction
and control of the LICENSOR,  at its sole cost and expense, and any and all sums
that may be received,  obtained,  collected or recovered in any such claim, suit
or proceeding,  whether by decree, judgment,  settlement or otherwise,  shall be
the sole and exclusive property of the LICENSOR.

         (b) If requested by  LICENSOR,  LICENSEE  shall join the LICENSOR as, a
party complainant in any such claim, suit or proceeding.

         (c)  LICENSOR  shall  defend,  at its own  expense,  any  claim  that a
Third-Party  shall  institute  effecting  the  Licensed  Product  granted to the
LICENSEE  herein.  LICENSEE  shall  cooperate  fully in the  defense of any such
claim,  suit or  proceeding  against  any party by a third  Person,  brought  in
connection with,  arising out of or related to the Licensed  Property,  and each
party shall  execute such  documents  and take such actions as may be reasonably
requested by the other party and consistent  with the rights and  obligations of
the parties hereunder.

         (d) LICENSOR shall indemnify LICENSEE for any costs,  damages, or other
expenses  suffered by LICENSEE in connection with any Third-Party  claiming that
said  Third-Party is the owner or has rights to the Licensed Product licensed to
LICENSEE.

         (e) LICENSEE, in its sole discretion, and with the consent of LICENSOR,
undertake to institute and prosecute any claim,  suit or proceeding at law or in
equity  arising  out of or  related  to, or in any way  affecting  the  Licensed
Property in which case it shall be subject to the  direction  and control of the
LICENSEE,  at its  sole  cost  and  expense,  and any and all  sums  that may be
received,   obtained,  collected  or  recovered  in  any  such  claim,  suit  or
proceeding,  whether by decree, judgment,  settlement or otherwise, shall be the
sole and exclusive property of the LICENSEE. If requested by LICENSEE,  LICENSOR
shall join the  LICENSEE  as, a party  complainant  in any such  claim,  suit or
proceeding

         4. ARTICLE 10

                                 INDEMNIFICATION

         10.1 Survival of Representations  and Warranties and Covenants.  Except
as otherwise  expressly provided herein, all representations and warranties made
by any party in this Agreement  shall survive from and after the date hereof and
shall continue in effect for a period of two (2) years from the date hereof, and
all covenants  made by any party in this  Agreement  shall survive  indefinitely
unless  otherwise  terminated  by the  parties.  Any  right  of  indemnification
pursuant   to  this   Article  13  in  respect  of  a  claimed   breach  of  any
representation,  warranty or covenant  shall expire at the date of expiration of
the representation, warranty or covenant claimed to be breached (the "Expiration
Date"),  unless on or prior to the Expiration Date a Claim has been made against
the party from whom indemnification is sought. If a Claim is timely made, it may
continue  to be  asserted  beyond  the  Expiration  Date of the  representation,
warranty or covenant to which such Claim relates.

                                       20
<PAGE>

         10.2     Indemnification.

                  (a) The LICENSOR  hereby agrees to indemnify and hold harmless
LICENSEE from and against all Damages asserted against, imposed upon or incurred
by LICENSEE,  directly or indirectly, by reason of or resulting from, any breach
or  inaccuracy of any  representation,  warranty or covenant of the LICENSOR set
forth in this Agreement.

                  (b) The LICENSEE  hereby agrees to indemnify and hold harmless
LICENSOR from and against all Damages asserted against, imposed upon or incurred
by LICENSOR,  directly or indirectly,  by reason of or resulting from any breach
or  inaccuracy of any  representation,  warranty or covenant of the LICENSEE set
forth in this Agreement.

         10.3 Limitation of Indemnification.  LICENSOR herein shall be obligated
to indemnify LICENSEE for only such Third-Party Claims that are established by a
court  judgment  or  order  against  LICENSEE   involving  and  limited  to  the
Proprietary   Patent(s)  or  any  Enhancements   thereto.  The  obligations  and
liabilities of LICENSOR to indemnify  LICENSEE shall be subject to the following
terms and conditions:

                  (a) LICENSOR shall  indemnify and save LICENSEE  harmless from
all liability for actual  infringement of any Third-Party  Patent(s)  claimed by
said  Third-Party  to be the  Patent(s)  used and  developed by  LICENSOR.  And,
LICENSOR shall indemnify and save LICENSEE  harmless from and against all costs,
counsel  fees,  expenses  and  liabilities  incurred in or about any claim of or
action for such  infringement;  provided  however,  that LICENSEE shall promptly
notify LICENSOR,  in writing of said Third-Party  Claim and transmit to LICENSOR
all papers served on LICENSEE in any suit involving such claim of  infringement,
and provided  further,  that LICENSEE permits LICENSOR to have entire charge and
control of the defense of any such suit.

                  (b)  LICENSEE  shall  provide  LICENSOR  with all  records and
documents within the LICENSEE'S possession,  custody, or control relating to any
Third-Party  Claim.  Nothing in this  provision  shall be deemed to constitute a
waiver of any attorney-client, work-product or joint defense privilege.

                  (c) LICENSOR'S  indemnity obligation set forth in this Section
shall survive the  termination  or expiration of this  Agreement with respect to
the Third-Party's Claim of rights to the Proprietary Patent(s) of LICENSOR which
occurs during the Term.

                                       21
<PAGE>

                                   ARTICLE 11
5.

6.       TERMINATION

                  11.1     Termination of this Agreement

         If either party  breaches a material  provision of this  Agreement  and
fails to cure such  violation  within thirty (30) days after  written  notice of
said breach has been mailed by the other party,  this Agreement shall terminate.
Upon  termination,  the terms and  conditions  herein will  continue to apply to
LICENSOR  Products  owned by  LICENSEE.  If any  outstanding  debts are owing to
either  party  by  the  other,  these  amounts  shall  become  due  and  payable
immediately.

         A. LICENSEE'S Default.  If any of the following events occur,  LICENSEE
shall be in default and LICENSOR shall have the right to  immediately  terminate
this Agreement upon written notice to LICENSEE.

         If  LICENSEE  ceases  to  function  as  a  going  concern,  or  becomes
insolvent, makes an assignment for the benefit of creditors, files a petition in
bankruptcy,  permits a petition in  bankruptcy to be filed against it, or admits
in writing  its  inability  to pay its debts as they  mature or if a receiver is
appointed for a substantial part of its assets;

         LICENSEE  ceases to carry on the  business of a LICENSEE of  LICENSOR'S
Products;

         B. LICENSOR'S Default.  If any of the following events occur,  LICENSOR
shall be in  default  and  LICENSEE,  at its  option,  shall  have the  right to
terminate this Agreement upon thirty (30) days written notice to LICENSOR.

         LICENSOR ceases to function as a going concern,  or becomes  insolvent,
makes  an  assignment  for  the  benefit  of  creditors,  files  a  petition  in
bankruptcy,  permits a petition in  bankruptcy to be filed against it, or admits
in writing  its  inability  to pay its debts as they  mature or if a receiver is
appointed for a substantial part of its assets;

         C.  Obligations on Termination.  Upon termination of this Agreement for
any reason  whatsoever,  LICENSEE and LICENSOR shall perform each and all of the
following obligations, all of which shall survive such termination:

                   (ii) LICENSEE shall discontinue the use of any LICENSOR trade
or service Marks.

                   (ii) LICENSEE will promptly  refer to LICENSOR the details of
any verbal or written inquiries LICENSEE may receive regarding any of LICENSOR'S
Products, and, in the case of written inquiries,  will provide copies thereof to
LICENSOR;

                   (iii)  LICENSEE  shall do all other  things as  LICENSOR  may
reasonably  request  for the  purpose of  terminating  LICENSEE'S  business  and
contractual  arrangements  with LICENSOR and effecting an orderly  transition of
sales and/or service from LICENSEE to LICENSOR.

                                       22
<PAGE>

                                   ARTICLE 12

(i) CONSIDETRATION

         12.1     Consideration for exclusive License.

                  Upon the  execution of this  Agreement  LICENSEE  herein shall
issue to LICENSOR  and/or  nominees Two Million Two Hundred  Sixty  Thousand Six
Hundred  (2,260,600)  Shares  of  LICENSEE'S  (QT 5,  Inc.)  common  stock  (144
restricted) in addition to One Million One Hundred Sixty (1,000,160) shares have
been  previously  issued to Victor  Parker that he is holding in escrow and that
shall be released to him upon the execution of this Agreement.

Therefore,  the total stock  consideration  is Three  Million Two Hundred  Sixty
Thousand  Seven  Hundred  Sixty  Shares.  Said  shares  of stock  represent  the
consideration  paid by LICENSEE to LICENSOR  for the  exclusive  rights  granted
under this Agreement

      Removal of Legend LICENSEE shall remove any legend on the Shares within 10
days of the  certificate  qualifying  for the  removal  of such  legends  due to
registration compliance with Rule 144 or otherwise.

                                   ARTICLE 13

                            MISCELLANEOUS PROVISIONS

         13.1     Notices

                  (a) All  notices,  request,  demands and other  communications
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed  delivered  (i) on the date of  delivery  when
delivered  by hand;  (ii) on the date of  transmission  when  sent by  facsimile
transmission  during  normal  business  hours  with  telephone  confirmation  of
receipt;  (iii)  on the  next  business  day  after  transmission  when  sent by
facsimile  transmission  after normal  business  hours;  (iv) two (2) days after
dispatch  when sent by a reputable  courier  service that  maintains  records of
receipt  or (v) five (5) days  after  dispatch  when  sent by  registered  mail,
postage prepaid, return=receipt requested; provided that, in any such case, such
communication is addressed provided in the immediately following paragraph (b).

                  (b) All notices,  request,  demands and other  communications,
which are required or may be given pursuant to the terms of this Agreement shall
be addressed as follows:

(i) If to LICENSOR.

                                    2929 Vail Avenue
                                    City of Commerce
                                    California 90040.
                                    Telephone:       (323) 721 8552
                                    Facsimile:       (323) 721 8554

                                       23
<PAGE>

(ii) If to LICENSEE.

                                    QT 5, INC.
                                    Lindero Canyon Road
                                    Suite 120
                                    Westlake Village, CA 91362
                                    Telephone:       818 338 1510
                                    Facsimile:       818 338 1551

Or to such other  address as any party  shall have  designated  by notice in the
foregoing manner to the other parties.

         13.2  Compliance  with Laws.  In  connection  with the License  granted
herein and the  consummation  of the  transactions  contemplated  hereby and the
performance by a party of its  obligations  hereunder,  each of the LICENSOR and
the  LICENSEE  shall  comply  with all  applicable  laws,  requirements,  rules,
regulations  and  standards  of   Governmental   Authorities  of  any  pertinent
jurisdiction  so that  neither of the  parties  shall be subject to any fines or
penalties;  or violate any laws or regulations  affecting the lease, license and
sale of the Products contemplated herein.

         13.3  Authority  to Contract and  Perform.  Both  LICENSOR and LICENSEE
represents  that they each  respectively  have full right and authority to enter
into this Agreement and to perform its  obligations and that it has not made and
will  not  make  any  contract  or  commitment  contrary  to the  terms  of this
Agreement.

         134 Ethics and Compliance with Law. Both LICENSOR and LICENSEE covenant
each with the  other,  that they will  maintain  the  highest  ethical  business
standards and avoid and refrain from being involved in any activities  which may
in any manner  disparage the LICENSOR'S or LICENSEE'S  Products.  Furthermore in
the conduct of its  business,  both  LICENSOR and LICENSEE  will comply with all
applicable Federal, State and local laws, rules and regulations.

         13.5 Choice of Law. The validity,  construction  and performance of the
Agreement shall be interpreted,  construed and enforces according to the laws of
the State of California.

         13.6  Arbitration.  Except for any  controversy  or claim arising after
either party has become  insolvent,  bankrupt,  enters into a  composition  with
creditors,  or  has  a  receiver  appointed  for  any  of  its  properties,  any
controversy  or claim  arising  out of or  relating  to this  Agreement  will be
settled by  arbitration  or  mediation  in Los  Angeles  County,  California  in
accordance  with the rules,  then in effect,  of the  Judicial  Arbitration  and
Mediation  Service,  its successor or a similar  alternative  dispute resolution
entity.  Judgment  upon award  rendered may be entered in any court of competent
jurisdiction.  Whichever  party  prevails will be entitled to recover all of its
expenses,  cost, and reasonable  attorney fees as they relate to the arbitration
proceedings,  to any litigation or proceeding arising out of or relating to this
Agreement to compel arbitration,  or to enforce an award. The Parties shall have
the rights of discovery as provided in the  California  Code of Civil  Procedure
the same as if said action was filed in a judicial proceeding.

                                       24
<PAGE>

         13.7 Entire Agreement.  This Agreement (together with the Schedules and
the Exhibits  expressly  identified in this  Agreement)  constitutes  the entire
agreement of the parties with respect to the subject  matter hereof and thereof,
and supersedes all prior agreements and understandings of the parties,  oral and
written, in respect of such subject matter.

         13.8 Binding  Effect.  This Agreement  binds and insures the benefit of
the parties  hereto,  their  respective  heirs,  representatives,  successors or
assigns.

                   (b) 13.9 Paragraph  Headings.  The paragraph headings in this
Agreement are for convenience only, and they have no substantive or interpretive
effect.

         13.10 Waiver.  Neither modification of this Agreement nor any waiver of
any term or  condition  hereof  shall be  effective  unless it is in writing and
signed by the parties hereto.  If either party fails to meet the requirements of
any term of this  Agreement  or waives any  breach  hereunder,  that  failure or
waiver will neither prevent a subsequent  enforcement of such term nor be deemed
a waiver of any subsequent breach.

         13.11 Partial  Invalidity.  In the event of the determination  that any
terms,  covenant or  condition of this  Agreement is of no force or effect,  the
remaining terms,  conditions or covenants contained herein shall not be affected
thereby,  and  the  obligations  of  the  parties  hereto  with  respect  to the
performance of the remaining  terms,  covenants and conditions shall continue in
full force and effect.

         13.12 Assignment. Either Party may assign this Agreement.

         13.13  Indemnity.  LICENSOR and  LICENSEE  agree to each hold the other
free and harmless  from any and all claims,  damages and expenses of any kind or
nature  whatsoever:  (1) arising  from acts of the other;  or (2) as a direct or
indirect  consequence of  termination  of this Agreement in accordance  with its
terms.  LICENSOR  agrees to hold  LICENSEE  free and  harmless  from any and all
claims, damages, and expenses of any kind or nature including attorneys fees and
costs arising out of any claim of patent or other infringements by a third party
as it relates to the use by  LICENSEE  of  product(s)  supplied  to  LICENSEE by
LICENSOR.  Further,  LICENSEE is relying on the representations of LICENSOR that
it has the  approval  from the FDA for  over-the-counter  sales  to the  general
public. In that regard,  LICENSOR agrees to hold LICENSEE free and harmless from
any and all  claims,  damages,  and  expenses  of any kind or  nature  including
attorney  fees and  cost  arising  out of any  claim  from the FDA or any  other
governmental  agency  regarding  the sale of the  product  to the  public.  This
indemnification  shall be void and of no force or  effect if  LICENSEE  fails to
obey or comply with any reasonable instruction or limitation imposed by LICENSOR
or the  FDA.  This  section  shall  inure  to the  benefit  of  anyone  who buys
product(s) from LICENSEE that was supplied by LICENSOR.

                                       25
<PAGE>

                   (c) 13.14  Execution in  Counterparts.  This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

         13.15   Relationship  of  the  Parties.   LICENSEE  is  an  independent
contractor  and private  labeler.  Nothing in this  Agreement  will be deemed or
construed  to  create  an  agency,  partnership,  joint  venture  or  employment
relationship   between   LICENSOR  and  LICENSEE.   LICENSEE   will,   under  no
circumstances,  represent itself directly or by implication, as LICENSOR'S agent
or  employee,  nor will  LICENSEE  purport or attempt  to bind  LICENSOR  to any
liability or obligation  whatsoever.  Nothing  contained  herein will impose any
liability on LICENSOR in connection  with the operation of LICENSEE'S  business,
or for  any  expenditure,  obligation  or  liability  incurred  by  LICENSEE  in
performing or preparing to perform, any of its obligations under this Agreement.
The credit risk with respect to sales by LICENSEE to its customers will be borne
by LICENSEE,  and the collectibles of any amount due LICENSEE will in no respect
eliminate, reduce or otherwise affect an obligation of LICENSEE to LICENSOR.

         13.16 Amendment.  This Agreement may only be modified,  supplemented or
amended by a written instrument executed by the parties to it.

         13.17 Conditions Precedent.  Each and every provision of this Agreement
shall be contingent and become effective only upon the execution and delivery of
the Intellectual Property hereinabove described.

         13.18 Schedules. Exhibits and Other Agreements.

                  (a) The Schedules,  Exhibits and other agreements specifically
referred to in, and delivered  pursuant to, this  Agreement are an integral part
of it. Any disclosure that is made in any of the Schedules delivered pursuant to
this Agreement  shall be deemed  responsive to any other  applicable  disclosure
obligation hereunder.

                  (b) The  following  are the  Exhibits  and  Schedules  annexed
hereto and incorporated by reference and deemed to be part hereof:

(i) Exhibits:

                     Exhibit A - List of Patents of Licensor
                                 Exhibit B - Patent Pending List
                                 Exhibit C - FDA 510K Numbers
                     Exhibit D - Approved Platform Products
                                 Exhibit E -  Sales Projections

         13.19 [Intentionally Omitted]
7.

8. SIGNATURE PAGE

                                       26
<PAGE>

         IN WITNESS WHEREOF,  LICENSOR and LICENSEE have executed this Agreement
the day and year written below.

LICENSOR                                     LICENSEE
VMM, LLC                                     QT 5. INC.
5655 Lindero Canyon Rd. # 120
___________________                          Westlake Village, California, 91362

Dated: _____________, 2003                   Dated: ___________________, 2003

BY: _______________________________          BY:________________________________
           Managing Member                      Timothy J. Owens
Its: CEO

(i) VICTOR PARKER

--------------------------------------------------------------------------------

Dated:  ______________________, 2003

BY: ______________________
                  Victor Parker

                                    EXHIBIT A

Target System and Drug Test Cup. Patent numbers

9. Patents Issued Target System

<TABLE>
<S>                       <C>               <C>
1.No 4,748,042             5/31/88          Target Ringing & Spotting Machine (method and Apparatus for
                                            imprinting membrane with pattern of antibody)

2.No 4,797,260             1/10/89          Target Cassette (Antibody testing system)

3.No 5,036,569             8/6/61           Target Filter/Funnel Assembly Machine (Apparatus for automatically
                                            assembling filter into funnel).

4.No 5,137,691             8/11/92          Target Cassette with Removable Air Gap (Antibody testing system with
                                            removable air gap)

5.No 5,334,538             8/2/94           Gold Sol Immunoassay System and Device (A system for one step
                                            immunoassay testing).
</TABLE>

                                       27
<PAGE>

10. EXHIBIT B

11.

12. Patent Pending

Application Number 09752712 Drug Test Cup

                                       28
<PAGE>

                                    EXHIBIT C

                   FDA 510K NUMBERS

K892231            V-Trend Target CPR                 April 21, 1989

K885254            Target Reader                      January 27, 1989

K980153            Drug Cup (Professional)            March 27, 1998

K991465            Drug Cup (OTC)                     December 10, 1999

K890295/B          Target CK-MB                       August 15, 1989

K972094            Target Cardiac Troponin I          July 23, 1997

L963680/51         Target Myoglobin                   February 6, 1997

                                       29
<PAGE>

13. EXHIBIT D

                           APPROVED PLATFORM PRODUCTS

HCG- Human chorionic gonadotropin (Pregnancy Test) Rapid enzyme immunoassay test
for qualitative  detection of HCG in urine,  serum and plasma.  HCG is a hormone
produced  by the  developing  placenta.  Serum  and  urine  levels  of HCG climb
rapidly,  starting as soon as the week  following  implantation,  reaching  peak
levels near the end of the first trimester.  One-step technology offers superior
speed and simplicity without sacrificing sensitive and specific results.

Strep A Detects group A streptococci,  the cause of upper respiratory infections
and  pharyngitis.  Identification  is essential for the selection of appropriate
antibiotic therapy to avoid  complications such as acute  glomerulonephritis  or
rheumatic  fever. The test detects group A strep antigen directly from extracted
throat swabs or swabs from culture plates for test confirmation.

CK-MB  Creatine  Kinase  (CK)  Muscle  (M) Brain (B) Rapid  immunoassay  for the
quantitative  detection of CK-MB. CK-MB measurements in serum can provide useful
information to help confirm or exclude that myocardial  infraction has occurred.
The amount of CK-MB  released can also assess the infract  size.  CK_MB is found
predominantly  in the myocardial  tissue.  Detectable  increases in CK-MB levels
from non-cardiac sources are rare.

Myoglobin  Rapid enzyme  immunoassay  test for the  quantitative  detecti9on  of
Myoglobin in serum and plasmas an aid in the rapid diagnosis of acute myocardial
infarction.

Troponin I Rapid enzyme  immunoassay test for the quantitative  determination of
cardiac  troponin  I in serum and  plasma as an aid in the  rapid  diagnosis  of
myocardial in fraction.  Troponin is a thin filament  associated  complex of the
myocyte. Troponin I is a protein with a high specificity for cardiac injury.

Rubella Rapid enzyme immunoassay test for qualitative detection of rubella virus
specific IgG antibody. Rubella is a highly contagious yet generally mild disease
in most  people.  However,  it has great  significance  in women  infected  with
rubella,  the virus may infect the placenta,  multiply and induce serious damage
to the fetus,  including  low birth  weight,  cardio  vascular  detects,  mental
retardation  and bone  defects.  Therefore,  all women of child  bearing age, as
well,  as school age children and  healthcare  personnel  should be screened for
immunity to rubella.

CMV  Rapid  enzyme   immunoassay  for  qualitative   detection  of  antibody  to
Cytomegalovirus  in serum  and  plasma.  Cytomegalovirus  (CMV)  is human  viral
pathogen belonging to the herpes family.  Infection in humans is wide spread and
usually results in asymptomatic disease.  However, severe symptomatic infections
a very significant risk in infants and immunocomprised patients.

                                       30
<PAGE>

Rotavirus  Rapid  enzyme  immunoassay  test for  qualitative  detection of human
rotavirus particles and antigens in human fecal specimens.  Rotavirus is a major
cause of gastroenteritis in infants, young children and the elderly.  During the
winter  months a portion  of  gastroenterics  in  children  is due to  rotavirus
infection.  The disease  manifests with the symptoms of vomiting  diarrhea,  and
fever.  Rapid  and  accurate  diagnosis  is  important  to  avoid  inappropriate
antibiotic  therapy,  provide  proper  treatment  early and to prevent spread of
nosocmial infection.

Mono Qualitative and quantitative detection of heterophile antibodies associated
with infectious mononucleosis. IM is an acute disease caused by the Epstein Barr
virus.  Heterophile  antibodies are the primary antibodies,  which appear in the
patient's serum, usually 1 to3 weeks after the onset of symptoms Common symptoms
include fatigue, pharyngitis, fever, lymphadenopatherapy and splenomegaly.

CRP C-reactive  protein is an acute phase protection.  The test is a solid phase
gold immunoassay for the detection of CRP.  Quantitative  CRP measurements  have
been found to provide reliable early  indication of  postoperative  inflammatory
complications  if monitored on a daily basis. CRP is also predictive of clinical
cardiovascular disease.

READER  The  Reader  is  designed  to   interpret   selected   membrane   enzyme
immunoassays. The instrument is designed for laboratory, emergency room or field
use and requires only a few minutes to learn to operate. The reader permits more
precise, accurate readings of test results than visual interpretation.

(A)

                                       31
<PAGE>

14. EXHIBIT E

                                SALES PROJECTIONS

                    Please see following two-page projection.

EXHIBIT E                                                            PAGE 1 OF 2
SALES PROJECTIONS

<TABLE>
<CAPTION>
                                                                           Year 1 >>
                                                Month >>>                      1         2        3        4        5        6
                                                -----------------------------------------------------------------------------------
--------------
DEVICES
--------------
Qualitative
-----------------------------------
<S>                                             <C>                             <C>
              HIV 1 and 2
                 Total                          No. of Units

                 Bulk                80%        No. of Units                        -        -        -        -        -        -
                                                Cost per Unit *                $ 6.50   $ 6.50   $ 6.50   $ 6.50   $ 6.50   $ 6.50

                 Individually Package20%        No. of Units                        -        -        -        -        -        -
                                                Cost per Unit *                $ 7.50   $ 7.50   $ 7.50   $ 7.50   $ 7.50   $ 7.50

              Six Additional Devices            No of Units                         -        -        -        -        -        -
                 Rubella                        Cost per Unit *                $ 7.50   $ 7.50   $ 7.50   $ 7.50   $ 7.50   $ 7.50
                 CMV (Herpes)
                 Rotavirus
                 Streptococci Group A
                 HCG (Pregnancy)
                 Infectious Mononucleosis (Heterophile)
Quantitative
-----------------------------------
              Cardiac System
                 Myoglobin                      No. of Units                        -        -        -        -        -        -
                 CK - MB                        No. of Units                        -        -        -        -        -        -
                 Cardiac Troponin - 1           No. of Units                        -        -        -        -        -        -
                                                Cost per Unit *                $ 5.00   $ 5.00   $ 5.00   $ 5.00   $ 5.00   $ 5.00

              Initial CRP Device and two        No. of Units                        -        -        -        -        -        -
                 additional new tests per quarteCost per Unit *                $ 8.50   $ 8.50   $ 8.50   $ 8.50   $ 8.50   $ 8.50

Multiple Mobile Assay Analyzer
-----------------------------------------
                                                No. of Units                        -        -        -        -        -        -
                                                Cost per Unit *                 $ 300    $ 300    $ 300    $ 300    $ 300    $ 300

-----------------------------------
DRUG TESTS
-----------------------------------
              Drug Cup
                   Total                        No. of Units                        -        -        -   20,000   40,000   60,000

                   Bulk              80%        No. of Units                        -        -        -   16,000   32,000   48,000
                                                Cost per Unit *                $ 5.00   $ 5.00   $ 5.00   $ 5.00   $ 5.00   $ 5.00

                   Individually Packa20%        No. of Units                        -        -        -    4,000    8,000   12,000
                                                Cost per Unit *                $ 6.00   $ 6.00   $ 6.00   $ 6.00   $ 6.00   $ 6.00

<CAPTION>
                                                                                                                           Total
                                       Month >>>              7         8          9         10         11        12       Year 1
                                       ---------------------------------------------------------------------------------------------
--------------
DEVICES
--------------
Qualitative
--------------------------
<S>                                     <C>                     <C>
     HIV 1 and 2
        Total                          No. of Units          10,000     17,500    25,000     35,000     45,000    55,000    187,500

        Bulk                80%        No. of Units           8,000     14,000    20,000     28,000     36,000    44,000    150,000
                                       Cost per Unit *       $ 6.50     $ 6.50    $ 6.50     $ 6.50     $ 6.50    $ 6.50

        Individually Package20%        No. of Units           2,000      3,500     5,000      7,000      9,000    11,000     37,500
                                       Cost per Unit *       $ 7.50     $ 7.50    $ 7.50     $ 7.50     $ 7.50    $ 7.50

     Six Additional Devices            No of Units            2,000      3,500     5,000      7,000      9,000    11,000     37,500
        Rubella                        Cost per Unit *       $ 7.50     $ 7.50    $ 7.50     $ 7.50     $ 7.50    $ 7.50
        CMV (Herpes)
        Rotavirus
        Streptococci Group A
        HCG (Pregnancy)
        Infectious Mononucleosis (Heterophile)
Quantitative
--------------------------
     Cardiac System
        Myoglobin                      No. of Units          10,000     17,500    25,000     35,000     45,000    55,000    187,500
        CK - MB                        No. of Units          20,000     35,000    50,000     70,000     90,000   110,000    375,000
        Cardiac Troponin - 1           No. of Units          20,000     35,000    50,000     70,000     90,000   110,000    375,000
                                       Cost per Unit *       $ 5.00     $ 5.00    $ 5.00     $ 5.00     $ 5.00    $ 5.00

     Initial CRP Device and two        No. of Units          10,000     17,500    25,000     35,000     45,000    55,000    187,500
        additional new tests per quarteCost per Unit *       $ 8.50     $ 8.50    $ 8.50     $ 8.50     $ 8.50    $ 8.50

Multiple Mobile Assay Analyzer
------------------------------
                                       No. of Units             300        525       750      1,050      1,350     1,650      5,625
                                       Cost per Unit *        $ 300      $ 300     $ 300      $ 300      $ 300     $ 300

-----------------------------------
DRUG TESTS
-----------------------------------
        Drug Cup
        Total                         No. of Units          80,000    100,000   120,000    150,000    180,000   210,000    960,000

        Bulk 80%                      No. of Units          64,000     80,000    96,000    120,000    144,000   168,000    768,000
                                      Cost per Unit *       $ 5.00     $ 5.00    $ 5.00     $ 5.00     $ 5.00    $ 5.00

        Individually Packa 20%        No. of Units          16,000     20,000    24,000     30,000     36,000    42,000    192,000
                                      Cost per Unit *       $ 6.00     $ 6.00    $ 6.00     $ 6.00     $ 6.00    $ 6.00
</TABLE>

* Note:      Cost per Unit as indicated above represents Licensee's Cost

                                       32
<PAGE>

EXHIBIT E                                          PAGE 2 OF 2
SALES PROJECTIONS

<TABLE>
<CAPTION>
                                                               Year 2 >>
                                                               -------------
                                              Month >>>        13          14          15           16          17          18
                                              -------------------------------------------------------------------------------------
--------------
DEVICES
--------------
Qualitative
--------------
<S>                                           <C>                <C>
              HIV 1 and 2
                 Total                        No. of Units      70,000      85,000     100,000      130,000     160,000     190,000

                 Bulk             80%         No. of Units      56,000      68,000      80,000      104,000     128,000     152,000
                                              Cost per Unit *   $ 6.50      $ 6.50      $ 6.50       $ 6.50      $ 6.50      $ 6.50

                 Individually Pack20%d        No. of Units      14,000      17,000      20,000       26,000      32,000      38,000
                                              Cost per Unit *   $ 7.50      $ 7.50      $ 7.50       $ 7.50      $ 7.50      $ 7.50

              Six Additional Devices          No of Units       14,000      17,000      20,000       26,000      32,000      38,000
                 Rubella                      Cost per Unit *   $ 7.50      $ 7.50      $ 7.50       $ 7.50      $ 7.50      $ 7.50
                 CMV (Herpes)
                 Rotavirus
                 Streptococci Group A
                 HCG (Pregnancy)
                 Infectious Mononucleosis
Quantitative
--------------
              Cardiac System
                 Myoglobin                    No. of Units      70,000      85,000     100,000      130,000     160,000     190,000
                 CK - MB                      No. of Units     140,000     170,000     200,000      260,000     320,000     380,000
                 Cardiac Troponin - 1         No. of Units     140,000     170,000     200,000      260,000     320,000     380,000
                                              Cost per Unit *   $ 5.00      $ 5.00      $ 5.00       $ 5.00      $ 5.00      $ 5.00

              Initial CRP Device and two      No. of Units      70,000      85,000     100,000      130,000     160,000     190,000
                 additional new tests per     Cost per Unit *   $ 8.50      $ 8.50      $ 8.50       $ 8.50      $ 8.50      $ 8.50
                 quarter

Multiple Mobile Assay Analyzer                No. of Units       2,100       2,550       3,000        3,900       4,800       5,700
--------------------------------------
                                              Cost per Unit *      300       $ 300       $ 300        $ 300       $ 300       $ 300

--------------
DRUG TESTS
--------------
              Drug Cup
                   Total                      No. of Units     250,000     290,000     330,000      390,000     450,000     510,000

                   Bulk           80%         No. of Units     200,000     232,000     264,000      312,000     360,000     408,000
                                              Cost per Unit *   $ 5.00      $ 5.00      $ 5.00       $ 5.00      $ 5.00      $ 5.00

                   Individually Pa20%ged      No. of Units      50,000      58,000      66,000       78,000      90,000     102,000
                                              Cost per Unit *   $ 6.00      $ 6.00      $ 6.00       $ 6.00      $ 6.00      $ 6.00

<CAPTION>
                                                                                                                         Total
                                                19          20          21           22          23          24          Year 2
                                             -------------------------------------------------------------------------------------
--------------
DEVICES
--------------

Qualitative
--------------
<S>                                            <C>          <C>
              HIV 1 and 2
                 Total                          235,000     280,000     325,000      380,000     440,000     500,000    2,895,000

                 Bulk             80%           188,000     224,000     260,000      304,000     352,000     400,000    2,316,000
                                                 $ 6.50      $ 6.50      $ 6.50       $ 6.50      $ 6.50      $ 6.50

                 Individually Pack20%d           47,000      56,000      65,000       76,000      88,000     100,000      579,000
                                                 $ 7.50      $ 7.50      $ 7.50       $ 7.50      $ 7.50      $ 7.50

              Six Additional Devices             47,000      56,000      65,000       76,000      88,000     100,000      579,000
                 Rubella                         $ 7.50      $ 7.50      $ 7.50       $ 7.50      $ 7.50      $ 7.50
                 CMV (Herpes)
                 Rotavirus
                 Streptococci Group A
                 HCG (Pregnancy)
                 Infectious Mononucleosis
Quantitative
--------------
              Cardiac System
                 Myoglobin                      235,000     280,000     325,000      380,000     440,000     500,000    2,895,000
                 CK - MB                        470,000     560,000     650,000      760,000     880,000   1,000,000    5,790,000
                 Cardiac Troponin - 1           470,000     560,000     650,000      760,000     880,000   1,000,000    5,790,000
                                                 $ 5.00      $ 5.00      $ 5.00       $ 5.00      $ 5.00      $ 5.00

              Initial CRP Device and two        235,000     280,000     325,000      380,000     440,000     500,000    2,895,000
                 additional new tests per        $ 8.50      $ 8.50      $ 8.50       $ 8.50      $ 8.50      $ 8.50
                 quarter

Multiple Mobile Assay Analyzer                    7,050       8,400       9,750       11,400      13,200      15,000       86,850
--------------------------------------
                                                  $ 300       $ 300       $ 300        $ 300       $ 300       $ 300

--------------
DRUG TESTS
--------------
              Drug Cup
                   Total                        580,000     650,000     720,000      810,000     900,000   1,000,000    6,880,000

                   Bulk           80%           464,000     520,000     576,000      648,000     720,000     800,000    5,504,000
                                                 $ 5.00      $ 5.00      $ 5.00       $ 5.00      $ 5.00      $ 5.00

                   Individually Pa20%ged        116,000     130,000     144,000      162,000     180,000     200,000    1,376,000
                                                 $ 6.00      $ 6.00      $ 6.00       $ 6.00      $ 6.00      $ 6.00
</TABLE>

 *  Note:     Cost per Unit as indicated above represents Licensee's Cost

                                       33LOAN AND SECURITY AGREEMENT

                                 BY AND BETWEEN

                        CYPRESS SEMICONDUCTOR CORPORATION

                                       AND

                               SILICON VALLEY BANK

                               SEPTEMBER 25, 2003

                                       1.
<PAGE>

         THIS LOAN AND SECURITY AGREEMENT, dated as of September 25, 2003 (this
"Agreement"), is by and between SILICON VALLEY BANK ("Bank"), whose address is
3003 Tasman Drive, Santa Clara, California, 95054, and CYPRESS SEMICONDUCTOR
CORPORATION ("Borrower"), whose address is 3901 North First Street, San Jose,
California, 95134, and provides the terms on which Bank will lend to Borrower
and Borrower will repay Bank. The parties hereto agree as follows:

1.       DEFINITIONS; ACCOUNTING AND OTHER TERMS

         Capitalized terms used herein shall have the meanings given to such
terms in Section 13 of this Agreement and in Appendix A hereto. 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 thereto. 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
Advances and interest on the unpaid principal amount of the Advances.

                  2.1.1    Advances.

                    (a) Bank will make Advances not exceeding the Committed
Revolving Line minus (i) the outstanding principal balance of the Advances
(including drawn but unreimbursed Letters of Credit that are deemed to be
Advances pursuant to Section 2.1.2(c)), minus (ii) the amount of all outstanding
Letters of Credit (excluding drawn but unreimbursed Letters of Credit that are
deemed to be Advances pursuant to Section 2.1.2(c)) minus (iii) all amounts for
services utilized for Cash Management Services that Borrower and Bank agree to
in writing pursuant to Section 2.1.4. Amounts borrowed hereunder that remain
available for borrowing under this Agreement may be repaid and reborrowed prior
to the Maturity Date, without penalty or premium.

                    (b) To obtain an Advance, Borrower must notify Bank pursuant
to the terms set for in Section 2 of Appendix A. Borrower must promptly confirm
the notification by delivering to Bank a Loan Payment/Advance Request Form (the
"Payment/Advance Form"). Bank will credit Advances to Borrower's deposit
account. Bank may make Advances under this Agreement based on instructions from
a Responsible Officer or his or her designee or without instructions if the
Advances are necessary to meet Obligations which have become due. 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.

                    (c) The Committed Revolving Line shall terminate on the
Maturity Date, and all Advances are immediately due and payable on the Maturity
Date.

                                       1.
<PAGE>

                  2.1.2 Letters of Credit.

                    (a) Bank will issue or have issued documentary or standby
Letters of Credit for Borrower's account not exceeding the amount available
under the Committed Revolving Line (each, a "Letter of Credit"). Each Letter of
Credit will have an expiry date of no later than 180 days after the Maturity
Date, but Borrower's reimbursement obligation will be secured by cash on terms
acceptable to Bank at any time after the Maturity Date if such Maturity Date is
not extended by Bank or if an Event of Default occurs and continues. Borrower
agrees to execute any further documentation in connection with the Letters of
Credit as Bank may reasonably request.

                    (b) Prior to or simultaneously with the opening of each
Letter of Credit, Borrower shall pay to Bank Bank's customary fees in connection
with the opening of a letter of credit (the "Letter of Credit Fees"). For
standby Letters of Credit, Bank's fees shall be 0.60% per annum. The Letter of
Credit Fees shall be paid upon the opening of each Letter of Credit and upon
each anniversary thereof, if required. In addition, Borrower shall pay to Bank,
for its own account, any and all additional issuance, negotiation, processing,
transfer or other fees to the extent and as and when required by the provisions
of any application for Letters of Credit. All Letter of Credit Fees shall be
part of the Obligations.

                    (c) If any Letter of Credit is drawn upon, such amount shall
constitute an Advance and shall initially accrue interest at the Prime Rate,
provided that Borrower shall have the right, from time to time, to elect an
Interest Rate based on the LIBOR Rate pursuant to the terms of Appendix A. If
such amount is not paid immediately, then the full amount thereof shall accrue
interest at the rate set forth in Section 2.3.1.

                  2.1.3    Intentionally Omitted.

                  2.1.4    Cash Management Services.

                  Borrower may use the availability under the Committed
Revolving Line for Bank's cash management services, which may include merchant
services, direct deposit of payroll, business credit cards, automated clearing
house transactions, controlled disbursement accounts and check cashing services
identified in various cash management services agreements related to such
services (the "Cash Management Services"). Such aggregate amounts utilized for
Cash Management Services will reduce the amount otherwise available to be
borrowed under the Committed Revolving Line, provided that Borrower and Bank
shall enter into a written agreement with respect to any such Cash Management
Services that sets forth (i) the amount of availability under the Committed
Revolving Line that will be reduced with respect to such Cash Management
Services or the methodology for calculating such amounts and (ii) the terms and
conditions governing such Cash Management Services, including, without
limitation, the treatment of any credit extended by Bank to Borrower under such
Cash Management Services as Advances hereunder.

         2.2      Overadvances.

         If, at any time, Borrower's Obligations hereunder exceed the Committed
Revolving Line, Borrower shall immediately pay Bank the excess.

                                       2.
<PAGE>

         2.3      Interest Rate, Payments.

                  2.3.1 Interest Rate. Advances accrue interest on the
outstanding principal balance thereof at the Interest Rate (as defined in
Appendix A hereto). Borrower may elect to borrow Prime Rate Loans or LIBOR Rate
Loans, all as more particularly set forth in Appendix A hereto. During the
existence of an Event of Default, Obligations shall accrue interest at a rate
per annum equal to two percent (2%) above the rate effective immediately before
the Event of Default. The Interest Rate applicable to Prime Rate Loans increases
or decreases when the Prime Rate changes. Interest is computed on a 365 day year
for the actual number of days elapsed.

                  2.3.2 Payments. Interest due on the Advances is payable on
the first day of each month. Bank may debit any of Borrower's deposit accounts,
including account number 3300297750, 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 noon 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.

         2.4      Fees.

                  Borrower will pay:

                    (a) Commitment Fee. A fully earned, non-refundable loan fee
in the amount of 0.55% of the Committed Revolving Line ($275,000) is due on or
before the Closing Date.

                    (b) Bank Expenses. All Bank Expenses (including reasonable
attorneys' fees and expenses) incurred as of the Closing Date shall be paid by
Borrower upon demand. All Bank Expenses (including reasonable attorneys' fees)
incurred after the date of this Agreement are payable within 30 days after
receipt by Borrower of an invoice therefor.

3. CONDITIONS OF LOANS

         3.1      Conditions Precedent to Initial Advance.

         Bank's obligation to make the initial Advance is subject to the
condition precedent that it shall have received, in form and substance
satisfactory to it, the following:

                  (a) this Agreement;

                  (b) the Guaranty of each of Cypress Semiconductor
(Minnesota) Inc. and Cypress Semiconductor (Texas) Inc.;

                  (c) the Pledge Agreements;

                  (d) an opinion of counsel to Borrower;

                                       3.
<PAGE>

                  (e) an officer's certificate of Borrower with respect to its
Certificate of Incorporation, Bylaws, incumbency and resolutions authorizing the
execution and delivery of this Agreement;

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

                  (g) evidence of insurance;

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

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

         3.2      Conditions Precedent to All Advances.

         Bank's obligation to make each Advance, including the initial Advance,
is subject to the following:

                    (a) timely receipt of any Payment/Advance Form for a Prime
Rate Loan or a LIBOR Rate Borrowing Certificate for a LIBOR Rate Loan;

                    (b) the representations and warranties in Section 5 must be
true in all material respects on the date of the Payment/Advance Form or the
LIBOR Rate Borrowing Certificate and on the effective date of each Advance
(except that, in each case, representations and warranties in Section 5 made as
of a specified earlier date shall be true in all material respects as of such
specified earlier date) and no Event of Default may have occurred and be
continuing, or result from such Advance. Each Advance is Borrower's
representation and warranty on that date that the representations and warranties
of Section 5 remain true in all material respects (except that representations
and warranties in Section 5 made as of a specified earlier date shall be true in
all material respects as of such specified earlier date) ; and

                    (c) there has not been, in Bank's sole discretion, a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospect of repayment of
the Obligations (a "Material Adverse Change").

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. 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 (other than inchoate indemnity
obligations).

                                       4.
<PAGE>

         4.2      Authorization to File; Delivery of Additional Documentation.

         Borrower authorizes Bank to file financing statements (Form UCC-1)
without notice to Borrower, with all appropriate jurisdictions, as Bank deems
appropriate, in order to perfect or protect Bank's security interest in the
Collateral. Borrower shall execute and deliver to Bank, at the request of Bank,
all documents that Bank may reasonably request, in form satisfactory to Bank, to
perfect and continue perfected Bank's security interest in the Collateral and in
order to fully consummate all of the transactions contemplated under the Loan
Documents.

5.       REPRESENTATIONS AND WARRANTIES

         Except as set forth in the Disclosure Letter, Borrower represents and
warrants as follows:

         5.1      Due Organization; Organizational Structure; Authorization.

         Borrower and each Guarantor 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 would
not reasonably be expected to cause a Material Adverse Change.

         Borrower has not changed its state of formation or organizational
structure or type or any organizational number assigned by its jurisdiction of
formation in the past five (5) years.

         The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not contravene 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 would 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.

         5.3      Litigation.

         Except as disclosed in Borrower's public filings with the SEC, there
are no actions or proceedings pending or, to the knowledge of Borrower's
Responsible Officers, overtly threatened by or against Borrower or any
Subsidiary in which a likely adverse decision would reasonably be expected to
cause a Material Adverse Change.

         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 deterioration in Borrower's consolidated financial condition since the date
of the most recent financial statements submitted to Bank that would reasonably
be expected to cause a Material Adverse Change.

                                       5.
<PAGE>

         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. Except for loans extended
to Borrower's employees in connection with Borrower's employee stock purchase
assistance plan, 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 would 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, except to
the extent that noncompliance would not reasonably be expected to result in a
Material Adverse Change. Borrower and each Subsidiary has timely filed all
required tax returns and paid, or made adequate provision to pay, all material
taxes, except those being contested in good faith with adequate reserves under
GAAP. Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted, except where the failure to do so would not reasonably be
expected to cause a Material Adverse Change.

         5.7      Subsidiaries.

         Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.

         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 (it
being recognized by Bank that the projections and forecasts provided by Borrower
in good faith and based upon reasonable assumptions are not viewed as facts and
that actual results during the period or periods covered by such projections and
forecasts may differ from the projected and forecasted results).

         5.9      Designation of Indebtedness under this Agreement as Senior
Indebtedness.

         All principal of, interest (including all interest accruing after the
commencement of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as

                                       6.
<PAGE>

a claim in any such proceeding), and all fees, costs, expenses and other amounts
accrued or due under this Agreement shall constitute "Designated Senior
Indebtedness" under the terms of the 2000 Indenture and the 2003 Indenture,
respectively.

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 (other than inchoate
indemnity obligations):

         6.1      Designated Senior Indebtedness.

         Borrower shall designate all principal of, interest (including all
interest accruing after the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is allowable as a
claim in any such proceeding), and all fees, costs, expenses and other amounts
accrued or due under this Agreement as "Designated Senior Indebtedness", or such
similar term, in any future Subordinated Debt incurred by Borrower after the
date hereof, if such Subordinated Debt contains such term or similar term and if
the effect of such designation is to grant to Bank the same or similar rights as
granted to Bank as a holder of "Designated Senior Indebtedness" under the 2000
Indenture or the 2003 Indenture.

         6.2      Government Compliance.

         Borrower shall, and shall cause each of its Subsidiaries to, maintain
its legal existence and good standing in its jurisdiction of formation and each
jurisdiction in which the nature of its business requires them to be so
qualified, except where the failure to take such action would not reasonably be
expected to have a material adverse effect on Borrower's and its Subsidiaries'
business or operations, taken as a whole; provided, that (a) the legal existence
of any Subsidiary that is not a Guarantor may be terminated or permitted to
lapse, and any qualification of such Subsidiary to do business may be terminated
or permitted to lapse, if, in the good faith judgment of Borrower, such
termination or lapse is in the best interests of Borrower and its Subsidiaries,
taken as a whole, and (b) Borrower may not permit its qualification to do
business in the jurisdiction of its chief executive office to terminate or
lapse; and provided, further, that this Section 6.2 shall not be construed to
prohibit any other transaction that is otherwise permitted in Section 7 of this
Agreement.

         Borrower will comply, and have each Subsidiary comply, with all laws,
ordinances and regulations to which it is subject, noncompliance with which
could have a material adverse effect on Borrower's business or operations or
would reasonably be expected to cause a Material Adverse Change.

         6.3      Financial Statements, Reports, Certificates.

                    (a) Borrower will deliver to Bank: (i) as soon as available,
but no later than 5 days after filing with the SEC, the Borrower's 10K and 10Q
reports; (ii) a Compliance Certificate together with delivery of the 10K and 10Q
reports; (iii) within 45 days after the end of each fiscal year, annual
financial projections for the following fiscal year (on a quarterly basis) as
approved by Borrower's board of directors, together with any related business
forecasts used in the preparation of such annual financial projections; (iv) a
prompt report of any legal

                                       7.
<PAGE>

actions pending or threatened against Borrower or any Subsidiary that could
result in damages or costs to Borrower or any Subsidiary of $10,000,000 or more;
and (v) budgets, sales projections, operating plans or other financial
information Bank reasonably requests.

         Borrower's 10K and 10Q reports required to be delivered pursuant to
Section 6.3(a)(i) shall be deemed to have been delivered on the date on which
Borrower posts such report or provides a link thereto on Borrower's website on
the Internet; provided, that Borrower shall provide paper copies to Bank of the
Compliance Certificates required by Section 6.3(a)(ii).

                    (b) Within 30 days after the last day of each quarter,
Borrower will deliver to Bank (i) a cash balance report, including account
statements detailing cash management types of investments held and maturity
dates, and (ii) an accounts receivable aging report, by invoice date.

         6.4      Intentionally Omitted.

         6.5      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.

         6.6      Insurance.

         Borrower shall maintain in full force and effect insurance of the types
customarily carried in its line of business, including, without limitation,
self-insurance.

         6.7      FINANCIAL COVENANTS.

         Borrower will maintain, on a consolidated basis, the following as of
the last day of each fiscal quarter:

                    (a) Tangible Net Worth. A Tangible Net Worth not less than
Six Hundred Million Dollars ($600,000,000).

                    (b) Quick Ratio. A ratio of (A) unrestricted cash, cash
equivalents, short and long term Investments and accounts receivable net of
reserves to (B) Current Liabilities exclusive of the current liability
associated with Subordinated Debt, of not less than 1.00:1.00.

         6.8      Intentionally Omitted.

         6.9      USE OF PROCEEDS.

         Borrower shall use the Advances (including Advances constituting
Letters of Credit) only for its general working capital requirements, including,
without limitation, capital expenditures, and for any other purpose not
expressly prohibited hereunder.

                                       8.
<PAGE>

         6.10     Further Assurances.

         Borrower will execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank's security interest in
the Collateral or to effect the purposes of this Agreement.

7.       NEGATIVE COVENANTS

         Borrower will not, and will not permit any of its Subsidiaries to, do
any of the following without Bank's prior written consent for so long as Bank
has an obligation to lend or there are any outstanding Obligations (other than
inchoate indemnity 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 part of
its business or property, except for:

                    (a) Transfers in the ordinary course of business;

                    (b) Transfers to Borrower or any of its Subsidiaries from
Borrower or any of its Subsidiaries;

                    (c) Transfers of property for fair market value;

                    (d) Transfers of property in connection with sale-leaseback
transactions;

                    (e) Transfers of property to the extent such property is
exchanged for credit against, or proceeds are promptly applied to, the purchase
price of other property used or useful in the business of Borrower or its
Subsidiaries;

                    (f) Transfers constituting (i) non-exclusive licenses, (ii)
exclusive licenses with respect to geographic locations, or fields of use, or
custom products developed for a particular customer;

                    (g) Transfers otherwise permitted by the Loan Documents;

                    (h) sales or discounting of delinquent accounts;

                    (i) Transfers of used, worn-out or obsolete property, or of
surplus property for fair market value;

                    (j) Transfers associated with the making or disposition of a
Permitted Investment;

                    (k) Transfers in connection with a permitted acquisition of
a portion of the assets or rights acquired; and

                                       9.
<PAGE>

                    (l) Transfers not otherwise permitted in this Section 7.1,
provided, that the aggregate book value of all such Transfers by Borrower and
its Subsidiaries, together, shall not exceed in any fiscal year, 10% of
Borrower's consolidated total assets as of the last day of the fiscal year
immediately preceding the date of determination.

         7.2      Changes in Business, Ownership, or Business Locations.

         Engage in any material line of business other than those lines of
business conducted by Borrower and its Subsidiaries on the date hereof and any
businesses reasonably related, complementary or incidental thereto or reasonable
extensions thereof. Borrower will not, without prior written notice, change its
state of incorporation.

         7.3      Mergers or Acquisitions.

         Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any Person other than with Borrower or any Subsidiary, or
acquire, or permit any of its Subsidiaries to acquire, all or substantially all
of the capital stock or property of a Person other than Borrower or any
Subsidiary, except where no Event of Default has occurred and is continuing or
would result from such action during the term of this Agreement and (a) Borrower
is the surviving entity or (b) such merger or consolidation is a Transfer
otherwise permitted pursuant to Section 7.1 hereof.

         7.4      Indebtedness.

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

         7.5      Encumbrance.

         Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
hereunder.

         7.6      Distributions; Investments.

         Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments. Pay any dividends or
make any distribution or payment or redeem, retire or purchase any capital
stock, except for Permitted Distributions.

         7.7      Transactions with Affiliates.

         Directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of Borrower except for:

                    (a) transactions that are in the ordinary course of
Borrower's business, upon fair and reasonable terms (when viewed in the context
of any series of transactions of which it may be a part, if applicable); or

                                       10.
<PAGE>

                    (b) transactions among Borrower and its Subsidiaries and
among Borrower's Subsidiaries.

         7.8      Subordinated Debt:

         Make or permit any payment on or amendments of any Subordinated Debt,
except:

                    (a) payments under the terms of the Subordinated Debt;

                    (b) payments made with Borrower's capital stock or other
Subordinated Debt;

                    (c) amendments to Subordinated Debt so long as such
Subordinated Debt remains subordinated in right of payment to this Agreement; or

                    (d) other purchases or payments of Subordinated Debt,
provided that the aggregate amount of such purchases or payments made pursuant
to this subsection (d) during the period commencing on the Closing Date and
ending on the date of determination, when combined with distributions, dividends
or purchases of Borrower's capital stock in cash during such period, shall not
exceed 50% of Borrower's consolidated positive cash flow for the period
beginning on June 30, 2003, and ending on the last day of the fiscal quarter
immediately preceding the date of determination, and no Event of Default exists
or will result from such purchases.

         7.9      Compliance.

         Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940, as amended, or
use the proceeds of any Advance for the purpose of purchasing or carrying margin
stock; 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) principal hereunder when due; (b) interest
hereunder within 3 Business Days of when due; and (c) any other Obligations
hereunder within 30 days of receipt by Borrower of an invoice therefor. During
the additional period the failure to cure the default is not an Event of Default
(but no Advance will be made during the cure period);

         8.2      Covenant Default.

                                       11.
<PAGE>

                    (a) If Borrower does not perform any obligation in Section
6.6 or 6.7 or violates any covenant in Section 7; or

                    (b) If Borrower does not perform or observe any other
material covenant in this Agreement, any Loan Documents, or in any agreement
between Borrower and Bank and has not cured the default within 20 days after a
Responsible Officer has knowledge of such default;

         8.3      Intentionally Omitted.

         8.4      Change of Control.

         If a Change of Control occurs;

         8.5      Attachment.

         If 20% or more of consolidated total assets of Borrower is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in 10 days, or if Borrower is
enjoined, restrained, or prevented by court order from conducting a 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 of Borrower's assets by any government agency
and not paid within 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
Advances will be made during the cure period);

         8.6      Insolvency.

         If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 60 days (but no Advances will be made before any
Insolvency Proceeding is dismissed);

         8.7      Other Agreements.

         If Borrower fails to (a) make any payment exceeding $10,000,000 of
Indebtedness when due and such failure continues after the applicable grace or
notice period, if any, specified in the agreement or instrument relating
thereto, or (b) perform or observe any other condition or covenant, or any other
event shall occur or condition exist under any agreement or instrument relating
to any Indebtedness exceeding $10,000,000, and such failure continues after the
applicable grace or notice period, if any, specified in the agreement or
instrument relating thereto and the effect of such failure, event or condition
is to cause the holder or holders of such Indebtedness to accelerate the
maturity of such Indebtedness or cause the mandatory repurchase of any
Indebtedness exceeding $10,000,000;

                                       12.
<PAGE>

         8.8      Judgments.

         If a money judgment(s) in the aggregate of at least $10,000,000 (not
covered by insurance) is rendered against Borrower and is unsatisfied and
unstayed for 30 days (but no Advances will be made before the judgment is stayed
or satisfied);

         8.9      Misrepresentations.

         If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement in any warranty or representation in
this Agreement or in any writing delivered to Bank or to induce Bank to enter
this Agreement or any Loan Document; or

         8.10     Guaranty.

         Any guaranty of any Obligations ceases for any reason to be in full
force or any Guarantor does not perform any material obligation under any
guaranty of the Obligations, or any material misrepresentation or material
misstatement exists as of the date made or deemed made in any warranty or
representation in any guaranty of the Obligations or in any certificate
delivered to Bank by a Guarantor in connection with any guaranty, or any
circumstance described in Sections 8.4, 8.6 or 8.8 occurs to any Guarantor.

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 8.6 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;

                    (c) Make any payments and do any acts it considers necessary
or reasonable to protect its security interest in the Collateral;

                    (d) 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; and

                    (e) 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

                                       13.
<PAGE>

forms of payment or security relating to the Collateral and (b) 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
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 (other than inchoate
indemnity obligations) have been fully repaid and performed and Bank's
obligation to provide Advances terminates.

         9.3      Bank Expenses.

         Any amounts paid by Bank in connection with this Agreement are Bank
Expenses and immediately due and payable, bearing interest at the then
applicable rate and secured by the Collateral. No payments by Bank are deemed an
agreement to make similar payments in the future or Bank's waiver of any Event
of Default.

         9.4      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; or (c) any diminution in the value 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.

         Except as otherwise required in this Agreement, Borrower waives demand,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, or release.

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 facsimile 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

                                       14.
<PAGE>

         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.

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
prior 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 to any other bank or financial institution.

         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 with respect to (a) and (b) above, for losses caused by Bank's and its
officers', employees', and agents' 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,

                                       15.
<PAGE>

and negotiations between the parties about the subject matter of this Agreement
are superseded by 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 (other than inchoate indemnity
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.

         12.8     Confidentiality.

         In handling any confidential or non-public information concerning the
Borrower and its Subsidiaries, Bank will maintain the confidentiality of such
information, but disclosure of information may be made (a) to Bank's
subsidiaries or affiliates in connection with their business with Borrower,
provided they are bound by this confidentiality provision, (b) to prospective
transferees or purchasers of any interest in the loans, provided they are bound
by this confidentiality provision, (c) as required by law, regulation, subpoena,
or other order, (d) as required in connection with Bank's examination or audit,
provided that any Person receiving confidential or non-public information is
bound by this confidentiality provision or similar regulations, and (e) as Bank
considers appropriate exercising remedies under this Agreement, provided that
any Person receiving confidential or non-public information is bound by this
confidentiality provision or similar regulations. 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

         In this Agreement:

         "2000 Indenture" is that certain Subordinated Indenture dated as of
January 15, 2000, executed by and between Borrower, as issuer, and State Street
Bank and Trust Company of

                                       16.
<PAGE>

California, N.A., as trustee, relating to 3.75% Convertible Subordinated Notes
due 2005, as supplemented from time to time.

         "2003 Indenture" is that is that certain Indenture dated as of June 3,
2003, by and between Borrower, as issuer, and U.S. Bank National Association, as
trustee, relating to the 1.25% Convertible Subordinated Plus Cash Notes due June
15, 2008, as supplemented from time to time.

         "Accounts" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.

         "Advance" or "Advances" is a loan advance (or advances) under the
Committed Revolving Line, including Advances used to (i) fund Letters of Credit,
or (ii) extend financial accommodations for Cash Management Services to the
extent that Borrower and Bank have agreed in writing to extend financial
accommodations pursuant to the terms of Section 2.1.4.

         "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).

         "Borrower's Books" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.

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

         "Cash Management Services" are defined in Section 2.1.4.

         "Change in Control" is a transaction in which any "person" or "group"
(within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended) becomes the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended), directly or indirectly,
of greater than 35% of the shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors.

         "Closing Date" is the date of this Agreement.

         "Code" is the Uniform Commercial Code in effect in any applicable
jurisdiction.

         "Collateral" is the property described as such in the Pledge Agreement.

                                       17.
<PAGE>

         "Committed Revolving Line" is an Advance or Advances not to exceed a
principal amount outstanding at any time of $50,000,000.

         "Compliance Certificate" is a Compliance Certificate signed by a
Responsible Officer in substantially the same form of Exhibit C attached hereto.

         "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.

         "Copyrights" are all copyright rights, applications or registrations
and like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.

         "Current Liabilities" are the aggregate amount of Total Liabilities
which mature within one (1) year.

         "Disclosure Letter" means the disclosure letter, dated as of the
Closing Date, addressed from Borrower to Bank, as amended or amended and
restated from time to time.

         "ERISA" is the Employment Retirement Income Security Act of 1974, as
amended, and its regulations.

         "GAAP" is generally accepted accounting principles.

         "Guarantor" is Cypress Semiconductor (Minnesota) Inc. and Cypress
Semiconductor (Texas) Inc.

         "Guaranty" is the Unconditional Guaranty dated as of the Closing Date
and executed by each Guarantor.

         "Indebtedness" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.

         "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

                                       18.
<PAGE>

the benefit of creditors, compositions, extensions generally with its creditors,
or proceedings seeking reorganization, arrangement, or other relief.

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

         "Letter of Credit" is defined in Section 2.1.2.

         "Letter of Credit Fees" is defined in Section 2.1.2.

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

         "Loan Documents" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower or Guarantor, any pledge agreements, and any
other present or future agreement between Borrower and Bank or for the benefit
of Bank in connection with this Agreement, all as amended, extended or restated.

         "Material Adverse Change" has the meaning set forth in Section 3.2(c)
hereof.

         "Maturity Date" is September 25, 2005.

         "Obligations" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later in connection with this Agreement,
including cash management services and letters of credit, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.

         "Patents" are patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues, extensions
and continuations-in-part of the same.

         "Permitted Distributions" means:

                    (a) purchases of capital stock from former employees,
consultants and directors pursuant to repurchase agreements or other similar
agreements;

                    (b) distributions or dividends consisting solely of
Borrower's capital stock;

                    (c) purchases for value of any rights distributed in
connection with any stockholder rights plan;

                    (d) purchases of capital stock or options to acquire such
capital stock with the proceeds received from a substantially concurrent
issuance of capital stock or convertible securities;

                    (e) purchases of capital stock pledged as collateral for
loans to employees;

                                       19.
<PAGE>

                    (f) purchases of capital stock in connection with the
exercise of stock options or stock appreciation rights by way of cashless
exercise or in connection with the satisfaction of withholding tax obligations;

                    (g) purchases of fractional shares of capital stock arising
out of stock dividends, splits or combinations or business combinations;

                    (h) the settlement or performance of such Person's
obligations under any equity derivative transaction, option contract or similar
transaction or combination of transactions; and

                    (i) other distributions, dividends or purchases of
Borrower's capital stock in cash, provided that the aggregate amount of such
distributions, dividends, or purchases made pursuant to this clause (i) during
the period commencing on the Closing Date and ending on the date of
determination, when combined with purchases of Subordinated Debt during such
period, shall not exceed 50% of Borrower's consolidated positive cash flow for
the period beginning on June 30, 2003, and ending on the last day of the fiscal
quarter immediately preceding the date of determination, and no Event of Default
exists or will result from such other distribution, dividend, or purchase.

         "Permitted Indebtedness" is:

                    (j) Borrower's Indebtedness to Bank under this Agreement or
any other Loan Document;

                    (k) (i) Any Indebtedness that does not exceed $5,000,000 in
principal amount existing on the Closing Date, and (ii) any Indebtedness in
excess of $5,000,000 in principal amount existing on the Closing Date and shown
on the Disclosure Letter;

                    (l) Subordinated Debt;

                    (m) Indebtedness to trade creditors and with respect to
surety bonds and similar obligations;

                    (n) Guaranties of Permitted Indebtedness;

                    (o) Indebtedness consisting of interest rate, currency, or
commodity swap agreements, interest rate cap or collar agreements or
arrangements designated to protect a Person against fluctuations in interest
rates, currency exchange rates, or commodity prices;

                    (p) Indebtedness between Borrower and any of its
Subsidiaries or among any of Borrower's Subsidiaries;

                    (q) Up to $200,000,000 in principal amount of Indebtedness
(and related interest and other amounts) of SunPower Corp. and guaranties of
such Indebtedness by Borrower and its Subsidiaries;

                    (r) Indebtedness with respect to documentary letters of
credit;

                                       20.
<PAGE>

                    (s) Capitalized leases and purchase money Indebtedness
secured by Permitted Liens;

                    (t) Indebtedness of entities acquired in any permitted
merger or acquisition transaction;

                    (u) Refinanced Permitted Indebtedness, provided that the
amount of such Indebtedness is not increased except by an amount equal to a
reasonable premium or other reasonable amount paid in connection with such
refinancing and by an amount equal to any existing, but unutilized, commitment
thereunder; and

                    (v) Other Indebtedness, if, on the date of incurring any
Indebtedness pursuant to this subsection (m), the outstanding aggregate amount
of all Indebtedness incurred pursuant to this subsection (m) does not exceed 20%
of Borrower's consolidated total assets calculated as of the end of the
immediately prior fiscal quarter.

         "Permitted Investments" are:

                    (w) Investments existing on the Closing Date;

                    (x) (i) Marketable direct obligations issued or
unconditionally guaranteed by the United States or its agencies or any State
maturing within 1 year from its acquisition, (ii) commercial paper maturing no
more than 2 years after its creation and having the highest rating from either
Standard & Poor's Corporation or Moody's Investors Service, Inc., and (iii)
Bank's certificates of deposit issued maturing no more than 2 years after issue;

                    (y) Investments approved by the Borrower's Board of
Directors or otherwise pursuant to a Board-approved investment policy;

                    (z) Investments in or to Borrower or any of its
Subsidiaries;

                    (aa) Investments consisting of deposit and investment
accounts in the name of Borrower or any Subsidiary;

                    (bb) Investments consisting of extensions of credit to
Borrower's or its Subsidiaries' customers in the nature of accounts receivable,
prepaid royalties or notes receivable arising from the sale or lease of goods,
provision of services or licensing activities of Borrower;

                    (cc) Investments received in satisfaction or partial
satisfaction of obligations owed by financially troubled obligors;

                    (dd) Investments acquired in exchange for any other
Investments in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization;

                    (ee) Investments acquired as a result of a foreclosure with
respect to any secured Investment;

                                       21.
<PAGE>

                    (ff) Investments consisting of interest rate, currency, or
commodity swap agreements, interest rate cap or collar agreements or
arrangements designated to protect a Person against fluctuations in interest
rates, currency exchange rates, or commodity prices;

                    (gg) Investments consisting of loans and advances to
employees; and

                    (hh) Other Investments, if, on the date of incurring any
Investments pursuant to this subsection (l), the outstanding aggregate amount of
all Investments incurred pursuant to this subsection (l) does not exceed 20% of
Borrower's consolidated total assets calculated as of the end of the immediately
prior fiscal quarter.

         "Permitted Liens" are:

                    (ii) (i) Liens existing on the Closing Date securing
Indebtedness that does not exceed $5,000,000 in principal amount and (ii) Liens
existing on the Closing Date securing Indebtedness in excess of $5,000,000 in
principal amount and shown on the Disclosure Letter or (iii) Liens arising under
this Agreement or other Loan Documents;

                    (jj) 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;

                    (kk) Liens (including with respect to capital leases) (i) on
property (including accessions, additions, parts, replacements, fixtures,
improvements and attachments thereto, and the proceeds thereof) acquired or held
by Borrower or its Subsidiaries incurred for financing such property (including
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof), or (ii) existing on property
(and accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof) when acquired, if the Lien is
confined to such property (including accessions, additions, parts, replacements,
fixtures, improvements and attachments thereto, and the proceeds thereof);

                    (ll) Liens incurred in the extension, renewal or refinancing
of the indebtedness secured by Liens described in (a) through (s), 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 it
secures may not increase;

                    (mm) 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;

                    (nn) Leases or subleases granted in the ordinary course of
Borrower's business, including in connection with Borrower's leased premises or
leased property;

                    (oo) Liens in favor of custom and revenue authorities
arising as a matter of law to secure the payment of custom duties in connection
with the importation of goods;

                                       22.
<PAGE>

                    (pp) Liens on insurance proceeds securing the payment of
financed insurance premiums;

                    (qq) Customary Liens granted in favor of a trustee to secure
fees and other amounts owing to such trustee under an indenture or other similar
agreement;

                    (rr) Liens on assets acquired in mergers and acquisitions
not prohibited by the covenant limiting mergers and acquisitions;

                    (ss) Liens consisting of pledges of cash, cash equivalents
or government securities to secure swap or foreign exchange contracts or letters
of credit;

                    (tt) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Sections 8.5 or 8.8;

                    (uu) Liens in favor of other financial institutions arising
in connection with Borrower's deposit or securities accounts held at such
institutions;

                    (vv) Carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceeding if adequate reserves with respect
thereto are maintained on the books of the applicable Person;

                    (ww) Pledges or deposits in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
social security legislation;

                    (xx) Deposits to secure the performance of bids, trade
contracts (other than for borrowed money), contracts for the purchase of
property, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case, incurred in the
ordinary course of business and not representing an obligation for borrowed
money;

                    (yy) Easements, rights-of-way, restrictions and other
similar encumbrances affecting real property which do not materially detract
from the value of the property subject thereto or materially interfere with the
ordinary conduct of the business of the applicable Person; and

                    (zz) Liens granted by SunPower Corp. in its property in
connection with Indebtedness permitted pursuant to clause (h) of the definition
of "Permitted Indebtedness"; and

                    (aaa) Liens not otherwise permitted, provided that the
amount of all such Liens is not in excess of 10% of Borrower's consolidated
total assets calculated as of the end of the immediately prior fiscal quarter
(with any such Lien valued as the amount of the obligation secured by such
Lien).

                                       23.
<PAGE>

         "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.

         "Pledge Agreements" are the Stock Pledge Agreement (100% Pledge) and
the Stock Pledge Agreement (65% Pledge) dated as of the Closing Date by Borrower
in favor of Bank.

         "Responsible Officer" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Treasurer of Borrower.

         "SEC" means the Securities and Exchange Commission.

         "Subordinated Debt" is (a) Indebtedness incurred by Borrower
subordinated to Borrower's Indebtedness owed to Bank and which is reflected in a
written agreement in a manner and form reasonably acceptable to Bank and
approved by Bank in writing, and (b) all Indebtedness under both the 2000
Indenture and the 2003 Indenture, and (c) to the extent the terms of
subordination do not change adversely to Bank, refinancings, refundings,
renewals, amendments or extensions of any of the foregoing.

         "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 (i) any amounts attributable to (without
duplication and exclusive of goodwill, Patents, Trademarks, Copyrights and
research and development expenses relating to acquisitions occurring after the
Closing Date) (a) goodwill, (b) intangible items such as unamortized debt
discount and expense, Patents, Trademarks, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.

         "Total Liabilities" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and the current portion of Subordinated Debt allowed to be
paid, but excluding all other Subordinated Debt.

         "Trademarks" are trademark and servicemark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Assignor connected with the trademarks.

                                       24.
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.

BORROWER:

CYPRESS SEMICONDUCTOR CORPORATION

By:___________________________________________________

Printed Name:_________________________________________

Title:________________________________________________

BANK:

SILICON VALLEY BANK

By:___________________________________________________

Printed Name:_________________________________________

Title_________________________________________________

<PAGE>

                                   APPENDIX A

                                LIBOR SUPPLEMENT

1. Definitions.

         "Business Day" means, with respect to LIBOR Rate Loans, a day of the
year (a) that is not a Saturday, Sunday or other day on which banks in the State
of California or the City of London are authorized or required to close and (b)
on which dealings are carried on in the interbank market in which Bank
customarily participates.

         "Interest Period" means for each LIBOR Rate Loan, a period of
approximately one, two or three months as the Borrower may elect, provided that
the last day of an Interest Period for a LIBOR Rate Loan shall be determined in
accordance with the practices of the LIBOR interbank market as from time to time
in effect, provided, further, in all cases such period shall expire not later
than the applicable Maturity Date.

         "Interest Rate" shall mean as to: (a) Prime Rate Loans, a rate equal to
the Prime Rate; and (b) LIBOR Rate Loans, a rate of 1.75% per annum in excess of
the LIBOR Rate (based on the LIBOR Rate applicable for the Interest Period
selected by the Borrower).

         "LIBOR Base Rate" means, for any Interest Period for a LIBOR Rate Loan,
the rate of interest per annum determined by Bank to be the per annum rate of
interest as 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 before 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 Loan.

         "LIBOR Rate" shall mean, for any Interest Period for a LIBOR Rate Loan,
a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%)
equal to (i) the LIBOR Base Rate for such Interest Period divided by (ii) 1
minus the Reserve Requirement for such Interest Period.

         "LIBOR Rate Loans" means any Advances made or a portion thereof on
which interest is payable based on the LIBOR Rate in accordance with the terms
hereof.

         "Prime Rate" means the variable rate of interest per annum, most
recently announced by Bank as its "prime rate," whether or not such announced
rate is the lowest rate available from Bank. The interest rate applicable to the
Prime Rate Loans shall change on each date there is a change in the Prime Rate.

         "Prime Rate Loans" means any Advances made or a portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
hereof.

         "Regulatory Change" means, with respect to Bank, any change on or after
the date of this Loan 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

                                       1.
<PAGE>

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.

         "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 (i) any category of liabilities which includes deposits by reference to
which the LIBOR Rate is to be determined as provided in the definition of "LIBOR
Base Rate" or (ii) any category of extensions of credit or other assets which
include Loans.

2. Requests for Loans. Each LIBOR Rate Loan shall be made upon the irrevocable
written request of Borrower received by Bank not later than 11 :00 a.m. (Santa
Clara, California time) on the Business Day three (3) Business Days prior to the
date such Loan is to be made. Each such notice shall specify the date such Loan
is to be made, which day shall be a Business Day; the amount of such Loan, the
Interest Period for such Loan, and comply with such other requirements as Bank
determines are reasonable or desirable in connection therewith.

         Each written request for a LIBOR Rate Loan shall be in the form of a
LIBOR Rate Loan Borrowing Certificate as set forth on Exhibit A, which shall be
duly executed by the Borrower.

         Each Prime Rate Loan shall be made upon the irrevocable written request
of Borrower received by Bank not later than 11:00 a.m. (Santa Clara, California
time) on the Business Day one (1) Business day prior to the date such Loan is to
be made. Each such notice shall specify the date such Loan is to be made, which
day shall be a Business Day and the amount of such Loan, and comply with such
other requirements as Bank determines are reasonable or desirable in connection
therewith.

3.       Conversion/Continuation of Loans.

         (a)      Borrower may from time to time submit in writing a request
                  that Prime Rate Loans be converted to LIBOR Rate Loans or that
                  any existing LIBOR Rate Loans continue for an additional
                  Interest Period. Such request shall specify the amount of the
                  Prime Rate Loans which will constitute LIBOR Rate Loans
                  (subject to the limits set forth below) and the Interest
                  Period to be applicable to such LIBOR Rate Loans. Each written
                  request for a conversion to a LIBOR Rate Loan or a
                  continuation of a LIBOR Rate Loan shall be substantially in
                  the form of a LIBOR Rate Conversion/Continuation Certificate
                  as set forth on Exhibit B to this Supplement which shall be
                  duly executed by the Borrower. Subject to the terms and
                  conditions contained herein, three (3) Business Days after
                  Bank's receipt of such a request from Borrower, such Prime
                  Rate Loans shall be converted to LIBOR Rate Loans or such
                  LIBOR Rate Loans shall continue, as the case may be provided
                  that:

                                       2.
<PAGE>

                  (i)      no Event of Default or event which with notice or
                           passage of time or both would constitute an Event of
                           Default exists;

                  (ii)     no party hereto shall have sent any notice of
                           termination of this Supplement or of the Loan
                           Agreement;

                  (iii)    Borrower shall have complied with such customary
                           procedures as Bank has established from time to time
                           for Borrower's requests for LIBOR Rate Loans;

                  (iv)     the amount of a LIBOR Rate Loan shall be $1,000,000
                           or such greater amount which is an integral multiple
                           of $100,000; and

                  (v)      Bank shall have determined that the Interest Period
                           or LIBOR Rate is available to Bank which can be
                           readily determined as of the date of the request for
                           such LIBOR Rate Loan.

         Any request by Borrower to convert Prime Rate Loans to LIBOR Rate Loans
or continue any existing LIBOR Rate Loans shall be irrevocable. 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 Rate market to fund any LIBOR Rate Loans, but the provisions
hereof shall be deemed to apply as if Bank had purchased such deposits to fund
the LIBOR Rate Loans.

         (b)      Any LIBOR Rate Loans shall automatically convert to Prime Rate
                  Loans upon the last day of the applicable Interest Period,
                  unless Bank has received and approved a complete and proper
                  request to continue such LIBOR Rate Loan at least three (3)
                  Business Days prior to such last day in accordance with the
                  terms hereof. Any LIBOR Rate Loans shall, at Bank's option,
                  convert to Prime Rate Loans in the event that (i) an Event of
                  Default, or event which with the notice or passage of time or
                  both would constitute an Event of Default, shall exist, (ii)
                  this Supplement or the Loan Agreement shall terminate, or
                  (iii) the aggregate principal amount of the Prime Rate Loans
                  which have previously been converted to LIBOR Rate Loans, or
                  the aggregate principal amount of existing LIBOR Rate Loans
                  continued, as the case may be, at the beginning of an Interest
                  Period shall at any time during such Interest Period exceeds
                  the Committed Revolving Line. Borrower agrees to pay to Bank,
                  upon demand by Bank (or Bank may, at its option, charge
                  Borrower's loan account) any amounts required to compensate
                  Bank for any loss (including loss of anticipated profits),
                  cost or expense incurred by such person, as a result of the
                  conversion of LIBOR Rate Loans to Prime Rate Loans pursuant to
                  any of the foregoing.

         (c)      On all Loans, Interest shall be payable by Borrower to Bank
                  monthly in arrears not later than the first (1st) day of each
                  calendar month at the applicable Interest Rate.

                                       3.
<PAGE>

4.       Additional Requirements/Provisions Regarding LIBOR Rate Loans, Etc.

         (a)      If for any reason (including voluntary or mandatory prepayment
                  or acceleration), Bank receives all or part of the principal
                  amount of a LIBOR Rate Loan prior to the last day of the
                  Interest Period for such Loan, 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 or the offshore
                  currency interbank markets or United States Treasury
                  investment products, as the case may be, for a period starting
                  on the date on which it was so received and ending on the last
                  day of such 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 to 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
                  Loans 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 Supplement in respect of any Loans
                           (other than changes which affect taxes measured by or
                           imposed on the overall net income of Bank by the
                           jurisdiction in which such Bank has its principal
                           office); or

                  (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 Loans or any
                           deposits referred to in the definition of "LIBOR Base
                           Rate"); or

                  (iii)    imposes any other condition affecting this Supplement
                           (or any of such extensions of credit or liabilities).

Bank will notify Borrower of any event occurring after the date of the Loan
Agreement which will entitle Bank to compensation pursuant to this section 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 4. Determinations and allocations by Bank for purposes of this Section 4
of the effect of any Regulatory Change on its costs of maintaining its
obligations to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of Loans, and of the additional amounts required to
compensate Bank in respect of any Additional Costs, shall be conclusive absent
manifest error.

                                       4.
<PAGE>

         (c)      Borrower shall pay to Bank, upon the request of Bank, such
                  amount or amounts as shall be sufficient (in the sole good
                  faith opinion of such Bank) to compensate it for any loss,
                  costs or expense incurred by it as a result of any failure by
                  Borrower to borrow a Loan on the date for such borrowing
                  specified in the relevant notice of borrowing hereunder.

         (d)      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 its policies with
                  respect to capital adequacy) by an amount deemed by Bank to be
                  material, then from time to time, within 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 and
                  setting forth the additional amount or amounts to be paid to
                  it hereunder shall be conclusive absent manifest error.

         (e)      If at any time Bank, in its sole and absolute discretion,
                  determines that: (i) the amount of the LIBOR Rate Loans for
                  periods equal to the corresponding Interest Periods are not
                  available to Bank in the offshore currency interbank markets,
                  or (ii) the LIBOR Rate does not accurately reflect the cost to
                  Bank of lending the LIBOR Rate Loan, then Bank shall promptly
                  give notice thereof to Borrower, and upon the giving of such
                  notice Banks obligation to make the LIBOR Rate Loans shall
                  terminate, unless Bank and the Borrower agree in writing to a
                  different interest rate Loans shall terminate, unless Bank and
                  the Borrower agree in writing to a different interest rate
                  applicable to LIBOR Rate Loans. If it shall become unlawful
                  for Bank to continue to fund or maintain any Loans, or to
                  perform its obligations hereunder, upon demand by Bank,
                  Borrower shall prepay the Loans 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 4(a) of
                  this Supplement).

                                       5.
<PAGE>

                          EXHIBIT A TO LIBOR SUPPLEMENT

                      LIBOR RATE LOAN BORROWING CERTIFICATE

         The undersigned hereby certifies as follows:

         I, ________________________, am the duly elected and acting
__________________ of Cypress Semiconductor Corporation ("Borrower").

         This certificate is delivered pursuant to Section 2 of that certain
LIBOR Supplement to Agreement together with the Loan and Security Agreement by
and between Borrower and SILICON VALLEY BANK ("Bank) (the "Loan Agreement"). The
terms used in this Borrowing Certificate which are defined in the Loan Agreement
have the same meaning herein as ascribed to them therein .

         Borrower hereby requests on __________________, 200_ a LIBOR Rate Loan
(the "Loan") as follows:

                    (a) The date on which the Loan is to be made is
______________, 200_.

                    (b) The amount of the Loan is to be
__________________________ ($__________________) for an Interest Period of
___________ month( s).

         All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete in all material respects as of the date
of this request for a loan; provided, however, that those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date.

         IN WITNESS WHEREOF, this Borrowing Base Certificate is executed by the
undersigned as of this ____ day of _______________, 200_.

                                         CYPRESS SEMICONDUCTOR CORPORATION

                                         By:__________________________________

                                         Title:_______________________________

For Internal Bank Use Only

--------------------------------------------------------------------------------
LIBOR Pricing Date    I LIBOR Rate    I LIBOR Rate Variance     Maturity Date
--------------------------------------------------------------------------------
                   |                |        ___%             |
--------------------------------------------------------------------------------

                                       1.
<PAGE>

                          EXHIBIT B TO LIBOR SUPPLEMENT

                 LIBOR RATE CONVERSION/CONTINUATlON CERTIFICATE

         The undersigned hereby certifies as follows:

         1, ________________________, am the duly elected and acting
_________________ of Cypress Semiconductor Corporation ("Borrower").

         This certificate is delivered pursuant to Section 2 of that certain
LIBOR Supplement to Agreement together with the Loan and Security Agreement by
and between Borrower and SILICON VALLEY BANK ("Bank") (the "Loan Agreement").
The terms used in this LIBOR Rate Conversion/Continuation Certificate which are
defined in the Loan Agreement .have the same meaning herein as ascribed to them
therein.

         Borrower hereby requests on ____________, 200_ a LIBOR Rate Loan (the
"Loan") as follows:

         (a)      ____ (i)  A rate conversion of an existing Prime Rate Loan
                            from a Prime Rate Loan to a LIBOR Rate Loan; or

                  ____ (ii) A continuation of an existing LIBOR Rate Loan as a
                            LIBOR Rate Loan;

                            [Check (i) or (ii) above]

         (b)      The date on which the Loan is to be made is ___________, 200_.

         (c)      The amount of the Loan is to be _____________($_____________),
for an Interest Period of ___________ month(s).

         All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete in all material respects as of the date
of this request for a loan; provided, however, that those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date.

                                       1.
<PAGE>

         IN WITNESS WHEREOF, this LIBOR Rate Conversion/Continuation Certificate
is executed by the undersigned as of this __ day of ___________, 200_.

                                              CYPRESS SEMICONDUCTOR CORPORATION

                                              By:_______________________________

                                              Title:____________________________

For Internal Bank Use Only

--------------------------------------------------------------------------------
LIBOR Pricing Date    I LIBOR Rate    I LIBOR Rate Variance     Maturity Date
--------------------------------------------------------------------------------
                   |                |        ___%             |
--------------------------------------------------------------------------------

                                       2.
<PAGE>

                                    EXHIBIT A

                        Forms of Stock Pledge Agreements

                                       1.

<PAGE>

                                    EXHIBIT B

                  PRIME RATE LOAN PAYMENT/ADVANCE REQUEST FORM
           DEADLINE FOR SAME DAY PROCESSING IS 12:00 NOON PACIFIC TIME

<TABLE>
<CAPTION>

<S>                                                                                     <C>
Fax To:                                                                                 Date:
         ---------------------------                                                         ----------------------

Borrower:  Cypress Semiconductor Corporation

|_| Loan Payment:

   From Account #                                             To Account #
                 -----------------------------------------                -----------------------------------------
                        (Name and Deposit Account #)                                   (Loan  Account #)

   Principal $                                    and/or Interest $
              -----------------------------------                  ------------------------------------------------

Borrower's representations and warranties in the Loan and Security Agreement are
true, correct and complete in all material respects on and as of the date
hereof, but those representations and warranties expressly referring to another
date shall be true, correct and complete in all material respects as of such
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 #)                                            (Name and Deposit Account #)

Amount of Advance $
                   ----------------------------------

Borrower's representations and warranties in the Loan and Security Agreement are
true, correct and complete in all material respects on and as of the date of the
requested Advance, but those representations and warranties expressly referring
to another date shall be true, correct and complete in all material respects as
of such 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 12:00 noon, Pacific Time

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:
                     -----------------------------------------------------------------------------------
</TABLE>

                                       1.
<PAGE>

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).

<TABLE>
<CAPTION>

<S>                                                           <C>
Authorized Signature:                                         2nd Signature (if required):
                     --------------------------------                                     -------------------------
Print Name/Title:                                             Print Name/Title:
                 ------------------------------------                          ------------------------------------
Telephone #                                                   Telephone #
            -----------------------------------------                     -----------------------------------------
</TABLE>

                                       2.
<PAGE>

                                    EXHIBIT C

                             COMPLIANCE CERTIFICATE

TO:           SILICON VALLEY BANK
              3003 Tasman Drive
              Santa Clara, CA 95054

FROM:         Cypress Semiconductor Corporation
              3901 North First Street
              San Jose, CA  95134

         The undersigned authorized officer of CYPRESS SEMICONDUCTOR CORPORATION
("Borrower") certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending _______________ with all required
covenants, except as noted below, and (ii) all representations and warranties in
the Agreement are true and correct in all material respects on this date (but
those representations and warranties expressly referring to another date shall
be true, correct, and complete in all material respects as of such date).
Attached are the required documents supporting the certification. The
undersigned officer certifies that such documents were prepared in accordance
with Generally Accepted Accounting Principles (GAAP) consistently applied from
one period to the next, except as explained in an accompanying letter or
footnotes. The undersigned officer acknowledges that no borrowings may be
requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.

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

<TABLE>
<CAPTION>

Financial Covenant                        Required                    Actual               Complies
------------------                        --------                    ------               --------
     Maintain on a Quarterly Basis:
     ------------------------------

<S>                                     <C>                          <C>                   <C>      <C>
Quick Ratio                              Not less than 1.00:1.00     $________             Yes      No

Tangible Net Worth                       Not less than $600,000,000  $________             Yes      No

Reporting Covenant                       Required                                          Complies
------------------                       --------                                          --------

Cash holding report                      Quarterly within 30 days                          Yes      No

A/R Aging                                Quarterly within 30 days                          Yes      No

10K and 10Q reports & Compliance Within 5 days of filing                                   Yes      No
Certificate

Financial Projections                    Annually within 45 days of FYE                    Yes      No
</TABLE>

<PAGE>

                                       2
<PAGE>

Sincerely,

<TABLE>
<CAPTION>
CYPRESS SEMICONDUCTOR CORPORATION                                               BANK USE ONLY
<S>                                                              <C>

-------------------------------------------                      Received By:
SIGNATURE                                                                    --------------------------------
                                                                             AUTHORIZED SIGNER
-------------------------------------------
TITLE                                                            Date:
                                                                      ---------------------------------------
-------------------------------------------                      Verified:
Date                                                                      -----------------------------------
                                                                             AUTHORIZED SIGNER

                                                                 Date:
                                                                      ---------------------------------------

                                                                 Compliance Status:             Yes       No
</TABLE>

                                       3.
<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                             <C>
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 Interest Rate, Payments.............................................................................3

         2.5 Fees ...............................................................................................3

3. CONDITIONS OF LOANS...........................................................................................3

         3.1 Conditions Precedent to Initial Credit Extension....................................................3

         3.2 Conditions Precedent to all Credit Extensions.......................................................4

4. CREATION OF SECURITY INTEREST.................................................................................4

         4.1 Grant of Security Interest..........................................................................4

5. REPRESENTATIONS AND WARRANTIES................................................................................5

         5.1 Due Organization and Authorization..................................................................5

         5.2 Collateral..........................................................................................5

         5.3 Litigation..........................................................................................5

         5.4 No Material Adverse Change in Financial Statements..................................................5

         5.5 Solvency............................................................................................6

         5.6 Regulatory Compliance...............................................................................6

         5.7 Subsidiaries........................................................................................6

         5.8 Full Disclosure.....................................................................................6

6. AFFIRMATIVE COVENANTS.........................................................................................6

         6.1 Government Compliance...............................................................................7

         6.2 Financial Statements, Reports, Certificates.........................................................7

         6.3 Inventory; Returns..................................................................................7

         6.4 Taxes...............................................................................................7

         6.5 Insurance...........................................................................................7

         6.7 Financial Covenants.................................................................................8

         6.10 Use of Proceeds....................................................................................8

         6.12 Further Assurances.................................................................................8
</TABLE>

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)
<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>      <C>                                                                                                    <C>
7. NEGATIVE COVENANTS............................................................................................8

         7.1 Dispositions........................................................................................8

         7.2 Changes in Business, Ownership, Management or Business Locations....................................9

         7.3 Mergers or Acquisitions.............................................................................9

         7.4 Indebtedness........................................................................................9

         7.5 Encumbrance.........................................................................................9

         7.6 Distributions; Investments.........................................................................10

         7.7 Transactions with Affiliates.......................................................................10

         7.8 Subordinated Debt..................................................................................10

         7.9 Compliance.........................................................................................10

8. EVENTS OF DEFAULT............................................................................................11

         8.1 Payment Default....................................................................................11

         8.2 Covenant Default...................................................................................11

         8.3 Material Adverse Change............................................................................11

         8.4 Attachment.........................................................................................11

         8.5 Insolvency.........................................................................................11

         8.6 Other Agreements...................................................................................11

         8.7 Judgments..........................................................................................12

         8.8 Misrepresentations.................................................................................12

         8.9 Guaranty...........................................................................................12

9. BANK'S RIGHTS AND REMEDIES...................................................................................12

         9.1 Rights and Remedies................................................................................12

         9.2 Power of Attorney..................................................................................13

         9.4 Bank Expenses......................................................................................13

         9.5 Bank's Liability for Collateral....................................................................13

         9.6 Remedies Cumulative................................................................................13

         9.7 Demand Waiver......................................................................................13

10. NOTICES.....................................................................................................13

11. CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER.................................................................14

12. GENERAL PROVISIONS..........................................................................................14
</TABLE>

                                       ii.
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)
<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                             <C>
         12.1 Successors and Assigns............................................................................14

         12.2 Indemnification...................................................................................14

         12.3 Time of Essence...................................................................................14

         12.4 Severability of Provision.........................................................................14

         12.5 Amendments in Writing, Integration................................................................15

         12.6 Counterparts......................................................................................15

         12.7 Survival..........................................................................................15

         12.8 Confidentiality...................................................................................15

         12.9 Attorneys' Fees, Costs and Expenses...............................................................15

13. DEFINITIONS.................................................................................................15
</TABLE>

                                      iii.
<PAGE>

An extra section break has been inserted above this paragraph. Do not delete
this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.

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