DIGITALTHINK INC
EXHIBIT 10.1 LOAN AND SECURITY AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>exhibit10_1.txt
<DESCRIPTION>EXHIBIT 10.1 LOAN AND SECURITY AGREEMENT
<TEXT>
                                                                    EXHIBIT 10.1


                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
                               DIGITALTHINK, INC.



<PAGE>



                                TABLE OF CONTENTS

                                                                           Page

1        ACCOUNTING AND OTHER TERMS...........................................4
         --------------------------

2        LOAN AND TERMS OF PAYMENT............................................4
         -------------------------
         2.1      Promise to Pay..............................................4
         2.2      Overadvances................................................5
         2.3      Interest Rate, Payments.....................................5
         2.4      Fees........................................................6

3        CONDITIONS OF LOANS..................................................6
         -------------------
         3.1      Conditions Precedent to Initial Credit Extension............6
         3.2      Conditions Precedent to all Credit Extensions...............6

4        CREATION OF SECURITY INTEREST........................................6
         -----------------------------
         4.1      Grant of Security Interest..................................6
         4.2      Authorization To File.......................................6

5        REPRESENTATIONS AND WARRANTIES.......................................7
         ------------------------------
         5.1      Due Organization and Authorization..........................7
         5.2      Collateral..................................................7
         5.3      Litigation..................................................7
         5.4      No Material Adverse Change in Financial Statements..........7
         5.5      Solvency....................................................7
         5.6      Regulatory Compliance.......................................8
         5.7      Investments in Subsidiaries.................................8
         5.8      Full Disclosure.............................................8

6        AFFIRMATIVE COVENANTS................................................8
         ---------------------
         6.1      Government Compliance.......................................8
         6.2      Financial Statements, Reports, Certificates.................8
         6.3      Inventory; Returns..........................................9
         6.4      Taxes.......................................................9
         6.5      Insurance...................................................9
         6.6      Accounts; Minimum Balances..................................9
         6.7      Financial Covenants.........................................9
         6.8      Further Assurances.........................................10

7        NEGATIVE COVENANTS..................................................10
         ------------------
         7.1      Dispositions...............................................10
         7.2      Changes in Business, Ownership, Management or Locations of
                  Collateral.................................................10
         7.3      Mergers or Acquisitions....................................10
         7.4      Indebtedness...............................................10
         7.5      Encumbrance................................................11
         7.6      Distributions; Investments.................................11
         7.7      Transactions with Affiliates...............................11
         7.8      Subordinated Debt..........................................11
         7.9      Compliance.................................................11

8        EVENTS OF DEFAULT...................................................11
         -----------------
         8.1      Payment Default............................................11
         8.2      Covenant Default...........................................11
         8.3      Material Adverse Change....................................12

<PAGE>

         8.4      Attachment.................................................12
         8.5      Insolvency.................................................12
         8.6      Other Agreements...........................................12
         8.7      Judgments..................................................12
         8.8      Misrepresentations.........................................12

9        BANK'S RIGHTS AND REMEDIES..........................................12
         --------------------------
         9.1      Rights and Remedies........................................12
         9.2      Power of Attorney..........................................13
         9.3      Bank Expenses..............................................13
         9.4      Bank's Liability for Collateral............................14
         9.5      Remedies Cumulative........................................14
         9.6      Demand Waiver..............................................14

10       NOTICES.............................................................14
         -------

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

12       GENERAL PROVISIONS..................................................14
         ------------------
         12.1     Successors and Assigns.....................................14
         12.2     Indemnification............................................15
         12.3     Time of Essence............................................15
         12.4     Severability of Provision..................................15
         12.5     Amendments in Writing, Integration.........................15
         12.6     Counterparts...............................................15
         12.7     Survival...................................................15
         12.8     Confidentiality............................................15
         12.9     Effect of Amendment and Restatement........................16
         12.10    Attorneys' Fees, Costs and Expenses........................16

13       DEFINITIONS.........................................................16
         -----------
         13.1     Definitions................................................16

<PAGE>

This AMENDED AND RESTATED LOAN AND SECURITY  AGREEMENT dated as of the Effective
Date, between SILICON VALLEY BANK ("Bank"),  whose address is 3003 Tasman Drive,
Santa Clara, California 95054 with a loan production office located at 185 Berry
Street,  Suite 3000,  San Francisco,  California  94107 and  DIGITALTHINK,  INC.
("Borrower"),  whose address is 601 Brannan  Street,  San Francisco,  California
94107.

                                    RECITALS

A........Bank  and  Borrower  are  parties  to that  certain  Loan and  Security
Agreement  dated  December 20, 2001,  as amended  (collectively,  the  "Original
Agreement").

B........Borrower and Bank desire in this Agreement to set forth their agreement
with respect to a working  capital loan and to amend and restate in its entirety
without  novation  the  Original  Agreement in  accordance  with the  provisions
herein.

                                    AGREEMENT

The parties agree as follows:

1 ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement will be construed following GAAP.
Calculations and determinations must be made following GAAP. The term "financial
statements"  includes  the  notes  and  schedules.  The  terms  "including"  and
"includes" always mean "including (or includes) without  limitation," in this or
any Loan Document.

2 LOAN AND TERMS OF PAYMENT

2.1   Promise to Pay.

Borrower  promises  to pay  Bank  the  unpaid  principal  amount  of all  Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.

2.1.1 Revolving Advances.

(a)  Bank will make Advances not exceeding  (i) the  Committed  Revolving  Line,
     minus (ii) the Cash Management Services Sublimit, minus (iii) the amount of
     all outstanding Letters of Credit (including drawn but unreimbursed Letters
     of Credit),  and minus (iv) the FX  Reserve.  Amounts  borrowed  under this
     Section may be repaid and reborrowed during the term of this Agreement.

(b)  To obtain an Advance,  Borrower  must notify Bank by facsimile or telephone
     by 12:00 p.m.  Pacific  time on the Business Day the Advance is to be made.
     Borrower must promptly  confirm the  notification by delivering to Bank the
     Payment/Advance  Form  attached as Exhibit B. 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  terminates on the Revolving  Maturity Date,
     when all Advances are immediately payable.

(d)  Bank's  obligation to lend the undisbursed  portion of the Obligations will
     terminate if, in Bank's sole discretion,  there has been a material adverse
     change in the general affairs, management,  results of operation, condition
     (financial or  otherwise) or the prospect of repayment

<PAGE>

     of the Obligations, or there has been any material adverse  deviation  by
     Borrower from the most recent  business  plan of Borrower  presented to and
     accepted by Bank prior to the execution of this Agreement.

2.1.2 Letters of Credit Sublimit.

Bank will issue or have  issued  Letters of Credit for  Borrower's  account  not
exceeding (i) the Committed Revolving Line minus (ii) the outstanding  principal
balance of the Advances minus the Cash Management  Sublimit,  minus (iii) the FX
Reserve;  however,  the face amount of outstanding  Letters of Credit (including
drawn but unreimbursed Letters of Credit) may not exceed $4,000,000.  Borrower's
Letter of Credit  reimbursement  obligation will be secured by unencumbered cash
on terms acceptable to Bank at any time upon the Revolving  Maturity Date if the
term of this Agreement is not extended by Bank.  Borrower  agrees to execute any
further  documentation  in  connection  with the  Letters  of Credit as Bank may
reasonably request.

2.1.3 Foreign Exchange Sublimit.

Borrower may enter in foreign  exchange  forward  contracts  with the Bank under
which Borrower  commits to purchase from or sell to Bank a set amount of foreign
currency  more than one business  day after the  contract  date (the "FX Forward
Contract").  Bank will subtract 10% of each outstanding FX Forward Contract from
the  foreign  exchange  sublimit,  which is a  maximum  of  $1,000,000  (the "FX
Reserve").  The total FX  Forward  Contracts  at any one time may not  exceed 10
times the amount of the FX Reserve.  Bank may terminate the FX Forward Contracts
if an Event of  Default  occurs.  The FX Reserve  may not  exceed (i)  Committed
Revolving  Line minus (ii) the  outstanding  principal  balance of the  Advances
minus (iii) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed  Letters of Credit) minus (iv) the outstanding  portion of the Cash
Management Services Sublimit.

2.1.4 Cash Management Services Sublimit.

Borrower may use up to $1,000,000 for Bank's Cash Management  Services which may
include merchant services,  direct deposit of payroll, business credit card, and
check cashing services identified in various cash management services agreements
related to such services (the "Cash Management  Services  Sublimit");  provided,
however,  the Cash Management Services Sublimit may not exceed (i) the Committed
Revolving  Line minus (ii) the  outstanding  principal  balance of the  Advances
minus (iii) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed  Letters  of  Credit)  minus  (iv) the  outstanding  portion  of FX
reserve.  All amounts Bank pays for any Cash Management Services will be treated
as Advances under the Committed Revolving Line.

2.2   Overadvances.

If Borrower's Obligations under Section 2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the
Committed  Revolving  Line,  Borrower must  immediately  pay in cash to Bank the
excess.

2.3   Interest Rate, Payments.

(a)  Interest  Rate.  Advances  accrue  interest  on the  outstanding  principal
     balance at a per annum rate of 0.5 percentage  points above the Prime Rate.
     After an Event of Default,  Obligations  accrue interest at 5 percent above
     the rate effective  immediately  before the Event of Default.  The interest
     rate  increases  or  decreases  when the Prime Rate  changes.  Interest  is
     computed on a 360 day year for the actual number of days elapsed.

(b)  Payments.  Interest due on the Committed  Revolving  Line is payable on the
     17th of each  month.  Bank may debit  any of  Borrower's  deposit  accounts
     including  Account Number  3300018304  for principal and interest  payments
     owing or any amounts Borrower owes Bank.

<PAGE>

     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 interest shall accrue.

2.4   Fees.

Borrower will pay:

(a)  Facility  Fee. A fully earned,  non  refundable  quarterly  facility fee of
     $4,396.20  is due on January 1, 2004 and $7,000  will be due on the 1st day
     of each fiscal quarter thereafter; and

(b)  Bank Expenses.  All Bank Expenses (including reasonable attorneys' fees and
     reasonable  expenses incurred through and after the date of this Agreement,
     are payable when due.

2.4.2 Letter of Credit Fee.

Borrower  will pay Bank the Letter of Credit Fee at the time of the  issuance or
renewal of each Letter of Credit, and on each anniversary thereof.

3     CONDITIONS OF LOANS

3.1   Conditions Precedent to Initial Credit Extension.

Bank's  obligation  to make the  initial  Credit  Extension  is  subject  to the
condition  precedent  that it  receive  the  agreements,  documents  and fees it
requires.

3.2   Conditions Precedent to all Credit Extensions.

Bank's  obligations to make each Credit Extension,  including the initial Credit
Extension, is subject to the following:

(a)  timely receipt of any Payment/Advance Form; and

(b)  the  representations and warranties in Section 5 must be materially true on
     the  date of the  Payment/Advance  Form and on the  effective  date of each
     Credit  Extension  and  no  Event  of  Default  may  have  occurred  and be
     continuing,  or result from the Credit Extension.  Each Credit Extension is
     Borrower's   representation   and   warranty   on  that   date   that   the
     representations and warranties of Section 5 remain true.

4     CREATION OF SECURITY INTEREST

4.1   Grant of Security Interest.

Borrower grants Bank a continuing  security  interest in all presently  existing
and later acquired  Collateral to secure all Obligations and performance of each
of Borrower's  duties under the Loan Documents.  Except for Permitted Liens, any
security  interest will be a first priority security interest in the Collateral.
Bank may place a "hold" on any deposit  account  pledged as Collateral.  If this
Agreement is  terminated,  Bank's lien and security  interest in the  Collateral
will continue until Borrower fully satisfies its Obligations.

4.2   Authorization To File.

<PAGE>

Borrower  authorizes  Bank  to  file  financing  statements  without  notice  to
Borrower,  with all appropriate  jurisdictions,  as Bank deems  appropriate,  in
order to perfect or protect Bank's interest in the Collateral.

5     REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1   Due Organization and Authorization.

Borrower and each  Subsidiary is duly existing and in good standing in its state
of formation  and qualified and licensed to do business in, and in good standing
in, any state in which the conduct of its business or its  ownership of property
requires  that it be  qualified,  except  where the  failure  to do so could not
reasonably  be expected to cause a Material  Adverse  Change.  Borrower  has not
changed its state of  formation or its  organizational  structure or type or any
organizational number (if any) assigned by its jurisdiction of formation.

The  execution,  delivery and  performance  of the Loan Documents have been duly
authorized,  and  do not  conflict  with  Borrower's  formation  documents,  nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the  default  could  reasonably  be  expected to cause a Material
Adverse Change.

5.2   Collateral.

Borrower has good title to the Collateral,  free of Liens except Permitted Liens
or Borrower has Rights to each asset that is  Collateral.  Borrower has no other
deposit account,  other than the deposit accounts described in the Schedule. The
Accounts are bona fide,  existing  obligations,  and the service or property has
been  performed or delivered  to the account  debtor or its agent for  immediate
shipment to and unconditional  acceptance by the account debtor.  The Collateral
is not in the possession of any third party bailee (such as at a warehouse).  In
the event that  Borrower,  after the date hereof,  intends to store or otherwise
deliver the  Collateral  to such a bailee,  then Borrower will receive the prior
written  consent of Bank and such bailee must  acknowledge  in writing  that the
bailee is holding such  Collateral  for the benefit of Bank. All Inventory is in
all  material  respects  of good and  marketable  quality,  free  from  material
defects.

5.3   Litigation.

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

5.4   No Material Adverse Change in Financial Statements.

All  consolidated   financial  statements  for  Borrower,  and  any  Subsidiary,
delivered  to  Bank  fairly   present  in  all  material   respects   Borrower's
consolidated   financial  condition  and  Borrower's   consolidated  results  of
operations.  There  has  not  been  any  material  deterioration  in  Borrower's
consolidated  financial  condition  since the date of the most recent  financial
statements submitted to Bank.

5.5   Solvency.

The  fair  salable  value  of  Borrower's  assets   (including   goodwill  minus
disposition  costs) exceeds the fair value of its  liabilities;  the Borrower is
not  left  with  unreasonably  small  capital  after

<PAGE>

the  transactions  in this  Agreement;  and  Borrower  is able to pay its  debts
(including trade debts) as they mature.

5.6   Regulatory Compliance.

Borrower  is  not  an  "investment  company"  or a  company  "controlled"  by an
"investment  company" under the Investment  Company Act. Borrower is not engaged
as one of its important  activities in extending  credit for margin stock (under
Regulations  T and U of the Federal  Reserve Board of  Governors).  Borrower has
complied in all material  respects  with the Federal Fair Labor  Standards  Act.
Borrower has not violated any laws,  ordinances or rules, the violation of which
could  reasonably  be  expected  to cause a  Material  Adverse  Change.  None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge,  by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally.  Borrower and each  Subsidiary has 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 could not reasonably be
expected to cause a Material Adverse Change.

5.7   Investments in 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.

6     AFFIRMATIVE COVENANTS

Borrower  will do all of the  following for so long as Bank has an obligation to
lend, or there are outstanding Obligations:

6.1   Government Compliance.

Borrower  will  maintain  its and all  Subsidiaries'  legal  existence  and good
standing in its  jurisdiction  of formation and maintain  qualification  in each
jurisdiction in which the failure to so qualify would  reasonably be expected to
cause a material adverse effect on Borrower's  business or operations.  Borrower
will comply,  and have each  Subsidiary  comply,  with all laws,  ordinances and
regulations  to which it is  subject,  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.

6.2   Financial Statements, Reports, Certificates.

(a)  Borrower will deliver to Bank: (i) as soon as available,  but no later than
     30 days after the last day of each month, a company  prepared  consolidated
     balance  sheet  and  income

<PAGE>

     statement  covering  Borrower's   consolidated
     operations  during the period  certified by a Responsible  Officer and in a
     form acceptable to Bank;  (ii) as soon as available,  but no later than 120
     days after the last day of  Borrower's  fiscal year,  audited  consolidated
     financial statements prepared under GAAP,  consistently  applied,  together
     with an unqualified opinion on the financial statements from an independent
     certified  public  accounting firm reasonably  acceptable to Bank;  (iii) a
     prompt report of any legal actions pending or threatened  against  Borrower
     or any Subsidiary  that could result in damages or costs to Borrower or any
     Subsidiary  of  $100,000  or more;  and (iv)  budgets,  sales  projections,
     operating plans or other financial information Bank reasonably requests.

(b)  Within 30 days after the last day of each month,  Borrower  will deliver to
     Bank with the monthly financial statements a Compliance  Certificate signed
     by a Responsible Officer in the form of Exhibit C.

(c)  Allow Bank to audit  Borrower's  Collateral  at  Borrower's  expense.  Such
     audits  will be  conducted  only at such times as an Event of  Default  has
     occurred and is continuing.

6.3   Inventory; Returns.

Borrower will keep all  Inventory in good and  marketable  condition,  free from
material  defects.  Returns  and  allowances  between  Borrower  and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement.  Borrower must promptly notify Bank of all returns,  recoveries,
disputes and claims that involve more than $50,000.

6.4   Taxes.

Borrower will make,  and cause each  Subsidiary to make,  timely  payment of all
material  federal,  state,  and local taxes or  assessments  and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.

6.5   Insurance.

Borrower  will keep its  business  and the  Collateral  insured for risks and in
amounts, as Bank may reasonably  request.  Insurance policies will be in a form,
with  companies,  and in  amounts  that  are  satisfactory  to  Bank  in  Bank's
reasonable  discretion.  All property policies will have a lender's loss payable
endorsement  showing Bank as an additional loss payee and all liability policies
will show the Bank as an  additional  insured and provide  that the insurer must
give  Bank at least 20 days  notice  before  canceling  its  policy.  At  Bank's
request,  Borrower will deliver certified copies of policies and evidence of all
premium  payments.  Proceeds payable under any policy will, at Bank's option, be
payable to Bank on account of the Obligations.

6.6   Accounts; Minimum Balances.

Borrower will maintain its depository  and  investment  accounts with or through
Bank.  In  addition,  Borrower  agrees that it shall  maintain the lesser of (i)
$8,000,000  or (ii) 80% of its total cash or cash  equivalents  in Bank's sweep,
demand deposit or investment accounts.

6.7   Financial Covenants.

Borrower will maintain as of the last day of each month:

(i)  Minimum Cash. Borrower shall maintain, at all times,  unrestricted cash and
     short  term  marketable  securities  at  Bank  of  at  least  2  times  the
     outstanding  Advances  (including the aggregate  usage under the Letters of
     Credit  Sublimit,  Foreign Exchange  Sublimit and Cash Management  Services
     Sublimit).

<PAGE>

(ii) Minimum  EBITDA.  Borrower shall maintain a minimum EBITDA of  ($3,500,000)
     for the quarter  ended  September  30, 2003,  ($2,100,000)  for the quarter
     ending  December 31, 2003,  ($1,500,000)  for the quarter  ending March 31,
     2004,  ($750,000)  for the quarter ending June 30, 2004, $1 for the quarter
     ending  September 30, 2004,  the quarter  ending  December 31, 2004 and the
     quarter ending March 31, 2005. "EBITDA" is Borrower's consolidated earnings
     before  interest  expense,  income  taxes,  depreciation,  amortization  of
     intangible  assets,  and  other  non-cash  charges,  such as write  down of
     intangibles and restructuring charges.

6.8   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

For so long as Bank  has an  obligation  to lend or  there  are any  outstanding
Obligations,  Borrower shall not,  without  Bank's prior written  consent (which
shall be a matter of its good faith business judgment), do any of the following:

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  Transfers  (i) of Inventory in the ordinary  course of
business; (ii) of non-exclusive licenses and similar arrangements for the use of
the property of Borrower or its Subsidiaries in the ordinary course of business;
or (iii) of worn-out or obsolete Equipment.

7.2   Changes in Business, Ownership, Management or Locations of Collateral.

Engage in or permit any of its Subsidiaries to engage in any business other than
the businesses currently engaged in by Borrower or reasonably related thereto or
have a material change in its ownership or management of greater than 25% (other
than by the sale of  Borrower's  equity  securities  in a public  offering or to
venture  capital  investors so long as Borrower  identifies the venture  capital
investors prior to the closing of the investment). Borrower will not, without at
least 30 days prior written notice,  relocate its chief executive office, change
its state of formation  (including  reincorporation),  change its organizational
number or name or add any new offices or business locations (such as warehouses)
in which Borrower maintains or stores over $5,000 in Collateral.

7.3   Mergers or Acquisitions.

Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate,
with any other Person, or acquire, or permit any of its Subsidiaries to acquire,
all or  substantially  all of the capital  stock or property of another  Person,
except  where (i) no Event of Default has occurred  and is  continuing  or would
result  from  such  action  during  the term of this  Agreement  and  (ii)  such
transaction  would not result in a  decrease  of more than 25% of  Tangible  Net
Worth.  A Subsidiary may merge or  consolidate  into another  Subsidiary or into
Borrower.

7.4   Indebtedness.

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

<PAGE>

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 here,  subject
to Permitted Liens.

7.6   Distributions; Investments.

Directly or indirectly  acquire or own any Person, or make any Investment in any
Person, other than Permitted  Investments,  or permit any of its Subsidiaries to
do so. Pay any dividends or make any  distribution or payment or redeem,  retire
or purchase any capital stock.

7.7   Transactions with Affiliates.

Directly or  indirectly  enter into or permit to exist any material  transaction
with any Affiliate of Borrower except for transactions  that are in the ordinary
course of Borrower's  business,  upon fair and reasonable terms that are no less
favorable to Borrower than would be obtained in an arm's length transaction with
a non-affiliated Person.

7.8   Subordinated Debt.

Make or permit any payment on any Subordinated  Debt,  except under the terms of
the  Subordinated  Debt, or amend any provision in any document  relating to the
Subordinated Debt without Bank's prior written consent.

7.9   Compliance.

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

8     EVENTS OF DEFAULT

Any one of the following is an Event of Default:

8.1   Payment Default.

If Borrower  fails to pay any of the  Obligations  within 3 days after their due
date, however, during such period no Credit Extensions will be made;

8.2   Covenant Default.

(a)  If Borrower  fails to perform any  obligation  under Sections 6.2 or 6.7 or
     violates any of the covenants contained in Section 7 of this Agreement, or

(b)  If  Borrower  fails or  neglects  to  perform,  keep,  or observe any other
     material term,  provision,  condition,  covenant, or agreement contained in
     this Agreement,  in any of the Loan  Documents,  or in any other present or
     future agreement between Borrower and Bank and as to any default under such
     other term, provision,  condition, covenant or agreement that can be cured,

<PAGE>

     has failed to cure such default  within ten (10) days after the  occurrence
     thereof;  provided,  however,  that if the default  cannot by its nature be
     cured within the ten (10) day period or cannot after  diligent  attempts by
     Borrower  be cured  within such ten (10) day  period,  and such  default is
     likely to be cured within a reasonable  time,  then Borrower  shall have an
     additional  reasonable  period  (which shall not in any case exceed  thirty
     (30) days) to attempt to cure such default, and within such reasonable time
     period the failure to have cured such default  shall not be deemed an Event
     of Default  (provided  that no Credit  Extensions  will be made during such
     cure period);

8.3   Material Adverse Change.

If there (i) occurs a material  adverse change in the business,  operations,  or
financial  condition of the  Borrower,  or (ii) is a material  impairment of the
prospect of repayment of any portion of the Obligations;  or (iii) is a material
impairment  of the  value  or  priority  of  Bank's  security  interests  in the
Collateral (the foregoing being defined as a "Material Adverse Change").

8.4   Attachment.

If any material portion of Borrower's assets is attached,  seized, levied on, or
comes into  possession of a trustee or receiver and the  attachment,  seizure or
levy is not  removed in 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 Credit  Extensions  will be made
during the cure period);

8.5   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 30 days (but no Credit  Extensions  will be made  before  any  Insolvency
Proceeding is dismissed);

8.6   Other Agreements.

If there is a default in any agreement  between  Borrower and a third party that
gives  the  third  party  the right to  accelerate  any  Indebtedness  exceeding
$100,000 or that could cause a Material Adverse Change;

8.7   Judgments.

If a money  judgment(s) in the aggregate of at least $50,000 is rendered against
Borrower and is unsatisfied  and unstayed for 10 days (but no Credit  Extensions
will be made before the judgment is stayed or satisfied); or

8.8   Misrepresentations.

If   Borrower   or  any  Person   acting  for   Borrower   makes  any   material
misrepresentation  or  material  misstatement  now or later 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.

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:

<PAGE>

(a)  Declare all  Obligations  immediately  due and payable  (but if an Event of
     Default described in Section 8.5 occurs all Obligations are immediately due
     and payable without any action by Bank);

(b)  Stop advancing money or extending credit for Borrower's  benefit under this
     Agreement or under any other agreement between Borrower and Bank;

(c)  Settle or adjust  disputes and claims  directly  with  account  debtors for
     amounts,  on terms and in any order that Bank considers  advisable;  notify
     any Person owing  Borrower money of Bank's  security  interest in the funds
     and verify the amount of the Account. Borrower must collect all payments in
     trust for Bank and, if requested by Bank,  immediately deliver the payments
     to  Bank  in the  form  received  from  the  account  debtor,  with  proper
     endorsements for deposit;

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

(e)  Apply to the  Obligations  any (i)  balances  and  deposits  of Borrower it
     holds,  or (ii) any  amount  held by Bank owing to or for the credit or the
     account of Borrower;

(f)  Ship, reclaim, recover, store, finish, maintain,  repair, prepare for sale,
     advertise for sale, and sell the Collateral; and

(g)  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: (i) endorse Borrower's name
on any checks or other forms of payment or security;  (ii) sign  Borrower's name
on any  invoice or bill of lading  for any  Account  or drafts  against  account
debtors,  (iii) make, settle,  and adjust all claims under Borrower's  insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines  reasonable;  and
(v) 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 have been fully
repaid  and  performed  and  Bank's  obligation  to  provide  Credit  Extensions
terminates.

9.3    Bank Expenses.

If Borrower  fails to pay any amount or furnish any required proof of payment to
third  persons,  Bank may make all or part of the  payment  or obtain  insurance
policies  required in Section 6.5,  and take any action under the policies  Bank
deems prudent.  Any amounts paid by Bank are Bank Expenses and  immediately  due
and payable,  bearing  interest at the then  applicable  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.

<PAGE>

9.4   Bank's Liability for Collateral.

If Bank  complies  with  reasonable  banking  practices and Section 9-207 of the
Code, it is not liable for: (a) the safekeeping of the Collateral;  (b) any loss
or damage to the Collateral;  (c) any diminution in the value of the Collateral;
or (d) any act or default of any carrier, warehouseman, bailee, or other person.
Except as provided above, Borrower bears all risk of loss, damage or destruction
of the Collateral.

9.5   Remedies Cumulative.

Bank's rights and remedies under this  Agreement,  the Loan  Documents,  and all
other agreements are cumulative. Bank has all rights and remedies provided under
the Code, by law, or in equity. Bank's exercise of one right or remedy is not an
election,  and Bank's waiver of any Event of Default is not a continuing waiver.
Bank's delay is not a waiver, election, or acquiescence.  No waiver is effective
unless signed by Bank and then is only  effective for the specific  instance and
purpose for which it was given.

9.6   Demand Waiver.

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

10    NOTICES

All notices or demands by any party about this  Agreement  or any other  related
agreement must be in writing and be personally delivered or sent by an overnight
delivery service, by certified mail, postage prepaid,  return receipt requested,
or by  telefacsimile  to the  addresses  set  forth  at the  beginning  of  this
Agreement.  A party may  change its  notice  address  by giving the other  party
written notice.

11    CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

California  law governs  the Loan  Documents  without  regard to  principles  of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in San Francisco 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 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.

<PAGE>

12.2  Indemnification.

Borrower  will  indemnify,  defend  and hold  harmless  Bank  and its  officers,
employees,  and  agents  against:  (a) all  obligations,  demands,  claims,  and
liabilities  asserted by any other  party in  connection  with the  transactions
contemplated  by the  Loan  Documents;  and (b)  all  losses  or  Bank  Expenses
incurred,  or paid by Bank from,  following,  or  consequential  to transactions
between Bank and Borrower  (including  reasonable  attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.

12.3  Time of Essence.

Time is of the essence for the performance of all obligations in this Agreement.

12.4  Severability of Provision.

Each  provision of this  Agreement is  severable  from every other  provision in
determining the enforceability of any provision.

12.5  Amendments in Writing, Integration.

All  amendments to this  Agreement must be in writing and signed by Borrower and
Bank. This Agreement  represents the entire agreement about this subject matter,
and  supersedes  prior   negotiations  or  agreements.   All  prior  agreements,
understandings,   representations,  warranties,  and  negotiations  between  the
parties about the subject matter of this Agreement merge into this Agreement and
the Loan Documents.

12.6  Counterparts.

This  Agreement may be executed in any number of  counterparts  and by different
parties on separate  counterparts,  each of which,  when executed and delivered,
are an original, and all taken together, constitute one Agreement.

12.7  Survival.

All covenants, representations and warranties made in this Agreement continue in
full force while any Obligations remain outstanding. The obligations of Borrower
in Section 12.2 to indemnify Bank will survive until all statutes of limitations
for actions that may be brought against Bank have run.

12.8  Confidentiality.

In handling any confidential information,  Bank will exercise the same degree of
care that it exercises for its own  proprietary  information,  but disclosure of
information  may be made (i) to Bank's  subsidiaries or affiliates in connection
with their business with Borrower, (ii) to prospective transferees or purchasers
of any interest in the loans  (provided,  however,  Bank shall use  commercially
reasonable  efforts in  obtaining  such  prospective  transferee  or  purchasers
agreement of the terms of this provision), (iii) as required by law, regulation,
subpoena, or other order, (iv) as required in connection with Bank's examination
or audit and (v) as Bank considers  appropriate  exercising  remedies under this
Agreement.  Confidential  information does not include  information that either:
(a) 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 (b) is disclosed
to Bank by a third  party,  if Bank  does  not  know  that  the  third  party is
prohibited from disclosing the information.

<PAGE>

12.9  Effect of Amendment and Restatement.

This  Agreement is intended to and does  completely  amend and restate,  without
novation,  the Original  Agreement.  All credit  extensions or loans outstanding
under the Original Agreement are and shall continue to be outstanding under this
Agreement.  All security  interests  granted  under the Original  Agreement  are
hereby confirmed and ratified and shall continue to secure all Obligations under
this Agreement.

12.10 Attorneys' Fees, Costs and Expenses.

In any action or  proceeding  between  Borrower and Bank arising out of the Loan
Documents,  the  prevailing  party will be entitled  to recover  its  reasonable
attorneys' fees and other reasonable costs and expenses incurred, in addition to
any other relief to which it may be entitled.

13    DEFINITIONS

13.1  Definitions.

In this Agreement:

     "Accounts" 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,  as such  definition  may be amended from time to
     time according to the Code.

     "Advance" or "Advances" is a loan advance (or advances) under the Committed
     Revolving Line.

     "Affiliate"  of a Person is a Person  that  owns or  controls  directly  or
     indirectly  the Person,  any Person that controls or is controlled by or is
     under common  control  with the Person,  and each of that  Person's  senior
     executive  officers,  directors,  partners  and,  for any Person  that is a
     limited liability company, that Person's managers and members.

     "Bank  Expenses" are all audit fees and expenses and  reasonable  costs and
     expenses (including reasonable attorneys' fees and expenses) for preparing,
     negotiating,  administering,  defending and  enforcing  the Loan  Documents
     (including appeals or Insolvency Proceedings).

     "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.

     "Code" is the California Uniform Commercial Code, as applicable.

     "Collateral" is the property described on Exhibit A.

     "Committed Revolving Line" is a Credit Extension of up to $8,000,000.

     "Contingent  Obligation"  is,  for  any  Person,  any  direct  or  indirect
     liability,  contingent  or not,  of that  Person for (i) any  indebtedness,
     lease, dividend, letter of credit or other obligation of another such as an
     obligation directly or indirectly guaranteed, endorsed, co-made, discounted

<PAGE>

     or sold with recourse by that Person,  or for which that Person is directly
     or indirectly  liable;  (ii) any  obligations for undrawn letters of credit
     for the account of that Person; and (iii) 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.

     "Credit Extension" is each Advance, Letter of Credit, Exchange Contract, or
     any other extension of credit by Bank for Borrower's benefit.

     "Effective Date" is the date Bank executes this Agreement.

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

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

     "FX Forward Contract" is defined in Section 2.1.3.

     "FX Reserve " is defined in Section 2.1.3.

     "GAAP" is generally accepted accounting principles.

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

     "Inventory"  is present  and future  inventory  in which  Borrower  has any
     interest,  including merchandise,  raw materials,  parts, supplies, packing
     and shipping materials,  work in process and finished products intended for
     sale or lease or to be furnished under a contract of service, of every kind
     and  description  now or later  owned by or in the  custody or  possession,
     actual or constructive, of Borrower, including inventory temporarily out of
     its  custody or  possession  or in  transit  and  including  returns on any
     accounts or other proceeds (including  insurance proceeds) from the sale or
     disposition of any of the foregoing and any documents of title.

     "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 Fee" is for each Letter of Credit an amount  equal to one
     and  one-quarter  percent  (1.25%)  of the face  amount  of such  Letter of
     Credit.

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

<PAGE>

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

     "Material Adverse Change" is defined in Section 8.3.

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

     "Original Agreement" has the meaning set forth in recital paragraph A.

     "Permitted Indebtedness" is:

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

     (b) Indebtedness existing on the Effective Date and shown on the Schedule;

     (c) Subordinated Debt;

     (d)  Indebtedness  to trade  creditors  incurred in the ordinary  course of
     business; and

     (e) Indebtedness secured by Permitted Liens.

     "Permitted Investments" are:

     (a)  Investments  shown on the Schedule and existing on the Effective Date;
     and

     (b) (i) marketable direct obligations issued or unconditionally  guaranteed
     by the United States or its agency or any State maturing within 1 year from
     its  acquisition,  (ii) commercial paper maturing no more than 1 year 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 1 year after issue.

     "Permitted Liens" are:

     (a) Liens  existing  on the  Effective  Date and shown on the  Schedule  or
     arising under this Agreement or other Loan Documents;

     (b) Liens for  taxes,  fees,  assessments  or other  government  charges or
     levies,  either not  delinquent  or being  contested  in good faith and for
     which Borrower  maintains  adequate  reserves on its Books, if they have no
     priority over any of Bank's security interests;

     (c) Purchase  money Liens (i) on Equipment  acquired or held by Borrower or
     its  Subsidiaries  incurred for financing the acquisition of the Equipment,
     or (ii) existing on equipment when acquired, if the Lien is confined to the
     property and improvements and the proceeds of the equipment;

     (d) Licenses or  sublicenses  granted in the ordinary  course of Borrower's
     business  and any  interest  or title of a licensor or under any license or
     sublicense, if the licenses and sublicenses permit granting Bank a security
     interest;

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

<PAGE>

     (f)  Liens  incurred  in  the  extension,  renewal  or  refinancing  of the
     indebtedness  secured  by  Liens  described  in (a)  through  (c),  but any
     extension,  renewal or  replacement  Lien must be  limited to the  property
     encumbered  by  the  existing   Lien  and  the  principal   amount  of  the
     indebtedness may not increase.

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

     "Prime Rate" is Bank's most recently  announced "prime rate," even if it is
     not Bank's lowest rate.

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

     "Revolving Maturity Date" is December 17, 2004.

     "Rights",  as applied to the  Collateral,  means the Borrower's  rights and
     interests  in, and powers with  respect to, that  Collateral,  whatever the
     nature of those rights,  interests and powers and, in any event,  including
     Borrower's power to transfer rights in such Collateral to Bank.

     "Schedule" is any attached schedule of exceptions.

     "Subordinated Debt" is debt incurred by Borrower subordinated to Borrower's
     indebtedness  owed to Bank and which is reflected in a written agreement in
     a manner and form acceptable to Bank and approved by Bank in writing.

     "Subsidiary" is for any Person,  or any other business entity of which more
     than  50% of the  voting  stock  or  other  equity  interests  is  owned or
     controlled, directly or indirectly, by the Person or one or more Affiliates
     of the Person.

     "Tangible  Net Worth" is, on any date,  the  consolidated  total  assets of
     Borrower and its Subsidiaries  minus,  (i) any amounts  attributable to (a)
     goodwill,  (b)  intangible  items such as  unamortized  debt  discount  and
     expense,  patents,  trade and  service  marks  and  names,  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 current portion  Subordinated Debt allowed
     to be paid, but excluding all other Subordinated Debt.


BORROWER:

DigitalThink, Inc.


By:     /s/ ROBERT J. KROLIK
       ----------------------------------------------

Title:  Chief Financial Officer
       ----------------------------------------------

<PAGE>

BANK:

SILICON VALLEY BANK


By:     /s/ JOELLEN ADEMSKI
       ----------------------------------------------

Title:  Senior Vice President
       ----------------------------------------------

Effective Date:  December 18, 2003
                -------------------------------------


<PAGE>


                                    EXHIBIT A


The Collateral consists of all of Borrower's right, title and interest in and to
the following  whether  owned now or hereafter  arising and whether the Borrower
has rights now or hereafter has rights therein and wherever located:

All goods and  equipment  now owned or hereafter  acquired,  including,  without
limitation,  all machinery,  fixtures,  vehicles  (including  motor vehicles and
trailers),  and any  interest  in any of the  foregoing,  and  all  attachments,
accessories,   accessions,   replacements,    substitutions,    additions,   and
improvements to any of the foregoing, wherever located;

All inventory, now owned or hereafter acquired,  including,  without limitation,
all merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products including such inventory as is temporarily
out of Borrower's  custody or possession or in transit and including any returns
upon any accounts or other proceeds,  including  insurance  proceeds,  resulting
from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;

All contract rights and general  intangibles (as such definitions may be amended
from time to time  according  to the  Code),  now owned or  hereafter  acquired,
including, without limitation, goodwill, trademarks, servicemarks, trade styles,
trade names, patents, patent applications, leases, license agreements, franchise
agreements,  blueprints, drawings, purchase orders, customer lists, route lists,
infringements,  claims,  computer  programs,  computer  discs,  computer  tapes,
literature,  reports,  catalogs,  design rights, income tax refunds, payments of
insurance and rights to payment of any kind,;

All now existing and hereafter  arising  accounts,  contract rights,  royalties,
license rights and all other forms of obligations  owing to Borrower arising out
of the sale or lease of goods,  the  licensing of technology or the rendering of
services  by  Borrower  (as such  definitions  may be amended  from time to time
according  to the Code)  whether or not earned by  performance,  and any and all
credit insurance,  insurance (including refund) claims and proceeds, guaranties,
and other security thereof, as well as all merchandise  returned to or reclaimed
by Borrower;

All documents,  cash,  deposit accounts,  securities,  securities  entitlements,
securities accounts,  investment property,  financial assets, letters of credit,
letter of credit rights, certificates of deposit,  instruments and chattel paper
and  electronic  chattel  paper now owned or hereafter  acquired and  Borrower's
Books relating to the foregoing;

All copyright rights,  copyright applications,  copyright registrations and like
protections  in each work of authorship  and  derivative  work thereof,  whether
published  or  unpublished,  now owned or hereafter  acquired;  all trade secret
rights,  including  all rights to  unpatented  inventions,  know-how,  operating
manuals, license rights and agreements and confidential  information,  now owned
or  hereafter  acquired;  all mask  work or  similar  rights  available  for the
protection of semiconductor  chips, now owned or hereafter acquired;  all claims
for damages by way of any past,  present and future  infringement  of any of the
foregoing; and

All Borrower's  Books  relating to the foregoing and any and all claims,  rights
and  interests  in any of the above and all  substitutions  for,  additions  and
accessions to and proceeds thereof.

Notwithstanding the foregoing, the Collateral shall not be deemed to include any
copyrights,  copyright applications,  copyright registration and like protection
in each work of authorship and  derivative  work thereof,  whether  published or
unpublished,  now owned or hereafter acquired; any patents,  patent applications
and like  protections  including  without  limitation  improvements,  divisions,
continuations,  renewals, reissues,  extensions and continuations-in-part of the
same, trademarks,  servicemarks and applications thereof,  whether registered or
not, and the goodwill of the business of Borrower  connected with and symbolized
by such trademarks,  any trade secret rights, including any rights to unpatented
inventions,  know-how,  operating  manuals,  license  rights and  agreements and
confidential  information,  now owned or hereafter  acquired;  or any claims for
damage  by  way of any  past,  present  and  future  infringement  of any of the
foregoing  (collectively,   the  "Intellectual   Property"),   except  that  the
Collateral shall include the proceeds of all the Intellectual Property including
proceeds  from the sale,  licensing  or

<PAGE>

other  disposition of the Intellectual  Property and proceeds that are accounts,
(e.g.,  accounts receivable of Borrower,  or general  intangibles  consisting of
proceeds  and  rights to  payment).  Notwithstanding  the prior  sentence,  if a
judicial  authority  (including a U.S.  Bankruptcy  Court) holds that a security
interest in the underlying Intellectual Property is necessary to have a security
interest in such accounts and general  intangibles of Borrower that are proceeds
of the  Intellectual  Property,  then the Collateral  shall  automatically,  and
effective  as of the  Closing  Date,  include the  Intellectual  Property to the
extent  necessary  to permit  perfection  of Bank's  security  interest  in such
accounts  and  general   intangibles  of  Borrower  that  are  proceeds  of  the
Intellectual Property.

Borrower and Bank are parties to that certain Negative Pledge Agreement, whereby
Borrower, in connection with Bank's loan or loans to Borrower, has agreed, among
other things, not to sell,  transfer,  assign,  mortgage,  pledge, lease grant a
security  interest in, or encumber  any of its  intellectual  property,  without
Bank's prior written consent.

<PAGE>

                                    EXHIBIT B

LOAN PAYMENT/ADVANCE REQUEST FORM DEADLINE FOR SAME DAY PROCESSING IS 12:00
P.S.T.
Fax To:                                                      Date:

LOAN PAYMENT:

    DigitalThink, Inc. (Borrower)

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

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

All Borrower's  representation and warranties in the Loan and Security Agreement
are true,  correct and complete in all material respects up to and including the
date of the transfer request for a loan payment,  but those  representations and
warranties  expressly  referring  to  another  date shall be true,  correct  and
complete in all material respects as of that date:

    Authorized Signature:                      Phone Number:
                          ---------------------             --------------------
--------------------------------------------------------------------------------
LOAN ADVANCE:

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

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

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

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

    Authorized Signature:                      Phone Number:
                          ---------------------             --------------------
--------------------------------------------------------------------------------
OUTGOING WIRE REQUEST

Complete only if all or a portion of funds from the loan advance above are to be
wired. Deadline for same day processing is 12:00pm, P.S.T.

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

Authorized Signature:                   2nd Signature (If Required):
                    --------------------                           -------------
Print Name/Title:                       Print Name/Title:
                 -----------------------                ------------------------
Telephone #                             Telephone #
           -----------------------------           -----------------------------

<PAGE>

                            NEGATIVE PLEDGE AGREEMENT

This Negative  Pledge  Agreement is made as of the Effective Date by and between
DigitalThink, Inc. ("Borrower") and Silicon Valley Bank ("Bank").

In connection  with,  among other  documents,  the Amended and Restated Loan and
Security Agreement (the "Loan Documents") being  concurrently  executed herewith
between Borrower and Bank, Borrower agrees as follows:

1.   Except  for  non-exclusive  licenses  granted  in the  ordinary  course  of
     business,  Borrower shall not sell,  transfer,  assign,  mortgage,  pledge,
     lease,  grant  a  security  interest  in,  or  encumber  any of  Borrower's
     intellectual property, including, without limitation, the following:

a.   Any  and  all   copyright   rights,   copyright   applications,   copyright
     registrations   and  like  protections  in  each  work  or  authorship  and
     derivative  work thereof,  whether  published or unpublished and whether or
     not the same also  constitutes a trade secret,  now or hereafter  existing,
     created, acquired or held;

b.   All  mask  works  or  similar  rights   available  for  the  protection  of
     semiconductor chips, now owned or hereafter acquired;

c.   Any and all trade secrets, and any and all intellectual  property rights in
     computer software and computer software products now or hereafter existing,
     created, acquired or held;

d.   Any and all  design  rights  which  may be  available  to  Borrower  now or
     hereafter existing, created, acquired or held;

e.   All patents,  patent applications and like protections  including,  without
     limitation,  improvements,  divisions,  continuations,  renewals, reissues,
     extensions  and   continuations-in-part  of  the  same,  including  without
     limitation the patents and patent applications;

f.   Any  trademark  and  servicemark   rights,   whether   registered  or  not,
     applications   to  register  and   registrations   of  the  same  and  like
     protections,  and the entire goodwill of the business of Borrower connected
     with and symbolized by such trademarks;

g.   Any  and  all  claims  for  damages  by way of  past,  present  and  future
     infringements of any of the rights included above,  with the right, but not
     the  obligation,  to sue for and  collect  such  damages  for  said  use or
     infringement of the intellectual property rights identified above;

h.   All  licenses  or  other  rights  to use  any of the  Copyrights,  Patents,
     Trademarks or Mask Works,  and all license fees and royalties  arising from
     such use to the extent permitted by such license or rights; and

i.   All  amendments,   extensions,  renewals  and  extensions  of  any  of  the
     Copyrights, Trademarks, Patents, or Mask Works; and

j.   All proceeds and products of the foregoing,  including  without  limitation
     all  payments  under  insurance  or any  indemnity  or warranty  payable in
     respect of any of the foregoing;

2.   It shall be an event of default under the Loan Documents  between  Borrower
     and  Bank  if  there  is a  breach  of any  term of  this  Negative  Pledge
     Agreement.

<PAGE>


3.   Capitalized terms used but not otherwise defined herein shall have the same
     meaning as in the Loan Documents.

BORROWER:

DigitalThink, Inc.


By:    /s/ ROBERT J. KROLIK
       -------------------------------------
Name:  Robert J. Krolik
       -------------------------------------
Title: Chief Financial Officer
       -------------------------------------


BANK:

SILICON VALLEY BANK


By: /s/ JOELLEN ADEMSKI
   -----------------------------------------
Name: Joellen Ademski
     ---------------------------------------
Title: Senior Vice President
      --------------------------------------


</TEXT>
</DOCUMENT>
