EXHIBIT 10.1

 

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”)
dated as of March 6, 2009 (the “Effective Date”) by and among (a) SILICON VALLEY
BANK, a California corporation, with its principal place of business at
3003 Tasman Drive, Santa Clara, California 95054 and with a loan production
office located at One Newton Executive Park, Suite 200, 2221 Washington Street,
Newton, Massachusetts 02462 (“Bank”), and (b) CALIPER LIFE SCIENCES, INC., a
Delaware corporation with a principal place of business located at 68 Elm
Street, Hopkinton, Massachusetts 01748 (“Caliper”), NOVASCREEN BIOSCIENCES
CORPORATION, a Maryland corporation (“NovaScreen”), XENOGEN CORPORATION, a
Delaware corporation (“Xenogen”), XENOGEN BIOSCIENCES CORPORATION, an Ohio
corporation (“Xenogen Biosciences”) and CALIPER LIFE SCIENCES LTD., a company
organized under the laws of Canada (“Caliper Ltd.”) (hereinafter, Caliper,
NovaScreen, Xenogen, Xenogen Biosciences and Caliper Ltd. are jointly and
severally, individually and collectively, referred to as “Borrower”), amends and
restates a certain Amended and Restated Loan and Security Agreement by and among
Borrower and Bank dated as of February 15, 2008, as amended, and provides the
terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The
parties agree as follows:

 

1                                         ACCOUNTING AND OTHER TERMS

 

1.1                               ACCOUNTING TERMS NOT DEFINED IN THIS AGREEMENT
SHALL BE CONSTRUED FOLLOWING GAAP.  CALCULATIONS AND DETERMINATIONS MUST BE MADE
FOLLOWING GAAP.  CAPITALIZED TERMS NOT OTHERWISE DEFINED IN THIS AGREEMENT SHALL
HAVE THE MEANINGS SET FORTH IN SECTION 13.  ALL OTHER TERMS CONTAINED IN THIS
AGREEMENT, UNLESS OTHERWISE INDICATED, SHALL HAVE THE MEANING PROVIDED BY THE
CODE TO THE EXTENT SUCH TERMS ARE DEFINED THEREIN.

 

1.2                               AGENTED LOAN ARRANGEMENT.

 

(a)                                  Designation of Agent.  Each Borrower hereby
designates Caliper as the agent (the “Agent”) of each Borrower to discharge the
duties and responsibilities of the Agent as provided herein.

 

(b)                                 Operation of Loan Arrangement.

 

(i)                                     Except as otherwise permitted by Bank,
Credit Extensions hereunder shall be requested solely by the Agent as agent for
each Borrower.

 

(ii)                                  Any Credit Extension which may be made by
Bank under this Agreement and which is directed to the Agent is received by the
Agent in trust for that Borrower who is intended to receive such Credit
Extension.  The Agent shall distribute the proceeds of any such Credit Extension
solely to that Borrower.  Each Borrower shall be directly indebted to Bank for
each Credit Extension distributed to any Borrower by the Agent, together with
all accrued interest thereon, as if that amount had been advanced directly by
Bank to a Borrower (whether or not the subject Credit Extension was based upon
the accounts and/or inventory or other assets of the Borrower which actually
received such distribution), in addition to which each Borrower shall be liable
to Bank for all Obligations under this Agreement, whether or not the proceeds of
the Credit Extension are distributed to any particular Borrower.

 

(iii)                               Bank shall have no responsibility to inquire
as to the distribution of Credit Extensions made by Bank through the Agent as
described herein.

 

(c)                                  Credit Extensions Directly to Borrower.

 

(i)                                     If, for any reason, and at any time
during the term of this Agreement:

 

(A)                              any Borrower, including the Agent, as agent for
each Borrower, shall be unable to, or prohibited from carrying out the terms and
conditions of this Agreement (as determined by Bank in Bank’s sole and absolute
discretion); or

 

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(B)                                Bank deems it inexpedient (in Bank’s sole and
absolute discretion) to continue making Credit Extensions to or for the account
of any particular Borrower, or to channel such Credit Extensions through the
Agent, then Bank may make Credit Extensions directly to such Borrower as Bank
determines to be expedient, which Credit Extensions may be made without regard
to the procedures otherwise included in this Article 1.

 

(ii)                                  In the event that Bank determines to forgo
the procedures included herein pursuant to which Credit Extensions are to be
channeled through the Agent, then Bank may designate one or more Borrower to
fulfill the financial and other reporting requirements otherwise imposed herein
upon the Agent.

 

(iii)                               Each Borrower shall remain liable to Bank
for the payment and performance of all Obligations (which payment and
performance shall continue to be secured by all Collateral) notwithstanding any
determination by Bank to cease making Credit Extensions to or for the benefit of
any Borrower.

 

(d)                                 Continuation of Authority of Agent.  The
authority of the Agent to request Credit Extensions on behalf of, and to bind,
each Borrower, shall continue unless and until Bank acts as provided in
Section 1.2(c) above, or Bank actually receives:

 

(i)                                     written notice of: (i) the termination
of such authority, and (ii) the subsequent appointment of a successor Agent,
which notice is executed by the respective Presidents of each Borrower then
eligible for borrowing under this Agreement; and

 

(ii)                                  written notice from the successor Agent
(i) accepting such appointment; (ii) acknowledging that the removal and
appointment has been effected by the respective Presidents of each Borrower
eligible for borrowing under the within Agreement; and (iii) acknowledging that
from and after the date of appointment, the newly appointed Agent shall be bound
by the terms hereof, and that as used herein, the term “Agent” shall mean and
include the newly appointed Agent.

 

(e)                                  Indemnification.  The Agent and each
Borrower respectively shall indemnify, defend, and save and hold Bank harmless
from and against any liabilities, claims, demands, expenses, or losses made
against or suffered by Bank on account of, or arising out of, this Agreement,
Bank’s reliance upon Credit Extension requests made by the Agent, or any other
action taken by Bank hereunder or under any of Bank’s various agreements with
the Agent and/or any Borrower and/or any other Person arising under this
Agreement.

 

2                                         LOAN AND TERMS OF PAYMENT

 

2.1                               PROMISE TO PAY.  BORROWER HEREBY
UNCONDITIONALLY, JOINTLY AND SEVERALLY, PROMISES TO PAY BANK THE OUTSTANDING
PRINCIPAL AMOUNT OF ALL CREDIT EXTENSIONS AND ACCRUED AND UNPAID INTEREST
THEREON AS AND WHEN DUE IN ACCORDANCE WITH THIS AGREEMENT.

 

2.1.1                     REVOLVING ADVANCES.

 

(A)                                  AVAILABILITY.  SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT AND TO DEDUCTION OF RESERVES, BANK SHALL MAKE
ADVANCES TO BORROWER UP TO THE AVAILABILITY AMOUNT.  AMOUNTS BORROWED UNDER THE
REVOLVING LINE MAY BE REPAID, AND PRIOR TO THE REVOLVING LINE MATURITY DATE,
REBORROWED, SUBJECT TO THE APPLICABLE TERMS AND CONDITIONS PRECEDENT HEREIN.

 

(B)                                 TERMINATION; REPAYMENT.  THE REVOLVING LINE
TERMINATES ON THE REVOLVING LINE MATURITY DATE, WHEN THE PRINCIPAL AMOUNT OF ALL
ADVANCES, THE UNPAID INTEREST THEREON, AND ALL OTHER OBLIGATIONS RELATING TO THE
REVOLVING LINE SHALL BE IMMEDIATELY DUE AND PAYABLE.

 

2.1.2                     LETTERS OF CREDIT SUBLIMIT.

 

(A)                                  AS PART OF THE REVOLVING LINE AND SUBJECT
TO DEDUCTION OF RESERVES, BANK SHALL ISSUE OR HAVE ISSUED LETTERS OF CREDIT FOR
BORROWER’S ACCOUNT.  THE FACE AMOUNT OF OUTSTANDING LETTERS OF CREDIT (INCLUDING

 

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DRAWN BUT UNREIMBURSED LETTERS OF CREDIT AND ANY LETTER OF CREDIT RESERVE) MAY
NOT EXCEED FIVE MILLION DOLLARS ($5,000,000) INCLUSIVE OF CREDIT EXTENSIONS
RELATING TO SECTIONS 2.1.3 AND 2.1.4.  SUCH AGGREGATE AMOUNTS UTILIZED HEREUNDER
SHALL AT ALL TIMES REDUCE THE AMOUNT OTHERWISE AVAILABLE FOR ADVANCES UNDER THE
REVOLVING LINE.  IF, ON THE REVOLVING LINE MATURITY DATE OR AFTER THE OCCURRENCE
AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT THERE ARE ANY OUTSTANDING
LETTERS OF CREDIT, THEN ON SUCH DATE BORROWER SHALL PROVIDE TO BANK CASH
COLLATERAL IN AN AMOUNT EQUAL TO 105% OF THE FACE AMOUNT OF ALL SUCH LETTERS OF
CREDIT PLUS ALL INTEREST, FEES, AND COSTS DUE OR TO BECOME DUE IN CONNECTION
THEREWITH (AS ESTIMATED BY BANK IN ITS GOOD FAITH BUSINESS JUDGMENT), TO SECURE
ALL OF THE OBLIGATIONS RELATING TO SAID LETTERS OF CREDIT.  ALL LETTERS OF
CREDIT SHALL BE IN FORM AND SUBSTANCE ACCEPTABLE TO BANK IN ITS SOLE DISCRETION
AND SHALL BE SUBJECT TO THE TERMS AND CONDITIONS OF BANK’S STANDARD APPLICATION
AND LETTER OF CREDIT AGREEMENT (THE “LETTER OF CREDIT APPLICATION”).  BORROWER
AGREES TO EXECUTE ANY FURTHER DOCUMENTATION IN CONNECTION WITH THE LETTERS OF
CREDIT AS BANK MAY REASONABLY REQUEST.  BORROWER FURTHER AGREES TO BE BOUND BY
THE REGULATIONS AND INTERPRETATIONS OF THE ISSUER OF ANY LETTERS OF CREDIT
GUARANTIED BY BANK AND OPENED FOR BORROWER’S ACCOUNT OR BY BANK’S
INTERPRETATIONS OF ANY LETTER OF CREDIT ISSUED BY BANK FOR BORROWER’S ACCOUNT,
AND BORROWER UNDERSTANDS AND AGREES THAT BANK SHALL NOT BE LIABLE FOR ANY ERROR,
NEGLIGENCE, OR MISTAKE, WHETHER OF OMISSION OR COMMISSION, IN FOLLOWING
BORROWER’S INSTRUCTIONS OR THOSE CONTAINED IN THE LETTERS OF CREDIT OR ANY
MODIFICATIONS, AMENDMENTS, OR SUPPLEMENTS THERETO.

 

(B)                                 THE OBLIGATION OF BORROWER TO IMMEDIATELY
REIMBURSE BANK FOR DRAWINGS MADE UNDER LETTERS OF CREDIT SHALL BE ABSOLUTE,
UNCONDITIONAL, AND IRREVOCABLE, AND SHALL BE PERFORMED STRICTLY IN ACCORDANCE
WITH THE TERMS OF THIS AGREEMENT, SUCH LETTERS OF CREDIT, AND THE LETTER OF
CREDIT APPLICATION.  ANY AMOUNTS BANK PAYS ON BEHALF OF BORROWER FOR ANY LETTERS
OF CREDIT WILL BE TREATED AS ADVANCES UNDER THE REVOLVING LINE AND WILL ACCRUE
INTEREST AT THE INTEREST RATE APPLICABLE TO ADVANCES.

 

(C)                                  BORROWER MAY REQUEST THAT BANK ISSUE A
LETTER OF CREDIT PAYABLE IN A FOREIGN CURRENCY.  IF A DEMAND FOR PAYMENT IS MADE
UNDER ANY SUCH LETTER OF CREDIT, BANK SHALL TREAT SUCH DEMAND AS AN ADVANCE TO
BORROWER OF THE EQUIVALENT OF THE AMOUNT THEREOF (PLUS FEES AND CHARGES IN
CONNECTION THEREWITH SUCH AS WIRE, CABLE, SWIFT OR SIMILAR CHARGES) IN DOLLARS
AT THE THEN-PREVAILING RATE OF EXCHANGE IN SAN FRANCISCO, CALIFORNIA, FOR SALES
OF THE FOREIGN CURRENCY FOR TRANSFER TO THE COUNTRY ISSUING SUCH FOREIGN
CURRENCY.

 

(D)                                 TO GUARD AGAINST FLUCTUATIONS IN CURRENCY
EXCHANGE RATES, UPON THE ISSUANCE OF ANY LETTER OF CREDIT PAYABLE IN A FOREIGN
CURRENCY, BANK SHALL CREATE A RESERVE (THE “LETTER OF CREDIT RESERVE”) UNDER THE
REVOLVING LINE IN AN AMOUNT EQUAL TO TEN PERCENT (10%) OF THE FACE AMOUNT OF
SUCH LETTER OF CREDIT.  THE AMOUNT OF THE LETTER OF CREDIT RESERVE MAY BE
ADJUSTED BY BANK FROM TIME TO TIME TO ACCOUNT FOR FLUCTUATIONS IN THE EXCHANGE
RATE.  THE AVAILABILITY OF FUNDS UNDER THE REVOLVING LINE SHALL BE REDUCED BY
THE AMOUNT OF SUCH LETTER OF CREDIT RESERVE FOR AS LONG AS SUCH LETTER OF CREDIT
REMAINS OUTSTANDING.

 

2.1.3                     FOREIGN EXCHANGE SUBLIMIT.  AS PART OF THE REVOLVING
LINE AND SUBJECT TO THE DEDUCTION OF RESERVES, BORROWER MAY ENTER INTO FOREIGN
EXCHANGE CONTRACTS WITH BANK UNDER WHICH BORROWER COMMITS TO PURCHASE FROM OR
SELL TO BANK A SPECIFIC AMOUNT OF FOREIGN CURRENCY (EACH, A “FX FORWARD
CONTRACT”) ON A SPECIFIED DATE (THE “SETTLEMENT DATE”).  FX FORWARD CONTRACTS
SHALL HAVE A SETTLEMENT DATE OF AT LEAST ONE (1) FX BUSINESS DAY AFTER THE
CONTRACT DATE AND SHALL BE SUBJECT TO A RESERVE OF TEN PERCENT (10%) OF EACH
OUTSTANDING FX FORWARD CONTRACT IN A MAXIMUM AGGREGATE AMOUNT EQUAL TO FIVE
HUNDRED THOUSAND DOLLARS ($500,000) (THE “FX RESERVE”).  THE AGGREGATE AMOUNT OF
FX FORWARD CONTRACTS AT ANY ONE TIME PLUS CREDIT EXTENSIONS MADE PURSUANT TO
SECTIONS 2.1.2 AND 2.1.4 MAY NOT EXCEED TEN (10) TIMES THE MAXIMUM AGGREGATE
AMOUNT OF THE FX RESERVE.  ANY AMOUNTS NEEDED TO FULLY REIMBURSE BANK WILL BE
TREATED AS ADVANCES UNDER THE REVOLVING LINE AND WILL ACCRUE INTEREST AT THE
INTEREST RATE APPLICABLE TO ADVANCES.

 

2.1.4                     CASH MANAGEMENT SERVICES SUBLIMIT.  BORROWER MAY USE
UP TO FIVE MILLION DOLLARS ($5,000,000) INCLUSIVE OF CREDIT EXTENSIONS RELATING
TO SECTIONS 2.1.2 AND 2.1.3 (THE “CASH MANAGEMENT SERVICES SUBLIMIT”) OF THE
REVOLVING LINE FOR BANK’S CASH MANAGEMENT SERVICES WHICH MAY INCLUDE MERCHANT
SERVICES, DIRECT DEPOSIT OF PAYROLL, BUSINESS CREDIT CARD, AND CHECK CASHING
SERVICES IDENTIFIED IN BANK’S VARIOUS CASH MANAGEMENT SERVICES AGREEMENTS
(COLLECTIVELY, THE “CASH MANAGEMENT SERVICES”).  THE DOLLAR AMOUNT OF ANY CASH
MANAGEMENT SERVICES PROVIDED UNDER THIS SUBLIMIT WILL REDUCE THE AMOUNT
OTHERWISE AVAILABLE UNDER THE REVOLVING LINE.  ANY AMOUNTS USED OR RESERVED BY
BORROWER FOR ANY CASH MANAGEMENT SERVICES WILL REDUCE THE AMOUNT OTHERWISE
AVAILABLE FOR CREDIT EXTENSIONS UNDER THE REVOLVING LINE.  ANY AMOUNTS BANK PAYS
ON BEHALF OF BORROWER FOR ANY CASH MANAGEMENT SERVICES WILL BE TREATED AS
ADVANCES UNDER THE REVOLVING LINE AND WILL ACCRUE INTEREST AT THE INTEREST RATE
APPLICABLE TO ADVANCES.

 

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2.2                               OVERADVANCES.  IF, AT ANY TIME THE SUM OF
(A) THE OUTSTANDING AMOUNT OF ANY ADVANCES (INCLUDING ANY AMOUNTS USED FOR CASH
MANAGEMENT SERVICES) PLUS (B) THE FACE AMOUNT OF ANY OUTSTANDING LETTERS OF
CREDIT (INCLUDING DRAWN BUT UNREIMBURSED LETTERS OF CREDIT AND ANY LETTER OF
CREDIT RESERVE), PLUS (C) THE FX RESERVE EXCEEDS THE LESSER OF EITHER THE
REVOLVING LINE OR THE BORROWING BASE (SUCH EXCESS AMOUNT BEING AN
“OVERADVANCE”), BORROWER SHALL IMMEDIATELY PAY TO BANK IN CASH SUCH
OVERADVANCE.  WITHOUT LIMITING BORROWER’S OBLIGATION TO REPAY BANK ANY AMOUNT OF
THE OVERADVANCE, BORROWER AGREES TO PAY BANK INTEREST ON THE OUTSTANDING AMOUNT
OF ANY OVERADVANCE, ON DEMAND, AT THE DEFAULT RATE.

 

2.3                               PAYMENT OF INTEREST ON THE CREDIT EXTENSIONS.

 

(A)                                  INTEREST RATE; ADVANCES.  SUBJECT TO
SECTION 2.3(B), THE PRINCIPAL AMOUNT OUTSTANDING UNDER THE REVOLVING LINE SHALL
ACCRUE INTEREST AT A FLOATING PER ANNUM RATE EQUAL TO: (X) IF BORROWER’S
UNRESTRICTED CASH IS EQUAL TO OR GREATER THAN TWENTY MILLION DOLLARS
($20,000,000.00), ONE PERCENTAGE POINT (1.00%) ABOVE THE PRIME RATE, OR (Y) IF
BORROWER’S UNRESTRICTED CASH IS LESS THAN TWENTY MILLION DOLLARS
($20,000,000.00), TWO PERCENTAGE POINTS (2.00%) ABOVE THE PRIME RATE, WHICH
INTEREST SHALL BE PAYABLE MONTHLY IN ACCORDANCE WITH SECTION 2.3(F) BELOW.  ANY
CHANGES TO THE APPLICABLE INTEREST RATE DUE AS SET FORTH IN (X) OR (Y) ABOVE,
SHALL BE EFFECTIVE ON THE FIRST DAY OF THE MONTH FOLLOWING SUCH EVENT.

 

(B)                                 DEFAULT RATE. IMMEDIATELY UPON THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, OBLIGATIONS SHALL
BEAR INTEREST AT A RATE PER ANNUM WHICH IS TWO PERCENTAGE POINTS (2.00%) ABOVE
THE RATE EFFECTIVE IMMEDIATELY BEFORE THE OCCURRENCE OF THE EVENT OF DEFAULT
(THE “DEFAULT RATE”).  PAYMENT OR ACCEPTANCE OF THE INCREASED INTEREST RATE
PROVIDED IN THIS SECTION 2.3(B) IS NOT A PERMITTED ALTERNATIVE TO TIMELY PAYMENT
AND SHALL NOT CONSTITUTE A WAIVER OF ANY EVENT OF DEFAULT OR OTHERWISE PREJUDICE
OR LIMIT ANY RIGHTS OR REMEDIES OF BANK.

 

(C)                                  ADJUSTMENT TO INTEREST RATE.  CHANGES TO
THE INTEREST RATE OF ANY CREDIT EXTENSION BASED ON CHANGES TO THE PRIME RATE
SHALL BE EFFECTIVE ON THE EFFECTIVE DATE OF ANY CHANGE TO THE PRIME RATE AND TO
THE EXTENT OF ANY SUCH CHANGE.

 

(D)                                 360-DAY YEAR.  INTEREST SHALL BE COMPUTED ON
THE BASIS OF A 360-DAY YEAR FOR THE ACTUAL NUMBER OF DAYS ELAPSED.

 

(E)                                  DEBIT OF ACCOUNTS.  BANK MAY DEBIT ANY OF
BORROWER’S DEPOSIT ACCOUNTS, INCLUDING THE DESIGNATED DEPOSIT ACCOUNT, FOR
PRINCIPAL AND INTEREST PAYMENTS OR ANY OTHER AMOUNTS BORROWER OWES BANK WHEN
DUE.  THESE DEBITS SHALL NOT CONSTITUTE A SET-OFF.

 

(F)                                    PAYMENT; INTEREST COMPUTATION; FLOAT
CHARGE.  INTEREST IS PAYABLE MONTHLY ON THE LAST CALENDAR DAY OF EACH MONTH.  IN
COMPUTING INTEREST ON THE OBLIGATIONS, ALL PAYMENTS RECEIVED AFTER 12:00 P.M.
EASTERN TIME ON ANY DAY SHALL BE DEEMED RECEIVED ON THE NEXT BUSINESS DAY.  IN
ADDITION, BANK SHALL BE ENTITLED TO CHARGE BORROWER A “FLOAT” CHARGE IN AN
AMOUNT EQUAL TO TWO (2) BUSINESS DAYS INTEREST, AT THE INTEREST RATE APPLICABLE
TO THE ADVANCES, ON ALL PAYMENTS RECEIVED BY BANK.  THE FLOAT CHARGE FOR EACH
MONTH SHALL BE PAYABLE ON THE LAST DAY OF THE MONTH.  BANK SHALL NOT, HOWEVER,
BE REQUIRED TO CREDIT BORROWER’S ACCOUNT FOR THE AMOUNT OF ANY ITEM OF PAYMENT
WHICH IS UNSATISFACTORY TO BANK IN ITS GOOD FAITH BUSINESS JUDGMENT, AND BANK
MAY CHARGE BORROWER’S DESIGNATED DEPOSIT ACCOUNT FOR THE AMOUNT OF ANY ITEM OF
PAYMENT WHICH IS RETURNED TO BANK UNPAID.

 

2.4                               FEES.  BORROWER SHALL PAY TO BANK:

 

(A)                                  COMMITMENT FEE.  (I) A FULLY EARNED,
NON-REFUNDABLE COMMITMENT FEE OF FIFTY TWO THOUSAND FIFTY FOUR  AND 79/100
DOLLARS ($52,054.79), PAYABLE ON THE EFFECTIVE DATE; AND (II) A FULLY EARNED,
NON-REFUNDABLE ANNIVERSARY FEE OF ONE HUNDRED TWENTY FIVE THOUSAND DOLLARS
($125,000), PAYABLE ON THE EARLIEST TO OCCUR OF (X) DECEMBER 1, 2009; (Y) THE
TERMINATION OF THIS AGREEMENT; AND (Z) THE OCCURRENCE OF AN EVENT OF DEFAULT.

 

(B)                                 LETTER OF CREDIT FEE.  BANK’S CUSTOMARY FEES
AND EXPENSES FOR THE ISSUANCE OR RENEWAL OF LETTERS OF CREDIT, UPON THE
ISSUANCE, EACH ANNIVERSARY OF THE ISSUANCE, AND THE RENEWAL OF SUCH LETTER OF
CREDIT BY BANK;

 

(C)                                  TERMINATION FEE.  SUBJECT TO THE TERMS OF
SECTION 12.1, A TERMINATION FEE, IF AND WHEN DUE IN ACCORDANCE WITH
SECTION 12.1;

 

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(D)                                 UNUSED REVOLVING LINE FACILITY FEE.  A FEE
(THE “UNUSED REVOLVING LINE FACILITY FEE”), WHICH FEE SHALL BE PAID MONTHLY, IN
ARREARS, ON THE LAST DAY OF EACH MONTH, IN AN AMOUNT EQUAL TO ONE-HALF OF ONE
PERCENT (0.50%) PER ANNUM OF THE AVERAGE UNUSED PORTION OF THE REVOLVING LINE,
AS DETERMINED BY BANK.  THE UNUSED PORTION OF THE REVOLVING LINE, FOR THE
PURPOSES OF THIS CALCULATION, SHALL INCLUDE AMOUNTS RESERVED UNDER THE CASH
MANAGEMENT SERVICES SUBLIMIT FOR PRODUCTS PROVIDED AND UNDER THE FOREIGN
EXCHANGE SUBLIMIT FOR FX FORWARD CONTRACTS (AS DESCRIBED IN SECTION 2.1.3). 
BORROWER SHALL NOT BE ENTITLED TO ANY CREDIT, REBATE OR REPAYMENT OF ANY UNUSED
REVOLVING LINE FACILITY FEE PREVIOUSLY EARNED BY BANK PURSUANT TO THIS
SECTION NOTWITHSTANDING ANY TERMINATION OF THE WITHIN AGREEMENT, OR SUSPENSION
OR TERMINATION OF BANK’S OBLIGATION TO MAKE LOANS AND ADVANCES HEREUNDER; AND

 

(E)                                  BANK EXPENSES.  ALL BANK EXPENSES
(INCLUDING REASONABLE ATTORNEYS’ FEES AND REASONABLE EXPENSES FOR DOCUMENTATION
AND NEGOTIATION OF THIS AGREEMENT) INCURRED THROUGH AND AFTER THE EFFECTIVE
DATE, WHEN DUE.

 

2.5                               WITHHOLDING.  PAYMENTS RECEIVED BY BANK FROM
BORROWER HEREUNDER WILL BE MADE FREE AND CLEAR OF ANY WITHHOLDING TAXES. 
SPECIFICALLY, HOWEVER, IF AT ANY TIME ANY GOVERNMENTAL AUTHORITY, APPLICABLE
LAW, REGULATION OR INTERNATIONAL AGREEMENT REQUIRES BORROWER TO MAKE ANY SUCH
WITHHOLDING OR DEDUCTION FROM ANY SUCH  PAYMENT OR OTHER SUM PAYMENT HEREUNDER
TO BANK, BORROWER HEREBY COVENANTS AND AGREES THAT THE AMOUNT DUE FROM BORROWER
WITH RESPECT TO SUCH PAYMENT OR OTHER SUM PAYABLE HEREUNDER WILL BE INCREASED TO
THE EXTENT NECESSARY TO ENSURE THAT, AFTER THE MAKING OF SUCH REQUIRED
WITHHOLDING OR DEDUCTION, BANK RECEIVES A NET SUM EQUAL TO THE SUM WHICH IT
WOULD HAVE RECEIVED HAD NO WITHHOLDING OR DEDUCTION BEEN REQUIRED AND BORROWER
SHALL PAY THE FULL AMOUNT WITHHELD OR DEDUCTED TO THE RELEVANT GOVERNMENTAL
AUTHORITY.  BORROWER WILL, UPON REQUEST, FURNISH BANK WITH PROOF SATISFACTORY TO
BANK INDICATING THAT BORROWER HAS MADE SUCH WITHHOLDING PAYMENT PROVIDED,
HOWEVER, THAT BORROWER NEED NOT MAKE ANY WITHHOLDING PAYMENT IF THE AMOUNT OR
VALIDITY OF SUCH WITHHOLDING PAYMENT IS CONTESTED IN GOOD FAITH BY APPROPRIATE
AND TIMELY PROCEEDINGS AND AS TO WHICH PAYMENT IN FULL IS BONDED OR RESERVED
AGAINST BY BORROWER.  THE AGREEMENTS AND OBLIGATIONS OF BORROWER CONTAINED IN
THIS SECTION 2.5 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.

 

3                                         CONDITIONS OF LOANS

 

3.1                               CONDITIONS PRECEDENT TO INITIAL CREDIT
EXTENSION.  BANK’S OBLIGATION TO MAKE THE INITIAL CREDIT EXTENSION HEREUNDER IS
SUBJECT TO THE CONDITION PRECEDENT THAT BANK SHALL HAVE RECEIVED, IN FORM AND
SUBSTANCE SATISFACTORY TO BANK, SUCH DOCUMENTS, AND COMPLETION OF SUCH OTHER
MATTERS, AS BANK MAY REASONABLY DEEM NECESSARY OR APPROPRIATE, INCLUDING,
WITHOUT LIMITATION:

 

(A)                                  BORROWER SHALL HAVE DELIVERED DULY EXECUTED
ORIGINAL SIGNATURES TO THE LOAN DOCUMENTS TO WHICH IT IS A PARTY;

 

(B)                                 BORROWER SHALL HAVE DELIVERED DULY EXECUTED
ORIGINAL SIGNATURES TO THE CONTROL AGREEMENTS;

 

(C)                                  EACH BORROWER SHALL HAVE DELIVERED ITS
OPERATING DOCUMENTS AND A GOOD STANDING CERTIFICATE OF SUCH BORROWER CERTIFIED
BY THE SECRETARY OF STATE (OR EQUIVALENT) OF THE APPLICABLE STATE OR
JURISDICTION OF INCORPORATION OR ORGANIZATION OF SUCH BORROWER, DATED AS OF A
DATE NO EARLIER THAN THIRTY (30) DAYS PRIOR TO THE EFFECTIVE DATE;

 

(D)                                 BORROWER SHALL HAVE DELIVERED DULY EXECUTED
ORIGINAL SIGNATURES TO THE COMPLETED BORROWING RESOLUTIONS FOR EACH BORROWER;

 

(E)                                  BORROWER SHALL HAVE DELIVERED A
SUBORDINATION AGREEMENT DULY EXECUTED BY ANY HOLDER OF SUBORDINATED DEBT, IF
ANY, AS REQUIRED BY BANK, IN FAVOR OF BANK;

 

(F)                                    BANK SHALL HAVE RECEIVED CERTIFIED
COPIES, DATED AS OF A RECENT DATE, OF FINANCING STATEMENT SEARCHES, AS BANK
SHALL REQUEST, ACCOMPANIED BY WRITTEN EVIDENCE (INCLUDING ANY UCC TERMINATION
STATEMENTS) THAT THE LIENS INDICATED IN ANY SUCH FINANCING STATEMENTS EITHER
CONSTITUTE PERMITTED LIENS OR HAVE BEEN OR, IN CONNECTION WITH THE INITIAL
CREDIT EXTENSION, WILL BE TERMINATED OR RELEASED;

 

(G)                                 BORROWER SHALL HAVE DELIVERED THE PERFECTION
CERTIFICATE(S) EXECUTED BY EACH BORROWER;

 

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(H)                                 BORROWER SHALL HAVE DELIVERED A LANDLORD’S
CONSENT EXECUTED BY EACH LANDLORD OF BORROWER AS REQUIRED BY BANK, IN FAVOR OF
BANK;

 

(I)                                     BORROWER SHALL HAVE DELIVERED A
BAILEE’S/WAREHOUSEMAN’S WAIVER EXECUTED BY EACH BAILEE, IF ANY, OF BORROWER AS
REQUIRED BY BANK, IN FAVOR OF BANK;

 

(J)                                     BORROWER SHALL HAVE DELIVERED A LEGAL
OPINION OF BORROWER’S COUNSEL AS TO AUTHORITY AND ENFORCEABILITY, DATED AS OF
THE EFFECTIVE DATE TOGETHER WITH THE DULY EXECUTED ORIGINAL SIGNATURES THERETO;

 

(K)                                  BORROWER SHALL HAVE DELIVERED EVIDENCE
SATISFACTORY TO BANK THAT THE INSURANCE POLICIES REQUIRED BY SECTION 6.7 HEREOF
ARE IN FULL FORCE AND EFFECT, TOGETHER WITH APPROPRIATE EVIDENCE SHOWING LOSS
PAYABLE AND/OR ADDITIONAL INSURED CLAUSES OR ENDORSEMENTS IN FAVOR OF BANK; AND

 

(L)                                     BORROWER SHALL HAVE PAID THE FEES AND
BANK EXPENSES THEN DUE AS SPECIFIED IN SECTION 2.4 HEREOF.

 

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 AN EXECUTED TRANSACTION
REPORT;

 

(B)                                 THE REPRESENTATIONS AND WARRANTIES IN
SECTION 5 SHALL BE TRUE, ACCURATE AND COMPLETE IN ALL MATERIAL RESPECTS ON THE
DATE OF THE TRANSACTION REPORT AND ON THE FUNDING DATE OF EACH CREDIT EXTENSION;
PROVIDED, HOWEVER, THAT SUCH MATERIALITY QUALIFIER SHALL NOT BE APPLICABLE TO
ANY REPRESENTATIONS AND WARRANTIES THAT ALREADY ARE QUALIFIED OR MODIFIED BY
MATERIALITY IN THE TEXT THEREOF; AND PROVIDED, FURTHER THAT THOSE
REPRESENTATIONS AND WARRANTIES EXPRESSLY REFERRING TO A SPECIFIC DATE SHALL BE
TRUE, ACCURATE AND COMPLETE IN ALL MATERIAL RESPECTS AS OF SUCH DATE, AND NO
DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING OR RESULT FROM
THE CREDIT EXTENSION.  EACH CREDIT EXTENSION IS BORROWER’S REPRESENTATION AND
WARRANTY ON THAT DATE THAT THE REPRESENTATIONS AND WARRANTIES IN SECTION 5
REMAIN TRUE, ACCURATE AND COMPLETE IN ALL MATERIAL RESPECTS; PROVIDED, HOWEVER,
THAT SUCH MATERIALITY QUALIFIER SHALL NOT BE APPLICABLE TO ANY REPRESENTATIONS
AND WARRANTIES THAT ALREADY ARE QUALIFIED OR MODIFIED BY MATERIALITY IN THE TEXT
THEREOF; AND PROVIDED, FURTHER THAT THOSE REPRESENTATIONS AND WARRANTIES
EXPRESSLY REFERRING TO A SPECIFIC DATE SHALL BE TRUE, ACCURATE AND COMPLETE IN
ALL MATERIAL RESPECTS AS OF SUCH DATE; AND

 

(C)                                  BANK DETERMINES IN GOOD FAITH, BASED UPON
INFORMATION AVAILABLE TO IT AND IN ITS REASONABLE JUDGMENT, THAT THERE HAS NOT
BEEN ANY MATERIAL IMPAIRMENT IN THE GENERAL AFFAIRS, MANAGEMENT, RESULTS OF
OPERATION, FINANCIAL CONDITION OR THE PROSPECT OF REPAYMENT OF THE OBLIGATIONS,
OR ANY MATERIAL ADVERSE DEVIATION BY BORROWER FROM THE MOST RECENT BUSINESS PLAN
OF BORROWER PRESENTED TO AND ACCEPTED BY BANK.

 

3.3                               COVENANT TO DELIVER.

 

Borrower agrees to deliver to Bank each item required to be delivered to Bank
under this Agreement as a condition to any Credit Extension.  Borrower expressly
agrees that the extension of a Credit Extension prior to the receipt by Bank of
any such item shall not constitute a waiver by Bank of Borrower’s obligation to
deliver such item, and any such extension in the absence of a required item
shall be in Bank’s sole discretion.

 

3.4                               PROCEDURES FOR BORROWING.  SUBJECT TO THE
PRIOR SATISFACTION OF ALL OTHER APPLICABLE CONDITIONS TO THE MAKING OF AN
ADVANCE SET FORTH IN THIS AGREEMENT, TO OBTAIN AN ADVANCE (OTHER THAN ADVANCES
UNDER SECTIONS 2.1.2 OR 2.1.4), BORROWER SHALL NOTIFY BANK (WHICH NOTICE SHALL
BE IRREVOCABLE) BY ELECTRONIC MAIL, FACSIMILE, OR TELEPHONE BY 12:00 P.M.
EASTERN TIME ON THE FUNDING DATE OF THE ADVANCE.  TOGETHER WITH SUCH
NOTIFICATION, BORROWER MUST PROMPTLY DELIVER TO BANK BY ELECTRONIC MAIL OR
FACSIMILE A COMPLETED TRANSACTION REPORT EXECUTED BY A RESPONSIBLE OFFICER OR
HIS OR HER DESIGNEE.  BANK SHALL CREDIT ADVANCES TO THE DESIGNATED DEPOSIT
ACCOUNT.  BANK MAY MAKE ADVANCES UNDER THIS AGREEMENT BASED ON INSTRUCTIONS FROM
A RESPONSIBLE OFFICER OR HIS OR HER DESIGNEE OR WITHOUT INSTRUCTIONS IF THE
ADVANCES ARE NECESSARY TO MEET OBLIGATIONS WHICH HAVE BECOME DUE.  BANK MAY RELY
ON ANY TELEPHONE NOTICE GIVEN BY A PERSON WHOM BANK BELIEVES IS A RESPONSIBLE
OFFICER OR DESIGNEE.

 

4                                         CREATION OF SECURITY INTEREST

 

4.1                               GRANT OF SECURITY INTEREST.  BORROWER HEREBY
GRANTS BANK, TO SECURE THE PAYMENT AND PERFORMANCE IN FULL OF ALL OF THE
OBLIGATIONS, A CONTINUING SECURITY INTEREST IN, AND PLEDGES TO BANK, THE
COLLATERAL,

 

6

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WHEREVER LOCATED, WHETHER NOW OWNED OR HEREAFTER ACQUIRED OR ARISING, AND ALL
PROCEEDS AND PRODUCTS THEREOF.  BORROWER REPRESENTS, WARRANTS, AND COVENANTS
THAT THE SECURITY INTEREST GRANTED HEREIN IS AND SHALL AT ALL TIMES CONTINUE TO
BE A FIRST PRIORITY PERFECTED SECURITY INTEREST IN THE COLLATERAL (SUBJECT ONLY
TO PERMITTED LIENS THAT MAY HAVE SUPERIOR PRIORITY TO BANK’S LIEN UNDER THIS
AGREEMENT).  IF BORROWER SHALL ACQUIRE A COMMERCIAL TORT CLAIM, BORROWER SHALL
PROMPTLY NOTIFY BANK IN A WRITING SIGNED BY BORROWER OF THE GENERAL DETAILS
THEREOF AND GRANT TO BANK IN SUCH WRITING A SECURITY INTEREST THEREIN AND IN THE
PROCEEDS THEREOF, ALL UPON THE TERMS OF THIS AGREEMENT, WITH SUCH WRITING TO BE
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO BANK.

 

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are repaid in
full in cash.  Upon payment in full in cash of the Obligations and at such time
as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at
Borrower’s sole cost and expense, promptly release its Liens in the Collateral
and all rights therein shall revert to Borrower.

 

4.2                               AUTHORIZATION TO FILE FINANCING STATEMENTS. 
BORROWER HEREBY AUTHORIZES BANK TO FILE FINANCING STATEMENTS, WITHOUT NOTICE TO
BORROWER, WITH ALL APPROPRIATE JURISDICTIONS TO PERFECT OR PROTECT BANK’S
INTEREST OR RIGHTS HEREUNDER, INCLUDING A NOTICE THAT ANY DISPOSITION OF THE
COLLATERAL, BY EITHER BORROWER OR ANY OTHER PERSON, SHALL BE DEEMED TO VIOLATE
THE RIGHTS OF BANK UNDER THE CODE.  WITHOUT LIMITING THE FOREGOING, BORROWER
HEREBY AUTHORIZES BANK TO FILE FINANCING STATEMENTS WHICH DESCRIBE THE
COLLATERAL AS “ALL ASSETS” AND/OR “ALL PERSONAL PROPERTY” OF BORROWER OR WORDS
OF SIMILAR IMPORT.

 

5                                         REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants as follows at all times unless expressly
provided below:

 

5.1                               DUE ORGANIZATION; AUTHORIZATION; POWER AND
AUTHORITY.  BORROWER AND EACH OF ITS SUBSIDIARIES ARE DULY EXISTING AND IN GOOD
STANDING AS REGISTERED ORGANIZATIONS IN THEIR RESPECTIVE JURISDICTIONS OF
FORMATION AND ARE QUALIFIED AND LICENSED TO DO BUSINESS AND ARE IN GOOD STANDING
IN ANY JURISDICTION IN WHICH THE CONDUCT OF THEIR BUSINESS OR THEIR OWNERSHIP OF
PROPERTY REQUIRES THAT THEY BE QUALIFIED EXCEPT WHERE THE FAILURE TO DO SO COULD
NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON BORROWER’S
BUSINESS.  IN CONNECTION WITH THIS AGREEMENT, BORROWER HAS DELIVERED TO BANK A
COMPLETED CERTIFICATE SUBSTANTIALLY IN THE FORM PROVIDED BY BANK TO BORROWER,
ENTITLED “PERFECTION CERTIFICATE”.  BORROWER REPRESENTS AND WARRANTS TO BANK
THAT (A) BORROWER’S EXACT LEGAL NAME IS THAT INDICATED ON THE PERFECTION
CERTIFICATE AND ON THE SIGNATURE PAGE HEREOF; (B) BORROWER IS AN ORGANIZATION OF
THE TYPE AND IS ORGANIZED IN THE JURISDICTION SET FORTH IN THE PERFECTION
CERTIFICATE; (C) THE PERFECTION CERTIFICATE ACCURATELY SETS FORTH BORROWER’S
ORGANIZATIONAL IDENTIFICATION NUMBER OR ACCURATELY STATES THAT BORROWER HAS
NONE; (D) THE PERFECTION CERTIFICATE ACCURATELY SETS FORTH BORROWER’S PLACE OF
BUSINESS, OR, IF MORE THAN ONE, ITS CHIEF EXECUTIVE OFFICE AS WELL AS BORROWER’S
MAILING ADDRESS (IF DIFFERENT THAN ITS CHIEF EXECUTIVE OFFICE); (E) BORROWER
(AND EACH OF ITS PREDECESSORS) HAS NOT, IN THE PAST FIVE (5) YEARS, CHANGED ITS
JURISDICTION OF FORMATION, ORGANIZATIONAL STRUCTURE OR TYPE, OR ANY
ORGANIZATIONAL NUMBER ASSIGNED BY ITS JURISDICTION; AND (F) ALL OTHER
INFORMATION SET FORTH ON THE PERFECTION CERTIFICATE PERTAINING TO BORROWER AND
EACH OF ITS SUBSIDIARIES IS ACCURATE AND COMPLETE IN ALL MATERIAL RESPECTS.  IF
BORROWER IS NOT NOW A REGISTERED ORGANIZATION BUT LATER BECOMES ONE, BORROWER
SHALL PROMPTLY NOTIFY BANK OF SUCH OCCURRENCE AND PROVIDE BANK WITH BORROWER’S
ORGANIZATIONAL IDENTIFICATION NUMBER.

 

The execution, delivery and performance by Borrower of the Loan Documents to
which it is a party have been duly authorized, and do not (i) conflict with any
of Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law,
(iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any of its Subsidiaries or any of their property or assets may
be bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect) or (v) constitute an event of default under any material
agreement by which Borrower is bound.  Borrower is not in default under any
agreement to which it is a party or by which Borrower or any of its Subsidiaries
may be bound in which the default could reasonably be expected to have a
material adverse effect on Borrower’s business.

 

5.2                               COLLATERAL.  BORROWER HAS GOOD TITLE TO, HAS
RIGHTS IN, AND THE POWER TO TRANSFER EACH ITEM OF COLLATERAL UPON WHICH IT
PURPORTS TO GRANT A LIEN HEREUNDER, FREE AND CLEAR OF ANY AND ALL LIENS EXCEPT
PERMITTED LIENS.  BORROWER HAS NO DEPOSIT ACCOUNTS OTHER THAN THE DEPOSIT
ACCOUNTS WITH BANK AND DEPOSIT ACCOUNTS DESCRIBED IN THE PERFECTION CERTIFICATE
DELIVERED TO BANK IN CONNECTION HEREWITH OR OF WHICH BORROWER HAS GIVEN BANK
NOTICE

 

7

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AND TAKEN SUCH ACTIONS AS ARE NECESSARY TO GIVE BANK A PERFECTED SECURITY
INTEREST THEREIN.  THE ACCOUNTS ARE BONA FIDE, EXISTING OBLIGATIONS OF THE
ACCOUNT DEBTORS.

 

THE COLLATERAL IS NOT IN THE POSSESSION OF ANY THIRD PARTY BAILEE (SUCH AS A
WAREHOUSE) EXCEPT (X) AS OTHERWISE PROVIDED IN THE PERFECTION CERTIFICATE AND
(Y) EQUIPMENT OR INVENTORY IN THE POSSESSION OF THIRD PARTY CARRIERS IN THE
ORDINARY COURSE OF BUSINESS FOR DELIVERY TO BORROWER OR TO CUSTOMERS OF BORROWER
AND ITS SUBSIDIARIES. NONE OF THE COMPONENTS OF THE COLLATERAL SHALL BE
MAINTAINED AT LOCATIONS OTHER THAN AS PROVIDED IN THE PERFECTION CERTIFICATE OR
AS BORROWER HAS GIVEN BANK NOTICE PURSUANT TO SECTION 7.2.  IN THE EVENT THAT
BORROWER, AFTER THE DATE HEREOF, INTENDS TO STORE OR OTHERWISE DELIVER ANY
PORTION OF THE COLLATERAL IN AN AMOUNT IN EXCESS OF TWO HUNDRED FIFTY THOUSAND
DOLLARS ($250,000) IN THE AGGREGATE AT ANY TIME, TO A BAILEE, THEN BORROWER WILL
FIRST RECEIVE THE WRITTEN CONSENT OF BANK, SUCH CONSENT NOT TO BE UNREASONABLY
WITHHELD, AND SUCH BAILEE MUST EXECUTE AND DELIVER A BAILEE AGREEMENT IN FORM
AND SUBSTANCE SATISFACTORY TO BANK IN ITS SOLE DISCRETION.

 

ALL INVENTORY IS IN ALL MATERIAL RESPECTS OF GOOD AND MARKETABLE QUALITY, FREE
FROM MATERIAL DEFECTS.

 

BORROWER IS THE SOLE OWNER OF ITS INTELLECTUAL PROPERTY, EXCEPT FOR (I) LICENSES
GRANTED TO ITS CUSTOMERS AND/OR LICENSEES IN THE ORDINARY COURSE OF BUSINESS,
AND (II) CERTAIN PATENTS THAT ARE JOINTLY OWNED BY THE BORROWER AND OTHER THIRD
PARTIES WHO HAVE COLLABORATED WITH THE BORROWER ON TECHNICAL DEVELOPMENT
PROJECTS.  AS OF THE DATE HEREOF, EACH PATENT IS VALID AND ENFORCEABLE AND NO
PART OF THE INTELLECTUAL PROPERTY HAS BEEN JUDGED INVALID OR UNENFORCEABLE, IN
WHOLE OR IN PART, AND TO THE BEST OF BORROWER’S KNOWLEDGE, NO CLAIM HAS BEEN
MADE THAT ANY PART OF THE INTELLECTUAL PROPERTY VIOLATES THE RIGHTS OF ANY THIRD
PARTY.

 

EXCEPT AS NOTED ON THE PERFECTION CERTIFICATE, BORROWER IS NOT A PARTY TO, NOR
IS BOUND BY, ANY MATERIAL LICENSE OR OTHER AGREEMENT WITH RESPECT TO WHICH
BORROWER IS THE LICENSEE (A) THAT PROHIBITS OR OTHERWISE RESTRICTS BORROWER FROM
GRANTING A SECURITY INTEREST IN BORROWER’S INTEREST IN SUCH LICENSE OR AGREEMENT
OR ANY OTHER PROPERTY, OR (B) FOR WHICH A DEFAULT UNDER OR TERMINATION OF COULD
INTERFERE WITH THE BANK’S RIGHT TO SELL ANY COLLATERAL.  BORROWER SHALL PROVIDE
WRITTEN NOTICE TO BANK WITHIN TEN (10) DAYS OF ENTERING OR BECOMING BOUND BY ANY
SUCH MATERIAL LICENSE OR AGREEMENT (OTHER THAN OVER-THE-COUNTER SOFTWARE THAT IS
COMMERCIALLY AVAILABLE TO THE PUBLIC).  BORROWER SHALL TAKE SUCH STEPS AS BANK
REQUESTS TO OBTAIN THE CONSENT OF, OR WAIVER BY, ANY PERSON WHOSE CONSENT OR
WAIVER IS NECESSARY FOR (X) ALL SUCH LICENSES OR CONTRACT RIGHTS TO BE DEEMED
“COLLATERAL” AND FOR BANK TO HAVE A SECURITY INTEREST IN IT THAT MIGHT OTHERWISE
BE RESTRICTED OR PROHIBITED BY LAW OR BY THE TERMS OF ANY SUCH LICENSE OR
AGREEMENT (SUCH CONSENT OR AUTHORIZATION MAY INCLUDE A LICENSOR’S AGREEMENT TO A
CONTINGENT ASSIGNMENT OF THE LICENSE TO BANK IF BANK DETERMINES THAT IS
NECESSARY IN ITS GOOD FAITH JUDGMENT), WHETHER NOW EXISTING OR ENTERED INTO IN
THE FUTURE, AND (Y) BANK TO HAVE THE ABILITY IN THE EVENT OF A LIQUIDATION OF
ANY COLLATERAL TO DISPOSE OF SUCH COLLATERAL IN ACCORDANCE WITH BANK’S RIGHTS
AND REMEDIES UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

5.3                               ACCOUNTS RECEIVABLE.

 

(a)                                  For each Account with respect to which
Advances are requested, on the date each Advance is requested and made, such
Account shall meet the Minimum Eligibility Requirements set forth in Section 13
below.

 

(b)                                 All statements made and all unpaid balances
appearing in all invoices, instruments and other documents evidencing the
Accounts are and shall be true and correct and all such invoices, instruments
and other documents, and all of Borrower’s Books are genuine and in all respects
what they purport to be.  All sales and other transactions underlying or giving
rise to each Account shall comply in all material respects with all applicable
laws and governmental rules and regulations.  Borrower has no knowledge of any
actual or imminent Insolvency Proceeding of any Account Debtor whose accounts
are an Eligible Account in any Borrowing Base Certificate.  To the best of
Borrower’s knowledge, all signatures and endorsements on all documents,
instruments, and agreements relating to all Accounts are genuine, and all such
documents, instruments and agreements are legally enforceable in accordance with
their terms.

 

5.4                               LITIGATION.  OTHER THAN AS DISCLOSED ON THE
PERFECTION CERTIFICATE, AS OF THE DATE HEREOF, THERE ARE NO ACTIONS OR
PROCEEDINGS PENDING OR, TO THE KNOWLEDGE OF THE RESPONSIBLE OFFICERS, THREATENED
IN WRITING BY OR AGAINST BORROWER OR ANY OF ITS SUBSIDIARIES INVOLVING MORE THAN
ONE MILLION DOLLARS ($1,000,000.00).

 

5.5                               NO MATERIAL DEVIATION/DETERIORATION IN
FINANCIAL CONDITION.  ALL CONSOLIDATED FINANCIAL STATEMENTS FOR BORROWER AND ANY
OF ITS SUBSIDIARIES DELIVERED TO BANK FAIRLY PRESENT IN ALL MATERIAL RESPECTS
BORROWER’S CONSOLIDATED FINANCIAL CONDITION AND BORROWER’S CONSOLIDATED RESULTS
OF OPERATIONS.  THERE HAS NOT BEEN

 

8

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ANY MATERIAL DETERIORATION IN BORROWER’S CONSOLIDATED FINANCIAL CONDITION SINCE
THE DATE OF THE MOST RECENT FINANCIAL STATEMENTS SUBMITTED TO BANK.

 

5.6                               SOLVENCY.  THE FAIR SALABLE VALUE OF
BORROWER’S ASSETS (INCLUDING GOODWILL MINUS DISPOSITION COSTS) EXCEEDS THE FAIR
VALUE OF ITS LIABILITIES; BORROWER IS NOT LEFT WITH UNREASONABLY SMALL CAPITAL
AFTER THE TRANSACTIONS IN THIS AGREEMENT; AND BORROWER IS ABLE TO PAY ITS DEBTS
(INCLUDING TRADE DEBTS) AS THEY MATURE.

 

5.7                               REGULATORY COMPLIANCE.  BORROWER IS NOT AN
“INVESTMENT COMPANY” OR A COMPANY “CONTROLLED” BY AN “INVESTMENT COMPANY” UNDER
THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.  BORROWER IS NOT ENGAGED AS ONE
OF ITS IMPORTANT ACTIVITIES IN EXTENDING CREDIT FOR MARGIN STOCK (UNDER
REGULATIONS T AND U OF THE FEDERAL RESERVE BOARD OF GOVERNORS).  NO BORROWER NOR
ANY SUBSIDIARIES IS A “HOLDING COMPANY” OR AN “AFFILIATE” OF A “HOLDING COMPANY”
OR A “SUBSIDIARY COMPANY” OF A “HOLDING COMPANY” AS EACH TERM IS DEFINED AND
USED IN THE PUBLIC UTILITY HOLDING COMPANY ACT OF 2005.  BORROWER HAS 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 HAVE A MATERIAL ADVERSE EFFECT ON ITS BUSINESS.  NONE
OF BORROWER’S OR ANY OF ITS SUBSIDIARIES’ PROPERTIES OR ASSETS HAS BEEN USED BY
BORROWER OR ANY SUBSIDIARY OR, TO THE BEST OF BORROWER’S KNOWLEDGE, BY PREVIOUS
PERSONS, IN DISPOSING, PRODUCING, STORING, TREATING, OR TRANSPORTING ANY
HAZARDOUS SUBSTANCE OTHER THAN LEGALLY.  BORROWER AND EACH OF ITS SUBSIDIARIES
HAVE OBTAINED ALL CONSENTS, APPROVALS AND AUTHORIZATIONS OF, MADE ALL
DECLARATIONS OR FILINGS WITH, AND GIVEN ALL NOTICES TO, ALL GOVERNMENT
AUTHORITIES THAT ARE NECESSARY TO CONTINUE THEIR RESPECTIVE BUSINESSES AS
CURRENTLY CONDUCTED.

 

5.8                               SUBSIDIARIES; INVESTMENTS.  OTHER THAN AS SET
FORTH IN THE PERFECTION CERTIFICATE, AS OF THE DATE HEREOF, BORROWER DOES NOT
OWN ANY STOCK, PARTNERSHIP INTEREST OR OTHER EQUITY SECURITIES EXCEPT FOR
PERMITTED INVESTMENTS.

 

5.9                               TAX RETURNS AND PAYMENTS; PENSION
CONTRIBUTIONS.  BORROWER AND ITS SUBSIDIARIES HAVE TIMELY FILED ALL REQUIRED TAX
RETURNS AND REPORTS, AND BORROWER AND ITS SUBSIDIARIES, IF ANY, HAVE TIMELY PAID
ALL FOREIGN, FEDERAL, STATE AND LOCAL TAXES, ASSESSMENTS, DEPOSITS AND
CONTRIBUTIONS OWED BY BORROWER.  BORROWER MAY DEFER PAYMENT OF ANY CONTESTED
TAXES, PROVIDED THAT BORROWER (A) IN GOOD FAITH CONTESTS ITS OBLIGATION TO PAY
THE TAXES BY APPROPRIATE PROCEEDINGS PROMPTLY AND DILIGENTLY INSTITUTED AND
CONDUCTED, (B) NOTIFIES BANK IN WRITING OF THE COMMENCEMENT OF, AND ANY MATERIAL
DEVELOPMENT IN, THE PROCEEDINGS, (C) POSTS BONDS OR TAKES ANY OTHER STEPS
REQUIRED TO PREVENT THE GOVERNMENTAL AUTHORITY LEVYING SUCH CONTESTED TAXES FROM
OBTAINING A LIEN UPON ANY OF THE COLLATERAL THAT IS OTHER THAN A “PERMITTED
LIEN”.  BORROWER IS UNAWARE OF ANY CLAIMS OR ADJUSTMENTS PROPOSED FOR ANY OF
BORROWER’S PRIOR TAX YEARS WHICH COULD RESULT IN ADDITIONAL TAXES BECOMING DUE
AND PAYABLE BY BORROWER IN THE AGGREGATE IN EXCESS OF TWO HUNDRED FIFTY THOUSAND
DOLLARS ($250,000).  BORROWER HAS PAID ALL AMOUNTS NECESSARY TO FUND ALL PRESENT
PENSION, PROFIT SHARING AND DEFERRED COMPENSATION PLANS IN ACCORDANCE WITH THEIR
TERMS, AND BORROWER HAS NOT WITHDRAWN FROM PARTICIPATION IN, AND HAS NOT
PERMITTED PARTIAL OR COMPLETE TERMINATION OF, OR PERMITTED THE OCCURRENCE OF ANY
OTHER EVENT WITH RESPECT TO, ANY SUCH PLAN WHICH COULD REASONABLY BE EXPECTED TO
RESULT IN ANY LIABILITY OF BORROWER, INCLUDING ANY LIABILITY TO THE PENSION
BENEFIT GUARANTY CORPORATION OR ITS SUCCESSORS OR ANY OTHER GOVERNMENTAL AGENCY.

 

5.10                        USE OF PROCEEDS.  BORROWER SHALL USE THE PROCEEDS OF
THE CREDIT EXTENSIONS SOLELY AS WORKING CAPITAL AND TO FUND ITS GENERAL BUSINESS
REQUIREMENTS AND NOT FOR PERSONAL, FAMILY, HOUSEHOLD OR AGRICULTURAL PURPOSES.

 

5.11                        FULL DISCLOSURE.  NO WRITTEN REPRESENTATION,
WARRANTY OR OTHER STATEMENT OF BORROWER IN ANY CERTIFICATE OR WRITTEN STATEMENT
GIVEN TO BANK, AS OF THE DATE SUCH REPRESENTATION, WARRANTY, OR OTHER STATEMENT
WAS MADE, TAKEN TOGETHER WITH ALL SUCH WRITTEN CERTIFICATES AND WRITTEN
STATEMENTS GIVEN TO BANK, CONTAINS ANY UNTRUE STATEMENT OF A MATERIAL FACT OR
OMITS TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS CONTAINED IN THE
CERTIFICATES OR STATEMENTS NOT MISLEADING (IT BEING RECOGNIZED BY BANK THAT THE
PROJECTIONS AND FORECASTS PROVIDED BY BORROWER IN GOOD FAITH AND BASED UPON
REASONABLE ASSUMPTIONS ARE NOT VIEWED AS FACTS AND THAT ACTUAL RESULTS DURING
THE PERIOD OR PERIODS COVERED BY SUCH PROJECTIONS AND FORECASTS MAY DIFFER FROM
THE PROJECTED OR FORECASTED RESULTS).

 

6                                         AFFIRMATIVE COVENANTS

 

Borrower shall do all of the following:

 

6.1                               GOVERNMENT COMPLIANCE.  MAINTAIN ITS AND ALL
ITS SUBSIDIARIES’ LEGAL EXISTENCE AND GOOD STANDING IN THEIR RESPECTIVE
JURISDICTIONS OF FORMATION AND MAINTAIN QUALIFICATION IN EACH JURISDICTION IN
WHICH THE

 

9

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FAILURE TO SO QUALIFY WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT ON BORROWER’S BUSINESS OR OPERATIONS.  BORROWER SHALL COMPLY, AND HAVE
EACH SUBSIDIARY COMPLY, WITH ALL LAWS, ORDINANCES AND REGULATIONS TO WHICH IT IS
SUBJECT, THE NONCOMPLIANCE WITH WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON
BORROWER’S BUSINESS.

 

6.2                               FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.

 

(a)                                  Borrower shall provide Bank with the
following:

 

(i) (A) weekly, and (B) upon each request for a Credit Extension, a Transaction
Report;

 

(ii) within fifteen (15) days after the end of each month, (A) monthly accounts
receivable agings, aged by invoice date, (B) monthly accounts payable agings,
aged by invoice date, and outstanding or held check registers, if any, and
(C) monthly reconciliations of accounts receivable agings (aged by invoice
date), transaction reports, Deferred Revenue report, monthly cash report and
general ledger;

 

(iii) within forty-five (45) days after the end of each quarter a Compliance
Certificate signed by a Responsible Officer, certifying that as of the end of
such quarter, Borrower was in full compliance with all of the terms and
conditions of this Agreement, and setting forth calculations showing compliance
with the financial covenants set forth in this Agreement and such other
information as Bank shall reasonably request, including, without limitation, a
statement that at the end of such quarter there were no held checks;

 

(iv) as soon as available, and in any event within forty-five (45) days after
the end of each fiscal quarter of Caliper, quarterly unaudited consolidated and
consolidating (including each Borrower and any other Subsidiary of Caliper)
financial statements, including, without limitation, a company prepared
consolidated and consolidating balance sheet and income statement covering
Caliper’s consolidated (including each Borrower and any other Subsidiary of
Caliper) operations during the period certified by a Responsible Officer and in
a form acceptable to Bank;

 

(v) annually, when presented to Caliper’s board of directors, (A) annual
operating budgets (including income statements, balance sheets and cash flow
statements, by month) for the upcoming fiscal year of Borrower, and (B) annual
financial projections for the following fiscal year (presented on a quarterly
basis), together with any related business forecasts used in the preparation of
such annual financial projections; and

 

(vi) as soon as available, and in any event within one hundred twenty (120) days
following the end of Caliper’s fiscal year, annual audited consolidated and
consolidating (including each Borrower and any other Subsidiary of Caliper)
financial statements certified by, and with an unqualified opinion of,
independent certified public accountants acceptable to Bank.

 

(b)                                 In the event that Borrower is or becomes
subject to the reporting requirements under the Securities Exchange Act of 1934,
as amended, within five (5) days after filing, all reports on Form 10-K, 10-Q
and 8-K filed with the Securities and Exchange Commission or a link thereto on
Borrower’s or another website on the Internet.

 

(c)                                  In connection with the delivery of the
Compliance Certificate required pursuant to Section 6.2(a)(iii) above, written
notice of (i) any material change in the composition of the intellectual
property, (ii) the registration of any copyright (including any subsequent
ownership right of Borrower in or to any copyright), patent (registered in the
United States), or trademark not previously disclosed to Bank, or
(iii) Borrower’s knowledge of an event that materially adversely affects the
value of the intellectual property.

 

6.3                               ACCOUNTS RECEIVABLE.

 

(a)                                  Schedules and Documents Relating to
Accounts.  Borrower shall deliver to Bank transaction reports and schedules of
collections, as provided in Section 6.2, on Bank’s standard forms; provided,
however, that Borrower’s failure to execute and deliver the same shall not
affect or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor
shall Bank’s failure to advance or lend against a specific Account affect or
limit Bank’s Lien and other rights therein.  If requested by Bank, Borrower
shall furnish Bank with copies (or, at Bank’s request, originals) of all
contracts, orders, invoices, and other similar documents, and all shipping
instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of

 

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which gave rise to such Accounts.  In addition, Borrower shall deliver to Bank,
on its request, the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Accounts, in the same form as received, with all necessary endorsements, and
copies of all credit memos.

 

(b)                                 Disputes.  Borrower shall promptly notify
Bank of all disputes or claims in excess of Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate relating to Accounts.  Borrower may forgive
(completely or partially), compromise, or settle any Account for less than
payment in full, or agree to do any of the foregoing so long as (i) Borrower
does so in good faith, in a commercially reasonable manner, in the ordinary
course of business, in arm’s-length transactions, and reports the same to Bank
in the regular reports provided to Bank; (ii) no Default or Event of Default has
occurred and is continuing; and (iii) after taking into account all such
discounts, settlements and forgiveness, the total outstanding Advances will not
exceed the Availability Amount.

 

(c)                                  Collection of Accounts.  Borrower shall
have the right to collect all Accounts, unless and until a Default or an Event
of Default has occurred and is continuing.  All payments on, and proceeds of,
Accounts shall be deposited directly by the applicable Account Debtor into a
lockbox account, or such other “blocked account” as Bank may specify, pursuant
to a blocked account agreement in form and substance satisfactory to Bank in its
sole discretion.  Whether or not an Event of Default has occurred and is
continuing, Borrower shall hold all payments on, and proceeds of, Accounts in
trust for Bank, and Borrower shall promptly deliver all such payments and
proceeds to Bank in their original form, duly endorsed, to be applied to the
Obligations pursuant to the terms of Section 9.5 hereof; provided, however, that
on any date in which Net Liquidity is greater than or equal to Five Hundred
Thousand Dollars ($500,000), such payments and proceeds shall be transferred to
an account maintained by Borrower at Bank.

 

(d)                                 Returns.  Provided no Event of Default has
occurred and is continuing, if any Account Debtor returns any Inventory in an
amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate to Borrower, Borrower shall promptly (i) determine the reason for such
return, (ii) issue a credit memorandum to the Account Debtor in the appropriate
amount, and (iii) provide a copy of such credit memorandum to Bank, upon request
from Bank.  In the event any such attempted return occurs after the occurrence
and during the continuance of any Event of Default, Borrower shall hold the
returned Inventory in trust for Bank, and immediately notify Bank of the return
of the Inventory.

 

(e)                                  Verification.  Bank may, from time to time,
verify directly with the respective Account Debtors the validity, amount and
other matters relating to the Accounts, either in the name of Borrower or Bank
or such other name as Bank may choose.

 

(F)                                    NO LIABILITY.  BANK SHALL NOT BE
RESPONSIBLE OR LIABLE FOR ANY SHORTAGE OR DISCREPANCY IN, DAMAGE TO, OR LOSS OR
DESTRUCTION OF, ANY GOODS, THE SALE OR OTHER DISPOSITION OF WHICH GIVES RISE TO
AN ACCOUNT, OR FOR ANY ERROR, ACT, OMISSION, OR DELAY OF ANY KIND OCCURRING IN
THE SETTLEMENT, FAILURE TO SETTLE, COLLECTION OR FAILURE TO COLLECT ANY ACCOUNT,
OR FOR SETTLING ANY ACCOUNT IN GOOD FAITH FOR LESS THAN THE FULL AMOUNT THEREOF,
NOR SHALL BANK BE DEEMED TO BE RESPONSIBLE FOR ANY OF BORROWER’S OBLIGATIONS
UNDER ANY CONTRACT OR AGREEMENT GIVING RISE TO AN ACCOUNT.  NOTHING HEREIN
SHALL, HOWEVER, RELIEVE BANK FROM LIABILITY FOR ITS OWN GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.

 

6.4                               REMITTANCE OF PROCEEDS.  EXCEPT AS OTHERWISE
PROVIDED IN SECTION 6.3(C), DELIVER, IN KIND, ALL PROCEEDS ARISING FROM THE
DISPOSITION OF ANY COLLATERAL TO BANK IN THE ORIGINAL FORM IN WHICH RECEIVED BY
BORROWER NOT LATER THAN THE FOLLOWING BUSINESS DAY AFTER RECEIPT BY BORROWER, TO
BE APPLIED TO THE OBLIGATIONS PURSUANT TO THE TERMS OF SECTION 9.4 HEREOF;
PROVIDED THAT, IF NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING,
BORROWER SHALL NOT BE OBLIGATED TO REMIT TO BANK THE PROCEEDS OF THE SALE OF
WORN OUT OR OBSOLETE EQUIPMENT DISPOSED OF BY BORROWER IN GOOD FAITH IN AN ARM’S
LENGTH TRANSACTION FOR AN AGGREGATE PURCHASE PRICE OF TWENTY FIVE THOUSAND
DOLLARS ($25,000) OR LESS (FOR ALL SUCH TRANSACTIONS IN ANY FISCAL YEAR). 
BORROWER AGREES THAT IT WILL NOT COMMINGLE PROCEEDS OF COLLATERAL (OTHER THAN
PROCEEDS FROM ACCOUNTS OR PROCEEDS FROM INVENTORY SALES IN THE ORDINARY COURSE
OF BUSINESS, IN EACH CASE REMITTED TO BANK IN ACCORDANCE WITH
SECTION 6.3(C) HEREOF) WITH ANY OF BORROWER’S OTHER FUNDS OR PROPERTY, BUT WILL
HOLD SUCH PROCEEDS SEPARATE AND APART FROM SUCH OTHER FUNDS AND PROPERTY AND IN
AN EXPRESS TRUST FOR BANK.  NOTHING IN THIS SECTION LIMITS THE RESTRICTIONS ON
DISPOSITION OF COLLATERAL SET FORTH ELSEWHERE IN THIS AGREEMENT.

 

6.5                               Taxes; Pensions.  Make, and cause each of its
Subsidiaries, if any, to make, timely payment of all foreign, federal, state and
local taxes or assessments (other than taxes and assessments which Borrower is
contesting

 

11

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pursuant to the terms of Section 5.9 hereof), and shall deliver to Bank, on
demand, appropriate certificates attesting to such payments, and pay all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms.

 

6.6                               ACCESS TO COLLATERAL; BOOKS AND RECORDS.  AT
REASONABLE TIMES, ON ONE (1) BUSINESS DAY’S NOTICE (PROVIDED NO NOTICE IS
REQUIRED IF AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING), BANK, OR ITS
AGENTS, SHALL HAVE THE RIGHT, ON A SEMI-ANNUAL BASIS (OR MORE FREQUENTLY AFTER
THE OCCURRENCE OF AN EVENT OF DEFAULT) TO INSPECT THE COLLATERAL AND THE RIGHT
TO AUDIT AND COPY BORROWER’S BOOKS.  THE FOREGOING INSPECTIONS AND AUDITS SHALL
BE AT BORROWER’S EXPENSE, AND THE CHARGE THEREFOR SHALL BE $750 PER PERSON PER
DAY (OR SUCH HIGHER AMOUNT AS SHALL REPRESENT BANK’S THEN-CURRENT STANDARD
CHARGE FOR THE SAME), PLUS REASONABLE OUT-OF-POCKET EXPENSES.  IN THE EVENT
BORROWER AND BANK SCHEDULE AN AUDIT MORE THAN TEN (10) DAYS IN ADVANCE, AND
BORROWER CANCELS OR SEEKS TO RESCHEDULES THE AUDIT WITH LESS THAN TEN (10) DAYS
WRITTEN NOTICE TO BANK, THEN (WITHOUT LIMITING ANY OF BANK’S RIGHTS OR
REMEDIES), BORROWER SHALL PAY BANK A FEE OF $1,000 PLUS ANY OUT-OF-POCKET
EXPENSES INCURRED BY BANK TO COMPENSATE BANK FOR THE ANTICIPATED COSTS AND
EXPENSES OF THE CANCELLATION OR RESCHEDULING.

 

6.7                               INSURANCE.  KEEP ITS BUSINESS AND THE
COLLATERAL INSURED FOR RISKS AND IN AMOUNTS STANDARD FOR COMPANIES IN BORROWER’S
INDUSTRY AND LOCATION AND AS BANK MAY REASONABLY REQUEST.  INSURANCE POLICIES
SHALL BE IN A FORM, WITH COMPANIES, AND IN AMOUNTS THAT ARE SATISFACTORY TO
BANK.  ALL PROPERTY POLICIES SHALL HAVE A LENDER’S LOSS PAYABLE ENDORSEMENT
SHOWING BANK AS THE SOLE LENDER LOSS PAYEE AND WAIVE SUBROGATION AGAINST BANK,
AND ALL LIABILITY POLICIES SHALL SHOW, OR HAVE ENDORSEMENTS SHOWING, BANK AS AN
ADDITIONAL INSURED.  ALL POLICIES (OR THE LOSS PAYABLE AND ADDITIONAL INSURED
ENDORSEMENTS) SHALL PROVIDE THAT THE INSURER MUST GIVE BANK AT LEAST THIRTY (30)
DAYS NOTICE BEFORE CANCELING, AMENDING, OR DECLINING TO RENEW ITS POLICY.  AT
BANK’S REQUEST, BORROWER SHALL DELIVER CERTIFIED COPIES OF POLICIES AND EVIDENCE
OF ALL PREMIUM PAYMENTS.  PROCEEDS PAYABLE UNDER ANY POLICY SHALL, AT BANK’S
OPTION, BE PAYABLE TO BANK ON ACCOUNT OF THE OBLIGATIONS.  NOTWITHSTANDING THE
FOREGOING, (A) SO LONG AS NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING,
BORROWER SHALL HAVE THE OPTION OF APPLYING THE PROCEEDS OF ANY CASUALTY POLICY
UP TO TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000), IN THE AGGREGATE, TOWARD
THE REPLACEMENT OR REPAIR OF DESTROYED OR DAMAGED PROPERTY; PROVIDED THAT ANY
SUCH REPLACED OR REPAIRED PROPERTY (I) SHALL BE OF EQUAL OR LIKE VALUE AS THE
REPLACED OR REPAIRED COLLATERAL AND (II) SHALL BE DEEMED COLLATERAL IN WHICH
BANK HAS BEEN GRANTED A FIRST PRIORITY SECURITY INTEREST, AND (B) AFTER THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, ALL PROCEEDS
PAYABLE UNDER SUCH CASUALTY POLICY SHALL, AT THE OPTION OF BANK, BE PAYABLE TO
BANK ON ACCOUNT OF THE OBLIGATIONS.  IF BORROWER FAILS TO OBTAIN INSURANCE AS
REQUIRED UNDER THIS SECTION 6.7 OR TO PAY ANY AMOUNT OR FURNISH ANY REQUIRED
PROOF OF PAYMENT TO THIRD PERSONS AND BANK, BANK MAY MAKE ALL OR PART OF SUCH
PAYMENT OR OBTAIN SUCH INSURANCE POLICIES REQUIRED IN THIS SECTION 6.7, AND TAKE
ANY ACTION UNDER THE POLICIES BANK DEEMS PRUDENT.

 

6.8                               OPERATING ACCOUNTS.

 

(A)                                  MAINTAIN (I) ITS AND ITS SUBSIDIARIES’
PRIMARY DEPOSITORY, OPERATING AND SECURITIES ACCOUNTS WITH BANK AND BANK’S
AFFILIATES, WITH ALL EXCESS FUNDS MAINTAINED AT OR INVESTED THROUGH BANK OR AN
AFFILIATE OF BANK WHICH ACCOUNTS SHALL REPRESENT AT LEAST SEVENTY-FIVE PERCENT
(75%) OF THE DOLLAR VALUE OF BORROWER’S AND SUCH SUBSIDIARIES ACCOUNTS AT ALL
FINANCIAL INSTITUTIONS; AND (II) AT ALL TIMES, MAINTAIN BALANCE OF NOT LESS THAN
THREE MILLION DOLLARS ($3,000,000) IN A DESIGNATED DEPOSIT ACCOUNT AT BANK.  ANY
GUARANTOR SHALL MAINTAIN ITS PRIMARY DEPOSITORY, OPERATING AND SECURITIES
ACCOUNTS WITH BANK, OR SVB SECURITIES.

 

(B)                                 PROVIDE BANK FIVE (5) DAYS PRIOR-WRITTEN
NOTICE BEFORE ESTABLISHING ANY COLLATERAL ACCOUNT AT OR WITH ANY BANK OR
FINANCIAL INSTITUTION OTHER THAN BANK OR ITS AFFILIATES.  IN ADDITION, FOR EACH
COLLATERAL ACCOUNT THAT BORROWER AT ANY TIME MAINTAINS, BORROWER SHALL CAUSE THE
APPLICABLE BANK OR FINANCIAL INSTITUTION (OTHER THAN BANK) AT OR WITH WHICH ANY
COLLATERAL ACCOUNT IS MAINTAINED TO EXECUTE AND DELIVER A CONTROL AGREEMENT OR
OTHER APPROPRIATE INSTRUMENT WITH RESPECT TO SUCH COLLATERAL ACCOUNT TO PERFECT
BANK’S LIEN IN SUCH COLLATERAL ACCOUNT IN ACCORDANCE WITH THE TERMS HEREUNDER. 
THE PROVISIONS OF THE PREVIOUS SENTENCE SHALL NOT APPLY TO DEPOSIT ACCOUNTS
EXCLUSIVELY USED FOR PAYROLL, PAYROLL TAXES AND OTHER EMPLOYEE WAGE AND BENEFIT
PAYMENTS TO OR FOR THE BENEFIT OF BORROWER’S EMPLOYEES AND IDENTIFIED TO BANK BY
BORROWER AS SUCH.

 

6.9                               FINANCIAL COVENANTS.

 

Borrower shall maintain at all times, to be tested as of the last day of each
quarter:

 

(A)                                  ADJUSTED QUICK RATIO.  A RATIO OF QUICK
ASSETS TO QUICK LIABILITIES OF AT LEAST 0.95 TO 1.0 FOR THE QUARTER ENDING
DECEMBER 31, 2008 AND FOR EACH FISCAL QUARTER THEREAFTER.

 

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(B)                                 MINIMUM EBITDA-CAP EX.  BORROWER’S EBITDA
MINUS ITS CAPITAL EXPENDITURES, (“EBITDA-CAP EX”) FOR THE TWO (2) QUARTER PERIOD
ENDING AS OF THE LAST DAY OF EACH QUARTER, SHALL BE IN AN AMOUNT EQUAL TO:
(I) LOSSES NOT GREATER THAN (A) ONE MILLION FIVE HUNDRED THOUSAND DOLLARS
($1,500,000) FOR THE QUARTER ENDED DECEMBER 31, 2008; (B) SIX MILLION EIGHT
HUNDRED THOUSAND DOLLARS ($6,800,000) FOR THE QUARTER ENDING MARCH 31, 2009;
(C) EIGHT MILLION SEVEN HUNDRED THOUSAND DOLLARS ($8,700,000) FOR THE QUARTER
ENDING JUNE 30, 2009; AND (D) FIVE MILLION FIVE HUNDRED THOUSAND DOLLARS
($5,500,000) FOR THE QUARTER ENDING SEPTEMBER 30, 2009; (II) SIXTY THOUSAND
DOLLARS ($60,000) FOR THE QUARTER ENDING DECEMBER 31, 2009; (III) LOSSES NOT
GREATER THAN (A) TWO MILLION DOLLARS ($2,000,000) FOR THE QUARTER ENDING
MARCH 31, 2010; (B) SIX MILLION DOLLARS ($6,000,000) FOR THE QUARTER ENDING
JUNE 30, 2010; AND (C) TWO MILLION DOLLARS ($2,000,000) FOR THE QUARTER ENDING
SEPTEMBER 30, 2010; AND (IV) THREE MILLION EIGHT HUNDRED THOUSAND DOLLARS
($3,800,000) FOR THE QUARTER ENDING DECEMBER 31, 2010.

 

6.10                        PROTECTION AND REGISTRATION OF INTELLECTUAL PROPERTY
RIGHTS.  BORROWER SHALL: (A) PROTECT, DEFEND AND MAINTAIN THE VALIDITY AND
ENFORCEABILITY OF ITS INTELLECTUAL PROPERTY IN A MANNER CONSISTENT WITH PRUDENT
BUSINESS PRACTICES; (B) PROMPTLY ADVISE BANK IN WRITING OF INFRINGEMENTS OF ITS
INTELLECTUAL PROPERTY; AND (C) NOT ALLOW ANY INTELLECTUAL PROPERTY MATERIAL TO
BORROWER’S BUSINESS TO BE ABANDONED, FORFEITED OR DEDICATED TO THE PUBLIC
WITHOUT BANK’S WRITTEN CONSENT.

 

6.11                        LITIGATION COOPERATION.  FROM THE DATE HEREOF AND
CONTINUING THROUGH THE TERMINATION OF THIS AGREEMENT, MAKE AVAILABLE TO BANK,
WITHOUT EXPENSE TO BANK, BORROWER AND ITS OFFICERS, EMPLOYEES AND AGENTS AND
BORROWER’S BOOKS, TO THE EXTENT THAT BANK MAY DEEM THEM REASONABLY NECESSARY TO
PROSECUTE OR DEFEND ANY THIRD-PARTY SUIT OR PROCEEDING INSTITUTED BY OR AGAINST
BANK WITH RESPECT TO ANY COLLATERAL OR RELATING TO BORROWER.

 

6.12                        FURTHER ASSURANCES.  BORROWER SHALL EXECUTE ANY
FURTHER INSTRUMENTS AND TAKE FURTHER ACTION AS BANK REASONABLY REQUESTS TO
PERFECT OR CONTINUE BANK’S LIEN IN THE COLLATERAL OR TO EFFECT THE PURPOSES OF
THIS AGREEMENT.

 

6.13                        Creation/Acquisition of Subsidiaries.  In the event
Borrower or any Subsidiary creates or acquires any Subsidiary, Borrower and such
Subsidiary shall promptly notify Bank of the creation or acquisition of such new
Subsidiary and, at the request of Bank, take all such action as may be
reasonably required by Bank to cause each such Subsidiary to become a
co-Borrower or guarantor under the Loan Documents and grant a continuing pledge
and security interest in and to the assets of such Subsidiary (substantially as
described on Exhibit A hereto); and, at the request of Bank, Borrower shall
grant and pledge to Bank a perfected security interest in the stock, units or
other evidence of ownership of each such Subsidiary.

 

7                                         NEGATIVE COVENANTS

 

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

 

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 (A) OF INVENTORY IN THE ORDINARY COURSE OF BUSINESS; (B) OF
WORN-OUT OR OBSOLETE EQUIPMENT; (C) EQUIPMENT AND INTELLECTUAL PROPERTY NO
LONGER NECESSARY OR USEFUL IN THE CONDUCT OF BORROWER’S BUSINESS, UP TO A
MAXIMUM AGGREGATE AMOUNT OF ONE MILLION DOLLARS ($1,000,000.00) PER ANNUM;
(D) IN CONNECTION WITH PERMITTED LIENS AND PERMITTED INVESTMENTS; (E) OF
LICENSES FOR THE USE OF THE PROPERTY OF BORROWER OR ITS SUBSIDIARIES IN THE
ORDINARY COURSE OF BUSINESS; AND (F) CROSS-LICENSES ENTERED INTO IN THE
SETTLEMENT OF LITIGATION OR THREATENED OR POTENTIAL LITIGATION AND CONSISTENT
WITH BORROWER’S PAST PRACTICES.

 

7.2                               CHANGES IN BUSINESS, MANAGEMENT, OWNERSHIP,
CONTROL, OR BUSINESS LOCATIONS.  (A) ENGAGE IN OR PERMIT ANY OF ITS SUBSIDIARIES
TO ENGAGE IN ANY BUSINESS OTHER THAN THE BUSINESSES CURRENTLY ENGAGED IN BY
BORROWER AND SUCH SUBSIDIARY, AS APPLICABLE, OR REASONABLY RELATED THERETO;
(B) LIQUIDATE OR DISSOLVE; OR (C) ENTER INTO ANY TRANSACTION OR SERIES OF
RELATED TRANSACTIONS IN WHICH THE STOCKHOLDERS OF BORROWER IMMEDIATELY PRIOR TO
THE FIRST SUCH TRANSACTION OWN LESS THAN FIFTY ONE PERCENT (51%) OF THE VOTING
STOCK OF BORROWER IMMEDIATELY AFTER GIVING EFFECT TO SUCH TRANSACTION OR RELATED
SERIES OF SUCH TRANSACTIONS (OTHER THAN BY THE SALE OF BORROWER’S EQUITY
SECURITIES IN A PUBLIC OFFERING OR TO VENTURE CAPITAL INVESTORS SO LONG AS
BORROWER IDENTIFIES TO BANK THE VENTURE CAPITAL INVESTORS PRIOR TO THE CLOSING
OF THE TRANSACTION).  BORROWER SHALL NOT, WITHOUT AT LEAST TEN (10) DAYS PRIOR
WRITTEN NOTICE TO BANK: (1) ADD ANY NEW OFFICES OR BUSINESS LOCATIONS AT WHICH
ANY MATERIAL AMOUNT OF INVENTORY OR EQUIPMENT WILL BE LOCATED, (2) CHANGE ITS
JURISDICTION OF ORGANIZATION, (3) CHANGE ITS ORGANIZATIONAL STRUCTURE OR TYPE,

 

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(4) CHANGE ITS LEGAL NAME, OR (5) CHANGE ANY ORGANIZATIONAL NUMBER (IF ANY)
ASSIGNED BY ITS JURISDICTION OF ORGANIZATION.

 

7.3                               MERGERS OR ACQUISITIONS.  MERGE OR
CONSOLIDATE, OR PERMIT ANY OF ITS SUBSIDIARIES TO MERGE OR CONSOLIDATE, WITH ANY
OTHER PERSON, OR ACQUIRE, OR PERMIT ANY OF ITS SUBSIDIARIES TO ACQUIRE, ALL OR
SUBSTANTIALLY ALL OF THE CAPITAL STOCK OR PROPERTY OF ANOTHER PERSON.  A
SUBSIDIARY MAY MERGE OR CONSOLIDATE INTO ANOTHER SUBSIDIARY OR INTO BORROWER.

 

7.4                               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, PERMIT ANY COLLATERAL NOT TO BE SUBJECT TO THE FIRST
PRIORITY SECURITY INTEREST GRANTED HEREIN, OR ENTER INTO ANY AGREEMENT,
DOCUMENT, INSTRUMENT OR OTHER ARRANGEMENT (EXCEPT WITH OR IN FAVOR OF BANK) WITH
ANY PERSON WHICH DIRECTLY OR INDIRECTLY PROHIBITS OR HAS THE EFFECT OF
PROHIBITING BORROWER OR ANY SUBSIDIARY FROM ASSIGNING, MORTGAGING, PLEDGING,
GRANTING A SECURITY INTEREST IN OR UPON, OR ENCUMBERING ANY OF BORROWER’S OR ANY
SUBSIDIARY’S INTELLECTUAL PROPERTY, EXCEPT AS IS OTHERWISE PERMITTED IN
SECTION 7.1 HEREOF AND THE DEFINITION OF “PERMITTED LIEN” HEREIN.

 

7.6                               MAINTENANCE OF COLLATERAL ACCOUNTS.  MAINTAIN
ANY COLLATERAL ACCOUNT EXCEPT PURSUANT TO THE TERMS OF SECTION 6.8(B) HEREOF.

 

7.7                               INVESTMENTS; DISTRIBUTIONS.  (A) DIRECTLY OR
INDIRECTLY MAKE ANY INVESTMENT OTHER THAN PERMITTED INVESTMENTS, OR PERMIT ANY
OF ITS SUBSIDIARIES TO DO SO; OR (B) PAY ANY DIVIDENDS OR MAKE ANY DISTRIBUTION
OR PAYMENT OR REDEEM, RETIRE OR PURCHASE ANY CAPITAL STOCK PROVIDED THAT
(I) BORROWER MAY CONVERT ANY OF ITS CONVERTIBLE SECURITIES INTO OTHER SECURITIES
PURSUANT TO THE TERMS OF SUCH CONVERTIBLE SECURITIES OR OTHERWISE IN EXCHANGE
THEREOF, (II) BORROWER MAY PAY DIVIDENDS SOLELY IN COMMON STOCK; AND
(III) BORROWER MAY REPURCHASE THE STOCK OF FORMER EMPLOYEES OR CONSULTANTS
PURSUANT TO STOCK REPURCHASE AGREEMENTS SO LONG AS AN EVENT OF DEFAULT DOES NOT
EXIST AT THE TIME OF SUCH REPURCHASE AND WOULD NOT EXIST AFTER GIVING EFFECT TO
SUCH REPURCHASE, PROVIDED SUCH REPURCHASE DOES NOT EXCEED IN THE AGGREGATE OF
FIFTY THOUSAND DOLLARS ($50,000) PER FISCAL YEAR.

 

7.8                               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.

 

7.9                               SUBORDINATED DEBT.  (A) MAKE OR PERMIT ANY
PAYMENT ON ANY SUBORDINATED DEBT, EXCEPT UNDER THE TERMS OF THE SUBORDINATION,
INTERCREDITOR, OR OTHER SIMILAR AGREEMENT TO WHICH SUCH SUBORDINATED DEBT IS
SUBJECT, OR (B) AMEND ANY PROVISION IN ANY DOCUMENT RELATING TO THE SUBORDINATED
DEBT WHICH WOULD INCREASE THE AMOUNT THEREOF OR ADVERSELY AFFECT THE
SUBORDINATION THEREOF TO OBLIGATIONS OWED TO BANK.

 

7.10                        COMPLIANCE.  BECOME AN “INVESTMENT COMPANY” OR A
COMPANY CONTROLLED BY AN “INVESTMENT COMPANY”, UNDER THE INVESTMENT COMPANY ACT
OF 1940, AS AMENDED, OR UNDERTAKE AS ONE OF ITS IMPORTANT ACTIVITIES EXTENDING
CREDIT TO PURCHASE OR CARRY MARGIN STOCK (AS DEFINED IN REGULATION U OF THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM), OR USE THE PROCEEDS OF ANY
CREDIT EXTENSION FOR THAT PURPOSE; FAIL TO MEET THE MINIMUM FUNDING REQUIREMENTS
OF ERISA, PERMIT A REPORTABLE EVENT OR NON-EXEMPT PROHIBITED TRANSACTION, AS
DEFINED IN ERISA, TO OCCUR; FAIL TO COMPLY WITH THE FEDERAL FAIR LABOR STANDARDS
ACT OR VIOLATE ANY OTHER LAW OR REGULATION, IF THE VIOLATION COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON BORROWER’S BUSINESS, OR PERMIT ANY
OF ITS SUBSIDIARIES TO DO SO; WITHDRAW OR PERMIT ANY SUBSIDIARY TO WITHDRAW FROM
PARTICIPATION IN, PERMIT PARTIAL OR COMPLETE TERMINATION OF, OR PERMIT THE
OCCURRENCE OF ANY OTHER EVENT WITH RESPECT TO, ANY PRESENT PENSION, PROFIT
SHARING AND DEFERRED COMPENSATION PLAN WHICH COULD REASONABLY BE EXPECTED TO
RESULT IN ANY LIABILITY OF BORROWER, INCLUDING ANY LIABILITY TO THE PENSION
BENEFIT GUARANTY CORPORATION OR ITS SUCCESSORS OR ANY OTHER GOVERNMENTAL AGENCY.

 

8                                         EVENTS OF DEFAULT

 

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

 

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8.1                               PAYMENT DEFAULT.  BORROWER FAILS TO (A) MAKE
ANY PAYMENT OF PRINCIPAL OR INTEREST ON ANY CREDIT EXTENSION ON ITS DUE DATE, OR
(B) PAY ANY OTHER OBLIGATIONS WITHIN THREE (3) BUSINESS DAYS AFTER SUCH
OBLIGATIONS ARE DUE AND PAYABLE.  DURING THE CURE PERIOD, THE FAILURE TO CURE
THE PAYMENT DEFAULT IS NOT AN EVENT OF DEFAULT (BUT NO CREDIT EXTENSION WILL BE
MADE DURING THE CURE PERIOD);

 

8.2                               COVENANT DEFAULT.

 

(a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4,
6.5, 6.6, 6.7, 6.8, 6.9, 6.10, or 6.11, or violates any covenant in Section 7;
or

 

(B) BORROWER FAILS OR NEGLECTS TO PERFORM, KEEP, OR OBSERVE ANY OTHER TERM,
PROVISION, CONDITION, COVENANT OR AGREEMENT CONTAINED IN THIS AGREEMENT, ANY
LOAN DOCUMENTS, AND AS TO ANY DEFAULT (OTHER THAN THOSE SPECIFIED IN THIS
SECTION 8) UNDER SUCH OTHER TERM, PROVISION, CONDITION, COVENANT OR AGREEMENT
THAT CAN BE CURED, HAS FAILED TO CURE THE DEFAULT WITHIN TEN (10) DAYS AFTER THE
OCCURRENCE THEREOF; PROVIDED, HOWEVER, THAT IF THE DEFAULT CANNOT BY ITS NATURE
BE CURED WITHIN THE TEN (10) DAY PERIOD OR CANNOT AFTER DILIGENT ATTEMPTS BY
BORROWER BE CURED WITHIN SUCH TEN (10) DAY PERIOD, AND SUCH DEFAULT IS LIKELY TO
BE CURED WITHIN A REASONABLE TIME, THEN BORROWER SHALL HAVE AN ADDITIONAL PERIOD
(WHICH SHALL NOT IN ANY CASE EXCEED THIRTY (30) DAYS) TO ATTEMPT TO CURE SUCH
DEFAULT, AND WITHIN SUCH REASONABLE TIME PERIOD THE FAILURE TO CURE THE DEFAULT
SHALL NOT BE DEEMED AN EVENT OF DEFAULT (BUT NO CREDIT EXTENSIONS SHALL BE MADE
DURING SUCH CURE PERIOD).  GRACE PERIODS PROVIDED UNDER THIS SECTION SHALL NOT
APPLY, AMONG OTHER THINGS, TO FINANCIAL COVENANTS OR ANY OTHER COVENANTS SET
FORTH IN SUBSECTION (A) ABOVE;

 

8.3                               MATERIAL ADVERSE CHANGE.  A MATERIAL ADVERSE
CHANGE OCCURS;

 

8.4                               ATTACHMENT.  (A) ANY MATERIAL PORTION OF
BORROWER’S ASSETS IS ATTACHED, SEIZED, LEVIED ON, OR COMES INTO POSSESSION OF A
TRUSTEE OR RECEIVER AND THE ATTACHMENT, SEIZURE OR LEVY IS NOT REMOVED IN TEN
(10) DAYS; (B) THE SERVICE OF PROCESS UPON BANK (OR BANK’S AFFILIATE) SEEKING TO
ATTACH, BY TRUSTEE OR SIMILAR PROCESS, ANY FUNDS OF BORROWER, OR OF ANY ENTITY
UNDER CONTROL OF BORROWER (INCLUDING A SUBSIDIARY) ON DEPOSIT WITH BANK;
(C) BORROWER IS ENJOINED, RESTRAINED, OR PREVENTED BY COURT ORDER FROM
CONDUCTING A MATERIAL PART OF ITS BUSINESS; (D) A JUDGMENT OR OTHER CLAIM IN
EXCESS OF ONE MILLION DOLLARS ($1,000,000) BECOMES A LIEN ON ANY OF BORROWER’S
ASSETS; OR (E) A NOTICE OF LIEN, LEVY, OR ASSESSMENT IS FILED AGAINST ANY OF
BORROWER’S ASSETS BY ANY GOVERNMENT AGENCY AND NOT PAID WITHIN TEN (10) DAYS
AFTER BORROWER RECEIVES NOTICE.  THESE ARE NOT EVENTS OF DEFAULT IF STAYED OR IF
A BOND IS POSTED PENDING CONTEST BY BORROWER (BUT NO CREDIT EXTENSIONS SHALL BE
MADE DURING THE CURE PERIOD);

 

8.5                               INSOLVENCY.  (A) BORROWER IS UNABLE TO PAY ITS
DEBTS (INCLUDING TRADE DEBTS) AS THEY BECOME DUE OR OTHERWISE BECOMES INSOLVENT;
(B) BORROWER BEGINS AN INSOLVENCY PROCEEDING; OR (C) AN INSOLVENCY PROCEEDING IS
BEGUN AGAINST BORROWER AND NOT DISMISSED OR STAYED WITHIN FORTY FIVE (45) DAYS
(BUT NO CREDIT EXTENSIONS SHALL BE MADE WHILE OF ANY OF THE CONDITIONS DESCRIBED
IN CLAUSE (A) EXIST AND/OR UNTIL ANY INSOLVENCY PROCEEDING IS DISMISSED);

 

8.6                               OTHER AGREEMENTS.  THERE IS A DEFAULT IN ANY
AGREEMENT TO WHICH BORROWER OR ANY GUARANTOR IS A PARTY WITH A THIRD PARTY OR
PARTIES RESULTING IN A RIGHT BY SUCH THIRD PARTY OR PARTIES, WHETHER OR NOT
EXERCISED, TO ACCELERATE THE MATURITY OF ANY INDEBTEDNESS IN AN AMOUNT IN EXCESS
OF ONE MILLION DOLLARS ($1,000,000) OR THAT COULD HAVE A MATERIAL ADVERSE EFFECT
ON BORROWER’S BUSINESS;

 

8.7                               JUDGMENTS.  A JUDGMENT OR JUDGMENTS FOR THE
PAYMENT OF MONEY IN AN AMOUNT, INDIVIDUALLY OR IN THE AGGREGATE, OF AT LEAST ONE
MILLION DOLLARS ($1,000,000) (NOT COVERED BY INDEPENDENT THIRD-PARTY INSURANCE)
SHALL BE RENDERED AGAINST BORROWER AND SHALL REMAIN UNSATISFIED AND UNSTAYED FOR
A PERIOD OF THIRTY (30) DAYS AFTER THE ENTRY THEREOF (PROVIDED THAT NO CREDIT
EXTENSIONS WILL BE MADE PRIOR TO THE SATISFACTION OR STAY OF SUCH JUDGMENT);

 

8.8                               MISREPRESENTATIONS.  BORROWER OR ANY PERSON
ACTING FOR BORROWER MAKES ANY REPRESENTATION, WARRANTY, OR OTHER STATEMENT NOW
OR LATER IN THIS AGREEMENT, ANY LOAN DOCUMENT OR IN ANY WRITING DELIVERED TO
BANK OR TO INDUCE BANK TO ENTER INTO THIS AGREEMENT OR ANY LOAN DOCUMENT, AND
SUCH REPRESENTATION, WARRANTY, OR OTHER STATEMENT IS INCORRECT IN ANY MATERIAL
RESPECT WHEN MADE; OR

 

8.9                               SUBORDINATED DEBT.  A DEFAULT OR BREACH OCCURS
UNDER ANY AGREEMENT BETWEEN BORROWER AND ANY CREDITOR OF BORROWER THAT SIGNED A
SUBORDINATION, INTERCREDITOR, OR OTHER SIMILAR AGREEMENT WITH BANK, OR ANY
CREDITOR THAT HAS SIGNED SUCH AN AGREEMENT WITH BANK BREACHES ANY TERMS OF SUCH
AGREEMENT.

 

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9                                         BANK’S RIGHTS AND REMEDIES

 

9.1                               RIGHTS AND REMEDIES.  WHILE AN EVENT OF
DEFAULT OCCURS AND CONTINUES BANK MAY, WITHOUT NOTICE OR DEMAND, DO ANY OR ALL
OF THE FOLLOWING:

 

(A)                                  DECLARE ALL OBLIGATIONS IMMEDIATELY DUE AND
PAYABLE (BUT IF AN EVENT OF DEFAULT DESCRIBED IN SECTION 8.5 OCCURS ALL
OBLIGATIONS ARE IMMEDIATELY DUE AND PAYABLE WITHOUT ANY ACTION BY BANK);

 

(B)                                 STOP ADVANCING MONEY OR EXTENDING CREDIT FOR
BORROWER’S BENEFIT UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT BETWEEN
BORROWER AND BANK;

 

(C)                                  DEMAND THAT BORROWER (I) DEPOSITS CASH WITH
BANK IN AN AMOUNT EQUAL TO THE AGGREGATE AMOUNT OF ANY LETTERS OF CREDIT
REMAINING UNDRAWN, AS COLLATERAL SECURITY FOR THE REPAYMENT OF ANY FUTURE
DRAWINGS UNDER SUCH LETTERS OF CREDIT, AND BORROWER SHALL FORTHWITH DEPOSIT AND
PAY SUCH AMOUNTS, AND (II) PAY IN ADVANCE ALL LETTER OF CREDIT FEES SCHEDULED TO
BE PAID OR PAYABLE OVER THE REMAINING TERM OF ANY LETTERS OF CREDIT;

 

(D)                                 TERMINATE ANY FX FORWARD CONTRACTS;

 

(E)                                  SETTLE OR ADJUST DISPUTES AND CLAIMS
DIRECTLY WITH ACCOUNT DEBTORS FOR AMOUNTS ON TERMS AND IN ANY ORDER THAT BANK
CONSIDERS ADVISABLE, NOTIFY ANY PERSON OWING BORROWER MONEY OF BANK’S SECURITY
INTEREST IN SUCH FUNDS, AND VERIFY THE AMOUNT OF SUCH ACCOUNT;

 

(F)                                    MAKE ANY PAYMENTS AND DO ANY ACTS IT
CONSIDERS NECESSARY OR REASONABLE TO PROTECT THE COLLATERAL AND/OR ITS SECURITY
INTEREST IN THE COLLATERAL.  BORROWER SHALL ASSEMBLE THE COLLATERAL IF BANK
REQUESTS AND MAKE IT AVAILABLE AS BANK DESIGNATES.  BANK MAY ENTER PREMISES
WHERE THE COLLATERAL IS LOCATED, TAKE AND MAINTAIN POSSESSION OF ANY PART OF THE
COLLATERAL, AND PAY, PURCHASE, CONTEST, OR COMPROMISE ANY LIEN WHICH APPEARS TO
BE PRIOR OR SUPERIOR TO ITS SECURITY INTEREST AND PAY ALL EXPENSES INCURRED.
BORROWER GRANTS BANK A LICENSE TO ENTER AND OCCUPY ANY OF ITS PREMISES, WITHOUT
CHARGE, TO EXERCISE ANY OF BANK’S RIGHTS OR REMEDIES;

 

(G)                                 APPLY TO THE OBLIGATIONS ANY (I) BALANCES
AND DEPOSITS OF BORROWER IT HOLDS, OR (II) ANY AMOUNT HELD BY BANK OWING TO OR
FOR THE CREDIT OR THE ACCOUNT OF BORROWER;

 

(H)                                 SHIP, RECLAIM, RECOVER, STORE, FINISH,
MAINTAIN, REPAIR, PREPARE FOR SALE, ADVERTISE FOR SALE, AND SELL THE
COLLATERAL.  BANK IS HEREBY GRANTED A NON-EXCLUSIVE, ROYALTY-FREE LICENSE OR
OTHER RIGHT TO USE, WITHOUT CHARGE, BORROWER’S LABELS, PATENTS, COPYRIGHTS, MASK
WORKS, RIGHTS OF USE OF ANY NAME, TRADE SECRETS, TRADE NAMES, TRADEMARKS,
SERVICE MARKS, AND ADVERTISING MATTER, OR ANY SIMILAR PROPERTY AS IT PERTAINS TO
THE COLLATERAL, IN COMPLETING PRODUCTION OF, ADVERTISING FOR SALE, AND SELLING
ANY COLLATERAL AND, IN CONNECTION WITH BANK’S EXERCISE OF ITS RIGHTS UNDER THIS
SECTION, BORROWER’S RIGHTS UNDER ALL LICENSES AND ALL FRANCHISE AGREEMENTS INURE
TO BANK’S BENEFIT;

 

(I)                                     PLACE A “HOLD” ON ANY ACCOUNT MAINTAINED
WITH BANK AND/OR DELIVER A NOTICE OF EXCLUSIVE CONTROL, ANY ENTITLEMENT ORDER,
OR OTHER DIRECTIONS OR INSTRUCTIONS PURSUANT TO ANY CONTROL AGREEMENT OR SIMILAR
AGREEMENTS PROVIDING CONTROL OF ANY COLLATERAL;

 

(J)                                     DEMAND AND RECEIVE POSSESSION OF
BORROWER’S BOOKS; AND

 

(K)                                  EXERCISE ALL RIGHTS AND REMEDIES AVAILABLE
TO BANK UNDER THE LOAN DOCUMENTS OR AT LAW OR EQUITY, INCLUDING ALL REMEDIES
PROVIDED UNDER THE CODE (INCLUDING DISPOSAL OF THE COLLATERAL PURSUANT TO THE
TERMS THEREOF).

 

9.2                               POWER OF ATTORNEY.  BORROWER HEREBY
IRREVOCABLY APPOINTS BANK AS ITS LAWFUL ATTORNEY-IN-FACT, EXERCISABLE UPON THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO: (A) ENDORSE
BORROWER’S NAME ON ANY CHECKS OR OTHER FORMS OF PAYMENT OR SECURITY; (B) SIGN
BORROWER’S NAME ON ANY INVOICE OR BILL OF LADING FOR ANY ACCOUNT OR DRAFTS
AGAINST ACCOUNT DEBTORS; (C) SETTLE AND ADJUST DISPUTES AND CLAIMS ABOUT THE
ACCOUNTS DIRECTLY WITH ACCOUNT DEBTORS, FOR AMOUNTS AND ON TERMS BANK DETERMINES
REASONABLE; (D) MAKE, SETTLE, AND ADJUST ALL CLAIMS UNDER BORROWER’S INSURANCE
POLICIES; (E) PAY, CONTEST OR SETTLE ANY LIEN, CHARGE, ENCUMBRANCE, SECURITY
INTEREST, AND ADVERSE CLAIM IN OR TO THE COLLATERAL, OR ANY JUDGMENT BASED
THEREON, OR OTHERWISE TAKE ANY ACTION TO TERMINATE OR DISCHARGE THE SAME; AND
(F) TRANSFER THE COLLATERAL INTO THE NAME OF BANK OR A THIRD PARTY AS THE CODE
PERMITS.  BORROWER HEREBY APPOINTS BANK AS ITS LAWFUL ATTORNEY-IN-FACT TO SIGN
BORROWER’S NAME ON ANY DOCUMENTS NECESSARY TO PERFECT OR CONTINUE THE PERFECTION
OF ANY SECURITY INTEREST REGARDLESS OF WHETHER AN EVENT OF DEFAULT HAS OCCURRED
UNTIL ALL OBLIGATIONS HAVE BEEN SATISFIED IN FULL AND BANK IS UNDER NO FURTHER
OBLIGATION TO MAKE CREDIT EXTENSIONS

 

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HEREUNDER.  BANK’S FOREGOING APPOINTMENT AS BORROWER’S ATTORNEY IN FACT, AND ALL
OF BANK’S RIGHTS AND POWERS, COUPLED WITH AN INTEREST, ARE IRREVOCABLE UNTIL ALL
OBLIGATIONS HAVE BEEN FULLY REPAID AND PERFORMED AND BANK’S OBLIGATION TO
PROVIDE CREDIT EXTENSIONS TERMINATES.

 

9.3                               PROTECTIVE PAYMENTS.  IF BORROWER FAILS TO
OBTAIN THE INSURANCE CALLED FOR BY SECTION 6.7 OR FAILS TO PAY ANY PREMIUM
THEREON OR FAILS TO PAY ANY OTHER AMOUNT WHICH BORROWER IS OBLIGATED TO PAY
UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, BANK MAY OBTAIN SUCH INSURANCE
OR MAKE SUCH PAYMENT, AND ALL AMOUNTS SO PAID BY BANK ARE BANK EXPENSES AND
IMMEDIATELY DUE AND PAYABLE, BEARING INTEREST AT THE THEN HIGHEST APPLICABLE
RATE, AND SECURED BY THE COLLATERAL.  BANK WILL MAKE REASONABLE EFFORTS TO
PROVIDE BORROWER WITH NOTICE OF BANK OBTAINING SUCH INSURANCE AT THE TIME IT IS
OBTAINED OR WITHIN A REASONABLE TIME THEREAFTER.  NO PAYMENTS BY BANK ARE DEEMED
AN AGREEMENT TO MAKE SIMILAR PAYMENTS IN THE FUTURE OR BANK’S WAIVER OF ANY
EVENT OF DEFAULT.

 

9.4                               APPLICATION OF PAYMENTS AND PROCEEDS.  UNLESS
AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING AND SUBJECT TO
SECTION 6.3(C) HEREOF, BANK MAY APPLY ANY FUNDS IN ITS POSSESSION, WHETHER FROM
BORROWER ACCOUNT BALANCES, PAYMENTS, OR PROCEEDS REALIZED AS THE RESULT OF ANY
COLLECTION OF ACCOUNTS OR OTHER DISPOSITION OF THE COLLATERAL, FIRST, TO BANK
EXPENSES, INCLUDING WITHOUT LIMITATION, THE REASONABLE COSTS, EXPENSES,
LIABILITIES, OBLIGATIONS AND ATTORNEYS’ FEES INCURRED BY BANK IN THE EXERCISE OF
ITS RIGHTS UNDER THIS AGREEMENT; SECOND, TO THE INTEREST DUE UPON ANY OF THE
OBLIGATIONS; AND THIRD, TO THE PRINCIPAL OF THE OBLIGATIONS AND ANY APPLICABLE
FEES AND OTHER CHARGES, IN SUCH ORDER AS BANK SHALL DETERMINE IN ITS SOLE
DISCRETION.  ANY SURPLUS SHALL BE PAID TO BORROWER OR OTHER PERSONS LEGALLY
ENTITLED THERETO; BORROWER SHALL REMAIN LIABLE TO BANK FOR ANY DEFICIENCY.  IF
AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, BANK MAY APPLY ANY FUNDS IN
ITS POSSESSION, WHETHER FROM BORROWER ACCOUNT BALANCES, PAYMENTS, PROCEEDS
REALIZED AS THE RESULT OF ANY COLLECTION OF ACCOUNTS OR OTHER DISPOSITION OF THE
COLLATERAL, OR OTHERWISE, TO THE OBLIGATIONS IN SUCH ORDER AS BANK SHALL
DETERMINE IN ITS SOLE DISCRETION.  ANY SURPLUS SHALL BE PAID TO BORROWER OR TO
OTHER PERSONS LEGALLY ENTITLED THERETO; BORROWER SHALL REMAIN LIABLE TO BANK FOR
ANY DEFICIENCY.  IF BANK, IN ITS GOOD FAITH BUSINESS JUDGMENT, DIRECTLY OR
INDIRECTLY ENTERS INTO A DEFERRED PAYMENT OR OTHER CREDIT TRANSACTION WITH ANY
PURCHASER AT ANY SALE OF COLLATERAL, BANK SHALL HAVE THE OPTION, EXERCISABLE AT
ANY TIME, OF EITHER REDUCING THE OBLIGATIONS BY THE PRINCIPAL AMOUNT OF THE
PURCHASE PRICE OR DEFERRING THE REDUCTION OF THE OBLIGATIONS UNTIL THE ACTUAL
RECEIPT BY BANK OF CASH THEREFOR.

 

9.5                               BANK’S LIABILITY FOR COLLATERAL.  SO LONG AS
BANK COMPLIES WITH REASONABLE BANKING PRACTICES REGARDING THE SAFEKEEPING OF THE
COLLATERAL IN THE POSSESSION OR UNDER THE CONTROL OF BANK, BANK SHALL NOT BE
LIABLE OR RESPONSIBLE FOR: (A) THE SAFEKEEPING OF THE COLLATERAL; (B) ANY LOSS
OR DAMAGE TO THE COLLATERAL; (C) ANY DIMINUTION IN THE VALUE OF THE COLLATERAL;
OR (D) ANY ACT OR DEFAULT OF ANY CARRIER, WAREHOUSEMAN, BAILEE, OR OTHER
PERSON.  BORROWER BEARS ALL RISK OF LOSS, DAMAGE OR DESTRUCTION OF THE
COLLATERAL.

 

9.6                               NO WAIVER; REMEDIES CUMULATIVE.  BANK’S
FAILURE, AT ANY TIME OR TIMES, TO REQUIRE STRICT PERFORMANCE BY BORROWER OF ANY
PROVISION OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL NOT WAIVE, AFFECT,
OR DIMINISH ANY RIGHT OF BANK THEREAFTER TO DEMAND STRICT PERFORMANCE AND
COMPLIANCE HEREWITH OR THEREWITH.  NO WAIVER HEREUNDER SHALL BE EFFECTIVE UNLESS
SIGNED BY BANK AND THEN IS ONLY EFFECTIVE FOR THE SPECIFIC INSTANCE AND PURPOSE
FOR WHICH IT IS GIVEN.  BANK’S RIGHTS AND REMEDIES UNDER THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS ARE CUMULATIVE.  BANK HAS ALL RIGHTS AND REMEDIES PROVIDED
UNDER THE CODE, BY LAW, OR IN EQUITY.  BANK’S EXERCISE OF ONE RIGHT OR REMEDY IS
NOT AN ELECTION, AND BANK’S WAIVER OF ANY EVENT OF DEFAULT IS NOT A CONTINUING
WAIVER.  BANK’S DELAY IN EXERCISING ANY REMEDY IS NOT A WAIVER, ELECTION, OR
ACQUIESCENCE.

 

9.7                               DEMAND WAIVER.  BORROWER WAIVES DEMAND, NOTICE
OF DEFAULT OR DISHONOR, NOTICE OF PAYMENT AND NONPAYMENT, NOTICE OF ANY DEFAULT,
NONPAYMENT AT MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION, OR RENEWAL
OF ACCOUNTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER, AND GUARANTEES HELD BY BANK
ON WHICH BORROWER IS LIABLE.

 

10                                  NOTICES

 

All notices, consents, requests, approvals, demands, or other communication
(collectively, “Communication”), other than Advance requests made pursuant to
Section 3.4, by any party to this Agreement or any other Loan Document must be
in writing and be delivered or sent by facsimile at the addresses or facsimile
numbers listed below.  Bank or Borrower may change its notice address by giving
the other party written notice thereof.  Each such Communication shall be deemed
to have been validly served, given, or delivered: (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the U.S. mail, registered
or certified mail, return receipt requested, with proper postage prepaid;
(b) upon transmission, when sent by facsimile or electronic mail transmission
(with such facsimile or electronic mail promptly confirmed by delivery of a copy
by personal delivery or United States mail as otherwise provided in this
Section 10); (c) one (1) Business Day after deposit with a

 

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reputable overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number indicated below.  Advance
requests made pursuant to Section 3.4 must be in writing and may be in the form
of electronic mail, delivered to Bank by Borrower at the e-mail address of Bank
provided below and shall be deemed to have been validly served, given, or
delivered when sent (with such electronic mail promptly confirmed by delivery of
a copy by personal delivery or United States mail as otherwise provided in this
Section 10).  Bank or Borrower may change its address, facsimile number, or
electronic mail address by giving the other party written notice thereof in
accordance with the terms of this Section 10.

 

If to Borrower:                   Caliper Life Sciences, Inc.

 

68 Elm Street

 

Hopkinton, Massachusetts 01748

 

Attn: Peter McAree, Chief Financial Officer

 

Fax: (508) 497-2726

 

Email:  Peter.Mcaree@caliperls.com

 

 

with a copy to:

Caliper Life Sciences, Inc.

 

850 Marina Village Parkway

 

Alameda, California 94501-1038

 

Attn: Steve Creager, General Counsel

 

Fax: (650) 623-0505

 

Email: Stephen.Creager@caliperls.com

 

 

If to Bank:

Silicon Valley Bank

 

One Newton Executive Park, Suite 200

 

2221 Washington Street

 

Newton, Massachusetts 02462

 

Attn:   Mr.  Ryan Ravenscroft

 

Fax:   (617) 969-5962

 

Email: rravenscroft@svb.com

 

 

with a copy to:

Riemer & Braunstein LLP

 

Three Center Plaza

 

Boston, Massachusetts 02108

 

Attn: Charles W. Stavros, Esquire

 

Fax: (617) 880-3477

 

Email: cstavros@riemerlaw.com

 

11                                  CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
AND JUDICIAL REFERENCE

 

Massachusetts law governs the Loan Documents (other than the Securities Account
Control Agreements executed in connection with the Amended and Restated Loan and
Security Agreement, by and among Borrower and Bank), without regard to
principles of conflicts of law.  Borrower and Bank each submit to the exclusive
jurisdiction of the State and Federal courts in Massachusetts; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Bank.  Borrower expressly
submits and consents in advance to such jurisdiction in any action or suit
commenced in any such court, and Borrower hereby waives any objection that it
may have based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief
as is deemed appropriate by such court.  Borrower hereby waives personal service
of the summons, complaints, and other process issued in such action or suit and
agrees that service of such summons, complaints, and other process may be made
by registered or certified mail addressed to Borrower at the address set forth
in Section 10 of this Agreement and that service so made shall be deemed
completed upon the earlier to occur of Borrower’s actual receipt thereof or
three (3) days after deposit in the U.S. mails, proper postage prepaid.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE, BANK SHALL
SPECIFICALLY HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER
OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE
ENFORCE BANK’S RIGHTS AGAINST BORROWER OR ITS PROPERTY.

 

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TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

12                                  GENERAL PROVISIONS

 

12.1                        TERMINATION PRIOR TO MATURITY DATE.  THIS AGREEMENT
MAY BE TERMINATED PRIOR TO THE REVOLVING LINE MATURITY DATE BY BORROWER,
EFFECTIVE THREE (3) BUSINESS DAYS AFTER WRITTEN NOTICE OF TERMINATION IS GIVEN
TO BANK OR IF BANK’S OBLIGATION TO FUND CREDIT EXTENSIONS TERMINATES PURSUANT TO
THE TERMS OF SECTION 2.1.1(C).  NOTWITHSTANDING ANY SUCH TERMINATION, BANK’S
LIEN AND SECURITY INTEREST IN THE COLLATERAL SHALL CONTINUE UNTIL BORROWER FULLY
SATISFIES ITS OBLIGATIONS.  IF SUCH TERMINATION IS AT BORROWER’S ELECTION,
BORROWER SHALL PAY TO BANK, IN ADDITION TO THE PAYMENT OF ANY OTHER EXPENSES OR
FEES THEN-OWING, A TERMINATION FEE IN AN AMOUNT EQUAL TO (I) FROM THE EFFECTIVE
DATE THROUGH AND INCLUDING THE FIRST ANNIVERSARY OF THE EFFECTIVE DATE, ONE-HALF
OF ONE PERCENT OF THE REVOLVING LINE (I.E. ONE HUNDRED TWENTY FIVE THOUSAND
DOLLARS ($125,000)), AND (II) THEREAFTER, $0.00; PROVIDED THAT NO TERMINATION
FEE SHALL BE CHARGED IF THE CREDIT FACILITY HEREUNDER IS REPLACED WITH A NEW
FACILITY FROM ANOTHER DIVISION OF SILICON VALLEY BANK.  UPON PAYMENT IN FULL OF
THE OBLIGATIONS AND AT SUCH TIME AS BANK’S OBLIGATION TO MAKE CREDIT EXTENSIONS
HAS TERMINATED, BANK SHALL RELEASE ITS LIENS AND SECURITY INTERESTS IN THE
COLLATERAL AND ALL RIGHTS THEREIN SHALL REVERT TO BORROWER.

 

12.2                        SUCCESSORS AND ASSIGNS.  THIS AGREEMENT BINDS AND IS
FOR THE BENEFIT OF THE SUCCESSORS AND PERMITTED ASSIGNS OF EACH PARTY.  BORROWER
MAY NOT ASSIGN THIS AGREEMENT OR ANY RIGHTS OR OBLIGATIONS UNDER IT WITHOUT
BANK’S PRIOR WRITTEN CONSENT (WHICH MAY BE GRANTED OR WITHHELD IN BANK’S
REASONABLE 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 AND THE OTHER LOAN DOCUMENTS.

 

12.3                        INDEMNIFICATION.  BORROWER AGREES TO INDEMNIFY,
DEFEND AND HOLD BANK AND ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS,
OR ANY OTHER PERSON AFFILIATED WITH OR REPRESENTING BANK HARMLESS AGAINST:
(A) ALL OBLIGATIONS, DEMANDS, CLAIMS, AND LIABILITIES (COLLECTIVELY, “CLAIMS”)
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 ARISING FROM TRANSACTIONS BETWEEN BANK AND BORROWER
(INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES), EXCEPT FOR CLAIMS AND/OR
LOSSES DIRECTLY CAUSED BY BANK’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

12.4                        TIME OF ESSENCE.  TIME IS OF THE ESSENCE FOR THE
PERFORMANCE OF ALL OBLIGATIONS IN THIS AGREEMENT.

 

12.5                        SEVERABILITY OF PROVISIONS.  EACH PROVISION OF THIS
AGREEMENT IS SEVERABLE FROM EVERY OTHER PROVISION IN DETERMINING THE
ENFORCEABILITY OF ANY PROVISION.

 

12.6                        AMENDMENTS IN WRITING; INTEGRATION.  ALL AMENDMENTS
TO THIS AGREEMENT MUST BE IN WRITING SIGNED BY BOTH BANK AND BORROWER.  THIS
AGREEMENT AND THE LOAN DOCUMENTS REPRESENT THE ENTIRE AGREEMENT ABOUT THIS
SUBJECT MATTER AND SUPERSEDE PRIOR NEGOTIATIONS OR AGREEMENTS.  ALL PRIOR
AGREEMENTS, UNDERSTANDINGS, REPRESENTATIONS, WARRANTIES, AND NEGOTIATIONS
BETWEEN THE PARTIES ABOUT THE SUBJECT MATTER OF THIS AGREEMENT AND THE LOAN
DOCUMENTS MERGE INTO THIS AGREEMENT AND THE LOAN DOCUMENTS.

 

12.7                        COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY
NUMBER OF COUNTERPARTS AND BY DIFFERENT PARTIES ON SEPARATE COUNTERPARTS, EACH
OF WHICH, WHEN EXECUTED AND DELIVERED, ARE AN ORIGINAL, AND ALL TAKEN TOGETHER,
CONSTITUTE ONE AGREEMENT.

 

12.8                        SURVIVAL.  ALL COVENANTS, REPRESENTATIONS AND
WARRANTIES MADE IN THIS AGREEMENT CONTINUE IN FULL FORCE UNTIL THIS AGREEMENT
HAS TERMINATED PURSUANT TO ITS TERMS AND ALL OBLIGATIONS (OTHER THAN INCHOATE
INDEMNITY OBLIGATIONS AND ANY OTHER OBLIGATIONS WHICH, BY THEIR TERMS, ARE TO
SURVIVE THE TERMINATION OF THIS AGREEMENT) HAVE BEEN SATISFIED.  THE OBLIGATION
OF BORROWER IN SECTION 12.3 TO INDEMNIFY BANK SHALL SURVIVE UNTIL THE STATUTE OF
LIMITATIONS WITH RESPECT TO SUCH CLAIM OR CAUSE OF ACTION SHALL HAVE RUN.

 

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12.9                        CONFIDENTIALITY.  IN HANDLING ANY CONFIDENTIAL
INFORMATION, BANK SHALL EXERCISE THE SAME DEGREE OF CARE THAT IT EXERCISES FOR
ITS OWN PROPRIETARY INFORMATION, BUT DISCLOSURE OF INFORMATION MAY BE MADE:
(A) TO BANK’S SUBSIDIARIES OR AFFILIATES; (B) TO PROSPECTIVE TRANSFEREES OR
PURCHASERS OF ANY INTEREST IN THE CREDIT EXTENSIONS (PROVIDED, HOWEVER, BANK
SHALL USE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN SUCH PROSPECTIVE
TRANSFEREE’S OR PURCHASER’S AGREEMENT TO THE TERMS OF THIS PROVISION); (C) AS
REQUIRED BY LAW, REGULATION, SUBPOENA, OR OTHER ORDER; (D) TO BANK’S REGULATORS
OR AS OTHERWISE REQUIRED IN CONNECTION WITH BANK’S EXAMINATION OR AUDIT; AND
(E) AS BANK CONSIDERS APPROPRIATE IN EXERCISING REMEDIES UNDER THIS AGREEMENT. 
CONFIDENTIAL INFORMATION DOES NOT INCLUDE INFORMATION THAT EITHER: (I) 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 (II) IS DISCLOSED TO BANK BY A
THIRD PARTY, IF BANK DOES NOT KNOW THAT THE THIRD PARTY IS PROHIBITED FROM
DISCLOSING THE INFORMATION.

 

12.10                 ATTORNEYS’ FEES, COSTS AND EXPENSES.  IN ANY ACTION OR
PROCEEDING BETWEEN BORROWER AND BANK ARISING OUT OF OR RELATING TO THE LOAN
DOCUMENTS, BANK SHALL BE ENTITLED TO RECOVER ITS REASONABLE ATTORNEYS’ FEES AND
OTHER COSTS AND EXPENSES INCURRED, IN ADDITION TO ANY OTHER RELIEF TO WHICH IT
MAY BE ENTITLED.

 

12.11                 BORROWER LIABILITY.  AS DETAILED IN ARTICLE 1, EACH
BORROWER HAS APPOINTED CALIPER AS AGENT FOR EACH BORROWER FOR ALL PURPOSES
HEREUNDER, INCLUDING WITH RESPECT TO REQUESTING CREDIT EXTENSIONS HEREUNDER. 
EACH BORROWER HEREUNDER SHALL BE OBLIGATED, JOINTLY AND SEVERALLY, TO REPAY ALL
CREDIT EXTENSIONS MADE HEREUNDER, REGARDLESS OF WHICH BORROWER ACTUALLY RECEIVES
SAID CREDIT EXTENSION, AS IF EACH BORROWER HEREUNDER DIRECTLY RECEIVED ALL
CREDIT EXTENSIONS.  EACH BORROWER WAIVES ANY SURETYSHIP DEFENSES AVAILABLE TO IT
UNDER THE CODE OR ANY OTHER APPLICABLE LAW.  EACH BORROWER WAIVES ANY RIGHT TO
REQUIRE BANK TO: (I) PROCEED AGAINST ANY BORROWER OR ANY OTHER PERSON;
(II) PROCEED AGAINST OR EXHAUST ANY SECURITY; OR (III) PURSUE ANY OTHER REMEDY. 
BANK MAY EXERCISE OR NOT EXERCISE ANY RIGHT OR REMEDY IT HAS AGAINST ANY
BORROWER OR ANY SECURITY IT HOLDS (INCLUDING THE RIGHT TO FORECLOSE BY JUDICIAL
OR NON-JUDICIAL SALE) WITHOUT AFFECTING ANY BORROWER’S LIABILITY. 
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT OR OTHER RELATED DOCUMENT,
EACH BORROWER IRREVOCABLY WAIVES ALL RIGHTS THAT IT MAY HAVE AT LAW OR IN EQUITY
(INCLUDING, WITHOUT LIMITATION, ANY LAW SUBROGATING BORROWER TO THE RIGHTS OF
BANK UNDER THIS AGREEMENT) TO SEEK CONTRIBUTION, INDEMNIFICATION OR ANY OTHER
FORM OF REIMBURSEMENT FROM ANY OTHER BORROWER, OR ANY OTHER PERSON NOW OR
HEREAFTER PRIMARILY OR SECONDARILY LIABLE FOR ANY OF THE OBLIGATIONS, FOR ANY
PAYMENT MADE BY BORROWER WITH RESPECT TO THE OBLIGATIONS IN CONNECTION WITH THIS
AGREEMENT OR OTHERWISE AND ALL RIGHTS THAT IT MIGHT HAVE TO BENEFIT FROM, OR TO
PARTICIPATE IN, ANY SECURITY FOR THE OBLIGATIONS AS A RESULT OF ANY PAYMENT MADE
BY BORROWER WITH RESPECT TO THE OBLIGATIONS IN CONNECTION WITH THIS AGREEMENT OR
OTHERWISE.  ANY AGREEMENT PROVIDING FOR INDEMNIFICATION, REIMBURSEMENT OR ANY
OTHER ARRANGEMENT PROHIBITED UNDER THIS SECTION SHALL BE NULL AND VOID.  IF ANY
PAYMENT IS MADE TO A BORROWER IN CONTRAVENTION OF THIS SECTION, SUCH BORROWER
SHALL HOLD SUCH PAYMENT IN TRUST FOR BANK AND SUCH PAYMENT SHALL BE PROMPTLY
DELIVERED TO BANK FOR APPLICATION TO THE OBLIGATIONS, WHETHER MATURED OR
UNMATURED.

 

12.12                 RIGHT OF SET OFF.   BORROWER HEREBY GRANTS TO BANK, A
LIEN, SECURITY INTEREST AND RIGHT OF SET OFF AS SECURITY FOR ALL OBLIGATIONS TO
BANK, WHETHER NOW EXISTING OR HEREAFTER ARISING UPON AND AGAINST ALL DEPOSITS,
CREDITS, COLLATERAL AND PROPERTY, NOW OR HEREAFTER IN THE POSSESSION, CUSTODY,
SAFEKEEPING OR CONTROL OF BANK OR ANY ENTITY UNDER THE CONTROL OF BANK
(INCLUDING A BANK SUBSIDIARY) OR IN TRANSIT TO ANY OF THEM.  AT ANY TIME AFTER
THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, WITHOUT DEMAND
OR NOTICE, BANK MAY SET OFF THE SAME OR ANY PART THEREOF AND APPLY THE SAME TO
ANY LIABILITY OR OBLIGATION OF BORROWER EVEN THOUGH UNMATURED AND REGARDLESS OF
THE ADEQUACY OF ANY OTHER COLLATERAL SECURING THE OBLIGATIONS.  ANY AND ALL
RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

12.13                 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT.  THIS
AGREEMENT AMENDS AND RESTATES IN ITS ENTIRETY A CERTAIN AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT BY AND AMONG BORROWER AND BANK DATED AS OF
FEBRUARY 15, 2008, AS AMENDED.

 

12.14                 CONFIRMATIONS AND RATIFICATIONS BY BORROWER.  BORROWER
HEREBY RATIFIES, CONFIRMS AND REAFFIRMS, ALL AND SINGULAR, THE TERMS AND
DISCLOSURES CONTAINED IN THE PERFECTION CERTIFICATE, AND ACKNOWLEDGES, CONFIRMS
AND AGREES THAT THE DISCLOSURES AND INFORMATION BORROWER PROVIDED TO BANK IN
EACH PERFECTION CERTIFICATE HAS NOT CHANGED AS OF THE DATE OF THIS AGREEMENT.

 

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13                                  DEFINITIONS

 

13.1                        DEFINITIONS.  AS USED IN THIS AGREEMENT, THE
FOLLOWING TERMS HAVE THE FOLLOWING MEANINGS:

 

“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to Borrower.

 

“Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.

 

“Advance” or “Advances” means an advance (or advances) under the Revolving Line.

 

“Affiliate” of any 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.

 

“Agent” is defined in Section 1.2(a).

 

“Agreement” is defined in the preamble hereof.

 

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

 

“Bank” is defined in the preamble hereof.

 

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

 

“Borrower” is defined in the preamble hereof.

 

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

 

“Borrowing Base” is (a) eighty percent (80%) of Eligible Accounts plus (b) the
lesser of seventy percent (70%) of Borrower’s unrestricted cash at Bank or
Twelve Million Dollars ($12,000,000); provided, that on each of the first three
(3) Business Days and each of the last three (3) Business Days of each fiscal
quarter of the Borrower, the Borrowing Base is (a) eighty percent (80%) of
Eligible Accounts plus (b) the lesser of ninety percent (90%) of Borrower’s
unrestricted cash at Bank or Twelve Million Dollars ($12,000,000), in each case
as determined by Bank from Borrower’s most recent Borrowing Base Certificate,
provided, however, that Bank may decrease the foregoing percentages and/or
amounts in its good faith business judgment based on events, conditions,
contingencies, or risks which, as determined by Bank, may adversely affect the
value of the Collateral.

 

“Borrowing Base Certificate” is that certain certificate included within each
Transaction Report.

 

“Borrowing Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s board of directors or other appropriate body and
delivered by such Person to Bank approving the Loan Documents to which such
Person is a party and the transactions contemplated thereby, together with a
certificate executed by its secretary on behalf of such Person certifying that
(a) such Person has the authority to execute, deliver, and perform its
obligations under each of the Loan Documents to which it is a party, (b) that
attached to such certificate is a true, correct, and complete copy of the
resolutions then in full force and effect authorizing and ratifying the
execution, delivery, and performance by such Person of the Loan Documents to
which it is a party, (c) the name(s) of the Person(s) authorized to execute the
Loan Documents on behalf of such Person, together with a sample of the true
signature(s) of such Person(s), and (d) that Bank may conclusively rely on such
certificate unless and until such Person shall have delivered to Bank a further
certificate canceling or amending such prior certificate.

 

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

 

“Caliper” is defined in the preamble hereof.

 

“Caliper LTD” is defined in the preamble hereof.

 

“Cash Equivalents and Marketable Securities” means (a) marketable direct
obligations issued or unconditionally guaranteed by the United States or any
agency or any State thereof having maturities of not more than one (1) year from
the date of acquisition; (b) commercial paper maturing no more than one (1) year
after its creation and having the highest rating from either Standard & Poor’s
Ratings Group or Moody’s Investors Service, Inc., (c) Bank’s certificates of
deposit issued maturing no more than one (1) year after issue, and (d) any
marketable securities owned and held by Caliper in compliance with Caliper’s
approved investment guidelines as of the Effective Date (a copy of which has
been delivered to Bank).

 

“Cash Management Services” is defined in Section 2.1.4.

 

“Cash Management Services Sublimit” is defined in Section 2.1.4.

 

“Code”  means (i) the Uniform Commercial Code, as the same may, from time to
time, be enacted and in effect in the Commonwealth of  Massachusetts; provided,
that, to the extent that the Code is used to define any term herein or in any
Loan Document and such term is defined differently in different Articles or
Divisions of the Code, the definition of such term contained in Article or
Division 9 shall govern; provided further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection, or
priority of, or remedies with respect to, Bank’s Lien on any Collateral is
governed by the Uniform Commercial Code in effect in a jurisdiction other than
the Commonwealth of  Massachusetts, the term “Code” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes on the provisions thereof relating to such attachment, perfection,
priority, or remedies and for purposes of definitions relating to such
provisions and (ii) with respect to Canadian Borrower or any tangible assets
located in Canada, the Personal Property Security Act (Ontario) as amended and
as may be further amended and in effect from time to time; provided further,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection, or priority of, or remedies with respect to, Bank’s
Lien on any Collateral is governed by the Personal Property Security Act in
effect in a provincial jurisdiction other than Ontario, the term “Code” shall
mean the Personal Property Security Act as enacted and in effect in such other
province solely for purposes of the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of definitions
relating to such provisions.

 

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

 

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account.

 

“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.

 

“Communication” is defined in Section 10.

 

“Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit B.

 

“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
any guarantee or other support arrangement.

 

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“Control Agreement” is any control agreement entered into among the depository
institution at which Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which Borrower maintains a Securities
Account or a Commodity Account, Borrower, and Bank pursuant to which Bank
obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.

 

“Credit Extension” is any Advance, Letter of Credit, FX Forward Contract, amount
utilized for Cash Management Services, or any other extension of credit by Bank
for Borrower’s benefit.

 

“Current Liabilities” are all obligations and liabilities of Borrower to Bank,
plus, without duplication, the aggregate amount of Borrower’s Total Liabilities
that mature within one (1) year.

 

“Default” means any event which with notice or passage of time or both, would
constitute an Event of Default.

 

“Default Rate” is defined in Section 2.3(b).

 

“Deferred Revenue” is all amounts received or invoiced in advance of performance
under contracts and not yet recognized as revenue.

 

“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

 

“Designated Deposit Account” is Borrower’s deposit account, account number
3300540681, maintained with Bank.

 

“Dollars,” “dollars” and “$” each mean lawful money of the United States.

 

“Domestic Subsidiary” means a Subsidiary organized under the laws of the United
States or any state or territory thereof or the District of Columbia.

 

“EBITDA” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the
extent deducted in the calculation of Net Income, depreciation expense,
amortization expense, restructuring expense and non-cash stock-based
compensation expense, plus (d) income tax expense.

 

“Effective Date” is defined in the preamble hereof.

 

“Eligible Accounts” are Accounts which arise in the ordinary course of
Borrower’s business that meet all Borrower’s representations and warranties in
Section 5.3.  Bank reserves the right at any time and from time to time after
the Effective Date upon notice to Borrower, to adjust any of the criteria set
forth below and to establish new criteria in its good faith business judgment. 
Without limiting the fact that the determination of which Accounts are eligible
for borrowing is a matter of Bank’s good faith judgment, the following (“Minimum
Eligibility Requirements”) are the minimum requirements for an Account to be an
Eligible Account.  Unless Bank agrees otherwise in writing, Eligible Accounts
shall not include:

 

(a)

 

Accounts for which the Account Debtor has not been invoiced or where goods or
services have not yet been rendered to the Account Debtor (sometimes called memo
billings or pre-billings);

 

 

 

(b)

 

Accounts that the Account Debtor has not paid within ninety (90) days of invoice
date;

 

 

 

(c)

 

Accounts owing from an Account Debtor, fifty percent (50%) or more of whose
Accounts have not been paid within ninety (90) days of invoice date;

 

 

 

(d)

 

Accounts billed and/or payable outside the United States;

 

 

 

(e)

 

Accounts with credit balances over ninety (90) days from invoice date;

 

 

 

(f)

 

Accounts owing from an Account Debtor, including Affiliates, whose total
obligations to Borrower exceed twenty-five (25%) of all Accounts, for the
amounts that exceed that percentage, unless Bank approves in writing;

 

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(g)

 

Accounts subject to contractual arrangements between Borrower and an Account
Debtor where payments shall be scheduled or due according to completion or
fulfillment requirements where the Account Debtor has a right of offset for
damages suffered as a result of Borrower’s failure to perform in accordance with
the contract (sometimes called contracts accounts receivable, progress billings,
milestone billings, or fulfillment contracts);

 

 

 

(h)

 

Accounts owing from an Account Debtor the amount of which may be subject to
withholding based on the Account Debtor’s satisfaction of Borrower’s complete
performance (but only to the extent of the amount withheld; sometimes called
retainage billings);

 

 

 

(i)

 

Accounts owing from an Account Debtor which does not have its principal place of
business in the United States or Canada except for Eligible Foreign Accounts;

 

 

 

(j)

 

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

 

 

 

(k)

 

Accounts owing from an Account Debtor to the extent that Borrower is indebted or
obligated in any manner to the Account Debtor (as creditor, lessor, supplier or
otherwise - sometimes called “contra” accounts, accounts payable, customer
deposits or credit accounts), with the exception of customary credits,
adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;

 

 

 

(l)

 

Accounts for demonstration or promotional equipment, or in which goods are
consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on approval”,
“bill and hold”, or other terms if Account Debtor’s payment may be conditional;

 

 

 

(m)

 

Accounts that represent non-trade receivables or that are derived by means other
than in the ordinary course of Borrower’s business;

 

 

 

(n)

 

Accounts for which the Account Debtor is Borrower’s Affiliate, officer,
employee, or agent;

 

 

 

(o)

 

Accounts in which the Account Debtor disputes liability or makes any claim (but
only up to the disputed or claimed amount), or if the Account Debtor is subject
to an Insolvency Proceeding, or becomes insolvent, or goes out of business;

 

 

 

(p)

 

Accounts owing from an Account Debtor with respect to which Borrower has
received Deferred Revenue (but only to the extent of such Deferred Revenue);

 

 

 

(q)

 

Accounts subject to chargebacks or other payment deductions taken by an Account
Debtor;

 

 

 

(r)

 

Accounts for which Bank in its good faith business judgment determines
collection to be doubtful; and

 

 

 

(s)

 

other Accounts Bank deems ineligible in the exercise of its good faith business
judgment.

 

“Eligible Foreign Accounts” are Accounts billed from the United States for which
the Account Debtor does not have its principal place of business in the United
States or Canada but are otherwise Eligible Accounts that Bank approves in
writing.

 

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

 

“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.

 

“Event of Default” is defined in Section 8.

 

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

 

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

 

“Funding Date” is any date on which a Credit Extension is made to or on account
of Borrower which shall be a Business Day.

 

“FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is
conducting its normal business and (b) the Foreign Currency being purchased or
sold by Borrower is available to Bank from the entity from which Bank shall buy
or sell such Foreign Currency.

 

“FX Forward Contract” is defined in Section 2.1.3.

 

“FX Reserve” is defined in Section 2.1.3.

 

“GAAP” means (i) with respect to Caliper Ltd., generally accepted accounting
principles set forth in the opinions and pronouncements of the Canadian
Institute of Chartered Accountants or in such other statements by such other
Person as may be approved by a significant segment of the accounting profession
in Canada, which are applicable to the circumstances as of the date of
determination and (ii) with respect to Borrower (other than Caliper Ltd.),
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

 

“General Intangibles” is all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights,
including any rights to unpatented inventions, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other
tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.

 

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

 

“Interest Expense” means for any fiscal period, interest expense (whether cash
or non-cash) determined in accordance with GAAP for the relevant period ending
on such date, including, in any event, interest expense with respect to any
Credit Extension and other Indebtedness of Borrower and its Subsidiaries, if
any, including, without limitation or duplication, all commissions, discounts,
or related amortization and other fees and charges with respect to letters of
credit and bankers’ acceptance financing and the net costs associated with
interest rate swap, cap, and similar arrangements, and the interest portion of
any deferred payment obligation (including leases of all types).

 

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

 

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

 

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“Letter of Credit” means a standby letter of credit issued by Bank or another
institution based upon an application, guarantee, indemnity or similar agreement
on the part of Bank as set forth in Section 2.1.2.

 

“Letter of Credit Application” is defined in Section 2.1.2(a).

 

“Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(d).

 

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

 

“Loan Documents” are, collectively, this Agreement, the Perfection Certificate,
any note, or notes or guaranties executed by Borrower or any guarantor, and any
other present or future agreement between Borrower any guarantor and/or for the
benefit of Bank in connection with this Agreement, all as amended, restated, or
otherwise modified.

 

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

 

“Minimum Eligibility Requirements” is defined in the defined term “Eligible
Accounts”.

 

“Net Income” means, as calculated on a consolidated basis for Borrower and its
Subsidiaries, if any,  for any period as at any date of determination, the net
profit (or loss), after provision for taxes, of Borrower and its Subsidiaries
for such period taken as a single accounting period.

 

“Net Liquidity” is, on any date of measurement, Borrower’s unrestricted cash at
Bank minus (a) the amount of all outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit plus an amount equal to the Letter of Credit
Reserves), minus (b) the FX Reserve, and minus (c) the outstanding principal
balance of any Advances (including any amounts used for Cash Management
Services).

 

“NovaScreen” is defined in the preamble hereof.

 

“Obligations” are Borrower’s obligation to pay when due any debts, principal,
interest, Bank Expenses and other amounts Borrower owes Bank now or later,
whether under this Agreement, the Loan Documents, or otherwise, including,
without limitation, all obligations relating to letters of credit, cash
management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank, and the performance of Borrower’s
duties under the Loan Documents.

 

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified with the Secretary of State of such Person’s state of formation on a
date that is no earlier than thirty (30) days prior to the Effective Date, and,
(a) if such Person is a corporation, its bylaws in current form, (b) if such
Person is a limited liability company, its limited liability company agreement
(or similar agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current
amendments or modifications thereto.

 

“Payment” means all checks, wire transfers and other items of payment received
by Bank (including proceeds of Accounts and payment of all the Obligations in
full) for credit to Borrower’s outstanding Credit Extensions or, if the balance
of the Credit Extensions has been reduced to zero, for credit to its Deposit
Accounts.

 

“Perfection Certificate” is: (a) with respect to Caliper, that certain
Perfection Certificate dated as of the date hereof, executed by Caliper in favor
of Bank, (b) with respect to NovaScreen, that certain Perfection Certificate
dated as of the date hereof, executed by NovaScreen in favor of Bank, (c) with
respect to Xenogen, that certain Perfection Certificate dated as of the date
hereof, executed by Xenogen in favor of Bank, (d) with respect to Xenogen
Biosciences, that certain Perfection Certificate dated as of the date hereof,
executed by Xenogen Biosciences in favor of Bank; and (e) with respect to
Caliper LTD, that certain Perfection Certificate dated as of the date hereof,
executed by Caliper LTD in favor of Bank.

 

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“Permitted Indebtedness” is:

 

(a)                                  Borrower’s Indebtedness to Bank under this
Agreement and the other Loan Documents;

 

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

 

(c)                                  Subordinated Debt, if any;

 

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

 

(e)                                  Indebtedness secured by Permitted Liens;

 

(f)                                    other unsecured Indebtedness that does
not, in the aggregate, exceed One Million Dollars ($1,000,000.00) outstanding at
any time; and

 

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

 

“Permitted Investments” are:

 

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

 

(b)                                 Cash Equivalents and Marketable Securities;

 

(c)                                  Investments consisting of (i) travel
advances and employee relocation loans and other employee loans and advances in
the ordinary course of business, and (ii) loans to employees, officers or
directors relating to the purchase of equity securities of Borrower or its
Subsidiaries pursuant to employee stock purchase plans or agreements approved by
Borrower’s Board of Directors; and

 

(d)                                 joint ventures or strategic alliances in the
ordinary course of Borrower’s business consisting of the non-exclusive licensing
of technology, the development of technology or the providing of technical
support, provided that any cash investments by Borrower do not exceed One
Million Dollars ($1,000,000.00) in the aggregate in any fiscal year.

 

“Permitted Liens” are:

 

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

 

(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 Liens;

 

(c)                                  Liens (i) on Equipment acquired or held by
Borrower incurred for financing the acquisition of the Equipment securing no
more than One Million Dollars ($1,000,000.00) in the aggregate amount
outstanding, or (ii) existing on Equipment when acquired, if the Liens in both
(i) and (ii) are confined to the property and improvements and the proceeds of
the Equipment; and

 

(d)                                 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.

 

(e)                                  leases or subleases of real property
granted in the ordinary course of business, and leases, subleases, licenses or
sublicenses of property (other than real property or intellectual property)
granted in the ordinary course of Borrower’s business, if the leases, subleases,
licenses and sublicenses do not prohibit granting Bank a security interest;

 

(f)                                    licenses of intellectual property granted
to third parties in the ordinary course of business;

 

27

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(g)                                 Liens in favor of Sotax Corporation
(“Sotax”) and US Bank National Association (“US Bank”) in an amount not to
exceed One Million Dollars ($1,000,000) plus accrued interest thereon, deposited
by Sotax with US Bank pursuant to a certain Indemnification Escrow Agreement
dated as of November 10, 2008, by an among Borrower, Sotax and US Bank.

 

(h)                                 Liens arising from judgments, decrees or
attachments in circumstances not constituting an Event of Default under
Section 8.4 or 8.7.

 

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

 

“Prime Rate” is the greater of (i) four and one-half of one percent (4.50%) and
(ii) Bank’s most recently announced “prime rate,” even if it is not Bank’s
lowest rate.

 

“Quick Assets” is, on any date, all cash and Cash Equivalents and Marketable
Securities as shown on Borrower’s consolidated financial statements as of such
date prepared in accordance with GAAP, plus net billed accounts receivable and
Unbilled Accounts, excluding any cash or Cash Equivalents and Marketable
Securities that are restricted or are pledged to any Person other than Bank or
any of Bank’s Affiliates.

 

“Quick Liabilities” are Current Liabilities, less Deferred Revenue, real estate
related restructuring reserves, and customer deposits.

 

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made.

 

“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Reserves” means, as of any date of determination after consultation with
Borrower, such amounts as Bank may from time to time establish and revise in
good faith, reducing the amount of Advances, Letters of Credit and other
financial accommodations which would otherwise be available to Borrower under
the lending formulas:  (a) to reflect events, conditions, contingencies or risks
which, as determined by Bank in good faith, do or may affect (i) the Collateral
or any other property which is security for the Obligations or its value
(including without limitation any increase in delinquencies of Accounts),
(ii) the assets or business of Borrower or any guarantor, or (iii) the security
interests and other rights of Bank in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Bank’s good
faith belief that any collateral report or financial information furnished by or
on behalf of Borrower or any guarantor to Bank is or may have been incomplete,
inaccurate or misleading in any material respect; or (c) in respect of any state
of facts which Bank determines in good faith constitutes an Event of Default or
may, with notice or passage of time or both, constitute an Event of Default.

 

“Responsible Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer and Vice President, Finance of Borrower.

 

“Revolving Line” is an Advance or Advances in an aggregate amount of up to
Twenty Five Million Dollars ($25,000,000) outstanding at any time.

 

“Revolving Line Maturity Date” is November 30, 2010.

 

“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.

 

“Settlement Date” is defined in Section 2.1.3.

 

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of
Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination,
intercreditor, or other similar agreement in form and substance satisfactory to
Bank entered into between Bank and the other creditor), on terms acceptable to
Bank.

 

28

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“Subordination Agreement” is any agreement, in form and substance acceptable to
Bank in its sole discretion, as required by Bank in its sole discretion,
subordinating Subordinated Debt to the Bank.

 

“Subsidiary” means, with respect to any Person, any Person of which more than
50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by such Person or one or more Affiliates of such Person.

 

“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 permitted by Bank
to be paid by Borrower, but excluding all other Subordinated Debt.

 

“Transaction Report” is the Bank’s standard reporting package provided by Bank
to Borrower, a form of which is attached as Exhibit C hereto.

 

“Transfer” is defined in Section 7.1.

 

“Unbilled Account” is the estimated face value amount (as reasonably determined
by Borrower based upon the best information available to Borrower) of an invoice
for an Account pursuant to services performed by Borrower, which invoice will be
generated (but has not yet been generated) within thirty (30) days of the last
day of the month in which such services were performed, net of any offsets.

 

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

 

 “Xenogen” is defined in the preamble hereof.

 

“Xenogen Biosciences” is defined in the preamble hereof.

 

[Signature page follows.]

 

29

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

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as a sealed instrument under the laws of the Commonwealth of Massachusetts as of
the Effective Date.

 

BORROWER:

 

CALIPER LIFE SCIENCES, INC.

 

By:

/s/ Peter F. McAree

 

Name:

Peter F. McAree

Title:

Senior Vice President and CFO

 

NOVASCREEN BIOSCIENCES CORPORATION

 

By:

/s/ Peter F. McAree

 

Name:

Peter F. McAree

Title:

Vice President, Finance

 

XENOGEN CORPORATION

 

By:

/s/ Peter F. McAree

 

Name:

Peter F. McAree

Title:

Vice President, Finance

 

XENOGEN BIOSCIENCES CORPORATION

 

By:

/s/ Peter F. McAree

 

Name:

Peter F. McAree

Title:

Senior Vice President and CFO

 

CALIPER LIFE SCIENCES LTD.

 

By:

/s/ Peter F. McAree

 

Name:

Peter F. McAree

Title:

Vice President, Finance

 

BANK:

 

SILICON VALLEY BANK

 

By

/s/ Ryan Ravenscroft

 

Name:

Ryan Ravenscroft

 

Title:

Vice President

 

 

 

Effective Date: March 6, 2009

 

 

[Signature page to Loan and Security Agreement]

 

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

 

EXHIBIT A

 

The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:

 

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as provided below), commercial
tort claims, documents, instruments (including any promissory notes), chattel
paper (whether tangible or electronic), cash, deposit accounts, certificates of
deposit, fixtures, letters of credit rights (whether or not the letter of credit
is evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; 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,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

 

Notwithstanding the foregoing, the Collateral does not include any of the
following, whether now owned or hereafter acquired (a) more than 65% of the
presently existing and hereafter arising issued and outstanding shares of
capital stock owned by Borrower of any Foreign Subsidiary (other than Caliper
Ltd.) which shares entitle the holder thereof to vote for directors or any other
matter, (b) license agreements solely for the use of Intellectual Property of a
third party, with respect to which license Borrower is the licensee, (c) any
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or
unpublished, (d) any patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues,
extensions, and continuations-in-part of the same, trademarks, service marks
and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, and the goodwill of the business of Borrower
connected with and symbolized thereby, (e) any know-how, operating manuals,
trade secret rights, rights to unpatented inventions, and (f) any claims for
damage by way of any past, present, or future infringement of any of the
foregoing; provided, however, the Collateral shall include all Accounts, license
and royalty fees and other revenues, proceeds, or income arising out of or
relating to any of the foregoing.

 

Pursuant to the terms of a certain negative pledge arrangement with Bank,
Borrower has agreed not to encumber any of its copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of
the business of Borrower connected with and symbolized thereby, know-how,
operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of
the foregoing, without Bank’s prior written consent.

 

1

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

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

TO:

SILICON VALLEY BANK

Date:

FROM:

CALIPER LIFE SCIENCES, INC.

 

 

NOVASCREEN BIOSCIENCES CORPORATION

 

 

XENOGEN CORPORATION

 

 

XENOGEN BIOSCIENCES CORPORATION

 

 

CALIPER LIFE SCIENCES, LTD.

 

 

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

 

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

 

Reporting Covenant

 

Required

 

Complies

 

 

 

 

 

Quarterly consolidated and consolidating financial statements with Compliance
Certificate

 

Quarterly within 45 days

 

Yes o  No o

Annual consolidated and consolidating financial statement (CPA Audited) + CC

 

FYE within120 days

 

Yes o  No o

10-Q, 10-K and 8-K

 

Within 5 days after filing with SEC

 

Yes o  No o

A/R & A/P Agings; Deferred Revenue report, cash report

 

Monthly within 15 days

 

Yes o  No o

Transaction Reports

 

Weekly and with each Advance request

 

Yes o  No o

Board approved projections

 

Annually, as revised

 

Yes o  No o

 

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

 

Financial Covenant

 

Required

 

Actual

 

Complies

 

Maintain at all times, tested quarterly:

 

 

 

 

 

 

 

Minimum Quick Ratio

 

0.95:1.00

 

:1.0

 

Yes o  No o

 

Minimum EBITDA minus Cap Ex*

 

$

 

$

 

Yes o  No o

 

 

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

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

 

1

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                                                The following financial covenant
analyses and information set forth in Schedule 1 attached hereto are true and
accurate as of the date of this Certificate.

 

                                                The following are the exceptions
with respect to the certification above:  (If no exceptions exist, state “No
exceptions to note.”)

 

 

CALIPER LIFE SCIENCES, INC.

 

BANK USE ONLY

 

 

 

By

 

 

Received by:

 

Name:

Peter F. McAree

 

AUTHORIZED SIGNER

Title:

Senior Vice President and CFO

 

Date:

 

 

 

 

NOVASCREEN BIOSCIENCES CORPORATION

 

Verified:

 

 

 

AUTHORIZED SIGNER

By

 

 

Date:

 

Name:

Peter F. McAree

 

 

Title:

Vice President, Finance

 

Compliance
Status:                                                                                                                                         
Yes o   No o

 

 

 

XENOGEN CORPORATION

 

 

 

 

 

By

 

 

 

Name:

Peter F. McAree

 

 

Title:

Vice President, Finance

 

 

 

 

 

XENOGEN BIOSCIENCES CORPORATION

 

 

 

 

 

By

 

 

 

Name:

Peter F. McAree

 

 

Title:

Senior Vice President and CFO

 

 

 

 

 

CALIPER LIFE SCIENCES LTD.

 

 

 

 

 

By

 

 

 

Name:

Peter F. McAree

 

 

Title:

Vice President, Finance

 

 

 

2

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

 

Schedule 1 to Compliance Certificate

 

Financial Covenants of Borrower

 

Dated:

 

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall control.

 

I.                                         ADJUSTED QUICK RATIO (Section 6.9(a))

 

Required: A ratio of Quick Assets to Quick Liabilities of at least: 0.95 to 1.0
for the quarter ending March 31, 2009 and for each fiscal quarter thereafter

 

A.

 

Aggregate value of the unrestricted cash and Cash Equivalents and Marketable
Securities of Borrower

 

$

 

 

 

 

 

B.

 

Aggregate value of the net billed accounts receivable and Unbilled Accounts of
Borrower

 

$

 

 

 

 

 

C.

 

Quick Assets (the sum of lines A and B)

 

$

 

 

 

 

 

D.

 

Aggregate value of Obligations to Bank

 

$

 

 

 

 

 

E.

 

Aggregate value of liabilities of Borrower (including all Indebtedness) that
matures within one (1) year and current portion of Subordinated Debt permitted
by Bank to be paid by Borrower

 

$

 

 

 

 

 

F

 

Aggregate value of (i) Deferred Revenue, (ii) real estate related restructuring
expenses, and (iii) customer deposits

 

 

 

 

 

 

 

G.

 

Quick Liabilities (the sum of lines D and E minus line F)

 

$

 

 

 

 

 

H.

 

Adjusted Quick Ratio (line C divided by line G)

 

 

 

Is line H equal to or greater than 0.95 to 1.0

 

                                                o No, not in
compliance                                                                                                                                                                                                                                                            
o Yes, in compliance

 

3

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II.                                     MINIMUM EBITDA minus CAP-EX
(Section 6.9(b)

 

Required: Borrower’s EBITDA minus its capital expenditures, (“EBITDA-Cap Ex”)
for the two (2) quarter period ending as of the last day of each quarter, shall
be in an amount equal to: (i) losses not greater than (A) One Million Five
Hundred Thousand Dollars ($1,500,000) for the quarter ended December 31, 2008;
(B) Six Million Eight Hundred Thousand Dollars ($6,800,000) for the quarter
ending March 31, 2009; (C) Eight Million Seven Hundred Thousand Dollars
($8,700,000) for the quarter ending June 30, 2009; and (D) Five Million Five
Hundred Thousand Dollars ($5,500,000) for the quarter ending September 30, 2009;
(ii) Sixty Thousand Dollars ($60,000) for the quarter ending December 31, 2009;
(iii) losses not greater than (A) Two Million Dollars ($2,000,000) for the
quarter ending March 31, 2010; (B) Six Million Dollars ($6,000,000) for the
quarter ending June 30, 2010; and (C) Two Million Dollars ($2,000,000) for the
quarter ending September 30, 2010; and (iv) Three Million Eight Hundred Thousand
Dollars ($3,800,000) for the quarter ending December 31, 2010.

 

A.

Net Income

$

 

 

 

B.

Interest Expense

$

 

 

 

C.

To the extent included in the determination of Net Income:

 

 

 

 

 

1.             Depreciation expense

$

 

 

 

 

2.             Amortization expense

$

 

 

 

 

3.             Non-cash stock-based compensation expense and restructuring
expense

$

 

 

 

D.

income tax expense

$

 

 

 

E.

EBITDA (line A, plus line B, plus line C.1, plus line C.2, plus line C.3, and
plus line D)

$

 

 

 

F.

capital expenditures

$

 

 

 

G.

EBIDTA minus CAP EX (line E minus line F)

$

 

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

 

                                                                                               
o No, not in
compliance                                                                                                                                                                                                                                                            
o Yes, in compliance

 

1

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EXHIBIT C

 

Transaction Report

 

(Bank to provide)

 

1

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