Exhibit 10.1

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (as the same may
from time to time be amended, modified, supplemented or restated, this
“Agreement”) dated as of May 14, 2018 (the “Effective Date”) among SILICON
VALLEY BANK, a California corporation (“Bank”), as collateral agent (in such
capacity, “Collateral Agent”), the Lenders listed on Schedule 1.1 hereof or
otherwise a party hereto from time to time including Bank in its capacity as a
Lender and MIDCAP FUNDING III TRUST and MIDCAP FINANCIAL TRUST (individually and
collectively, jointly and severally, “MidCap”) (each a “Lender” and
collectively, the “Lenders”), and CLEARSIDE BIOMEDICAL, INC., a Delaware
corporation (“Borrower”), provides the terms on which the Lenders shall lend to
Borrower and Borrower shall repay the Lenders and amends and restates, in its
entirety, that certain Amended and Restated Loan and Security Agreement by and
between Bank, the Lenders from time to time party thereto and Borrower dated as
of September 28, 2016 (as amended from time to time, the “Prior Agreement”),
which in turn, amended and restated the Original Agreement (as such term is
defined in the Prior Agreement). The parties agree as follows:

1ACCOUNTING AND OTHER TERMS

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 14.  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.

2LOAN AND TERMS OF PAYMENT

2.1Promise to Pay.  Borrower hereby unconditionally promises to pay to each
Lender in accordance with its respective Pro Rata Share, the outstanding
principal amount of all Credit Extensions advanced to Borrower by each Lender
and accrued and unpaid interest thereon and any other amounts due hereunder as
and when due in accordance with this Agreement.

2.1.1Term Loans.

(a)Availability.  

(i)Subject to the terms and conditions of this Agreement, the Lenders agree,
severally and not jointly, to make term loans to Borrower on the Effective Date
in an aggregate amount of Ten Million Dollars ($10,000,000) according to each
Lender’s Term Loan Commitment in respect of Term A Loans as set forth on
Schedule 1.1 hereto (such term loans are hereinafter referred to singly as a
“Term A Loan”, and collectively as the “Term A Loans”).  A portion of the Term A
Loan shall be used to refinance the Existing Lender Debt in full on the
Effective Date.  

(ii)Subject to the terms and conditions of this Agreement, the Lenders agree,
severally and not jointly, during the Term B Loan Draw Period, to make term
loans to Borrower in an aggregate amount of Five Million Dollars ($5,000,000)
according to each Lender’s Term Loan Commitment in respect of Term B Loans as
set forth on Schedule 1.1 hereto (such term loans are hereinafter referred to
singly as a “Term B Loan”, and collectively as the “Term B Loans”).

(iii)Subject to the terms and conditions of this Agreement, the Lenders agree,
severally and not jointly, during the Term C Loan Draw Period, to make term
loans to Borrower in an aggregate amount of Five Million Dollars ($5,000,000)
according to each Lender’s Term Loan Commitment in respect of Term C Loans as
set forth on Schedule 1.1 hereto (such term loans are hereinafter referred to
singly as a “Term C Loan”, and collectively as the “Term C Loans”); each Term A
Loan, Term B Loan and Term C Loan is hereinafter referred to singly as a “Term
Loan” and the Term A Loans, the Term B Loans and the Term C Loans are
hereinafter referred to collectively as the “Term Loans”).  

 

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(b)Repayment.  The Term Loans shall be “interest only” through the Amortization
Start Date and shall be payable in accordance with Section 2.3(c)
below.  Borrower shall repay the Term Loans in equal monthly installments of
principal, together with accrued interest, in arrears, to each Lender in
accordance with its respective Pro Rata Share, as calculated by such Lender
(which calculations shall be deemed correct absent manifest error) (each, a
“Term Loan Payment”).  Beginning on the Amortization Start Date, each Term Loan
Payment shall be payable on the Payment Date of each month.  Borrower’s final
Term Loan Payment, due on the Term Loan Maturity Date, shall include all
outstanding principal and accrued and unpaid interest under the term Loans and
the Final Payment.  Once repaid, no Term Loan may be reborrowed.  Each Term Loan
may only be prepaid in accordance with Sections 2.1.1(c)(i) and 2.1.1(c)(ii).

(c)Prepayment.

(i)Mandatory Prepayment Upon an Acceleration.  If the Term Loans are accelerated
following the occurrence and during the continuance of an Event of Default,
Borrower shall immediately pay to each Lender in accordance with its respective
Pro Rata Share, an amount equal to the sum of (i) all outstanding principal,
plus accrued and unpaid interest with respect to the Term Loans, (ii) the Final
Payment, (iii) the Termination Fee and (iv) all other Obligations that are due
and payable, including, without limitation Lenders’ Expenses and interest at the
Default Rate to the extent applicable.

(ii)Voluntary Prepayment.  Borrower shall have the option to prepay all, but not
less than all, of the Term Loans advanced by the Lenders under this Agreement,
provided Borrower (a) delivers written notice to each Lender of its election to
prepay the Term Loans at least ten (10) days prior to such prepayment, and (b)
pays to each Lender in accordance with its respective Pro Rata Share on the date
of such prepayment, pursuant to a payoff letter in form and substance
satisfactory to Collateral Agent and each Lender, an amount equal to the sum of
(i) all outstanding principal, plus accrued and unpaid interest thereon, (ii)
the Final Payment, (iii) the Termination Fee and (iv) all other Obligations that
are due and payable, including, without limitation, Lenders’ Expenses and
interest at the Default Rate to the extent applicable.

 

2.2Intentionally Omitted.  

2.3Payment of Interest on the Credit Extensions.  

(a)Interest Rate.  Subject to Section 2.3(b), the principal amount outstanding
under the Term Loans shall accrue interest at a floating per annum rate equal to
the Basic Rate as determined by Collateral Agent, which interest shall be
payable monthly in arrears in accordance with Sections 2.1.1(b), 2.3(c) and
2.6(a).  Interest shall accrue on each Term Loan commencing on, and including,
the Funding Date of such Term Loan, and shall accrue on the principal amount
outstanding under such Term Loan through and including the day on which such
Term Loan is paid in full.

(b)Default Rate. Immediately upon the occurrence and during the continuance of
an Event of Default, Obligations shall accrue interest at a floating per annum
rate equal to the rate that is otherwise applicable thereto plus four percentage
points (4.00%) (the “Default Rate”).  Fees and expenses which are required to be
paid by Borrower pursuant to the Loan Documents (including, without limitation,
Lenders’ Expenses) but are not paid when due shall bear interest until paid at a
rate equal to the highest rate applicable to the Obligations.  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
Collateral Agent.

(c)Payment; Interest Computation.  Interest is payable on the Payment Date of
each month and shall be computed on the basis of a 360-day year for the actual
number of days elapsed.  In computing interest, (i) all payments received after
12:00 p.m. Eastern time on any day shall be deemed received at the opening of
business on the next Business Day, and (ii) the date of the making of any Credit
Extension shall be included and the date of payment shall be excluded; provided,
however, that if any Credit Extension is repaid on the same day on which it is
made, such day shall be included in computing interest on such Credit Extension.

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2.4Secured Promissory Notes.  The Term Loans may at the request of a Lender be
evidenced by a Secured Promissory Note or Notes in the form attached as
Exhibit F hereto (each a “Secured Promissory Note”), and shall be repayable as
set forth in this Agreement.  Borrower irrevocably authorizes each Lender to
make or cause to be made, on or about the Funding Date of any Term Loan or at
the time of receipt of any payment of principal on such Lender’s Secured
Promissory Note, an appropriate notation on such Lender’s Secured Promissory
Note Record reflecting the making of such Term Loan or (as the case may be) the
receipt of such payment.  The outstanding amount of each Term Loan set forth on
such Lender’s Secured Promissory Note Record shall be prima facie evidence of
the principal amount thereof owing and unpaid to such Lender, but the failure to
record, or any error in so recording, any such amount on such Lender’s Secured
Promissory Note Record shall not limit or otherwise affect the obligations of
Borrower under any Secured Promissory Note or any other Loan Document to make
payments of principal of or interest on any Secured Promissory Note when
due.  Upon receipt of an affidavit of an officer of a Lender as to the loss,
theft, destruction, or mutilation of its Secured Promissory Note, Borrower shall
issue, in lieu thereof, a replacement Secured Promissory Note in the same
principal amount thereof and of like tenor.

 

2.5Fees.  

(a)Final Payment.  Borrower shall pay to each Lender in accordance with its
respective Pro Rata Share, the Final Payment, when due hereunder;

(b)Termination Fee.  Borrower shall pay to each Lender in accordance with its
respective Pro Rata Share, upon termination of this Agreement for any reason
prior to the Term Loan Maturity Date, in addition to the payment of any other
amounts then-owing, a termination fee (the “Termination Fee”) in an amount equal
to (i) three percent (3.00%) of the original principal amount of each Term Loan
made to Borrower if such termination occurs prior to the first anniversary of
the Funding Date of such Term Loan or (ii) two percent (2.00%) of the original
principal amount of each Term Loan made to Borrower if such termination occurs
on or after the first anniversary of the Funding Date of such Term Loan but
prior to the Term Loan Maturity Date; provided that no termination fee shall be
charged if the credit facilities hereunder are replaced with a new facility or
facilities from the Lenders; and

(c)Lenders’ Expenses.  Borrower shall pay to each Lender, such Lenders’ Expenses
(including reasonable attorneys’ fees and expenses for documentation and
negotiation of this Agreement incurred through and after the Effective Date,
when due (or, if no stated due date, upon demand by such Lender).  Borrower has
paid to the Lenders a deposit of Twenty-Five Thousand Dollars ($25,000) (the
“Good Faith Deposit”).  If Borrower executes the Loan Documents, the Good Faith
Deposit shall be applied to Lender Expenses due on the Effective Date, with any
remaining amount to be applied towards the facility fee.  If Borrower chooses
not to execute the Loan Documents, the Good Faith Deposit shall be applied to
Lender Expenses incurred, with any remaining amount to be retained by the
Lenders in accordance with their respective Pro Rata Share.

(d)Fees Fully Earned.  Unless otherwise provided in this Agreement or in a
separate writing signed by each of the Lenders, Borrower shall not be entitled
to any credit, rebate, or repayment of any fees earned by the Lenders pursuant
to this Agreement notwithstanding any termination of this Agreement or the
suspension or termination of Lenders’ obligations to make loans and advances
hereunder.  The Lenders may deduct amounts owing by Borrower to such Lender
under the clauses of this Section 2.5 pursuant to the terms of Section
2.6(c).  Each Lender shall provide Borrower written notice of deductions made by
such Lender from the Designated Deposit Account pursuant to the terms of the
clauses of this Section 2.5.

2.6Payments; Application of Payments; Debit of Accounts.

(a)Except as otherwise expressly provided herein, all payments by Borrower under
the Loan Documents shall be made to each Lender (in accordance with its
respective Pro Rata Share) to which such payments are owed, at such Lender’s
office in immediately available funds on the date specified herein. Unless
otherwise provided, interest is payable monthly on the Payment Date of each
month.  Payments of principal and/or interest received after 3:00 noon Eastern
time are considered received at the opening of business on the next Business
Day.  When a payment is due on a day that is not a Business Day, the payment is
due the next Business Day and additional fees or interest, as applicable, shall
continue to accrue until paid. All payments to be made by Borrower hereunder or
under any other Loan Document, including payments of principal and interest, and
all fees, expenses, indemnities and

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reimbursements, shall be made without set‑off, recoupment or counterclaim, in
lawful money of the United States and in immediately available funds.

(b)Collateral Agent and each Lender has the exclusive right to determine the
order and manner in which all payments with respect to the Obligations may be
applied.  Borrower shall have no right to specify the order or the accounts to
which Collateral Agent and each Lender shall allocate or apply any payments
required to be made by Borrower to Collateral Agent and each Lender or otherwise
received by Collateral Agent and each Lender under this Agreement when any such
allocation or application is not specified elsewhere in this Agreement.

(c)Collateral Agent and each Lender may debit or initiate an automated clearing
house payment from any of Borrower’s deposit accounts, including the Designated
Deposit Account, for principal and interest payments or any other amounts
Borrower owes Collateral Agent and each Lender when due.  These debits and
automated clearing house payments shall not constitute a set-off.  Without
limiting the foregoing, Borrower shall tender to Collateral Agent and Lenders
any authorization forms as Collateral Agent or any Lender may require to
implement such debit or automated clearing house payment.

2.7Withholding.  

(a)Payments received by the Lenders from Borrower under this Agreement will be
made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or
other charges imposed by any Governmental Authority (including any interest,
additions to tax or penalties applicable thereto).  Specifically, however, if at
any time any Governmental Authority, applicable law, regulation or international
agreement requires Borrower to make any withholding or deduction from any such
payment or other sum payable hereunder to the Lenders, 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, each Lender
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 the Lenders with proof reasonably satisfactory to the
Lenders 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 2.7 shall survive the termination of this Agreement.

(b)If any assignee of any Lender’s rights under Section 12.2 of this Agreement
is not a “United States Person” as defined in Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended from time to time (such assignee, a
“Non-U.S. Lender”), such Non-U.S. Lender shall, upon becoming party to this
Agreement, to the extent that such Non-U.S. Lender is entitled to an exemption
from U.S. withholding tax on interest, deliver to Borrower a complete and
properly executed IRS Form W-8BEN, W-8BEN-E, W-8ECI or W-8IMY, as appropriate,
or any successor form prescribed by the IRS, certifying that such Non-U.S.
Lender is entitled to such exemption from U.S. withholding tax on
interest.  Notwithstanding Section 2.6(a) above, Borrower shall not be required
to pay any additional amount to any Non-U.S. Lender under Section 2.6(a) if such
Non-U.S. Lender fails or is unable to deliver the forms, certificates or other
evidence described in the preceding sentence, unless such non-U.S. Lender's
failure or inability to deliver such forms is the result of any change in any
applicable law, treaty or governmental rule, or any change in the interpretation
thereof, after such Non-U.S. Lender became a party to this Agreement.

3CONDITIONS OF LOANS

3.1Conditions Precedent to Initial Credit Extension.  Each Lender’s obligation
to make the initial Credit Extension is subject to the condition precedent that
Collateral Agent and each Lender shall have received, in form and substance
satisfactory to Collateral Agent and each Lender, such documents, and completion
of such other matters, as Collateral Agent and each Lender may reasonably deem
necessary or appropriate, including, without limitation:  

(a)duly executed original signatures to the Loan Documents;

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(b)duly executed original certificate, in form and substance satisfactory to
Collateral Agent and each Lender, executed by the Borrower’s secretary (or other
appropriate officer acceptable to Collateral Agent and each Lender) on behalf of
the Borrower certifying (a) that attached to such certificate is a true,
correct, and complete copy of the Borrowing Resolutions then in full force and
effect, (b) 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), (c) that attached to such certificate are true,
correct, and complete copies of the and long-form good standing certificates of
Borrower and its Subsidiaries certified by the Secretary of State (or equivalent
agency) of Borrower’s and such Subsidiaries’ jurisdiction of organization or
formation and each jurisdiction in which Borrower and each Subsidiary is
qualified to conduct business, each as of a date no earlier than thirty (30)
days prior to the Effective Date, and (d) that Agent and the Lenders may
conclusively rely on such certificate unless and until such Person shall have
delivered to Agent a further certificate canceling or amending such prior
certificate;

(c)duly executed original signatures to the completed Borrowing Resolutions for
Borrower;

(d)certified copies, dated as of a recent date, of financing statement searches,
as Collateral Agent may 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;

(e)the Perfection Certificate of Borrower, together with the duly executed
original signature thereto;

(f)a bailee’s waiver in favor of Collateral Agent for each location where
Borrower maintains property with a third party (unless such leased location
contain less than One Hundred Thousand Dollars ($100,000) in Borrower’s assets
or property), by each such third party, together with the duly executed original
signatures thereto;

(g)a duly executed legal opinion of counsel to Borrower dated as of the
Effective Date;

(h)evidence satisfactory to Collateral Agent that the insurance policies and
endorsements required by Section 6.5 hereof are in full force and effect,
together with appropriate evidence showing lender loss payable and/or additional
insured clauses or endorsements in favor of Collateral Agent; and

(i)payment of the fees and Lenders’ Expenses then due as specified in
Section 2.5 hereof.

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

(a)receipt by the Lenders of (i) an executed Disbursement Letter in the form of
Exhibit E attached hereto; and (ii) an executed Payment/Advance Request Form in
the form of Exhibit C attached hereto;  

(b)the representations and warranties in this Agreement shall be true, accurate,
and complete in all material respects on the date of the Disbursement Letter
(and the Payment/Advance Form) 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
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 this Agreement 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)in such Lender’s sole discretion, there has not been a Material Adverse
Change;

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(d)receipt by Collateral Agent and each Lender of such evidence as Collateral
Agent or such Lender shall request to confirm that the deliveries made in
Section 3.1 remain current, accurate and in full force and effect, or if not,
updates thereto, each in form and substance satisfactory to the Collateral Agent
and each Lender; and

(e)to the extent not delivered at the Effective Date, duly executed original
Secured Promissory Notes, if requested by a Lender.

3.3Covenant to Deliver. Borrower agrees to deliver to Collateral Agent and the
Lenders each item required to be delivered to Collateral Agent and the Lenders
under this Agreement as a condition precedent to any Credit Extension.  Borrower
expressly agrees that a Credit Extension made prior to the receipt by Collateral
Agent or any Lender of any such item shall not constitute a waiver by Collateral
Agent or any Lender of Borrower’s obligation to deliver such item, and the
making of any Credit Extension in the absence of a required item shall be in
each Lender’s sole discretion.

3.4Procedures for Borrowing.  Subject to the prior satisfaction of all other
applicable conditions to the making of a Term Loan set forth in this Agreement,
to obtain a Term Loan, Borrower shall notify the Lenders (which notice shall be
irrevocable) by electronic mail, facsimile, or telephone by 3:00 p.m. Eastern
time five (5) Business Days prior to the date the Term Loan is to be
made.  Together with any such electronic or facsimile notification, Borrower
shall deliver to the Lenders by electronic mail or facsimile a completed
Disbursement Letter (and the Payment/Advance Form) executed by a Responsible
Officer or his or her designee.  The Lenders may rely on any telephone notice
given by a person whom a Lender believes is a Responsible Officer or
designee.  On the Funding Date, each Lender shall credit or send via federal
funds wire transfer to the Designated Deposit Account an amount equal to its
Term Loan Commitment in respect of the applicable Term Loan.  Each Lender may
make Term Loans under this Agreement based on instructions from a Responsible
Officer or his or her designee or without instructions if the Term Loans are
necessary to meet Obligations which have become due.

4CREATION OF SECURITY INTEREST  

4.1Grant of Security Interest.  Borrower hereby grants Collateral Agent, for the
ratable benefit of the Lenders, to secure the payment and performance in full of
all of the Obligations, a continuing security interest in, and pledges to
Collateral Agent, for the ratable benefit of the Lenders, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof.  

Borrower acknowledges that it previously has entered, and/or may in the future
enter, into Bank Services Agreements with Bank.  Regardless of the terms of any
Bank Services Agreement, Borrower agrees that any amounts owed by Borrower to
Bank thereunder in respect of Bank Services (but subject to the limitations set
forth in the definition of Bank Services) shall be deemed to be Obligations
hereunder and that it is the intent of Borrower and Bank to have all such
Obligations secured by the first priority perfected security interest in the
Collateral granted herein (subject only to Permitted Liens that are permitted
pursuant to the terms of this Agreement to have superior priority to Collateral
Agent’s Lien in this Agreement); provided that notwithstanding the foregoing,
the amount of Bank Services that are deemed Obligations and secured by the first
priority perfected security interest in the Collateral shall be reduced on a
dollar-for-dollar basis by the amount of Bank Services Collateral, if any.

If this Agreement is terminated, Collateral Agent’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 (other
than inchoate indemnity obligations) and at such time as the Lenders’ obligation
to make Credit Extensions has terminated, Collateral Agent shall, at the sole
cost and expense of Borrower, release its Liens in the Collateral and all rights
therein shall revert to Borrower.  In the event (x) all Obligations (other than
inchoate indemnity obligations), except for Bank Services, are satisfied in
full, and (y) this Agreement is terminated, Collateral Agent shall terminate the
security interest granted herein upon Borrower providing cash collateral
acceptable to Bank in its good faith business judgment for Bank Services, if any
up to an amount not to exceed, in the aggregate, the Bank Services Collateral
(inclusive of any Bank Services Collateral already provided).  In the event such
Bank Services consist of outstanding Letters of Credit, Borrower shall provide
to Bank cash collateral in an amount equal to (x) if such Letters of Credit are
denominated in Dollars, then at least one hundred five percent (105.0%); and
(y) if such Letters of Credit are denominated in a Foreign Currency, then at
least one hundred ten percent (110.0%), of the Dollar Equivalent of the face
amount of all such Letters of Credit plus all interest, fees, and costs due or
to become due in

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connection therewith (as estimated by Bank in its business judgment), to secure
all of the Obligations relating  to such  Letters of Credit and in all cases, up
to an amount not to exceed, in the aggregate, the Bank Services Collateral
(inclusive of any Bank Services Collateral already provided).

4.2Priority of Security Interest.  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 are permitted pursuant to the terms of this Agreement to
have superior priority to Collateral Agent’s Lien under this Agreement).  If
Borrower shall acquire a commercial tort claim in excess of One Hundred Thousand
Dollars ($100,000), Borrower shall promptly notify Collateral Agent in a writing
signed by Borrower of the general details thereof and grant to Collateral Agent,
for the ratable benefit of the Lenders, 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 Collateral
Agent.

4.3Authorization to File Financing Statements.  Borrower hereby authorizes
Collateral Agent to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Collateral Agent’s interest
or rights hereunder, including a notice that any disposition of the Collateral
except as permitted under Section 7.1 hereof, by either Borrower or any other
Person, shall be deemed to violate the rights of Collateral Agent under the
Code.  

5REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Collateral Agent and the Lenders as follows:

5.1Due Organization, Authorization; Power and Authority.  Borrower is duly
existing and in good standing as a Registered Organization in its jurisdiction
of formation and is qualified and licensed to do business and is in good
standing in any jurisdiction in which the conduct of its business or its
ownership of property requires that it be qualified except where the failure to
do so could not reasonably be expected to have a material adverse effect on
Borrower’s business.  In connection with this Agreement, Borrower has delivered
to Collateral Agent a completed certificate signed by Borrower entitled
“Perfection Certificate”.  Borrower represents and warrants to 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 (it
being understood and agreed that Borrower may from time to time update certain
information in the Perfection Certificate after the Effective Date to the extent
permitted by one or more specific provisions in this Agreement).  If Borrower is
not now a Registered Organization but later becomes one, Borrower shall promptly
notify Collateral Agent of such occurrence and provide Collateral Agent 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 are being obtained pursuant to Section 6.1(b))) or
(v) conflict with, contravene, constitute a default or breach under, or result
in or permit the termination or acceleration of, 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 it is bound in which the default could reasonably be
expected to have a material adverse effect on Borrower’s business.

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5.2Collateral.  Borrower has good title to, rights in, and the power to transfer
each item of the Collateral upon which it purports to grant a Lien hereunder,
free and clear of any and all Liens except Permitted Liens.  Borrower has no
Collateral Accounts at or with any bank or financial institution other than Bank
or Bank’s Affiliates except for the Collateral Accounts described in the
Perfection Certificate delivered to Collateral Agent in connection herewith and
which Borrower has taken such actions as are necessary to give Collateral Agent
a perfected security interest therein, pursuant to the terms of Section
6.6(b).  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 as otherwise provided in the Perfection Certificate or as
permitted pursuant to Section 7.2.  None of the components of the Collateral
shall be maintained at locations other than as provided in the Perfection
Certificate or as permitted pursuant to Section 7.2.  

Borrower is the sole owner of the Intellectual Property which it owns or
purports to own except for (a) non-exclusive licenses granted to its customers
in the ordinary course of business and licenses of Intellectual Property that
could not result in a legal transfer of title of the licensed property that may
be exclusive in respects other than territory and that may be exclusive as to
territory only as to discrete geographical areas outside of the United States,
(b) over-the-counter software that is commercially available to the public, and
(c) Intellectual Property licensed to Borrower and noted on the Perfection
Certificate.  To the best of Borrower’s knowledge, each Patent which it owns or
purports to own and which is material to Borrower’s business is valid and
enforceable, and no part of the Intellectual Property which Borrower owns or
purports to own and which is material to Borrower’s business has been judged
invalid or unenforceable, in whole or in part.  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 to the extent such claim would not
reasonably be expected to have a material adverse effect on Borrower’s
business.  Borrower is in material compliance with all License Agreements or
similar agreements and there is no default or event of default under any such
agreements.  No part of any License Agreement has been judged invalid or
unenforceable, in whole or in part, and to Borrower’s knowledge, no claim has
been made that any part of any License Agreement violates the rights of any
third party.

Except as noted on the Perfection Certificate, Borrower is not a party to, nor
is it bound by, any Restricted License.

5.3Litigation.  There are no actions or proceedings pending or, to the knowledge
of any Responsible Officer, threatened in writing by or against Borrower or any
of its Subsidiaries involving more than, individually or in the aggregate, Two
Hundred Fifty Thousand Dollars ($250,000).

5.4Financial Statements; Financial Condition.  All consolidated financial
statements for Borrower and any of its Subsidiaries delivered to each Lender
fairly present in all material respects Borrower’s consolidated financial
condition and Borrower’s consolidated results of operations as of the dates and
periods covered thereby.  There has not been any material deterioration in
Borrower’s consolidated financial condition since the date of the most recent
financial statements submitted to each Lender.

5.5Solvency.  The fair salable value of Borrower’s consolidated assets
(including goodwill minus disposition costs) exceeds the fair value of
Borrower’s 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.

5.6Regulatory 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 X, T and U of the Federal
Reserve Board of Governors).  Borrower (a) has complied in all material respects
with all Requirements of Law, and (b) has not violated any Requirements of Law
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.

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5.7Subsidiaries; Investments.  Borrower does not own any stock, partnership, or
other ownership interest or other equity securities except for Permitted
Investments.

5.8Tax Returns and Payments; Pension Contributions.  Borrower has timely filed,
or has obtained extensions for filing, 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 (a) to the
extent such taxes are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor, or (b) if such taxes, assessments, deposits and
contributions do not, individually or in the aggregate, exceed Fifty Thousand
Dollars ($50,000).  

To the extent Borrower defers payment of any contested taxes, Borrower shall (i)
notify Collateral Agent in writing of the commencement of, and any material
development in, the proceedings, and (ii) post bonds or take 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 excess of Fifty Thousand Dollars ($50,000).  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.

5.9Use 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.  A portion of the
proceeds of the Term A Loans shall be used by Borrower to repay the Existing
Lender Debt in full on the Effective Date.

5.10Full Disclosure.  No written representation, warranty or other statement of
Borrower in any certificate or written statement given to Collateral Agent or
any Lender, as of the date such representation, warranty, or other statement was
made, taken together with all such written certificates and written statements
given to Collateral Agent or any Lender, 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
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).

5.11Definition of “Knowledge.”  For purposes of the Loan Documents, whenever a
representation or warranty is made to Borrower’s knowledge or awareness, to the
“best of” Borrower’s knowledge, or with a similar qualification, knowledge or
awareness means the actual knowledge, after reasonable investigation, of any
Responsible Officer.

5.12Regulatory Status.  Borrower has received all Governmental Approvals needed
in connection with the testing, manufacture, marketing or sale of any product
currently being conducted by or on behalf of the Borrower and any such product
is being tested, manufactured, marketed or sold, as the case may be, in material
compliance with all applicable laws and applicable Governmental Approvals.  As
of any Funding Date, there have been no Governmental Reporting Events that could
reasonably be expected to have a material adverse effect on the Borrower or its
Subsidiaries, or on Borrower’s or its Subsidiaries’ Governmental Approvals or
products.

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6AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1Government Compliance.

(a)Maintain its and all its Subsidiaries’ legal existence and good standing in
their respective jurisdictions of formation and maintain qualification in each
other jurisdiction in which the 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, in all
material respects, with all laws, ordinances and regulations to which it is
subject.

(b)Obtain all of the Governmental Approvals necessary for the performance by
Borrower of its obligations under the Loan Documents to which it is a party and
the grant of a security interest to Collateral Agent in all of its
property.  Borrower shall promptly provide copies of any such obtained
Governmental Approvals to the Lenders.

6.2Financial Statements, Reports, Certificates.  Provide each Lender with the
following:

(a)Monthly Financial Statements.  As soon as available, but no later than thirty
(30) days after the last day of each month, a company prepared consolidated
balance sheet and income statement covering Borrower’s consolidated operations
for such month certified by a Responsible Officer and in a form acceptable to
Collateral Agent and the Lenders (the “Monthly Financial Statements”);

(b)Monthly Compliance Certificate.  Within thirty (30) days after the last day
of each month and together with the Monthly Financial Statements, a duly
completed Compliance Certificate signed by a Responsible Officer, certifying
that as of the end of such month, 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 Collateral Agent or any Lender may reasonably request;

(c)Annual Operating Budget and Financial Projections.  Within sixty (60) days
after the end of each fiscal year of Borrower, (i) annual operating budgets
(including income statements, balance sheets and cash flow statements, by month)
for the upcoming fiscal year of Borrower, and (ii) annual financial projections
for the following fiscal year (on a quarterly basis) as approved by Borrower’s
board of directors, together with any related business forecasts used in the
preparation of such annual financial projections and, as soon as available, any
periodic updates thereto;

(d)Annual Audited Financial Statements.  As soon as available, but no later than
one hundred twenty (120) days after the last day of Borrower’s fiscal year,
audited consolidated financial statements prepared under GAAP, consistently
applied, together with an unqualified opinion on the financial statements from
an independent certified public accounting firm reasonably acceptable to
Collateral Agent and the Lenders;

(e)Other Statements.  Within five (5) days of delivery, copies of all
statements, reports and notices made available to Borrower’s security holders or
to any holders of Subordinated Debt;

(f)SEC Filings.  Within five (5) days of filing, copies of all periodic and
other reports, proxy statements and other materials filed by Borrower with the
SEC, any Governmental Authority succeeding to any or all of the functions of the
SEC or with any national securities exchange, or distributed to its
shareholders, as the case may be.  Documents required to be delivered pursuant
to the terms hereof (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which Borrower
posts such documents, or provides a link thereto, on Borrower’s website on the
Internet at Borrower’s website address; provided, however, Borrower shall
promptly notify the Lenders in writing (which may be by electronic mail) of the
posting of any such documents;

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(g)Legal Action Notice.  A prompt report of any legal actions pending or
threatened in writing against Borrower or any of its Subsidiaries that could
result in damages or costs to Borrower or any of its Subsidiaries of,
individually or in the aggregate, Two Hundred Fifty Thousand Dollars ($250,000)
or more;

(h)Default Notice.  Promptly and in any event within three (3) Business Days of
Borrower becoming aware of the existence of any Event of Default or event which,
with the giving of notice or passage of time, or both, would constitute an Event
of Default, written notice of such Event of Default or event; and

(i)Other Financial Information.  Promptly after Collateral Agent or any Lender’s
reasonable request therefor, such other information regarding Borrower’s or any
of its Subsidiaries’ operations, business affairs, financial condition and/or
compliance with this Agreement.

6.3Inventory; Returns.  Keep all Inventory in good and marketable condition,
free from material defects.  Returns and allowances between Borrower and its
Account Debtors shall follow Borrower’s customary practices as they exist at the
Effective Date.  Borrower must promptly notify the Lenders of all returns,
recoveries, disputes and claims that involve more than Two Hundred Fifty
Thousand Dollars ($250,000).

6.4Taxes; Pensions.  Timely file, and require each of its Subsidiaries to timely
file, or obtain extensions for filing, all required tax returns and reports and
timely pay, and require each of its Subsidiaries to timely pay, all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
Borrower and each of its Subsidiaries, except for deferred payment of any taxes
contested pursuant to the terms of Section 5.8 hereof, and shall deliver to the
Lenders, 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.

6.5Insurance.

(a)Keep its business and the Collateral insured for risks and in amounts
standard for companies in Borrower’s industry and location and as Collateral
Agent or Lenders may reasonably request.  Insurance policies shall be in a form,
with financially sound and reputable insurance companies that are not Affiliates
of Borrower, and in amounts that are satisfactory to Collateral Agent and the
Lenders.  All property policies shall have a lender’s loss payable endorsement
showing Collateral Agent as lender loss payee.  All liability policies shall
show, or have endorsements showing, Collateral Agent as an additional
insured.  Collateral Agent shall be named as lender loss payee and/or additional
insured with respect to any such insurance providing coverage in respect of any
Collateral.

(b)Ensure that proceeds payable under any property policy are, at Collateral
Agent’s option, payable to Collateral Agent 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) with respect to any loss, but not exceeding Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate for all losses under all casualty
policies in any one year, 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 Collateral Agent 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 Collateral Agent, be payable to Collateral Agent, for the ratable
benefit of the Lenders, on account of the Obligations.  

(c)At Collateral Agent’s or any Lender’s request, Borrower shall deliver
certified copies of insurance policies and evidence of all premium
payments.  Each provider of any such insurance required under this Section 6.5
shall agree, by endorsement upon the policy or policies issued by it or by
independent instruments furnished to Collateral Agent, that it will give
Collateral Agent twenty (20) days (ten (10) days for non-payment of premiums)
prior written notice before any such policy or policies shall be materially
altered or canceled.  If Borrower fails to obtain insurance as required under
this Section 6.5 or to pay any amount or furnish any required proof of payment
to third persons, Collateral Agent and/or any Lender may make all or part of
such payment or obtain such insurance policies required in this Section 6.5, and
take any action under the policies Collateral Agent or such Lender deems
prudent.

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6.6Operating Accounts.

(a)Maintain its and each of its Subsidiaries’ (i) operating and deposit accounts
with Bank, (ii) primary securities accounts, inclusive of any accounts
maintained in connection with asset management, with Bank and Bank’s Affiliates
and (iii) business credit cards, letters of credit and foreign exchange
transactions with Bank and Bank’s Affiliates.  

(b)Maintain at all times at least fifty percent (50%) of Borrower’s cash with
Bank, provided, that if the dollar value of all Borrower’s cash at Bank, at any
time, is less than Forty Million Dollars ($40,000,000), then one hundred percent
(100%) of Borrower’s cash shall be held with Bank.

(c)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 Bank’s Affiliates.  For each Collateral Account that Borrower at any time
maintains, Borrower shall cause the applicable bank or financial institution 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 Collateral Agent’s Lien in such Collateral Account
in accordance with the terms hereunder which Control Agreement may not be
terminated without the prior written consent of the Collateral Agent.  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
Collateral Agent by Borrower as such.

6.7Intentionally Omitted.  

6.8Protection of Intellectual Property Rights.

(a)(i) Use commercially reasonable efforts to protect, defend and maintain the
validity and enforceability of its Intellectual Property material to Borrower’s
business; (ii) promptly advise Collateral Agent and each Lender in writing of
material infringements or any other event that could reasonably be expected to
materially and adversely affect the value of its Intellectual Property material
to Borrower’s business; and (iii) not allow any Intellectual Property material
to Borrower’s business to be abandoned, forfeited or dedicated to the public
without each Lender’s written consent.  

(b)Provide written notice to Collateral Agent and each Lender within ten (10)
days of entering or becoming bound by any Restricted License (other than
over-the-counter software that is commercially available to the
public).  Borrower shall take such commercially reasonable steps as Collateral
Agent or any Lender requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for (i) any Restricted License to be deemed
“Collateral” and for Collateral Agent to have a security interest in it that
might otherwise be restricted or prohibited by law or by the terms of any such
Restricted License, whether now existing or entered into in the future, and
(ii) Collateral Agent to have the ability in the event of a liquidation of any
Collateral to dispose of such Collateral in accordance with Collateral Agent’s
rights and remedies under this Agreement and the other Loan Documents, provided
that the failure to obtain such consent or waiver, after talking the steps set
forth above, shall not constitute an Event of Default hereunder.

6.9Litigation Cooperation.  From the date hereof and continuing through the
termination of this Agreement, make available to Collateral Agent and the
Lenders, without expense to Collateral Agent or the Lenders, Borrower and its
officers, employees and agents and Borrower's books and records, to the extent
that Collateral Agent or any Lender may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Collateral Agent or any Lender with respect to any Collateral or relating to
Borrower.

6.10Access to Collateral; Books and Records.  Allow Collateral Agent or any
Lender, or their respective agents, at reasonable times, on three (3) Business
Days’ notice (provided no notice is required if an Event of Default has occurred
and is continuing), to inspect the Collateral and audit and copy Borrower’s
Books.  Such inspections or audits shall be conducted no more often than once
every twelve (12) months unless an Event of Default has occurred and is
continuing in which case such inspections and audits shall occur as often as
Collateral Agent or any Lender shall determine is necessary.  The foregoing
inspections and audits shall be at Borrower’s expense, and

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the charge therefor shall be One Thousand Dollars ($1,000) per person per day
(or such higher amount as shall represent Collateral Agent’s or such Lender’s
then-current standard charge for the same), plus reasonable out-of-pocket
expenses.  In the event Borrower and Collateral Agent and/or any Lender schedule
an audit more than ten (10) days in advance, and Borrower cancels or seeks to
reschedule the audit with less than ten (10) days written notice to Collateral
Agent or such Lender, then (without limiting any of Collateral Agent’s or such
Lender’s rights or remedies), Borrower shall pay Collateral Agent and/or such
Lender a fee of One Thousand Dollars ($1,000) plus any out-of-pocket expenses
incurred by Collateral Agent and/or such Lender to compensate Collateral Agent
and/or such Lender for the anticipated costs and expenses of the cancellation or
rescheduling.

6.11Formation or Acquisition of Subsidiaries.  Notwithstanding and without
limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, at the
time that Borrower forms any direct or indirect Subsidiary or acquires any
direct or indirect Subsidiary after the Effective Date, Borrower shall (a) with
respect to Domestic Subsidiaries only, cause such new Domestic Subsidiary to
provide to Collateral Agent and the Lenders a joinder to the Loan Agreement to
cause such Domestic Subsidiary to become a co‑borrower hereunder, together with
such appropriate financing statements and/or Control Agreements, all in form and
substance satisfactory to Collateral Agent and the Lenders (including being
sufficient to grant Collateral Agent, for the ratable benefit of the Lenders, a
first priority Lien (subject to Permitted Liens) in and to the assets of such
newly formed or acquired Domestic Subsidiary), (b) provide to Collateral Agent
and the Lenders appropriate certificates and powers and financing statements,
pledging all of the direct or beneficial ownership interest in such new
Subsidiary to Collateral Agent, for the ratable benefit of the Lenders, in form
and substance satisfactory to Collateral Agent and the Lenders, and (c) provide
to Collateral Agent or the Lenders all other documentation in form and substance
reasonably satisfactory to Collateral Agent and the Lenders, which in its
opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above.  Any document, agreement, or
instrument executed or issued pursuant to this Section 6.11 shall be a Loan
Document.

6.12Further Assurances.  Execute any further instruments and take further action
as Collateral Agent or any Lender reasonably requests to perfect or continue
Collateral Agent’s Lien in the Collateral or to effect the purposes of this
Agreement.  Deliver to Collateral Agent and the Lenders, within five (5) days
after the same are sent or received, copies of all correspondence, reports,
documents and other filings with any Governmental Authority regarding compliance
with or maintenance of Governmental Approvals or Requirements of Law or that
could reasonably be expected to have a material effect on any of the
Governmental Approvals or otherwise on the operations of Borrower or any of its
Subsidiaries (each a “Governmental Reporting Event”).

7NEGATIVE COVENANTS

Borrower shall not do any of the following without the prior written consent of
the Required Lenders:

7.1Dispositions.  Convey, sell, lease, transfer, assign, 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 surplus, worn‑out or obsolete
Equipment that is, in the reasonable judgment of Borrower, no longer
economically practicable to maintain or useful in the ordinary course of
business of Borrower; (c) consisting of Permitted Liens and Permitted
Investments; (d) consisting of the sale or issuance of any stock of Borrower
permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s use
or transfer of money or Cash Equivalents in a manner that is not prohibited by
the terms of this Agreement or the other Loan Documents; (f) Permitted Licenses,
and (g) not to exceed Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate in any fiscal year.

7.2Changes in Business, Management, Ownership 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; (c) fail to provide
notice to Collateral Agent and Lenders of any Key Person departing from or
ceasing to be employed by Borrower within five (5) days after his or her
departure from Borrower; or (d) permit or suffer any Change in Control.  

Borrower shall not, without at least ten (10) days prior written notice to
Collateral Agent: (1) add any new offices or business locations, including
warehouses (unless such new offices or business locations contain less than One
Hundred Thousand Dollars ($100,000) in Borrower’s assets or property) or deliver
any portion of the Collateral

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valued, individually or in the aggregate, in excess of One Hundred Thousand
Dollars ($100,000) to a bailee at a location other than to a bailee and at a
location already disclosed in the Perfection Certificate, (2) change its
jurisdiction of organization, (3) change its organizational structure or type,
(4) change its legal name, or (5) change any organizational number (if any)
assigned by its jurisdiction of organization.  If Borrower intends to deliver
any portion of the Collateral valued, individually or in the aggregate, in
excess of One Hundred Thousand Dollars ($100,000) to a bailee, and Collateral
Agent and such bailee are not already parties to a bailee agreement governing
both the Collateral and the location to which Borrower intends to deliver the
Collateral, then Borrower will first receive the written consent of Collateral
Agent, and such bailee shall execute and deliver a bailee agreement in form and
substance satisfactory to Collateral Agent in its reasonable discretion.

7.3Mergers 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 (including, without limitation, by
the formation of any Subsidiary).  A Subsidiary may merge or consolidate into a
Domestic Subsidiary (so long as the surviving entity is a Domestic Subsidiary)
or into Borrower (so long as the surviving entity is the Borrower).

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

7.5Encumbrance.  Create, incur, allow, or suffer 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 Collateral Agent, for the ratable
benefit of the Lenders, and Liens described in clause (c) of Permitted Liens)
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 Liens” herein.

7.6Maintenance of Collateral Accounts.  Maintain any Collateral Account except
pursuant to the terms of Section 6.6(b) hereof.

7.7Distributions; Investments.  (a) 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 that the aggregate amount of all such repurchases does not
exceed Two Hundred Fifty Thousand Dollars ($250,000) per fiscal year; or (b)
directly or indirectly make any Investment (including, without limitation, by
the formation of any Subsidiary) other than Permitted Investments, or permit any
of its Subsidiaries to do so; or (c) directly or indirectly make any Investment
in or form or acquire any Foreign Subsidiary.

7.8Transactions with Affiliates.  Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower, except for (i)
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, (ii)
equity financings with existing and/or new investors of Borrower which does not
result in a Change in Control and the terms of such equity financing do not
conflict or violate the terms of this Agreement, (ii) transactions permitted
pursuant to the terms of the second sentence of Section 7.3 hereof, (iv)
Investments permitted under sub-clause (f) of the definition of Permitted
Investments, and (v) debt financings from Borrower’s existing investors so long
as all such Indebtedness is Subordinated Debt.

7.9Subordinated 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, provide for earlier or greater principal, interest, or other
payments thereon, or adversely affect the subordination

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thereof to Obligations owed to the Lenders (except as otherwise provided for by
the terms of the subordination agreement, intercreditor, or other similar
agreement between such Person and Collateral Agent).

7.10Compliance.  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 (a) meet the minimum funding requirements of ERISA, (b) prevent
a Reportable Event or Prohibited Transaction as defined in ERISA, or (c) comply
with the Federal Labor Standards Act, the failure of any of the conditions in
clauses (a) through (c) which could reasonably be expected to have a material
adverse effect on Borrower’s business, or violate any other law or regulation,
if the violation could reasonably be expected to have a materials adverse effect
on Borrower’s business or permit any 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.

7.11Amendments to Organization Documents and Material Agreements.  Amend, modify
or waive any provision of (a) any material agreement in a manner that is
materially adverse to Borrower, that is adverse to Collateral Agent or any
Lender, that pertains to rights to assign or grant a security interest in such
material agreement or that could or could reasonably be expected to result in a
Material Adverse Change, or (b) any of its organizational documents (other than
a change in registered agents, changes made exclusively as the result of equity
financings with existing and/or new investors of Borrower which does not result
in a Change in Control and the terms of such equity financing do not conflict or
violate the terms of this Agreement, or a change that could not adversely affect
the rights of Collateral Agent or Lenders hereunder, but, for the avoidance of
doubt, under no circumstances a change of its name, type of organization or
jurisdiction of organization), in each case, without the prior written consent
of Collateral Agent and each Lender.  Borrower shall provide to Collateral Agent
and each Lender copies of all amendments, waivers and modifications of any
material agreement or organizational documents.  

 

7.12Compliance with Anti‑Terrorism Laws.  Collateral Agent and the Lenders
hereby notify Borrower and each of its Subsidiaries that pursuant to the
requirements of Anti‑Terrorism Laws, and Collateral Agent’s and each Lender’s
policies and practices, Collateral Agent and each Lender is required to obtain,
verify and record certain information and documentation that identifies Borrower
and each of its Subsidiaries and their principals, which information includes
the name and address of Borrower and each of its Subsidiaries and their
principals and such other information that will allow Collateral Agent and each
Lender to identify such party in accordance with Anti‑Terrorism Laws.  Neither
Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its
Subsidiaries permit any Affiliate to, directly or indirectly, knowingly enter
into any documents, instruments, agreements or contracts with any Person listed
on the OFAC Lists.  Borrower and each of its Subsidiaries shall immediately
notify Collateral Agent and each Lender if Borrower or such Subsidiary has
knowledge that Borrower, or any Subsidiary or Affiliate of Borrower, is listed
on the OFAC Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is
indicted on, or (d) is arraigned and held over on charges involving money
laundering or predicate crimes to money laundering.  Neither Borrower nor any of
its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries, permit
any Affiliate to, directly or indirectly, (i) conduct any business or engage in
any transaction or dealing with any Blocked Person, including, without
limitation, the making or receiving of any contribution of funds, goods or
services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise
engage in any transaction relating to, any property or interests in property
blocked pursuant to Executive Order No. 13224 or any similar executive order or
other Anti‑Terrorism Law, or (iii) engage in or conspire to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in Executive Order No.
13224 or other Anti‑Terrorism Law.

 

 

 

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8EVENTS OF DEFAULT

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

8.1Payment Default.  Borrower fails to (a) make any payment of principal or
interest on any Credit Extension when due, or (b) pay any other Obligations
within three (3) Business Days after such Obligations are due and payable (which
three (3) Business Day cure period shall not apply to payments due on the Term
Loan Maturity Date).  During the cure period, the failure to make or pay any
payment specified under clause (b) hereunder is not an Event of Default (but no
Credit Extension will be made during the cure period);

8.2Covenant Default.

(a)Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4,
6.5, 6.6, 6.8(b), 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 or any
Loan Documents, and as to any default (other than those specified elsewhere 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).  Cure periods provided under
this section shall not apply, among other things, to financial covenants or any
other covenants set forth in clause (a) above;

8.3Material Adverse Change.  A Material Adverse Change occurs;

8.4Attachment; Levy; Restraint on Business.

(a)(i) The service of process seeking to attach, by trustee or similar process,
any funds of Borrower or of any entity under the control of Borrower (including
a Subsidiary) in excess of Two Hundred Fifty Thousand Dollars ($250,000), or
(ii) a notice of lien or levy is filed against any of Borrower’s assets by any
Governmental Authority, and the same under subclauses (i) and (ii) hereof are
not, within ten (10) days after the occurrence thereof, discharged or stayed
(whether through the posting of a bond or otherwise); provided, however, no
Credit Extensions shall be made during any ten (10) day cure period; or

(b)(i) any material portion of Borrower’s assets is attached, seized, levied on,
or comes into possession of a trustee or receiver, or (ii) any court order
enjoins, restrains, or prevents Borrower from conducting all or any material
part of its business;

8.5Insolvency.  (a) Borrower or any of its Subsidiaries is unable to pay its
debts (including trade debts) as they become due or otherwise becomes insolvent;
(b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or
(c) an Insolvency Proceeding is begun against Borrower or any of its
Subsidiaries and is not dismissed or stayed within thirty (30) days (but no
Credit Extensions shall be made while any of the conditions described in clause
(a) exist and/or until any Insolvency Proceeding is dismissed);

8.6Other Agreements.  There is, under any agreement to which Borrower or any
Guarantor is a party with a third party or parties, (a) any default resulting in
a right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount individually or in the aggregate
in excess of Two Hundred Fifty Thousand Dollars ($250,000); or (b) any breach or
default by Borrower, the result of which could reasonably be expected to have a
material adverse effect on Borrower’s business; provided, however, that the
Event of Default under this Section 8.6 caused by the occurrence of a default
under such other agreement shall be cured or waived for purposes of this
Agreement upon Collateral Agent and each Lender receiving written notice from
the party asserting such default of such cure or waiver of the default under
such other agreement, if at the time of such cure or waiver under such other

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agreement (x) Collateral Agent or a Lender has not declared an Event of Default
under this Agreement and/or exercised any rights with respect thereto; (y) any
such cure or waiver does not result in an Event of Default under any other
provision of this Agreement or any Loan Document; and (z) in connection with any
such cure or waiver under such other agreement, the terms of any agreement with
such third party are not modified or amended in any manner which could in the
good faith judgment of Collateral Agent and the Lenders be materially less
advantageous to Borrower;

8.7Judgments; Penalties.  One or more fines, penalties or final judgments,
orders or decrees for the payment of money in an amount, individually or in the
aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000) (not
covered by independent third-party insurance as to which liability has been
accepted by such insurance carrier) shall be rendered against Borrower by any
Governmental Authority, and the same are not, within ten (10) days after the
entry, assessment or issuance thereof, discharged, satisfied, or paid, or after
execution thereof, stayed or bonded pending appeal, or such judgments are not
discharged prior to the expiration of any such stay (provided that no Credit
Extensions will be made prior to the satisfaction, payment, discharge, stay, or
bonding of such fine, penalty, judgment, order or decree);

8.8Misrepresentations.  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 Collateral Agent and/or Lenders or
to induce Collateral Agent and/or Lenders to enter this Agreement or any Loan
Document, and such representation, warranty, or other statement is incorrect in
any material respect when made;

8.9Subordinated Debt.  Any document, instrument, or agreement evidencing the
subordination of any Subordinated Debt shall for any reason be revoked or
invalidated or otherwise cease to be in full force and effect, any Person shall
be in breach thereof or contest in any manner the validity or enforceability
thereof or deny that it has any further liability or obligation thereunder, or
the Obligations shall for any reason be subordinated or shall not have the
priority contemplated by this Agreement; or

8.10Governmental Approvals.  Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not renewed
in the ordinary course for a full term or (b) subject to any decision by a
Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) cause, or could reasonably be expected to cause,
a Material Adverse Change, or (ii) adversely affects the legal qualifications of
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction.

8.11Lien Priority.  Any Lien created hereunder or by any other Loan Document
shall at any time fail to constitute a valid and perfected Lien on any of the
Collateral purported to be secured thereby, subject to no prior or equal Lien,
other than Permitted Liens which are permitted to have priority in accordance
with the terms of this Agreement.

8.12Public Company.  The Borrower’s equity fails to remain registered with the
SEC in good standing and/or such equity fails to remain publicly traded on and
registered with a public securities exchange.

9RIGHTS AND REMEDIES

9.1Rights and Remedies.  

(a)Upon the occurrence and during the continuance of an Event of Default,
Collateral Agent may, and at the written direction of Required Lenders shall,
without notice or demand, do any or all of the following: (i) deliver notice of
the Event of Default to Borrower, (ii) by notice to Borrower declare all
Obligations immediately due and payable (but if an Event of Default described in
Section 8.5 occurs all Obligations shall be immediately due and payable without
any action by Collateral Agent or the Lenders) or (iii) by notice to Borrower
suspend or terminate the obligations, if any, of the Lenders to advance money or
extend credit for Borrower’s benefit under this Agreement

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or under any other agreement between Borrower and Collateral Agent and/or the
Lenders (but if an Event of Default described in Section 8.5 occurs all
obligations, if any, of the Lenders to advance money or extend credit for
Borrower’s benefit under this Agreement or under any other agreement between
Borrower and Collateral Agent and/or the Lenders shall be immediately terminated
without any action by Collateral Agent or the Lenders);

(b)Without limiting the rights of Collateral Agent and the Lenders set forth in
Section 9.1(a) above, upon the occurrence and during the continuance of an Event
of Default, Collateral Agent shall have the right, without notice or demand, to
do any or all of the following:

(i)foreclose upon and/or sell or otherwise liquidate, the Collateral;

(ii)apply to the Obligations any (a) balances and deposits of Borrower that
Collateral Agent or any Lender holds or controls, or (b) any amount held or
controlled by Collateral Agent or any Lender owing to or for the credit or the
account of Borrower; and/or

(iii)commence and prosecute an Insolvency Proceeding or consent to Borrower
commencing any Insolvency Proceeding;

(c)Without limiting the rights of Collateral Agent and the Lenders set forth in
Sections 9.1(a) and (b) above, upon the occurrence and during the continuance of
an Event of Default, Collateral Agent shall have the right, without notice or
demand, to do any or all of the following:

(i)suspend or terminate the obligations, if any, of the Lenders to advance money
or extend credit for Borrower’s benefit under this Agreement or under any other
agreement between Borrower and Collateral Agent and/or the Lenders (but if an
Event of Default described in Section 8.5 occurs all obligations, if any, of the
Lenders to advance money or extend credit for Borrower’s benefit under this
Agreement or under any other agreement between Borrower and Collateral Agent
and/or the Lenders shall be immediately terminated without any action by
Collateral Agent or the Lenders);

(ii)demand that Borrower, to the extent not already collateralized with Bank
Services Collateral, deposit cash with Bank in an amount not to exceed Bank
Services Collateral, which shall, in the case of any Letters of Credit that
constitute Bank Services, equal to at least (x) if one hundred five percent
(105.0%), with respect to Letters of Credit denominated in Dollars, and (y) one
hundred ten percent (110.0%), with respect to Letters of Credit denominated in a
Foreign Currency, of the Dollar Equivalent of the aggregate face amount of all
Letters of Credit remaining undrawn (plus all interest, fees, and costs due or
to become due in connection therewith (as estimated by Bank in its good faith
business judgment)) in call cases, up to an amount not to exceed, in the
aggregate, the Bank Services Collateral (inclusive of any Bank Services
Collateral already provided), to secure all of the Obligations relating to such
Letters of Credit, as collateral security for the repayment of any future
drawings under such Letters of Credit, and Borrower shall forthwith deposit and
pay such amounts;

(iii)terminate any FX Contracts to the extent Borrower’s obligations to pay
under such FX Contracts plus either (A) the amount owed by Borrower in respect
of any other Bank Services (inclusive of any Subject Letters of Credit) does not
exceed One Million Dollars ($1,000,000) in the aggregate or (B) the amount owed
by Borrower in respect of any Bank Services (exclusive of any Subject Letters of
Credit) does not exceed Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate (it being understood that both conditions under (A) and (B) above must
be satisfied);

(iv)verify the amount of, demand payment of and performance under, and collect
any Accounts and General Intangibles, settle or adjust disputes and claims
directly with Account Debtors for amounts on terms and in any order that
Collateral Agent considers advisable, and notify any Person owing Borrower money
of Collateral Agent’s security interest in such funds;

(v)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 Collateral Agent requests and make it available
as Collateral Agent designates.  Collateral Agent may enter premises where the

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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 Collateral Agent a license to enter and occupy any of its
premises, without charge, to exercise any of Collateral Agent’s rights or
remedies;

(vi)apply to the Obligations any (i) balances and deposits of Borrower it holds,
or (ii) any amount held or controlled by Collateral Agent or any Lender owing to
or for the credit or the account of Borrower;

(vii)ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell the Collateral.  Collateral Agent 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, 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
Collateral Agent’s exercise of its rights under this Section, Borrower’s rights
under all licenses and all franchise agreements inure to Collateral Agent, for
the benefit of the Lenders;

(viii)place a “hold” on any account maintained with Collateral Agent or the
Lenders 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;

(ix)appoint a receiver to seize, manage and realize any of the Collateral, and
such receiver shall have any right and authority as any competent court will
grant or authorize in accordance with any applicable law, including any power or
authority to manage the business of Borrower or any of its Subsidiaries;

(x)demand and receive possession of Borrower’s Books; and

(xi)subject to clauses 9.1(a) and (b), exercise all rights and remedies
available to Collateral Agent and each Lender 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).

9.2Power of Attorney.  Borrower hereby irrevocably appoints Collateral Agent 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 Collateral Agent 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 Collateral Agent or a third party as the Code
permits.  Borrower hereby appoints Collateral Agent as its lawful
attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of Collateral Agent’s security interest in the
Collateral regardless of whether an Event of Default has occurred until all
Obligations (other than inchoate indemnity obligations) have been satisfied in
full and Collateral Agent and the Lenders are under no further obligation to
make Credit Extensions hereunder.  Collateral Agent’s foregoing appointment as
Borrower’s attorney in fact, and all of Collateral Agent’s rights and powers,
coupled with an interest, are irrevocable until all Obligations (other than
inchoate indemnity obligations) have been fully repaid and performed and
Collateral Agent’s and the Lenders’ obligation to provide Credit Extensions
terminates.

9.3Protective Payments.  If Borrower fails to obtain the insurance called for by
Section 6.5 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, Collateral Agent may obtain such insurance or make such payment, and
all amounts so paid by Collateral Agent are Lenders’ Expenses and immediately
due and payable, bearing interest at the Default Rate, and secured by the
Collateral.  Collateral Agent will make reasonable efforts to provide Borrower
with notice of Collateral Agent obtaining such insurance or making such payment
at the time it is obtained or paid or within a reasonable time thereafter.  No
such payments by Collateral Agent are deemed an agreement to make similar
payments in the future or Collateral Agent’s waiver of any Event of Default.

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9.4Application of Payments and Proceeds Upon Default.  Notwithstanding anything
to the contrary contained in this Agreement, upon the occurrence and during the
continuance of an Event of Default, (a) Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times thereafter
received by Collateral Agent from or on behalf of Borrower of all or any part of
the Obligations, and, as between Borrower on the one hand and Collateral Agent
and Lenders on the other, Collateral Agent shall have the continuing and
exclusive right to apply and to reapply any and all payments received against
the Obligations in such manner as Collateral Agent may deem advisable
notwithstanding any previous application by Collateral Agent, and (b) unless the
Collateral Agent and the Lenders shall agree otherwise, the proceeds of any sale
of, or other realization upon all or any part of the Collateral shall be
applied: first, to the Lenders’ Expenses; second, to accrued and unpaid interest
on the Obligations (including any interest which, but for the provisions of the
United States Bankruptcy Code, would have accrued on such amounts); third, to
the principal amount of the Obligations outstanding; and fourth, to any other
indebtedness or obligations of Borrower owing to Collateral Agent or any Lender
under the Loan Documents.  Any balance remaining shall be delivered to Borrower
or to whoever may be lawfully entitled to receive such balance or as a court of
competent jurisdiction may direct.  In carrying out the foregoing, (x) amounts
received shall be applied in the numerical order provided until exhausted prior
to the application to the next succeeding category, and (y) each of the Persons
entitled to receive a payment in any particular category shall receive an amount
equal to its pro rata share of amounts available to be applied pursuant thereto
for such category.  Any reference in this Agreement to an allocation between or
sharing by the Lenders of any right, interest or obligation “ratably,”
“proportionally” or in similar terms shall refer to Pro Rata Share unless
expressly provided otherwise.  Collateral Agent, or if applicable, each Lender,
shall promptly remit to the other Lenders such sums as may be necessary to
ensure the ratable repayment of each Lender’s portion of any Term Loan and the
ratable distribution of interest, fees and reimbursements paid or made by
Borrower.  Notwithstanding the foregoing, a Lender receiving a scheduled payment
shall not be responsible for determining whether the other Lenders also received
their scheduled payment on such date; provided, however, if it is later
determined that a Lender received more than its ratable share of scheduled
payments made on any date or dates, then such Lender shall remit to Collateral
Agent or other Lenders such sums as may be necessary to ensure the ratable
payment of such scheduled payments, as instructed by Collateral Agent.  If any
payment or distribution of any kind or character, whether in cash, properties or
securities, shall be received by a Lender in excess of its ratable share, then
the portion of such payment or distribution in excess of such Lender’s ratable
share shall be received by such Lender in trust for and shall be promptly paid
over to the other Lender for application to the payments of amounts due on the
other Lenders’ claims.  To the extent any payment for the account of Borrower is
required to be returned as a voidable transfer or otherwise, the Lenders shall
contribute to one another as is necessary to ensure that such return of payment
is on a pro rata basis.  If any Lender shall obtain possession of any
Collateral, it shall hold such Collateral for itself and as agent and bailee for
Collateral Agent and other Lenders for purposes of perfecting Collateral Agent’s
security interest therein.

9.5Liability for Collateral.  So long as Collateral Agent and the Lenders comply
with reasonable banking practices regarding the safekeeping of the Collateral in
the possession or under the control of Collateral Agent and the Lenders,
Collateral Agent and the Lenders 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.

9.6No Waiver; Remedies Cumulative.  Failure by Collateral Agent or any Lender,
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 Collateral Agent or any Lender thereafter to demand strict
performance and compliance herewith or therewith.  No waiver hereunder shall be
effective unless signed by Collateral Agent and the Required Lenders and then is
only effective for the specific instance and purpose for which it is given.  The
rights and remedies of Collateral Agent and the Lenders under this Agreement and
the other Loan Documents are cumulative.  Collateral Agent and the Lenders have
all rights and remedies provided under the Code, any applicable law, by law, or
in equity.  The exercise by Collateral Agent or any Lender of one right or
remedy is not an election, and Collateral Agent’s or any Lender’s waiver of any
Event of Default is not a continuing waiver.  Collateral Agent’s or any Lender’s
delay in exercising any remedy is not a waiver, election, or acquiescence.  

9.7Demand 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

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of accounts, documents, instruments, chattel paper, and guarantees held by
Collateral Agent or any Lender on which Borrower is liable.

10NOTICES

All notices, consents, requests, approvals, demands, or other communication by
any party to this Agreement or any other Loan Document must be in writing and
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, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a 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, facsimile number, or email address indicated
below.  Any of Collateral Agent, Lender or Borrower may change its mailing or
electronic mail address or facsimile number by giving the other party written
notice thereof in accordance with the terms of this Section 10.

 

If to Borrower:

    CLEARSIDE BIOMEDICAL, INC.
1220 Old Alpharetta Road, Suite 300
Alpharetta, GA 30005
Attn:  Charles A. Deignan – Chief Financial Officer
Fax:  
Email:  charlie.deignan@clearsidebio.com

 

If to Collateral Agent or Bank:   Silicon Valley Bank
3475 Piedmont Road, NE, Suite 560

Atlanta, GA 30305
Attn:  Scott McCarty
Fax:  (404) 467-4467
Email: smccarty@svb.com

If to any Lender other than Bank: at the address for such Lender set forth in
the signature pages to this Agreement or provided as a notice address for such
in connection with any assignment hereunder.

 

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

Except as otherwise expressly provided in any of the Loan Documents, California
law governs the Loan Documents without regard to principles of conflicts of
law.  Borrower, Collateral Agent and each Lender each submit to the exclusive
jurisdiction of the State and Federal courts in Santa Clara County, California;
provided, however, that nothing in this Agreement shall be deemed to operate to
preclude Collateral Agent or any Lender 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 Collateral Agent or any Lender.  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,
or subsequently provided by Borrower in accordance with, 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.

BORROWER, COLLATERAL AGENT AND EACH LENDER 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 EACH PARTY TO ENTER INTO THIS AGREEMENT.  EACH PARTY HAS REVIEWED
THIS WAIVER WITH ITS COUNSEL.

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WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court.  The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure §§ 638 through 645.1, inclusive.  The private judge shall have the
power, among others, to grant provisional relief, including without limitation,
entering temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers.  All such proceedings shall be closed to
the public and confidential and all records relating thereto shall be
permanently sealed.  If during the course of any dispute, a party desires to
seek provisional relief, but a judge has not been appointed at that point
pursuant to the judicial reference procedures, then such party may apply to the
Santa Clara County, California Superior Court for such relief.  The proceeding
before the private judge shall be conducted in the same manner as it would be
before a court under the rules of evidence applicable to judicial
proceedings.  The parties shall be entitled to discovery which shall be
conducted in the same manner as it would be before a court under the rules of
discovery applicable to judicial proceedings.  The private judge shall oversee
discovery and may enforce all discovery rules and orders applicable to judicial
proceedings in the same manner as a trial court judge.  The parties agree that
the selected or appointed private judge shall have the power to decide all
issues in the action or proceeding, whether of fact or of law, and shall report
a statement of decision thereon pursuant to California Code of Civil Procedure §
644(a).  Nothing in this paragraph shall limit the right of any party at any
time to exercise self-help remedies, foreclose against collateral, or obtain
provisional remedies.  The private judge shall also determine all issues
relating to the applicability, interpretation, and enforceability of this
paragraph.

This Section 11 shall survive the termination of this Agreement.

12GENERAL PROVISIONS

12.1Termination Prior to Term Loan Maturity Date; 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
have been satisfied.  So long as Borrower has satisfied the Obligations (other
than inchoate indemnity obligations, and any other obligations which, by their
terms, are to survive the termination of this Agreement, and any Obligations
under Bank Services Agreements that are cash collateralized in accordance with
Section 4.1 of this Agreement), this Agreement may be terminated prior to the
Term Loan Maturity Date by Borrower, effective three (3) Business Days after
written notice of termination is given to Bank.  Those obligations that are
expressly specified in this Agreement as surviving this Agreement’s termination
shall continue to survive notwithstanding this Agreement’s termination.

12.2Successors and Assigns.  This Agreement binds and is for the benefit of the
successors and permitted assigns of each party.  Borrower may not transfer,
pledge or assign this Agreement or any rights or obligations under it without
Collateral Agent’s and each Lender’s prior written consent (which may be granted
or withheld in Collateral Agent’s and each Lender’s discretion, subject to
Section 12.7).  The Lenders have the right, without the consent of or notice to
Borrower, to sell, transfer, assign, pledge, negotiate, or grant participation
in (any such sale, transfer, assignment, negotiation, or grant of a
participation, a “Lender Transfer”) all or any part of, or any interest in, the
Lenders’ obligations, rights, and benefits under this Agreement and the other
Loan Documents; provided, however, that any such Lender Transfer (other than a
transfer, pledge, sale or assignment to an Eligible Assignee) of its
obligations, rights, and benefits under this Agreement and the other Loan
Documents shall require the prior written consent of the Required Lenders (such
approved assignee, an “Approved Lender”).  Borrower and Collateral Agent shall
be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned until Collateral Agent shall have
received and accepted an effective assignment agreement in form satisfactory to
Collateral Agent executed, delivered and fully completed by the applicable
parties thereto, and shall have received such other information regarding such
Eligible Assignee or Approved Lender as Collateral Agent reasonably shall
require.  Notwithstanding anything to the contrary contained herein, so long as
no Event of Default has occurred and is continuing, no Lender Transfer (other
than a Lender Transfer (i) in respect of the Warrants or (ii) in connection with
(x) assignments by a Lender due to a forced divestiture at the request of any
regulatory agency;

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or (y) upon the occurrence of a default, event of default or similar occurrence
with respect to a Lender’s own financing or securitization transactions) shall
be permitted, without Borrower’s consent, to any Person which is an Affiliate or
Subsidiary of Borrower, a direct competitor of Borrower or a vulture hedge fund,
each as determined by Collateral Agent.

Notwithstanding anything to the contrary contained herein, the Collateral Agent,
acting solely for this purpose as an agent of the Borrower, shall maintain at
one of its offices in the United States a copy of each assignment agreement
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Term Loan Commitments of, and principal amounts (and stated
interest) of the Term Loans owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”).  The entries in the Register shall be
conclusive absent manifest error, and the Borrower, the Collateral Agent and the
Lenders shall treat each Person whose name is recorded in the Register pursuant
to the terms hereof as a Lender hereunder for all purposes of this
Agreement.  The Register shall be available for inspection by the Borrower and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice. Each Lender that sells or otherwise grants a participation shall, acting
solely for this purpose as a non-fiduciary agent of the Borrower, maintain a
register on which it enters the name and address of each Participant and the
principal amounts (and stated interest) of each participant’s interest in the
Term Loans or other obligations under the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
participant or any information relating to a participant's interest in any
commitments, loans, letters of credit or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary
to establish that such commitment, loan, letter of credit or other obligation is
in registered form under Section 5f.103-1(c) of the United States Treasury
Regulations.  The entries in the Participant Register shall be conclusive absent
manifest error, and such Lender shall treat each Person whose name is recorded
in the Participant Register as the owner of such participation for all purposes
of this Agreement notwithstanding any notice to the contrary.  The Collateral
Agent shall have no responsibility for establishing or maintaining a Participant
Register with respect to any Lender or participant; provided that so long as
Bank is Collateral Agent nothing contained in this sentence shall exclude Bank
(in its capacity as a Lender) from the obligation to maintain a Participant
Register in accordance with this Section with respect to any participations sold
by Bank in such capacity.

12.3Indemnification.  Borrower agrees to indemnify, defend and hold Collateral
Agent and the Lenders and their respective directors, officers, employees,
agents, attorneys, or any other Person affiliated with or representing
Collateral Agent or the Lenders (each, an “Indemnified Person”) harmless
against:  (i) all obligations, demands, claims, and liabilities (collectively,
“Claims”) claimed or asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (ii) all losses or expenses
(including Lenders’ Expenses) in any way suffered, incurred, or paid by such
Indemnified Person as a result of, following from, consequential to, or arising
from transactions between Collateral Agent, and/or the Lenders and Borrower
(including reasonable attorneys’ fees and expenses), except for Claims and/or
losses and/or expenses (including Lenders’ Expenses) directly caused by such
Indemnified Person’s gross negligence or willful misconduct.

This Section 12.3 shall survive until all statutes of limitation with respect to
the Claims, losses, and expenses for which indemnity is given shall have run.

12.4Time of Essence.  Time is of the essence for the performance of all
Obligations in this Agreement.

12.5Severability of Provisions.  Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

12.6Correction of Loan Documents.  Collateral Agent and the Lenders may correct
patent errors and fill in any blanks in the Loan Documents consistent with the
agreement of the parties so long as Collateral Agent and the Lenders provide
Borrower with written notice of such correction and allows Borrower at least ten
(10) days to object to such correction.  In the event of such objection, such
correction shall not be made except by an amendment signed by Collateral Agent,
the Lenders and Borrower.

12.7Amendments in Writing; Waiver; Integration.  (a) No amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan
Document, no approval or consent thereunder, or any

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consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by Borrower, Collateral Agent and
the Required Lenders provided that:

(i)no such amendment, waiver or other modification that would have the effect of
increasing or reducing a Lender’s Term Loan Commitment or Commitment Percentage
shall be effective as to such Lender without such Lender’s written consent;

(ii)no such amendment, waiver or modification that would affect the rights and
duties of Collateral Agent shall be effective without Collateral Agent’s written
consent or signature;

(iii)no such amendment, waiver or other modification shall, unless signed by all
the Lenders directly affected thereby, (A) reduce the principal of, rate of
interest on or any fees with respect to any Term Loan or forgive any principal,
interest (other than default interest) or fees (other than late charges) with
respect to any Term Loan (B) postpone the date fixed for, or waive, any payment
of principal of any Term Loan or of interest on any Term Loan (other than
default interest) or any fees provided for hereunder (other than late charges or
for any termination of any commitment); (C) change the definition of the term
“Required Lenders” or the percentage of Lenders which shall be required for the
Lenders to take any action hereunder; (D) release all or substantially all of
any material portion of the Collateral, authorize Borrower to sell or otherwise
dispose of all or substantially all or any material portion of the Collateral or
release any Guarantor of all or any portion of the Obligations or its guaranty
obligations with respect thereto, except, in each case with respect to this
clause (D), as otherwise may be expressly permitted under this Agreement or the
other Loan Documents (including in connection with any disposition permitted
hereunder); (E) amend, waive or otherwise modify this Section 12.7 or the
definitions of the terms used in this Section 12.7 insofar as the definitions
affect the substance of this Section 12.7; (F) consent to the assignment,
delegation or other transfer by Borrower of any of its rights and obligations
under any Loan Document or release Borrower of its payment obligations under any
Loan Document, except, in each case with respect to this clause (F), pursuant to
a merger or consolidation permitted pursuant to this Agreement; (G) amend any of
the provisions of Section 9.4 or amend any of the definitions of Pro Rata Share,
Term Loan Commitment, Commitment Percentage or that provide for the Lenders to
receive their Pro Rata Shares of any fees, payments, setoffs or proceeds of
Collateral hereunder; (H) subordinate the Liens granted in favor of Collateral
Agent securing the Obligations; or (I) amend any of the provisions of
Section 12.10.  It is hereby understood and agreed that all Lenders shall be
deemed directly affected by an amendment, waiver or other modification of the
type described in the preceding clauses (C), (D), (E), (F), (G) and (H) of the
preceding sentence;

(iv)the provisions of the foregoing clauses (i), (ii) and (iii) are subject to
the provisions of any interlender or agency agreement among the Lenders and
Collateral Agent pursuant to which any Lender may agree to give its consent in
connection with any amendment, waiver or modification of the Loan Documents only
in the event of the unanimous agreement of all Lenders.

(b)Other than as expressly provided for in Section 12.7(a)(i)‑(iii), Collateral
Agent may, if requested by the Required Lenders, from time to time designate
covenants in this Agreement less restrictive by notification to a representative
of Borrower.

(c)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.

12.8Counterparts.  This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Agreement.

12.9Confidentiality.  In handling any confidential information, the Lenders and
Collateral Agent shall exercise the same degree of care that it exercises for
their own proprietary information, but disclosure of information may be made:
(a) to the Lenders’ and Collateral Agent’s Subsidiaries or Affiliates (such
Subsidiaries and Affiliates, together with the Lenders and Collateral Agent,
collectively, “Lender Entities”); (b) to prospective transferees or purchasers
of any interest in the Credit Extensions (provided, however, the Lenders and
Collateral Agent shall use its

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best efforts to obtain any 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 the Lenders’ and Collateral Agent’s regulators or as
otherwise required in connection with the Lenders’ and Collateral Agent’s
examination or audit; (e) as the Lenders and Collateral Agent consider
appropriate in exercising remedies under the Loan Documents; and (f) to
third-party service providers of the Lenders and Collateral Agent so long as
such service providers have either executed a confidentiality agreement with the
Lenders and Collateral Agent, as applicable, with terms no less restrictive than
those contained herein or are otherwise bound by obligations of
confidentiality.  Confidential information does not include information that is
either: (i) in the public domain or in the Lenders’ and/or Collateral Agent’s
possession when disclosed to the Lenders and/or Collateral Agent through no
fault of the Lenders and Collateral Agent, or becomes part of the public domain
(other than as a result of its disclosure by the Lenders and/or Collateral Agent
in violation of this Agreement) after disclosure to the Lenders and/or
Collateral Agent; or (ii) disclosed to the Lenders and/or Collateral Agent by a
third party, if the Lenders and/or Collateral Agent do not know that the third
party is prohibited from disclosing the information.

Lender Entities may use anonymous forms of confidential information for
aggregate datasets, for analyses or reporting, and for any other uses not
expressly prohibited in writing by Borrower.  The provisions of the immediately
preceding sentence shall survive termination of this Agreement.

12.10Right of Set Off.  Borrower hereby grants to Collateral Agent and to each
Lender, a lien, security interest and right of set off as security for all
Obligations to Collateral Agent and each Lender hereunder, 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
Collateral Agent or the Lenders or any entity under the control of Collateral
Agent or the Lenders (including a Collateral Agent affiliate) 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, Collateral Agent or the Lenders 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
COLLATERAL AGENT 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.

12.11Attorneys’ Fees, Costs and Expenses.  In any action or proceeding between
Borrower and any Lender and/or Collateral Agent arising out of or relating to
the Loan Documents, the prevailing party 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.

12.12Electronic Execution of Documents.  The words “execution,” “signed,”
“signature” and words of like import in any Loan Document shall be deemed to
include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a
manually executed signature or the use of a paper-based recordkeeping systems,
as the case may be, to the extent and as provided for in any applicable law,
including, without limitation, any state law based on the Uniform Electronic
Transactions Act.

12.13Captions.  The headings used in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.

12.14Construction of Agreement.  The parties mutually acknowledge that they and
their attorneys have participated in the preparation and negotiation of this
Agreement.  In cases of uncertainty this Agreement shall be construed without
regard to which of the parties caused the uncertainty to exist.

12.15Relationship.  The relationship of the parties to this Agreement is
determined solely by the provisions of this Agreement.  The parties do not
intend to create any agency, partnership, joint venture, trust, fiduciary or
other relationship with duties or incidents different from those of parties to
an arm’s-length contract.

12.16Third Parties.  Nothing in this Agreement, whether express or implied, is
intended to: (a) confer any benefits, rights or remedies under or by reason of
this Agreement on any persons other than the express parties to it and their
respective permitted successors and assigns; (b) relieve or discharge the
obligation or liability of any person

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not an express party to this Agreement; or (c) give any person not an express
party to this Agreement any right of subrogation or action against any party to
this Agreement.

12.17Cooperation of Borrower.  If necessary, Borrower agrees to (i) execute any
documents (including new Secured Promissory Notes) reasonably required to
effectuate and acknowledge each assignment of a Term Loan Commitment or Loan to
an assignee in accordance with Section 12.2, (ii) make Borrower’s management
available to meet with Collateral Agent and prospective participants and
assignees of Term Loan Commitments or Credit Extensions (which meetings shall be
conducted no more often than twice every twelve months unless an Event of
Default has occurred and is continuing), and (iii) assist Collateral Agent or
the Lenders in the preparation of information relating to the financial affairs
of Borrower as any prospective participant or assignee of a Term Loan Commitment
or Term Loan reasonably may request. Subject to the provisions of Section 12.9,
Borrower authorizes each Lender to disclose to any prospective participant or
assignee of a Term Loan Commitment, any and all information in such Lender’s
possession concerning Borrower and its financial affairs which has been
delivered to such Lender by or on behalf of Borrower pursuant to this Agreement,
or which has been delivered to such Lender by or on behalf of Borrower in
connection with such Lender’s credit evaluation of Borrower prior to entering
into this Agreement.

12.18Effect of Amendment and Restatement.  This Agreement is intended to and
does completely amend and restate, without novation, the Prior Agreement.  All
security interests granted by Borrower under the Prior Agreement are hereby
confirmed and ratified and shall continue to secure all Obligations under this
Agreement. Without limiting the foregoing, any warrant(s) issued in connection
with the Prior Agreement (to the extent not yet exercised, terminated or amended
and restated in connection with this Agreement) remain(s) in full force and
effect.

13AGENT

13.1Appointment and Authorization of Collateral Agent. Each Lender hereby
irrevocably appoints, designates and authorizes Collateral Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. The provisions
of this Article are solely for the benefit of Collateral Agent and the Lenders
and Borrower nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof.  The duties of Collateral Agent
shall be mechanical and administrative in nature.  Notwithstanding any provision
to the contrary contained elsewhere herein or in any other Loan Document,
Collateral Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against
Collateral Agent. Without limiting the generality of the foregoing sentence, the
use of the term “collateral agent” herein and in the other Loan Documents with
reference to Collateral Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
law. Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.  Without limiting the generality of the
foregoing, Collateral Agent shall have the sole and exclusive right and
authority (to the exclusion of the Lenders), and is hereby authorized, to (a)
act as collateral agent for Collateral Agent and each Lender for purposes of the
perfection of all liens created by the Loan Documents and all other purposes
stated therein, (b) manage, supervise and otherwise deal with the Collateral,
(c) take such other action as is necessary or desirable to maintain the
perfection and priority of the liens created or purported to be created by the
Loan Documents, (d) except as may be otherwise specified in any Loan Document,
exercise all remedies given to Collateral Agent and the other Lenders with
respect to the Collateral, whether under the Loan Documents, applicable law or
otherwise and (e) execute any amendment, consent or waiver under the Loan
Documents on behalf of any Lender that has consented in writing to such
amendment, consent or waiver; provided, however, that Collateral Agent hereby
appoints, authorizes and directs each Lender to act as collateral sub-agent for
Collateral Agent and the Lenders for purposes of the perfection of all liens
with respect to the Collateral, including any deposit account maintained by
Borrower with, and cash and cash equivalents held by, such Lender, and may
further authorize and direct the Lenders to take further actions as collateral
sub-agents for purposes of enforcing such liens or otherwise to transfer the
Collateral subject thereto to Collateral Agent, and each Lender hereby agrees to
take such further actions to the extent, and only to the extent, so authorized
and directed.  

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13.2Successor Agent.

(a)Collateral Agent may at any time assign its rights, powers, privileges and
duties hereunder to (i) another Lender or an Affiliate of Collateral Agent or
any Lender or any Approved Fund, or (ii) any Person to whom Collateral Agent, in
its capacity as a Lender, has assigned (or will assign, in conjunction with such
assignment of agency rights hereunder) fifty percent (50%) or more of the Credit
Extensions or Term Loan Commitments then held by Collateral Agent (in its
capacity as a Lender), in each case without the consent of the Lenders or
Borrower.  Following any such assignment, Agent shall give notice to the Lenders
and Borrower.  An assignment by Collateral Agent pursuant to this subsection (a)
shall not be deemed a resignation by Collateral Agent for purposes of subsection
(b) below.

(b)Without limiting the rights of Collateral Agent to designate an assignee
pursuant to subsection (a) above, Collateral Agent may at any time give notice
of its resignation to the Lenders and Borrower.  Upon receipt of any such notice
of resignation, Required Lenders shall have the right to appoint a successor
Collateral Agent in consultation with Borrower; provided that no such
consultation shall be required (i) for the appointment of any Lender or any
Affiliate thereof or (ii) if an Event of Default has occurred and is
continuing.  If no such successor shall have been so appointed by Required
Lenders and shall have accepted such appointment within ten (10) Business Days
after the retiring Agent gives notice of its resignation, then the retiring
Collateral Agent may, on behalf of the Lenders, appoint a successor Collateral
Agent; provided, however, that if Collateral Agent shall notify Borrower and the
Lenders that no Person has accepted such appointment, then such resignation
shall nonetheless become effective in accordance with such notice from
Collateral Agent that no Person has accepted such appointment and, from and
following delivery of such notice, (i) the retiring Collateral Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents, and (ii) all payments, communications and determinations provided to
be made by, to or through Collateral Agent shall instead be made by or to each
Lender directly, until such time as Required Lenders appoint a successor
Collateral Agent as provided for above in this subsection (b).  

(c)Upon (i) an assignment permitted by subsection (a) above, or (ii) the
acceptance of a successor’s appointment as Collateral Agent pursuant to
subsection (b) above, such successor shall succeed to and become vested with all
of the rights, powers, privileges and duties of the retiring (or retired)
Collateral Agent, and the retiring Collateral Agent shall be discharged from all
of its duties and obligations hereunder and under the other Loan Documents (if
not already discharged therefrom as provided above in this subsection (c)).  The
fees payable by Borrower to a successor Collateral Agent shall be the same as
those payable to its predecessor unless otherwise agreed between Borrower and
such successor.  After the retiring Collateral Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Article shall continue in
effect for the benefit of such retiring Agent and its sub-agents in respect of
any actions taken or omitted to be taken by any of them while the retiring
Collateral Agent was acting or was continuing to act as Collateral Agent.

13.3Delegation of Duties. Collateral Agent may execute any of its duties under
this Agreement or any other Loan Document by or through its, or its Affiliates’,
agents, employees or attorneys-in-fact and shall be entitled to obtain and rely
upon the advice of counsel and other consultants or experts concerning all
matters pertaining to such duties. Collateral Agent shall not be responsible for
the negligence or misconduct of any agent or attorney-in-fact that it selects in
the absence of gross negligence or willful misconduct.  Any such Person to whom
Collateral Agent delegates a duty shall benefit from this Article 13 to the
extent provided by Collateral Agent.

13.4Liability of Collateral Agent. Except as otherwise provided herein, no
“Agent-Related Person” (as defined  below) shall (a) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own (and with respect to Collateral Agent, its, its Affiliates,
and their officers, directors, employees, agents, advisors, auditors and
attorneys-in-fact of such Persons) gross negligence or willful misconduct in
connection with its duties expressly set forth herein), or (b) be responsible in
any manner to any Lender or participant for any recital, statement,
representation or warranty made by any Borrower or any officer thereof,
contained herein or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
or participant to ascertain or to inquire as to the observance

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or performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the Collateral, other
properties or books or records of Borrower or any Affiliate thereof.  The term
“Agent-Related Person” means the Collateral Agent, together with its Affiliates,
and the officers, directors, employees, agents, advisors, auditors and
attorneys-in-fact of such Persons; provided, however, that no Agent-Related
Person shall be an Affiliate of Borrower.

13.5Reliance by Collateral Agent. Collateral Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, communication,
signature, resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, electronic mail
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to Borrower), independent accountants and other experts selected by Collateral
Agent. Collateral Agent shall be fully justified in failing or refusing to take
any action under any Loan Document (a) if such action would, in the opinion of
Collateral Agent, be contrary to law or any Financing Document, (b) if such
action would, in the opinion of Collateral Agent, expose Collateral Agent to any
potential liability under any law, statute or regulation or (c) if Collateral
Agent shall not first have received such advice or concurrence of all Lenders as
it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of all Lenders (or Required Lenders where
authorized herein) and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.

13.6Notice of Default. Collateral Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default and/or Event of Default, unless
Collateral Agent shall have received written notice from a Lender or Borrower,
describing such default or Event of Default. Agent will notify the Lenders of
its receipt of any such notice. While an Event of Default has occurred and is
continuing, Collateral Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Event of
Default as Collateral Agent shall deem advisable or in the best interest of the
Lenders, including without limitation,  satisfaction of other security
interests, liens or encumbrances on the Collateral not permitted under the Loan
Documents, payment of taxes on behalf of Borrower, payments to landlords,
warehouseman, bailees and other Persons in possession of the Collateral and
other actions to protect and safeguard the Collateral, and actions with respect
to insurance claims for casualty events affecting Borrower and/or the
Collateral.

13.7Credit Decision; Disclosure of Information by Collateral Agent. Each Lender
acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by Collateral Agent hereafter taken, including
any consent to and acceptance of any assignment or review of the affairs of
Borrower or any Affiliate thereof, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender as to any
matter, including whether Agent-Related Persons have disclosed material
information in their possession. Each Lender represents to Collateral Agent that
it has, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of, and investigation into, the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower, and
all applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrower hereunder. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by Collateral Agent herein,
Collateral Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of
Borrower which may come into the possession of any Agent-Related Person.

13.8Indemnification of Collateral Agent. Whether or not the transactions
contemplated hereby are consummated, each  Lender shall, severally and pro rata
based on its respective Pro Rata Share, indemnify upon demand each Agent-Related
Person (to the extent not reimbursed by or on behalf of Borrower and without
limiting the obligation of Borrower to do so), and hold harmless each
Agent-Related Person from and against any and all

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Indemnified Liabilities (which shall not include legal expenses of Collateral
Agent incurred in connection with the closing of the transactions contemplated
by this Agreement) incurred by it; provided, however, that no Lender shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a judgment by a court of
competent jurisdiction to have resulted from such Agent-Related Person’s own
gross negligence or willful misconduct; provided, however, that no action taken
in accordance with the directions of the Required Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this Section.
Without limitation of the foregoing, each Lender shall, severally and pro rata
based on its respective Pro Rata Share, reimburse Collateral Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including Lenders’
Expenses incurred after the closing of the transactions contemplated by this
Agreement) incurred by Collateral Agent (in its capacity as Collateral Agent,
and not as a Lender) in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that
Collateral Agent is not reimbursed for such expenses by or on behalf of
Borrower. The undertaking in this Section shall survive the payment in full of
the Obligations, the termination of this Agreement and the resignation of
Agent.  The term “Indemnified Liabilities” means those liabilities described in
Section 12.3.

13.9Collateral Agent in its Individual Capacity.  With respect to its Credit
Extensions, Bank shall have the same rights and powers under this Agreement as
any other Lender and may exercise such rights and powers as though it were not
Collateral Agent, and the terms “Lender” and “Lenders” include Bank in its
individual capacity. Bank and its Affiliates may lend money to, invest in, and
generally engage in any kind of business with, Borrower and any of its
Affiliates and any person who may do business with or own securities of Borrower
or any of its Affiliates, all as if Bank were not Collateral Agent and without
any duty to account therefor to Lenders.  Bank and its Affiliates may accept
fees and other consideration from Borrower for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.  Each
Lender acknowledges the potential conflict of interest between Bank as a Lender
holding disproportionate interests in the Credit Extensions and Bank as Agent,
and expressly consents to, and waives, any claim based upon, such conflict of
interest.

13.10Collateral Agent May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, examinership, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
Borrower, Collateral Agent (irrespective of whether the principal of any Credit
Extension, shall then be due and payable as herein expressed or by declaration
or otherwise and irrespective of whether Collateral Agent shall have made any
demand on Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

(a)to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Credit Extensions and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and Collateral Agent
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Lenders and Collateral Agent and their respective agents and
counsel and all other amounts due the Lenders and Collateral Agent allowed in
such judicial proceeding); and

(b)to collect and receive any monies or other property payable or deliverable on
any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to Collateral Agent and, in the event that
Collateral Agent shall consent to the making of such payments directly to the
Lenders, to pay to Collateral Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Collateral Agent and its
agents and counsel, including Lenders’ Expenses.  To the extent that Collateral
Agent fails timely to do so, each Lender may file a claim relating to such
Lender’s claim.

 

13.11Collateral and Guaranty Matters. The Lenders irrevocably authorize
Collateral Agent, at its option and in its discretion, to release (a) Borrower
and any Lien on any Collateral granted to or held by Collateral Agent under any
Loan Document (i) in accordance with Article 9 hereof or (ii) upon the date that
all Obligations (other than inchoate indemnity obligations for which no claim
has yet been made and any other obligations which, by their

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terms, are to survive the termination of this Agreement) due hereunder have been
fully and indefeasibly paid in full and no Term Loan Commitments or other
obligations of any Lender to provide funds to Borrower under this Agreement
remain outstanding, and (b) any Lien on any Collateral that is transferred or to
be transferred as part of or in connection with any disposition or transfer
permitted hereunder or under any other Loan Document. Upon request by Collateral
Agent at any time, all Lenders will confirm in writing Collateral Agent’s
authority to release its interest in particular types or items of Collateral
pursuant to this Section 13.11.

13.12Advances; Payments; Non-Funding Lenders.

(a)Advances; Payments.  If Collateral Agent receives any payment for the account
of Lenders on or prior to 3:00 p.m. (Eastern time) on any Business Day,
Collateral Agent shall pay to each applicable Lender such Lender’s Pro Rata
Share of such payment on such Business Day. If Collateral Agent receives any
payment for the account of Lenders after 12:00 p.m. (Pacific time) on any
Business Day, Collateral Agent shall pay to each applicable Lender such Lender’s
Pro Rata Share of such payment on the next Business Day. To the extent that any
Lender has failed to fund any Credit Extension when required to fund a Credit
Extension pursuant to the terms of this Agreement (a “Non-Funding Lender”),
Collateral Agent shall be entitled to set-off the funding short-fall against
that Non-Funding Lender’s Pro Rata Share of all payments received from Borrower.

(b)Return of Payments.

(i)If Collateral Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Collateral Agent from Borrower and such related payment is not received by
Collateral Agent, then Collateral Agent will be entitled to recover such amount
(including interest accruing on such amount at the Federal Funds Rate for the
first Business Day and thereafter, at the rate otherwise applicable to such
Obligation) from such Lender on demand without set-off, counterclaim or
deduction of any kind.  

(ii)If Collateral Agent determines at any time that any amount received by
Collateral Agent under this Agreement must be returned to Borrower or paid to
any other person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Collateral Agent will not be required to distribute any portion
thereof to any Lender.  In addition, each Lender will repay to Collateral Agent
on demand any portion of such amount that Collateral Agent has distributed to
such Lender, together with interest at such rate, if any, as Collateral Agent is
required to pay to Borrower or such other person, without set-off, counterclaim
or deduction of any kind.

13.13Miscellaneous.

(a)Neither Collateral Agent nor any Lender shall be responsible for the failure
of any Non-Funding Lender to make a Credit Extension or make any other advance
required hereunder.  The failure of any Non‑Funding Lender to make any Credit
Extension or any payment required by it hereunder shall not relieve any other
Lender (each such other Lender, an “Other Lender”) of its obligations to make
the Credit Extension or payment required by it, but neither any Other Lender nor
Agent shall be responsible for the failure of any Non-Funding Lender to make a
Credit Extension or make any other payment required hereunder.  Notwithstanding
anything set forth herein to the contrary, a Non-Funding Lender shall not have
any voting or consent rights under or with respect to any Loan Document or
constitute a “Lender” (or be included in the calculation of “Required Lender”
hereunder) for any voting or consent rights under or with respect to any Loan
Document.  At Borrower’s request, Collateral Agent or a person reasonably
acceptable to Collateral Agent shall have the right with Collateral Agent’s
consent and in Collateral Agent’s sole discretion (but shall have no obligation)
to purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that
it shall, at Collateral Agent’s request, sell and assign to Collateral Agent or
such person, all of the Term Loan Commitments and all of the outstanding Credit
Extensions of that Non-Funding Lender for an amount equal to the principal
balance of the Credit Extensions held by such Non-Funding Lender and all accrued
interest and fees with respect thereto through the date of sale, such purchase
and sale to be consummated pursuant to an executed assignment agreement
reasonably acceptable to Collateral Agent.

(b)Each Lender shall promptly remit to the other Lenders such sums as may be
necessary to ensure the ratable repayment of each Lender’s portion of any Credit
Extension and the ratable distribution of interest,

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fees and reimbursements paid or made by Borrower.  Notwithstanding the
foregoing, if this Agreement requires payments of principal and interest to be
made directly to the Lenders, a Lender receiving a scheduled payment shall not
be responsible for determining whether the other Lenders also received their
scheduled payment on such date; provided, however, if it is determined that a
Lender received more than its ratable share of scheduled payments made on any
date or dates, then such Lender shall remit to the Collateral Agent (for
Collateral Agent to redistribute to itself and the Lenders in a manner to ensure
the payment to Collateral Agent of any sums due Collateral Agent hereunder and
the ratable repayment of each Lender’s portion of any Credit Extension and the
ratable distribution of interest, fees and reimbursements) such sums as may be
necessary to ensure the ratable payment of such scheduled payments, as
instructed by Collateral Agent.  If any payment or distribution of any kind or
character, whether in cash, properties or securities and whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise, shall
be received by a Lender in excess of its ratable share, then (i) the portion of
such payment or distribution in excess of such Lender’s ratable share shall be
received by such Lender in trust for application to the payments of amounts due
on the other Lender’s claims, or, in the case of Collateral, shall hold such
Collateral for itself and as agent and bailee for the Collateral Agent and other
Lenders and (ii) such Lender shall promptly advise the Collateral Agent of the
receipt of such payment, and, within five (5) Business Days of such receipt and,
in the case of payments and distributions, such Lender shall purchase (for cash
at face value) from the other Lenders (through the Collateral Agent), without
recourse, such participations in the Credit Extension made by the other Lenders
as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them in accordance with the respective Pro Rata
Shares of the Lenders; provided, however, that if all or any portion of such
excess payment is thereafter recovered by or on behalf of Borrower from such
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest; provided,
further, that the provisions of this Section shall not be construed to apply to
(x) any payment made by Borrower pursuant to and in accordance with the express
terms of this Agreement or the other Loan Documents, or (y) any payment obtained
by a Lender as consideration for the assignment of or sale of a participation in
any of its Term Loan Commitment pursuant to Section 12.2.  Borrower agrees that
any Lender so purchasing a participation from another Lender pursuant to this
Section may exercise all its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Lender were the direct
creditor of Borrower in the amount of such participation.  No documentation
other than notices and the like shall be required to implement the terms of this
Section.  The Collateral Agent shall keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased pursuant
to this Section and shall in each case notify the Lenders following any such
purchases.

14DEFINITIONS

14.1Definitions.  As used in the Loan Documents, the word “shall” is mandatory,
the word “may” is permissive, the word “or” is not exclusive, the words
“includes” and “including” are not limiting, the singular includes the plural,
and numbers denoting amounts that are set off in brackets are negative.  As used
in this Agreement, the following capitalized 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.

“Affiliate” is, with respect to any Person, each other 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-Related Person” is defined in Section 13.4.

“Agreement” is defined in the preamble hereof.

“Amortization Start Date” is November 1, 2019, provided, that if the Term C Loan
is made during the Term C Loan Draw Period, then the “Amortization Start Date”
shall be January 1, 2020.

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“Anti‑Terrorism Laws” are any laws relating to terrorism or money laundering,
including Executive Order No. 13224 (effective September 24, 2001), the USA
PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the
laws administered by OFAC.

“Approved Fund” is any (i) investment company, fund, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business or (ii) any Person (other than a natural
person) which temporarily warehouses loans for any Lender or any entity
described in the preceding clause (i) and that, with respect to each of the
preceding clauses (i) and (ii), is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) a Person (other than a natural person) or an
Affiliate of a Person (other than a natural person) that administers or manages
a Lender.

“Approved Lender” is defined in Section 12.2.

“Authorized Signer” is any individual listed in Borrower’s Borrowing Resolution
who is authorized to execute the Loan Documents, including any Advance request,
on behalf of Borrower.

“Bank” is defined in the preamble hereof.

“Bank Services”  are any products, credit services, and/or financial
accommodations previously, now, or hereafter provided to Borrower or any of its
Subsidiaries by Bank or any of Bank Affiliate, including, without limitation,
any Letters of Credit, cash management services (including, without limitation,
merchant services, direct deposit of payroll, business credit cards, and check
cashing services), interest rate swap arrangements, and foreign exchange
services as any such products or services may be identified in Bank’s various
agreements related thereto (each, a “Bank Services Agreement”); provided that
the total amount of Bank Services and all Obligations in respect of Bank
Services shall not exceed (A) Two Hundred Fifty Thousand Dollars ($250,000)
(exclusive of any Subject Letters of Credit and (B) One Million Dollars
($1,000,000) (inclusive of any Subject Letters of Credit), in the aggregate at
any time.

“Bank Services Collateral” is cash collateral acceptable to Bank in its good
faith business judgment, which may be used solely for the purpose of cash
collateralizing Bank Services, not to exceed the lesser of (i) the total amount
of outstanding obligations of Borrower and its Subsidiaries in respect of Bank
Services then outstanding and (ii) (A) Two Hundred Fifty Thousand Dollars
($250,000) (exclusive of any Subject Letters of Credit and (B) One Million
Dollars ($1,000,000) (inclusive of any Subject Letters of Credit) (in each case
under clauses (A) or (B) reduced on a dollar-for-dollar basis to the extent Bank
Services Collateral is applied to pay amounts owed by Borrower or its
Subsidiaries in respect of Bank Services) in the aggregate at any time. 

“Basic Rate” is with respect to the Term Loans, the per annum rate of interest
(based on a year of three hundred sixty (360) days) equal to the sum of (a) the
greater of (i) the thirty (30) day U.S. DOLLAR LIBOR rate reported in The Wall
Street Journal on the last Business Day of the month that immediately precedes
the month in which the interest will accrue and (ii) one and eighty-nine
hundredths of one percent (1.89%) plus (b) six and one half of one percent
(6.50%).  For the avoidance of doubt, in no event will the Basic Rate equal less
than eight and fourteen hundredths of one percent (8.14%).  

“Blocked Person” is any Person:  (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order No.
13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti‑Terrorism Law, (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.

“Borrower” is defined in the preamble hereof.

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“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 Resolutions” are, with respect to any Person, those resolutions
substantially in the form attached hereto as Exhibit D.

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

“Cash Equivalents” 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) money market
funds at least ninety-five percent (95%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (c) of this
definition.

“Change in Control” means (a) at any time, any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), shall become, or obtain rights (whether
by means or warrants, options or otherwise) to become, the “beneficial owner”
(as defined in Rules 13(d)-3 and 13(d)‑5 under the Exchange Act), directly or
indirectly, of forty-nine percent (49%) or more of the ordinary voting power for
the election of directors of Borrower (determined on a fully diluted basis); (b)
during any period of twelve (12) consecutive months, a majority of the members
of the board of directors or other equivalent governing body of Borrower cease
to be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body; or (c) at any time,
Borrower shall cease to own and control, of record and beneficially, directly or
indirectly, one hundred percent (100%) of each class of outstanding capital
stock of each subsidiary of Borrower.

“Claims” are defined in Section 12.3.

“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of California; 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, Collateral Agent’s Lien on any Collateral is governed by the Uniform
Commercial Code in effect in a jurisdiction other than the State of California,
the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction 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.

“Collateral Agent” is, Bank, not in its individual capacity, but solely in its
capacity as agent on behalf of and for the benefit of the Lenders.

“Commitment Percentage” is set forth in Schedule 1.1, as amended from time to
time.

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

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“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, in each
case, 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.

“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 Collateral Agent pursuant to which
Collateral Agent obtains control (within the meaning of the Code) over such
Deposit Account, Securities Account, or Commodity Account.

“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.

“Credit Extension” is any Term Loan or any other extension of credit by
Collateral Agent or Lenders for Borrower’s benefit.

“Currency” is coined money and such other banknotes or other paper money as are
authorized by law and circulate as a medium of exchange.

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

“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 the multicurrency account denominated in
Dollars, account number 3301246939, maintained by Borrower with Bank.

“Disbursement Letter” is that certain form attached hereto as Exhibit E.

“Dollars,” “dollars” or use of the sign “$” means only lawful money of the
United States and not any other currency, regardless of whether that currency
uses the “$” sign to denote its currency or may be readily converted into lawful
money of the United States.

“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated
in Dollars, such amount, and (b) with respect to any amount denominated in a
Foreign Currency, the equivalent amount therefor in Dollars as determined by
Bank at such time on the basis of 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.

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

“Effective Date” is defined in the preamble hereof.

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“Eligible Assignee” is (i) a Lender, (ii) an Affiliate of a Lender, (iii) an
Approved Fund and (iv) any commercial bank, savings and loan association or
savings bank or any other entity which is an “accredited investor” (as defined
in Regulation D under the Securities Act of 1933, as amended) and which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies, in
each case, which either (A) has a rating of BBB or higher from Standard & Poor’s
Rating Group and a rating of Baa2 or higher from Moody’s Investors Service, Inc.
at the date that it becomes a Lender or (B) has total assets in excess of Seven
Hundred and Fifty Million Dollars ($750,000,000.00), and in each case of clauses
(i) through (iv), which, through its applicable lending office, is capable of
lending to Borrower without the imposition of any withholding or similar taxes;
provided that notwithstanding the foregoing, “Eligible Assignee” shall not
include, unless an Event of Default has occurred and is continuing, (i) Borrower
or any of Borrower’s Affiliates or Subsidiaries or (ii) a direct competitor of
Borrower or a vulture hedge fund, each as determined by Collateral
Agent.  Notwithstanding the foregoing, (x) in connection with assignments by a
Lender due to a forced divestiture at the request of any regulatory agency, the
restrictions set forth herein shall not apply and Eligible Assignee shall mean
any Person or party and (y) in connection with a Lender’s own financing or
securitization transactions, the restrictions set forth herein shall not apply
and Eligible Assignee shall mean any Person or party providing such financing or
formed to undertake such securitization transaction and any transferee of such
Person or party upon the occurrence of a default, event of default or similar
occurrence with respect to such financing or securitization transaction;
provided that no such sale, transfer, pledge or assignment under this clause (y)
shall release such Lender from any of its obligations hereunder or substitute
any such Person or party for such Lender as a party hereto until Collateral
Agent shall have received and accepted an effective assignment agreement from
such Person or party in form satisfactory to Collateral Agent executed,
delivered and fully completed by the applicable parties thereto, and shall have
received such other information regarding such Eligible Assignee as Collateral
Agent reasonably shall require.

“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.

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

“Existing Lender Debt” is the indebtedness of Borrower to Lenders in the
aggregate principal outstanding amount as of the Effective Date of approximately
Seven Million Two Hundred Thirty Five Thousand Dollars ($7,235,000) pursuant to
the Prior Agreement.

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate quoted to Collateral Agent on such day on such transactions as
determined by Collateral Agent in a commercially reasonable manner.

“Final Payment” is a payment (in addition to and not a substitution for the
regular monthly payments of principal plus accrued interest) due on the earliest
to occur of (a) the Term Loan Maturity Date, or (b) the acceleration of any Term
Loan, or (c) the prepayment of a Term Loan pursuant to Section 2.1.1(c)(i) or
(ii), equal to the original principal amount of such Term Loan multiplied by the
Final Payment Percentage, payable to Lenders in accordance with their respective
Pro Rata Shares.

“Final Payment Percentage” is five and one half percentage points (5.50%).

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

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

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

“FX Contract” is any foreign exchange contract by and between Borrower and Bank
under which Borrower commits to purchase from or sell to Bank a specific amount
of Foreign Currency on a specified date.

“GAAP” is 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 Intellectual Property, claims, income
and other tax refunds, security and other deposits, payment intangibles,
contract rights, 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.

“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

“Governmental Reporting Event” is defined in Section 6.12.

“Guarantor” is any Person providing a Guaranty in respect of the Obligations to
the Collateral Agent for the benefit of the Lenders.

“Guaranty” is any guarantee of all or any part of the Obligations, as the same
may from time to time be amended, restated, modified or otherwise supplemented.

“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, (d) Contingent
Obligations, (e) non-contingent obligations of such Person to reimburse any bank
or other Person in respect of amounts paid under a letter of credit, banker’s
acceptance or similar instrument, (f) equity securities of such Person subject
to repurchase or redemption other than at the sole option of such Person, and
(g) all Indebtedness of others guaranteed by such Person.

“Indemnified Liabilities” is defined in Section 13.8.

“Indemnified Person” is defined in Section 12.3.

“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.

“Intellectual Property” means, with respect to any Person, means all of such
Person’s right, title, and interest in and to the following:

(a)its Copyrights, Trademarks and Patents;

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(b)any and all trade secrets and trade secret rights, including, without
limitation, any rights to unpatented inventions, know-how, operating manuals;

(c)any and all source code;

(d)any and all design rights which may be available to such Person;

(e)any and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
Intellectual Property rights identified above; and

(f)all amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents.

“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” means, with respect to any Person, directly or indirectly, (a) to
purchase or acquire any stock or stock equivalents, or any obligations or other
securities of, or any interest in, any Person, including the establishment or
creation of a Subsidiary, (b) to make or commit to make any acquisition
(including through licensing) of (i) of all or substantially all of the assets
of another Person, or (ii) any business, product, business line or product line,
division or other unit operation of any Person or (c) make or purchase any
advance, loan, extension of credit or capital contribution to, or any other
investment in, any Person.

“Key Person” is each of Borrower’s (a) Chief Executive Officer, who is Daniel H.
White as of the Effective Date, (b) Chief Financial Officer, who is Charles A.
Deignan as of the Effective Date, and (c) Executive VP, Research & Development,
who is Glenn Noronha as of the Effective Date.  

“Lender” is any one of the Lenders.

“Lenders” are the Persons identified on Schedule 1.1 hereto and each assignee
that becomes a party to this Agreement pursuant to Section 12.2.

“Lender Entities” is defined in Section 12.9.

“Lender Transfer” is defined in Section 12.2.

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

“Letter of Credit” is a standby or commercial letter of credit issued by Bank
upon request of Borrower based upon an application, guarantee, indemnity, or
similar agreement.

“License Agreement” is a license or sublicense agreement or other agreement with
respect to rights in Intellectual Property.

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.

“Loan Documents” are, collectively, this Agreement, the Perfection Certificate,
each Compliance Certificate, each Disbursement Letter, each Loan Payment/Advance
Request Form, each Guaranty, any subordination

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agreements, any note, or notes or guaranties executed by Borrower or any other
Person, and any other present or future agreement entered into by Borrower, any
Guarantor or any other Person for the benefit of the Lenders and Collateral
Agent 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 Collateral Agent’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; or (c) a material impairment of
the prospect of repayment of any portion of the Obligations.

“Monthly Financial Statements” is defined in Section 6.2(a).

“Non-Funding Lender” is defined in 13.12(a).

“Obligations” are Borrower’s obligations to pay when due any debts, principal,
interest, fees, Lenders’ Expenses, indemnities and other amounts Borrower owes
Collateral Agent or the Lenders now or later, under this Agreement or the other
Loan Documents (other than the Warrants), including, without limitation,
interest accruing after Insolvency Proceedings begin (whether or not allowed)
and debts, liabilities, or obligations of Borrower assigned to the Lenders
and/or Collateral Agent, to perform Borrower’s duties under the Loan Documents
(other than the Warrants) and in respect of Bank Services (subject to reduction
on a dollar for dollar basis by the amount of Bank Services Collateral, if any).

“OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

“OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed.
Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified by the Secretary of State (or equivalent agency) of such Person’s
jurisdiction of organization 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.

“Other Lender” is defined in Section 13.13(a).

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

“Payment Date” is the first (1st) calendar day of each calendar month,
commencing on June 1, 2018.

“Payment/Advance Form” is that certain form attached hereto as Exhibit C.

“Perfection Certificate” is defined in Section 5.1.

“Permitted Indebtedness” is:

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

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

(c)Subordinated Debt;

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

(e)Indebtedness incurred as a result of endorsing negotiable instruments
received in the ordinary course of business;

(f)Indebtedness secured by Liens permitted under clauses (a) and (c) of the
definition of “Permitted Liens” hereunder;

(g)Indebtedness of Borrower to any Subsidiary and Contingent Obligations of any
Subsidiary with respect to obligations of Borrower (provided that the primary
obligations are not prohibited hereby), and Indebtedness of any Subsidiary to
Borrower in an aggregate principal amount not to exceed Two Hundred Fifty
Thousand Dollars ($250,000) or any other Subsidiary and Contingent Obligations
of any Subsidiary with respect to obligations of any other Subsidiary (provided
that the primary obligations are not prohibited hereby);

(h)extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (g) 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; and

(i)Bank Services permitted pursuant to this Agreement to the extent they
constitute Indebtedness and are not Obligations hereunder.

“Permitted Investments” are:

(a)Investments (including, without limitation, Subsidiaries) existing on the
Effective Date and shown on the Perfection Certificate;

(b)Investments consisting of Cash Equivalents held by Borrower;

(c)Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
Borrower;

(d)Investments consisting of deposit accounts in which Collateral Agent has a
perfected security interest;

(e)Investments accepted in connection with Transfers permitted by Section 7.1;

(f)Investments (i) by Borrower in Subsidiaries not to exceed Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate in any fiscal year and (ii) by
Subsidiaries in other Subsidiaries not to exceed Two Hundred Fifty Thousand
Dollars ($250,000) in the aggregate in any fiscal year or in Borrower;

(g)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, in an
aggregate amount outstanding at any time not to exceed Two Hundred Fifty
Thousand Dollars ($250,000) for (i) and (ii);

(h)Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business;

(i)Investments consisting of notes receivable of, or prepaid royalties and other
credit extensions, to customers and suppliers who are not Affiliates, in the
ordinary course of business; provided that this paragraph (j) shall not apply to
Investments of Borrower in any Subsidiary; and

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(j)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 Two Hundred Fifty Thousand
Dollars ($250,000) in the aggregate in any fiscal year.

“Permitted License” is (a) any non-exclusive license of patent rights of
Borrower or its Subsidiaries so long as all such Permitted Licenses are grated
to third parties in the ordinary course of business, do not result in a legal
transfer of title to the licensed property, and have been granted in exchange
for fair consideration, and (b) any exclusive license of patent rights of
Borrower or its Subsidiaries so long as such Permitted Licenses do not result in
a legal transfer of title to the licensed property, are exclusive solely as to
discrete geographical areas outside of the United States, and have been granted
in exchange for fair consideration.

“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 (i) not due and payable or (ii) being contested in good faith and for
which Borrower maintains adequate reserves on its Books, provided that no notice
of any such Lien has been filed or recorded under the Internal Revenue Code of
1986, as amended, and the Treasury Regulations adopted thereunder;

(c)purchase money Liens and capital leases (i) on Equipment acquired or held by
Borrower incurred for financing the acquisition of the Equipment securing no
more than Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate amount
outstanding, or (ii) existing on Equipment when acquired, if the Lien is
confined to the property and improvements and the proceeds of the Equipment;

(d)Liens of carriers, warehousemen, suppliers, or other Persons that are
possessory in nature arising in the ordinary course of business so long as such
Liens attach only to Inventory, securing liabilities in the aggregate amount not
to exceed Two Hundred Fifty Thousand Dollars ($250,000) and which are not
delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;

(e)Liens to secure payment of workers’ compensation, employment insurance,
old-age pensions, social security and other like obligations incurred in the
ordinary course of business (other than Liens imposed by ERISA);

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

(g)leases or subleases of real property granted in the ordinary course of
Borrower’s business (or, if referring to another Person, in the ordinary course
of such Person’s business), and leases, subleases, non-exclusive licenses or
sublicenses of personal property (other than Intellectual Property) granted in
the ordinary course of Borrower’s business (or, if referring to another Person,
in the ordinary course of such Person’s business), if the leases, subleases,
licenses and sublicenses do not prohibit granting Collateral Agent a security
interest therein;

(h)Permitted Licenses;

(i)Liens arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default under Sections 8.4 and 8.7;

(j)Easements, reservations, rights-of-way, restrictions, minor defects or
irregularities in title and other similar Liens affecting real property not
interfering in any material respect with the ordinary course of the business of
Borrower;

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(k)deposits to secure the performance of leases incurred in the ordinary course
of business and not representing an obligation for borrowed money so long as
each such deposit: (1) is made at the commencement of a lease or its renewal
when there is no underlying default under such lease, and (2) is in an amount
not exceeding Two Hundred Fifty Thousand Dollars ($250,000) less the face amount
of any outstanding Subject Letters of Credit;

(l)deposits to secure the performance of bids, trade contracts (other than for
borrowed money), contracts for the purchase of property permitted hereunder,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case, incurred in the ordinary course of
business not representing an obligation for borrowed money in an amount not to
exceed Two Hundred Fifty Thousand Dollars ($250,000);

(m)Liens in favor of other financial institutions arising in connection with
Borrower’s deposit and/or securities accounts held at such institutions,
provided that Bank has a perfected security interest in the amounts held in such
deposit and/or securities accounts, subject to Section 6.6; and

(n)Liens in the form of Bank Services Collateral.

“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.

“Prior Agreement” is defined in the preamble hereof.

“Prior Effective Date” means the “Effective Date” of the Prior Agreement.

“Pro Rata Share” is, as of any date of determination, with respect to each
Lender, a percentage (expressed as a decimal, rounded to the ninth decimal
place) determined by dividing the outstanding principal amount of Term Loans
held by such Lender by the aggregate outstanding principal amount of all Term
Loans.

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

“Required Lenders” means, unless all of the Lenders and Collateral Agent agree
otherwise in writing, Lenders having (a) more than fifty percent (50%) of the
Term Loan Commitments of all Lenders, or (b) if such Term Loan Commitments have
expired or been terminated, more than fifty percent (50%) of the aggregate
outstanding principal amount of the Credit Extensions; provided, that, at any
time when there are two (2) or more unaffiliated Lenders, Required Lenders must
include at least two (2) unaffiliated Lenders.  For purposes of determining the
number of unaffiliated Lenders under this definition, a Lender and any other
Lenders that are Affiliates or Approved Funds of such Lender shall be counted as
a single Lender.

“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.

“Responsible Officer” is any of the President & Chief Executive Officer, Chief
Financial Officer and Executive VP, Research & Development of Borrower.  

“Restricted License” is 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.

“SEC” shall mean the Securities and Exchange Commission, any successor thereto,
and any analogous Governmental Authority.

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“Secured Promissory Note” is defined in Section 2.4.

“Secured Promissory Note Record” is a record maintained by each Lender with
respect to the outstanding Obligations owed by Borrower to Lender and credits
made thereto.

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

“Subject Letters of Credit” means, any letter of credit issued by Bank to secure
certain lease obligations of Borrower and any additional or replacement letters
of credit to the extent that they serve to secure such lease obligations of
Borrower and so long as the aggregate amount of all such Subject Letters of
Credit does not exceed the sum of One Million Dollars ($1,000,000) less the
amount of any other outstanding Bank Services.

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

“Subsidiary” is, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person.  Unless the context otherwise requires, each reference
to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

“Term Loan” is defined in Section 2.1.1(a)(ii) hereof.

“Term A Loan” is defined in Section 2.1.1(a)(i) hereof.

“Term B Loan” is defined in Section 2.1.1(a)(ii) hereof.

“Term B Loan Data Milestone Event” means confirmation by Collateral Agent that
Collateral Agent and each Lender has received evidence, in form and substance
reasonably satisfactory to Collateral Agent and each Lender, that Borrower has
produced positive Phase 3 data meeting primary endpoints from the CLS-1003 Phase
3 trial in RVO (SAPPHIRE).

“Term B Loan Draw Period” is the period commencing on the later of (i) the
occurrence of the Term B Loan Data Milestone Event and (ii) October 31, 2018 and
ending on the earlier of (i) March 31, 2019, and (ii) the occurrence of an Event
of Default.

“Term C Loan” is defined in Section 2.1.1(a)(iii) hereof.

“Term C Loan Data Milestone Event” means confirmation by Collateral Agent that
Collateral Agent and each Lender has received evidence, in form and substance
reasonably satisfactory to Collateral Agent and each Lender, that the U.S. Food
& Drug Administration has accepted the NDA on CLS-1001 (Uveitis) filed by
Borrower.

“Term C Loan Draw Period” is the period commencing on the later of (i) the
occurrence of the Term C Loan Data Milestone Event and (ii) October 31, 2018 and
ending on the earlier of (i) March 31, 2019, and (ii) the occurrence of an Event
of Default.

“Term Loan Commitment” is, for any Lender, the obligation of such Lender to make
a Term Loan, up to the principal amount shown on Schedule 1.1.  “Term Loan
Commitments” means the aggregate amount of such commitments of all Lenders.

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“Term Loan Maturity Date” is, for each Term Loan, October 1, 2022.

“Term Loan Payment” is defined in Section 2.1.1(b) hereof.

“Termination Fee” is defined in Section 2.5(b).

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.

“Transfer” is defined in Section 7.1.

“Warrants” are those certain Warrants to Purchase Stock dated as of the Prior
Effective Date, or any date theretofore or thereafter, issued by Borrower in
favor of each Lender or such Lender’s Affiliates.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Effective Date.

BORROWER:

 

 

 

 

 

CLEARSIDE BIOMEDICAL, INC.

 

 

 

 

 

By /s/ Daniel H. White

 

 

Name:  Daniel H. White

 

 

Title:    President & CEO

 

 

 

 

 

 

COLLATERAL AGENT AND LENDER:

 

 

 

 

 

SILICON VALLEY BANK

 

 

 

 

 

By /s/ Scott McCarty

 

 

Name:  Scott McCarty

 

 

Title:    Director

 

 

 

 

 

 

LENDER:

 

 

 

 

 

MIDCAP FINANCIAL TRUST

 

with a copy to:

 

 

 

By: Apollo Capital Management, L.P.,

 

c/o MidCap Financial Services, LLC, as servicer

its investment manager

 

7255 Woodmont Avenue, Suite 200

 

 

Bethesda, Maryland 20814

By: Apollo Capital Management GP, LLC,its general partner

 

 

 

Attn:  General Counsel

 

 

Facsimile:  301-941-1450

By /s/Maurice Amsellem

 

E-mail:  legalnotices@midcapfinancial.com

Name:  Maurice Amsellem

 

 

Title:    Authorized Signatory

 

 

 

 

 

MIDCAP FUNDING III TRUST

 

with a copy to:

 

 

 

By: Apollo Capital Management, L.P.,

 

c/o MidCap Financial Services, LLC, as servicer

its investment manager

 

7255 Woodmont Avenue, Suite 200

 

 

Bethesda, Maryland 20814

By: Apollo Capital Management GP, LLC,its general partner

 

 

 

Attn:  General Counsel

 

 

Facsimile:  301-941-1450

By /s/Maurice AMsellem

 

E-mail:  legalnotices@midcapfinancial.com

Name:  Maurice Amsellem

 

 

Title:    Authorized Signatory

 

 

 

 

 

[Signature Page to Second Amended and Restated Loan and Security Agreement]

 

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

 

SCHEDULE 1.1

Lenders and Commitments

 

Term A Loans

 

Lender

Term Loan Commitment

Commitment Percentage

SILICON VALLEY BANK

$5,000,000.00

50.00%

MIDCAP FINANCIAL TRUST

$3,500,000.00

35.00%

MIDCAP FUNDING III TRUST

$1,500,000.00

15.00%

TOTAL

$10,000,000.00

100.00%

 

 

Term B Loans

 

Lender

Term Loan Commitment

Commitment Percentage

SILICON VALLEY BANK

$2,500,000.00

50.00%

MIDCAP FINANCIAL TRUST

$2,500,000.00

50.00%

TOTAL

$5,000,000.00

100.00%

 

Term C Loans

Lender

Term Loan Commitment

Commitment Percentage

SILICON VALLEY BANK

$2,500,000.00

50.00%

MIDCAP FINANCIAL TRUST

$2,500,000.00

50.00%

TOTAL

$5,000,000.00

100.00%

 

Aggregate (all Term Loans)

 

Lender

Term Loan Commitment

Commitment Percentage

SILICON VALLEY BANK

$10,000,000.00

50.00%

MIDCAP FINANCIAL TRUST

$8,500,000.00

42.50%

MIDCAP FUNDING III TRUST

$1,500,000.00

   7.50%

TOTAL

$20,000,000.00

100.00%

 

 

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

 

EXHIBIT A

COLLATERAL DESCRIPTION

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, 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 Intellectual
Property; provided, however, the Collateral shall include all License
Agreements, Accounts and all proceeds of Intellectual Property.  If a judicial
authority (including a U.S. Bankruptcy Court) would hold that a security
interest in the underlying Intellectual Property is necessary to have a security
interest in such Accounts and such property that are proceeds of Intellectual
Property, then the Collateral shall automatically, and effective as of the
Effective Date, include the Intellectual Property to the extent necessary to
permit perfection of Bank’s security interest in such Accounts and such other
property of Borrower that are proceeds of the Intellectual Property.

Pursuant to the terms of a certain negative pledge arrangement with Collateral
Agent and the Lenders, Borrower has agreed not to encumber any of its
Intellectual Property without Collateral Agent’s and each Lender’s prior written
consent.

 

 

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

 

EXHIBIT B

COMPLIANCE CERTIFICATE

TO:SILICON VALLEY BANK, as Collateral Agent and LenderDate:  

MIDCAP FUNDING III TRUST and MIDCAP FINANCIAL TRUST, as Lender

and any other Lenders from time to time party to the Agreement (defined below)

FROM:  CLEARSIDE BIOMEDICAL, INC.

The undersigned authorized officer of CLEARSIDE BIOMEDICAL, INC. (“Borrower”)
certifies that under the terms and conditions of the Second Amended and Restated
Loan and Security Agreement between Borrower, the Collateral Agent and the
Lenders from time to time party thereto (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, or obtained extensions
for filing, 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 or any of its Subsidiaries relating to unpaid
employee payroll or benefits of which Borrower has not previously provided
written notification to Collateral Agent and the Lenders.  

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 Covenants

Required

Complies

 

 

 

Monthly financial statements with

Compliance Certificate

Monthly within 30 days

Yes   No

Annual financial statement (CPA Audited) + CC

FYE within 120 days

Yes   No

10‑Q, 10‑K and 8-K

Within 5 days after filing with SEC

Yes   No

Annual Budget and Projections

FYE within 60 days*

Yes   No

 

*and as soon as possible after any updates thereto

 

Other Matters

Have there been any amendments of or other changes to the capitalization table
of Borrower and to the Operating Documents of Borrower or any of its
Subsidiaries?  If yes, provide copies of any such amendments or changes with
this Compliance Certificate.

Yes

No

 

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

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

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

1

 

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

 

 

CLEARSIDE BIOMEDICAL, INC.

 

LENDER USE ONLY

 

 

 

 

 

Received by:

By:

 

 

AUTHORIZED SIGNER

Name:

 

Date:

Title:

 

 

 

 

Verified:

 

 

 

AUTHORIZED SIGNER

 

 

Date:

 

 

 

 

 

Compliance Status:

Yes

No

 

2

 

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

 

EXHIBIT C – LOAN PAYMENT/ADVANCE REQUEST FORM

DEADLINE FOR SAME DAY PROCESSING IS NOON PACIFIC TIME*

Fax To:  Date: _____________________

 

LOAN PAYMENT:

CLEARSIDE BIOMEDICAL, INC.

 

From Account #To Account #

(Deposit Account #)(Loan Account #)

Principal $and/or Interest $

 

Authorized Signature:Phone Number:

Print Name/Title:

 

LOAN ADVANCE:

 

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

 

From Account #To Account #

(Loan Account #)(Deposit Account #)

 

Amount of Advance $

 

All Borrower’s representations and warranties in the Second Amended and Restated
Loan and Security Agreement are true, correct and complete in all material
respects on the date of the request for an advance; 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:

 

Authorized Signature:Phone Number:

 

Print Name/Title:

 

 

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

 

OUTGOING WIRE REQUEST:

Complete only if all or a portion of funds from the loan advance above is to be
wired.

Deadline for same day processing is noon, Pacific Time

 

Beneficiary Name: Amount of Wire: $

Beneficiary Bank: Account Number:

City and State:

 

Beneficiary Bank Transit (ABA) #: Beneficiary Bank Code (Swift, Sort, Chip,
etc.):

(For International Wire Only)

 

Intermediary Bank: Transit (ABA) #:

 

For Further Credit to:

 

Special Instruction:

 

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

 

 

Authorized Signature: 2nd Signature (if required):

 

Print Name/Title: Print Name/Title:

 

Telephone #: Telephone #:

 

* Unless otherwise provided for an Advance bearing interest at LIBOR.

 

 

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

 

EXHIBIT D

BORROWING RESOLUTIONS

 

CORPORATE BORROWING certificatE

 

 

Borrower:  CLEARSIDE BIOMEDICAL, INC. Date:  

Lenders:SILICON VALLEY BANK, as Collateral Agent and Lender

MIDCAP FUNDING III TRUST and MIDCAP FINANCIAL TRUST, as Lender

 

I hereby certify as follows, as of the date set forth above:

1.I am the Secretary, Assistant Secretary or other officer of Borrower.   My
title is as set forth below.

 

2.Borrower’s exact legal name is set forth above.  Borrower is a corporation
existing under the laws of the State of Delaware.  

 

3.Attached hereto are true, correct and complete copies of Borrower’s
Certificate of Incorporation (including amendments), as filed with the Secretary
of State of the state in which Borrower is incorporated as set forth
above.  Such Certificate of Incorporation have not been amended, annulled,
rescinded, revoked or supplemented, and remain in full force and effect as of
the date hereof.  

 

4.The following resolutions were duly and validly adopted by Borrower’s Board of
Directors at a duly held meeting of such directors (or pursuant to a unanimous
written consent or other authorized corporate action).  Such resolutions are in
full force and effect as of the date hereof and have not been in any way
modified, repealed, rescinded, amended or revoked, and the Lenders may rely on
them until each Lender receives written notice of revocation from Borrower.

 

Resolved, that any one of the following officers or employees of Borrower, whose
names, titles and signatures are below, may act on behalf of Borrower:

Name

Title

Signature

Authorized to Add or Remove Signatories

 

 

 

☐

 

 

 

☐

 

 

 

☐

 

 

 

☐

 

Resolved Further, that any one of the persons designated above with a checked
box beside his or her name may, from time to time, add or remove any individuals
to and from the above list of persons authorized to act on behalf of Borrower.

 

Resolved Further, that such individuals may, on behalf of Borrower:

 

 

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

 

 

Borrow Money.  Borrow money from the Lenders.

Execute Loan Documents.  Execute any loan documents any Lender requires.

Grant Security.  Grant Collateral Agent a security interest in any of Borrower’s
assets.

Negotiate Items.  Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.

Apply for Letters of Credit.  Apply for letters of credit from Silicon Valley
Bank.

Enter Derivative Transactions.  Execute spot or forward foreign exchange
contracts, interest rate swap agreements, or other derivative transactions.

Further Acts.  Designate other individuals to request advances, pay fees and
costs and execute other documents or agreements (including documents or
agreement that waive Borrower’s right to a jury trial) they believe to be
necessary to effect these resolutions.

 

Resolved Further, that all acts authorized by the above resolutions and any
prior acts relating thereto are ratified.

 

5.The persons listed above are Borrower's officers or employees with their
titles and signatures shown next to their names.

 

 

By:  

Name:  

Title:  

 

 

*** If the Secretary, Assistant Secretary or other certifying officer executing
above is designated by the resolutions set forth in paragraph 4 as one of the
authorized signing officers, this Certificate must also be signed by a second
authorized officer or director of Borrower.

 

 

I, the __________________________ of Borrower, hereby certify as to paragraphs 1
through 5 above, as of the date set forth above.

 

 

By:  

Name:  

Title:  

 

 

 

 

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

 

EXHIBIT E

Form of Disbursement Letter

[see attached]

WEST\281321201.5

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

 

DISBURSEMENT LETTER

[_______], 2018

The undersigned, being the duly elected and acting of CLEARSIDE BIOMEDICAL,
INC., a Delaware corporation (“Borrower”), does hereby certify to SILICON VALLEY
BANK (“Bank” and “Lender”), as collateral agent (the “Collateral Agent”) in
connection with that certain Second Amended and Restated Loan and Security
Agreement dated as of May 7, 2018, by and among Borrower, Collateral Agent and
the Lenders from time to time party thereto (the “Loan Agreement”; with other
capitalized terms used below having the meanings ascribed thereto in the Loan
Agreement) that:

1.The representations and warranties made by Borrower in Section 5 of the Loan
Agreement and in the other Loan Documents are true and correct in all material
respects as of the date hereof.

2.No event or condition has occurred that would constitute an Event of Default
under the Loan Agreement or any other Loan Document.

3.Borrower is in compliance with the covenants and requirements contained in
Sections 4, 6 and 7 of the Loan Agreement.

4.All conditions referred to in Section 3 of the Loan Agreement to the making of
the Term Loan to be made on or about the date hereof have been satisfied or
waived by Collateral Agent.

5.No Material Adverse Change has occurred.

6.The undersigned is a Responsible Officer.

 

 

[Balance of Page Intentionally Left Blank]

 

 

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

 

7.The proceeds of the Term [A][B][C] Loan shall be disbursed as follows:

Disbursement from Bank:

 

Loan Amount

$_______________

Plus:

 

‑‑Deposit Received

$__________

 

 

Less:

 

‑‑Facility Fee

($_________)

[‑‑Existing Debt Payoff to be remitted to [PAYOFF BANK] per the Payoff Letter
dated [DATE]

($_________)]

[‑‑Interim Interest

($_________)]

‑‑Lender’s Legal Fees

($_________)*

 

 

TOTAL TERM [A][B][C] LOAN NET PROCEEDS FROM LENDERS

$_______________

 

8.The [initial][Term Loan][Term A Loan] shall amortize in accordance with the
Amortization Table attached hereto.

9.The aggregate net proceeds of the Term Loans shall be transferred to the
Designated Deposit Account as follows:

Account Name:

CLEARSIDE BIOMEDICAL, INC.

Bank Name:

Silicon Valley Bank

Bank Address:

3003 Tasman Drive
Santa Clara, California 95054

Account Number:

____________________________________

ABA Number:

121140399

 

 

 

[Balance of Page Intentionally Left Blank]

 

 

* Legal fees and costs are through the Effective Date.  Postclosing legal fees
and costs, payable after the Effective Date, to be invoiced and paid
postclosing.

 

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

 

Dated as of the date first set forth above.

BORROWER:

 

 

 

 

 

CLEARSIDE BIOMEDICAL, INC.

 

 

 

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

COLLATERAL AGENT AND LENDER:

 

 

 

 

 

SILICON VALLEY BANK

 

 

 

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

 

 

 

LENDER:

 

MIDCAP FINANCIAL TRUST

 

By:    Apollo Capital Management, L.P.,      

its investment manager

 

By:    Apollo Capital Management GP, LLC,

its general partner

 

     

By: ________________________________

         Name: Maurice Amsellem

         Title:   Authorized Signatory

 

 

Address:

 

c/o MidCap Financial Services, LLC, as servicer

7255 Woodmont Avenue, Suite 200
Bethesda, Maryland 20814
Attn:  Account Manager for Clearside Biomedical transaction
Facsimile:  301-941-1450

E-mail:  notices@midcapfinancial.com

 

with a copy to:

 

c/o MidCap Financial Services, LLC, as servicer

7255 Woodmont Avenue, Suite 200
Bethesda, Maryland 20814
Attn:  General Counsel
Facsimile:  301-941-1450

E-mail:  legalnotices@midcapfinancial.com

[Signature Page to Disbursement Letter]

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

 

 

MIDCAP FUNDING III TRUST

 

By:    Apollo Capital Management, L.P.,      

its investment manager

 

By:    Apollo Capital Management GP, LLC,

its general partner

 

     

By: ________________________________

         Name: Maurice Amsellem

         Title:   Authorized Signatory

 

 

Address:

 

c/o MidCap Financial Services, LLC, as servicer

7255 Woodmont Avenue, Suite 200
Bethesda, Maryland 20814
Attn:  Account Manager for Clearside Biomedical transaction
Facsimile:  301-941-1450

E-mail:  notices@midcapfinancial.com

 

with a copy to:

 

c/o MidCap Financial Services, LLC, as servicer

7255 Woodmont Avenue, Suite 200
Bethesda, Maryland 20814
Attn:  General Counsel
Facsimile:  301-941-1450

E-mail:  legalnotices@midcapfinancial.com

 

[Signature Page to Disbursement Letter]

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

 

AMORTIZATION TABLE
(Term [A][B][c] Loan)

[see attached]

 

 

 

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

 

EXHIBIT F

Form of Secured Promissory Note

            [see attached]

 

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

 

SECURED PROMISSORY NOTE
(Term [A][B][C] Loan)

$____________________Dated:  [_________]

FOR VALUE RECEIVED, the undersigned, CLEARSIDE BIOMEDICAL, INC., a Delaware
corporation with offices located at 1220 Old Alpharetta Road, Suite 300,
Alpharetta, GA 30005 (“Borrower”) HEREBY PROMISES TO PAY to the order of
[SILICON VALLEY BANK][MIDCAP] (“Lender”) the principal amount of [___________]
MILLION DOLLARS ($______________) or such lesser amount as shall equal the
outstanding principal balance of the Term [A][B][C] Loan made to Borrower by
Lender, plus interest on the aggregate unpaid principal amount of such
Term [A][B][C] Loan, at the rates and in accordance with the terms of the Loan
and Security Agreement dated [_________, 2018] by and among Borrower, Lender,
Silicon Valley Bank, as Collateral Agent, and the other Lenders from time to
time party thereto (as amended, restated, supplemented or otherwise modified
from time to time, the “Loan Agreement”).  If not sooner paid, the entire
principal amount and all accrued and unpaid interest hereunder shall be due and
payable on the Term Loan Maturity Date as set forth in the Loan Agreement.  Any
capitalized term not otherwise defined herein shall have the meaning attributed
to such term in the Loan Agreement.

Principal, interest and all other amounts due with respect to the Term [A][B][C]
Loan, are payable in lawful money of the United States of America to Lender as
set forth in the Loan Agreement and this Secured Promissory Note (this
“Note”).  The principal amount of this Note and the interest rate applicable
thereto, and all payments made with respect thereto, shall be recorded by Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto which is
part of this Note.

The Loan Agreement, among other things, (a) provides for the making of a secured
Term [A][B][C] Loan by Lender to Borrower, and (b) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events.

This Note may not be prepaid except as set forth in Section 2.1.1(c)(i)  and
Section 2.1.1(c)(ii) of the Loan Agreement.

This Note and the obligation of Borrower to repay the unpaid principal amount of
the Term [A][B][C] Loan, interest on the Term [A][B][C] Loan and all other
amounts due Lender under the Loan Agreement is secured under the Loan Agreement.

Presentment for payment, demand, notice of protest and all other demands and
notices of any kind in connection with the execution, delivery, performance and
enforcement of this Note are hereby waived.

Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys’ fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower’s obligations hereunder not
performed when due.

This Note shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of California.

It is intended that this Note and the obligations evidenced herein are in
registered form under Section 5f.103-1(c) of the United States Treasury
Regulations. The ownership of any interest in this Note shall be registered on
the Register as required pursuant to Section 12.2 of the Loan Agreement.
Notwithstanding anything else in this Note to the contrary, the right to the
principal of, and stated interest on, this Note may be transferred only in
strict compliance with Section 12.2 of the Loan Agreement and the transferee is
identified on the Register as the owner of an interest in such obligation.
Borrower shall be entitled to treat the registered holder of this Note (as
recorded on the Register) as the owner in fact thereof for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in
this Note on the part of any other person or entity.

 

 

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

 

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of
its officers thereunto duly authorized on the date hereof.

 

 

BORROWER:

 

 

 

 

 

CLEARSIDE BIOMEDICAL, INC.

 

 

 

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

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

 

LOAN INTEREST RATE AND PAYMENTS OF PRINCIPAL

Date

Principal

Amount

Interest Rate

Scheduled

Payment Amount

Notation By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

[g201805152045061145090.jpg]
Marketing Consent Form

SVB Financial Group is proud of our business relationships and occasionally like
to promote these relationships.  We would like to use your company’s information
and logo for promotional and marketing purposes in SVB Financial Group member
businesses (collectively “SVB”) materials.  While we would appreciate your
consent to all of the uses listed below, please review and select all of the
uses that you consent to below.

☐Marketing:  You consent to SVB’s use of Company’s name, logo and images
provided to us in written and oral presentations, advertising, marketing and PR
materials, professional lists, and Web sites.

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credit facility alongside your company’s name in any oral presentations,
advertising, marketing and PR materials, customer lists, and Web sites.

☐Reference:  You consent to SVB’s use of Company and representatives’ names as a
reference for SVB.

☐Testimonial:  You consent to SVB’s use of Company and representatives’ names
and quotations in written and oral presentations, marketing and PR materials,
and Web sites.  Our practice is to send you a draft of any quotation concerning
Company prior to publishing.

☐News release:  You consent to SVB’s use of Company’s name, trademarks, service
marks, quotations, and images provided to us in the SVB’s news releases
concerning Company.  Our practice is to send you a draft of any news release
concerning Company prior to publishing.

Logos:  Please submit your company’s logo in:

oFull color and black and white versions, with or without taglines, and

oAt least 300 dpi in EPS, TIF, or JPG formats ‑ please do not send PDF or Web
site logos.

Names:  Please make sure to print the Company name, and any individual names and
titles as you would like them displayed in materials or lists.  

Company Name

You grant to SVB a limited license to use the information for the limited
purposes above, which you can revoke upon written notice to SVB.  The signer
below acknowledges that he or she has authority to bind the Company to this
consent.  SVB will not be responsible for versions that were printed prior to
receiving notice revoking any such consent.  Company is solely responsible for
defense and maintenance of its intellectual property.

Please return this completed form via email to logo@svb.com.  If you have any
questions, contact the SVB Marketing Department at 650.855.3079.

ACCEPTED AND AGREED ON BEHALF OF (“COMPANY” OR “YOU”:

 

Name and TitleSignatureDate

 

 

Address

 

 

Phone NumberEmail

 

Corporate Headquarters© SVB Financial Group.  All rights reserved.  Member
Federal Reserve System, SVB,

3005 Tasman Drive  Santa Clara, California 95054 U.S.A.SVB>Find a way, SVB
Financial Group, and Silicon Valley Bank are registered  trademarks.

Phone 408.654.7400 svb.com13‑12759.  Rev. 03‑15‑13.