Exhibit 10.2
THIRD AMENDED AND RESTATED
SUBORDINATED NOTE AND SECURITY AGREEMENT

$12,000.000   Dated as of February 22, 2011

     FOR VALUE RECEIVED, OPKO Health, Inc., a Delaware corporation with offices
at 4400 Biscayne Blvd., Miami, Florida 33137 (“Borrower”), pursuant to this
Third Amended and Restated Subordinated Note and Security Agreement (this “Third
Amended and Restated Note”), hereby promises to pay to The Frost Group, LLC, a
Florida limited liability company (“Lender”) at such place as Lender may
designate from time to time in writing, in lawful money of the United States of
America, the principal amount of $12,000,000, or such lesser amount as shall
equal the outstanding principal balance of the loan (the “Loan”) made to
Borrower by Lender pursuant to the Credit Agreement, dated as of March 27, 2007,
as amended by that certain Amendment No. 1 to Credit Agreement dated November 6,
2008, and Amendment No. 2 to Credit Agreement dated the date hereof, by and
among Borrower, Lender and OPKO Pharmaceuticals, LLC (formerly known as Acuity
Pharmaceuticals, LLC) (the “Amended Credit Agreement”), and to pay all other
amounts due with respect to the Loan on the dates and in the amounts set forth
in the Amended Credit Agreement and this Third Amended and Restated Note. This
Third Amended and Restated Note amends, restates and replaces in all respects
the Subordinated Note and Security Agreement of Acuity Pharmaceuticals, Inc.,
dated as of January 11, 2007, the obligations under which were assumed by
Borrower pursuant to the original Credit Agreement, as well as the Amended and
Restated Subordinated Note and Security Agreement dated as of March 27, 2007 and
the Second Amended and Restated Note and Security Agreement dated November 6,
2008.
     1. Definitions. All capitalized terms used, but not defined herein, shall
have the meanings ascribed to them in the Amended Credit Agreement. In addition,
the terms set forth below shall have the following meanings:
          (a) “Affiliate” means any Person that owns or controls directly or
indirectly ten percent (10%) or more of the stock of another entity, any Person
that controls or is controlled by or is under common control with such Persons
or any Affiliate of such Persons and each of such Person’s officers, directors,
joint venturers or partners.
          (b) “Code” means the Uniform Commercial Code as adopted and in effect
in the State of Florida, as amended from time to time; provided that if by
reason of mandatory provisions of law, the creation and/or perfection or the
effect of perfection or nonperfection of the security interest in any Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than Florida, the term “Code” shall also mean the Uniform Commercial Code as in
effect from time to time in such jurisdiction for purposes of the provisions
hereof relating to such creation, perfection or effect of perfection or
non-perfection.
          (c) “Equity Securities” of Borrower means (1) all common stock,
preferred stock, participations, shares, partnership interests, membership
interests or other equity interests in and of Borrower (regardless of how
designated and whether or not voting or nonvoting) and (2) all warrants, options
and other rights to acquire any of the foregoing.
          (d) “Event of Default” shall mean the occurrence of one or more of the
following events:

 

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

 

               (1) Borrower shall fail to make any payment due to Lender under
this Third Amended and Restated Note when the same shall become due and payable,
whether at maturity, by acceleration or otherwise, within five days after
receipt of written notice from Lender that such payment is due and unpaid.
               (2) Borrower violates any of the covenants contained in
Sections 7 and 8 of this Third Amended and Restated Note and fails to remedy
such violation within ten (10) days after receipt of written notice from Lender
that such a violation has occurred.
               (3) Any material portion of Borrower’s assets is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower’s assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof; provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower.
               (4) One or more defaults shall exist under any agreement with any
third party or parties which consists of the failure to pay any Indebtedness at
maturity or which results in a right by such third party or parties, whether or
not exercised, to accelerate the maturity of Indebtedness in an aggregate amount
in excess of One Hundred Fifty Thousand Dollars ($150,000).
               (5) A judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least One Hundred Fifty Thousand
Dollars ($150,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period often (10) days or more.
               (6) Any material misrepresentation or material misstatement that
exists now or hereafter in any warranty, representation, statement,
certification, or report made to Lender by Borrower or any officer, employee,
agent, or director of Borrower shall prove to have been false or misleading in
any material respect when made or furnished.
               (7) Any document executed in connection with the Loan ceases to
be, or Borrower asserts that such document is not, in any material respect, a
legal, valid and binding obligation of Borrower enforceable in accordance with
its terms.
               (8) A proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect of
Borrower in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian, trustee (or similar official) of
Borrower or for any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of sixty (60) consecutive days or such court
shall enter a decree or order granting the relief sought in such proceeding.

-2-

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

 

               (9) Borrower commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, consents
to the entry of an order for relief in an involuntary case under any such law,
or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian (or other similar official) of Borrower
or for any substantial part of its property, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action in furtherance of any of the
foregoing.
          (e) “Indebtedness” means, with respect to Borrower, the aggregate
amount of, without duplication, (a) all obligations of Borrower for borrowed
money, (b) all obligations of Borrower evidenced by bonds, debentures, notes or
other similar instruments, (c) all obligations of Borrower to pay the deferred
purchase price of property or services (excluding trade payables aged less than
one hundred eighty (180) days), (d) all capital lease obligations of Borrower,
(e) all obligations or liabilities of others secured by a Lien on any asset of
Borrower, whether or not such obligation or liability is assumed, (t) all
obligations or liabilities of others guaranteed by Borrower, and (g) any other
obligations or liabilities which are required by GAAP to be shown as debt on the
balance sheet of Borrower.
          (f) “Intellectual Property” means all of Borrower’s right, title and
interest in and to patents, patent rights (and applications and registrations
therefor), trademarks and service marks (and applications and registrations
therefor), inventions, copyrights, mask works (and applications and
registrations therefor), trade names, trade styles, software and computer
programs, source code, object code, trade secrets, methods, processes, know how,
drawings, specifications, descriptions, and all memoranda, notes, and records
with respect to any research and development, all whether now owned or
subsequently acquired or developed by Borrower and whether in tangible or
intangible form or contained on magnetic media readable by machine together with
all such magnetic media (but not including embedded computer programs and
supporting information included within the definition of “goods” under the
Code).
          (g) “Lien” means any voluntary or involuntary security interest,
pledge, bailment, lease, mortgage, hypothecation, conditional sales and title
retention agreement, encumbrance or other lien with respect to any property of
the Borrower in favor of any person.
          (h) “Permitted Indebtedness” means and includes:
               (1) Indebtedness of Borrower to Lender;
               (2) Indebtedness arising from the endorsement of instruments in
the ordinary course of business;
               (3) Indebtedness existing on the date hereof and disclosed in the
Schedule of Exceptions to the Amended Credit Agreement or in the financial
statements included with the Company’s periodic reports filed with the SEC;
               (4) Indebtedness of Borrower in an aggregate original principal
amount not to exceed $250,000 which is secured by Liens permitted under clause
(5) of the definition of Permitted Liens;

-3-

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

 

               (5) Other Indebtedness in an aggregate amount not exceeding
$500,000 at any time; and
               (6) Extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon Borrower.
          (i) “Permitted Investments” means and includes any of the following
investments:
               (1) Deposits and deposit accounts with commercial banks organized
under the laws of the United States or a state thereof to the extent: (i) the
deposit accounts of each such institution are insured by the Federal Deposit
Insurance Corporation up to the legal limit; and (ii) each such institution has
an aggregate capital and surplus of not less than One Hundred Million Dollars
($100,000,000).
               (2) Investments in marketable obligations issued or fully
guaranteed by the United States and maturing not more than one (l) year from the
date of Issuance.
               (3) Investments in open market commercial paper rated at least
“A1” or “P1” or higher by a national credit rating agency and maturing not more
than one (1) year from the creation thereof.
               (4) Investments pursuant to or arising under currency agreements
or interest rate agreements entered into in the ordinary course of business.
               (5) Investments, not requiring the use of cash or the assumption
of liabilities, in joint ventures, partnerships or similar business arrangements
entered into in the ordinary course of business in substantially the same
industry and growth stage as Borrower.
               (6) Other investments aggregating not In excess of Five Hundred
Thousand Dollars ($500,000) at any time.
          (j) “Permitted Liens” means:
               (1) The Lien created by this Agreement.
               (2) Liens for fees, taxes, levies, imposts, duties or other
governmental charges of any kind which are not yet delinquent or which are being
contested in good faith by appropriate proceedings which suspend the collection
thereof (provided that such appropriate proceedings do not involve any
substantial danger of the sale, forfeiture or loss of any material item of
Collateral or Collateral which in the aggregate is material to Borrower and that
Borrower has adequately bonded such Lien or reserves sufficient to discharge
such Lien have been provided on the books of Borrower).

-4-

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

 

               (3) Liens existing as of the date of this Third Amended and
Restated Note and identified in the Schedule of Exceptions to the Amended Credit
Agreement.
               (4) carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s or other similar Liens arising in the ordinary course of business
and which are not delinquent or remain payable without penalty or which are
being contested in good faith and by appropriate proceedings (provided that such
appropriate proceedings do not involve any substantial danger of the sale,
forfeiture or loss of any material item of Collateral or Collateral which in the
aggregate is material to Borrower and that Borrower has adequately bonded such
Lien or reserves sufficient to discharge such Lien have been provided on the
books of Borrower).
               (5) Liens upon any equipment or other personal property acquired
by Borrower after the date hereof to secure (i) the purchase price of such
equipment or other personal property, or (ii) lease obligations or indebtedness
incurred solely for the purpose of financing the acquisition of such equipment
or other personal property; provided that such Liens are confined solely to the
equipment or other personal property so acquired and the proceeds thereof and
the amount secured does not exceed the acquisition price thereof.
               (6) licenses of Intellectual Property entered into in the
ordinary course of business (whether as licensor or licensee);
               (7) bankers’ liens, rights of setoff and similar Liens incurred
on deposits made in the ordinary course of business and Liens in favor of
financial institutions arising in connection with Borrower’s deposit accounts or
securities accounts held at such institutions to secure customary fees and
charges;
               (8) any judgment, attachment or similar Lien not resulting in an
Event of Default hereunder; and
               (9) Liens incurred in the extension, renewal or refinancing of
the indebtedness secured by Liens described above 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.
          (k) “Person” means and includes any individual, any partnership, any
corporation, any business trust, any joint stock company, any limited liability
company, any unincorporated association or any other entity and any domestic or
foreign national, state or local government, any political subdivision thereof,
and any department, agency, authority or bureau of any of the foregoing.
          (l) “Subsidiary” means any corporation or other entity of which a
majority of the outstanding equity securities entitled to vote for the election
of directors or other governing body (otherwise than as the result of a default)
is owned by Borrower directly or indirectly through Subsidiaries.
          (m) “Warrant” means the warrant to acquire 4,000,000 shares of Common
Stock of Borrower, dated as of March 27, 2007, issued to Lender.
     2. Payments of Principal, Interest, Etc. The principal amount of the Loan
evidenced hereby, together with any accrued and unpaid interest, and any and all
unpaid costs, fees and expenses accrued, shall be due and payable on March 31,
2012 (the “Maturity Date”).

-5-

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

 

     3. Interest. All amounts outstanding from time to time hereunder shall bear
interest until such amounts are paid, at the Interest Rate (as defined in the
Amended Credit Agreement). Following any Event of Default (including before or
after any judgment is entered) and after the Maturity Date, the principal
balance outstanding hereunder, together with all such other amounts outstanding
hereunder, shall bear interest at a rate per annum equal to the Default Rate (as
defined in the Amended Credit Agreement).
     4. Prepayments. Borrower may prepay in cash, at any time or from time to
time, all or any portion of the amounts due hereunder, without penalty or
premium; provided, however, that any prepayment (whether voluntary or
involuntary) shall be applied first to accrued and unpaid interest and second to
outstanding principal and other sums due hereunder.
     5. Security Interest.
          (a) Grant of Security Interest. Borrower grants to Lender a valid and
continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure prompt, full and complete payment of the
amounts due hereunder and in order to secure prompt, full and complete
performance by Borrower of each of its covenants and duties under the Amended
Credit Agreement and this Third Amended and Restated Note. The “Collateral”
shall mean and include all right, title, interest, claims and demands of
Borrower in and to all personal property of Borrower located within the United
States, including without limitation, all of the following:
               (1) All goods (and embedded computer programs and supporting
information included within the definition of “goods” under the Code) and
equipment now owned or hereafter acquired, including, without limitation, all
laboratory equipment, computer equipment, office equipment, machinery, fixtures,
vehicles (including motor vehicles and trailers), and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever
located.
               (2) All inventory now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower’s custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower’s books relating to any of the foregoing.
               (3) All contract rights and general intangibles (except to the
extent included within the definition of Intellectual Property), now owned or
hereafter acquired, including, without limitation, goodwill, license agreements,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, infringements, claims, software, computer programs, computer disks,
computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payment intangibles, commercial tort claims, payments of insurance and
rights to payment of any kind.

-6-

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

 

               (4) All now existing and hereafter arising accounts, contract
rights, royalties, license rights, license fees and all other forms of
obligations owing to Borrower arising out of the sale or lease of goods, the
licensing of technology or the rendering of services by Borrower (subject, in
each case, to the contractual rights of third parties to require funds received
by Borrower to be expended in a particular manner), whether or not earned by
performance, and any and all credit insurance, guaranties, and other security
therefor, as well as all merchandise returned to or reclaimed by Borrower and
Borrower’s books relating to any of the foregoing.
               (5) All documents, cash, deposit accounts, letters of credit
(whether or not the letter of credit is evidenced by a writing), certificates of
deposit, instruments, promissory notes, chattel paper (whether tangible or
electronic) and investment property, including, without limitation, all
securities, whether certificated or uncertificated, security entitlements,
securities accounts, commodity contracts and commodity accounts, and all
financial assets held in any securities account or otherwise, wherever located,
now owned or hereafter acquired and Borrower’s books relating to the foregoing.
               (6) Any and all claims, rights and interests in any of the above
and all substitutions for, additions and accessions to and proceeds thereof,
including, without limitation, insurance, condemnation, requisition or similar
payments and proceeds of the sale or licensing of Intellectual Property to the
extent such proceeds no longer constitute Intellectual Property.
               (7) Notwithstanding the foregoing, the Collateral shall not
include any Intellectual Property; provided, however, that the Collateral shall
include all accounts receivables, accounts, and general intangibles that consist
of rights to payment and proceeds from the sale, licensing or disposition of all
or any part, or rights in, the foregoing (the “Rights to Payment”).
Notwithstanding the foregoing, if a judicial authority (including a U.S.
Bankruptcy Court) holds that a security interest in the underlying Intellectual
Property is necessary to have a security interest in the Rights to Payment, then
the Collateral shall automatically, and effective as of the date hereof, include
the Intellectual Property to the extent necessary to permit perfection of
Lender’s security interest in the Rights to Payment.
          (b) After-Acquired Property. If Borrower shall at any time acquire a
commercial tort claim, as defined in the Code, Borrower shall immediately notify
Lender in writing signed by Borrower of the brief details thereof and grant to
Lender in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Third Amended and Restated Note, with such writing to
be in form and substance satisfactory to Lender.
          (c) Duration of Security Interest. Lender’s security interest in the
Collateral shall continue until the payment in full and the satisfaction of all
obligations of Borrower under this Third Amended and Restated Note, and the
termination of any commitment to fund any Loan, whereupon such security interest
shall terminate. Lender shall, at Borrower’s sole cost and expense, execute such
further documents and take such further actions as may be reasonably necessary
to make effective the release contemplated by this Section 5(c). including duly
executing and delivering termination statements for filing in all relevant
jurisdictions under the Code.

-7-

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

 

          (d) Location and Possession of Collateral. The Collateral is and shall
remain in the possession of Borrower at its locations at 4400 Biscayne Blvd.,
15th Floor, Miami, Florida, Hialeah, Florida, and Jupiter, Florida. Borrower
shall remain in full possession, enjoyment and control of the Collateral (except
only as may be otherwise required by Lender for perfection of its security
interest therein) and so long as no Event of Default has occurred and is
continuing, shall be entitled to manage, operate and use the same and each part
thereof with the rights and franchises appertaining thereto; provided that the
possession, enjoyment, control and use of the Collateral shall at all time be
subject to the observance and performance of the terms of this Agreement.
          (e) Delivery of Additional Documentation Required. Borrower shall from
time to time execute and deliver to Lender, at the request of Lender, all
financing statements and other documents Lender may reasonably request, in form
satisfactory to Lender, to perfect and continue Lender’s perfected security
interests in the Collateral and in order to consummate fully all of the
transactions contemplated under this Third Amended and Restated Note and the
Amended Credit Agreement.
          (f) Right to Inspect. Lender (through any of its officers, employees,
or agents) shall have the right, upon reasonable prior notice, from time to time
during Borrower’s usual business hours, to inspect Borrower’s books and records
and to make copies thereof and to inspect, test, and appraise the Collateral in
order to verify Borrower’s financial condition or the amount, condition of, or
any other matter relating to, the Collateral.
          (g) Protection of Intellectual Property. Borrower shall use its
commercially reasonable efforts to (i) protect, defend and maintain the validity
and enforceability of its material Intellectual Property and promptly advise
Lender in writing of material infringements which become known to Borrower, and
(ii) not allow any Intellectual Property material to Borrower’s business to be
abandoned, forfeited or dedicated to the public except in the ordinary course of
Borrower’s business.
     6. Subordination. Lender agrees that the Liens granted to it hereunder in
equipment and other personal property acquired by Borrower after the date hereof
(“Third Party Equipment”) which secure Indebtedness constituting Permitted
Indebtedness under Subclause (4) of the definition of Permitted Indebtedness
shall be subordinate to the Liens of existing or future lenders providing
equipment financing and equipment lessors for Third Party Equipment or if such
lenders prohibit the granting of Liens to other lenders, Lender shall release
its Lien on such Third Party Equipment and the proceeds thereof; provided that
such Liens are confined solely to the equipment so financed and the proceeds
thereof and are Permitted Liens. Upon the expiration of the Liens of such other
lenders or the termination of their prohibition of Liens in favor of other
Lenders, the Third Party Equipment shall automatically become part of the
Collateral, and Lender is authorized at that time to amend any filed financing
statement(s) to reflect that change. Notwithstanding the foregoing, the
obligations hereunder shall not be subordinate in right of payment to any
obligations to other lenders, equipment lenders or equipment lessors, and
Lender’s rights and remedies hereunder shall not in any way be subordinate to
the rights and remedies of any such lenders or equipment lessors.
     7. Affirmative Covenants. Borrower covenants that, so long as any amounts
are due and payable hereunder to Lender or any commitment to make any Loan still
exists, Borrower shall:
          (a) Maintain its corporate existence and its good standing in its
jurisdiction of incorporation and maintain qualification in each jurisdiction in
which the failure to so qualify could reasonably be expected to have a material
adverse effect on the financial condition, operations or business of Borrower.
Borrower shall maintain in force all licenses, approvals and agreements, the
loss of which could reasonably be expected to have a material adverse effect on
its financial condition, operations or business.

-8-

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

 

          (b) Comply with all statutes, laws, ordinances and government rules
and regulations to which it is subject, noncompliance with which could
reasonably be expected to materially adversely affect the financial condition,
operations or business of Borrower.
          (c) Deliver to Lender, promptly as they are available and in any
event: (i) at the time of filing of Borrower’s Form 10-K with the Securities and
Exchange Commission after the end of each fiscal year of Borrower, the financial
statements of Borrower filed with such Form 10-K; and (ii) at the time of filing
of Borrower’s Form 10-Q with the Securities and Exchange Commission after the
end of each of the first three fiscal quarters of Borrower, the financial
statements of Borrower filed with such Form 10-Q. If, at any time during which
any Obligations are outstanding under this Third Amended and Restated Note,
Borrower ceases to be subject to the reporting obligations of the Securities and
Exchange Act of 1934, as amended, Borrower shall deliver to Lender (w) as soon
as available, but in any event within forty five (45) days after the end of each
month, a company prepared balance sheet, income statement and cash flow
statement covering Borrower’s operations during such period, certified by
Borrower’s president, treasurer or chief financial officer (each, a “Responsible
Officer”); (x) as soon as available, but in any event within one hundred twenty
(120) days after the end of Borrower’s fiscal year, audited financial statements
of Borrower prepared in accordance with GAAP, together with an unqualified
opinion on such financial statements of a nationally recognized or other
independent public accounting firm reasonably acceptable to Lender; (y) as soon
as available, but in any event within ninety (90) days after the end of
Borrower’s fiscal year or the date of Borrower’s board of directors’ adoption,
Borrower’s operating budget and plan for the next fiscal year; and (z) such
other financial information as Lender may reasonably request from time to time.
In addition, Borrower shall deliver to Lender (i) promptly upon becoming
available, copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders; (ii) immediately upon receipt of
notice thereof, a report of any material legal actions pending or threatened
against Borrower or the commencement of any action, proceeding or governmental
investigation involving Borrower is commenced that is reasonably expected to
result in damages or costs to Borrower of One Hundred Fifty Thousand Dollars
($150,000) or more; and (iii) such other financial information as Lender may
reasonably request from time to time.
          (d) Each time financial statements are furnished pursuant to
Section 7(c) above, deliver to Lender an Officer’s Certificate signed by a
Responsible Officer in form satisfactory to Lender, certifying such financial
statements, Borrower’s compliance with the terms of this Third Amended and
Restated Note and that no default or Event of Default has occurred under this
Third Amended and Restated Note.
          (e) As soon as possible, and in any event within five (5) days after
the discovery of a default or an Event of Default, provide Lender with an
Officer’s Certificate setting forth the facts relating to or giving rise to such
default or Event of Default and the action which Borrower proposes to take with
respect thereto.

-9-

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

 

          (f) Make due and timely payment or deposit of all federal, state, and
local taxes, assessments, or contributions required of it by law or imposed upon
any property belonging to it, and will execute and deliver to Lender, on demand,
appropriate certificates attesting to the payment or deposit thereof; and
Borrower will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Lender with proof satisfactory to Lender
indicating that Borrower has made such payments or deposits; provided that
Borrower need not make any payment if the amount or validity of such payment is
contested in good faith by appropriate proceedings which suspend the collection
thereof (provided that such proceedings do not involve any substantial danger of
the sale, forfeiture or loss of any material item of Collateral or Collateral
which in the aggregate is material to Borrower and that Borrower has adequately
bonded such amounts or reserves sufficient to discharge such amounts have been
provided on the books of Borrower).
          (g) Keep and maintain all items of equipment and other similar types
of personal property that form any significant portion or portions of the
Collateral in good operating condition and repair and shall make all necessary
replacements thereof and renewals thereto so that the value and operating
efficiency thereof shall at all times be maintained and preserved. Borrower
shall not permit any such material item of Collateral to become a fixture to
real estate or an accession to other personal property, without the prior
written consent of Lender. Borrower shall not permit any such material item of
Collateral to be operated or maintained in violation of any applicable law,
statute, rule or regulation. With respect to items of leased equipment (to the
extent Lender has any security interest in any residual Borrower’s interest in
such equipment under the lease), Borrower shall keep, maintain, repair, replace
and operate such leased equipment in accordance with the terms of the applicable
lease.
          (h) Keep its business and the Collateral insured for risks and in
amounts, and as Lender may reasonably request. Insurance policies shall be in a
form, with companies, and in amounts that are satisfactory to Lender. All
property policies shall have a lender’s loss payable endorsement showing Lender
as an additional loss payee and all liability policies shall show Lender as an
additional insured and all policies shall provide that the insurer must give
Lender at least thirty (30) days notice before canceling its policy. At Lender’s
request, Borrower shall deliver certified copies of policies and evidence of all
premium payments. Subject to the rights of the Senior Obligations, proceeds
payable under any policy shall, at Lender’s option, be payable to Lender on
account of the Obligations. Notwithstanding the foregoing, 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, toward the replacement or repair
of destroyed or damaged property; provided that (i) any such replaced or
repaired property (a) shall be of equal or like value as the replaced or
repaired Collateral and (b) shall be deemed Collateral in which Lender has been
granted a security interest and (ii) subject to the rights of the Senior
Obligations, after the occurrence and during the continuation of an Event of
Default all proceeds payable under such casualty policy shall, at the option of
Lender, be payable to Lender, on account of the Indebtedness evidenced by this
Third Amended and Restated Note and the Amended Credit Agreement. If Borrower
fails to obtain insurance as required under Section 7(h) or to pay any amount or
furnish any required proof of payment to third persons and Lender, Lender may
make all or part of such payment or obtain such insurance policies required in
Section 7(h), and take any action under the policies Lender deems prudent. On or
prior to the Initial Closing Date and prior to each policy renewal, Borrower
shall furnish to Lender certificates of insurance or other evidence satisfactory
to Lender that insurance complying with all of the above requirements is in
effect.

-10-

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

 

          (i) Assuming the proper filing of one or more financing statement(s)
identifying the Collateral with the proper state and/or local authorities, the
security interests in the Collateral granted to Lender pursuant to this
Agreement (i) constitute and will continue to constitute first priority security
interests (except to the extent any Permitted Liens may have a superior priority
to Lender’s Lien under this Agreement) and (ii) are and will continue to be
superior and prior to the rights of all other creditors of Borrower (except to
the extent of such Permitted Liens).
          (j) At any time and from time to time Borrower shall execute and
deliver such further instruments and take such further action as may reasonably
be requested by Lender to make effective the purposes of this Agreement,
including without limitation, the continued perfection and priority of Lender’s
security interest in the Collateral.
     8. Negative Covenants. Borrower covenants that, so long as any amounts are
due and payable hereunder to Lender or any commitment to make any Loan still
exists, without the prior approval of Lender, Borrower shall not:
          (a) Change its name, jurisdiction of incorporation, or principal place
of business without thirty (30) days prior written notice to Lender.
          (b) Subject to its rights under Section 8(d), remove any items of
Collateral from the Collateral location(s) specified in this Third Amended and
Restated Note.
          (c) Create, incur, assume or suffer to exist any Lien of any kind upon
any of Borrower’s property, whether now owned or hereafter acquired, except
Permitted Liens.
          (d) Convey, sell, lease or otherwise dispose of all or any part of the
Collateral to any Person (collectively, a “Transfer”), except for: (i) Transfers
of inventory in the ordinary course of business; or (ii) Transfers of worn-out
or obsolete equipment.
          (e) Except as set forth in the Schedule of Exceptions to the Amended
Credit Agreement delivered by Borrower as of the date hereof and pursuant to
obligations under its Certificate of Incorporation, (i) pay any dividends or
make any distributions on its Equity Securities; (ii) purchase, redeem, retire,
defease or otherwise acquire for value any of its Equity Securities (other than
repurchases pursuant to the terms of employee stock purchase plans, employee
restricted stock agreements or similar arrangements in an aggregate amount not
to exceed One Hundred Thousand Dollars ($100,000)); (iii) return any capital to
any holder of its Equity Securities as such; (iv) make any distribution of
assets, Equity Securities, obligations or securities to any holder of its Equity
Securities as such; or (v) set apart any sum for any such purpose; provided,
however, Borrower may pay dividends payable solely in common stock.
          (f) Engage in or permit any of its Subsidiaries to engage in any
business other than the businesses currently engaged in by Borrower or
reasonably related thereto.

-11-

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

 

          (g) Enter into any contractual obligation with any Affiliate or engage
in any other transaction with any Affiliate except upon terms at least as
favorable to Borrower as an arms-length transaction with persons who are not
Affiliates of Borrower.
          (h) (i) Prepay, redeem, purchase, defease or otherwise satisfy in any
manner prior to the scheduled repayment thereof any Indebtedness for borrowed
money (other than amounts due or permitted to be prepaid under this Agreement)
or lease obligations, (ii) amend, modify or otherwise change the terms of any
Indebtedness for borrowed money or lease obligations so as to accelerate the
scheduled repayment thereof or (iii) repay any notes to officers, directors or
shareholders.
          (i) Create, incur, assume or permit to exist any Indebtedness except
Permitted Indebtedness.
          (j) Make any investment except for Permitted Investments.
          (k) Become an “investment company” or a company controlled by an
“investment company” under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Loan for that purpose; fail to meet the
minimum funding requirements of the Employment Retirement Income Security Act of
1974, and its regulations, as amended from time to time (“ERISA”), permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower’s business or operations or could reasonably be
expected to cause a material adverse change, or permit any of its Subsidiaries
to do so.
          (l) Create, incur, assume or suffer to exist any Lien of any kind upon
any Intellectual Property or Transfer any Intellectual Property, whether now
owned or hereafter acquired, other than licenses of Intellectual Property
entered into in the ordinary course of business.
     9. Lender’s Rights and Remedies.
          (a) Rights and Remedies. Upon the occurrence of an Event of Default,
while such Event of Default is continuing (provided that an Event of Default
shall be continuing at all times after any cure period therefor expires), Lender
shall not have any further obligation to advance money or extend credit to or
for the benefit of Borrower. In addition, upon the occurrence and during the
continuance of an Event of Default, the entire unpaid principal sum hereunder,
plus any and all interest accrued thereon, plus all other sums due and payable
to Lender hereunder shall, at the option of Lender, become due and payable
immediately without presentment, demand, notice of nonpayment, protest, notice
of protest, or other notice of dishonor, all of which are hereby expressly
waived by Borrower. Lender shall have the rights, options, duties and remedies
of a secured party as permitted by law and, in addition to and without
limitation of the foregoing, Lender may, at its election, without notice of
election and without demand, do anyone or more of the following, all of which
are authorized by Borrower:

-12-

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

 

               (1) Make such payments and do such acts as Lender considers
necessary or reasonable to protect Lender’s security interest in the Collateral.
Borrower agrees to assemble the Collateral if Lender so requires and to make the
Collateral available to Lender as Lender may designate. Borrower authorizes
Lender and its designees and agents to enter the premises where the Collateral
is located, to take and maintain possession of the Collateral, or any part of
it, and to pay, purchase, contest, or compromise any Lien which in Lender’s
determination appears or is claimed to be prior or superior to its security
interest and to pay all expenses incurred in connection therewith. With respect
to any of Borrower’s owned premises, Borrower hereby grants Lender a license to
enter into possession of such premises and to occupy the same, without charge,
for up to one hundred twenty (120) days in order to exercise any of Lender’s
rights or remedies provided herein, at law, in equity, or otherwise;
               (2) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Lender and its agents and any purchasers at or after
foreclosure are hereby granted a nonexclusive, irrevocable, perpetual, fully
paid, royalty-free license or other right, solely pursuant to the provisions of
this Section 9, to use, without charge, Borrower’s Intellectual Property,
including without limitation, labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any property of a similar nature, now or at any time hereafter owned
or acquired by Borrower or in which Borrower now or at any time hereafter has
any rights; provided that such license shall only be exercisable in connection
with the disposition of Collateral upon Lender’s exercise of its remedies
hereunder;
               (3) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower’s premises) as Lender
determines are commercially reasonable; and
               (4) Credit bid and purchase all or any portion of the Collateral
at any public sale.
Any deficiency that exists after disposition of the Collateral as provided above
will be paid immediately by Borrower.
          (b) Set Off Right. Lender may set off and apply to the obligations
hereunder any and all indebtedness at any time owing to or for the credit or the
account of Borrower or any other assets of Borrower in Lender’s possession or
control.
          (c) Effect of Sale. Upon the occurrence of an Event of Default and
during the continuation thereof, to the extent permitted by law, Borrower
covenants that it will not at any time insist upon or plead, or in any manner
whatsoever claim or take any benefit or advantage of, any stay or extension law
now or at any time hereafter in force, nor claim, take nor insist upon any
benefit or advantage of or from any law now or hereafter in force providing for
the valuation or appraisement of the Collateral or any part thereof prior to any
sale or sales thereof to be made pursuant to any provision herein contained, or
to the decree, judgment or order of any court of competent jurisdiction; nor,
after such sale or sales, claim or exercise any right under any statute now or
hereafter made or enacted by any state or otherwise to redeem the property so
sold or any part thereof, and, to the full extent legally permitted, except as
to rights

-13-

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

 

expressly provided herein, hereby expressly waives for itself and on behalf of
each and every Person, except decree or judgment creditors of Borrower,
acquiring any interest in or title to the Collateral or any part thereof
subsequent to the date of this Agreement, all benefit and advantage of any such
law or laws, and covenants that it will not invoke or utilize any such law or
laws or otherwise hinder, delay or impede the execution of any power herein
granted and delegated to Lender, but will suffer and permit the execution of
every such power as though no such power, law or laws had been made or enacted.
Any sale, whether under any power of sale hereby given or by virtue of judicial
proceedings, shall operate to divest all right, title, interest, claim and
demand whatsoever, either at law or in equity, of Borrower in and to the
property sold, and shall be a perpetual bar, both at law and in equity, against
Borrower, its successors and assigns, and against any and all Persons claiming
the property sold or any part thereof under, by or through Borrower, its
successors or assigns.
          (d) Power of Attorney in Respect of the Collateral. Borrower does
hereby irrevocably appoint Lender (which appointment is coupled with an
interest), the true and lawful attorney in fact of Borrower with full power of
substitution, for it and in its name to file any notices of security interests,
financing statements and continuations and amendments thereof pursuant to the
Code or federal law, as may be necessary to perfect, or to continue the
perfection of Lender’s security interests in the Collateral. Borrower does
hereby irrevocably appoint Lender (which appointment is coupled with an
interest) on the occurrence of an Event of Default and during the continuation
thereof, the true and lawful attorney in fact of Borrower with full power of
substitution, for it and in its name: (a) to ask, demand, collect, receive,
receipt for, sue for, compound and give acquittance for any and all rents,
issues, profits, avails, distributions, income, payment draws and other sums in
which a security interest is granted under Section 5 with full power to settle,
adjust or compromise any claim thereunder as fully as if Lender were Borrower
itself; (b) to receive payment of and to endorse the name of Borrower to any
items of Collateral (including checks, drafts and other orders for the payment
of money) that come into Lender’s possession or under Lender’s control; (c) to
make all demands, consents and waivers, or take any other action with respect
to, the Collateral; (d) in Lender’s discretion to file any claim or take any
other action or proceedings, either in its own name or in the name of Borrower
or otherwise, which Lender may reasonably deem necessary or appropriate to
protect and preserve the right, title and interest of Lender in and to the
Collateral; (e) endorse Borrower’s name on any checks or other forms of payment
or security; (f) sign Borrower’s name on any invoice or bill of lading for any
account or drafts against account debtors; (g) make, settle, and adjust all
claims under Borrower’s insurance policies; (h) settle and adjust disputes and
claims about the accounts directly with account debtors, for amounts and on
terms Lender determines reasonable; (i) transfer the Collateral into the name of
Lender or a third party as the Code permits; and G) to otherwise act with
respect thereto as though Lender were the outright owner of the Collateral.
     10. Remedies Cumulative, Etc.
          (a) No right or remedy conferred upon or reserved to Lender hereunder
or now or hereafter existing at law or in equity is intended to be exclusive of
any other right or remedy, and each and every such right or remedy shall be
cumulative and concurrent, and in addition to every other such right or remedy,
and may be pursued singly, concurrently, successively or otherwise, at the sole
discretion of Lender, and shall not be exhausted by anyone exercise thereof but
may be exercised as often as occasion therefor shall occur.

-14-

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

 

          (b) Borrower hereby waives presentment, demand, notice of nonpayment,
protest, notice of protest, notice of dishonor and any and all other notices in
connection with any default in the payment of, or any enforcement of the payment
of, all amounts due under this Third Amended and Restated Note. To the extent
permitted by law, Borrower waives the right to any stay of execution and the
benefit of all exemption laws now or hereafter in effect.
          (c) Costs and Expenses. Following the occurrence of any Event of
Default, Borrower shall pay upon demand all costs and expenses (including
reasonable attorneys’ fees and expenses) incurred by Lender in the exercise of
any of its rights, remedies or powers under this Third Amended and Restated Note
and any amount thereof not paid promptly following demand therefor shall be
added to the principal sum hereunder and shall bear interest at the Default Rate
from the date of such demand until paid in full.
     11. Indemnification and Waiver. Whether or not the transactions
contemplated hereby shall be consummated:
          (a) General Indemnity. Borrower agrees upon demand to payor reimburse
Lender for all liabilities, obligations and out-of-pocket expenses, including
Lender’s expenses and reasonable fees and expenses of counsel for Lender from
time to time arising in connection with the enforcement or collection of sums
due under this Third Amended and Restated Note or the Amended Credit Agreement,
and in connection with any amendment or modification of such documents or any
“work-out” in connection with such documents. Borrower shall indemnify,
reimburse and hold Lender, and each of its respective successors, assigns,
agents, attorneys, officers, directors, shareholders, servants, agents and
employees (each an “Indemnified Person”) harmless from and against all
liabilities, losses, damages, actions, suits, demands, claims of any kind and
nature (including claims relating to environmental discharge, cleanup or
compliance), all costs and expenses whatsoever to the extent they may be
incurred or suffered by such Indemnified Person in connection therewith
(including reasonable attorneys’ fees and expenses), fines, penalties (and other
charges of any applicable governmental authority), licensing fees relating to
any item of Collateral, damage to or loss of use of property (including
consequential or special damages to third parties or damages to Borrower’s
property), or bodily injury to or death of any person (including any agent or
employee of Borrower) (each, a “Claim”), directly or indirectly relating to or
arising out of the use of the proceeds of the Loans or otherwise, the falsity of
any representation or warranty of Borrower or Borrower’s failure to comply with
the terms of this Third Amended and Restated Note or the Amended Credit
Agreement. The foregoing indemnity shall cover, without limitation, (i) any
Claim in connection with a design or other defect (latent or patent) in any item
of equipment or product included in the Collateral, (ii) any Claim for
infringement of any patent, copyright, trademark or other intellectual property
right, (iii) any Claim resulting from the presence on or under or the escape,
seepage, leakage, spillage, discharge, emission or release of any Hazardous
Substances on the premises owned, occupied or leased by Borrower, including any
Claims asserted or arising under any environmental law, or (iv) any Claim for
negligence or strict or absolute liability in tort; provided, however, Borrower
shall not indemnify Lender for any liability incurred by Lender as a direct and
sole result of Lender’s gross negligence or willful misconduct. Such indemnities
shall continue in full force and effect, notwithstanding the expiration or
termination of this Third Amended and Restated Note. Upon Lender’s written
demand, Borrower shall assume and diligently conduct, at its sole cost and
expense, the entire defense of Lender, each of its partners, and each of their
respective, agents, employees, directors, officers, shareholders, successors and
assigns against any indemnified Claim described in this Section. Borrower shall
not settle or compromise any Claim against or involving Lender without first
obtaining Lender’s written consent thereto, which consent shall not be
unreasonably withheld.

-15-

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

 

     12. Notices. All notices required to be given to any of the parties
hereunder shall be in writing and shall be deemed to have been sufficiently
given for all purposes when presented personally to such party or sent by hand
delivery, facsimile, courier service guaranteeing next business day delivery, or
overnight U.S. express mail, return receipt requested, to such party at its
address set forth in the Amended Credit Agreement with copies to the parties
designated to receive copies in the Amended Credit Agreement. Such notice shall
be deemed to be given when received. Any notice of any change in such address
shall also be given in the manner set forth above. Whenever the giving of notice
is required, the giving of such notice may be waived in writing by the party
entitled to receive such notice.
     13. Severability. In the event that any provision of this Third Amended and
Restated Note is held to be invalid, illegal or unenforceable in any respect or
to any extent, such provision shall nevertheless remain valid, legal and
enforceable in all such other respects and to such extent as may be permissible.
Any such invalidity, illegality or unenforceability shall not affect any other
provisions of this Third Amended and Restated Note, but this Third Amended and
Restated Note shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
     14. Successors and Assigns. This Third Amended and Restated Note inures to
the benefit of Lender and binds Borrower, and their respective successors and
assigns, and the words “Borrower” and “Lender” whenever occurring herein shall
be deemed and construed to include such respective successors and assigns;
provided, however, neither this Third Amended and Restated Note nor any rights
hereunder may be assigned by Borrower without Lender’s prior written consent,
which consent may be granted or withheld in Lender’s sole discretion.
     15. Governing Law. This Third Amended and Restated Note shall be governed
by and construed in accordance with the laws of the State of Florida. Borrower
agrees that any action or proceeding against it to enforce the Third Amended and
Restated Note may be commenced in state or federal court in any county in the
State of Florida, and Borrower waives personal service of process and agrees
that a summons and complaint commencing an action or proceeding in any such
court shall be properly served and shall confer personal jurisdiction if served
by registered or certified mail in accordance with the notice provisions set
forth herein.
     16. Entire Agreement; Construction; Amendments and Waivers.
          (a) Entire Agreement. This Third Amended and Restated Note and each of
the related loan documents dated as of the date hereof, taken together,
constitute and contain the entire agreement between Borrower and Lender with
respect to the subject matter hereof and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications between the
parties, whether written or oral, with respect to such subject matter. Borrower
acknowledges that it is not relying on any representation or agreement made by
Lender or any employee, attorney or agent thereof, other than the specific
agreements set forth in this Third Amended and Restated Note and the related
loan documents.

-16-

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

 

          (b) Construction. This Third Amended and Restated Note is the result
of negotiations between and has been reviewed by each of Borrower and Lender as
of the date hereof and their respective counsel; accordingly, this Third Amended
and Restated Note shall be deemed to be the product of the parties hereto, and
no ambiguity shall be construed in favor of or against Borrower or Lender.
Borrower and Lender agree that they intend the literal words of this Third
Amended and Restated Note and the related loan documents and that no parol
evidence shall be necessary or appropriate to establish Borrower’s or Lender’s
actual intentions.
          (c) Amendments and Waivers. Any and all amendments, modifications,
discharges or waivers of, or consents to any departures from any provision of
this Third Amended and Restated Note or of any of the related loan documents
shall not be effective without the written consent of Lender and Borrower. Any
waiver or consent with respect to any provision of such loan documents shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on Borrower in any case shall entitle
Borrower to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, waiver or consent affected in
accordance with this Section shall be binding upon Lender and on Borrower.
     17. Reliance by Lender. All covenants, agreements, representations and
warranties made herein by Borrower shall be deemed to be material to and to have
been relied upon by Lender, notwithstanding any investigation by Lender.
     18. No Set-Offs by Borrower. All sums payable by Borrower pursuant to this
Third Amended and Restated Note or any of the related loan documents shall be
payable without notice or demand and shall be payable in United States Dollars
without set-off or reduction of any manner whatsoever.
     19. Survival. All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any obligations
hereunder or commitment to fund remain outstanding. The obligations of Borrower
to indemnify Lender with respect to the expenses, damages, losses, costs and
liabilities described in Section 11 shall survive until all applicable statute
of limitations periods with respect to actions that may be brought against
Lender have run.
     20. WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES HERETO HEREBY IRREVOCABL Y
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO TRIAL BY JURY.
SIGNATURE PAGE FOLLOWS

-17-

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

 

     IN WITNESS WHEREOF, Borrower has duly executed this Third Amended and
Restated Note as of the day and year first above written.

            OPKO HEALTH, INC.
      By:           Name:           Title:        

-18-