**Exhibit 10.1**

 

 

**AMENDED AND RESTATEDLOAN AND SECURITY AGREEMENT**

 

**by****and among**

 

**IMMUNICON CORPORATION AND ITS SUBSIDIARIES,**

 

**as****Borrowers**

 

**and**

 

**SILICON VALLEY BANK,**

 

**as****Bank**

 

**OCTOBER 20, 2004**

 

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**AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT**

 

**THIS AMENDED AND RESTATED LOAN AND SECURITYAGREEMENT** (this “Agreement”) dated October 20, 2004,between SILICON VALLEY BANK (“Bank”), whose address is 3003 Tasman Drive, SantaClara, California 95054 and having a loan production office at One NewtonExecutive Park, Suite 200, 2221 Washington Street, Newton, Massachusetts 02462and IMMUNICON CORPORATION, a Delaware corporation whose address is 3401 MasonsMill Road, Suite 100, Huntingdon Valley, Pennsylvania 19006  (the “Company”); IMMUNIVEST CORPORATION, aDelaware corporation, IMMC HOLDINGS, INC., a Delaware corporation and IMMUNICONEUROPE, INC., a Delaware corporation whose addresses are 1209 Orange Street,Wilmington, Delaware 19801 (each a “Borrower” and collectively, the “Borrowers”)provides the terms on which Bank will lend to Borrowers and Borrowers willrepay Bank.

 

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WHEREAS, Borrowers and Bank have previously entered into that certainLoan and Security Agreement, dated as of April 30, 2002 (as amended from timeto time, the “Prior Agreement”);

 

WHEREAS, in connection with the Prior Agreement, the Company has issuedcertain Warrants to Bank (the “Existing Warrants”); and

 

WHEREAS, Borrowers and Bank desire to amend and restate in its entiretythe Prior Agreement, all as more fully set forth herein.

 

NOW, THEREFORE, Borrowers and Bank hereby amend and restate in itsentirety the Prior Agreement as follows:

 

**ACCOUNTING AND OTHER TERMS**

 

Accounting terms not defined in this Agreement will be construedfollowing GAAP. Calculations and determinations must be made followingGAAP.  The term “financial statements”includes the notes and schedules.  Theterms “including” and “includes” always mean “including (or includes) withoutlimitation,” in this or any Loan Document.

 

**LOAN AND TERMS OF PAYMENT**

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**Promise to Pay.**

 

Borrowers jointly and severally promise to pay Bank on the terms andconditions set forth herein, the unpaid principal amount of all CreditExtensions and interest on the unpaid principal amount of the CreditExtensions.

 

**Term Loan.**

 

Pursuant to the Prior Agreement Bank has made a Term Loan to Borrowersin the original amount of Five Million Dollars ($5,000,000).

 

As of October 1, 2004, the unpaid principal balance of the Term Loan isEight Hundred Ninety Nine Thousand Nine Hundred Twenty Five and .32/100 Dollars($899,925.32) and Borrowers have no defenses or set offs to the repayment ofthe Term Loan.  It is expressly agreedthat the indebtedness evidenced by the Term Note has not been extinguished ordischarged by this Agreement.  TheBorrowers agree that the execution of this Agreement is not intended to andshall not cause or result in a novation with respect to the Term Note and allreferences in the Term Note to the Loan Agreement shall be deemed to refer tothe Prior Agreement as amended and restated in its entirety by this Agreement.

 

Borrowers shall in accordance with the Term Note continue to make equalinstallments of Term Loan principal and accrued interest each in the amount of$152,954.24 (the “Term Loan Payment”) on the first (1st) day of each month during the termof the Term Loan.  Borrowers’ final TermLoan Payment, due on the Term Loan Maturity Date, includes all outstanding TermLoan principal, accrued and unpaid interest and any and all accrued and unpaidfees.

 

**Supplemental Equipment Loan.**

 

Pursuant to the Prior Agreement Bank has made a Supplemental EquipmentLoan to Borrowers in the original amount of Two Million Dollars ($2,000,000).

 

As of October 1,  2004, theunpaid principal balance of the Supplemental Equipment Loan is One MillionEighty Two Thousand Four Hundred Forty Seven and .58/100 Dollars($1,082,447.58) and Borrowers have no defenses or set offs to the repayment ofthe

 

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Supplemental Equipment Loan.  The Borrowers agree that the execution ofthis Agreement is not intended to and shall not cause or result in a novationwith respect to the Tranche I Supplemental Equipment Term Note and the TrancheII Supplemental Equipment Term Note and all references in the Tranche ISupplemental Equipment Term Note and the Tranche II Supplemental Equipment TermNote to the Loan Agreement shall be deemed to refer to the Prior Agreement asamended and restated in its entirety by this Agreement.

 

Borrowers shall in accordance with the Tranche I Supplemental EquipmentTerm Note and the Tranche II Supplemental Equipment Term Note, continue to makeequal installments of the Supplemental Equipment Loan principal and accruedinterest each in the amount of $61,839.57 (the “Supplemental Equipment LoanPayment”) on the first (1st) day of each month during the term of the SupplementalEquipment Loan.  Borrowers’ finalSupplemental Equipment Loan Payment, due on the Supplemental Equipment MaturityDate, includes all outstanding Supplemental Equipment Loan principal, accruedand unpaid interest and any and all accrued and unpaid fees.

 

**Equipment Advances.**

 

Through December 31, 2005 (the “Equipment Availability End Date”), Bankwill make advances (“Equipment Advance” and, collectively, “Equipment Advances”)not exceeding the Committed Equipment Line. The Equipment Advances may only be used to finance or refinanceEquipment purchased on or after ninety (90) days before the date of eachEquipment Advance and may not exceed one hundred percent (100%) of theequipment invoice, excluding taxes, shipping, warranty charges, freightdiscounts and installation expense. Software may constitute up to twenty percent (20%) of the aggregateamount of all Equipment Advances.  EachEquipment Advance must be for a minimum of Two Hundred Thousand Dollars($200,000).  The number of EquipmentAdvances is limited to five (5).

 

Interest accrues from the date of each Equipment Advance at the rate inSection 2.2 (a) and is payable monthly. Each Equipment Advance is payable in forty eight (48) equal monthlyinstallments (the “Repayment Period”) of principal, plus accrued interest,beginning on the first (1st) day of each month after each Equipment Advance and continuingthereafter until the last day of each Repayment Period (the “Equipment MaturityDate”).  All Equipment Advances shall beevidenced by the Equipment Term Note to be executed and delivered by Borrowersto Bank on the Closing Date and shall be repaid in accordance with the terms ofthe Equipment Term Note.  EquipmentAdvances when repaid may not be reborrowed.

 

To obtain an Equipment Advance, the Company must notify Bank (thenotice is irrevocable) by facsimile no later than 3:00 p.m. Eastern time one(1) Business Day before the day on which the Equipment Advance is to bemade.  The notice in the form of ExhibitB (Payment/Advance Form) must be signed by a Responsible Officer or designeeand include a copy of the invoice for the Equipment being financed.

 

**Interest Rate, Payments.**

 

Interest Rate.  (i) Equipment Advances accrue interest on theoutstanding principal balance****at aper annum rate of one half of one percentage points (0.50%) above the PrimeRate.  (ii)  The outstanding principal balance of the TermLoan continues to accrue interest at the fixed rate of six and three quarters percent (6.75%) per annum.  (iii) The outstanding principal balance of the Supplemental Equipment Loancontinues to accrue interest at the fixed rate of eight and one half percent(8.50%) per annum. After an Event of Default, Obligations accrue interest atfive percent (5%) above the rate effective immediately before the Event ofDefault.  The interest rate increases ordecreases when the Prime Rate changes. Interest is computed on a 360 day year for the actual number of dayselapsed.

 

Payments.  Bank may debit any Borrower’s depositaccounts including Account

 

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Number                                        for principal and interest payments owing or any amounts any Borrower owesBank.  Bank will promptly notify theCompany when it debits any Borrower’s accounts. These debits are not a set-off.  Paymentsreceived after 12:00 noon Eastern time are consideredreceived at the opening of business on the next Business Day.  When a payment is due on a day that is not aBusiness Day, the payment is due the next Business Day and additional fees or interest accrue.

 

On April 29, 2005 or if the Term Loan is accelerated following theoccurrence of an Event of Default, Borrowers will pay, in addition to theunpaid principal and accrued interest and all other amounts due on such datewith respect to the Term Loan, an amount equal to the Final Payment.

 

In addition to the fees paid under the Prior Agreement, Borrowers willpay:

 

Facility Fee.  A fully earned,nonrefundable fee in the amount of Thirty Thousand Dollars ($30,000).

 

Bank Expenses.All Bank Expenses (including reasonable attorneys’ fees and reasonableexpenses) incurred through and after the date of this Agreement, are payablewhen due.

 

**Joint Obligations.**

 

Each Person included in the term “Borrower” hereby covenants and agreeswith Bank as follows:

 

(a) The Obligations include all present and future indebtedness,duties, obligations, and liabilities, whether now existing or contemplated orhereafter arising, of any one or more of the Borrowers.

 

(b) Reference in this Agreement and the other Loan Documents to the “Borrower”or otherwise with respect to any one or more of the Persons now or hereafterincluded in the definition of “Borrower” shall mean each and every such Personand any one or more of such Persons, jointly and severally, unless the context requiresotherwise.

 

(c) Each Person included in the term “Borrower” in the discretion ofits respective management is to agree among themselves as to the allocation ofthe benefits of each Equipment Advance.

 

(d) For administrative convenience, each Person included in the term “Borrower”hereby irrevocably appoints the Company as the Borrower’s attorney-in-fact,with power of substitution (with the prior written consent of Bank in theexercise of its sole and absolute discretion), in the name of the Company or inthe name of any Borrower or otherwise to take any and all actions with respectto this Agreement, the other Loan Documents, the Obligations and/or theCollateral (including, without limitation, the proceeds thereof) as the Companymay so elect from time to time, including, without limitation, actions to (i)request the Equipment Advance and direct Bank to disburse or credit theproceeds of the Equipment Advance directly to an account of the Company, anyone or more of such Persons or otherwise, which direction shall evidence themaking of the Equipment Advance and shall constitute the acknowledgment by eachsuch Person of the receipt of the proceeds of the Equipment Advance, (ii) enterinto, execute, deliver, amend, modify, restate, substitute, extend and/or renewthis Agreement, any other Loan Documents, security agreements, mortgages,deposit account agreements, instruments, certificates, waivers, letter ofcredit applications, releases, documents and agreements from time to time, and(iii) endorse any check or other item of payment in the name of such Person orin the name of the

 

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Company. The foregoing appointment is coupled with an interest, cannot be revokedwithout the prior written consent of Bank, and may be exercised from time totime through the Company’s duly authorized officer, officers or other Person orPersons designated by the Company to act from time to time on behalf of theCompany.

 

(e) Each Person included in the term “Borrower” hereby irrevocablyauthorizes Bank to make the Equipment Advance to any one or more or all of suchPerson(s), pursuant to the provisions of this Agreement upon the written, oralor telephone request any one or more of the Persons who is from time to time aResponsible Officer of a Borrower under the provisions of the most recentcertificate of corporate resolutions and/or incumbency of the Person includedin the term “Borrower” on file with Bank and also upon the written, oral ortelephone request of any one of the Persons who is from time to time a ResponsibleOfficer of the Company under the provisions of the most recent certificate ofcorporate resolutions and/or incumbency for the Company on file with Bank.

 

(f) Bank assumes no responsibility or liability for any errors,mistakes, and/or discrepancies in the oral, telephonic, written or othertransmissions of any instructions, orders, requests and confirmations betweenBank and any one or more of the Persons included in the term “Borrower” or Bankin connection with the Credit Extension or any other transaction in connectionwith the provisions of this Agreement.

 

**Inter-Company Debt, Contribution.**

 

Without implying any limitation on the joint and several nature of the Obligations, Bank agrees that, notwithstandingany other provision of this Agreement, the Persons included in the term “Borrower”may create reasonable inter-company indebtedness between or among the Personsincluded in the term “Borrower” with respect to the allocation of the benefitsand proceeds of the Equipment Advance. The Persons included in the term “Borrower” agree among themselves, andBank consents to that agreement, that each such Person shall have rights ofcontribution from all of the such Persons to theextent such Person incurs Obligations in excess of the proceeds of the EquipmentAdvance received by, or allocated to purposes for the direct benefit of, suchPerson.  All such indebtedness and rightsshall be, and are hereby agreed by the Persons included in the term “Borrower”to be, subordinate in priority and payment to the indefeasible repayment infull in cash of the Obligations, and, unless Bank agrees in writing otherwise,shall not be exercised or repaid in whole or in part until all of theObligations have been indefeasibly paid in full in cash.  Each Person included in the term “Borrower”agrees that all of such inter-company indebtedness and rights of contributionare part of the Collateral and secure the Obligations.  Each Person included in the term “Borrower”hereby waives all rights of counter claim, recoupment and offset between oramong themselves arising on account of that indebtedness and otherwise.  No Person included in the term “Borrower”shall secure any inter-company indebtedness or rights of contribution with anyLien or security.

 

**Borrowers are Integrated Group.**

 

Each Person included in the term “Borrower” hereby represents andwarrants to Bank that each of them will derive benefits, directly andindirectly, from the Equipment Advance, both in their separate capacity and asa member of the integrated group to which each such Person belongs and becausethe successful operation of the integrated group is dependent upon thecontinued successful performance of the functions of the integrated group as awhole, because (i) the terms of the consolidated financing provided under thisAgreement are more favorable than would otherwise would be obtainable by suchPersons individually, and (ii) the additional administrative and other costsand reduced flexibility associated with individual financing arrangements whichwould otherwise be required if obtainable would substantially reduce the valueto such Persons of the financing.

 

Each Person included in the term “Borrower” hereby represents andwarrants

 

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that all of the representations and warranties contained in the LoanDocuments are true and correct on and as of the date hereof as if made on andas of such date, both before and after giving effect to this Agreement, andthat no Event of Default has occurred and is continuing or exists or wouldoccur or exist after giving effect to this Agreement.

 

**Primary Obligations.**

 

The obligations and liabilities of each Person included in the term “Borrower”,as guarantor under this Section shall be primary, direct and immediate, shallnot be subject to any counterclaim, recoupment, set off, reduction or defensebased upon any claim that such Person may have against any one or more of theother Persons included in the term “Borrower”, Bank and/or any other guarantorand shall not be conditional or contingent upon pursuit or enforcement by Bankof any remedies it may have against Persons included in the term “Borrower”with respect to this Agreement or any of the other Loan Documents, whetherpursuant to the terms thereof or by operation of law.  Without limiting the generality of theforegoing, Bank shall not be required to make any demand upon any of thePersons included in the term “Borrower”, or to sell the Collateral or otherwisepursue, enforce or exhaust its or their remedies against the Persons includedin the term “Borrower” or the Collateral either before, concurrently with orafter pursuing or enforcing its rights and remedies hereunder.  Any one or more successive or concurrentactions or proceedings may be brought against each Person included in the term “Borrower”under this Section, either in the same action, if any, brought against any oneor more of the Persons included in the term “Borrower” or in separate actionsor proceedings, as often as Bank may deem expedient or advisable.  Without limiting the foregoing, it is specificallyunderstood that any modification, limitation or discharge of any of theliabilities or obligations of any one or more of the Persons included in theterm “Borrower”, any other guarantor or any obligor under any of the LoanDocuments, arising out of, or by virtue of, any bankruptcy, arrangement,reorganization or similar proceeding for relief of debtors under federal orstate law initiated by or against any one or more of the Persons included inthe term “Borrower”, in their respective capacities as borrowers and guarantorsunder this Section, or under any of the Loan Documents shall not modify, limit,lessen, reduce, impair, discharge, or otherwise affect the liability of eachBorrower under this Section in any manner whatsoever, and this Section shallremain and continue in full force and effect. It is the intent and purpose of this Section that each Person includedin the term “Borrower” shall and does hereby waive all rights and benefitswhich might accrue to any other guarantor by reason of any such proceeding, andthe Persons included in the term “Borrower” agree that they shall be liable forthe full amount of the obligations and liabilities under this Sectionregardless of, and irrespective to, any modification, limitation or dischargeof the liability of any one or more of the Persons included in the term “Borrower”,any other guarantor or any obligor under any of the Loan Documents, that mayresult from any such proceedings.

 

**CONDITIONS OF LOANS**

 

**ConditionsPrecedent to Initial Credit Extension.**

 

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

 

**Conditions Precedent to all CreditExtensions.**

 

Bank’s obligations to make each Credit Extension, including the initialCredit Extension, is subject to the following:

 

timely receipt ofany Payment/Advance Form; and

 

therepresentations and warranties in Section 5 must be true on the date of the

 

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Payment/Advance Form and on the effective date of each Credit Extensionand no Event of Default may have occurred and be continuing, or result from theCredit Extension. Each Credit Extension is Borrower’s representation andwarranty on that date that the representations and warranties of Section 5 remaintrue.

 

**CREATION OF SECURITY INTEREST**

 

**Grant ofSecurity Interest.**

 

Each Borrower grants Bank a continuing security interest in allpresently existing and later acquired Collateral to secure all Obligations andperformance of each of Borrower’s duties under the Loan Documents.  Except for Permitted Liens, any securityinterest will be a first priority security interest in the Collateral.  Bank may place a “hold” on any depositaccount pledged as Collateral. Notwithstanding the foregoing, the security interest granted herein doesnot extend to and the term “Collateral” does not include any license orcontract rights to the extent (i) the granting of a security interest in itwould be contrary to applicable law, or (ii) that such rights are nonassignableby their terms (but only to the extent such prohibition is enforceable underapplicable law, including, without limitation, Section 9318(4) of the Code)without the consent of the licensor or other party (but only to the extent suchconsent has not been obtained).  Exceptas disclosed on the Schedule, no Borrower is a licensee under, nor is bound by,any license agreement for which the failure to maintain such license could havea Material Adverse Change on such Borrower’s financial condition or business andthat prohibits or otherwise restricts such Borrower from granting a securityinterest in such Borrower’s interest in such license or agreement or any otherproperty.  Notwithstanding the foregoing,the security interest granted herein does not extend to and the term “Collateral”does not include any Equipment leased to any Borrower pursuant to those certainlease financing transactions more particularly described on the Schedule.  Notwithstanding the security interestsgranted herein, nothing set forth herein is intended to, nor shall constitute,an assignment of any Borrower’s obligations, including any obligations toperform, under any contracts between any Borrower and its customers and orclients, provided that subject to the foregoing provisions of this Section 4.1,Bank shall have a security interest in all such contract rights as part of the “Collateral”.  If this Agreement is terminated, Bank’s lienand security interest in the Collateral will continue until Borrowers fullysatisfy their Obligations.

 

**Authorization to File.**

 

Each Borrower authorizes Bank to file financing statements withoutnotice to any Borrower, with all appropriate jurisdictions, as Bank deemsappropriate, in order to perfect or protect Bank’s interest in the Collateral.

 

**REPRESENTATIONS AND WARRANTIES**

 

Each Borrower represents and warrants as follows:

 

**Due Organization and Authorization.**

 

The Company and each Borrower is duly existing and in good standing inthe State of Delaware and qualified and licensed to do business in, and in goodstanding in, any state in which the conduct of its business or its ownership ofproperty requires that it be qualified, except where the failure to do so couldnot reasonably be expected to cause a Material Adverse Change.  Each Borrower and each Subsidiary’s exactlegal name is as set forth on the first page of thisAgreement.  The execution, delivery andperformance of the Loan Documents have been duly

 

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authorized, and do not conflict withBorrower’s formation documents, nor constitute an event of default under anymaterial agreement by which any Borrower is bound.  Borrowers are not in default under anyagreement to which, or by which it is bound, in which the default couldreasonably be expected to cause a Material Adverse Change.

 

Each****Borrower has goodtitle to the Collateral, free of Liens except Permitted Liens.  The Accounts are bona fide, existingobligations, and the service or property has been performed or delivered to theaccount debtor or its agent for immediate shipment to and unconditionalacceptance by the account debtor.  EachBorrower has no notice of any actual or imminent Insolvency Proceeding of anyaccount debtor whose accounts are an Eligible Account in any Borrowing BaseCertificate.  All Inventoryis in all material respects of good and marketable quality, free from materialdefects.  Except as noted on theSchedule, No Borrower is party to, nor is bound by, any material license orother material agreement with respect to which any Borrower is the licenseethat prohibits or otherwise restricts any Borrower from granting a securityinterest in such Borrower’s interest in such license or agreement or any otherproperty.  Borrower will provide writtennotice to Bank within ten (10) days of entering or becoming bound by any suchlicense or agreement which is reasonably likely to have a material impact onany Borrower’s business or financial condition (other than over-the-countersoftware that is commercially available to the public).  Each Borrower shall take such steps as Bank reasonablyrequests to obtain the consent of, authorization by, or waiver by, any personwhose consent or waiver is necessary for all such licenses or contract rightsto be deemed “Collateral” and for Bank to have a security interest in it thatmight otherwise be restricted or prohibited by law or by the terms of any suchlicense or agreement (such consent or authorization may include a licensor’sagreement to a contingent assignment of the license to Bank if the Bankdetermines that is necessary in its good faith judgment), whether now existingor entered into in the future.

 

There are no actions or proceedings pending or, to the knowledge of theCompany’s Responsible Officers, threatened by or against any Borrower or anySubsidiary in which a likely adverse decision could reasonably be expected tocause a Material Adverse Change.

 

**No Material Adverse Change in Financial Statements.**

 

All consolidated financial statements for Borrowers, and anySubsidiary, delivered to Bank fairly present in all material respects Borrowers’consolidated financial condition and Borrowers’ consolidated results ofoperations.  There has not been anymaterial deterioration in any Borrower’s consolidated financial condition sincethe date of the most recent consolidated financial statements submitted toBank.

 

**Solvency.**

 

The fair salable value of Borrowers’ assets (including goodwill minusdisposition costs) exceeds the fair value of its liabilities; the Borrowers arenot left with unreasonably small capital after the transactions in thisAgreement or any of the Loan Documents; and Borrowers are able to pay theirdebts (including trade debts) as they mature.

 

**Regulatory Compliance.**

 

No Borrower is an “investment company” or a company “controlled” by an “investmentcompany” under the Investment Company Act. No Borrower is engaged as one of its important activities in extendingcredit for margin stock (under Regulations T and U of the Federal Reserve Boardof Governors).  Each Borrower hascomplied in all material respects with the Federal Fair Labor StandardsAct.  No Borrower has violated any laws,ordinances or rules, the violation of which could reasonably be expected tocause a Material Adverse Change.  None ofany Borrower’s or any Subsidiary’s properties or assets has been used by anyBorrower or any Subsidiary or, to the best of Borrower’s knowledge, by previousPersons, in disposing, producing,

 

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storing, treating, or transporting anyhazardous substance other than legally. Each Borrower and each Subsidiary has timely filed all required taxreturns and paid, or made adequate provision to pay, all material taxes, exceptthose being contested in good faith with adequate reserves under GAAP.  Each Borrower and each Subsidiary hasobtained all consents, approvals and authorizations of, made all declarationsor filings with, and given all notices to, all government authorities that arenecessary to continue its business as currently conducted, except where thefailure to do so could not reasonably be expected to cause a Material AdverseChange.

 

**Subsidiaries.**

 

Borrowers do not own any stock, partnership interest or other equitysecurities except for Permitted Investments.

 

**Full Disclosure.**

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No written representation, warranty or other statement of any Borrowerin any certificate or written statement given to Bank (taken together with allsuch written certificates and written statements to Bank) contains any untruestatement of a material fact or omits to state a material fact necessary tomake the statements contained in the certificates or statements notmisleading.  It being recognized by Bankthat the projections and forecasts provided by Borrowers in good faith andbased upon reasonable assumptions are not viewed asfacts and that actual results during the period or periods covered by suchprojections and forecasts may differ from the projected and forecasted results.

 

**AFFIRMATIVE COVENANTS**

 

Borrowers will do all of the following for so long as Bank has anobligation to make any Credit Extension, or there are outstanding Obligations:

 

**Government Compliance.**

 

Each Borrower will maintain its and all Subsidiaries’ legal existenceand good standing as a Registered Organization in only the State of Delawareand maintain qualification in each jurisdiction in which the failure to soqualify would reasonably be expected to cause a material adverse effect on anyBorrower’s business or operations.  EachBorrower will comply, and have each Subsidiary comply, with all laws,ordinances and regulations to which it is subject, noncompliance with whichcould have a material adverse effect on any Borrower’s business or operationsor would reasonably be expected to cause a Material Adverse Change.

 

**Financial Statements, Reports, Certificates.**

 

The Company will deliver to Bank: (i) as soon as available, but no later than thirty (30) days after thelast day of each month, a company prepared consolidated balance sheet andincome statement covering the Company’s consolidated operations during theperiod certified by a Responsible Officer and in a form acceptable to Bank;(ii) as soon as available, but no later than one hundred twenty (120) daysafter the last day of Company’s fiscal year, audited consolidated financialstatements prepared under GAAP, consistently applied, together with anunqualified opinion on the financial statements from an independent certifiedpublic accounting firm reasonably acceptable to Bank; (iii) a prompt report ofany legal actions pending or threatened against any Borrower or any Subsidiarythat could result in damages or costs to any Borrower or any Subsidiary of$100,000 or more; and (iv) budgets, sales projections, operating plans or otherfinancial information Bank reasonably requests.

 

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Within thirty (30) days after the last day of each month, the Companywill deliver to Bank with the monthly financial statements a ComplianceCertificate signed by a Responsible Officer in the form of Exhibit C.

 

AllowBank to audit the Collateral at Borrowers’ expense.  Such audits will be conducted no more oftenthan every six (6) months unless an Event of Default has occurred and iscontinuing.

 

**Inventory; Returns.**

 

Borrowers will keep all Inventory in good andmarketable condition, free from material defects.  Returns and allowances between any Borrowerand its account debtors will follow Borrowers’ customary practices as theyexist at execution of this Agreement. Borrowers must promptly notify Bank of all returns, recoveries, disputesand claims, that involve more than $50,000.

 

Each Borrower will make, and cause each Subsidiary to make, timelypayment of all material federal, state, and local taxes or assessments (otherthan taxes and assessments which any Borrower is contesting in good faith, withadequate reserves maintained in accordance with GAAP) and will deliver to Bank,on demand, appropriate certificates attesting to the payment.

 

**Insurance.**

 

Each Borrower will keep its business and the Collateral insured forrisks and in amounts standard for Borrower’s industry, and as Bank mayreasonably request.  Insurance policieswill be in a form, with companies, and in amounts that are satisfactory to Bankin Bank’s reasonable discretion.  Allproperty policies will have a lender’s loss payable endorsement showing Bank asan additional loss payee and all liability policies will show the Bank as anadditional insured and provide that the insurer must give Bank at least twenty(20) days notice before canceling its policy. At Bank’s request, the Company will deliver certified copies of policiesand evidence of all premium payments. Proceeds payable under any policy will,at Bank’s option, be payable to Bank on account of the Obligations.

 

**Primary Accounts.**

 

Each Borrower will maintain its primary depository and operatingaccounts with Bank and Borrowers will at all times maintain not less than 33%of cash on deposit with Bank, which is not subject to any security interest,other than in favor of Bank. However this requirement will be limited to nomore than $12,500,000 of Borrower’s total available cash.

 

**Financial Covenants.**

 

Borrowers will maintain as of the last day of each month (unlessotherwise stated below):

 

**Quick Ratio (Adjusted)**.  A ratio of Quick Assets toCurrent Liabilities (including, without limitation, long term Indebtedness infavor of Bank) minus Deferred Revenue of at least 2.00 to 1.00.

 

**Remaining Months Liquidity**.  At all times, Borrowers will maintain, as ofthe last day of each month, at least six (6) Remaining MonthsLiquidity.

 

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**Further Assurances.**

 

Borrowers will execute any further instruments and take further actionas Bank reasonably requests to perfect or continue Bank’s security interest inthe Collateral or to effect the purposes of thisAgreement.

 

**NEGATIVE COVENANTS**

 

Borrowers will not do any of the following without Bank’s prior writtenconsent, for so long as Bank has an obligation to make Credit Extensions orthere are any outstanding Obligations:

 

**Dispositions.**

 

Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”),or permit any Subsidiaries to Transfer, all or any part of its business orproperty, except for Transfers (i) of Inventory in the ordinary course ofbusiness; (ii) of non-exclusive licenses and similar arrangements for the useof the property of any Borrower or its Subsidiaries in the ordinary course ofbusiness; or (iii) of worn-out or obsolete Equipment.

 

**Changes in Business, Ownership, Management orBusiness Locations.**

 

Engage in or permit any of its Subsidiaries to engage in any businessother than the businesses currently engaged in by any Borrower or reasonablyrelated thereto or have a material change in its management.  Borrowers will not, without at least thirty(30) days prior written notice, change their state of formation, relocate theirchief executive offices or add any new offices or business locations.

 

**Mergers or Acquisitions.**

 

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

 

**Indebtedness.**

 

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

 

**Encumbrance.**

 

Create, incur, or allow any Lien on any of its property, or assign orconvey any right to receive income, including the sale of any Accounts, orpermit any of its Subsidiaries to do so, except for Permitted Liens, or permitany Collateral not to be subject to the first priority security interestgranted here, subject to Permitted Liens. In addition, Borrowers shall not sell, transfer, assign, mortgage,pledge, lease, grant a security interest in, or encumber, or enter into anyagreement, document, instrument or other arrangement (except with or in favorof the Bank) with any Person which directly or indirectly prohibits or has theeffect of prohibiting Borrowers from selling, transferring, assigning,mortgaging, pledging, leasing, granting a security interest in or upon, orencumbering any of Borrower’s Intellectual Property.

 

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## **Distributions; Investments.**

 

Directly or indirectly acquire or own any Person, or make anyInvestment in any Person, other than Permitted Investments, or permit any ofits Subsidiaries to do so.  Pay anydividends or make any distribution or payment, except in connection with aPermitted Investment or redeem, retire or purchase any capital stock.

 

**Transactions with Affiliates.**

## ** **

Directly or indirectly enter into or permit to exist any material transactionwith any Affiliate of any Borrower except for transactions between Borrowers ortransactions that are in the ordinary course of a Borrower’s business, uponfair and reasonable terms that are no less favorable to any Borrower than wouldbe obtained in an arm’s length transaction with a nonaffiliated Person.

 

**Subordinated Debt.**

 

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

 

## **Compliance.**

##  

Become an “investment company” or a company controlled by an “investmentcompany,” under the Investment Company Act of 1940 or undertake as one of itsimportant activities extending credit to purchase or carry margin stock, or usethe proceeds of any Credit Extension for that purpose; fail to meet the minimumfunding requirements of ERISA, permit a Reportable Event or ProhibitedTransaction, as defined in ERISA, to occur; fail to comply with the FederalFair Labor Standards Act or violate any other law or regulation, if theviolation could reasonably be expected to have a material adverse effect onBorrower’s business or operations or would reasonably be expected to cause aMaterial Adverse Change, or permit any of its Subsidiaries to do so.

 

# **EVENTS OF DEFAULT**

 

Any one of the following is an Event of Default:

 

## **Payment Default.**

 

If any Borrower fails to pay any of theObligations within three (3) Business Days of when due.  During the additional period the failure tocure the default is not an Event of Default (but no Credit Extension will bemade during the cure period);

 

## **Covenant Default.**

 

If Borrowers fail to perform any obligation under Sections 6.2 or 6.7or violates any of the covenants contained in Article 7 of this Agreement, or

 

If any Borrower fails or neglects to perform, keep, or observe anyother material term, provision, condition, covenant, or agreement contained inthis Agreement, in any of the Loan Documents, or in any other present or futureagreement between any Borrower and Bank and as to any default under such otherterm, provision, condition, covenant or agreement that can

 

----

 

be cured, has failed to cure such default within ten (10) days afterthe occurrence thereof; provided, however, that if the default cannot by itsnature be cured within the ten (10) day period or cannot after diligentattempts by any Borrower be cured within such ten (10) day period, and suchdefault is likely to be cured within a reasonable time, then Borrowers shallhave an additional reasonable period (which shall not in any case exceed thirty(30) days) to attempt to cure such default, and within such reasonable timeperiod the failure to have cured such default shall not be deemed an Event ofDefault (provided that no Credit Extensions will be made during such cureperiod);

 

## **Material Adverse Change.**

 

If there (i) occurs a material adverse change in the business,operations, or condition (financial or otherwise) of the Borrowers or (ii) Bankdetermines, based upon information available to it and in its reasonablejudgment, that there is a reasonable likelihood that Borrowers will fail tocomply with one or more of the financial covenants in Section 6.7 during thenext succeeding financial reporting period.

 

## **Attachment.**

 

If a material portion of Borrowers’ assets, taken as a whole, isattached, seized, levied on, or comes into possession of a trustee or receiverand the attachment, seizure or levy is not removed in ten (10) days, or if anyBorrower is enjoined, restrained, or prevented by court order from conducting amaterial part of its business or if a judgment or other claim becomes a Lien ona material portion of Borrowers’ assets taken together as a whole, or if anotice of lien, levy, or assessment is filed against any of Borrower’s assetsby any government agency and not paid within ten (10) days after such Borrowerreceives notice.  These are not Events ofDefault if stayed or if a bond is posted pending contest by such Borrower (butno Credit Extensions will be made during the cure period);

 

## **Insolvency.**

 

If any Borrower becomes insolvent or if any Borrower begins anInsolvency Proceeding or an Insolvency Proceeding is begun against any Borrowerand not dismissed or stayed within 30 days (but no Credit Extensions will bemade before any Insolvency Proceeding is dismissed);

 

## **Other Agreements.**

 

If there is a default in any agreement between any Borrower and a thirdparty that gives the third party the right to accelerate any Indebtednessexceeding $100,000 or that could be reasonably expected to cause a MaterialAdverse Change;

 

## **Judgments.**

 

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

 

## **Misrepresentations.**

 

If any Borrower or any Person acting for Borrower makes any materialmisrepresentation or material misstatement now or later in any warranty orrepresentation in this Agreement or in any writing delivered to Bank or toinduce Bank to enter this Agreement or any Loan Document;

 

----

 

or

 

## **Subsidiaries.**

 

Any circumstance described in Sections 8.3, 8.4, 8.5 or 8.7 occurs toany Subsidiary which is not also a Borrower.

 

# **BANK’S RIGHTS AND REMEDIES**

 

## **Rights and Remedies.**

 

When an Event of Default occurs and continues Bank may, without noticeor demand, do any or all of the following:

 

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

 

Stop advancing money or extending credit for Borrower’s benefit underthis Agreement or under any other agreement between any Borrower and Bank;

 

Settle or adjust disputes and claims directly with account debtors foramounts, on terms and in any order that Bank considers advisable;

 

Make any payments and do any acts it considers necessary or reasonableto protect its security interest in the Collateral.  Borrowers will assemble the Collateral ifBank requires and make it available as Bank designates.  Bank may enter premises where the Collateralis located, take and maintain possession of any part of the Collateral, andpay, purchase, contest, or compromise any Lien which appears to be prior orsuperior to its security interest and pay all expenses incurred.  Each Borrower grants Bank a license to enterand occupy any of its premises, without charge, to exercise any of Bank’srights or remedies;

 

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

 

Ship, reclaim, recover, store, finish, maintain, repair, prepare forsale, advertise for sale, and sell the Collateral.  Bank is granted a non-exclusive, royalty-freelicense or other right to use, without charge, Borrower’s labels, Patents,Copyrights, rights of use of any name, trade secrets, trade names, Trademarks,service marks, and advertising matter, or any similar property as it pertainsto the Collateral, in completing production of, advertising for sale, andselling any Collateral and, in connection with Bank’s exercise of its rightsunder this Section, each Borrower’s rights under all licenses and all franchiseagreements inure to Bank’s benefit;

 

Bank may place a “hold” on any account maintained with Bank and delivera notice of exclusive control, any entitlement order, or other directions orinstructions pursuant to any control agreement or similar agreements providingcontrol of any Collateral; and

 

Dispose of the Collateral according to the Code.

 

## **Power of Attorney.**

 

Effective only when an Event of Default occurs and continues, eachBorrower irrevocably

 

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appoints Bank as its lawful attorney to:  (i) endorse each Borrower’s name on anychecks or other forms of payment or security; (ii) sign each Borrower’s name onany invoice or bill of lading for any Account or drafts against accountdebtors, (iii) make, settle, and adjust all claims under Borrower’s insurancepolicies; (iv) settle and adjust disputes and claims about the Accountsdirectly with account debtors, for amounts and on terms Bank determinesreasonable; and (v) transfer the Collateral into the name of Bank or a thirdparty as the Code permits.  Bank mayexercise the power of attorney to sign each Borrower’s name on any documentsnecessary to perfect or continue the perfection of any security interestregardless of whether an Event of Default has occurred.  Bank’s appointment as each Borrower’sattorney in fact, and all of Bank’s rights and powers, coupled with aninterest, are irrevocable until all Obligations have been fully repaid andperformed and Bank’s obligation to provide Credit Extensions terminates.

 

## **Accounts Collection.**

 

When an Event of Default occurs and continues, Bank may notify anyPerson owing any Borrower money of Bank’s security interest in the funds andverify the amount of the Account.  EachBorrower must collect all payments in trust for Bank and, if requested by Bank,immediately deliver the payments to Bank in the form received from the accountdebtor, with proper endorsements for deposit.

 

## **Bank Expenses.**

 

If any Borrower fails to pay any amount or furnish any required proofof payment to third persons, Bank may make all or part of the payment or obtaininsurance policies required in Section 6.5, and take any action under thepolicies Bank deems prudent.  Any amountspaid by Bank are Bank Expenses and immediately due and payable, bearinginterest at the then applicable rate and secured by the Collateral.  No payments by Bank are deemed an agreementto make similar payments in the future or Bank’s waiver of any Event ofDefault.

 

## **Bank’s Liability for Collateral.**

 

If Bank complies with reasonable banking practices and the Code, it isnot liable for: (a) the safekeeping of the Collateral; (b) any loss or damageto 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.  Borrowers bear all risk of loss, damage ordestruction of the Collateral.

 

## **Remedies Cumulative.**

 

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

 

## **Demand Waiver.**

 

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

 

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# **NOTICES**

 

All notices or demands by any party about this Agreement or any otherrelated agreement must be in writing and be personally delivered or sent by anovernight delivery service, by certified mail, postage prepaid, return receiptrequested, or by telefacsimile to the addresses set forth at the beginning ofthis Agreement.  A party may change itsnotice address by giving the other party written notice.

 

# **CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER**

 

Pennsylvania****law governsthe Loan Documents without regard to principles of conflicts of law.  Borrowers and Bank each submit to theexclusive jurisdiction of the State and Federal courts in the Commonwealth ofPennsylvania provided, however, that if for any reason the Bank can not availitself of the courts of the Commonwealth of Pennsylvania, the Borrowers andBank each submit to the jurisdiction of the State and Federal Courts in SantaClara County, California.

 

**BORROWERS AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OFANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANYCONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALLOTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTERINTO THIS AGREEMENT.  EACH PARTY HASREVIEWED THIS WAIVER WITH ITS COUNSEL.**

 

# **GENERAL PROVISIONS**

 

## **Successors and Assigns.**

 

This Agreement binds and is for the benefit of the successors andpermitted assigns of each party. Borrowers may not assign this Agreement or any rights under it withoutBank’s prior written consent which may be granted or withheld in Bank’sdiscretion. Bank has the right, without the consent of or notice to Borrowers,to sell, transfer, negotiate, or grant participation in all or any part of, orany interest in, Bank’s obligations, rights and benefits under this Agreement.

 

Borrowers will jointly and severally indemnify, defend and hold harmlessBank and its officers, employees, and agents against:  (a) all obligations, demands, claims, andliabilities asserted by any other party in connection with the transactionscontemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred,or paid by Bank from, following, or consequential to transactions between Bankand Borrowers (including reasonable attorneys fees and expenses), except forlosses caused by Bank’s gross negligence or willful misconduct.

 

## **Time of Essence.**

 

Time is of the essence for the performance of all obligations in thisAgreement.

 

## **Severability of Provision.**

 

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

 

## **Amendments in Writing, Integration.**

 

All amendments to this Agreement must be in writing and signed byBorrowers and Bank.  This Agreementrepresents the entire agreement about this subject matter, and supersedes prior

 

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negotiations or agreements.  All prior agreements, understandings, representations,warranties, and negotiations between the parties about the subject matter ofthis Agreement merge into this Agreement and the Loan Documents.  The Borrowers agree that the execution ofthis Agreement is not intended to and shall not cause or result in acancellation or modification of the Existing Warrants, which Existing Warrantsshall remain in full force and effect.

 

## **Counterparts.**

 

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

 

## **Survival.**

 

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

 

## **Confidentiality.**

 

In handling any confidential information, Bank will exercise the samedegree of care that it exercises for its own proprietary information, butdisclosure of information may be made (i) to Bank’s subsidiaries or affiliatesin connection with their business with any Borrower, (ii) to prospective transfereesor purchasers of any interest in the loans (provided, however, Bank shall usecommercially reasonable efforts in obtaining such prospective transferee orpurchasers agreement of the terms of this provision), (iii) as required by law,regulation, subpoena, or other order, (iv) as required in connection with Bank’sexamination or audit and (v) as Bank considers appropriate exercising remediesunder this Agreement.  Confidentialinformation does not include information that either: (a) is in the publicdomain or in Bank’s possession when disclosed to Bank, or becomes part of thepublic domain after disclosure to Bank; or (b) is disclosed to Bank by a thirdparty, if Bank does not know that the third party is prohibited from disclosingthe information.

 

## **Effective Date.**

 

Notwithstanding anything set forth in this Agreement or any LoanDocument to the contrary, this Agreement and all of the Loan Documents shallnot be effective until the date on which the Bank executes this Agreement asindicated on the signature page to this Agreement.

 

## **Attorneys’ Fees, Costs and Expenses.**

 

In any action or proceeding between any Borrower and Bank arising outof the Loan Documents, the prevailing party will be entitled to recover itsreasonable attorneys’ fees and other reasonable costs and expenses incurred, inaddition to any other relief to which it may be entitled.

 

# **DEFINITIONS**

 

## **Definitions.**

 

In this Agreement:

 

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“**Accounts**” has the meaningset forth in the Code and includes all existing and later arising accounts, contractrights, and other obligations owed Borrower in connection with its sale orlease of goods (including licensing software and other technology) or provisionof services,**all creditinsurance, guaranties, other security and all merchandise returned or reclaimedby Borrower and Borrower’s Books relating to any of the foregoing.

 

“**Affiliate**” of a Person isa Person that owns or controls directly or indirectly the Person, any Personthat 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 liabilitycompany, that Person’s managers and members.

 

“**Agreement**” means thisAmended and Restated Loan and Security Agreement.

 

“**Bank Expenses**” are allaudit fees and expenses and reasonable costs and expenses (including reasonableattorneys’ fees and expenses) for preparing, negotiating, administering,defending and enforcing the Loan Documents (including appeals or InsolvencyProceedings).

 

“**Borrower’s Books**” are allBorrowers’ books and records including ledgers, records regarding Borrowers’assets or liabilities, the Collateral, business operations or financialcondition and all computer programs or discs or any equipment containing theinformation.

 

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

 

“**Cash Burn**” is defined theaverage net before tax loss for the three (3) month period then ending.

 

“**Closing Date**” is the dateof this Agreement.

 

“**Code**” is the UniformCommercial Code, in effect in the Commonwealth of Pennsylvania as in effectfrom time to time.

 

“**Collateral**” is theproperty described on Exhibit A.

 

“**Committed Equipment Line**”is a Credit Extension of up to Twelve Million Dollars ($12,000,000).

 

“**Contingent Obligation**”is, for any Person, any direct or indirect liability, contingent or not, ofthat Person for (i) any indebtedness, lease, dividend, letter of credit orother obligation of another such as an obligation directly or indirectlyguaranteed, endorsed, co-made, discounted or sold with recourse by that Person,or for which that Person is directly or indirectly liable; (ii) any obligationsfor undrawn letters of credit for the account of that Person; and (iii) allobligations from any interest rate, currency or commodity swap agreement,interest rate cap or collar agreement, or other agreement or arrangementdesignated to protect a Person against fluctuation in interest rates, currencyexchange rates or commodity prices;  but “ContingentObligation” does not include endorsements in the ordinary course ofbusiness.  The amount of a ContingentObligation is the stated or determined amount of the primary obligation forwhich the Contingent Obligation is made or, if not determinable, the maximumreasonably anticipated liability for it determined by the Person in good faith;but the amount may not exceed the maximum of the obligations under theguarantee or other support arrangement.

 

“**Credit Extension**” is each****Equipment****Advance or any other extension of credit by Bank for any Borrower’sbenefit, including, without limitation, all amounts advanced under the TermLoan and the Supplemental Equipment Loan pursuant to the Prior Agreement.

 

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“**Current Assets**” areamounts that under GAAP should be included on that date as current assets onBorrower’s consolidated balance sheet.

 

“**Current Liabilities**” arethe aggregate amount of Borrower’s Total Liabilities which mature within one(1) year.

 

“**Deferred Revenue**” is allamounts received in advance of performance under maintenance contracts and notyet recognized as revenue.

 

“**Equipment Advance**” isdefined in Section 2.1.1.

 

“**Equipment Availability End Date**”is defined in Section 2.1.1.

 

“**Equipment Maturity Date**”is defined in Section 2.1.1.

 

“**Equipment Term Note**”means that certain Equipment Term Note of even date herewith in the principalamount of Twelve Million Dollars ($12,000,000) from Borrowers in favor of Bank,together with all renewals, amendments, modifications and substitutionstherefor.

 

“**ERISA**” is the EmploymentRetirement Income Security Act of 1974, and its regulations.

 

“**Final Payment**”****is a payment (in addition to and not asubstitution for the regular monthly payments of principal plus accruedinterest) due on the last day of the repayment period for each advance madeunder the Term Loan equal to the amount of each advance multiplied by the FinalPayment Percentage.

 

“**Final Payment Percentage**”is five percent (5.0%).

 

“**GAAP**” is generallyaccepted accounting principles.

 

“**Guarantor**” is any presentor future guarantor of the Obligations.

 

“**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 ofcredit, (b) obligations evidenced by notes, bonds, debentures or similarinstruments, (c) capital lease obligations and (d) Contingent Obligations.

 

“**Insolvency Proceeding**”are proceedings by or against any Person under the United States BankruptcyCode, or any other bankruptcy or insolvency law, including assignments for thebenefit of creditors, compositions, extensions generally with its creditors, orproceedings seeking reorganization, arrangement, or other relief.

 

“**Intellectual****Property**” has the meaning set forth inSchedule A.

 

“**Inventory**” has themeaning set forth in the Code and includes is present and future inventory inwhich any Borrower has any interest, including merchandise, raw materials,parts, supplies, packing and shipping materials, work in process and finishedproducts intended for sale or lease or to be furnished under a contract ofservice, of every kind and description now or later owned by or in the custodyor possession, actual or constructive, of any Borrower, including inventorytemporarily out of its custody or possession or in transit and includingreturns on any accounts or other Proceeds from the sale or disposition of anyof the foregoing and any documents of title.

 

“**Investment**” is anybeneficial ownership of (including stock, partnership interest or othersecurities) any Person, or any loan, advance or capital contribution to anyPerson.

 

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“**Letter-of-credit right**”means a right to payment or performance under a letter of credit, whether ornot the beneficiary has demanded or is at the time entitled to demand paymentor performance.

 

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

 

“**Liquidity**” is defined asunrestricted cash, cash equivalents, and marketable securities held at theBank, Bank affiliates or financial institutions with which the Bank hasexecuted account control agreements in place, in a form satisfactory to Bankthat includes notification provisions, less principal outstandings.

 

“**Loan Documents**” are,collectively, this Agreement, the Equipment Term Note, the Term Note, theTranche I Supplemental Equipment Term Note, the Tranche II SupplementalEquipment Term Note,****any note, ornotes or guaranties executed by any Borrower or any Guarantor, and any otherpresent or future agreement between any Borrower and/or for the benefit of Bankin connection with this Agreement, including, without limitation the PriorAgreement, all as amended, extended or restated.

 

“**Material Adverse Change**”means the occurrence of any of the events set forth in Section 8.3.

 

“**Obligations**” are debts,principal, interest, Bank Expenses and other amounts any Borrower owes Bank nowor later, including cash management services, letters of credit and foreignexchange contracts, if any and including interest accruing after InsolvencyProceedings begin and debts, liabilities, or obligations of any Borrowerassigned to Bank.

 

“**Permitted Indebtedness**” is:

 

Borrowers’ indebtedness to Bank under this Agreement or any other LoanDocument;

 

#### Indebtednessexisting on the Closing Date and shown on the Schedule;

 

#### SubordinatedDebt;

 

#### Indebtednessamong the Borrowers;

 

#### Indebtednessto trade creditors incurred in the ordinary course of business; and

 

#### Indebtednesssecured by Permitted Liens.

 

**“Permitted Investments”**are:

 

#### Investmentsshown on the Schedule and existing on the Closing Date; and

 

#### (i)  marketable direct obligations issued orunconditionally guaranteed by the United States or its agency or any Statematuring within 1 year from its acquisition, (ii) commercial paper maturing nomore than 1 year after its creation and having the highest rating from eitherStandard & Poor’s Corporation or Moody’s Investors Service, Inc., and (iii)Bank’s certificates of deposit issued maturing no more than 1 year after issue.

 

**“Permitted Liens”**are:

 

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#### Liensexisting on the Closing Date and shown on the Schedule or arising under thisAgreement or other Loan Documents;

 

#### Liensfor taxes, fees, assessments or other government charges or levies, either notdelinquent or being contested in good faith and for which Borrowers maintainadequate reserves on its Books, if they have no priority over any of Bank’ssecurity interests;

 

#### Purchasemoney Liens (i) on Equipment acquired or held by any Borrower or itsSubsidiaries incurred for financing the acquisition of the Equipment, or (ii)existing on Equipment when acquired, if the Lien is confined to the propertyand improvements and the Proceeds of the Equipment;

 

#### Licensesor sublicenses granted in the ordinary course of Borrower’s business and anyinterest or title of a licensor or under any license or sublicense, if thelicenses and sublicenses permit granting Bank a security interest;

 

#### Leasesor subleases granted in the ordinary course of Borrower’s business, includingin connection with Borrower’s leased premises or leased property;

 

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

 

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

 

“**Proceeds**” has the meaning described in theCode as in effect from time to time.

 

“**Prime Rate**” is Bank’s most recentlyannounced “prime rate,” even if it is not Bank’s lowest rate.

 

“**Quick Assets**” is, on any date, the Company’sconsolidated, unrestricted cash, cash equivalents, net billed accountsreceivable and investments determined according to GAAP.

 

“**Registered Organization**” means anorganization organized solely under the law of a single state or the UnitedStates and as to which the state or the United States must maintain a publicrecord showing the organization to have been organized.

 

“**Remaining Months Liquidity**” is Liquiditydivided by Cash Burn.

 

“**Responsible****Officer**” is each of the Chief Executive Officer, thePresident, the Chief Financial Officer and the Controller of the Company.

 

“**Schedule**” is any attached schedule ofexceptions.

 

“**Subordinated Debt**” isdebt incurred by any Borrower subordinated to Borrowers’ indebtedness owed toBank and which is reflected in a written agreement in a manner and formacceptable to Bank and approved by Bank in writing.

 

“**Subsidiary**” is for any Person, or any otherbusiness entity of which more than 50% of the voting stock or other equityinterests is owned or controlled, directly or indirectly, by the

 

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Personor one or more Affiliates of the Person.

 

“**Supplemental Equipment Loan**” means a theterms loans made pursuant to the Prior Agreement in an amount of up to TwoMillion Dollars ($2,000,000).

 

“**Supplemental Equipment Loan Maturity Date**”is April 1, 2005 for all Credit Extensions made under the Tranche ISupplemental Equipment Term Note and July 1, 2006 for all Credit Extensionsmade under the Tranche II Supplemental Equipment Term Note.

 

“**Supporting Obligation**” means aLetter-of-credit right, secondary obligation or obligation of a secondaryobligor or that supports the payment or performance of an account, chattelpaper, a document, a general intangible, an instrumentor investment property.

 

“**Tangible Net Worth**” is, on any date, theconsolidated total assets of Borrowers and their Subsidiaries minus, (i) anyamounts attributable to (a) goodwill, (b) intangible items such as unamortizeddebt discount and expense, Patents, trade and service marks and names,Copyrights and research and development expenses except prepaid expenses, and(c) reserves not already deducted from assets, and (ii) Total Liabilities.

 

“**Term Loan**” is a loan made pursuant to thePrior Agreement in the original principal amount of Five Million Dollars($5,000,000).

 

“**Term Loan Maturity Date**” is April 1, 2005.

 

“**Term Loan Payment**” is defined in Section2.1.1(c).

 

“**Term Note**” means that certain EquipmentTerm Note dated April 30, 2002 in the principal amount of Five Million Dollars($5,000,000) from Borrowers in favor of Bank, together with all renewals,amendments, modifications and substitutions therefor.

 

“**Total****Liabilities**”is on any day, obligations that should, under GAAP, be classified as liabilitieson the Company’s consolidated balance sheet, including all Indebtedness, andcurrent portion Subordinated Debt allowed to be paid, but excluding all otherSubordinated Debt.

 

**“Tranche I Supplemental Equipment Term Note”**meansthat certain Tranche I Supplemental Equipment Term Note dated April 30, 2003 inthe principal amount of One Million Five Hundred Thousand Dollars ($1,500,000)from Borrowers in favor of Bank, together with all renewals, amendments,modifications and substitutions therefor.

 

**“Tranche II Supplemental Equipment Term Note”**meansthat certain Tranche II Supplemental Equipment Term Note dated April 30, 2003in the principal amount of Five Hundred Thousand Dollars ($500,000) fromBorrowers in favor of Bank, together with all renewals, amendments,modifications and substitutions therefor.

 

*[Signatures appear on the following page]*

 
| BORROWERS:             |
|------------------------|
|                   |
| IMMUNICON  CORPORATION |
|                   |
| By:                    |   | (SEAL) |
|                   | Name: |
|                   | Title: |

 

----

 
| IMMUNIVEST  CORPORATION |
|-------------------------|
|                    |
| By:                     |   | (SEAL) |
|                    | Name: |
|                    | Title: |
|                    |
| IMMC  HOLDINGS, INC.    |
|                    |
| By:                     |   | (SEAL) |
|                    | Name: |
|                    | Title: |
|                    |
| IMMUNICON  EUROPE, INC. |
|                    |
| By:                     |   | (SEAL) |
|                    | Name: |
|                    | Title: |
|                    |
| BANK:                   |
|                    |
| SILICON  VALLEY BANK    |
|                    |
| By:                     |   |   |
|                    | Name: |
|                    | Title: |
|                    |
| Effective  as of        |   | ,  200  |
|                         |  |  |  |  |  |

 

**EXHIBIT A**

 

TheCollateral consists of all of Borrower’s right, title and interest in and tothe following:

 

Allgoods and equipment now owned or hereafter acquired, including, withoutlimitation, all machinery, fixtures, vehicles (including motor vehicles andtrailers), and any interest in any of the foregoing, and all attachments, accessories,accessions, replacements, substitutions, additions, and improvements to any ofthe foregoing, wherever located;

 

Allinventory, now owned or hereafter acquired, including, without limitation, allmerchandise, raw materials, parts, supplies, packing and shipping materials,work in process and finished products including such inventory as istemporarily out of Borrower’s custody or possession or in transit and includingany returns upon any accounts or other Proceeds,  resulting from the sale or dispositionof any of the foregoing and any documents of title representing any of theabove;

 

Allcontract rights and general intangibles now owned or hereafter acquired,including,

 

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without limitation, goodwill, license agreements, franchise agreements,blueprints, drawings, purchase orders, customer lists, route lists,infringements, claims, computer programs, computer discs, computer tapes,literature, reports, catalogs, design rights, income tax refunds, payments ofinsurance and rights to payment of any kind;

 

Allnow existing and hereafter arising accounts, contract rights, royalties,license rights and all other forms of obligations owing to Borrower arising outof the sale or lease of goods, the licensing of technology or the rendering ofservices by Borrower, whether or not earned by performance, and any and allcredit insurance, guaranties, and other security therefor, as well as allmerchandise returned to or reclaimed by Borrower;

 

AllLetter-Of-Credit Rights (whether or not the letter of credit is evidenced by awriting);

 

Alldocuments, cash, deposit accounts, securities, securities entitlements,securities accounts, investment property, financial assets, letters of credit,certificates of deposit, instruments and chattel paper now owned or hereafteracquired and Borrower’s Books relating to the foregoing;

 

AllSupporting Obligations and all Borrower’s Books relating to the foregoing andany and all claims, rights and interests in any of the above and allsubstitutions for, additions and accessions to and Proceeds thereof.

 

Borrowerhas further agreed, among other things, not to sell, transfer, assign,mortgage, pledge, lease grant a security interest in, or encumber any of itsIntellectual Property (as hereinafter defined) or enter into any agreement,document, instrument or other arrangement (except with or in favor of the Bank)with any Person which directly or indirectly prohibits or has the effect ofprohibiting Borrower from selling, transferring, assigning, mortgaging,pledging, leasing, granting a security interest in, or encumbering any of itsIntellectual Property, without Bank’s prior written consent.

 

Notwithstanding the foregoing, the Collateral shall not be deemed toinclude any copyrights, copyright applications, copyright registration and likeprotection in each work of authorship and derivative work thereof, whetherpublished or unpublished, now owned or hereafter acquired; any patents, patentapplications and like protections including without limitation improvements,divisions, continuations, renewals, reissues, extensions andcontinuations-in-part of the same, trademarks, servicemarks and applicationstherefor, whether registered or not, and the goodwill of the business ofBorrower connected with and symbolized by such trademarks, any trade secretrights, including any rights to unpatented inventions, know-how, operatingmanuals, license rights and agreements and confidential information, now ownedor hereafter acquired; or any claims for damage by way of any past, present andfuture infringement of any of the foregoing (collectively, the “IntellectualProperty”). 

 

**EXHIBIT B**

 

**L****OAN****P****AYMENT****/A****DVANCE****R****EQUEST****F****ORM**

DEADLINE FOR SAME DAY PROCESSING IS 3:00 E.S.T.

**Fax To: (617) 969-5962      Date:**

 

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| o                   | Loan  Payment:                                                                                                                                                                                           | Client Name (Borrower)                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                | From Account #                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | To Account #                                  |
| (Deposit Account #) | (Loan Account #)                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                |                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                | Principal  $                                                                                                                                                                                                       | and/or interest  $                                                                           |
|                |                                                                                                                                                                                                                                                                                                                                                                          |
|                | All Borrower’s representations and warranties in the Loan and  Security Agreement are true, correct and complete in all material respects to  on the date of the telephone transfer request for and advance, but those  representations and warranties expressly referring to another date shall be  true, correct and complete in all material respects as of the date: |
|                |                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|                | **Authorized Signature:**                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   Phone Number: |
|                     |                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |

 
| o                   | Loan  Paymenet:                                                                                                                                                                                          | Client Name (Borrower)                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                | From Account #                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | To Account #                                  |
| (Deposit Account #) | (Loan Account #)                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                |                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                | Principal  $                                                                                                                                                                                                       | and/or interest  $                                                                           |
|                |                                                                                                                                                                                                                                                                                                                                                                          |
|                | All Borrower’s representations and warranties in the Loan and  Security Agreement are true, correct and complete in all material respects to  on the date of the telephone transfer request for and advance, but those  representations and warranties expressly referring to another date shall be  true, correct and complete in all material respects as of the date: |
|                |                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|                | **Authorized Signature:**                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   Phone Number: |
|                     |                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |

 
| o                | **LOAN ADVANCE:**                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                                                                                                     |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             | ** **                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                                                                     |
| (Loan Account #) | (Deposit Account #)                                                                                                                                                                                                                                                                                                                                                           |   |
|             |                                                                                                                                                                                                                                                                                                                                                                          |   |
|             | Amount of Advance  $                                                                                                                                                                                               |
|             |                                                                                                                                                                                                                                                                                                                                                                          |
|             | All Borrower’s representations and warranties in the Loan and  Security Agreement are true, correct and complete in all material respects to  on the date of the telephone transfer request for and advance, but those  representations and warranties expressly referring to another date shall be  true, correct and complete in all material respects as of the date: |
|             |                                                                                                                                                                                                                                                                                                                                                                          |
|             | **Authorized Signature:**                                                                                                                                                                                                                                                                                                                                                     |   |   Phone Number:                                                                                                                                                                                |
|             | ** **                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                                                                     |
|             | **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 Loan and  Security Agreement are true, correct and complete in all material respects to  on the date of the telephone transfer request for and advance, but those  representations and warranties expressly referring to another date shall be  true, correct and complete in all material respects as of the date: |
|             |                                                                                                                                                                                                                                                                                                                                                                          |
|             | **Authorized Signature:**                                                                                                                                                                                                                                                                                                                                                     |   |   Phone Number:                                                                                                                                                                                |
|                  |                                                                                                                                                                                                                                                                                                                                                                               |        |                                                                                                                                                                                                          |  |  |  |  |

 

----

 
| o                   | Loan  Payment:                                                                                                                                                                                           | Client Name (Borrower)                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |                                                                                                                                                                                                                                                                                                                                                                          |
|                | From Account #                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | To Account #                                  |
| (Deposit Account #) | (Loan Account #)                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                |
|                | Principal  $                                                                                                                                                                                                       | and/or interest  $                                                                           |
|                |                                                                                                                                                                                                                                                                                                                                                                          |
|                | All Borrower’s representations and warranties in the Loan and  Security Agreement are true, correct and complete in all material respects to  on the date of the telephone transfer request for and advance, but those  representations and warranties expressly referring to another date shall be  true, correct and complete in all material respects as of the date: |
|                |                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|                | **Authorized Signature:**                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   Phone Number: |
|                     |                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |

 
| o      | **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 Loan and  Security Agreement are true, correct and complete in all material respects to  on the date of the telephone transfer request for and advance, but those  representations and warranties expressly referring to another date shall be  true, correct and complete in all material respects as of the date: |
|   |                                                                                                                                                                                                                                                                                                                                                                          |                |                                                                                                                                                                                                     |
|   | **Authorized Signature:**                                                                                                                                                                                                                                                                                                                                                     |                |   Phone Number:                                                                                                                                                                                |
|        |                                                                                                                                                                                                                                                                                                                                                                               |                     |                                                                                                                                                                                                          |  |  |  |  |  |

 
|                                                    | **O****UTGOING****W****IRE****R****EQUEST**                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                         |                          |
|---------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|
|                                                    | **Complete only if all or a portion of funds from the *loan advance* above are to be wired.**                                                                                                                                                                                                                     |
| Deadline  for same day processing is 12:00 p.m., E.S.T. |
|                                                    |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                         |
|                                                    | Beneficiary  Name:                                                                                                                                     | Amount  of Wire: $                                |
|                                                    |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                         |
|                                                    | Beneficiary  Bank:                                                                                                                                     | Account  Number:                                  |
|                                                    |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                         |
|                                                    | City  and State:                                                                                                                                       |                                                                                                                                                                                                         |
|                                                    |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                         |
|                                                    | Beneficiary  Bank Transit (ABA) #:                                                                                                                     | Beneficiary  Bank Code (Swift, Sort, Chip, etc,):                                                                                                                                                            |
|                                                    |                                                                                                                                                                                                                                                                                                              | **(For International Wire Only)**                                                                                                                                                                            |
|                                                    | Intermediary  Bank:                                                                                                                                    | Transit  (ABA) #                                  |
|                                                    |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                         |
|                                                    | For  Further Credit to:                                                                                                                                |                                                                                                                                                                                                         |
|                                                    |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                         |
|                                                    | Special  Instruction:                                                                                                                                  |                                                                                                                                                                                                         |
|                                                    |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                         |
|                                                    | *By signing below, I (we) acknowledge and agree that my  (our) funds transfer request shall be processed in accordance with and  subject to the terms and conditions set fortsh 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  #                                      |
|                                                         |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                              |                               |  |  |  |

 
|                                                    | **O****UTGOING****W****IRE****R****EQUEST**                                                                                                                                                                  |                                                                                                                                                                                                         |   |
|---------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                    | **Complete only if all or a portion of funds from the *loan advance* above are to be wired**                                                                                                                 |
| Deadline  for same day processing is 12:00 p.m., E.S.T. |
|                                                    |                                                                                                                                                                                                         |                                                                                                                                                                                                         |
|                                                    | Beneficiary  Name:                                | Amount  of Wire: $                                |
|                                                         |                                                                                                                                                                                                              |                                                                                                                                                                                                              |        |  |

 

----

 
|   | Beneficiary  Bank:                                                                                                                                    | Account  Number:                                  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | City  and State:                                                                                                                                      |                                                                                                                                                                                                         |
|   | Beneficiary  Bank Transit (ABA) #:                                                                                                                    | Beneficiary  Bank Code (Swift, Sort, Chip, etc,):                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                             | **(For International Wire Only)**                                                                                                                                                                            |
|   | Intermediary  Bank:                                                                                                                                   | Transit  (ABA) #                                                                                                                                                                                             |
|   | For  Further Credit to:                                                                                                                               |                                                                                                                                                                                                         |
|   | Special  Instruction:                                                                                                                                 |                                                                                                                                                                                                         |
|   | *By signing below, I (we) acknowledge and agree that my (our)  funds transfer request shall be processed in accordance with and subject to  the terms and conditions set forth in the agreements(s) covering funds  transfer service(s), which agreements(s) were previously received and  executed by me (us).* |
|   |                                                                                                                                                                                                                                                                                                             |
|   | Authorized  Signature:                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                         |   | 2nd Signature (If Required): |   |   |
|   | Print  Name/Title:                                                                                                                                    | Print  Name/Title:                                |
|   | Telephone  #                                                                                                                                          | Telephone  #                                      |
|        |                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                              |  |  |  |  |

 

**EXHIBIT CCOMPLIANCE CERTIFICATE**

 

TO:  SILICON VALLEY BANK

3003Tasman Drive

SantaClara, CA 95054

 

FROM:  Immunicon Corporation

 

Theundersigned authorized officer of Immunicon Corporation (“Borrower”) certifiesthat under the terms and conditions of the Loan and Security Agreement betweenBorrower and Bank (the “Agreement”), (i) Borrower is in complete compliance forthe period ending                                with all required covenants except as noted below and (ii) all representationsand warranties in the Agreement are true and correct in all material respectson this date.  In addition, theundersigned certifies that (1) Borrower and each Subsidiary has timely filedall required tax returns and paid, or made adequate provision to pay, allmaterial taxes, except those being contested in good faith with adequatereserves under GAAP and (ii) no liens has been levied or claims made againstBorrower or any of its Subsidiaries relating to unpaid employee payroll orbenefits which Borrower has not previously notified in writing to Bank.  Attached are the required documentssupporting the certification.  The Officer certifies that these are preparedin accordance with Generally Accepted Accounting Principles (GAAP) consistentlyapplied from one period to the next except as explained in an accompanyingletter or footnotes.  The Officeracknowledges that no borrowings may be requested at any time or date ofdetermination that Borrower is not in compliance with any of the terms of theAgreement, and that compliance is determined not just at the date thiscertificate is delivered.

 

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

 

**Reporting Covenant Required Complies**

 

Monthlyfinancial statements + CC****Monthlywithin 30 days Yes No

Annual(Audited)  FYEwithin 120 days Yes No

 

**Financial Covenant Required Actual Complies**

 

Maintainon a Monthly Basis:

MinimumQuick Ratio (Adjusted) 2:1.00          :1.00Yes No

MinimumLiquidity Coverage 6 months             Yes No

 

Borrowers only have deposit accounts locatedat the following institutions: 

 

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**                                        .**

**{**PRIVATE **}****BANK USE ONLY**

 

Receivedby:

AUTHORIZEDSIGNER

 

Date:

 

Verified:

AUTHORIZEDSIGNER

 

Date:

ComplianceStatus: Yes    No

 

**Comments Regarding Exceptions:**  SeeAttached.

 

Sincerely,

 

 
|      |   |
|-----------|--------|
|      |   |
|      |
| SIGNATURE |   |
|      |
| TITLE     |   |
|      |
| DATE      |   |
|           |        |  |  |  |

 

Schedule to Loan and Security Agreement

 

Theexact correct corporate name of Borrower is:

 

1. Immunicon Corporation

 

2. Immunivest Corporation

 

3. IMMC Holdings, Inc.

 

4. Immunicon Europe, Inc.

 

Borrower’s State of formation: Delaware

 

Borrower has operated under only the following other names (if none, sostate):

 

Immunicon Corporation formerly conducted business, under the same name,as a Pennsylvania corporation.

 

All other addresses at which the Borrower does businessare as follows (attach additional sheets if necessary and include allwarehouse addresses):

 

Immunicon Europe, Inc. has a business address at Hengelosestraat 705,7521 PA Enschede, the Netherlands.

 

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Borrower has deposit accounts and/or investment accounts located onlyat the following institutions:

 

List Acct. Numbers:

 

Liens existing on the Closing Date and disclosed to and accepted byBank in writing:

 

 

Investments existing on the Closing Date and disclosed to and acceptedby Bank in writing:

 

 

**Subordinated Debt:**

 

Indebtednesson the Closing Date and disclosed to and consented to by Bank in writing:

 

 

 

The following is a list of the Borrower’s copyrights (includingcopyrights of software) which are registered with the United States CopyrightOffice.  (Please include name of thecopyright and registration number and attach a copy of the registration):

 

 

 

The following is a list of all software which the Borrower sells,distributes or licenses to others, which is not registered with the UnitedStates Copyright Office. (Please include versions which are not registered:

 

 

 

The following is a list of all of the Borrower’s patents which areregistered with the United States Patent Office. (Please include name of thepatent and registration number and attach a copy of the registration.):

 

 

 

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The following is a list of all of the Borrower’s patents which arepending with the United States Patent Office. (Please include name of the patent and a copy of the application.):

 

 

 

The following is a list of all of the Borrower’s registered trademarks.(Please include name of the trademark and a copy of the registration.):

 

 

 

Borrower is not subject to litigation which would have a materialadverse effect on the Borrower’s financial condition, except the following(attach additional comments, if needed):

 

1. Immunicon Corporation: 23-2269490

 

2. Immunivest Corporation: 51-0339032

 

3. IMMC Holdings, Inc.: 75-2971611

 

Delaware Organizational Numbers:

 

1. Immunicon Corporation: 3325853

 

2. Immunivest Corporation: 2289144

 

3. IMMC Holdings, Inc.:  3474398 

 

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