**Exhibit 10.10**

**LOAN AND SECURITY AGREEMENT**

**THIS LOAN AND SECURITY AGREEMENT** (this“**Agreement**”) dated as of the Effective Date between **SILICON VALLEY BANK**, a California corporation (“**Bank**”), and **ARCA Discovery, Inc.**, a Delaware corporation (“**Borrower**”), provides theterms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows: 

 

Accounting termsnot defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All otherterms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein. 

 

**2.1 Promise toPay**. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement. 

**2.1.1 Growth Capital Line A.**

(a)Availability. Subject to the terms and conditions of this Agreement, during the GC Line A Draw Period, Bank shall make advances (each, a “**GC Line A Advance**” and, collectively, “**GC Line A Advances**”) notexceeding the Growth Capital Line A. After repayment, no GC Line A Advance may be reborrowed. GC Line A Advances made on or after the Effective Date and on or before December 31, 2007 are called “**GC Line A Tranche OneAdvances**,” and GC Line A Advances made after December 31, 2007 and on or before the last day of the GC Line A Draw Period are called “**GC Line A Tranche Two Advances**.” If Borrower has not advanced all of Growth CapitalLine A by the end of the GC Line A Draw Period, any such amounts not advanced as of such date shall be added to, and become part of the Growth Capital Line B. 

(b) Repayment. The period of time commencing on the Effective Date and ending on the day immediately prior to the GC Line A Tranche One Amortization Start Date is called the “**GC Line A Tranche OneInterest Only Period**,” and the period of time commencing on January 1, 2008 and ending on June 30, 2008 is called the “**GC Line A Tranche Two Interest Only Period**.” During the GC Line A Tranche One Interest OnlyPeriod, Borrower will make monthly payments to Bank of accrued interest only on the outstanding principal amount of all GC Line A Tranche One Advances, and during the GC Line A Tranche Two Interest Only Period, Borrower will make monthly payments toBank of accrued interest only on the outstanding principal amount of all GC Line A Tranche Two Advances. GC Line A Advances made and outstanding on July 31, 2007 are payable in thirty (30) consecutive equal monthly installments ofprincipal and interest, beginning on the earlier of (i) the first day of the month following the date which is six months from the date of the first GC Line A Advance or (ii) July 1, 2008 (the “**GC Line A Tranche OneAmortization Start Date**”) and ending on the GC Line A Tranche One Maturity Date (the “**GC Line A Tranche One Amortization Period**”). Any GC Line A Advances made after D 31, 2007 and outstanding on the last day of the GC LineA Draw Period are payable in thirty (30) consecutive equal monthly installments of principal and interest, beginning on July 1, 2008 (the “**GC Line A Tranche Two Amortization Start Date**”) and ending on the GC Line A TrancheTwo Maturity Date (the “**GC Line A Tranche Two Amortization Period**”). 

(c) Prepayment. At Borrower’s option, solong as an Event of Default has not occurred and is not continuing, Borrower shall have the option to prepay without penalty or premium all, but not less than all, of Growth Capital Line A advanced by Bank under this Agreement, provided Borrower(i) provides written notice to Bank of its election to exercise to prepay the Growth Capital Line A at least thirty (30) days prior to such prepayment, and (ii) pays, on the date of the prepayment (A) all accrued and unpaidinterest with respect to all outstanding GC Line A Advances through the date the prepayment is made; (B) all unpaid principal with respect to all outstanding GC Line A Advances; and (C) all other sums, if any, that shall have become dueand payable hereunder with respect to Growth Capital Line A. 

**2.1.2 Growth Capital Line B.**

(a) Availability. Subject to the terms and conditions of this Agreement, during the GC Line B Draw Period, Bank shall make advances (each, a“**GC Line B Advance**” and, collectively, “**GC Line B Advances**”) not exceeding the Growth Capital Line B. After repayment, no GC Line B Advance may be reborrowed. GC Line B Advances made on or after the MilestoneAchievement Date and on or before June 30, 2008 are called “**GC Line B Tranche One Advances**,” and GC Line B Advances made after June 30, 2008 and on or before the last day of the GC Line B Draw Period are called “**GCLine B Tranche Two Advances**.” 

(b) Repayment. The period of time commencing on the Milestone Achievement Date and ending onthe day immediately prior to the GC Line B Tranche One Amortization Start Date is called the “**GC Line B Tranche One Interest Only Period**,” and the period of time commencing on July 1, 2008 and ending on December 31, 2008is called the “**GC Line B Tranche Two Interest Only Period**.” During the GC Line B Tranche One Interest Only Period, Borrower will make monthly payments to Bank of accrued interest only on the outstanding principal amount of all GCLine B Tranche One Advances, and during the GC Line B Tranche Two Interest Only Period, Borrower will make monthly payments to Bank of accrued interest only on the outstanding principal amount of all GC Line B Tranche Two Advances. GC Line BAdvances made and outstanding on June 30, 2008 are payable in twenty-four (24) consecutive equal monthly installments of principal and interest, beginning on the earlier of (i) the first day of the month following the date which issix months from the date of the first GC Line B Advance or (ii) January 1, 2009 (the “**GC Line B Tranche One Amortization Start Date**”) and ending on the GC Line B Tranche One Maturity Date (the “**GC Line B TrancheOne Amortization Period**”). Any GC Line B Advances made after June 30, 2008 and outstanding on the last day of the GC Line B Draw Period are payable in twenty-four (24) consecutive equal monthly installments of principal andinterest, beginning on January 1, 2009 (the “**GC Line B Tranche Two Amortization Start Date**”) and ending on the GC Line B Tranche Two Maturity Date (the “**GC Line B Tranche Two Amortization Period**”). 

(c) Prepayment. At Borrower’s option, so long as an Event of Default has not occurred and is not continuing, Borrower shall have theoption to prepay without penalty or premium all, but not less than all, of Growth Capital Line B advanced by Bank under this Agreement, provided Borrower (i) provides written notice to Bank of its election to exercise to prepay the GrowthCapital Line B at least thirty (30) days prior to such prepayment, and (ii) pays, on the date of the prepayment (A) all accrued and unpaid interest with respect to all outstanding GC Line B Advances through the date the prepayment ismade; (B) all unpaid principal with respect to all outstanding GC Line B Advances; and (C) all other sums, if any, that shall have become due and payable hereunder with respect to Growth Capital Line B. 

**2.2 Payment of Interest on the Credit Extensions.**

(a) Interest Rates. Subject to Section 2.2(b), the principal amounts outstanding under Growth Capital Line A and Growth Capital Line B, respectively, shall accrue interest at, during the GC Line A TrancheOne Interest Only Period with respect to GC Line A Tranche One Advances, during the GC Line A Tranche Two Interest Only Period with respect to GC Line A Tranche Two Advances, during the GC Line B Tranche One Interest Only Period with respect to GCLine B Tranche One Advances, and during the GC Line B Tranche Two Interest Only Period with respect to GC Line B Tranche Two Advances, a floating per annum rate equal to the Prime Rate, which interest shall be payable monthly in accordance withSection 2.2(f) below. On the GC Line A Tranche One Amortization Start Date with respect to the GC Line A Tranche One Amortization Period, on the GC Line A Tranche Two Amortization Start Date with respect to the GC Line A Tranche TwoAmortization Period, on the GC Line B Tranche One Amortization Start Date with respect to the GC Line B Tranche One Amortization Period, and on the GC Line B Tranche Two Amortization Date with respect to the GC Line B Tranche Two AmortizationPeriod, the principal amounts outstanding under Growth Capital Line A and Growth Capital Line B, respectively, shall accrue interest at a per annum rate equal to the Prime Rate, which shall be fixed as of the GC Line A Tranche One Amortization StartDate the GC Line A Tranche Two Amortization Start Date, the GC Line B Tranche One Amortization Start Date, and the GC Line B Tranche Two Amortization Start Date, as the case may be, which interest shall be payable monthly in accordance withSection 2.2(f) below. 

(b) Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default,Obligations shall bear interest at a rate per annum which is five percentage points above the rate that is otherwise applicable thereto (the “**Default Rate**”). Payment or acceptance of the increased interest rate provided in thisSection 2.2(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank. 

 

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(c) Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension based onchanges to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change. 

(d) 360-Day Year. Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed. 

(e)Debit of Accounts. Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute aset-off. 

(f) Payments. Unless otherwise provided, interest is payable monthly on the first calendar day of each month. Payments ofprincipal and/or interest received after 12:00 p.m. Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day andadditional fees or interest, as applicable, shall continue to accrue. 

**2.3 Fees. Borrower shall pay to Bank:**

(a) Commitment Fee. A fully earned, non-refundable commitment fee of $7,500.00 (which includes the Bank’s attorney’s fees for draftingand negotiating the initial Loan Documents), on the Effective Date; and 

(b) Bank Expenses. All Bank Expenses (including reasonableattorneys’ fees and expenses but excluding the Bank’s attorney’s fees for drafting and negotiating the initial Loan Documents) incurred through and after the Effective Date, when due. 

 
 **3****CONDITIONS OF LOANS**
**3.1 ConditionsPrecedent to Initial Credit Extension**. Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that Borrower shall consent to or shall have delivered, in form and substance satisfactory to Bank, suchdocuments, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation: 

(a)duly executed original signatures to the Loan Documents to which it is a party; 

(b) duly executed original signatures to the completedCorporate Borrowing Certificate for Borrower, plus all exhibits thereto; 

(c) good standing certificates/certificates of foreignqualification from the Secretaries of State of the States of Delaware and Colorado, dated no later than 30 days prior to the Effective Date. 

(d) the Perfection Certificate executed by Borrower; 

(e) a copy of its Investors’ Rights Agreement, Right of First Refusaland Co-Sale Agreement and Voting Agreement and any amendments thereto; 

(f) evidence satisfactory to Bank that the insurance policiesrequired by Section 6.4 hereof are in full force and effect, together with appropriate evidence showing loss payable and/or additional insured clauses or endorsements in favor of Bank; and 

(g) payment of the fees and Bank Expenses then due as specified in Section 2.3 hereof. 

 

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**3.2 Conditions Precedent to all Credit Extensions**. Bank’s obligations to make each CreditExtension, including the initial Credit Extension, is subject to the following: 

(a) except as otherwise provided in Section 3.4,timely receipt of an executed Payment/Advance Form; 

(b) the representations and warranties in Section 5 shall be true in all materialrespects on the date of the Payment/Advance Form and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified ormodified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Default orEvent of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in Section 5 remain true inall material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that thoserepresentations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and 

(c) there has not been a Material Adverse Change. 

**3.3 Covenant to Deliver**. Borrower agrees todeliver to Bank each item required to be delivered to Bank under this Agreement as a condition to any Credit Extension. Borrower expressly agrees that the extension of a Credit Extension prior to the receipt by Bank of any such item shall notconstitute a waiver by Bank of Borrower’s obligation to deliver such item, and any such extension in the absence of a required item shall be in Bank’s sole discretion. 

**3.4 Procedures for Borrowing**. Subject to the prior satisfaction of all other applicable conditions to the making of a GC Line A Advance or GC LineB Advance set forth in this Agreement, to obtain a GC Line A Advance or GC Line B Advance, as the case may be, Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time onthe Funding Date of such GC Line A Advance or GC Line B Advance. Together with any such electronic or facsimile notification, Borrower shall deliver to Bank by electronic mail or facsimile a completed Payment/Advance Form executed by a ResponsibleOfficer or his or her designee. Bank may rely on any telephone notice given by a person who Bank believes is a Responsible Officer or designee. Bank shall credit GC Line A Advances and GC Line B Advances to the Designated Deposit Account. Bank maymake Advances GC Line A Advances or GC Line B Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the GC Line A Advances or GC Line B Advances are necessary to meetObligations which have become due. 

 
 **4****CREATION OF SECURITY INTEREST**
**4.1 Grantof Security Interest**. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafteracquired or arising, and all proceeds and products thereof. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in theCollateral (subject only to Permitted Liens that may have superior priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of thegeneral details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank. 

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

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

 

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 **5****REPRESENTATIONS AND WARRANTIES**
Borrowerrepresents and warrants as follows: 

**5.1 Due Organization, Authorization; Power and Authority**. Borrower is duly existing and in goodstanding as a Registered Organization in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it bequalified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by Borrower,entitled “Perfection Certificate”. Borrower represents and warrants to Bank that (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is anorganization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrowerhas none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office);(e) other than a reincorporation from Colorado into Delaware, completed in 2004, Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or anyorganizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete in all material respects (it being understoodand agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Effective Date to the extent permitted by one or more specific provisions in this Agreement). 

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

**5.2 Collateral**. Borrower has good title to, has rights in, and the power to transfer each item of the Collateral upon which it purports to grant aLien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no deposit accounts other than the deposit accounts with Bank, the deposit accounts, if any, described in the Perfection Certificate delivered to Bank inconnection herewith, or of which Borrower has given Bank notice and taken such actions as are necessary to give Bank a perfected security interest therein. 

The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate and except for raw materials and inventory at off-site locations. Noneof the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as Borrower has given Bank notice pursuant to Section 7.2, except for raw materials and inventory at off-sitelocations. In the event that Borrower, after the date hereof, intends to store or otherwise deliver any portion of the Collateral, except for raw materials and inventory, to a bailee not listed on the Perfection Certificate, then Borrower will firstreceive the written consent of Bank and such bailee must execute and deliver a bailee agreement in form and substance satisfactory to Bank. 

Except as noted on the Perfection Certificate, Borrower is not a party to, nor is bound by, any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower fromgranting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of would interfere with the Bank’s right to sell any Collateral. Borrower shallprovide written notice to Bank within ten (10) days of entering or becoming bound by any such license or agreement not noted on the Perfection Certificate (other than over-the-counter software that is 

 

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commercially available to the public). Borrower shall take such steps as Bank requests to obtain the consent of, or waiver by, any person whose consent orwaiver is necessary for (x) all such licenses or agreements to be deemed “Collateral” and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such license oragreement, whether now existing or entered into in the future, and (y) Bank to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Bank’s rights and remedies under thisAgreement and the other Loan Documents. 

**5.3 Litigation**. There are no actions or proceedings pending or, to the knowledge of theResponsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries involving more than One Hundred Thousand Dollars ($100,000). 

**5.4 No Material Deviation in Financial Statements**. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects Borrower’sconsolidated financial condition and Borrower’s consolidated results of operations as of the date of such financial statements. There has not been any material deterioration in Borrower’s consolidated financial condition since the date ofthe most recent financial statements submitted to Bank. 

**5.5 Solvency**. The fair salable value of Borrower’s assets (includinggoodwill minus disposition costs) exceeds the fair value of its liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.

**5.6 Regulatory Compliance**. Borrower is not an “investment company” or a company “controlled” by an“investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower hascomplied in all material respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or a “subsidiarycompany” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005. Borrower has not violated any laws, ordinances or rules, the violation of which would reasonably be expected to have amaterial adverse effect on its business. None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing,producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all noticesto, all Government Authorities that are necessary to continue their respective businesses as currently conducted except where failure to do so would not reasonably be expected to have a material adverse effect on its business or operations.

**5.7 Subsidiaries; Investments**. Borrower does not own any stock, partnership interest or other equity securities except forPermitted Investments. 

**5.8 Tax Returns and Payments; Pension Contributions**. Borrower has timely filed or obtained extensions forfiling all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower. Borrower may defer payment of any contested taxes, provided thatBorrower (a) in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Bank in writing of the commencement of, and any material development in, theproceedings, (c) posts bonds or takes any other steps required to prevent the governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien”. Borrower isunaware of any claims or adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharingand deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any suchplan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 

**5.9 Use of Proceeds**. Borrower shall use the proceeds of the Credit Extensions solely as working capital and to fund its general businessrequirements and not for personal, family, household or agricultural purposes. 

 

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**5.10 Full Disclosure**. No written representation, warranty or other statement of Borrower in anycertificate or written statement given to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue statement of amaterial fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading in light of the circumstances under which they were made (it being recognized by Bank that the projectionsand forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecastedresults). 

 
 **6****AFFIRMATIVE COVENANTS**
Borrower shall do allof the following: 

**6.1 Government Compliance.**

(a) Maintain its and, except as provided in Section 7.3, all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdictionin which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower’s business or operations. Borrower shall comply, and have each Subsidiary comply, with all laws, ordinances and regulations to whichit is subject, noncompliance with which could have a material adverse effect on Borrower’s business. 

(b) Obtain all of theGovernmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Bank in all of its property. Borrower shall promptly upon request providecopies of any such obtained Governmental Approvals to Bank. 

**6.2 Financial Statements, Reports, Certificates**. Deliver to Bank:(i) as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Borrower’s consolidated operations for such month certified bya Responsible Officer and in a form acceptable to Bank; (ii) as soon as available, but no later than one hundred fifty (150) days after the last day of Borrower’s fiscal year, audited consolidated financial statements prepared underGAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Bank in its reasonable discretion; (iii) within five (5) days of delivery,copies of all statements, reports and notices made generally available to Borrower’s security holders or to any holders of Subordinated Debt, (iv) in the event that Borrower becomes subject to the reporting requirements under theSecurities Exchange Act of 1934, as amended, within five (5) days of filing, all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission or a link thereto on Borrower’s or another website on the Internet;(v) a prompt report of any legal actions pending or threatened against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of One Hundred Thousand Dollars ($100,000) or more; and(vi)** **budgets, sales projections, operating plans and other financial information reasonably requested by Bank. 

**6.3 Taxes;Pensions**. Make, and cause each of its Subsidiaries to make, timely payment of all foreign, federal, state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting pursuant to the terms of Section 5.8hereof) and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms. 

**6.4 Insurance**. Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry andlocation as Bank may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to Bank. All property policies shall have a lender’s loss payable endorsement showing Bank as the sole lenderloss payee and waive subrogation against Bank, and all liability policies shall show, or have endorsements showing, Bank as an additional insured. All policies (or the loss payable and additional insured endorsements) shall provide that the insurershall endeavor to give Bank at least twenty (20) days notice before canceling, amending, or declining to renew its policy. At Bank’s request, Borrower shall deliver certified copies of policies and evidence of all premium payments. So longas no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy toward 

 

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the replacement or repair of destroyed or damaged property; provided that any such replaced or repaired property (i) shall be of equal or like value asthe replaced or repaired Collateral and (ii) shall be deemed Collateral in which Bank has been granted a first priority security interest, and after the occurrence and during the continuance of an Event of Default, all proceeds payable undersuch casualty policy shall, at the option of Bank, be payable to Bank on account of the Obligations. If Borrower fails to obtain insurance as required under this Section 6.4 or to pay any amount or furnish any required proof of payment to thirdpersons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.4, and take any action under the policies Bank deems prudent. 

**6.5 Operating Accounts.**

(a) Maintaina majority of its and its Subsidiaries’ primary operating and other deposit accounts and securities accounts with Bank and Bank’s Affiliates. 

(b) Provide Bank five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Accountthat Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrumentwith respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payrolltaxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such. 

**6.6 Protection of Intellectual Property Rights**. Borrower shall: (a) protect, defend and maintain the validity and enforceability of the intellectual property material to Borrower’s business; (b) promptly advise Bank inwriting of material infringements of its intellectual property; and (c) not allow any intellectual property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent.

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

**6.8 Warrants**. 

(a) At Closing, Borrower will issue Bank a Warrant to purchase up to 31,790 shares of its Series B Preferred Stock (the “**InitialWarrant**”), in the form attached hereto as **Exhibit D**, at a price per share equal to $2.43975. 

(b) Thereafter, for every GCLine A Advance or GC Line B Advance that Bank makes to Borrower, Borrower will issue Bank an additional Warrant (each an “**Additional Warrant**” and together with the Initial Warrant, the “**Warrants**”), substantially inthe same form as the Initial Warrant, for that number of shares of its Series B Preferred Stock, determined by multiplying the amount of Such GC Line A Advance or GC Line B Advance, as the case may be, by two percent (2.0%) and dividing suchnumber by the most recent price per share at which the Series B Preferred Stock was sold by Borrower in an arms-length transaction, as may be adjusted for stock splits, dividends or the like. Each Additional Warrant shall be executed and deliveredto Bank within ten (10) Business Days following such GC Line A Advance or GC Line B Advance. 

**6.9 Further Assurances**. Executeany further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement. 

 
 **7****NEGATIVE COVENANTS**
Borrower shall not doany of the following without Bank’s prior written consent: 

**7.1 Dispositions**. Convey, sell, lease, transfer or otherwise disposeof (collectively, “**Transfer**”), or permit any of its Subsidiaries to Transfer, all or any substantial part of its business or property, except (a) for 

 

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Transfers of Inventory in the ordinary course of business; (b) for Transfers of worn-out, surplus or obsolete Equipment; (c) in connection withPermitted Liens and Permitted Investments; (d) for other Transfers which do not exceed One Hundred Thousand Dollars ($100,000) in any fiscal year, so long as an Event of Default does not exist at the time of such Transfer and would not existafter giving effect to such Transfer; and (f) for other Transfers contemplated by the exceptions to the covenants in Sections 7.7 or 7.8. 

**7.2 Changes in Business, Management, Ownership, or Business Locations**. (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrowerand such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve, except as to Subsidiaries, as permitted by Section 7.3; or (c) (i) have a change in its Chief Executive Officer, Chief FinancialOfficer or Chief Operating Officer (unless a replacement is approved by a majority of Borrower’s Board of Directors) or (ii) enter into any transaction or series of related transactions in which the stockholders of Borrower who were notstockholders immediately prior to the first such transaction own more than 50% of the voting stock of Borrower immediately after giving effect to such transaction or related series of such transactions (other than by the sale of Borrower’sequity securities in a public offering or to venture capital investors so long as Borrower identifies to Bank the venture capital investors prior to the closing of the transaction). Borrower shall not, without at least thirty (30) days priorwritten notice to Bank: (1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Fifty Thousand Dollars ($50,000) in Borrower’s assets or property), provided thatBorrower may store raw materials and inventory at off-site locations without notice to Bank, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) changeany organizational number (if any) assigned by its jurisdiction of organization. 

**7.3 Mergers or Acquisitions**. Merge or consolidate,or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person. A Subsidiary may merge orconsolidate into another Subsidiary or into Borrower, except where (a) no Event of Default has occurred and is continuing or would result from such transaction, (b) such transaction would not result in a decrease of more than 25% ofBorrower’s Tangible Net Worth, and (c) Borrower is the surviving entity. 

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

**7.5 Encumbrance**. Create, incur,allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject tothe first priority security interest granted herein, or enter into any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibitingBorrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s intellectual property, except as is otherwise permitted in Section 7.1hereof and the definition of “Permitted Lien” herein. 

**7.6 Maintenance of Collateral Accounts**. Maintain any CollateralAccount except pursuant to the terms of Section 6.5(b) hereof. 

**7.7****Distributions; Investments**. (a) Pay anydividends or make any distribution or payment or redeem, retire or purchase any capital stock, provided that (i) Borrower may convert any of its convertible securities into other securities pursuant to the terms of such convertible securitiesor otherwise in exchange therefor, (ii) Borrower may pay dividends solely in common stock, and (iii) Borrower may repurchase stock of former employees or consultants pursuant to stock repurchase agreements, in the aggregate in any fiscalyear, so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase; or (b) directly or indirectly make any Investment other than Permitted Investments, or permit any ofits Subsidiaries to do so, except as permitted by Section 7.3. 

**7.8 Transactions with Affiliates**. Directly or indirectly enterinto or permit to exist any material transaction with any Affiliate of Borrower, except for (i) transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower thanwould be obtained in an arm’s length transaction with a non-affiliated Person and (ii) transactions otherwise permitted pursuant to subsection (f) of the definition of Permitted Investments. 

 

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**7.9 Subordinated Debt**. (a) Make or permit any payment on any Subordinated Debt, except underthe terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof oradversely affect the subordination thereof to Obligations owed to Bank. 

**7.10 Compliance**. Become an “investment company”or a company controlled by an “investment company”, under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board ofGovernors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; failto comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation would reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do so;withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan whichwould reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 

 
 **8****EVENTS OF DEFAULT**
Any one of the followingshall constitute an event of default (an “**Event of Default**”) under this Agreement: 

**8.1 Payment Default**. Borrowerfails to (a) make any payment of principal or interest on any Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) day graceperiod shall not apply to payments due on the GC Line A Maturity Date or GC Line B Maturity Date). During the cure period, the failure to cure the payment default is not an Event of Default (but no Credit Extension will be made during the cureperiod); 

**8.2 Covenant Default**. 

(a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.3, 6.4, 6.5 or 6.8 or violates any covenant in Section 7; or 

(b) Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than thosespecified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the defaultcannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall havean additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensionsshall be made during such cure period). Grace periods provided under this section shall not apply, among other things, to financial covenants or any other covenants set forth in subsection (a) above; 

**8.3 Material Adverse Change**. A Material Adverse Change occurs; 

**8.4 Attachment**. (a) Any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver; (b) the service of process seeking to attach, bytrustee or similar process, any funds of Borrower or of any entity under control of Borrower (including a Subsidiary) on deposit with Bank or any Bank Affiliate; (c) Borrower is enjoined, restrained, or prevented by court order from conductingany part of its business; or (d) a notice of lien, levy, or assessment is filed against any of Borrower’s assets by any government agency, and the same under clauses (a) through (d) hereof are not, within ten (10) days afterthe occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; 

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

 

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**8.6 Other Agreements**. There is a default in any agreement to which Borrower is a party with athird party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of One Hundred Thousand Dollars ($100,000) or that could have a materialadverse effect on Borrower’s business; provided, however, that the Event of Default under this Section 8.6 caused by the occurrence of a default under such other agreement shall be cured or waived for purposes of this Agreement upon Bankreceiving written notice from the party asserting such default of such cure or waiver of the default under such other agreement, if at the time of such cure or waiver under such other agreement (a) Bank has not declared an Event of Defaultunder this Agreement and/or exercised any rights with respect thereto; (b) any such cure or waiver does not result in an Event of Default under any other provision of this Agreement or any Loan Document; and (c) in connection with any suchcure or waiver under such other agreement, the terms of any agreement with such third party are not modified or amended in any manner which could in the good faith judgment of Bank be materially less advantageous to Borrower; 

**8.7 Judgments**. One or more judgments, orders, or decrees for the payment of money in an amount, individually or in the aggregate, of at least OneHundred Thousand Dollars ($100,000) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower and shall remain unsatisfied, unvacated, or unstayed for aperiod of ten (10) days after the entry thereof (provided that no Credit Extensions will be made prior to the satisfaction, vacation, or stay of such judgment, order, or decree); 

**8.8 Misrepresentations**. Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in thisAgreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect when made; 

**8.9 Subordinated Debt**. A default or breach occurs under any agreement between Borrower and any creditor of Borrower that signed a subordination,intercreditor, or other similar agreement with Bank, or any creditor that has signed such an agreement with Bank breaches any terms of such agreement; or 

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

 

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 **9****BANK’S RIGHTS AND REMEDIES**
**9.1Rights and Remedies**. While an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following: 

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

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

(c) settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considersadvisable, notify any Person owing Borrower money of Bank’s security interest in such funds, and verify the amount of such account; 

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

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

(f) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted anon-exclusive, royalty-free license or other right to use without charge, Borrower’s labels, patents, copyrights, mask works, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or anysimilar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section, Borrower’s rights under all licensesand all franchise agreements inure to Bank’s benefit; 

(g) place a “hold” on any account maintained with Bank and/or delivera notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral (and Bank agrees not to deliver such notice, order, directions orinstructions unless an Event of Default has occurred and is continuing); 

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

(i) exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided underthe Code (including disposal of the Collateral pursuant to the terms thereof). 

**9.2 Power of Attorney**. Borrower hereby irrevocablyappoints Bank as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b) signBorrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determinesreasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment basedthereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to signBorrower’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations (other than those arising under theWarrants and inchoate indemnity obligations) have been satisfied in full and Bank is under no further obligation to make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’srights and powers, coupled with an interest, are irrevocable until all Obligations (other than those arising under the Warrants and inchoate indemnity obligations) have been fully repaid and performed and Bank’s obligation to provide CreditExtensions terminates. 

 

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**9.3 Protective Payments**. If Borrower fails to obtain the insurance called for by Section 6.5or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document, Bank may obtain such insurance or make such payment, and all amounts so paid by Bank are BankExpenses and immediately due and payable, bearing interest at the then highest applicable rate, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower with notice of Bank obtaining such insurance or making such paymentat the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default. 

**9.4 Application of Payments and Proceeds**. Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or applyany payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this Agreement. If an Event of Default has occurred and is continuing, Bankmay apply any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations in such order as Bankshall determine in its sole discretion. Any surplus shall be paid to Borrower or other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, in its good faith business judgment, directly or indirectlyenters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price ordeferring the reduction of the Obligations until the actual receipt by Bank of cash therefor. 

**9.5 Bank’s Liability forCollateral**. So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of theCollateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage ordestruction of the Collateral. 

**9.6 No Waiver; Remedies Cumulative**. Bank’s failure, at any time or times, to require strictperformance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall beeffective unless signed by Bank and then is only effective for the specific instance and purpose for which it is given. Bank’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights andremedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay in exercising any remedy is not awaiver, election, or acquiescence. 

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

 
 **10****NOTICES**
All notices, consents, requests,approvals, demands, or other communication (collectively, “**Communication**”) by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered:(a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent byelectronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed tothe party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change its address or facsimile number by giving the other party written notice thereof in accordance with the terms of thisSection 10. 

 

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If to Borrower:
 ARCA Discovery, Inc. 1200 17th St., Suite 620 Denver, CO 80202 Attn:  Patrick Wheeler Fax:  303-825-0883 Email:  Pat.Wheeler@arcadiscovery.comIf to Bank: Silicon Valley Bank 380 Interlocken Crescent, Suite 600 Broomfield, CO 80021 Attn:  Adam Glick Fax:  303-469-9088 Email:  aglick@svb.com
 
 **11****CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE**
California law governs the Loan Documents other than the Warrants without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in SantaClara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security forthe Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection thatit may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service ofthe summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth inSection 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid. 

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

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVERIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to aprivate judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant tocomparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the jurisdiction of such court. Thereference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisionalrelief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating theretoshall be permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the SantaClara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall beentitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and orderapplicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shallreport a statement of decision thereon pursuant to the California 

 

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Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, forecloseagainst collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph. 

 
 **12****GENERAL PROVISIONS**
**12.1 Successors andAssigns**. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may begranted or withheld in Bank’s discretion). Bank has the right, without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights, andbenefits under this Agreement and the other Loan Documents. 

**12.2 Indemnification**. Borrower agrees to indemnify, defend and holdBank and its directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank harmless against: (a) all obligations, demands, claims, and liabilities (collectively, “**Claims**”) assertedby any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or arising from transactions between Bank and Borrower (includingreasonable attorneys’ fees and expenses), except, as to (a) and (b), for Claims and/or losses directly caused by Bank’s gross negligence or willful misconduct. 

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

**12.4 Severability of Provisions**. Each provision of this Agreement is severable from every other provision in determining the enforceability of anyprovision. 

**12.5 Amendments in Writing; Integration**. All amendments to this Agreement must be in writing and signed by both Bank andBorrower. This Agreement and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between theparties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents. 

**12.6Counterparts**. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement.

**12.7 Survival**. All covenants, representations and warranties made in this Agreement continue in full force until this Agreement hasterminated pursuant to its terms and all Obligations (other than those arising under the Warrants and inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have beensatisfied. The obligation of Borrower in Section 12.2 to indemnify Bank shall survive until the statute of limitations with respect to such claim or cause of action shall have run. 

**12.8 Confidentiality**. In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its ownproprietary information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall usecommercially reasonable efforts to obtain such prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators or asotherwise required in connection with Bank’s examination or audit; and (e) as Bank considers appropriate in exercising remedies under this Agreement. Confidential information does not include information that either: (i) is in thepublic domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank through no fault of Bank; or (ii) is disclosed to Bank by a third party, if Bank does not know that the third partyis prohibited from disclosing the information. 

**12.9 Attorneys’ Fees, Costs and Expenses**. In any action or proceeding betweenBorrower and Bank arising out of or relating to the Loan Documents, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which it may beentitled. 

 

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 **13****DEFINITIONS**
**13.1 Definitions**. Asused in this Agreement, the following terms have the following meanings: 

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

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

“**Additional Warrant**” is defined in Section 6.8(c). 

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

“**Agreement**” is defined in the preamble hereof. 

“**Bank**” is defined in thepreamble hereof. 

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

“**Borrower**” is defined in the preamble hereof 

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

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

**“Cash Equivalents”**means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agencyor any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from eitherStandard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue; and (d) money market funds at least ninety-fivepercent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition. 

“**Change of Control**” means (a) any event, transaction, or occurrence as a result of which any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the SecuritiesExchange Act of 1934, as amended (the “**Exchange Act**”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3promulgated under the Exchange Act), directly or indirectly, of securities of Borrower, representing more than fifty percent (50%) of the combined voting power of Borrower’s then outstanding securities (other than by the sale ofBorrower’s equity securities to venture capital investors so long as Borrower identifies to Bank the venture capital investors prior to the closing of the transaction) or (b) if Borrower sells all, or substantially all, of its assets inone transaction or a series of related transactions. 

“**Code**” is the Uniform Commercial Code, as the same may, from time totime, be enacted and in effect in the State of California; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, thedefinition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to,Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term “**Code**” shall mean the Uniform Commercial Code as enacted and in effect in suchother jurisdiction solely for purposes on the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions. 

 

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

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

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

“**Communication**” is defined in Section 10. 

“**Contingent Obligation**” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) anyindebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly orindirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or otheragreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. Theamount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in goodfaith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement. 

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

“**Corporate Borrowing Certificate**” is attached hereto as **Exhibit C**. 

“**Credit Extension**” is any GC Line A Advance, GC Line B Advance, or any other extension of credit by Bank for Borrower’s benefit.

“**Default Rate**” is defined in Section 2.2(b). 

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

“**Designated Deposit Account**” is Borrower’s deposit account, account number 3300445283, maintained with Bank.

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

“**Effective Date**” is the date Bank executes this Agreement as indicated on the signature page hereof. 

“**Equipment**” is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includeswithout limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing. 

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

“**Event ofDefault**” is defined in Section 8. 

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

 

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“**GAAP**” is generally accepted accounting principles set forth in the opinions andpronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may beapproved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination. 

“**GC Line A Advance**” is defined in Section 2.1.1(a). 

“**GC Line A Tranche One Amortization StartDate**” and “**GC Line A Tranche Two Amortization Start Date**” are defined in Section 2.1.1(b). 

****“**GC Line A Draw Period**” is the period of time from the Effective Date through June 30, 2008 (unless terminated earlier in accordance with Section 9).****

“**GC Line A Tranche One Maturity Date**” is the date which is twenty-nine (29) months following the GC Line A Tranche One AmortizationStart Date. 

“**GC Line A Tranche Two Maturity Date**” is December 1, 2010. 

“**GC Line B Advance**” is defined in Section 2.1.2(a). 

“**GC Line B Tranche One Amortization Start Date**” and “**GC Line B Tranche Two Amortization Start Date**” are defined in Section 2.1.2(b). 

****“**GC Line B Draw Period**” is the period of time from the Milestone Achievement Date through December 31, 2008 (unlessterminated earlier in accordance with Section 9).****

“**GC Line B Tranche One Maturity Date**” is the date which istwenty-three (23) months following the GC Line B Tranche One Amortization Start Date. 

“**GC Line B Tranche Two MaturityDate**” is December 1, 2010. 

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

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

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

“**Growth Capital Line A**” is a GC Line A Advance or GC Line A Advances in an aggregate amount of up to TwoMillion Dollars ($2,000,000). 

 

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“**Growth Capital Line B**” is a GC Line B Advance or GC Line B Advances in an aggregateamount of up to Two Million Dollars ($2,000,000), plus any amounts from Growth Capital Line A that may be added to such amount pursuant to Section 2.1.1(a) of this Agreement. 

“**Indebtedness**” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement andother obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations. 

“**Initial Warrant**” is defined in Section 6.8(a). 

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

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

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

“**IssuePrice**” is defined in Section 6.8(a). 

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

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

“**Material Adverse Change**” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse changein the business, operations, or condition (financial or otherwise) of Borrower; or (c) a material impairment of the prospect of repayment of any portion of the Obligations. 

“**Milestone Achievement Date**” means the date on which Borrower has (a) received a fully-executed term sheet for no less than$17,500,000 in new equity financing (not including convertible debt) from investors acceptable to Bank and (b) filed, at a minimum, the clinical data section of an Application to Market a New Drug, Biologic or an Antibiotic Drug forHuman Use (FDA Form 356H) with the U.S. Food and Drug Administration for the pharmaceutical being developed by Borrower commonly known as “Bucindolol”. 

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

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

“**Perfection Certificate**” is defined in Section 5.1. 

“**Permitted Indebtedness**” is: 

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

 

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

(c) Subordinated Debt; 

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

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

(f) Indebtedness secured by Permitted Liens; 

(g) Other unsecured Indebtedness not exceeding Fifty Thousand Dollars ($50,000) in the aggregate outstanding at any time; provided, however, that,at the time such Indebtedness is incurred, no Event of Default has occurred, is continuing or would result from such Indebtedness; and 

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

“**Permitted Investments**” are: 

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

(b) Cash Equivalents and any Investments permitted by Borrower’s investment policy, as amended from time to time, provided that such investmentpolicy (and any such amendment thereto) has been approved by Bank; 

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

(d) Investments consisting of deposit accounts inwhich Bank has a perfected security interest; 

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

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

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

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

(i) Investments in joint ventures, strategic alliances, licensingand similar arrangements customary in Borrower’s industry and which do not require Borrower to assume or otherwise become liable for the obligations of any third party not directly related to or arising out of such arrangement or transferownership of non-cash assets to such joint venture or other entity; and 

(j) other Investments not otherwise permitted by Section 7.7not exceeding $50,000 in the aggregate outstanding at any time; provided, however, that, at the time such Investment is made, no Event of Default has occurred, is continuing or would result from such Investment. 

 

-20- 

“**Permitted Liens**” are: 

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

(b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for whichBorrower maintains adequate reserves on its Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder; 

(c) purchase money Liens (including capital leases) (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of theEquipment securing no more than $500,000 in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment; 

(d) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business, and which arenot delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; 

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

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

(g) non-exclusive licenses of intellectual property granted to thirdparties in the ordinary course of business and the rights of licensors under licenses of intellectual property to Borrower or its Subsidiaries entered into the ordinary course of business; 

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

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

(j) bankers’ liens, rights of setoff and similar Liens incurred on deposits made in the ordinary course of business; and 

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

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

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

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

 

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

“**Responsible Officer**” is any of the Chief Executive Officer, President, ChiefFinancial Officer and Controller of Borrower. 

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

“**Series A Price**” is defined in Section 6.8(b).

“**Series B Round**” is defined in Section 6.8(a). 

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

“**Subsidiary**” means, with respect to any Person, any Person of which more than 50.0% of the voting stock or other equity interests (inthe case of Persons other than corporations) is owned or controlled directly or indirectly by such Person or one or more of Affiliates of such Person. A “Subsidiary” without further attribution means a Subsidiary of Borrower. 

****“**Tangible Net Worth**” is, on any date, the consolidated total assets of Borrower and its Subsidiaries minus (a) anyamounts attributable to (i) goodwill, (ii) intangible items such as unamortized debt discount and expense, patents, trade and service marks and names, copyrights and research and development expenses except prepaid expenses,(iii) notes, accounts receivable and other obligations owing to Borrower from its officers or other Affiliates, and (iv) reserves not already deducted from assets, and (b) Total Liabilities. ****

“**Total Liabilities**” is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower’s consolidatedbalance sheet, including all Indebtedness, and current portion of Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all other Subordinated Debt. 

“**Transfer**” is defined in Section 7.1. 

**[**Signature page follows.**]**

 

-22- 

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

 
BORROWER:**ARCA DISCOVERY, INC.**By 
/s/ Patrick Wheeler
Name: 
Patrick Wheeler
Title: 
SVP Finance
BANK:**SILICON VALLEY BANK**By 
/s/ Adam Glick
Name: 
Adam Glick
Title: 
Relationship Manager
Effective Date: 
July 17, 2007

[Signature page to Loan and Security Agreement] 

**EXHIBIT A**

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

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

all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to andreplacements, products, proceeds and insurance proceeds of any or all of the foregoing. 

Notwithstanding the foregoing, the Collateral doesnot include any of the following, whether now owned or hereafter acquired: any copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished,any patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and any applications therefor, whetherregistered or not, and the goodwill of the business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, any and all intellectual property rights in computer softwareand computer software products, any and all design rights, all licenses or other rights to use any copyrights, patents or trademarks, all amendments, extensions, renewals and extensions of any copyrights, patents or trademarks, and any claims fordamage by way of any past, present, or future infringement of any of the foregoing (collectively, “Intellectual Property”); provided, however, the Collateral shall include all Accounts, license and royalty fees and other revenues,proceeds, or income arising out of or relating to any of the foregoing. 

Pursuant to the terms of a certain negative pledge arrangementwith Bank, Borrower has agreed not to encumber any of its Intellectual Property, without Bank’s prior written consent. 

**EXHIBIT B**

**Loan Payment/Advance Request Form**

**[Omitted]**

**EXHIBIT C**

**CORPORATE BORROWING CERTIFICATE**

[Omitted] 

**EXHIBIT D**

**FORM OF WARRANT**

[Omitted]