Venture Loan and Security Agreement



 EXHIBIT 10.14 
  
 VENTURE LOAN AND SECURITY AGREEMENT 
  
 Dated as of March 18, 2005 
  
 by and between 
  
 HORIZON TECHNOLOGY FUNDING COMPANY LLC, 
 a Delaware limited liability company

 76 Batterson Park Road 
 Farmington, CT 06032 
  
 as Lender 
  
 and 
 CRYOCOR, INC., 
 a Delaware corporation 
 9717 Pacific Heights Boulevard 
 San Diego, CA
92121 
  
 as Borrower 
  
 COMMITMENT AMOUNT: $7,000,000 
  

							
	 	 	Loan Rate:	  	 	  	10.85% unless adjusted
				
	 	 	Commitment Termination Date:	  	 	  	March 25, 2005
				
	 	 	Maturity Date:	  	 	  	June 30, 2007








 The Lender and Borrower hereby agree as follows: 
  
 AGREEMENT 
  
 1. Definitions and Construction. 
  
 1.1 Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings: 
  
 “Account Control Agreement” means an agreement acceptable
to Lender which perfects via control Lender’s security interest in Borrower’s deposit accounts and/or accounts holding securities. 
  
 “Affiliate” means any Person that owns or controls directly or indirectly ten percent (10%) or more of the stock of another entity, any
Person that controls or is controlled by or is under common control with such Persons or any Affiliate of such Persons and each of such Person’s officers, directors, joint venturers or partners. 
  
 “Agreement” means this certain Venture Loan and Security
Agreement by and between Borrower and Lender dated as of the date on the cover page hereto (as it may from time to time be amended or supplemented in writing signed by the Borrower and Lender). 
  
 “Borrower” means the Borrower as set forth on the cover page
of this Agreement. 
  
 “Borrower’s Home
State” means California. 
  
 “Business
Day” means any day that is not a Saturday, Sunday, or other day on which banking institutions are authorized or required to close in Connecticut or Borrower’s Home State. 
  
 “Claim” has the meaning given such term in Section 10.3 of this Agreement 
  
 “Code” means the Uniform Commercial Code as adopted and in
effect in the State of Connecticut, as amended from time to time; provided that if by reason of mandatory provisions of law, the creation and/or perfection or the effect of perfection or non-perfection of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than Connecticut, the term “Code” shall also mean the Uniform Commercial Code as in effect from time to time in such jurisdiction for purposes of
the provisions hereof relating to such creation, perfection or effect of perfection or non-perfection. 
  
 “Collateral” has the meaning given such term in Section 4.1 of this Agreement. 
  
 “Commitment Fee” has the meaning given such term in
Section 2.6(b) of this Agreement. 
  
 “Commitment
Termination Date” has the meaning as set forth on the cover page of this Agreement. 
  

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 “Commitment Amount” has the meaning as set forth on the cover page of this Agreement.

  
 “Default” means any event which with the
passing of time or the giving of notice or both would become an Event of Default hereunder. 
  
 “Default Rate” means the per annum rate of interest equal to five percent (5%) over the Loan Rate, but such rate shall in no event be more than the highest rate permitted by applicable law to be
charged on commercial loans in a default situation. 
  
 “Disclosure Schedule” means Exhibit A attached hereto. 
  
 “Environmental Laws” means all foreign, federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties,
requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety and land use matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act and the Emergency Planning and Community
Right-to-Know Act. 
  
 “Equity Securities” of any
Person means (a) all common stock, preferred stock, participations, shares, partnership interests, membership interests or other equity interests in and of such Person (regardless of how designated and whether or not voting or non-voting) and (b)
all warrants, options and other rights to acquire any of the foregoing. 
  
 “ERISA” has the meaning given to such term in Section 7.11 of this Agreement. 
  
 “Event of Default” has the meaning given to such term in Section 8 of this Agreement. 
  
 “Funding Certificate” means a certificate executed by a
Responsible Officer of Borrower substantially in the form of Exhibit B or such other form as Lender may agree to accept. 
  
 “Funding Date” means any date on which the Loan is made to or on account of Borrower under this Agreement. 
  
 “GAAP” means generally accepted accounting principles as in
effect in the United States of America from time to time, consistently applied. 
  
 “Good Faith Deposit” has the meaning given such term in Section 2.6(a) of this Agreement. 
  
 “Governmental Authority” means (a) any federal, state, county, municipal or foreign government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, (c) any court or administrative tribunal, or (d) with respect to any Person, any arbitration tribunal or other
non-governmental authority to whose jurisdiction that Person has consented. 
  

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 “Hazardous Materials” means all those substances which are regulated by, or which may
form the basis of liability under, any Environmental Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or
toxic substance, or petroleum or petroleum derived substance or waste. 
  
 “Indebtedness” means, with respect to Borrower or any Subsidiary, the aggregate amount of, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade payables aged less than one hundred eighty (180) days), (d) all capital lease obligations
of such Person, (e) all obligations or liabilities of others secured by a Lien on any asset of such Person, whether or not such obligation or liability is assumed, (f) all obligations or liabilities of others guaranteed by such Person, and (g) any
other obligations or liabilities which are required by GAAP to be shown as debt on the balance sheet of such Person. Unless otherwise indicated, the term “Indebtedness” shall include all Indebtedness of Borrower and the
Subsidiaries. 
  
 “Indemnified Person” has the
meaning given such term in Section 10.3 of this Agreement. 
  
 “Intellectual Property” means all of Borrower’s right, title and interest in and to patents, patent rights (and applications and registrations therefor), trademarks and service marks (and applications and registrations
therefor), inventions, copyrights, mask works (and applications and registrations therefor), trade names, trade styles, software and computer programs, source code, object code, trade secrets, methods, processes, know how, drawings, specifications,
descriptions, and all memoranda, notes, and records with respect to any research and development, all whether now owned or subsequently acquired or developed by Borrower and whether in tangible or intangible form or contained on magnetic media
readable by machine together with all such magnetic media (but not including embedded computer programs and supporting information included within the definition of “goods” under the Code). 
  
 “Investment” means the purchase or acquisition of any
capital stock, equity interest, or any obligations or other securities of, or any interest in, any Person, or the extension of any advance, loan, extension of credit or capital contribution to, or any other investment in, or deposit with, any
Person. 
  
 “Landlord Agreement” means an
agreement substantially in the form provided by Lender to Borrower or such other form as Lender may agree to accept. 
  
 “Lender” means the Lender as set forth on the cover page of this Agreement. 
  
 “Lender’s Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees
and expenses) incurred in connection with the preparation, negotiation, documentation, administration and funding of the Loan Documents; and Lender’s reasonable attorneys’ fees, costs and expenses incurred in amending, modifying, enforcing
or defending the Loan Documents (including fees and expenses of appeal or review), including the exercise of any rights or remedies afforded hereunder or under applicable law, whether or not suit is 
  

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 brought, whether before or after bankruptcy or insolvency, including without limitation all fees and costs incurred by
Lender in connection with Lender’s enforcement of its rights in a bankruptcy or insolvency proceeding filed by or against Borrower or its Property. 
  
 “Lien” means any voluntary or involuntary security interest, pledge, bailment, lease, mortgage, hypothecation, conditional sales and
title retention agreement, encumbrance or other lien with respect to any Property in favor of any Person. 
  
 “Loan” means the advance of credit by Lender to Borrower under this Agreement. 
  
 “Loan Documents” means, collectively, this Agreement, the
Note, the Warrant, any Landlord Agreement, any Account Control Agreement and all other documents, instruments and agreements entered into in connection with this Agreement, all as amended or extended from time to time. 
  
 “Loan Rate” means, with respect to the Loan, the per annum
rate of interest (based on a year of twelve 30-day months) equal to the greater of (a) 10.85% or (b) 10.85% plus the difference between 2.40% and the one month LIBOR Rate, as reported in the Wall Street Journal, on the date which is
five (5) days before the Funding Date for the Loan (or, if such date is not a Business Day, the next earlier Business Day). Notwithstanding the foregoing, the Loan Rate shall not exceed the highest rate permitted by applicable law to be charged on
commercial loans. 
  
 “Maturity Date” means June
30, 2007, or if earlier, the date of acceleration of the Loan following an Event of Default or the date of prepayment, whichever is applicable. 
  
 “Note” means the promissory note executed in connection with the Loan in substantially the form of Exhibit C attached hereto.

  
 “Obligations” means all debt, principal,
interest, fees, charges, expenses and reasonable attorneys’ fees and costs and other amounts, obligations, covenants, and duties owing by Borrower to Lender of any kind and description (whether pursuant to or evidenced by the Loan Documents
(other than the Warrant), or by any other agreement between Lender and Borrower, and whether or not for the payment of money), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including all
Lender’s Expenses (other than Lender Expenses relating to the Warrant). 
  
 “Officer’s Certificate” means a certificate executed by a Responsible Officer substantially in the form of Exhibit E or such other form as Lender may agree to accept. 
  
 “Payment Date” has the meaning given such term in Section
2.2(a) of this Agreement. 
  
 “Permitted
Indebtedness” means and includes: 
  
 (a) Indebtedness
of Borrower to Lender; 
  
 (b) Indebtedness of Borrower secured
by Liens permitted under clause (e) of the definition of Permitted Liens; 
  

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 (c) Indebtedness arising from the endorsement of instruments in the ordinary course of business;

  
 (d) Indebtedness existing on the date hereof and set forth on
the Disclosure Schedule; 
  
 (e) Indebtedness subordinated to the
Obligations, provided that, such subordination terms and conditions are acceptable to Lender in its sole discretion; 
  
 (f) Other Indebtedness in an aggregate amount not exceeding $500,000 at any time; and 
  
 (g) Extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness above,
provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower. 
  
 “Permitted Investments” means and includes any of the following Investments as to which Lender has a perfected security interest:

  
 (a) Deposits and deposit accounts with commercial banks
organized under the laws of the United States or a state thereof if such institution has an aggregate capital and surplus of not less than One Hundred Million Dollars ($100,000,000). 
  
 (b) Investments in marketable obligations issued or fully guaranteed by the United States and maturing not more than one
(1) year from the date of issuance. 
  
 (c) Investments in open
market commercial paper rated at least “A1” or “P1” or higher by a national credit rating agency and maturing not more than one (1) year from the creation thereof. 
  
 (d) Investments pursuant to or arising under currency agreements or interest rate agreements entered into in the ordinary
course of business. 
  
 (e) Investments consisting of notes
receivable of, or prepaid royalties or other credit extensions to, customers and suppliers who are not Affiliates in the ordinary course of business; 
  
 (f) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; 
  
 (g) Investments consisting of Borrower’s accounts receivable in the ordinary course of business; 
  

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 (h) Investments, not requiring the use of cash or the assumption of liabilities, in joint ventures,
partnerships or similar business arrangements entered into in the ordinary course of business in substantially the same industry and growth stage as Borrower; 
  

(i) Investments consisting of loans to employees, officers or directors of Borrower relating to: (x) the purchase of equity securities of Borrower
pursuant to Borrower’s employee stock option plan, stock purchase plan or other similar arrangements approved by the Borrower’s board of directors; (y) Borrower’s compensation or relocation plans or agreements each as approved in good
faith by the Borrower’s board of directors; or (z) travel advances, employee relocation loans and other employee loans and advances in the ordinary course of business; provided, however, that the aggregate amount of cash used for such
Investments relating to subsections (x), (y) and (z) above outstanding at any time shall not exceed $350,000 without Lender’s prior written consent; 
  
 (j) Investments made pursuant to an investment policy adopted in good faith by the Borrower’s Board of Directors but outside those categories of
Investments described in (a) through (c) above; provided that the aggregate amount of such investments shall not exceed $100,000 without Lender’s prior written consent; and 
  
 (k) Other Investments aggregating not in excess of Five Hundred Thousand Dollars ($ 500,000) at any time. 
  
 “Permitted Liens” means and includes: 
  
 (a) the Lien created by this Agreement; 
  
 (b) Liens for fees, taxes, levies, imposts, duties or other governmental
charges of any kind which are not yet delinquent or which are being contested in good faith by appropriate proceedings which suspend the collection thereof (provided that such appropriate proceedings do not involve any substantial
danger of the sale, forfeiture or loss of any material item of Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books
of Borrower); 
  
 (c) Liens identified on the Disclosure
Schedule; 
  
 (d) carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s or other similar Liens arising in the ordinary course of business and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate
proceedings (provided that such appropriate proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower and that
Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of Borrower); 
  
 (e) Liens upon any equipment or other personal property acquired by Borrower after the date hereof to secure (i) the purchase price of such equipment or
other personal property, or (ii) lease obligations or indebtedness incurred solely for the purpose of financing the acquisition of such equipment or other personal property; provided that (A) such 
  

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 Liens are confined solely to the equipment or other personal property so acquired and the proceeds thereof and the amount
secured does not exceed the acquisition price thereof, and (B) no such Lien shall be created, incurred, assumed or suffered to exist in favor of Borrower’s officers, directors or shareholders holding five percent (5%) or more of Borrower’s
Equity Securities; 
  
 (f) licenses of Intellectual Property
entered into in the ordinary course of business (whether as licensor or licensee); 
  
 (g) bankers’ liens, rights of setoff and similar Liens incurred on deposits made in the ordinary course of business and Liens in favor of financial institutions arising in connection with Borrower’s deposit
accounts or securities accounts held at such institutions to secure customary fees and charges; 
  
 (h) any judgment, attachment or similar Lien not resulting in an Event of Default hereunder; 
  
 (i) Liens to secure payment of worker’s compensation, unemployment
insurance, old age pensions or other social security obligations of Borrower in the ordinary course of business; 
  
 (j) easements, reservations, rights-of-way, restrictions, minor defects or irregularities in title and similar charges or encumbrances affecting real
property not constituting a material adverse effect on the business or condition (financial or otherwise) of Borrower; and 
  
 (k) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described above but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase. 
  
 “Person” means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited
liability company, any unincorporated association or any other entity and any domestic or foreign national, state or local government, any political subdivision thereof, and any department, agency, authority or bureau of any of the foregoing.

  
 “Property” means any interest in any kind of
property or asset, whether real, personal or mixed, whether tangible or intangible. 
  
 “Responsible Officer” has the meaning given such term in Section 6.3 of this Agreement. 
  
 “Scheduled Payments” has the meaning given such term in Section 2.2(a) of this Agreement. 
  
 “Solvent” has the meaning given such term in Section
5.12 of this Agreement. 
  

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 “Subsidiary” means any corporation or other entity of which a majority of the
outstanding Equity Securities entitled to vote for the election of directors or other governing body (otherwise than as the result of a default) is owned by Borrower directly or indirectly through Subsidiaries. 
  
 “Term” means the period from and after the date hereof until
the payment in full of all amounts and liabilities payable under this Agreement and the other Loan Documents (other than the Warrant), including principal and interest on the Loans. 
  
 “Third Party Equipment” has the meaning given such term in Section 4.8 of this Agreement.

  
 “Transfer” has the meaning given such term in
Section 7.4 of this Agreement. 
  
 “Warrant” means the separate warrant or warrants dated on or about the date hereof in favor of the Lender or its designees to purchase securities of Borrower. 
  
 1.2 Construction. References in this Agreement to “Articles,” “Sections,” “Exhibits,”
“Schedules” and “Annexes” are to recitals, articles, sections, exhibits, schedules and annexes herein and hereto unless otherwise indicated. References in this Agreement and each of the other Loan Documents to any document,
instrument or agreement shall include (a) all exhibits, schedules, annexes and other attachments thereto, (b) all documents, instruments or agreements issued or executed in replacement thereof, and (c) such document, instrument or agreement, or
replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this
Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. The words
“include” and “including” and words of similar import when used in this Agreement or any other Loan Document shall not be construed to be limiting or exclusive. Unless otherwise indicated in this Agreement or any other Loan
Document, all accounting terms used in this Agreement or any other Loan Document shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with GAAP, and all terms describing
Collateral shall be construed in accordance with the Code. The terms and information set forth on the cover page of this Agreement are incorporated into this Agreement. 
  
 2. Loan; Repayment. 
  
 2.1 Commitment. 
  
 (a) The Commitment Amount. Subject to the terms and conditions of this Agreement and relying upon the representations and warranties herein set
forth as and when made or deemed to be made, Lender agrees to lend to Borrower prior to the Commitment Termination Date, the Loan in the amount of the Commitment Amount. 
  

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 (b) The Loan and the Note. The obligation of Borrower to repay the unpaid principal amount of and
interest on the Loan shall be evidenced by the Note issued to Lender. 
  
 (c) Use of Proceeds. The proceeds of the Loan shall be used solely for working capital or general corporate purposes of Borrower. 
  
 (d) Termination of Commitment to Lend. Notwithstanding anything in the Loan Documents, Lender’s obligation to lend the undisbursed portion of
the Commitment Amount to Borrower hereunder shall terminate on the earlier of (i) at Lender’s sole election, the occurrence of any Default or Event of Default hereunder, and (ii) the Commitment Termination Date. Notwithstanding the foregoing,
Lender’s obligation to lend the undisbursed portion of the Commitment Amount to Borrower shall terminate if, in Lender’s sole judgment, there has been a material adverse change in the general affairs, management, results of operations,
condition (financial or otherwise) or prospects of Borrower, whether or not arising from transactions in the ordinary course of business, or there has been any material adverse deviation by Borrower from the business plan of Borrower presented to
Lender on or before the date of this Agreement. 
  
 2.2
Payments. 
  
 (a) Scheduled Payments. Borrower, as
set forth in the Note, shall make payments of accrued interest only on the outstanding principal amount of the Loan commencing March 1, 2005 and continuing thereafter on the first Business Day of each calendar month (each a “Payment
Date”) and a final payment of all outstanding principal and accrued interest on June 30, 2007 (collectively, the “Scheduled Payments”). In any event, all unpaid principal and accrued interest shall be due and payable in
full on the Maturity Date. 
  
 (b) Interim Payment. Unless
the Funding Date for the Loan is the first day of a calendar month, Borrower shall pay the per diem interest (accruing at the Loan Rate from the Funding Date through the last day of that month) payable with respect to such Loan on the first Business
Day of the next calendar month. 
  
 (c) Payment of
Interest. Borrower shall pay interest on the Loan at a per annum rate of interest equal to the Loan Rate. All computations of interest on the Loan (including interest at the Default Rate, if applicable) shall be based on a year of twelve 30-day
months. Notwithstanding any other provision hereof, the amount of interest payable hereunder shall not in any event exceed the maximum amount permitted by the law applicable to interest charged on commercial loans. 
  
 (d) Application of Payments. All payments received by Lender prior to
an Event of Default shall be applied as follows: (1) first, to Lender’s Expenses then due and owing; and (2) second to all Scheduled Payments then due and owing (provided, however, if such payments are not sufficient to pay the
whole amount then due, such payments shall be applied first to unpaid interest at the Loan Rate, then to the remaining amount then due). After an Event of Default, all payments and application of proceeds shall be made as set forth in Section
9.7. 
  

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 (e) Late Payment Fee. Borrower shall pay to Lender a late payment fee equal to six percent (6%)
of any Scheduled Payment not paid within 5 Business Days of the Payment Date. 
  
 (f) Default Rate. Borrower shall pay interest at a per annum rate equal to the Default Rate on any amounts required to be paid by Borrower under this Agreement or the other Loan Documents (including Scheduled
Payments), payable with respect to the Loan, accrued and unpaid interest, and any fees or other amounts which remain unpaid after such amounts are due. If an Event of Default has occurred and the Obligations have been accelerated (whether
automatically or by Lender’s election), Borrower shall pay interest on the aggregate, outstanding accelerated balance hereunder from the date of the Event of Default until all Events of Default are cured, at a per annum rate equal to the
Default Rate. 
  
 2.3 Prepayments. 
  
 (a) Mandatory Prepayment Upon an Acceleration. If the Loan is
accelerated following the occurrence of an Event of Default pursuant to Section 9.1(a) hereof, then Borrower, in addition to any other amounts which may be due and owing hereunder, shall immediately pay to Lender the amount set forth in Section
2.3(b) below, as if the Borrower had opted to prepay on the date of such acceleration. 
  
 (b) Optional Prepayment. Upon five (5) Business Days’ prior written notice to Lender, Borrower may, at its option, at any time, prepay all of the Loan, by paying to Lender an amount equal to (without
duplication) (i) all accrued and unpaid Scheduled Payments with respect to the Loan due prior to the date of prepayment; (ii) any accrued and unpaid interest on the Loan; (iii) an amount equal to one percent (1.0%) of the Loan; (iv) the outstanding
principal balance of the Loan and (v) all other sums, if any, that shall have become due and payable hereunder. 
  
 2.4 Other Payment Terms. 
  
 (a) Place and Manner. Borrower shall make all payments due to Lender in lawful money of the United States. All payments of principal, interest,
fees and other amounts payable by Borrower hereunder shall be made, in immediately available funds, not later than 10:00 a.m. Connecticut time, on the date on which such payment is due. Borrower shall make such payments to Lender via wire transfer
as follows: 
  

			
	 Payment via wire transfer:
 Credit:
	 	Horizon Technology Funding Company LLC
		
	Bank Name:	 	ABN Amro/LaSalle Bank NA CDO Trust Services
		
	Bank Address:	 	 135 South LaSalle Street, Suite 1625
 Chicago,
Illinois 60603
 Attn: Timothy E. Williams, 312-904-0283

		
	Account No.:	 	2090067 – Trust GL
		
	FFCT-Reference Account Number	 	721771.1
		
	ABA Routing No.:	 	071000505
		
	Reference:	 	CryoCor, Inc. Invoice #                        

  

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 (b) Date. Whenever any payment is due hereunder on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be. 
  
 2.5 Procedure for Making the Loan. 
  
 (a) Notice. Whenever Borrower desires that Lender make the Loan, Borrower shall notify Lender of the date on which Borrower desires Lender to make
such Loan. Borrower’s notice shall be made at least five (5) Business Days in advance of the desired Funding Date, unless Lender elects at its sole discretion to allow the Funding Date to be within five (5) Business Days of the notice.
Borrower’s execution and delivery to Lender of the Note shall be Borrower’s agreement to the terms and calculations thereunder with respect to the Loan. Lender’s obligation to make the Loan shall be expressly subject to the
satisfaction of the conditions set forth in Sections 3.1 and 3.2. 
  
 (b) Loan Rate Calculation. Prior to the Funding Date, Lender shall establish the Loan Rate with respect to the Loan, which shall be set forth in the Note to be executed by Borrower with respect to the Loan and
shall be conclusive in the absence of a manifest error. 
  
 (c)
Disbursement. Lender shall disburse the proceeds of the Loan by wire transfer to Borrower at the account specified in the Funding Certificate for the Loan. 
  
 2.6 Good Faith Deposit; Legal, Due Diligence and Documentation Expenses and Closing Expenses; and
Commitment Fee. 
  
 (a) Good Faith Deposit. Borrower
has delivered to Lender a good faith deposit in the amount of Seventy Thousand Dollars ($70,000) (the “Good Faith Deposit”). Upon execution of this Agreement, the Good Faith Deposit will be applied to the Commitment Fee. 

 
 (b) Legal, Due Diligence and Documentation Expenses. It is agreed
that Lender shall be entitled to retain Ten Thousand Dollars ($10,000) as payment for its legal, due diligence and documentation expenses in connection with the closing of the Loan, and that such expenses shall not exceed $10,000 in the aggregate.

  
 (c) Commitment Fee. Borrower shall pay concurrently
with its execution and delivery of this Agreement a commitment fee in the amount of Seventy Thousand Dollars ($70,000) (the “Initial Commitment Fee”). Borrower shall pay concurrently with its closing of the sale of any of its Equity
Securities, an additional commitment fee in the amount of Seventy Thousand Dollars ($70,000) (the “Additional Commitment Fee” and collectively with the Initial Commitment Fee, the “Commitment Fee”). The Commitment
Fee shall be retained by Lender and be deemed fully earned upon receipt. 
  

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 3. Conditions of Loan. 
  
 3.1 Conditions Precedent to Closing. At the time of the execution and delivery of this Agreement, Lender shall have
received, in form and substance reasonably satisfactory to Lender, all of the following (unless Lender has agreed to waive such condition or document, in which case such condition or document shall be a condition precedent to the making of the Loan
and shall be deemed added to Section 3.2): 
  
 (a) Loan
Agreement. This Agreement duly executed by Borrower and Lender. 
  
 (b) Warrant. The Warrant to be issued to Lender or its designees, duly executed by Borrower. 
  
 (c) Secretary’s Certificate. A certificate of the secretary or assistant secretary of Borrower with copies of the following documents
attached: (i) the certificate of incorporation and bylaws of Borrower certified by Borrower as being complete and in full force and effect on the date thereof, (ii) incumbency and representative signatures, and (iii) resolutions authorizing the
execution and delivery of this Agreement and each of the other Loan Documents. 
  
 (d) Good Standing Certificates. A good standing certificate from Borrower’s state of incorporation and the state in which Borrower’s principal place of business is located. 
  
 (e) Certificate of Insurance. Evidence of the insurance coverage
required by Section 6.8 of this Agreement. 
  
 (f)
Consents. All necessary consents of shareholders and other third parties with respect to the execution, delivery and performance of this Agreement, the Warrant and the other Loan Documents. 
  
 (g) Legal Opinion. A legal opinion of Borrower’s counsel
covering the matters set forth in Exhibit D hereto. 
  
 (h) Account Control Agreements. Account Control Agreements for all of Borrower’s deposit accounts and accounts holding securities duly executed by all of the parties thereto, in the forms provided by Lender. 
  
 (i) Other Documents. Such other documents and completion of such
other matters, as Lender may deem necessary or appropriate. 
  
 3.2 Conditions Precedent to Making the Loan. The obligation of Lender to make the Loan is further subject to the following conditions: 
  
 (a) No Default. No Default or Event of Default shall have occurred and be continuing. 
  

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 (b) Landlord Agreements. Borrower shall have provided Lender with a Landlord Agreement for each
location where Borrower’s books and records and the Collateral is located (unless Borrower is the fee owner thereof). 
  
 (c) Note. Borrower shall have duly executed and delivered to Lender a Note in the amount of the Loan. 
  
 (d) UCC Financing Statements. Lender shall have received such
documents, instruments and agreements, including UCC financing statements or amendments to UCC financing statements, as Lender shall reasonably request to evidence the perfection and priority of the security interests granted to Lender pursuant to
Section 4. Borrower authorizes Lender to file any UCC financing statements or amendments to UCC financing statements it deems necessary to perfect its security interest in the Collateral. 
  
 (e) Funding Certificate. Borrower shall have duly executed and
delivered to Lender a Funding Certificate for the Loan. 
  
 (f)
Other Documents. Such other documents and completion of such other matters, as Lender may deem necessary or appropriate. 
  
 3.3 Covenant to Deliver. Borrower agrees (not as a condition but as a covenant) to deliver to Lender each item required to be delivered to Lender
as a condition to the Loan, if the Loan is advanced. Borrower expressly agrees that the extension of the Loan prior to the receipt by Lender of any such item shall not constitute a waiver by Lender of Borrower’s obligation to deliver such item,
and any such extension in the absence of a required item shall be in Lender’s sole discretion. 
  
 4. Creation of Security Interest. 
  
 4.1 Grant of Security Interest. Borrower grants to Lender a valid, first priority, continuing security interest in all presently existing and
hereafter acquired or arising Collateral in order to secure prompt, full and complete payment of any and all Obligations and in order to secure prompt, full and complete performance by Borrower of each of its covenants and duties under each of the
Loan Documents (other than the Warrant). The “Collateral” shall mean and include all right, title, interest, claims and demands of Borrower in and to all personal property of Borrower, including without limitation, all of the
following: 
  
 (a) All goods (and embedded computer programs and
supporting information included within the definition of “goods” under the Code) and equipment now owned or hereafter acquired, including, without limitation, all laboratory equipment, computer equipment, office equipment, machinery,
fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;

  
 (b) All inventory now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Borrower’s 
  

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 custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower’s books relating to any of the foregoing; 
  
 (c) All contract rights and general intangibles (except to the extent
included within the definition of Intellectual Property), now owned or hereafter acquired, including, without limitation, goodwill, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists,
infringements, claims, software, computer programs, computer disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payment intangibles, commercial tort claims, payments of insurance and rights to payment of any
kind; 
  
 (d) All now existing and hereafter arising accounts,
contract rights, royalties, license rights, license fees and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower (subject, in each case, to
the contractual rights of third parties to require funds received by Borrower to be expended in a particular manner), whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower and Borrower’s books relating to any of the foregoing; 
  
 (e) All documents, cash, deposit accounts, letters of credit (whether or not the letter of credit is evidenced by a writing), certificates of deposit,
instruments, promissory notes, chattel paper (whether tangible or electronic) and investment property, including, without limitation, all securities, whether certificated or uncertificated, security entitlements, securities accounts, commodity
contracts and commodity accounts, and all financial assets held in any securities account or otherwise, wherever located, now owned or hereafter acquired and Borrower’s books relating to the foregoing; and 
  
 (f) Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof, including, without limitation, insurance, condemnation, requisition or similar payments and proceeds of the sale or licensing of Intellectual Property to the extent such proceeds
no longer constitute Intellectual Property. 
  
 (g)
Notwithstanding the foregoing, the Collateral shall not include (i) more than 65% of the capital stock of any Subsidiary incorporated or organized under the laws of a jurisdiction other than the United States or any state or territory thereof or the
District of Columbia, and (ii) any Intellectual Property; provided, however, that the Collateral shall include all accounts receivable, accounts, and general intangibles that consist of rights to payment and proceeds from the sale,
licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the
underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the Closing Date, include the Intellectual Property to the extent necessary to permit
perfection of Agent’s security interest in the Rights to Payment. 
  

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 4.2 After-Acquired Property. If Borrower shall at any time acquire a commercial tort claim, as
defined in the Code, Borrower shall immediately notify Lender in writing signed by Borrower of the brief details thereof and grant to Lender in such writing a security interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory to Lender. 
  
 4.3 Duration of Security Interest. Lender’s security interest in the Collateral shall continue until the payment in full and the satisfaction of all Obligations and termination of Lender’s commitment
to fund the Loan, whereupon such security interest shall terminate. Lender shall, at Borrower’s sole cost and expense, execute such further documents and take such further actions as may be reasonably necessary to make effective the release
contemplated by this Section 4.3, including duly executing and delivering termination statements for filing in all relevant jurisdictions under the Code. 
  

4.4 Location and Possession of Collateral. The Collateral is and shall remain in the possession of Borrower at its location listed on the cover
page hereof or as set forth in the Disclosure Schedule. Notwithstanding the foregoing, Borrower shall be allowed to re-locate Collateral; provided that, Borrower shall provide Lender five (5) Business Days prior written notice of such re-location of
Collateral. Borrower shall remain in full possession, enjoyment and control of the Collateral (except only as may be otherwise required by Lender for perfection of its security interest therein) and so long as no Event of Default has occurred and is
continuing, shall be entitled to manage, operate and use the same and each part thereof with the rights and franchises appertaining thereto; provided that the possession, enjoyment, control and use of the Collateral shall at all time
be subject to the observance and performance of the terms of this Agreement. 
  
 4.5 Delivery of Additional Documentation Required. Borrower shall from time to time execute and deliver to Lender, at the request of Lender, all financing statements and other documents Lender may reasonably
request, in form satisfactory to Lender, to perfect and continue Lender’s perfected security interests in the Collateral and in order to consummate fully all of the transactions contemplated under the Loan Documents. 
  
 4.6 Right to Inspect. Lender (through any of its officers, employees,
or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower’s usual business hours but not more than twice per year (unless an Event of Default has occurred and is continuing), to inspect Borrower’s
books and records and to make copies thereof and to inspect, test, and appraise the Collateral in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral. 
  
 4.7 Intellectual Property. Borrower shall (i) protect, defend and
maintain the validity and enforceability of any Intellectual Property material to Borrower’s business and promptly advise Lender in writing of material infringements, and (ii) not allow any Intellectual Property material to Borrower’s
business to be abandoned, forfeited or dedicated to the public without Lender’s written consent. 
  
 4.8 Lien Subordination. Lender agrees that the Liens granted to it hereunder in Third Party Equipment shall be subordinate to the Liens of existing
or future lenders 
  

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 providing equipment financing and equipment lessors for equipment and other personal property acquired by Borrower after
the date hereof (“Third Party Equipment”) or if such lenders prohibit the granting of Liens to other lenders, Lender shall release its Lien on such Third Party Equipment and the proceeds thereof; provided that such
Liens are confined solely to the equipment so financed and the proceeds thereof and are Permitted Liens. Upon the expiration of the Liens of such other lenders or the termination of their prohibition of Liens in favor of other Lenders, the Third
Party Equipment shall automatically become part of the Collateral, and Lender is authorized at that time to amend any filed financing statement(s) to reflect that change. Notwithstanding the foregoing, the Obligations hereunder shall not be
subordinate in right of payment to any obligations to other lenders, equipment lenders or equipment lessors and Lender’s rights and remedies hereunder shall not in any way be subordinate to the rights and remedies of any such lenders or
equipment lessors. So long as no Event of Default has occurred and is continuing, Lender agrees to execute and deliver such agreements and documents as may be reasonably requested by Borrower from time to time which set forth the lien subordination
described in this Section 4.8 and are reasonably acceptable to Lender. Lender shall have no obligation to execute any agreement or document which would impose obligations, restrictions or lien priority on Lender which are less favorable to
Lender than those described in this Section 4.8. 
  
 5.
Representations and Warranties. Except as set forth in the Disclosure Schedule, Borrower represents and warrants as follows: 
  
 5.1 Organization and Qualification. Borrower is a corporation duly organized and validly existing and in good standing under the laws of its state
of incorporation and qualified and licensed to do business in, and is in good standing in, any state in which the conduct of its business or its ownership of Property requires that it be so qualified or in which the Collateral is located, except for
such states as to which any failure to so qualify would not have a material adverse effect on Borrower. 
  
 5.2 Authority. Borrower has all necessary power and authority to execute, deliver, and perform in accordance with the terms thereof, the Loan
Documents to which it is a party. Borrower has all requisite power and authority to own and operate its Property and to carry on its businesses as now conducted. 
  
 5.3 Conflict with Other Instruments, etc. Neither the execution and delivery of any Loan Document to which Borrower
is a party nor the consummation of the transactions therein contemplated nor compliance with the terms, conditions and provisions thereof will conflict with or result in a breach of any of the terms, conditions or provisions of the certificate of
incorporation, the by-laws, or any other organizational documents of Borrower or any law or any regulation, order, writ, injunction or decree of any court or governmental instrumentality or any material agreement or instrument to which Borrower is a
party or by which it or any of its Property is bound or to which it or any of its Property is subject, or constitute a default thereunder or result in the creation or imposition of any Lien, other than Permitted Liens. 
  
 5.4 Authorization; Enforceability. The execution and delivery of this
Agreement, the granting of the security interest in the Collateral, the incurring of the Loan, the execution and delivery of the other Loan Documents to which Borrower is a party and the 
  

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 consummation of the transactions herein and therein contemplated have each been duly authorized by all necessary action
on the part of Borrower. No authorization, consent, approval, license or exemption of, and no registration, qualification, designation, declaration or filing with, or notice to, any Person is, was or will be necessary to (i) the valid execution and
delivery of any Loan Document to which Borrower is a party, (ii) the performance of Borrower’s obligations under any Loan Document, or (iii) the granting of the security interest in the Collateral, except for filings in connection with the
perfection of the security interest in any of the Collateral or the issuance of the Warrant. The Loan Documents have been duly executed and delivered and constitute legal, valid and binding obligations of Borrower, enforceable in accordance with
their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application relating to or affecting the enforcement of creditors’ rights or by general principles of equity.

  
 5.5 No Prior Encumbrances. Borrower has good and
marketable title to the Collateral, free and clear of Liens except for Permitted Liens. Borrower has good title and ownership of, or is licensed under, all of Borrower’s current Intellectual Property. Borrower has not received any
communications alleging that Borrower has violated, or by conducting its business as proposed, would violate any proprietary rights of any other Person. Borrower has no knowledge of any infringement or violation by it of the intellectual property
rights of any third party and has no knowledge of any violation or infringement by a third party of any of its Intellectual Property. The Collateral and the Intellectual Property constitute substantially all of the assets and property of Borrower.

  
 5.6 Name; Location of Chief Executive Office, Principal
Place of Business and Collateral. Borrower has not done business under any name other than that specified on the signature page hereof. Borrower’s jurisdiction of incorporation, chief executive office, principal place of business, and the
place where Borrower maintains its records concerning the Collateral are presently located in the state and at the address set forth on the cover page of this Agreement. The Collateral is presently located at the address set forth on the cover page
hereof or as set forth in the Disclosure Schedule. 
  
 5.7
Litigation. There are no actions or proceedings pending by or against Borrower before any court or administrative agency in which an adverse decision could have a material adverse effect on Borrower or the aggregate value of the Collateral.
Borrower does not have knowledge of any such pending or threatened actions or proceedings. 
  
 5.8 Financial Statements. All financial statements relating to Borrower or any Affiliate that have been or may hereafter be delivered by Borrower to Lender present fairly in all material respects
Borrower’s financial condition as of the date thereof and Borrower’s results of operations for the period then ended. 
  
 5.9 No Material Adverse Effect. No event has occurred and no condition exists which could reasonably be expected to have a material adverse effect
on the financial condition, business or operations of Borrower since December 31, 2003. 
  
 5.10 Full Disclosure. No representation, warranty or other statement made by Borrower in any Loan Document (including the Disclosure Schedule), certificate or written 
  

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 statement furnished to Lender contains any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained in such certificates or statements not misleading. There is no fact known to Borrower which materially adversely affects, or which could in the future be reasonably expected to materially adversely
affect, its ability to perform its obligations under this Agreement. 
  
 5.11 Solvency, Etc. Borrower is Solvent (as defined below) and, after the execution and delivery of the Loan Documents and the consummation of the transactions contemplated thereby, Borrower will be Solvent.
“Solvent” means, with respect to any Person on any date, that on such date (a) the fair value of the property of such Person is greater than the fair value of the liabilities (including, without limitation, contingent liabilities)
of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person’s property would constitute an unreasonably small capital. 
  
 5.12 Subsidiaries. Borrower has no Subsidiaries. 
  
 5.13 Catastrophic Events; Labor Disputes. None of Borrower or its properties is or has been affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or other casualty that could reasonably be expected to have a material adverse effect on the financial condition, business or operations of Borrower. There are no
disputes presently subject to grievance procedure, arbitration or litigation under any of the collective bargaining agreements, employment contracts or employee welfare or incentive plans to which Borrower is a party, and there are no strikes,
lockouts, work stoppages or slowdowns, or, to the knowledge of Borrower, jurisdictional disputes or organizing activity occurring or threatened which could reasonably be expected to have a material adverse effect on the financial condition, business
or operations of Borrower. 
  
 5.14 Certain Agreements of
Officers, Employees and Consultants. 
  
 (a) No
Violation. To the knowledge of Borrower, no officer, employee or consultant of Borrower is, or is now expected to be, in violation of any term of any employment contract, proprietary information agreement, nondisclosure agreement, noncompetition
agreement or any other material contract or agreement or any restrictive covenant relating to the right of any such officer, employee or consultant to be employed by Borrower because of the nature of the business conducted or to be conducted by
Borrower or relating to the use of trade secrets or proprietary information of others, and to Borrower’s knowledge, the continued employment of Borrower’s officers, employees and consultants does not subject Borrower to any material
liability for any claim or claims arising out of or in connection with any such contract, agreement, or covenant. 
  
 (b) No Present Intention to Terminate. To the knowledge of Borrower, no officer of Borrower, and no employee or consultant of Borrower whose
termination, either 
  

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 individually or in the aggregate, could reasonably be expected to have a material adverse effect on the financial
condition, business or operations of Borrower, has any present intention of terminating his or her employment or consulting relationship with Borrower. 
  
 6. Affirmative Covenants. Borrower, until the full and complete payment of the Obligations, covenants and agrees that: 
  
 6.1 Good Standing. Borrower shall maintain its corporate existence
and its good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to have a material adverse effect on the financial condition, operations or
business of Borrower. Borrower shall maintain in force all licenses, approvals and agreements, the loss of which could reasonably be expected to have a material adverse effect on its financial condition, operations or business. 
  
 6.2 Government Compliance. Borrower shall comply with all statutes,
laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could reasonably be expected to materially adversely affect the financial condition, operations or business of Borrower. 
  
 6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to Lender: (a) as soon as available, but in any event within thirty (30) days after the end of each month, a company prepared balance sheet, income statement and cash flow statement covering Borrower’s operations during such period,
certified by Borrower’s president, treasurer or chief financial officer (each, a “Responsible Officer”); (b) as soon as available, but in any event within one hundred twenty (120) days after the end of Borrower’s fiscal
year, audited financial statements of Borrower prepared in accordance with GAAP, together with an unqualified opinion on such financial statements of a nationally recognized or other independent public accounting firm reasonably acceptable to
Lender; and (c) as soon as available, but in any event within ninety (90) days after the end of Borrower’s fiscal year or the date of Borrower’s board of directors’ adoption, Borrower’s operating budget and plan for the next
fiscal year; and (d) such other financial information as Lender may reasonably request from time to time. From and after such time as Borrower becomes a publicly reporting company, promptly as they are available and in any event: (x) at the time of
filing of Borrower’s Form 10-K with the Securities and Exchange Commission after the end of each fiscal year of Borrower, the financial statements of Borrower filed with such Form 10-K; and (y) at the time of filing of Borrower’s Form 10-Q
with the Securities and Exchange Commission after the end of each of the first three fiscal quarters of Borrower, the financial statements of Borrower filed with such Form 10-Q. In addition, Borrower shall deliver to Lender (i) promptly upon
becoming available, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders; (ii) immediately upon receipt of notice thereof, a report of any material legal actions pending or threatened
against Borrower or the commencement of any action, proceeding or governmental investigation involving Borrower is commenced that is reasonably expected to result in damages or costs to Borrower of One Hundred Fifty Thousand Dollars ($150,000) or
more; and (iii) such other financial information as Lender may reasonably request from time to time. 
  

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 6.4 Certificates of Compliance. Each time financial statements are furnished pursuant to
Section 6.3 above, Borrower shall deliver to Lender an Officer’s Certificate signed by a Responsible Officer in the form of, and certifying to the matters set forth in Exhibit E hereto. 
  
 6.5 Notice of Defaults. As soon as possible, and in any event within
five (5) days after the discovery of a Default or an Event of Default, Borrower shall provide Lender with an Officer’s Certificate setting forth the facts relating to or giving rise to such Default or Event of Default and the action which
Borrower proposes to take with respect thereto. 
  
 6.6
Taxes. Borrower shall make due and timely payment or deposit of all federal, state, and local taxes, assessments, or contributions required of it by law or imposed upon any Property belonging to it, and will execute and deliver to Lender, on
demand, appropriate certificates attesting to the payment or deposit thereof; and Borrower will make timely payment or deposit of all tax payments and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Lender with proof satisfactory to Lender indicating that Borrower has made such payments or deposits; provided that Borrower need
not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings which suspend the collection thereof (provided that such proceedings do not involve any substantial danger of the
sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such amounts or reserves sufficient to discharge such amounts have been provided on the
books of Borrower). 
  
 6.7 Use; Maintenance. Borrower
shall keep and maintain all items of equipment and other similar types of personal property that form any significant portion or portions of the Collateral in good operating condition and repair, ordinary wear and tear excepted, and shall make all
necessary replacements thereof and renewals thereto so that the value and operating efficiency thereof shall at all times be maintained and preserved. Borrower shall not permit any such material item of Collateral to become a fixture to real estate
or an accession to other personal property, without the prior written consent of Lender. Borrower shall not permit any such material item of Collateral to be operated or maintained in violation of any applicable law, statute, rule or regulation.
With respect to items of leased equipment (to the extent Lender has any security interest in any residual Borrower’s interest in such equipment under the lease), Borrower shall keep, maintain, repair, replace and operate such leased equipment
in accordance with the terms of the applicable lease. 
  
 6.8
Insurance. Borrower, at its expense, shall obtain and maintain: 
  
 (a) All Risk. “All risk” insurance against loss or damage to the Collateral. The coverage limit shall be determined to Lender’s reasonable satisfaction. The deductible shall not exceed Twenty
Five Thousand Dollars ($25,000). The policy shall name Lender as loss payee with respect to the Collateral, shall not be invalidated by any action of or breach of warranty by Borrower of any provision thereof and waive subrogation against Lender.

  

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 (b) General Liability Insurance. Commercial general liability insurance (including contractual
liability, products liability and completed operations coverages) reasonably satisfactory to Lender. The limit of liability shall be at least Five Million Dollars ($5,000,000) per occurrence. The policy shall be without deductible, except for
products liability coverage which may have a deductible up to Twenty Five Thousand Dollars ($25,000). The policy(ies) shall name Lender as additional insured in the full amount of Borrower’s liability coverage limits (or the coverage limits of
any successor to Borrower or such successor’s parent which is providing coverage), be primary and without contribution as respects any insurance carried by Lender, and contain cross liability and severability of interest clauses. 
  
 (c) Other Insurance. Such other insurance against risks of loss and
with terms as shall be reasonably required by Lender. 
  
 All
policies of insurance shall be placed with financially sound, commercial insurers reasonably satisfactory to Lender. All policies of insurance shall provide that Lender shall be given thirty (30) days notice of cancellation of coverage. This notice
provision shall be without qualification. On or prior to the first Funding Date and prior to each policy renewal, Borrower shall furnish to Lender certificates of insurance or other evidence satisfactory to Lender that insurance complying with all
of the above requirements is in effect. 
  
 6.9 Security
Interest. Assuming the proper filing of one or more financing statement(s) identifying the Collateral with the proper state and/or local authorities, the security interests in the Collateral granted to Lender pursuant to this Agreement (i)
constitute and will continue to constitute first priority security interests (except to the extent any Permitted Liens may have a superior priority to Lender’s Lien under this Agreement) and (ii) are and will continue to be superior and prior
to the rights of all other creditors of Borrower (except to the extent of such Permitted Liens), to the extent a security interest in the Collateral can be perfected under the Delaware Code by the filing of a UCC-1 financing statement with the
filing office of the Secretary of State of the State of Delaware. 
  
 6.10 Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Lender to make effective the purposes of this
Agreement, including without limitation, the continued perfection and priority of Lender’s security interest in the Collateral. 
  
 7. Negative Covenants. Borrower, until the full and complete payment of the Obligations, covenants and agrees that Borrower shall not: 

 
 7.1 Chief Executive Office. Change its name, jurisdiction of
incorporation, chief executive office, principal place of business or any of the items set forth in Section 1 of the Disclosure Schedule without thirty (30) days prior written notice to Lender. 
  
 7.2 Collateral Control. Subject to its rights under Sections 4.4
and 7.4, remove any items of Collateral from Borrower’s facility located at the address set forth on the cover page hereof or as set forth on the Disclosure Schedule. 
  
 7.3 Liens. Create, incur, assume or suffer to exist any Lien of any kind upon any Collateral, whether now owned or
hereafter acquired, except Permitted Liens. 
  

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 7.4 Other Dispositions of Collateral. Convey, sell, lease or otherwise dispose of (collectively, a
“Transfer”) all or any part of the Collateral to any Person except for: (i) Transfers of inventory in the ordinary course of business; or (ii) Transfers of worn-out or obsolete equipment; or ((iii) other Transfers which in the
aggregate do not exceed $100,000 in any fiscal year. 
  
 7.5
Distributions. (i) Pay any dividends or make any distributions on its Equity Securities; (ii) purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Securities (other than repurchases pursuant to the terms of
employee stock purchase plans, employee restricted stock agreements or similar arrangements in an aggregate amount not to exceed Two Hundred and Fifty Thousand Dollars ($ 250,000)); (iii) return any capital to any holder of its Equity Securities as
such; (iv) make any distribution of assets, Equity Securities, obligations or securities to any holder of its Equity Securities as such; or (v) set apart any sum for any such purpose; provided, however, Borrower may pay dividends
payable solely in common stock and may exchange its capital stock for another class of its capital stock. 
  
 7.6 Mergers or Acquisitions. Merge or consolidate with or into any other Person or acquire all or substantially all of the capital stock or assets
of another Person other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower (provided Borrower is the surviving corporation). 
  
 7.7 Change in Ownership. Engage in or permit any of its Subsidiaries to engage in any business other than the
businesses currently engaged in by Borrower or reasonably related thereto or have a material change in its ownership of greater than forty nine percent (49 %) (other than by the sale by Borrower of Borrower’s Equity Securities in a public
offering or to venture capital investors so long as Borrower identifies to Lender the venture capital investors prior to the closing of the investment). 
  

7.8 Transactions With Affiliates. Enter into any contractual obligation with any Affiliate or engage in any other transaction with any Affiliate
except upon terms at least as favorable to Borrower as an arms-length transaction with Persons who are not Affiliates of Borrower. 
  
 7.9 Indebtedness Payments. (i) Prepay, redeem, purchase, defease or otherwise satisfy in any manner prior to the scheduled repayment thereof any
Indebtedness for borrowed money (other than amounts due or permitted to be prepaid under this Agreement) or lease obligations other than repayment of such Indebtedness or obligations by conversion into Equity Securities of the Borrower, (ii) amend,
modify or otherwise change the terms of any Indebtedness for borrowed money or lease obligations so as to accelerate the scheduled repayment thereof or (iii) repay any notes to officers, directors or shareholders other than repayment of such notes
by conversion into Equity Securities of the Borrower. 
  
 7.10
Indebtedness. Create, incur, assume or permit to exist any Indebtedness except Permitted Indebtedness. 
  
 7.11 Investments. Make any Investment except for Permitted Investments. 
  

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 7.12 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, or use the proceeds of any Loan for that purpose; fail to meet the minimum
funding requirements of the Employment Retirement Income Security Act of 1974, and its regulations, as amended from time to time (“ERISA”), permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to
comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business or operations or could reasonably be expected to
cause a material adverse change, or permit any of its Subsidiaries to do so. 
  
 7.13 Maintenance of Accounts. (i) Maintain any deposit account or account holding securities owned by Borrower except accounts with respect to which Lender is able to take such actions as it deems necessary to
obtain a perfected security interest in such accounts through one or more Account Control Agreements; or (ii) grant or allow any other Person (other than Lender) to perfect a security interest in, or enter into any agreements with any Persons (other
than Lender) accomplishing perfection via control as to, any of its deposit accounts or accounts holding securities. 
  
 7.14 Negative Pledge Regarding Intellectual Property. Create, incur, assume or suffer to exist any Lien of any kind upon any Intellectual Property
or Transfer any Intellectual Property, whether now owned or hereafter acquired, other than licenses of Intellectual Property entered into in the ordinary course of business (whether as licensor or licensee). 
  
 8. Events of Default. Any one or more of the following events shall
constitute an “Event of Default” by Borrower under this Agreement: 
  
 8.1 Failure to Pay. If Borrower fails to pay when due and payable or when declared due and payable in accordance with the Loan Documents: (i) any Scheduled Payment on the relevant Payment Date or the Maturity
Date, or (ii) any other portion of the Obligations within five (5) days after receipt of written notice from Lender that such payment is due. 
  
 8.2 Certain Covenant Defaults. If Borrower fails to perform any obligation under Section 6.8 or violates any of the covenants contained in
Section 7 of this Agreement. 
  
 8.3 Other Covenant
Defaults. If Borrower fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained in this Agreement (other than as set forth in Sections 8.1, 8.2 or 8.4 through 8.13), in
any of the other Loan Documents and Borrower has failed to cure such default within twenty (20) days of the occurrence of such default. During this twenty (20) day period, the failure to cure the default is not an Event of Default. 
  
 8.4 Intentionally Omitted. 
  
 8.5 Seizure of Assets, Etc. If any material portion of Borrower’s
assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has
not been removed, discharged or rescinded within 
  

 23 








 ten (10) days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any
of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10) days after Borrower receives
notice thereof; provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower. 
  
 8.6 Service of Process. The service of process upon Lender seeking to
attach by a trustee or other process any funds of the Borrower on deposit or otherwise held by Lender, or the delivery upon Lender of a notice of foreclosure by any Person seeking to attach or foreclose on any funds of the Borrower on deposit or
otherwise held by Lender, or the delivery of a notice of foreclosure or exclusive control to any entity holding or maintaining Borrower’s deposit accounts or accounts holding securities by any Person (other than Lender) seeking to foreclose or
attach any such accounts or securities. 
  
 8.7 Default on
Indebtedness. One or more defaults shall exist under any agreement with any third party or parties which consists of the failure to pay any Indebtedness at maturity or which results in a right by such third party or parties, whether or not
exercised, to accelerate the maturity of Indebtedness in an aggregate amount in excess of One Hundred Fifty Thousand Dollars ($150,000) or a default shall exist under any financing agreement with Lender or any of Lender’s Affiliates.

  
 8.8 Judgments. If a judgment or judgments for the
payment of money in an amount, individually or in the aggregate, of at least one Hundred Fifty Thousand Dollars ($150,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days or more.

  
 8.9 Misrepresentations. Any warranty, representation,
statement, certification, or report made to Lender by Borrower or any officer, employee, agent, or director of Borrower shall prove to have been false or misleading in any material respect when made or furnished. 
  
 8.10 Breach of Warrant. If Borrower shall breach any term of the
Warrant. 
  
 8.11 Unenforceable Loan Document. If any Loan
Document shall in any material respect cease to be, or Borrower shall assert that any Loan Document is not, a legal, valid and binding obligation of Borrower enforceable in accordance with its terms. 
  
 8.12 Involuntary Insolvency Proceeding. If a proceeding shall have
been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the
appointment of a receiver, liquidator, assignee, custodian, trustee (or similar official) of Borrower or for any substantial part of its Property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of forty five (45) consecutive days or such court shall enter a decree or order granting the relief sought in such proceeding. 
  

 24 








 8.13 Voluntary Insolvency Proceeding. If Borrower shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or for any substantial part of its Property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action in furtherance of any of the foregoing. 
  
 9. Lender’s Rights and Remedies. 
  
 9.1 Rights and Remedies. Upon the occurrence of any Default or Event of Default, Lender shall not have any further obligation to advance money or extend credit to or for the benefit of Borrower. In addition,
upon the occurrence of an Event of Default and during the continuance thereof, Lender shall have the rights, options, duties and remedies of a secured party as permitted by law and, in addition to and without limitation of the foregoing, Lender may,
at its election, without notice of election and without demand, do any one or more of the following, all of which are authorized by Borrower: 
  
 (a) Acceleration of Obligations. Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
including without duplication (i) all accrued and unpaid Scheduled Payments with respect to the Loan, (ii) any accrued and unpaid interest, (iii) the amounts which would have otherwise come due under Section 2.3(b)(iii) if the Loan had been
voluntarily prepaid, (iv) the outstanding principal balance of the Loan and (v) all other sums, if any, that shall have become due and payable hereunder, immediately due and payable (provided that upon the occurrence of an Event of
Default described in Section 8.12 or 8.13 all Obligations shall become immediately due and payable without any action by Lender); 
  
 (b) Protection of Collateral. Make such payments and do such acts as Lender considers necessary or reasonable to protect Lender’s security
interest in the Collateral. Borrower agrees to assemble the Collateral if Lender so requires and to make the Collateral available to Lender as Lender may designate. Borrower authorizes Lender and its designees and agents to enter the premises where
the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien which in Lender’s determination appears or is claimed to be prior or superior to its security
interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower’s owned premises, Borrower hereby grants Lender a license to enter into possession of such premises and to occupy the same, without charge, for
up to one hundred twenty (120) days in order to exercise any of Lender’s rights or remedies provided herein, at law, in equity, or otherwise; 
  
 (c) Preparation of Collateral for Sale. Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell
(in the manner provided for herein) the Collateral. Lender and its agents and any purchasers at or after foreclosure are 
  

 25 








 hereby granted a non-exclusive, irrevocable, perpetual, fully paid, royalty-free license or other right, solely pursuant
to the provisions of this Section 9.1, to use, without charge, Borrower’s Intellectual Property, including without limitation, labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks,
and advertising matter, or any Property of a similar nature, now or at any time hereafter owned or acquired by Borrower or in which Borrower now or at any time hereafter has any rights; provided that such license shall only be
exercisable in connection with the disposition of Collateral upon Lender’s exercise of its remedies hereunder; 
  
 (d) Sale of Collateral. Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including Borrower’s premises) as Lender determines are commercially reasonable; and 
  
 (e) Purchase of Collateral. Credit bid and purchase all or any portion of the Collateral at any public sale. 
  
 Any deficiency that exists after disposition of the Collateral as provided above will be paid
immediately by Borrower. 
  
 9.2 Set Off Right. Lender may
set off and apply to the Obligations any and all indebtedness at any time owing to or for the credit or the account of Borrower or any other assets of Borrower in Lender’s possession or control. 
  
 9.3 Effect of Sale. Upon the occurrence of an Event of Default and
during the continuance thereof, to the extent permitted by law, Borrower covenants that it will not at any time insist upon or plead, or in any manner whatsoever claim or take any benefit or advantage of, any stay or extension law now or at any time
hereafter in force, nor claim, take nor insist upon any benefit or advantage of or from any law now or hereafter in force providing for the valuation or appraisement of the Collateral or any part thereof prior to any sale or sales thereof to be made
pursuant to any provision herein contained, or to the decree, judgment or order of any court of competent jurisdiction; nor, after such sale or sales, claim or exercise any right under any statute now or hereafter made or enacted by any state or
otherwise to redeem the property so sold or any part thereof, and, to the full extent legally permitted, except as to rights expressly provided herein, hereby expressly waives for itself and on behalf of each and every Person, except decree or
judgment creditors of Borrower, acquiring any interest in or title to the Collateral or any part thereof subsequent to the date of this Agreement, all benefit and advantage of any such law or laws, and covenants that it will not invoke or utilize
any such law or laws or otherwise hinder, delay or impede the execution of any power herein granted and delegated to Lender, but will suffer and permit the execution of every such power as though no such power, law or laws had been made or enacted.
Any sale, whether under any power of sale hereby given or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Borrower in and to the Property sold, and
shall be a perpetual bar, both at law and in equity, against Borrower, its successors and assigns, and against any and all Persons claiming the Property sold or any part thereof under, by or through Borrower, its successors or assigns. 

 

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 9.4 Power of Attorney in Respect of the Collateral. Borrower does hereby irrevocably appoint
Lender (which appointment is coupled with an interest), the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name to file any notices of security interests, financing statements and continuations and
amendments thereof pursuant to the Code or federal law, as may be necessary to perfect, or to continue the perfection of Lender’s security interests in the Collateral. Borrower does hereby irrevocably appoint Lender (which appointment is
coupled with an interest) on the occurrence of an Event of Default and during the continuance thereof, the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name: (a) to ask, demand, collect, receive,
receipt for, sue for, compound and give acquittance for any and all rents, issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Section 4 with full power to settle, adjust
or compromise any claim thereunder as fully as if Lender were Borrower itself; (b) to receive payment of and to endorse the name of Borrower to any items of Collateral (including checks, drafts and other orders for the payment of money) that come
into Lender’s possession or under Lender’s control; (c) to make all demands, consents and waivers, or take any other action with respect to, the Collateral; (d) in Lender’s discretion to file any claim or take any other action or
proceedings, either in its own name or in the name of Borrower or otherwise, which Lender may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Lender in and to the Collateral; (e) endorse
Borrower’s name on any checks or other forms of payment or security; (f) sign Borrower’s name on any invoice or bill of lading for any account or drafts against account debtors; (g) make, settle, and adjust all claims under Borrower’s
insurance policies; (h) settle and adjust disputes and claims about the accounts directly with account debtors, for amounts and on terms Lender determines reasonable; (i) transfer the Collateral into the name of Lender or a third party as the Code
permits; and (j) to otherwise act with respect thereto as though Lender were the outright owner of the Collateral. 
  
 9.5 Lender’s Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, after written notice from Lender, then Lender may do any or all of the following: (a) make payment of the same or any part thereof; or (b) obtain and maintain insurance policies of the type discussed in
Section 6.8 of this Agreement, and take any action with respect to such policies as Lender deems prudent. Any amounts paid or deposited by Lender shall constitute Lender’s Expenses, shall be immediately due and payable, shall bear
interest at the Default Rate and shall be secured by the Collateral. Any payments made by Lender shall not constitute an agreement by Lender to make similar payments in the future or a waiver by Lender of any Event of Default under this Agreement.
Borrower shall pay all reasonable fees and expenses, including without limitation, Lender’s Expenses, incurred by Lender in the enforcement or attempt to enforce any of the Obligations hereunder not performed when due. 
  
 9.6 Remedies Cumulative. Lender’s rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative. Lender shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Lender of one right or remedy
shall be deemed an election, and no waiver by Lender of any Event of Default on Borrower’s part shall be deemed a continuing waiver. No delay by Lender shall constitute a waiver, election, or acquiescence by it. 
  

 27 








 9.7 Application of Collateral Proceeds. The proceeds and/or avails of the Collateral, or any part
thereof, and the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Lender, at the time of or received by Lender after the occurrence and during the continuance of an Event of Default hereunder) shall
be paid to and applied as follows: 
  
 (a) First, to the
payment of out-of-pocket costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses,
liability and advances, including reasonable legal expenses and attorneys’ fees, incurred or made hereunder by Lender, including, without limitation, Lender’s Expenses; 
  
 (b) Second, to the payment to Lender without duplication of the amount then owing or unpaid on the Loans for
Scheduled Payments, any accrued and unpaid interest, the amounts which would have otherwise come due under Section 2.3(b)(iii), if the Loan had been voluntarily prepaid, the principal balance of the Loan, and all other Obligations with respect to
the Loan, (provided, however, if such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid upon the Loan, then to the unpaid interest thereon, then to the amounts which would have otherwise come due
under Section 2.3(b)(iii), if the Loan had been voluntarily prepaid, then to the principal balance of the Loan, and then to the payment of other amounts then payable to Lender under any of the Loan Documents); and 
  
 (c) Third, to the payment of the surplus, if any, to Borrower, its
successors and assigns, or to whosoever may be lawfully entitled to receive the same. 
  
 9.8 Reinstatement of Rights. If Lender shall have proceeded to enforce any right under this Agreement or any other Loan Document by foreclosure, sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case (unless otherwise ordered by a court of competent jurisdiction), Lender shall be restored to its former position and rights hereunder with
respect to the Property subject to the security interest created under this Agreement. 
  
 10. Waivers; Indemnification. 
  
 10.1 Demand; Protest. Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Lender on which Borrower may in any way be liable. 
  
 10.2 Lender’s Liability for Collateral. So long as Lender complies with its obligations, if any, under the Code, Lender shall not in any way
or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause other than Lender’s gross negligence or willful misconduct; (c) any
diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower. 
  

 28 








 10.3 Indemnification and Waiver. Whether or not the transactions contemplated hereby shall be
consummated: 
  
 (a) General Indemnity. Borrower agrees
upon demand to pay or reimburse Lender for all liabilities, obligations and out-of-pocket expenses, including Lender’s Expenses and reasonable fees and expenses of counsel for Lender from time to time arising in connection with the enforcement
or collection of sums due under the Loan Documents, and in connection with any amendment or modification of the Loan Documents or any “work-out” in connection with the Loan Documents. Borrower shall indemnify, reimburse and hold Lender,
and each of its respective successors, assigns, agents, attorneys, officers, directors, shareholders, servants, agents and employees (each an “Indemnified Person”) harmless from and against all liabilities, losses, damages, actions,
suits, demands, claims of any kind and nature (including claims relating to environmental discharge, cleanup or compliance), all costs and expenses whatsoever to the extent they may be incurred or suffered by such Indemnified Person in connection
therewith (including reasonable attorneys’ fees and expenses), fines, penalties (and other charges of any applicable Governmental Authority), licensing fees relating to any item of Collateral, damage to or loss of use of property (including
consequential or special damages to third parties or damages to Borrower’s property), or bodily injury to or death of any person (including any agent or employee of Borrower) (each, a “Claim”), directly or indirectly relating
to or arising out of the use of the proceeds of the Loans or otherwise, the falsity of any representation or warranty of Borrower or Borrower’s failure to comply with the terms of this Agreement or any other Loan Document during the Term. The
foregoing indemnity shall cover, without limitation, (i) any Claim in connection with a design or other defect (latent or patent) in any item of equipment or product included in the Collateral, (ii) any Claim for infringement of any patent,
copyright, trademark or other intellectual property right, (iii) any Claim resulting from the presence on or under or the escape, seepage, leakage, spillage, discharge, emission or release of any Hazardous Materials on the premises owned, occupied
or leased by Borrower, including any Claims asserted or arising under any Environmental Law, (iv) any Claim for negligence or strict or absolute liability in tort, or (v) any Claim asserted as to or arising under any Account Control Agreement or any
Landlord Agreement; provided, however, Borrower shall not indemnify any Indemnified Person for any liability incurred by such Indemnified Person as a direct and sole result of such Indemnified Person’s gross negligence or willful
misconduct. Such indemnities shall continue in full force and effect, notwithstanding the expiration or termination of this Agreement. Upon Lender’s written demand, Borrower shall assume and diligently conduct, at its sole cost and expense, the
entire defense of Lender, each of its partners, and each of their respective, agents, employees, directors, officers, shareholders, successors and assigns against any indemnified Claim described in this Section 10.3(a). Borrower shall not
settle or compromise any Claim against or involving Lender without first obtaining Lender’s written consent thereto, which consent shall not be unreasonably withheld. 
  
 (b) Waiver. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES
THAT IT SHALL NOT SEEK FROM LENDER UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES. 
  

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 (c) Survival; Defense. The obligations in this Section 10.3 shall survive payment of all
other Obligations pursuant to Section 12.8. At the election of any Indemnified Person, Borrower shall defend such Indemnified Person using legal counsel satisfactory to such Indemnified Person in such Person’s reasonable discretion, at
the sole cost and expense of Borrower. All amounts owing under this Section 10.3 shall be paid within thirty (30) days after written demand. 
  
 11. Notices. Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement
entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by certified mail, postage
prepaid, return receipt requested, by prepaid nationally recognized overnight courier, or by prepaid facsimile to Borrower or to Lender, as the case may be, at their respective addresses set forth below: 
  

			
	If to Borrower:	  	 CryoCor, Inc.
 9717 Pacific Heights
Boulevard
 San Diego, CA 92121
 Attention: Greg
Tibbitts
 Fax: (858) 909-2200
 Ph: (858)
909-2300

		
	If to Lender:	  	 Horizon Technology Funding Company LLC
 76 Batterson
Park Road
 Farmington, CT 06032
 Attention: Legal
Department
 Fax: (860) 676-8655
 Ph: (860)
676-8654


  
 The parties hereto may
change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other. 
  
 12. General Provisions. 
  
 12.1 Successors and Assigns. This Agreement and the Loan Documents shall bind and inure to the benefit of the respective successors and permitted
assigns of each of the parties; provided, however, neither this Agreement nor any rights hereunder may be assigned by Borrower without Lender’s prior written consent, which consent may be granted or withheld in Lender’s sole
discretion. Lender shall have the right without the consent of or notice to Borrower to sell, transfer, assign, negotiate, or grant participations in all or any part of, or any interest in Lender’s rights and benefits hereunder. Lender may
disclose the Loan Documents and any other financial or other information relating to Borrower or any Subsidiary to any potential participant or assignee of any of the Loan, provided that such participant or assignee agrees to protect
the confidentiality of such documents and information using the same measures that it uses to protect its own confidential information. 
  

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 12.2 Time of Essence. Time is of the essence for the performance of all obligations set forth in
this Agreement. 
  
 12.3 Severability of Provisions. Each
provision of this Agreement shall be several from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 
  
 12.4 Entire Agreement; Construction; Amendments and Waivers. 
  
 (a) Entire Agreement. This Agreement and each of the other Loan
Documents dated as of the date hereof, taken together, constitute and contain the entire agreement between Borrower and Lender and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the
parties, whether written or oral, respecting the subject matter hereof. Borrower acknowledges that it is not relying on any representation or agreement made by Lender or any employee, attorney or agent thereof, other than the specific agreements set
forth in this Agreement and the Loan Documents. 
  
 (b)
Construction. This Agreement is the result of negotiations between and has been reviewed by each of Borrower and Lender executing this Agreement as of the date hereof and their respective counsel; accordingly, this Agreement shall be deemed
to be the product of the parties hereto, and no ambiguity shall be construed in favor of or against Borrower or Lender. Borrower and Lender agree that they intend the literal words of this Agreement and the other Loan Documents and that no parol
evidence shall be necessary or appropriate to establish Borrower’s or Lender’s actual intentions. 
  
 (c) Amendments and Waivers. Any and all amendments, modifications, discharges or waivers of, or consents to any departures from any provision of
this Agreement or of any of the other Loan Documents shall not be effective without the written consent of Lender and Borrower, provided a waiver by Lender of any obligation of Borrower shall be effective upon Lender’s written consent. Any
waiver or consent with respect to any provision of the Loan Documents shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrower in any case shall entitle Borrower to any
other or further notice or demand in similar or other circumstances. Any amendment, modification, waiver or consent effected in accordance with this Section 12.4 shall be binding upon Lender and on Borrower. 
  
 12.5 Reliance by Lender. All covenants, agreements, representations
and warranties made herein by Borrower shall be deemed to be material to and to have been relied upon by Lender, notwithstanding any investigation by Lender. 
  
 12.6 No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Agreement or any of the other Loan Documents shall be payable without
notice or demand and shall be payable in United States Dollars without set-off or reduction of any manner whatsoever. 
  

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 12.7 Counterparts. This Agreement may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. 
  
 12.8 Survival. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any Obligations or commitment to fund remain outstanding. The obligations of Borrower to indemnify Lender with respect to the expenses, damages, losses, costs and liabilities
described in Section 10.3 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Lender have run. 
  
 13. Relationship of Parties. Borrower and Lender acknowledge, understand and agree that the relationship between
Borrower, on the one hand, and Lender, on the other, is, and at all time shall remain solely that of a borrower and lender. Lender shall not under any circumstances be construed to be a partner or a joint venturer of Borrower or any of its
Affiliates; nor shall Lender under any circumstances be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or any of its Affiliates, or to owe any fiduciary duty to Borrower or any of its Affiliates.
Lender does not undertake or assume any responsibility or duty to Borrower or any of its Affiliates to select, review, inspect, supervise, pass judgment upon or otherwise inform Borrower or any of its Affiliates of any matter in connection with its
or their Property, any Collateral held by Lender or the operations of Borrower or any of its Affiliates. Borrower and each of its Affiliates shall rely entirely on their own judgment with respect to such matters, and any review, inspection,
supervision, exercise of judgment or supply of information undertaken or assumed by Lender in connection with such matters is solely for the protection of Lender and neither Borrower nor any Affiliate is entitled to rely thereon. 
  
 14. Confidentiality. All information (other than periodic reports
filed by Borrower with the Securities and Exchange Commission) disclosed by Borrower to Lender in writing or through inspection pursuant to this Agreement that is marked confidential shall be considered confidential. Lender agrees to use the same
degree of care to safeguard and prevent disclosure of such confidential information as Lender uses with its own confidential information, but in any event no less than a reasonable degree of care. Lender shall not disclose such information to any
third party (other than to Lender’s partners, attorneys, governmental regulators, or auditors, or to Lender’s subsidiaries and affiliates and prospective transferees and purchasers of the Loans, all subject to the same confidentiality
obligation set forth herein or as required by law, regulation, subpoena or other order to be disclosed) and shall use such information only for purposes of evaluation of its investment in Borrower and the exercise of Lender’s rights and the
enforcement of its remedies under this Agreement and the other Loan Documents. The obligations of confidentiality shall not apply to any information that (a) was known to the public prior to disclosure by Borrower under this Agreement, (b) becomes
known to the public through no fault of Lender, (c) is disclosed to Lender by a third party having a legal right to make such disclosure, or (d) is independently developed by Lender. Notwithstanding the foregoing, Lender’s agreement of
confidentiality shall not apply if Lender has acquired indefeasible title to any Collateral or in connection with any enforcement or exercise of Lender’s rights and remedies under this Agreement following an Event of Default, including the
enforcement of Lender’s security interest in the Collateral. 
  

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 15. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CONNECTICUT, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER AND LENDER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE DISTRICT
OF CONNECTICUT. BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. 
  
 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. 
  

			
	 BORROWER:

	
	 CRYOCOR, INC.

		
	 By:
	 	 /s/    GREGORY M. AYERS


	 Name:
	 	 Gregory M. Ayers


	 Title:
	 	 President & CEO




  

			
	LENDER:
	
	HORIZON TECHNOLOGY FUNDING COMPANY LLC
	By: Horizon Technology Finance, LLC, its sole member
		
	By:	 	 /S/    ROBERT D. POMEROY, JR.


	Name:	 	Robert D. Pomeroy, Jr.
	Title:	 	Managing Member


  
  

 33