Exhibit 10.50











Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in places marked “* * *” and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.











_______________________________________________________________________________________________


_______________________________________________________________________________________________











CREDIT AGREEMENT


dated as of November 2, 2012


among


WELLSTAT DIAGNOSTICS, LLC


as the Borrower,


PDL BIOPHARMA, INC.,


as the Lender,


and


PDL BIOPHARMA, INC.,





as the Agent











_______________________________________________________________________________________________


_______________________________________________________________________________________________

















---




TABLE OF CONTENTSPageSection 1.Definitions; Interpretation.11.1.Definitions11.2.Interpretation12Section 2.Credit Facilities.132.1.Loan132.1.1.     Loan132.1.2.     General132.2.Loan Accounting132.2.1.     Recordkeeping132.2.2.     Notes132.3.Interest132.3.1.     Interest Rate132.3.2.     Interest Payments142.3.3.     Computation of Interest142.4.Prepayment142.4.1.     Voluntary Prepayment142.4.2.     Payments in Respect of the Assigned Interests142.5.Payment Upon Maturity142.6.Making of Payments152.7.Application of Payments and Proceeds152.8.Payment Dates152.9.Set-off152.10.Currency Matters15Section 3.Yield Protection.153.1.Taxes153.2.Increased Cost163.3.Mitigation of Circumstances183.4.Conclusiveness of Statements; Survival18Section 4.Conditions Precedent.184.1.Loan184.1.1.     Delivery of Loan Documents184.1.2.     Payment of Fees, Expenses and Existing Obligations194.1.3.     Representations and Warranties19


i


---




TABLE OF CONTENTS(continued)Page4.1.4.     No Default204.1.5.     No Material Adverse Change204.1.6.     Surviving Debt Subordination Agreement and Acknowledgment204.1.7.     Execution and Delivery of Letter Agreement20Section 5.Representations and Warranties.205.1.Organization205.2.Authorization; No Conflict205.3.Validity; Binding Nature215.4.Financial Condition215.5.No Material Adverse Change215.6.Litigation215.7.Ownership of Properties; Liens215.8.Capitalization; Subsidiaries225.9.Pension Plans225.10.Compliance with Law; Investment Company Act; Other Regulated Entities225.11.Margin Stock235.12.Taxes235.13.Solvency235.14.Environmental Matters235.15.Insurance245.16.Information245.17.Intellectual Property245.18.Labor Matters255.19.No Default255.20.Foreign Assets Control Regulations and Anti-Money Laundering255.20.1.     OFAC255.20.2.     Patriot Act25Section 6.Affirmative Covenants.266.1.Information266.1.1.     Annual Report266.1.2.     Quarterly Reports266.1.3.     Reserved266.1.4.     Compliance Certificate26


ii


---




TABLE OF CONTENTS(continued)Page6.1.5.     Monthly Net Revenue Report266.1.6.     Notice of Default; Litigation; ERISA Matters266.1.7.     Reserved276.1.8.     Budgets276.1.9.     Other Information276.2.Books; Records; Inspections276.3.Maintenance of Property; Insurance286.4.Compliance with Laws and Contractual Obligations; Payment of Taxes and Liabilities296.5.Maintenance of Existence296.6.Environmental Matters296.7.Further Assurances306.8.Post-Closing Obligations316.9.Assigned Interests Payments31Section 7.Negative Covenants.317.1.Debt317.2.Liens327.3.Restricted Payments337.4.Mergers; Consolidations; Asset Sales337.5.Modification of Organizational Documents or Surviving Debt Subordination Agreement and Acknowledgment347.6.Use of Proceeds357.7.Transactions with Affiliates357.8.Inconsistent Agreements357.9.Business Activities367.10.Investments367.11.Fiscal Year367.12.Deposit Accounts and Securities Accounts367.13.Sale-Leasebacks367.14.Hazardous Substances367.15.ERISA Liability37Section 8.Events of Default; Remedies.378.1.Events of Default37


iii


---




TABLE OF CONTENTS(continued)Page8.1.1.     Non-Payment of Credit378.1.2.     Default Under Other Debt.378.1.3.     Bankruptcy; Insolvency378.1.4.     Non-Compliance with Loan Documents.388.1.5.     Representations; Warranties388.1.6.     Judgments.388.1.7.     Invalidity of Collateral Documents398.1.8.     Invalidity of Subordination Provisions398.1.9.     Change of Control398.1.10.   Invalidity of Subordination Provisions398.2.Remedies39Section 9.The Agent.409.1.Appointment; Authorization409.2.Delegation of Duties409.3.Limited Liability409.4.Successor Agent409.5.Collateral Matters41Section 10.Miscellaneous.4110.1.Waiver; Amendments4110.2.Notices4110.3.Costs; Expenses4210.4.Indemnification by the Borrower4210.5.Marshaling; Payments Set Aside4310.6.Nonliability of the Lender4310.7.Confidentiality4310.8.Captions4410.9.Nature of Remedies4410.10.Counterparts4410.11.Severability4410.12.Entire Agreement4410.13.Successors; Assigns4410.14.Governing Law4410.15.Forum Selection; Consent to Jurisdiction; Service of Process4510.16.Waiver of Jury Trial45


iv


---







TABLE OF CONTENTS (continued)Page10.17.Collateral Agent45


v


---




TABLE OF CONTENTS (continued)


Annexes


|        |                                    
|------- | -----------------------------------
|Annex I | Internal Rate of Return Calculation

|         |          
|-------- | ---------
|Annex II | Addresses




Exhibits


|          |                       
|--------- | ----------------------
|Exhibit A | Compliance Certificate

Schedules


|             |              
|------------ | -------------
|Schedule 5.7 | Real Property

|              |                                                
|------------- | -----------------------------------------------
|Schedule 5.10 | Authorizations, Permits, Licenses and Approvals

|              |          
|------------- | ---------
|Schedule 5.15 | Insurance

|              |              
|------------- | -------------
|Schedule 5.18 | Labor Matters

|             |              
|------------ | -------------
|Schedule 7.1 | Existing Debt

|             |                
|------------ | ---------------
|Schedule 7.2 | Permitted Liens

|              |                     
|------------- | --------------------
|Schedule 7.10 | Existing Investments

|              |              
|------------- | -------------
|Schedule 7.12 | Bank Accounts




vi


---




CREDIT AGREEMENT





This Credit Agreement dated as of November 2, 2012, (as amended, restated or otherwise modified from time to time, this “ Agreement ”) is made among WELLSTAT DIAGNOSTICS, LLC, a Delaware limited liability company (the “ the Borrower ”), PDL BIOPHARMA, INC. (the “ the Lender ”), and PDL BIOPHARMA, INC., not individually, but as the Agent (as defined below).





The Borrower has agreed to enter into this Agreement with the Lender and the Agent evidencing its agreement to incur the Loan, and in connection therewith, to make the representations and warranties, covenants and undertakings as hereinafter set forth.





|           |                             
|---------- | ----------------------------
|Section 1. | Definitions; Interpretation.




1.1. Definitions .  When used herein the following terms shall have the following meanings:


“ Acquisition ” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or a substantial portion of the assets of a Person, or of all or a substantial portion of any business or division of a Person, (b) the acquisition of in excess of 50% of the Stock of any Person, or otherwise causing any Person to become a Subsidiary, (c) a merger, consolidation, amalgamation or any other combination with another Person (other than a combination between two Persons that prior to the merger, consolidation, amalgamation or combination were already Loan Parties) and (d) the acquisition of a brand, line of business, division, branch, product line, marketing rights, patent rights, or other Intellectual Property rights unrelated to Product, with respect to a product line, operating division, product or potential product, or other unit operation of any Person.


“ Affiliate ” of any Person means (a) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person and (b) any officer or director of such Person.  A Person shall be deemed to be “controlled by” any other Person if such Person possesses, directly or indirectly, power to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managers or power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.  Unless expressly stated otherwise herein, neither the Agent nor the Lender shall be deemed an Affiliate of any Loan Party.


“ Agent ” means PDL BioPharma, Inc. in its capacity as administrative agent for the Lender hereunder and any successor thereto in such capacity.


“ Agreement ” has the meaning set forth in the Preamble .


“ Applicable IRR Amount ” means on or before December 31, 2014, the IRR * * * Return Amount, and thereafter the IRR * * * Return Amount.


“ Applicable Law ” means all applicable provisions of all (i) constitutions, treaties, statutes, laws, rules, regulations and ordinances of any Governmental Authority, (ii) authorizations, consents, approvals, permits or licenses issued by, or a registration or filing with,


1


---




any Governmental Authority and (iii) orders, decisions, judgments, awards and decrees of any Governmental Authority (including common law and principles of public policy).


“ Assigned Interests ” means an amount equal to * * * of Net Revenues for each calendar month, commencing with the first calendar month of Commercialization.


“ Assigned Interests Payment ” means each monthly payment of Assigned Interests.





“ Audit Costs ” means the reasonable out-of-pocket costs of any audit of the books and records of the Borrower and its Subsidiaries with respect to amounts paid or payable under this Agreement, including all fees and expenses incurred in connection therewith.


“ Borrower ” has the meaning set forth in the Preamble .


“ Business Day ” means any day on which commercial banks are open for commercial banking business in New York, New York.


“ Capital Lease ” means, with respect to any Person, any lease of (or other agreement conveying the right to use) any real or personal property by such Person that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of such Person.


“ Capital Stock ” means, with respect to any Person, the Stock and Stock Equivalents of such Person.


“ Cash Equivalent Investment ” means, at any time, (a) any evidence of Debt, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, or corporate demand notes, in each case rated at least A-l by Standard & Poor's Ratings Group or P-l by Moody's Investors Service, Inc., (c) any certificate of deposit (or time deposit represented by a certificate of deposit) or banker's acceptance maturing not more than one year after such time, or any overnight Federal Funds transaction that is issued or sold by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, (d) any repurchase agreement entered into with any commercial banking institution of the nature referred to in clause (c) above which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) above and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such commercial banking institution thereunder, (e) money market accounts or mutual funds which invest predominantly in assets satisfying the foregoing requirements and (f) other short term liquid investments approved in writing by the Agent.


“ Change of Control ” means an event or series of events by which:


(a) any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) (other than the Holders) becomes the “beneficial owner” (as defined in Rules 13-d and 13d-5 under the Securities Exchange Act of 1934, except that a person or group


2


---




shall be deemed to have “beneficial ownership” of all Stock that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of fifty percent (50%) or more of the Stock and Stock Equivalents of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right);


(b) individuals who on the Closing Date constituted the board of directors or similar governing body of the Borrower (together with any new directors whose election or appointment by such board of directors or similar governing body or whose nomination for election by the shareholders of the Borrower was approved by a vote of a majority of the directors of the Borrower then still in office who were either directors on the Closing Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of directors or similar governing body of the Borrower then in office;


(c) all or substantially all of the assets of the Borrower are disposed of in any one or more transactions; or


(d) the Holders shall fail to hold directly 100% of the Capital Stock of the Borrower and pledge such Capital Stock to the Agent pursuant to a perfected first priority security interest therein.


“ Closing Date ” means the date on which the conditions set forth in Section 4.1 have been satisfied or waived by the Lender.


“ Closing Fee ” means the fee due from the Borrower to the Agent on or before the Closing Date in an amount equal to * * * of the aggregate principal amount of the Loan.


“ Collateral ” means all property and interests in property and proceeds thereof now owned or hereafter acquired by any Loan Party and any other Person who has granted a Lien to the Agent, in or upon which a Lien now or hereafter exists in favor of the Lender or the Agent for the benefit of the Agent and the Lender, whether under this Agreement or under any other documents executed by any such Persons and delivered to the Agent, including the Capital Stock and other collateral pledged by the Holders pursuant to the Guarantee and Pledge Agreement.


“ Collateral Access Agreement ” means an agreement in form and substance satisfactory to the Agent in its reasonable discretion pursuant to which a mortgagee or lessor of real property on which Collateral is stored or otherwise located, or a warehouseman, processor or other bailee of inventory or other property owned by any Loan Party, acknowledges the Liens of the Agent and waives (or, if approved by the Agent, subordinates) any Liens held by such Person on such property, and, in the case of any such agreement with a mortgagee or lessor, permits the Agent reasonable access to and use of such real property during the continuance of an Event of Default to assemble, complete and sell any Collateral stored or otherwise located thereon.


“ Collateral Documents ” means, collectively, the Guarantee and Pledge Agreement, the Security Agreement (including as may be supplemented by the joinder of any Subsidiary of the Borrower thereto), any Subsidiary Guaranty, and each other agreement or instrument pursuant to or in connection with which the Holders, any Loan Party or any other Person grants a security


3


---




interest in any Collateral to the Agent for the benefit of the Lender or pursuant to which any such security interest in Collateral is perfected, each as amended, restated or otherwise modified from time to time in accordance with the terms hereof and thereof.


“ Commercialization ” means any (i) sale, lease or other transfer of Product by any Person or (ii) license, assignment or other transfer of Intellectual Property to market, sell, lease or transfer Product or any other product utilizing such Intellectual Property resulting under clause (i) or (ii), in the receipt by any of the Loan Parties of revenue pursuant to such transactions; provided , that, the use, sale, license or other transfer of Product or Intellectual Property solely for research and development purposes by a Third Party that results in the receipt by the Loan Parties of revenue not to exceed  * * *  in the aggregate during the term of this Agreement shall not constitute Commercialization.


“ Commitment ” means, as to the Lender, the Lender's commitment to provide the Loan in the aggregate principal amount of $40,000,000 pursuant to Section 2.1.1 .


“ Compliance Certificate ” means a certificate substantially in the form of Exhibit A.


“ Contingent Obligation ” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to or otherwise to invest in a debtor, to provide security for the obligations of a debtor or otherwise to assure a creditor against loss) any indebtedness, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the Stock of any other Person.  The amount of any Person's obligation in respect of any Contingent Obligation shall (subject to any limitation set forth therein) be deemed to be the principal amount of the indebtedness, obligation or other liability supported thereby or the amount of the dividends or distributions guaranteed, as applicable.


“ Control Agreement ” means a tri-party deposit account, securities account or commodities account Control Agreement by and among the applicable Loan Party, the Agent and the depository, securities intermediary or commodities intermediary, and each in form and substance  satisfactory in all respects to the Agent in its reasonable discretion and in any event providing to the Agent “control” of such deposit account, securities or commodities account within the meaning of Articles 8 and 9 of the UCC.


“ Copyrights ” means all rights, title and interests (and all related IP Ancillary Rights) arising under any Applicable Law in copyrights and all mask work, database and design rights, whether or not registered or published, all registrations and recordations thereof and all applications in connection therewith.


“ Current Financial Statements ” has the meaning set forth in  Section 5.4.


“ Debt ” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all indebtedness evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person as lessee under Capital Leases which have been or should be recorded as liabilities on a balance sheet of such Person in accordance with GAAP, (d)


4


---




all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable in the ordinary course of business), (e) all indebtedness secured by a Lien on the property of such Person, whether or not such indebtedness shall have been assumed by such Person (with the amount thereof being measured as the fair market value of such property), (f) all obligations, contingent or otherwise, with respect to letters of credit (whether or not drawn), banker's acceptances and surety bonds issued for the account of such Person, (g) all Hedging Obligations of such Person, (h) all Contingent Obligations of such Person, (i) all non-compete payment obligations and earn-out, purchase price adjustment and similar obligations, (j) all obligations of such Person in respect of Disqualified Capital Stock issued by such Person, (k) all indebtedness of the types listed in (a) through (j) and (l) of any partnership of which such Person is a general partner and (l) all obligations of such Person under any synthetic lease transaction, where such obligations are considered borrowed money indebtedness for tax purposes but the transaction is classified as an operating lease in accordance with GAAP.


“ Default ” means any event that, if it continues uncured, will, with the lapse of time or the giving of notice or both, constitute an Event of Default.


“ Default Rate ” has the meaning set forth in Section 2.3.1 .


“ Disqualified Capital Stock ” means any Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable or is redeemable at the option of the holder thereof, in whole or in part, on or prior to December 31, 2022, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Stock referred to in (a) above, in each case at any time on or prior to December 31, 2022, or (c) contains any repurchase obligation which may come into effect prior to the Obligations being Paid in Full; provided that any Stock that would not constitute Disqualified Capital Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Stock is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem or repurchase such Stock upon the occurrence of a change in control or an asset sale occurring prior to December 31, 2022 shall not constitute Disqualified Capital Stock if such Stock provides that the issuer thereof will not redeem or repurchase any such Stock pursuant to such provisions prior to the repayment in full of the Obligations.


“ Dollar ” and “ $ ” mean lawful currency of the United States of America.


“ Environmental Claims ” means all claims, however asserted, by any governmental, regulatory or judicial authority or other Person alleging potential liability or responsibility under or for violation of any Environmental Law, or for release or injury to the environment or any Person or property or natural resources.


“ Environmental Laws ” means all present or future federal, state, provincial or local laws, statutes, common law duties, rules, regulations, ordinances and codes, including all amendments, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case relating to any


5


---




matter arising out of or relating to health and safety, or pollution or protection of the environment, natural resources or workplace, including any of the foregoing relating to the presence, use, production, recycling, reclamation, generation, handling, transport, treatment, storage, disposal, distribution, discharge, release, emission, control, cleanup or investigation or management of any Hazardous Substance.


“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.


“ Event of Default ” means any of the events described in Section 8.1 .


“ Excluded Taxes ” has the meaning set forth in Section 3.1(a) .


“ Existing Loan Documents ” means that certain Loan Agreement dated as of March 21, 2012, as amended by the First Amendment to Loan Agreement dated as of August 8, 2012, between Samuel J. Wohlstadter and Nadine H. Wohlstadter, as borrower, and PDL BioPharma, Inc., a Delaware corporation, as lender, and all documents and instruments executed and delivered from time to time in connection therewith.


“ Existing Obligations ” means all obligations, including accrued interest, outstanding pursuant to the Existing Loan Documents.


“ Fiscal Quarter ” means a fiscal quarter of a Fiscal Year.


“ Fiscal Year ” means the fiscal year of the Borrower and its Subsidiaries, which period shall be the 12-month period ending on December 31 of each year.


“ FRB ” means the Board of Governors of the Federal Reserve System or any successor thereto.


“ GAAP ” means generally accepted accounting principles as in effect in the United States of America.


“ Governmental Authority ” means any nation or government, any state, province, municipality or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank), and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.


“ Gross Revenue ” means, for any period of determination, the sum of the following for such period: (i) the amounts invoiced and recognized as revenue in accordance with GAAP by the Borrower, its Subsidiaries or any of their Affiliates with respect to (a) the sale of Product to a Third Party by the Borrower, its Subsidiaries or any of their Affiliates, (b) the sale, distribution or other commercial use of Product by such Third Party in connection with any marketing, royalty, manufacturing, co-promotion, co-development, or other strategic arrangements, (c) the license, assignment or other transfer of Intellectual Property to market, sell, lease or transfer Product or any other product utilizing such Intellectual Property and (ii) any collections in respect of write-offs or allowances for bad debts in respect of items described in the preceding


6


---




clause (i). For purposes of prevention of duplication, “Gross Revenue” shall not include amounts invoiced by Affiliates, distributors, wholesalers or other Persons acting in similar capacities to the extent that such amounts are duplicative.


“ Guarantee and Pledge Agreement ” means the Guarantee and Pledge Agreement, dated as of the Closing Date, made by the Holders in favor of the Agent, and governed by the laws of New York, as amended, restated or otherwise modified from time to time in accordance with the terms hereof and thereof.


“ Hazardous Substances ” means any waste, chemical, substance, or material listed, defined, classified, or regulated as a hazardous waste, hazardous substance, pollutant, contaminant, toxic substance, or hazardous, dangerous or radioactive material, chemical or waste or otherwise regulated by any Environmental Law, including, without limitation, any petroleum or any derivative, waste, or byproduct thereof, radon, asbestos, and polychlorinated biphenyls, and any other substance, the storage, manufacture, disposal, treatment, generation, use, transportation, remediation, release into or concentration in the environment of which is prohibited, controlled, regulated or licensed by any governmental authority under any Environmental Law.


“ Hedging Obligation ” means, with respect to any Person, any liability of such Person under any interest rate, currency or commodity swap agreement, cap agreement or collar agreement, and any other agreement or arrangement designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices.  The amount of any Person's obligation in respect of any Hedging Obligation shall be deemed to be the incremental obligation that would be reflected in the financial statements of such Person in accordance with GAAP.


“ Holders ” means, each of Samuel J. Wohlstadter and Nadine H. Wohlstadter, each natural relative who is a rightful heir of the foregoing, and any trust maintained by or for the benefit of any of the foregoing.


“ Indemnified Liabilities ” has the meaning set forth in Section 10.4 .


“ Intellectual Property ” means all rights, title and interests in intellectual property arising under any Applicable Law and all IP Ancillary Rights relating thereto, including all Copyrights, Patents, Trademarks, Internet Domain Names, Trade Secrets, industrial designs, integrated circuit topographies, and rights under IP Licenses.


“ Internet Domain Name ” means all right, title and interest (and all related IP Ancillary Rights) arising under any Applicable Law in internet domain names.


“ Investment ” means, with respect to any Person, (a) the purchase or other acquisition of any debt or equity security of any other Person, (b) the making of any loan, advance or capital contribution to any other Person, (c) becoming obligated with respect to a Contingent Obligation in respect of obligations of any other Person or (d) the making of an Acquisition.


“ IP Ancillary Rights ” means, with respect to an item of Intellectual Property all foreign counterparts to, and all divisionals, reversions, continuations, continuations-in-part, reissues,


7


---




reexaminations, renewals and extensions of, such Intellectual Property and all income, royalties, proceeds and liabilities at any time due or payable or asserted under or with respect to any of the foregoing or otherwise with respect to such Intellectual Property, including all rights to sue or recover at law or in equity for any past, present or future infringement, misappropriation, dilution, violation or other impairment thereof, and, in each case, all rights to obtain any other IP Ancillary Right.


“ IP License ” means all contractual obligations (and all related IP Ancillary Rights), whether written or oral, granting any right, title and interest in any Intellectual Property.


“ IRC ” means the Internal Revenue Code of 1986, as amended.


“ IRR ” shall mean the internal rate of return utilizing the same methodology utilized by the XIRR function in Microsoft Excel, version 2010.


“ IRR * * * Return Amount ” shall mean an aggregate amount such that, when paid to the Agent and taken together with all payments made by the Borrower to the Agent pursuant to this Agreement, including interest (including interest paid in kind and added to principal) and any Assigned Interests Payment but excluding payment or reimbursement of any fees, costs or expenses (including the Closing Fee or any Indemnified Liability), would equal the sum of (i) the aggregate principal amount of the Loan and (ii) such additional amount that would generate an IRR to the Lender in respect of the original principal amount of the Loan funded on the Closing Date of * * *  percent (* * * ) as of the date of payment, taking into account the amount and timing of all payments made by the Borrower pursuant to this Agreement as calculated pursuant to Annex I .


“ IRR * * * Return Amount ” shall mean an aggregate amount such that, when paid to the Agent and taken together with all payments made by the Borrower to the Agent pursuant to this Agreement, including interest (including interest paid in kind and added to principal) and any Assigned Interests Payment but excluding payment or reimbursement of any fees, costs or expenses (including the Closing Fee or any Indemnified Liability), would equal the sum of (i) the aggregate principal amount of the Loan and (ii) such additional amount that would generate an IRR to the Lender in respect of the original principal amount of the Loan funded on the Closing Date of * * *  percent (* * * ) as of the date of payment, taking into account the amount and timing of all payments made by the Borrower pursuant to this Agreement as calculated pursuant to Annex I .


“ Legal Costs ” means, with respect to any Person, (a) all reasonable fees and charges of any counsel, accountants, auditors, appraisers, consultants and other professionals to such Person, (b) the reasonable allocable cost of internal legal services of such Person and all reasonable disbursements of such internal counsel and (c) all court costs and similar legal expenses.


“ Lender Party ” has the meaning set forth in Section 10.4 .


“ Lender ” has the meaning set forth in the Preamble .


“ Letter Agreement ” has the meaning set forth in Section 4.1.7 .


8


---




“ Lien ” means, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, charge or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise.


“ Loan ” means the term loan from the Lender in a principal amount of $40,000,000 made to the Borrower on the Closing Date pursuant to Section 2.1.1 .


“ Loan Documents ” means this Agreement, the Notes, the Collateral Documents, the Letter Agreement, and all other documents, instruments and agreements delivered in connection with the foregoing, all as amended, restated or otherwise modified from time to time in accordance with the terms hereof and thereof.


“ Loan Party ” means the Borrower and each Subsidiary of the Borrower that has executed and delivered a Subsidiary Guaranty and Security Agreement.


“ Margin Stock ” means any “margin stock” as defined in Regulation T, U or X of the FRB.


“ Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the operations, assets, business, prospects, properties or condition (financial or otherwise) of the Borrower or the Loan Parties taken as a whole, (b) a material impairment of the ability of the Holders or any Loan Party to perform in any material respect any of its Obligations under any Loan Document to which it is a party or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Holders or any Loan Party of any Loan Document to which it is a party.


“ Maturity Date ” means the earliest of (a) the date of any sale, by means of one or more transactions, of all or substantially all of the assets or all or substantially all of the Intellectual Property of the Loan Parties, (b) December 31, 2017 if, as of such date, the consolidated revenue (as determined in accordance with GAAP) of the Loan Parties for the fiscal year ended as of such date is less than the Minimum 2017 Revenue Amount, (c) December 31, 2021, and (d) any date upon which the aggregate amount of all payments made by the Borrower to the Agent pursuant to this Agreement, including interest (including interest paid in kind and added to principal) and any Assigned Interests Payment but excluding payment or reimbursement of any fees, costs or expenses (including the Closing Fee or any Indemnified Liability), equals the Applicable IRR Amount.


“ Minimum 2017 Revenue Amount ” means * * *.


“ Monthly Net Revenue Report ” means, with respect to the relevant calendar month, a report reflecting Net Revenue for such calendar month, including a description of Gross Revenue for such calendar month and the adjustments and other reconciliations used to arrive at Net Revenue, in form and substance acceptable to the Agent and the Lender.


“ Net Revenue ” means, for any period of determination, the difference between (a) Gross Revenue for such period, less (b) the sum, with respect to the items described in clauses (i) and


9


---




(ii) of the definition of Gross Revenue, without duplication, of (i) bona fide cash, trade discounts and rebates actually granted or paid to Third Parties in accordance with customary industry standards, (ii) allowances and adjustments actually credited to customers for Product that is spoiled, damaged, outdated, obsolete, returned or otherwise recalled, but only if and to the extent the same are in accordance with sound business practices and not in excess of customary industry standards, (iii) charges for freight, postage, shipping, delivery, service and insurance charges, to the extent invoiced, (iv) taxes, duties or other governmental charges to the extent invoiced, (v) write-offs or allowances for bad debts, (vi) rebates and chargebacks and other price reduction programs, and (vii) other payments required by Applicable Law, in each case as determined in accordance with GAAP.


“ Non-Excluded Taxes ” has the meaning set forth in Section 3.1(a) .


“ Note ” means a promissory note in form and substance acceptable to the Lender and the Agent, as the same may be replaced, substituted, amended, restated or otherwise modified from time to time.


“ Obligations ” means all liabilities, indebtedness and obligations (including interest accrued at the rate provided in the applicable Loan Document after the commencement of a bankruptcy proceeding whether or not a claim for such interest is allowed) of any Loan Party under this Agreement, or the Holders or any Loan Party under any other Loan Document, any Collateral Document or any other document or instrument executed in connection herewith or therewith, in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, including the Applicable IRR Amount.


“ OFAC ” has the meaning set forth in Section 5.20.1.


“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.


“ Paid in Full ” or “ Payment in Full ” means, with respect to any Obligations, the payment in full in cash and performance of all such Obligations.


“ Patents ” means all (i) all patents and certificates of invention, or similar property rights, and applications for any of the foregoing, of the United States, any other country or any political subdivision thereof, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all rights corresponding thereto throughout the world, (iv) all inventions and improvements described therein, (v) all rights to sue for past, present and future infringements thereof, (vi) all licenses, claims, damages, and proceeds of suit arising therefrom, (vii) all proceeds of the foregoing, including, without limitation, licenses, royalties, and income, and (viii) without duplication, all IP Ancillary Rights in respect of the foregoing.


“ Permitted Lien ” means any Lien expressly permitted by Section 7.2 .


10


---




“ Permitted Refinancing ” means any replacement, renewal, refinancing or extension of any existing Debt, in any such case, permitted by this Agreement that (a) does not exceed the aggregate principal amount (plus accrued interest and any applicable premium and associated fees and expenses) of the Debt being replaced, renewed, refinanced or extended, (b) does not have a weighted average life to maturity at the time of such replacement, renewal, refinancing or extension that is less than the weighted average life to maturity of the Debt being replaced, renewed, refinanced or extended, (c) does not rank at the time of such replacement, renewal, refinancing or extension senior to the Debt being replaced, renewed, refinanced or extended, and (d) does not contain terms (including, without limitation, terms relating to security, amortization, interest rate, premiums, fees, covenants, subordination, event of default and remedies) that are less favorable to any Loan Party or adverse to the interests of the Agent and the Lender than those applicable to the Debt being replaced, renewed, refinanced or extended.


“ Person ” means any natural person, corporation, partnership, trust, limited liability company, association, Governmental Authority or unit, or any other entity, whether acting in an individual, fiduciary or other capacity.


“ Product ” means and includes any point-of-care device or assay used or useable on such device, and laboratory services business related to any of the foregoing, and any and all future iterations of any of the foregoing.


“ Qualified Capital Stock ” of any person shall mean any Stock of such person that is not Disqualified Capital Stock.


“ Restricted Payment ” has the meaning set forth in Section 7.3 .


“ Security Agreement ” means the Security Agreement, dated as of the Closing Date, made by the Borrower in favor of the Agent, and governed by the laws of the State of New York, as amended, restated or otherwise modified from time to time in accordance with the terms hereof and thereof.


“ Stock ” means all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership or profit interests in, or equivalents (regardless of how designated) of, a Person (other than an individual), whether voting or non-voting.


“ Stock Equivalents ” means all securities convertible into or exchangeable for Stock or any other Stock Equivalent and all warrants, options or other rights to purchase, subscribe for or otherwise acquire any Stock or any other Stock Equivalent, whether or not presently convertible, exchangeable or exercisable.


“ Subsidiary ” means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which such Person owns, directly or indirectly, such number of outstanding shares of voting Stock or Stock Equivalents as to have more than 50% of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity.  Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Borrower.


11


---




“ Subsidiary Guaranty ” means each Subsidiary Guaranty executed and delivered by a Subsidiary in favor of the Agent pursuant to Section 6.7 (to be based on the guaranty provisions of the Guarantee and Pledge Agreement, without the limitation on recourse set forth therein), in form and substance satisfactory to the Agent and the Lender.


“ Surviving Debt ” means the loans in the aggregate principal amount of * * * as of September 30, 2012 owed by the Borrower to Samuel and Nadine Wohlstadter.


“ Surviving Debt Subordination Agreement and Acknowledgment ” means the Subordination Acknowledgment and Agreement dated as of the Closing Date delivered by each of the Holders to the Borrower in form and substance acceptable to the Borrower.


“ Taxes ” has the meaning set forth in Section 3.1(a) .


“ Tax Returns ” has the meaning set forth in Section 5.12 .


“ Third Party ” means any Person other than the Borrower, Lender and Agent.


“ Trade Secrets ” means all right, title and interest (and all related IP Ancillary Rights) arising under any Applicable Law in or relating to trade secrets.


“ Trademark ” means all rights, title and interests (and all related IP Ancillary Rights) arising under any Applicable Law in trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers and, in each case, all goodwill associated therewith, all registrations and recordations thereof and all applications in connection therewith.


“ UCC ” means the Uniform Commercial Code as in effect in from time to time in the State of New York.


“ Wholly-Owned Subsidiary ” means, as to any Subsidiary, all of the Stock and Stock Equivalents of which (except directors' qualifying shares) are at the time directly or indirectly owned by the Borrower and/or another Wholly-Owned Subsidiary of the Borrower.





1.2. Interpretation .  In the case of this Agreement and each other Loan Document, (a) the meanings of defined terms are equally applicable to the singular and plural forms of the defined terms; (b) Annex, Exhibit, Schedule and Section references in each Loan Document are to the particular Annex, Exhibit, Schedule and Section of such Loan Document unless otherwise specified; (c) the term “including” is not limiting and means “including but not limited to”; (d) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including”; (e) unless otherwise expressly provided in such Loan Document, (i) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation; (f) this Agreement and the other Loan Documents may use several different


12


---




limitations, tests or measurements to regulate the same or similar matters, all of which are cumulative and each shall be performed in accordance with its terms; and (g) this Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Borrower, the Lender and the other parties hereto and thereto and are the products of all parties; accordingly, they shall not be construed against the Agent or the Lender merely because of the Agent's or the Lender's involvement in their preparation.  Any reference in any Loan Document to a Permitted Lien is not intended to subordinate or postpone, and shall not be interpreted as subordinating or postponing, or as any agreement to subordinate or postpone, any Lien created by any of the Loan Documents to any Permitted Lien.





|           |                   
|---------- | ------------------
|Section 2. | Credit Facilities.




2.1. Loan.





2.1.1. Loan .  On the terms and subject to the conditions of this Agreement, the Lender agrees to lend to the Borrower on the Closing Date the entire amount of its Commitment, after which the Commitment shall terminate.





2.1.2. General .  No portion of the Loan may be re-borrowed once repaid.  The proceeds of the Loan shall be used to repay and terminate the Existing Obligations in full concurrently with the incurrence of the Loan and for development of the Borrower's Intellectual Property rights, products and businesses in accordance with the Borrower's business activities as set forth in Section 7.9 , in each case in accordance with the Loan Documents and Applicable Law.





2.2. Loan Accounting.





2.2.1. Recordkeeping .  The Agent, on behalf of the Lender, shall record in its records the date and amount of the Loan made by the Lender, each interest payment paid in kind, accrued interest and each repayment of principal or interest thereon.  The aggregate unpaid principal amount so recorded shall be rebuttably presumptive evidence of the principal amount of the Loan owing and unpaid.  The failure to so record any such amount or any error in so recording any such amount shall not, however, limit or otherwise affect the Obligations of the Borrower hereunder or under any Note to repay the principal amount of the Loan hereunder, together with all interest accruing thereon.





2.2.2. Notes .  At the request of the Lender, the Loan shall be evidenced by one or more Notes, with appropriate insertions, payable to the order of the Lender in a face principal amount equal to the Loan and payable in such amounts and on such dates as are set forth herein.





2.3. Interest.





2.3.1. Interest Rate .  The Borrower promises to pay interest on the unpaid principal amount of the Loan for the period commencing on the Closing Date until the Loan is Paid in Full at a rate payable in cash or in kind, at the election of the Borrower, per annum equal to 5.00%.  The foregoing notwithstanding, (i) at any time an Event of Default exists, if requested by the Agent or the Lender, the interest rate then applicable to the Loan shall be increased by two percent (2.00%) per annum (any such increased rate, the “ Default Rate ”), (ii) any such increase


13


---




may thereafter be rescinded by the Lender, and (iii) upon the occurrence of an Event of Default under Section 8.1.1 or 8.1.3 , any such increase described in the foregoing clause (i) shall occur automatically.  In the event that the Obligations are not Paid in Full as of the Maturity Date, or in the event that the Obligations shall be declared or shall become due and payable pursuant to Section 8.2 , the Obligations shall bear interest subsequent thereto at the Default Rate and such interest shall be payable in cash on demand.  In no event shall interest or other amounts payable by the Borrower to the Lender hereunder exceed the maximum rate permitted under Applicable Law, and if any such provision of this Agreement is in contravention of any such law, (x) any amounts paid hereunder shall be deemed to be and shall be applied against the principal amount of the Obligations to the extent necessary such that the amounts paid hereunder do not exceed the maximum rate under Applicable Law and (y) such provision shall otherwise be deemed modified as necessary to limit such amounts paid to the maximum rate permitted under Applicable Law.





2.3.2. Interest Payments .  Interest accrued on the Loan during the period from the Closing Date until the Maturity Date shall accrue and be payable in cash or in kind, at the election of the Borrower, quarterly on each March 31, June 30, September 30 and December 31, in arrears, and, to the extent not paid in advance, upon a prepayment of the Loan in accordance with Section 2.4 and at maturity, in each such case, in cash.  After maturity and at any time an Event of Default exists, all accrued interest on the Loan shall be payable in cash on demand at the rates specified in Section 2.3.1 .





2.3.3. Computation of Interest .  Interest shall be computed for the actual number of days elapsed on the basis of a year of 360 days consisting of twelve 30-day months.





2.4. Prepayment.





2.4.1. Voluntary Prepayment.





(a) The Borrower may, on or before December 31, 2014, on at least three (3) Business Days' written notice to the Agent, not later than 12:00 noon New York City time on such day, prepay the Loan in full, provided that the amount so prepaid as of the date of prepayment is equal to the IRR * * *  Return Amount.





(b) The Borrower may, after December 31, 2014, on at least three (3) Business Days' written notice to the Agent, not later than 12:00 noon New York City time on such day, prepay the Loan in full, provided that the amount so prepaid as of the date of prepayment is equal to the IRR * * *  Return Amount.





2.4.2. Payments in Respect of the Assigned Interests .  Commencing upon Commercialization, the Borrower shall pay to the Lender the Assigned Interests in respect of Net Revenues earned during the immediately preceding month concurrently with the delivery of each Monthly Net Revenue Report in the amount set forth thereon, until the Maturity Date.





2.5. Payment Upon Maturity .  The Loan shall be Paid in Full on the Maturity Date by and upon payment in full of the Applicable IRR Amount.  The parties hereto agree that the amounts payable hereunder in respect of the Applicable IRR Amount are a reasonable


14


---




calculation of the parties' expected return to the Lender arising out of the transactions described herein, and, in the case of a prepayment of the Loans, foregone returns, and agree that the payment of such amounts constitute consideration pursuant to this Agreement that the parties agree is fair and reasonable.





2.6. Making of Payments .  All payments on the Loan in accordance with this Agreement, including any payment in respect of the Applicable IRR Amount and all payments of fees and expenses, shall be made by the Borrower to the Agent without setoff, recoupment or counterclaim and in immediately available funds, in United States Dollars, by wire transfer to the account of the Agent set forth on Annex II or as otherwise specified by the Agent, in any case, not later than 1:00 p.m. New York City time on the date due, and funds received after that hour shall be deemed to have been received by the Agent on the following Business Day.  The Agent shall promptly remit to the Lender all payments received in collected funds by the Agent for the account of such Lender.





2.7. Application of Payments and Proceeds .  Any payment by the Borrower hereunder shall be in respect of the Payment in Full of the Obligations; in the event that the Agent shall consent to any partial prepayment hereunder the proceeds of such partial prepayment shall be applied to such Obligations as the Agent shall determine in its sole discretion.





2.8. Payment Dates .  If any payment of principal of or interest on a Loan, or of any fees, falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day and, in the case of principal, additional interest shall accrue and be payable for the period of any such extension.





2.9. Set-off .  The Borrower agrees that the Agent and the Lender and its Affiliates have all rights of set-off and bankers' lien provided by Applicable Law, and in addition thereto, the Borrower agrees that at any time an Event of Default has occurred and is continuing, the Agent and the Lender may apply to the payment of any Obligations of the Borrower hereunder, whether or not then due, any and all balances, credits, deposits, accounts or moneys of the Borrower then or thereafter maintained with the Agent or such Lender.





2.10. Currency Matters .  All amounts payable under this Agreement and the other Loan Documents to the Agent and the Lender shall be payable in Dollars.





|           |                  
|---------- | -----------------
|Section 3. | Yield Protection.




3.1. Taxes.





(a) Except as otherwise provided in this Section 3.1 , all payments of principal and interest on the Loan and all other amounts payable under any Loan Document shall be made free and clear of and without deduction or withholding for any present or future income, excise, stamp, documentary, property or franchise taxes or other taxes, fees, duties, levies, withholdings or other charges of any nature whatsoever imposed by any taxing authority, including any interest, additions to tax or penalties applicable thereto (“ Taxes ”), excluding taxes imposed on or measured by the Lender's net income by the jurisdiction under which the Lender is organized or conducts business (other than


15


---




business arising from the Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction with respect to the Loan or  pursuant to or enforced any Loan Document (collectively, “ Excluded Taxes ” and all such non-Excluded Taxes, “ Non-Excluded Taxes ”)).  If any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any Applicable Law (as determined in the good faith reasonable discretion of the Borrower or the Agent), rule or regulation, then the Borrower shall:  (i) timely pay directly to the relevant taxing authority the full amount required to be so withheld or deducted; (ii) within thirty (30) days after the date of any such payment of Taxes, forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such authority; and (iii) in the case of Non-Excluded Taxes, pay to the Agent for the account of the Lender such additional amount or amounts as is necessary to ensure that the net amount actually received by the Lender will equal the full amount the Lender would have received had no such withholding or deduction (including withholdings and deductions applicable to any additional sums payable under this Section 3.1 ) been required.





(b) the Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.





(c) The Borrower shall reimburse and indemnify, within 10 days after receipt of demand therefor (with copy to the Agent), the Agent and the Lender for all Non-Excluded Taxes and Other Taxes (including any additional Taxes imposed by any jurisdiction on amounts payable under this Section 3.1 ) paid by the Agent or the Lender, or required to be withheld or deducted from a payment to the Agent or the Lender, and any liabilities arising therefrom or with respect thereto (including any penalty, interest or expense), whether or not such Taxes were correctly or legally asserted.  A certificate of the Agent or the Lender (or of the Agent on behalf of the Lender) claiming any compensation under this clause (c), setting forth the amounts to be paid thereunder and delivered to the Borrower with copy to the Agent, shall be conclusive, binding and final for all purposes, absent manifest error.


The provisions of this Section 3.1 shall survive the termination of this Agreement and repayment of all Obligations.


3.2. Increased Cost.





(a) If, after the Closing Date, the adoption or taking effect of, or any change in, any Applicable Law, rule, regulation or treaty, or any change in the interpretation or administration of any Applicable Law, rule, regulation or treaty by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Lender with any request, rule, guideline or directive (whether or not having the


16


---




force of law) of any such authority, central bank or comparable agency:  (i) shall impose, modify or deem applicable any reserve (including any reserve imposed by the FRB), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by the Lender; (ii) subject the Lender or the Agent to any Taxes (other than Taxes indemnified pursuant to Section 3.1 ); or (iii) shall impose on the Lender any other condition affecting its Loan, its Note or its obligation to make the Loan; and the result of anything described in clauses (i) through (iii) above is to increase the cost to (or to impose a cost on) such Lender of making or maintaining its Loan, or to reduce the amount of any sum received or receivable by such Lender under this Agreement or under its Note with respect thereto, then, upon demand by such Lender (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail, a copy of which shall be furnished to the Agent), the Borrower shall pay directly to the Lender such additional amount as will compensate the Lender for such increased cost or such reduction.





(b) If the Lender shall reasonably determine that any change in, or the adoption or phase-in of, any Applicable Law, rule or regulation regarding capital adequacy, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or the compliance by the Lender or any Person controlling the Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the Lender's or such controlling Person's capital as a consequence of such Lender's Commitments hereunder to a level below that which the Lender or such controlling Person could have achieved but for such change, adoption, phase-in or compliance (taking into consideration the Lender's or such controlling Person's policies with respect to capital adequacy) by an amount deemed by the Lender or such controlling Person to be material, then from time to time, upon demand by the Lender (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail, a copy of which shall be furnished to the Agent), the Borrower shall pay to the Lender such additional amount as will compensate the Lender or such controlling Person for such reduction.





(c) Notwithstanding anything herein to the contrary, (i) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or by United States or foreign regulatory authorities, in each case pursuant to Basel III, and (ii) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder or issued in connection therewith or in implementation thereof, shall in each case be deemed to be a change in law, regardless of the date enacted, adopted, issued or implemented.


17


---







3.3. Mitigation of Circumstances.





The Lender shall promptly notify the Borrower and the Agent of any event of which it has knowledge which will result in, and will use reasonable commercial efforts available to it (and not, in such Lender's sole judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, any obligation by the Borrower to pay any amount pursuant to Section 3.1 or 3.2 ; provided , that this Section 3.3 shall not apply to, or operate to prevent, any assignment of the Loan and the rights and obligations of the Lender pursuant to Section 10.13 .  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by the Lender in connection with this Section 3.3 .





3.4. Conclusiveness of Statements; Survival .  Determinations and statements of the Lender pursuant to Sections 3.1 or 3.2 shall be conclusive absent demonstrable error provided that the Lender or the Agent provides the Borrower with written notification of such determinations and statements.  The Lender may use reasonable averaging and attribution methods in determining compensation under Sections 3.1 or 3.2 and the provisions of such Sections shall survive repayment of the Loan, cancellation of the Notes and termination of this Agreement.





|           |                      
|---------- | ---------------------
|Section 4. | Conditions Precedent.




4.1. Loan .  The obligation of the Lender to make the Loan on the Closing Date is subject to the following conditions precedent, each of which shall be satisfactory in all respects to the Agent and the Lender:





4.1.1. Delivery of Loan Documents .  The Borrower shall have delivered the following documents in form and substance satisfactory to the Agent (and, as applicable, duly executed by all Persons named as parties thereto and dated the Closing Date or an earlier date satisfactory to the Agent):





(a) Agreement .  This Agreement.





(b) Notes .  A Note in respect of the Loan.





(c) Collateral Documents .  The Security Agreement, the Guarantee and Pledge Agreement, all other Collateral Documents, and all instruments, documents, certificates and agreements executed or delivered pursuant thereto (including Intellectual Property assignments and pledged equity and limited liability company interests in the Borrower and the Borrower's Subsidiaries, if any, with undated irrevocable transfer powers executed in blank), in each case, executed and delivered by the Holders, each Loan Party and each other Person named as a party thereto.





(d) Financing Statements .  Properly completed Uniform Commercial Code financing statements and other filings and documents required by law or the Loan Documents to provide the Agent perfected Liens (subject only to Permitted Liens) in the Collateral.


18


---







(e) Lien Searches .  Copies of Uniform Commercial Code search reports listing all effective financing statements or equivalent filings filed against the Holders or any Loan Party, with copies of such financing statements and filings; and copies of Patent, Trademark, Copyright and Internet Domain Name search reports in material jurisdictions listing all effective collateral assignments in respect of such Intellectual Property filed with respect to any Loan Party, with copies of such collateral assignment documentation.





(f) Authorization Documents .  For each Loan Party, such Person's (i) charter (or similar formation document), certified by the appropriate Governmental Authority (as applicable) in its jurisdiction of incorporation (or formation), (ii) good standing certificates in its jurisdiction of incorporation (or formation) and in each other jurisdiction requested by the Agent or the Lender, (iii) limited liability company agreement, partnership agreement, bylaws (and similar governing document) (as applicable), (iv) resolutions of its board of directors (or similar governing body) approving and authorizing such Person's execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby, and (v) signature and incumbency certificates of its directors and/or officers executing any of the Loan Documents, all certified by its secretary or an assistant secretary (or similar officer) as being in full force and effect without modification.





(g) Opinions of Counsel .  Opinions of counsel for each Loan Party, in form and substance requested by the Agent.





(h) Insurance .  Certificates or other evidence of insurance in effect as required by Section 6.3(b) , with endorsements naming the Agent as lenders' loss payee and/or additional insured, as applicable.





(i) Other Documents .  Such other certificates, documents and agreements that may be listed on the closing checklist provided by the Agent to the Borrower or as the Agent or the Lender may request.





4.1.2. Payment of Fees, Expenses and Existing Obligations .  The Borrower shall have paid, on or prior to the Closing Date, (i) all fees and expenses owing and payable to the Agent and the Lender as of the Closing Date, including the Closing Fee, (ii) subject to Section 10.3 and without duplication, all fees, expenses and other amounts payable set forth herein and costs and expenses incurred by the Agent and the Lender in connection with the transactions contemplated hereby which are required to be paid by the Borrower and (iii) all Existing Obligations, and shall provide evidence acceptable to the Agent of each of the foregoing.





4.1.3. Representations and Warranties .  Each representation and warranty by each Loan Party contained herein or by the Holders and each Loan Party in any other Loan Document to which the Holders or such Loan Party is a party, shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of the Closing Date.


19


---







4.1.4. No Default .  No Default or Event of Default shall have occurred and be continuing.





4.1.5. No Material Adverse Change .  Since December 31, 2011, there has been no event or occurrence that has or could reasonably be expected to result in a Material Adverse Effect.





4.1.6. Surviving Debt Subordination Agreement and Acknowledgment .  The Holders shall have executed and delivered to the Agent the Surviving Debt Subordination Agreement and Acknowledgment pursuant to which the Holders shall agree and acknowledge that the Surviving Debt is subordinated to the Obligations as set forth therein.





4.1.7. Execution and Delivery of Letter Agreement .  The Borrower shall have executed and delivered a letter agreement to the Agent dated as of the Closing Date (the “ Letter Agreement ”) containing, among other items, certain representations and warranties regarding its Intellectual Property, on terms and conditions acceptable to the Lender and Agent.





|           |                                
|---------- | -------------------------------
|Section 5. | Representations and Warranties.

To induce the Agent and the Lender to enter into this Agreement and to induce the Lender to advance the Loan hereunder, the Borrower represents and warrants to the Agent and the Lender that each of the following are, and after giving effect to the borrowing of the Loan, will be, true, correct and complete:





5.1. Organization .  The Borrower is a limited liability company validly existing and in good standing under the laws of the State of Delaware; and each other Loan Party is validly existing and in good standing (as applicable) under the laws of the jurisdiction of its organization; and each Loan Party is duly qualified to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required, except for such jurisdictions where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect.





5.2. Authorization; No Conflict .  Each of the Borrower and each other Loan Party is duly authorized to execute and deliver each Loan Document to which it is a party, the Borrower is duly authorized to borrow monies hereunder, the granting of the security interests pursuant to the Collateral Documents is within the corporate purposes of the Borrower and each other Loan Party party thereto, and the Borrower and each other Loan Party is duly authorized to perform its Obligations under each Loan Document to which it is a party.  The execution, delivery and performance by the Borrower of this Agreement and by each of the Holders, the Borrower and each Loan Party of each Loan Document to which it is a party, and the borrowings by the Borrower hereunder, do not and will not (a) require any consent or approval of any Governmental Authority (other than (i) any consent or approval which has been obtained and is in full force and effect and (ii) recordings and filings in connection with the Liens granted to the Agent under the Collateral Documents), (b) conflict with (i) any provision of Applicable Law, (ii) the charter, by-laws, limited liability company agreement, partnership agreement or other organizational documents of any Loan Party or (iii) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon the Holders or any


20


---




Loan Party or any of their respective properties or (c) require, or result in, the creation or imposition of any Lien on any asset of the Holders, the Borrower or any other Loan Party (other than Liens in favor of the Agent created pursuant to the Collateral Documents).





5.3. Validity; Binding Nature .  Each of this Agreement and each other Loan Document to which the Holders, the Borrower or any other Loan Party is a party is the legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors' rights generally and to general principles of equity.





5.4. Financial Condition .  The unaudited consolidated financial statements of the Borrower and its Subsidiaries (presented on a consolidated basis) as at December 31, 2011, together with the unaudited consolidated financial statements of the Borrower and its Subsidiaries (presented on a consolidated basis) as at June 30, 2012 (“Current Financial Statements”) have been prepared on a cash/tax accounting basis and present fairly the consolidated financial condition of such Persons as at such dates and the results of their operations for the periods then ended.  As of the Closing Date, the Borrower and its Subsidiaries have no liabilities other than as set forth on the foregoing financial statements other than trade payables and compensation costs incurred in the ordinary course of business.





5.5. No Material Adverse Change .  Since December 31, 2011, there has been no event or occurrence that has or could reasonably be expected to result in a Material Adverse Effect.





5.6. Litigation .  No litigation (including derivative actions), arbitration proceeding or governmental investigation or proceeding is pending or, to the Holders or any Loan Party's knowledge, threatened, against the Holders or any Loan Party or any of their respective properties which (i) purport to affect or pertain to this Agreement, any other Loan Document or any of the transactions contemplated hereby or (ii) could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement, any other Loan Document, or directing that the transactions provided for herein not be consummated as herein provided.  As of the Closing Date, neither the Holders nor any Loan Party is the subject of an audit or, to the Holders and each Loan Party's knowledge, any review or investigation by any Governmental Authority (excluding the IRS and other taxing authorities) concerning the violation or possible violation of any requirement of law.





5.7. Ownership of Properties; Liens .  There are no Liens on the Collateral other than those granted in favor of the Agent to secure the Obligations and Permitted Liens.  Each of the Borrower and each other Loan Party owns good and, in the case of real property, marketable, title to all of its properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens, charges and claims (including infringement claims with respect to Intellectual Property), and the Holders hold 100% of the Capital Stock of the Borrower free and clear of all Liens, charges and claims except as permitted by Section 7.2 .  As of the


21


---




Closing Date, Schedule 5.7 lists all of the real property owned, leased, subleased or otherwise owned or occupied by any Loan Party.





5.8. Capitalization; Subsidiaries.





(a) Equity Interests .  As of the Closing Date the Borrower has no Subsidiaries and does not hold any Capital Stock of any other Person.  All Stock and Stock Equivalents of each Loan Party are duly and validly issued and, in the case of each entity that is a corporation, are fully paid and non-assessable, and, other than the Stock and Stock Equivalents of the Borrower, are owned by the Borrower, directly or indirectly through Wholly-Owned Subsidiaries.  The Holders and each Loan Party is the record and beneficial owner of, and has good and marketable title to, the Stock and Stock Equivalents pledged by it to the Agent under the Collateral Documents, free of any and all Liens, rights or claims of other persons, except the security interest created by the Collateral Documents, and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any such Stock and Stock Equivalents. As of the Closing Date, no Loan Party is engaged in any joint venture with any other Person.





(b) No Consent of Third Parties Required .  No consent of any person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or reasonably desirable (from the perspective of a secured party) in connection with the creation, perfection or first priority status of the security interest of the Agent in any Stock and Stock Equivalents pledged to the Agent for the benefit of the Lender under the Collateral Documents or the exercise by the Agent of the voting or other rights provided for in the Collateral Documents or the exercise of remedies in respect thereof.





5.9. Pension Plans .  No Loan Parties have any liability under ERISA and no Loan Party sponsors any “pension plan” or has any liability subject to Title IV of ERISA.





5.10. Compliance with Law; Investment Company Act; Other Regulated Entities .  Except as set out in Schedule 5.10 , the Borrower and each other Loan Party possesses all necessary authorizations, permits, licenses and approvals from all Governmental Authorities in order to conduct their respective businesses as presently conducted.  All business and operations of the Borrower and each other Loan Party complies with all applicable federal, state and local laws and regulations, except where the failure so to comply could not reasonably be expected to result in a Material Adverse Effect.  Neither the Borrower nor any other Loan Party is operating any aspect of its business under any agreement, settlement, order or other arrangement with any Governmental Authority. Neither the Borrower nor any other Loan Party is an “investment company” or a company “controlled” by an “investment company” or a “subsidiary” of an “investment company”, within the meaning of the Investment Company Act of 1940.  None of any Loan Party, any Person controlling any Loan Party, or any Subsidiary of any Loan Party, is subject to regulation under any Federal or state statute, rule or regulation


22


---




limiting its ability to incur Debt, pledge its assets or perform its Obligations under the Loan Documents.





5.11. Margin Stock .  Neither the Borrower nor any Loan Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock.  No portion of the Obligations is secured directly or indirectly by Margin Stock.





5.12. Taxes .  Each of the Borrower and each other Loan Party has filed all federal, and all other material state, provincial, local and foreign income, sales, goods and services, harmonized sales and franchise and other tax returns, reports and statements (collectively, the “ Tax Returns ”) with the appropriate Governmental Authorities in all jurisdictions in which such Tax Returns are or were required to be filed. All such Tax Returns are true and correct in all material respects. All Taxes, charges and other impositions reflected therein or otherwise due and payable have been paid prior to the date on which any liability may be added thereto for non-payment thereof, except for those contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Loan Party, as applicable.  As of the Closing Date, no Tax Return is under audit or examination by any Governmental Authority and no notice of such an audit or examination or any assertion of any claim for Taxes has been given or made by any Governmental Authority.  Proper and accurate amounts have been withheld by the each Loan Party, as applicable, from their respective employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of Applicable Law and such withholdings have been timely paid to the respective Governmental Authorities.  No Loan Party has been a member of an affiliated, combined or unitary group other than the group of which the Holders or a Loan Party is the common parent or has liability for Taxes of any other person.





5.13. Solvency .  Both immediately before and after giving effect to (a) the Loan made on or prior to the date this representation and warranty is made or remade, (b) the disbursement of proceeds of such Loan, and (c) the payment and accrual of all transaction costs in connection with the foregoing, with respect to the Borrower and each other Loan Party, on a consolidated basis, (i) the fair value of its assets is greater than the amount of its liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated, (ii) the present fair saleable value of its assets is not less than the amount that will be required to pay the probable liability on its debts as they become absolute and matured, (iii) it is able to realize upon its assets and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business, (iv) it does not intend to, and does not believe that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature and (v) it is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which its property would constitute unreasonably small capital.





5.14. Environmental Matters .  The on-going operations of the Borrower and each other Loan Party comply in all respects with all Environmental Laws, except such non-compliance which could not (if enforced in accordance with Applicable Law) reasonably be expected to result in a Material Adverse Effect.  The Borrower and each other Loan Party have


23


---




obtained, and maintained in good standing, all licenses, permits, authorizations and registrations required under any Environmental Law and necessary for their respective ordinary course operations, and the Borrower and each other Loan Party are in compliance with all material terms and conditions thereof, except where the failure to do so could not reasonably be expected to result in material liability to the Borrower or any other Loan Party and could not reasonably be expected to result in a Material Adverse Effect.  None of the Borrower, any other Loan Party or any of their respective properties or operations is subject to any outstanding written order from or agreement with any federal, state or local Governmental Authority, nor subject to any judicial or docketed administrative proceeding, nor subject to any indemnification agreement or other contractual obligation, respecting any Environmental Law, Environmental Claim or Hazardous Substance.  There are no Hazardous Substances or other conditions or circumstances existing with respect to any property, or arising from operations prior to the Closing Date, of the Borrower or any other Loan Party that could reasonably be expected to result in a Material Adverse Effect.  Neither the Borrower nor any other Loan Party has any underground or above ground storage tanks that are not properly registered or permitted under applicable Environmental Laws or that are leaking or disposing of Hazardous Substances.





5.15. Insurance .  The Borrower and each other Loan Party and their respective properties are insured with financially sound and reputable insurance companies which are not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or such other Loan Party operates.  A true and complete listing of such insurance as of the Closing Date, including issuers, coverages and deductibles, is set forth on Schedule 5.15 .





5.16. Information .  All information heretofore or contemporaneously herewith furnished in writing by the Holders, the Borrower or any other Loan Party to the Agent or the Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all written information hereafter furnished by or on behalf of the Holders, the Borrower or any Loan Party to the Agent or the Lender pursuant hereto or in connection herewith will be, true and accurate in every material respect on the date as of which such information is dated or certified, and none of such information is or will be incomplete by omitting to state any material fact necessary to make such information not misleading in light of the circumstances under which made (it being recognized by the Agent and the Lender that any projections and forecasts provided by the Borrower are based on good faith estimates and assumptions believed by the Borrower to be reasonable as of the date of the applicable projections or assumptions and that actual results during the period or periods covered by any such projections and forecasts may differ from projected or forecasted results).





5.17. Intellectual Property .  Each Loan Party owns, or is licensed or otherwise has the right to use, all Intellectual Property necessary to conduct its business as currently conducted except for such Intellectual Property the failure of which to own or have a license or other right to use would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  To the knowledge of each Loan Party, (a) the conduct and operations of the businesses of each Loan Party do not, and the anticipated products and Intellectual Property applications of the Loan Parties will not, infringe upon, misappropriate, dilute or violate any Intellectual Property owned by any other Person and (b) no other Person has


24


---




contested any right, title or interest of any Loan Party in any Intellectual Property or any anticipated products and applications derived or expected to be derived therefrom, other than, in each case, as cannot reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  The Intellectual Property of the Loan Parties is sufficient, and conveys adequate rights, title and interests, for the Borrower and other Loan Parties to develop and commercialize its anticipated products and Intellectual Property applications.





5.18. Labor Matters .  Except as set forth on Schedule 5.18 , neither the Borrower nor any other Loan Party is subject to any labor or collective bargaining agreement.  There are no existing or threatened strikes, lockouts or other labor disputes involving the Borrower or any other Loan Party that singly or in the aggregate could reasonably be expected to have a Material Adverse Effect.  Hours worked by and payment made to employees of the Borrower and the other Loan Parties are not in violation of the Fair Labor Standards Act or any other Applicable Law, rule or regulation dealing with such matters.





5.19. No Default .  No Loan Party is in default under or with respect to any contractual obligation in any respect which, individually or together with all such defaults, would reasonably be expected to have a Material Adverse Effect.





5.20. Foreign Assets Control Regulations and Anti-Money Laundering.





5.20.1. OFAC .  Each Loan Party is and will remain in compliance in all material respects with all U.S. economic sanctions laws, Executive Orders and implementing regulations as promulgated by the U.S. Treasury Department's Office of Foreign Assets Control (“ OFAC ”) and all applicable anti-money laundering and counter-terrorism financing provisions of the Bank Secrecy Act and all regulations issued pursuant to any of the foregoing.  No Loan Party (i) is a Person designated by the U.S. government on the list of the Specially Designated Nationals and Blocked Persons (the “ SDN List ”) with which a U.S. Person cannot deal with or otherwise engage in business transactions, (ii) is a Person who is otherwise the target of U.S. economic sanctions laws such that a U.S. Person cannot deal or otherwise engage in business transactions with such Person or (iii) is controlled by (including without limitation by virtue of such person being a director or owning voting shares or interests), or acts, directly or indirectly, for or on behalf of, any person or entity on the SDN List, a Terrorist List or a foreign government that is the target of U.S. economic sanctions prohibitions such that the entry into, or performance under, this Agreement or any other Loan Document would be prohibited under U.S. law.





5.20.2. Patriot Act .  The Loan Parties and each of their Affiliates are in compliance with (a) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B Chapter V, as amended) and any other enabling legislation or executive order relating thereto and (b) the Patriot Act.  No part of the proceeds of any Loan will be used directly or indirectly for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977.





25


---




Section 6. Affirmative Covenants .


Until all Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted) are Paid in Full, the Borrower agrees that, unless at any time the Lender shall otherwise expressly consent in writing, it will:





6.1. Information .  Furnish to the Agent and the Lender:





6.1.1. Annual Report .  Promptly when available and in any event within 90 days of the end of each Fiscal Year of the Borrower beginning with the Fiscal Year ended December 31, 2012, the unaudited consolidated financial statements of the Borrower and the Subsidiaries as at the end of such Fiscal Year prepared, (i) if Commercialization has not occurred as of the last day of such period, on a basis consistent with the Current Financial Statements or (ii) if Commercialization has occurred as of the last day of such period, on a basis consistent with GAAP.





6.1.2. Quarterly Reports .  Commencing with respect to the first Fiscal Quarter of 2013, promptly when available and in any event within 45 days of the end of such Fiscal Quarter and each subsequent Fiscal Quarter, consolidated balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal quarter, together with consolidated financial statements for such period prepared, (i) if Commercialization has not occurred as of the last day of such period, on a basis consistent with the Current Financial Statements or (ii) if Commercialization has occurred as of the last day of such period, on a basis consistent with GAAP, and a management discussion and analysis relating to such information in reasonable detail, together with a comparison with the corresponding period of the previous Fiscal Year and a comparison with the budget for such period of the current Fiscal Year, certified by the chief financial officer of the Borrower.





6.1.3. Reserved.





6.1.4. Compliance Certificate .  Contemporaneously with the furnishing of the financial statements required pursuant to Sections 6.1.1 and 6.1.2 , a duly completed Compliance Certificate signed by the chief financial officer of the Borrower to the effect that such officer has not become aware of any Event of Default or Default that has occurred and is continuing or, if there is any such Event of Default, describing it and the steps, if any, being taken to cure it, and providing such other information as required thereby.





6.1.5. Monthly Net Revenue Report .  Commencing upon Commercialization, and thereafter promptly when available and in any event within 30 days after the end of each calendar month, a Monthly Net Revenue Report, together with a certificate of the Borrower signed by the chief financial officer of the Borrower certifying that the foregoing report is true, correct and accurate in all material respects as of such date.





6.1.6. Notice of Default; Litigation; ERISA Matters .  Promptly upon becoming aware of any of the following, written notice describing the same and the steps being taken by the Borrower or the applicable Loan Party affected thereby with respect thereto:





(a) the occurrence of an Event of Default or a Default;


26


---







(b) any litigation, arbitration or governmental investigation or proceeding not previously disclosed by the Borrower to the Lender which has been instituted or, to the knowledge of the Borrower, is threatened against the Holders, the Borrower or any other Loan Party, or to which any of the properties of any thereof is subject, which could reasonably be expected to have a Material Adverse Effect;





(c) any cancellation or material change in coverage in any insurance maintained by the Borrower or any other Loan Party; or





(d) any other event (including (i) any violation of any Environmental Law or the assertion of any Environmental Claim, (ii) the enactment or effectiveness of any law, rule or regulation, (iii) any violation or noncompliance with any law or (iv) any breach or non-performance of, or any default under, any contractual obligation of the Holders or any Loan Party) which could reasonably be expected to have a Material Adverse Effect.





6.1.7. Reserved.





6.1.8. Budgets .  As soon as practicable, and in any event not later than 30 days after the commencement of each Fiscal Year, a budget of the Borrower and its Subsidiaries for such Fiscal Year (including quarterly operating and cash flow budgets) prepared in a manner reasonably satisfactory to the Agent, accompanied by a certificate of the chief financial officer of the Borrower  to the effect that (a) such budget was prepared by the Borrower, in good faith, (b) the Borrower has a reasonable basis for the assumptions contained in such budget and (c) such budget has been prepared in accordance with such assumptions.





6.1.9. Other Information .  Promptly from time to time, such other information concerning the Holders, the Borrower and any other Loan Party as the Lender or the Agent may reasonably request.





6.2. Books; Records; Inspections .  Keep, and cause the Borrower and each other Loan Party to keep, its books and records in accordance with sound business practices sufficient to allow the preparation of financial statements in accordance with GAAP; permit, and cause the Borrower and each other Loan Party to permit, the Agent, the Lender, or any representative of the foregoing to inspect, at any reasonable time and with reasonable notice (or at any time without notice if an Event of Default exists), the properties and operations of the Borrower or such other Loan Party; and permit, and cause the Borrower and each other Loan Party to permit, at any reasonable time and with reasonable notice (or at any time without notice if an Event of Default exists), the Agent, the Lender, or any representative thereof to visit any or all of its offices, to discuss its financial matters with its directors or officers and its independent auditors, if any (and the Borrower hereby authorizes such independent auditors, if any, to discuss such financial matters with the Lender or the Agent or any representative thereof), and to examine (and, at the expense of the Borrower or the applicable Loan Party, photocopy extracts from) any of its books or other records; and permit, and cause the Borrower and each other Loan Party to permit, the Agent, the Lender and their representatives to inspect, at any reasonable time and with reasonable notice (or at any time without notice if an Event of Default exists), the


27


---




Collateral and other tangible assets of the Borrower or such Loan Party, to perform appraisals of the equipment of the Borrower or such Party, and to inspect, audit, check and make copies of and extracts from the books, records, computer data, computer programs, journals, orders, receipts, correspondence and other data relating to any Collateral, including the Assigned Interests for purposes of or otherwise in connection with conducting a review, audit or appraisal of such books and records.  In the event that the Agent or Lender shall determine pursuant to any audit of the books and records of the Borrower and its Subsidiaries conducted pursuant to this Section 6.2 that the aggregate amount paid to the Lender hereunder during any period covered by such audit is less than the aggregate amount that was in fact due and payable in respect of such period the Borrower shall promptly remit the amount of such shortfall to the Agent together with interest thereon payable at the Default Rate.





6.3. Maintenance of Property; Insurance.





(a) Keep, and cause each other Loan Party to keep, all property useful and necessary in the business of the Borrower or such other Loan Party in good working order and condition, ordinary wear and tear excepted, and maintain, and cause each other Loan Party to maintain, its Intellectual Property in accordance with the provisions of the Collateral Documents.





(b) Maintain, and cause each other Loan Party to maintain, with responsible insurance companies, such insurance coverage as shall be required by all laws, governmental regulations and court decrees and orders applicable to it and such other insurance, to such extent and against such hazards and liabilities, as is customarily maintained by companies similarly situated; provided that in any event, such insurance shall insure against all risks and liabilities of the type insured against as of the Closing Date and shall have insured amounts no less than, and deductibles no higher than, those amounts provided for as of the Closing Date.  Upon request of the Agent or the Lender, the Borrower shall furnish to the Agent or such Lender a certificate setting forth in reasonable detail the nature and extent of all insurance maintained by the Borrower and each other Loan Party.  The Borrower shall cause each issuer of an insurance policy to provide the Agent with an endorsement (i) showing the Agent as a loss payee with respect to each policy of property or casualty insurance and naming the Agent as an additional insured with respect to each policy of liability insurance, (ii) providing that 30 days' notice will be given to the Agent prior to any cancellation of, or reduction or change in coverage provided by or other material modification to such policy and (iii) acceptable in all other respects to the Agent.  The Borrower shall execute and deliver to the Agent, upon request of the Agent, a collateral assignment, in form and substance satisfactory to the Agent, of each business interruption insurance policy maintained by the Loan Parties.





(c) Unless the Borrower provides the Agent with evidence of the continuing insurance coverage required by this Agreement, the Agent may purchase insurance (to the extent of such insurance coverage as shall be required by clause (b) above) at the Borrower's expense to protect the Agent's and the Lender's interests in the Collateral.  This insurance may, but need not, protect the


28


---




Borrower's and each other Loan Party's interests.  The coverage that the Agent purchases may, but need not, pay any claim that is made against the Borrower or any other Loan Party in connection with the Collateral.  The Borrower may later cancel any insurance purchased by the Agent, but only after providing the Agent with evidence that the Borrower has obtained the insurance coverage required by this Agreement.  If the Agent purchases insurance for the Collateral, as set forth above, the Borrower will be responsible for the costs of that insurance, including interest and any other charges that may be imposed with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance and the costs of the insurance may be added to the principal amount of the Loan owing hereunder.





6.4. Compliance with Laws and Contractual Obligations; Payment of Taxes and Liabilities .  Comply, and cause each other Loan Party to comply, in all material respects with all Applicable Laws, rules, regulations, decrees, orders, judgments, licenses and permits and all indentures, agreements and other instruments binding upon it or its property, except where failure to comply could not reasonably be expected to have a Material Adverse Effect; (b) without limiting clause (a) above, ensure, and cause each other Loan Party to ensure, that no person who owns a controlling interest in or otherwise controls a Loan Party is or shall be (i) listed on the Specially Designated Nationals and Blocked Person List maintained by OFAC, Department of the Treasury, and/or any other similar lists maintained by OFAC pursuant to any authorizing statute, Executive Order or regulation or (ii) a person designated under Section 1(b) , (c) or (d) of Executive Order 13224, any related enabling legislation or any other similar Executive Orders; (c) without limiting clause (a) above, comply and cause each other Loan Party to comply, with all applicable Bank Secrecy Act and anti-money laundering laws and regulations; and (d) timely prepare and file all Federal and all other material Tax Returns required to be filed by Applicable Law and pay, and cause each other Loan Party to pay, prior to delinquency, all taxes and other governmental charges against it or any of its property, as well as claims of any kind which, if unpaid, could become a Lien on any of its property; provided that the foregoing shall not require the Borrower or any other Loan Party to pay any such Tax or charge so long as it shall promptly contest the validity thereof in good faith by appropriate proceedings and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP.





6.5. Maintenance of Existence .  Maintain and preserve, and (subject to Section 7.4 ) cause each other Loan Party to maintain and preserve, (a) its existence and good standing (as applicable) in the jurisdiction of its organization and (b) its qualification to do business and good standing (as applicable) in each jurisdiction where the nature of its business makes such qualification necessary, other than any such jurisdiction where the failure to be qualified or in good standing could not reasonably be expected to have a Material Adverse Effect.





6.6. Environmental Matters .  If any release or disposal of Hazardous Substances shall occur or shall have occurred on or from any real property or any other assets of the Borrower or any other Loan Party, cause, or direct the applicable Loan Party to cause, the prompt containment and removal of such Hazardous Substances and the remediation of such real property or other assets as is necessary to comply with all Environmental Laws and to preserve the value of such real property or other assets.  Without limiting the generality of the foregoing,


29


---




the Borrower shall, and shall cause each other Loan Party to, comply with each valid Federal or state judicial or administrative order requiring the performance at any real property by the Borrower or any other Loan Party of activities in response to the release or threatened release of a Hazardous Substance.  If any violation of any Environmental Law shall occur or shall have occurred at any real property or any other assets of the Borrower or any other Loan Party or otherwise in connection with their operations, cause, or direct the applicable Loan Party to cause, the prompt correction of such violation.





6.7. Further Assurances .  Promptly upon request by the Agent, the Holders and the Loan Parties shall (and, subject to the limitations hereinafter set forth, shall cause each of their Subsidiaries to) take such additional actions as the Agent may reasonably require from time to time in order (i) to subject to the Liens created by any of the Collateral Documents any of the properties, rights or interests, whether now owned or hereafter acquired, covered or intended to be covered by any of the Collateral Documents, (ii) to perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby, and (iii) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Agent and the Lender the rights granted or now or hereafter intended to be granted to the Agent and the Lender under any Loan Document or under any other document executed in connection therewith.  Without limiting the generality of the foregoing and except as otherwise approved in writing by the Lender, the Loan Parties shall cause each of their Subsidiaries (including any Subsidiary formed or acquired after the Closing Date) to guaranty the Obligations and cause each such Subsidiary to grant to the Agent, for the benefit of the Agent and the Lender, a security interest in, subject to the limitations hereinafter set forth, all of such Subsidiary's property to secure such guaranty, in each case pursuant to the execution and delivery of a Subsidiary Guaranty and a joinder to the Security Agreement and such other documents as may be reasonably requested, each in form and substance reasonably satisfactory to the Agent.  Furthermore and except as otherwise approved in writing by the Lender, the Borrower shall, and shall cause each of its Subsidiaries (except Inactive Subsidiaries) to, pledge all of the Stock and Stock Equivalents of each of its Subsidiaries to the Agent for the benefit of the Agent and the Lender, to secure the Obligations, in each case pursuant to documents in form and substance reasonably satisfactory to the Agent.  In connection with each pledge of Capital Stock, the Holders, the Borrower and each Subsidiary shall deliver, or cause to be delivered, to the Agent, irrevocable proxies and stock powers and/or assignments, as applicable, duly executed in blank, in each case pursuant to documents in form and substance reasonably satisfactory to the Agent.  In the event that any Capital Stock of the Borrower shall be transferred to any new Holder the Borrower shall cause such Holder to execute and deliver a Guarantee and Pledge Agreement to the Agent prior to or concurrently with such transfer.  The Borrower and each Loan Party shall be under an ongoing obligation to use commercially reasonable efforts to obtain a Collateral Access Agreement from the lessor of each leased property, bailee in possession of any Collateral with respect to each location where any Collateral is stored or located, which Collateral Access Agreement shall be in form and substance reasonably satisfactory to the Agent.  Without limiting the requirements of the Collateral Documents, in the event that any Loan Party shall acquire, develop, or otherwise obtain, register or seek to register any Patent, Copyright, Trademark, or other Intellectual Property with any Governmental Authority, or obtain, register or seek to register any application for, or license in respect of, any of the foregoing, the Borrower shall notify the Agent thereof within five (5) Business Days and shall promptly thereafter execute and deliver to the Agent, for the benefit of the Lenders, such


30


---




Intellectual Property Assignments, other Collateral Documents or other documents as the Agent may request in order to secure and perfect the security interest in respect of such Intellectual Property.





6.8. Post-Closing Obligations.





(a) Within thirty (30) days after the Closing Date (subject to extension by the Agent in its sole discretion), the Loan Parties shall deliver to the Agent a deposit account or securities account, as applicable, Control Agreement for each deposit account and securities account maintained by any Loan Party (other than zero balance payroll and similar accounts), in form and substance satisfactory to the Agent.





(b) Each Loan Party shall use commercially reasonable efforts to obtain a Collateral Access Agreement from the lessor of each leased property, bailee in possession of any Collateral or mortgage of any owned property with respect to each location where any Collateral is stored or located, which Collateral Access Agreement shall be in form and substance reasonably satisfactory to the Agent.





6.9. Assigned Interests Payments .  In the event of Commercialization, it shall remit to the Lender amounts pursuant to Section 2.4.2 .





Section 7. Negative Covenants .


Until the Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted) are Paid in Full, the Borrower agrees that, unless at any time the Lender shall otherwise expressly consent in writing, it will:





7.1. Debt .  Not, and not suffer or permit any Loan Party to, create, incur, assume or suffer to exist any Debt, except for the following Debt of the Borrower and/or Loan Party Subsidiaries:





(a) Obligations under this Agreement and the other Loan Documents;





(b) Debt that is unsecured or secured by Liens permitted by Section 7.2(d) ; provided that the aggregate principal amount of all such Debt at any time outstanding shall not exceed $50,000;





(c) Debt of the Borrower to any Loan Party that is a Wholly-Owned Subsidiary of the Borrower or Debt of any Loan Party that is a Wholly-Owned Subsidiary of the Borrower to the Borrower or another Loan Party that is a Wholly-Owned  Subsidiary of the Borrower; provided that all such Debt shall be evidenced by a global intercompany demand note in form and substance satisfactory to the Agent and pledged and delivered to the Agent pursuant to the applicable Collateral Document as additional collateral security for the


31


---




Obligations, and the obligations under such demand note shall be subordinated to the Obligations hereunder in a manner satisfactory to the Agent;





(d) Debt described on Schedule 7.1 as of the Closing Date, and any Permitted Refinancing thereof;





(e) Contingent Obligations arising with respect to customary indemnification obligations in favor of purchasers in connection with dispositions permitted under Section 7.4 ;





(f) Debt arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, provided that such Debt is extinguished within two (2) Business Days of notice to the Borrower or the relevant Subsidiary of its incurrence;





(g) Debt incurred in connection with the financing of insurance premiums in the ordinary course of business; and





(h) guaranties by the Borrower of the Debt of any Loan Party that is a Wholly-Owned Subsidiary of the Borrower or guaranties by any Subsidiary thereof of the Debt of the Borrower in each case so long as such Debt is otherwise permitted under Section 7.1(a) or (b) .





7.2. Liens .  Not, and not suffer or permit any Loan Party to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except :





(a) Liens for Taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves in accordance with GAAP and the execution or other enforcement of which is effectively stayed;





(b) Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics, customs brokers, landlords and materialmen and other similar Liens imposed by law and (ii) Liens consisting of pledges or deposits incurred in connection with worker's compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being diligently contested in good faith by appropriate proceedings and not involving any deposits or advances or borrowed money or the deferred purchase price of property or services and, in each case, for which it maintains adequate reserves in accordance with GAAP and the execution or other enforcement of which is effectively stayed;





(c) Liens described on Schedule 7.2 as of the Closing Date;


32


---







(d) (i) Liens arising in connection with Capital Leases (and attaching only to the property being leased), and (ii) Liens that constitute purchase money security interests on any property securing debt incurred for the purpose of financing all or any part of the cost of acquiring such property, in each case permitted by Section 7.1(b) ; provided that any such Lien attaches to such property within 60 days of the acquisition thereof and attaches solely to the property so acquired;





(e) attachments, appeal bonds, judgments and other similar Liens, in connection with judgments the existence of which do not constitute an Event of Default;





(f) easements, encroachments, rights of way, leases, subleases, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Borrower or any Subsidiary;





(g) any interest or title of a lessor or sublessor under any lease (other than a Capital Lease) or of a licensor or sublicensor under any license, in each case permitted by this Agreement;





(h) Liens arising from precautionary uniform commercial code financing statements filed under any lease (other than a Capital Lease) permitted by this Agreement;





(i) Liens arising under the Loan Documents; and





(j) the replacement, extension or renewal of any Lien permitted by clause (d) above upon or in the same property subject thereto arising out of the Permitted Refinancing of the Debt secured thereby.





7.3. Restricted Payments .  Not, and not suffer or permit any Loan Party to, (i) declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any Stock or Stock Equivalent, (ii) purchase, redeem or otherwise acquire for value any Stock or Stock Equivalent now or hereafter outstanding or (iii) make any payment or prepayment of principal of, premium, if any, interest, fees, redemption, exchange, purchase, retirement, defeasance, sinking fund or similar payment with respect to, Debt that is subordinated by its terms to the payment of the Obligations, including any Surviving Debt or any other indebtedness which is intended to be subordinated to the Obligations (the items described in clauses (i) , (ii) and (iii) above are referred to as “ Restricted Payments ”) except that any Subsidiary of the Borrower may declare and pay dividends to, repay intercompany debt owed to, and make internal profit-sharing payments to, the Borrower or any other Loan Party that is a Wholly-Owned Subsidiary of the Borrower.





7.4. Mergers; Consolidations; Asset Sales.





(a) Not, and not suffer or permit any Loan Party to, be a party to any merger, consolidation or amalgamation, except for any such merger or


33


---




consolidation (i) of any Subsidiary of the Borrower into the Borrower (so long as the Borrower survives such merger) or any Loan Party that is a Wholly-Owned Subsidiary of the Borrower, as applicable (so long as such Loan Party that is a Wholly-Owned Subsidiary survives such merger) or (ii) in which the Obligations shall be Paid in Full prior to or concurrently with the consummation of such transaction.





(b) Not, and not suffer or permit any Loan Party to, sell, transfer, dispose of, convey or lease any of its assets or Capital Stock of any Loan Party, or sell or assign with or without recourse any receivables, except for (i) sales or dispositions of worn-out or surplus equipment, all in the ordinary course of business, (ii) the abandonment or other disposition of Intellectual Property that is no longer useful or material to the conduct of the business of the Loan Parties as determined by the Borrower in its reasonable business judgment, (iii) dispositions of cash and Cash Equivalent Investments, (iv) licenses, sublicenses, leases or subleases (including any license or sublicense of Intellectual Property) granted to third parties in the ordinary course of business not interfering with the business of the Loan Parties in any material respect as determined by the Borrower in its reasonable business judgment, (v) the granting of Liens permitted under Section 7.2 , Restricted Payments permitted by Section 7.3 , transactions permitted by Section 7.4(a) and Investments permitted by Section 7.10 , (vi) dispositions resulting from any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of any Loan Party provided the proceeds thereof are promptly applied to replace such assets, and (vii) dispositions in connection with the Commercialization of Intellectual Property the revenues of which are applied in accordance with Section 6.9 or research and development activities not constituting Commercialization pursuant to the proviso of the definition thereof.





(c) Not, and not suffer or permit any Loan Party to, sell, transfer, dispose of, convey or license any of its Intellectual Property other than as permitted by the foregoing clauses (a) and (b) of this Section 7.4 .





7.5. Modification of Organizational Documents or Surviving Debt Subordination Agreement and Acknowledgment .  Not waive, amend or modify, and not suffer or permit any waiver, amendment or modification of, any term of the charter, limited liability company agreement, partnership agreement, articles of incorporation, by-laws or other organizational documents of the Borrower or any other Loan Party or the Surviving Debt Subordination Agreement and Acknowledgment, in each case except for those amendments and modifications that do not materially adversely affect the interests of the Agent or the Lender under the Loan Documents or in the Collateral (it being understood and agreed that any adverse impact on the effectiveness or validity of any Collateral Document or the Liens granted to the Agent thereunder or any amendment to the Surviving Debt Subordination Agreement and Acknowledgment that shall render the indebtedness incurred thereunder, including any principal, interest, fee or any other payment in respect thereof, payable in cash on or before the date that is ninety-one (91) days subsequent to the final Maturity Date, shall each be deemed to materially adversely affect such interests of the Agent and the Lender).


34


---







7.6. Use of Proceeds .  Not use the proceeds of the Loan for any purposes other than solely as expressly provided in Section 2.1.2 .





7.7. Transactions with Affiliates .  Not, and not suffer or permit any Loan Party to, enter into any transaction or arrangement with any Affiliate of the Borrower or of any such Loan Party, except :





(a) Restricted Payments permitted by Section 7.3 , intercompany loans among Loan Parties permitted by Section 7.1(c) , transactions permitted by Section 7.4(a) and Investments permitted by Section 7.10(a) and (b) ;





(b) in the ordinary course of business and pursuant to the reasonable requirements of the business of such Loan Party or such Subsidiary; provided that, in the case of this clause (b), such transaction shall be upon fair and reasonable terms no less favorable to such Loan Party or such Subsidiary than would be obtained in a comparable arm's length transaction with a Person not an Affiliate of the Borrower or such Subsidiary and which are disclosed in writing to the Agent;





(c) payment of compensation and benefits (including customary indemnities) to officers, directors and employees for actual services rendered to the Loan Parties in the ordinary course of business;





(d) payment of reasonable and customary fees to members of the boards of directors (or similar governing body) of the Loan Parties, and the reimbursement of actual out of pocket expenses incurred in connection with attending board of director meetings; and





(e) advances for reasonable travel and entertainment expenses and reasonable relocation costs and expenses and other reasonable loans and advances in the ordinary course of business.





7.8. Inconsistent Agreements .  Not, and not suffer or permit the Holders or any other Loan Party to, enter into any agreement containing any provision which would (i) be violated or breached by any borrowing by the Borrower hereunder or by the performance by the Holders, the Borrower or any other Loan Party of any of its Obligations hereunder or under any other Loan Document, (ii) prohibit the Holders, the Borrower or any other Loan Party from granting to the Agent and the Lender a Lien on any of its assets that constitute Collateral or (iii) other than pursuant to the Loan Documents, create or permit to exist or become effective any encumbrance or restriction on the ability of any other Subsidiary to (x) pay dividends or make other distributions to the Borrower or any Wholly-Owned Subsidiary, or pay any Debt owed to the Borrower or any Wholly-Owned Subsidiary, (y) make loans or advances to the Borrower or any Wholly-Owned Subsidiary or (z) transfer any of its assets or properties to the Borrower or any Wholly-Owned Subsidiary, except , in the case of clause (ii) and (iii) above: (a) negative pledges and restrictions on Liens in favor of any holder of Debt permitted under Section 7.1(b) but solely to the extent any negative pledge or limitation on Liens relates to the property that is the subject of such Debt and the proceeds and products thereof, (b) customary restrictions on


35


---




leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto, (c) customary provisions restricting assignment of any agreement entered into in the ordinary course of business, and (d) prohibitions and limitations that exist pursuant to Applicable Law.





7.9. Business Activities .  Not, and not suffer or permit any Loan Party to, engage in any line of business other than the businesses engaged in on the Closing Date and businesses directly related thereto.  As of the Closing Date the Borrower and other Loan Parties engage in the business of the development, manufacture, sale and distribution of small point of care diagnostic systems that can perform a wide variety of tests targeting the clinical diagnostics market utilizing electrochemiluminescence technology.





7.10. Investments .  Not, and not suffer or permit any Loan Party to, make or permit to exist, any Investment in any other Person, except the following:





(a) Investments between or among the Loan Parties;





(b) Investments constituting Debt permitted by Section 7.1(c) ;





(c) Contingent Obligations constituting Debt permitted by Section 7.1 ;





(d) Cash Equivalent Investments;





(e) Investments listed on Schedule 7.10 as of the Closing Date;





(f) extensions of trade credit in the ordinary course of business;





(g) other Investments in an aggregate amount not to exceed $50,000 at any time outstanding.





7.11. Fiscal Year .  Not, and not suffer or permit any other Loan Party to, change its Fiscal Year.





7.12. Deposit Accounts and Securities Accounts .  Not, and not suffer or permit any Loan Party to, maintain or establish any deposit account or securities account other than the deposit accounts and securities accounts set forth on Schedule 7.12 without prior written notice to the Agent and unless the Agent, the Borrower or such other Loan Party and the bank or securities intermediary at which such deposit account or securities account, as applicable, is to be opened or maintained enter into a Control Agreement regarding such deposit account or securities account, as applicable, on terms satisfactory to the Agent.





7.13. Sale-Leasebacks .  Not and not suffer or permit any Loan Party to, engage in a sale leaseback, synthetic lease or similar transaction involving any of its assets.





7.14. Hazardous Substances .  Not, and not suffer or permit any other Loan Party to, cause or suffer to exist any release of any Hazardous Substances at, to or from any real


36


---




property owned, leased, subleased or otherwise operated or occupied by any Loan Party that would violate any Environmental Law, form the basis for any Environmental Claims or otherwise adversely affect the value or marketability of any real property (whether or not owned by any Loan Party), other than such violations, Environmental Claims and effects that would not, in the aggregate, be reasonably be expected to have a Material Adverse Effect.  Notwithstanding the foregoing, under no circumstances will any Loan Party cause or suffer to exist any disposal of any Hazardous Substances at, on, under or in any real property owned, leased, subleased, or otherwise operated or occupied by any Loan Party.





7.15. ERISA Liability .  Not, and not suffer or permit, any liability under ERISA and the sponsorship of any “pension plan” or any liability subject to Title IV of ERISA.





Section 8. Events of Default; Remedies .





8.1. Events of Default .  Each of the following shall constitute an Event of Default under this Agreement:





8.1.1. Non-Payment of Credit .  Default, in the payment when due of the principal of the Loan or of any interest, fee, or other amount payable hereunder, including any IRR * * *  Return Amount, any IRR * * *  Return Amount or any Assigned Interests Payment, by any Loan Party, or any default in any payment of any amount due under any other Loan Document, shall occur.





8.1.2. Default Under Other Debt .





(a) Any default for the payment of principal or interest when due shall occur under the terms applicable to any Debt (other than the Obligations) of any Loan Party in an aggregate amount (for all such Debt so affected and including undrawn committed or available amounts and amounts owing to all creditors under any combined or syndicated credit arrangement) exceeding $50,000; and





(b) Any default shall occur under the terms applicable to any Debt (other than the Obligations) of any Loan Party in an aggregate amount (for all such Debt so affected and including undrawn committed or available amounts and amounts owing to all creditors under any combined or syndicated credit arrangement) exceeding $50,000 and such default shall result in the acceleration of the maturity of such Debt or permit the holder or holders thereof, or any trustee or agent for such holder or holders, to cause such Debt to become due and payable (or require the Borrower or any other Loan Party to purchase or redeem such Debt or post cash collateral in respect thereof) prior to its expressed maturity.





8.1.3. Bankruptcy; Insolvency .  (i) Any Loan Party becomes insolvent or generally fails to pay, or admits in writing its inability or refusal to pay, debts as they become due; (ii) any Holder or any Loan Party commences any case, proceeding or other action (x) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,


37


---




arrangement, adjustment, winding up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (y) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets; or (iii) there shall be commenced against any Holder or any Loan Party any case, proceeding or other action of a nature referred to in clause (ii) above that (x) results in the entry of an order for relief or any such adjudication or appointment or (y) remains undismissed or undischarged for a period of 60 days; (iv) there shall be commenced against any Holder or any Loan Party any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; (v) any Holder or any Loan Party shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (ii), (iii) or (iv) above; or (vi) any Holder or any Loan Party shall make a general assignment for the benefit of its creditors.





8.1.4. Non-Compliance with Loan Documents .


(a)  Failure by the Borrower or any other Loan Party to comply with or to perform any covenant set forth in Sections 6.1 , 6.4 , 6.5 , 6.6 , 6.8 , 6.9 and 7 ; or (b) failure by any Holder, the Borrower or any other Loan Party to comply with or to perform any other provision of this Agreement or any other Loan Document applicable to it (and not constituting an Event of Default under any other provision of this Section 8 ) and continuance of such failure described in this clause (b) for 30 days.





8.1.5. Representations; Warranties .  Any representation or warranty made by or in respect of any Holder or any Loan Party herein or any other Loan Document is breached or is false or misleading in any material respect, or any schedule, certificate, financial statement, report, notice or other writing furnished by any Holder or any Loan Party to the Agent or the Lender in connection herewith is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified.





8.1.6. Judgments .





(a) Final judgments which exceed an aggregate of $50,000 shall be rendered against any Loan Party and shall not have been paid, discharged or vacated or had execution thereof stayed pending appeal within 30 days after entry or filing of such judgments; or





(b) One or more non-monetary judgments, orders or decrees shall be rendered against any one or more of the Loan Parties or any of their respective Subsidiaries which has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, and there shall be any period of ten (10) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.


38


---







8.1.7. Invalidity of Collateral Documents .  Any Collateral Document shall cease to be in full force and effect; or any Holder or any Loan Party or other grantor or pledgor (or any Person by, through or on behalf of any Loan Party, grantor or pledgor) shall contest in any manner the validity, binding nature or enforceability of any Collateral Document.





8.1.8. Invalidity of Subordination Provisions .  Any subordination provision in any document or instrument governing Debt that is intended to be subordinated to the Obligations or any subordination provision in any subordination agreement that relates to any such Debt, or any subordination provision in any guaranty by any Loan Party of any such Debt, shall cease to be in full force and effect, or any Person (including the holder of any applicable Debt) shall contest in any manner the validity, binding nature or enforceability of any such provision.





8.1.9. Change of Control .  (a) A Change of Control shall occur, or (b) a “Change of Control” or other similar event shall occur, as defined in, or under, any indenture, agreement, instrument or other documentation evidencing or otherwise relating to any Debt.





8.1.10. Invalidity of Subordination Provisions .  Any subordination provision in any document or instrument governing the Surviving Debt or any other indebtedness that is intended to be subordinated to the Obligations or any subordination provision in any subordination agreement that relates to any such indebtedness, or any subordination provision in any guaranty by any Loan Party of any such indebtedness, shall cease to be in full force and effect, or any Person (including the holder of any applicable indebtedness) shall contest in any manner the validity, binding nature or enforceability of any such provision.





8.2. Remedies .  If any Event of Default described in Section 8.1.3 shall occur, the Loan and all other Obligations (including the Applicable IRR Amount) shall become immediately due and payable and all outstanding Commitments shall terminate, all without presentment, demand, protest or notice of any kind; and, if any other Event of Default shall occur and be continuing, the Agent may, and upon the written request of the Lender shall, declare all or any part of the Loan and other Obligations (including the Applicable IRR Amount) to be due and payable and/or all or any part of the Commitments then outstanding to be terminated, whereupon the Loan and other Obligations (including the Applicable IRR Amount) shall become immediately due and payable (in whole or in part, as applicable), and such Commitments shall immediately terminate (in whole or in part, as applicable), all without presentment, demand, protest or notice of any kind.  The Agent shall promptly advise the Borrower of any such declaration, but failure to do so shall not impair the effect of such declaration.  Any cash collateral delivered hereunder shall be applied by the Agent to any remaining Obligations (including the Applicable IRR Amount) and any excess remaining after the Obligations (including the Applicable IRR Amount) shall have been Paid in Full shall be delivered to the Borrower or as a court of competent jurisdiction may elect.  Upon the declaration of the Obligations (including the Applicable IRR Amount) to be, or the Obligations (including the Applicable IRR Amount) becoming, due and payable pursuant to this Section 8.2 such Obligations (including the Applicable IRR Amount) shall bear interest at the Default Rate as provided in Section 2.3.1 .


39


---







Section 9. The Agent .





9.1. Appointment; Authorization.





(a) Each Lender hereby irrevocably appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duty or responsibility except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with the Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent.





9.2. Delegation of Duties .  The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  The Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects with reasonable care.





9.3. Limited Liability .  None of the Agent or any of its directors, officers, employees or agents shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except to the extent resulting from its own gross negligence or willful misconduct as determined in a final non-appealable judgment by a court of competent jurisdiction), or (b) be responsible in any manner to the Lender for any recital, statement, representation or warranty made by any Holder or any Loan Party or Affiliate of Holders or of any Loan Party, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document (or the creation, perfection or priority of any Lien or security interest therein), or for any failure of any Holder or any Loan Party or any other party to any Loan Document to perform its Obligations hereunder or thereunder.  The Agent shall not be under any obligation to the Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Holder or any Loan Party or Affiliate of any Loan Party.





9.4. Successor Agent .  The Agent may resign as the Agent at any time upon 30 days' prior notice to the Lender.  If the Agent resigns under this Agreement, the Lender shall, with (so long as no Event of Default exists) the consent of the Borrower (which shall not be unreasonably withheld or delayed), appoint a successor agent for the Lender.  If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, on behalf of the Lender after consulting with the Lender and (so long as no Event of Default exists) the Borrower, a successor agent.  Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term “the Agent” shall mean such successor agent, and the retiring Agent's appointment, powers and duties as the Agent shall be terminated.  After any retiring the Agent's resignation hereunder as the Agent, the provisions of this Section 9 and Sections 10.4 and 10.5 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Agreement.  If no


40


---




successor agent has accepted appointment as the Agent by the date which is 30 days following a retiring the Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Lender shall perform all of the duties of the Agent hereunder until such time as the Lender shall appoint a successor agent as provided for above.





9.5. Collateral Matters .  Each Lender irrevocably authorizes the Agent, at its option and in its discretion, to release any Lien granted to or held by the Agent under any Collateral Document (i) when all Obligations have been Paid in Full; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any sale or other disposition permitted hereunder (it being agreed and understood that the Agent may conclusively rely without further inquiry on a certificate of an officer of the Borrower as to the sale or other disposition of property being made in compliance with this Agreement); or (iii) subject to Section 10.1 , if approved, authorized or ratified in writing by the Lender.  Upon request by the Agent at any time, the Lender will confirm in writing the Agent's authority to release types or items of Collateral pursuant to this Section 9.5 .  The Agent shall have the right, in accordance with the Collateral Documents, to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination thereof, and the Agent may purchase any Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the purchase price, may credit bid and setoff the amount of such price against the Obligations.





Section 10. Miscellaneous .





10.1. Waiver; Amendments .  No delay on the part of the Agent or the Lender in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy.  No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement, the Notes or any of the other Loan Documents (or any subordination and intercreditor agreement or other subordination provisions relating to any other Debt) shall in any event be effective unless the same shall be in writing and approved by the Agent and the Lender, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  No provision of Section 9 or other provision of this Agreement affecting the Agent in its capacity as such shall be amended, modified or waived without the consent of the Agent.





10.2. Notices .  All notices hereunder shall be in writing (including facsimile transmission) and shall be sent to the applicable party at its address shown on Annex II or at such other address as such party may, by written notice received by the other parties, have designated as its address for such purpose.  Notices sent by facsimile or other electronic transmission shall


41


---




be deemed to have been given when sent; notices sent to the Borrower by mail shall be deemed to have been given three Business Days after the date when sent by registered or certified mail, postage prepaid; and notices sent by hand delivery or overnight courier service shall be deemed to have been given when received.





10.3. Costs; Expenses .  The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Agent and the Lender (including Legal Costs) in connection with the administration (including perfection and protection of Collateral subsequent to the Closing Date) of this Agreement, the other Loan Documents and all other documents provided for herein or delivered or to be delivered hereunder or in connection herewith (including any proposed or actual amendment, supplement or waiver to any Loan Document), and all out-of-pocket costs and expenses (including Legal Costs) incurred by the Agent and the Lender in connection with the collection of the Obligations and enforcement of this Agreement, the other Loan Documents or any such other documents.  In addition, the parties agree that in the event that the Agent or Lender determines pursuant to any audit of the books and records of the Borrower and its Subsidiaries conducted pursuant to Section 6.2 that the aggregate amount paid to the Lender hereunder during any period covered by such audit was less than the aggregate amount that was in fact due and payable in respect of such period and the amount of such shortfall exceeds five percent (5%) of the amount that was due and payable, then all Audit Costs in respect of such audit shall be borne by the Borrower and reimbursed to the Agent or Lender, as applicable, and in all other cases, such Audit Costs shall be borne by the Agent or Lender conducting such audit.  All Obligations provided for in this Section 10.3 shall survive repayment of the Loan, cancellation of the Notes and termination of this Agreement.





10.4. Indemnification by the Borrower .  In consideration of the execution and delivery of this Agreement by the Agent and the Lender and the agreement to extend the Commitments provided hereunder, the Borrower hereby agrees to indemnify, exonerate and hold the Agent, the Lender and each of the officers, directors, employees, Affiliates, controlling persons, advisors and agents of the Agent and the Lender (each a “ the Lender Party ”) free and harmless from and against any and all actions, causes of action, suits, losses, liabilities (including, without limitation, strict liabilities), obligations, damages, penalties, judgments, fines, disbursements, expenses and costs, including Legal Costs (collectively, the “ Indemnified Liabilities ”), incurred by the Lender Parties or asserted against the Lender Party by any Person (including in connection with any action, suit or proceeding brought by any Holder, the Borrower, any other Loan Party or any Lender Party) as a result of, or arising out of, or relating to the execution, delivery, performance, administration or enforcement of this Agreement or any other Loan Document, the use of proceeds of the Loans, or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of any Loan Party, except to the extent any such Indemnified Liabilities result from the applicable Lender Party's own gross negligence, willful misconduct, or material breach of any Loan Document, in each case as determined by a court of competent jurisdiction in a final, non-appealable determination.  If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under Applicable Law.  All Obligations provided for in this Section 10.4 shall survive repayment of the Loan, cancellation of the Notes, any foreclosure under, or any modification, release or discharge of, any or all of the Collateral Documents and termination of this Agreement.


42


---







10.5. Marshaling; Payments Set Aside .  Neither the Agent nor the Lender shall be under any obligation to marshal any assets in favor of the Borrower or any other Person or against or in payment of any or all of the Obligations.  To the extent that the Borrower makes a payment or payments to the Agent or the Lender, or the Agent or the Lender enforces its Liens or exercises its rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent or the Lender in its discretion) to be repaid to a trustee, receiver or any other party in connection with any bankruptcy, insolvency or similar proceeding, or otherwise, then (a) to the extent of such recovery, the obligation hereunder or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred and (b) the Lender severally agrees to pay to the Agent upon demand its ratable share of the total amount so recovered from or repaid by the Agent to the extent paid to such Lender.





10.6. Nonliability of the Lender .  The relationship between the Borrower on the one hand and the Lender and the Agent on the other hand shall be solely that of borrower and lender.  Neither the Agent nor the Lender shall have any fiduciary responsibility to the Holders, the Borrower or any other Loan Party.  Neither the Agent nor the Lender undertakes any responsibility to the Holders, the Borrower or any other Loan Party to review or inform (including payment of all outstanding principal), the Borrower or any other Loan Party of any matter in connection with any phase of the Borrower's or any other Loan Party's business or operations.  Execution of this Agreement by the Borrower constitutes a full, complete and irrevocable release of any and all claims which the Borrower may have at law or in equity in respect of all prior discussions and understandings, oral or written, relating to the subject matter of this Agreement and the other Loan Documents.  Neither the Borrower, the Agent nor the Lender shall have any liability with respect to, and the Borrower, Agent and Lender each hereby waives, releases and agrees not to sue for, any special, indirect, punitive or consequential damages or liabilities.





10.7. Confidentiality .  The Agent and the Lender agree to use commercially reasonable efforts (equivalent to the efforts the Agent or such Lender applies to maintain the confidentiality of its own confidential information) to maintain as confidential all information provided to them by the Holders or any Loan Party and designated as confidential, except that the Agent and the Lender may disclose such information (a) to Persons employed or engaged by the Agent or such Lender or any of their Affiliates (including collateral managers of the Lender) in evaluating, approving, structuring or administering the Loan and the Commitments; (b) to any assignee or participant or potential assignee or participant that has agreed to comply with the covenant contained in this Section 10.7 (and any such assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in clause (a) above); (c) as required or requested by any federal or state regulatory authority or examiner, or as reasonably believed by the Agent or such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the advice of the Agent's or such Lender's counsel, is required by law; (e) in connection with the exercise of any right or remedy under the Loan Documents or in connection with any litigation to which the Agent or such Lender is a party; (f) to any nationally recognized rating agency or investor of the Lender that requires access to information about the Lender's investment portfolio in connection


43


---




with ratings issued or investment decisions with respect to such Lender; (g) that ceases to be confidential through no fault of the Agent or the Lender; or (h) to a Person that is an investor or prospective investor in the Agent or any of its Affiliates.





10.8. Captions .  Captions used in this Agreement are for convenience only and shall not affect the construction of this Agreement.





10.9. Nature of Remedies .  All Obligations of the Borrower and rights of the Agent and the Lender expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by Applicable Law.  No failure to exercise and no delay in exercising, on the part of the Agent or the Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.





10.10. Counterparts .  This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement.  Receipt by telecopy or electronic transmission of any executed signature page to this Agreement or any other Loan Document shall constitute effective delivery of such signature page.





10.11. Severability .  The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.





10.12. Entire Agreement . This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the parties hereto and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof and any prior arrangements made with respect to the payment by the Borrower of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of the Agent or the Lender





10.13. Successors; Assigns .  This Agreement shall be binding upon the Borrower, the Lender and the Agent and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Lender and the Agent and the successors and assigns of the Lender and the Agent.  No other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents.  The Borrower may not assign or transfer any of its rights or Obligations under this Agreement without the prior written consent of the Agent and the Lender.  The Lender may sell, transfer, or assign all or a portion of its rights and obligations hereunder to any Person acceptable to the Lender pursuant to assignment documentation reasonably acceptable to Lender and such assignee.





10.14. Governing Law .  THIS AGREEMENT AND EACH NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE


44


---




STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).





10.15. Forum Selection; Consent to Jurisdiction; Service of Process .  ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  EACH LOAN PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.  EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  Each Loan Party hereby appoints CT Corporation as such Loan Party's agent where notices and demands to or upon such Loan Party in respect of this Agreement or any other Loan Document may be served (without prejudice to the right of the Agent or the Lender  to serve process in any other manner permitted by law).  If for any reason such process agent is unable to act as such, such Loan Party will within 30 days appoint a substitute process agent located in the State of New York and give notice of such appointment to the Agent.





10.16. Waiver of Jury Trial .  EACH LOAN PARTY, AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.





10.17. Collateral Agent .  Each Lender hereby appoints PDL BioPharma, Inc. as its collateral agent under the Guarantee and Collateral Agreement and agrees that in so acting PDL BioPharma, Inc. will have all the rights, protections, exculpations, indemnities and other benefits provided to PDL BioPharma, Inc. under Section 9 hereof, and authorizes and directs PDL BioPharma, Inc. to take or refrain from taking any and all action that it deems necessary or


45


---




advisable in fulfilling its role as Collateral Agent under each Guarantee and Collateral Agreement.


[signature pages follow]





46


---




The parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first set forth above.





WELLSTAT DIAGNOSTICS, LLC














By: /s/  Nadine H Wohlstadter            _


Name:  Nadine Wohlstadter


Title:    Manager





[Credit Agreement - Signature Page]


---










PDL BIOPHARMA, INC.,


as the Agent and the Lender





By: : /s/  John P. McLaughlin            _


Name: John P. McLaughlin


Title:   CEO





[Credit Agreement - Signature Page]


---




ANNEX I


Internal Rate of Return Formula


See attached.





I-1


---




EXCEL FILE USED TO GENERATE IRR CALCULATIONS


ON FILE WITH AGENT





HARD COPY FOLLOWS FOR ILLUSTRATION





I-1


---




IRR CALCULATION





Term  9yr


Interest  5%


Principal  40








10/31/201212/31/20123/31/20133/20/20132/20/20142/20/20152/20/20162/20/20172/20/20182/20/20192/20/20202/20/2021Out(40.000)Interest - CashInterest - PIKRoyalty PaymentsTotal(40.000)———————————40.000——————————








XIRR





Cash on Cash








Notes:1.Royalty Payments should be * * * of net sales each month; this amount does not go towards principal repayment and currently does not hit interest; Wellstat to elect to pay interest in cash by making cash payment of interest due2.Payment dates to be set based on date payment received3.Outstanding principal used to calculate the required interest PIK; “Payment in Full” of the debt is based on the “Applicable IRR” at the time of payment4.Interest can be paid by Wellstat In cash or PIK notes at Wellstat election













---




ANNEX II


Addresses





LOAN PARTIES





Address for Notices:





Wellstat Diagnostics, LLC


930 Clopper Road


Gaithersburg, Maryland 20878


Attn: Manager


Telephone: (240) 631-2500


Facsimile . (240) 683-3793








Copy to:





Thomas F. Cooney, III, Esq.


K&L GATES LLP


1601 K Street, N.W.


Washington, D.C. 20006


Telephone: (202) 778-9076


Facsimile: (202) 778-9100














AGENT





PDL BioPharma, Inc.,


as the Agent and the Lender





Address for Notices:


932 Southwood Boulevard


Incline Village, NV 89451


Attention: General Counsel


Telephone: (775) 832-8500


Facsimile: (775) 832-8501





Bank:


Wells Fargo Bank, N.A.


San Francisco, CA 94136





Account #:


* * *


II- 1


---







ABA Routing #:


* * *





Swift Code:


* * *





II- 2


---




Exhibit A ‐ Compliance Certificate


See attached.





A-1


---










EXHIBIT A


COMPLIANCE CERTIFICATE


Date: _____________, 201_


This Compliance Certificate (this “ Certificate ”) is given by WELLSTAT DIAGNOSTICS, LLC, a Delaware limited liability company (“ Borrower ”),  pursuant to that certain Credit Agreement dated as of November 2, 2012 (the “ Credit Agreement ”;  capitalized terms used and not defined herein shall have the meaning set forth in the Credit Agreement), between Borrower and PDL BIOPHARMA, INC., as Lender and Agent (“ Agent ”).


Pursuant to Section 6.1.4 of the Credit Agreement, the undersigned hereby certifies that he or she is the duly appointed, qualified, and acting Controller of Borrower, and in such capacity, certifies on behalf of Borrower to Agent that:


1.  The financial statements delivered with this Certificate fairly present, (i) if Commercialization has not occurred as of the last day of the period reflected therein, on a basis consistent with the Current Financial Statements or (ii) if Commercialization has occurred as of the last day of such period, on a basis consistent with GAAP, the financial condition and the results of operations of Borrower and its Subsidiaries as of the dates of and for the periods covered by such financial statements as required by the Credit Agreement;


2.  Such officer has reviewed the terms of the Credit Agreement and made, or caused to be made under such officer's supervision, a review in reasonable detail of the transactions and conditions of Borrower and its Subsidiaries during the accounting period covered by such financial statements; and


3.  Such review has not disclosed the existence during or at the end of such accounting period, and such officer has no knowledge of, the existence, as of the date hereof, of any condition or event that constitutes a Default or an Event of Default, except as set forth on Schedule 1 hereto 1 , which includes a description of the nature and period of existence of such Default or Event of Default and what action Borrower has taken, is undertaking and proposes to take with respect thereto.


IN WITNESS WHEREOF, Borrower has caused this Certificate to be executed as of the date first written above.





WELLSTAT DIAGNOSTICS, LLC





By:


Name:


Title:  Controller





________________________


1  Schedule 1 should be prepared and attached if a Default or Event of Default has occurred.




---







[Schedules to be attached hereto]







---




Schedule 5.7


Real Property


Leases





|  |                             
|- | ----------------------------
|• | 9 W. Watkins Mill, Suite 100

Gaithersburg, MD 20878


|  |                             
|- | ----------------------------
|• | 9 W. Watkins Mill, Suite 200

Gaithersburg, MD 20878







---




Schedule 5.10


Authorizations, Permits, Licenses and Approvals


None.







---




Schedule 5.15


Insurance


See Attached







---







Client#: 4447  WELLSTAT2


ACORDTMCERTIFICATE OF LIABILITY INSURANCEDATE (MM/DD/YYYY)10/26/2012THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THISCERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIESBELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZEDREPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject tothe terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to thecertificate holder in lieu of such endorsement(s).PRODUCERWilliam Gallagher AssociatesInsurance Brokers, Inc.5950 Symphony Woods Road #314Columbia, MD  21044CONTACTNAME:Paulina LipinskiPHONE(A/C, No, Ext):443 283-1360FAX(A/C, No):617-330-4628E-MAILADDRESS:INSURER(S) AFFORDING COVERAGENAIC #INSUREDWellstat Diagnostics, LLCWellstat Management Co. LLC.930 Clopper RoadGaithersburg, MD  20878INSURER A:Travelers Indemnity Co. of Amer25666INSURER B:INSURER C:INSURER D:INSURER E:INSURER F:


COVERAGESCERTIFICATE NUMBER:REVISION NUMBER:


THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.  NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.INSRLTRTYPE OF INSURANCEADDLINSRSUBRWVDPOLICY NUMBERPOLICY EFF(MM/DD/YYYY)POLICY EXP(MM/DD/YYYY)LIMITSAGENERAL LIABILITYX6303B0358812/15/20122/15/2013EACH OCCURRENCE$1,000,000XCOMMERCIAL GENERAL LIABILITYDAMAGE TO RENTEDPREMISES (Ea occurrence)$1,000,000CLAIMS-MADEXOCCURMED EXP (Any one person)$10,000PERSONAL & ADV INJURY$1,000,000GENERAL AGGREGATE$2,000,000GENL. AGGREGATE LIMIT APPLIES PER:PRODUCTS-COMP/OP AGG$XPOLICYPRO-JECTLOC$AUTOMOBILE LIABILITYCOMBINED SINGLE LIMIT(Ea accident)$ANY AUTOBODILY INJURY (Per person)$ALL OWNED AUTOSSCHEDULED AUTOSBODILY INJURY (Per accident)$HIRED AUTOSNON-OWNED AUTOSPROPERTY DAMAGE(Per accident)$$UMBRELLA LIABOCCUREACH OCCURRENCE$EXCESS LIABCLAIMS-MADEAGGREGATE$DEDRETENTION $$WORKER'S COMPENSATIONAND EMPLOYERS' LIABILITYY/NWC STATU-TORY LIMITSOTH-ERANY PROPRIETOR/PARTNER/EXECUTIVEOFFICER/MEMBER EXCLUDED?☐N/AE.L. EACH ACCIDENT$(Mandatory In NH)If yes, describe underE.L. DISEASE - EA EMPLOYEE$DESCRIPTION OF OPERATIONS belowE.L. DISEASE - POLICY LIMIT$ABusiness PersonalProperty6303B0358812/15/20122/15/2013$16,272,500 limitDESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space required)PDL BioPharma, Inc. is included as an additional insured as their interest may appear.


CERTIFICATE HOLDERCANCELLATION


PDL BioPharma, Inc.932 Southwood BoulevardIncline Village, NV  89451SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORETHE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED INACCORDANCE WITH THE POLICY PROVISIONS.AUTHORIZED REPRESENTATIVE


©  1998-2010 ACORD CORPORATION.  All rights reserved.


ACORD 25 (2010/05)  1  of  1  The ACORD name and logo are registered marks of ACORD


#S296881/M260099  PAL







---




Schedule 5.18


Labor Matters


None







---




Schedule 7.1


Existing Debt





Long term note payable to Bioveris (Roche) - ***


Total debt owed to Samuel and Nadine Wohlstadter as of September 30, 2012 - ***










---




Schedule 7.2


Permitted Liens





None.







---




Schedule 7.10


Existing Investments


None







---




Schedule 7.12


Bank Accounts





BankDescriptionAccount NumberWells Fargo Bank N.A.Payroll Account***Wells Fargo Bank N.A.Operating Account***