exhibit1059_loanagtge.htm


    Exhibit
10.59

     


    


    LOAN
AND SECURITY AGREEMENT

    


     

    THIS LOAN AND SECURITY
AGREEMENT, dated as of October 14, 2008 (as amended, restated,
supplemented or otherwise modified from time to time, this “Agreement”) is among
GENERAL ELECTRIC CAPITAL CORPORATION (“GECC”), in its
capacity as agent for Lenders (as defined below) (together with its successors
and assigns in such capacity, “Agent”), the
financial institutions who are or hereafter become parties to this Agreement as
lenders (together with GECC, collectively the “Lenders”, and each
individually, a “Lender”), CYTORI
THERAPEUTICS, INC., a Delaware corporation (“Borrower”), and the
other entities or persons, if any, who are or hereafter become parties to this
Agreement as guarantors (each a “Guarantor” and
collectively, the “Guarantors”, and
together with Borrower, each a “Loan Party” and
collectively, “Loan
Parties”).

     

    RECITALS

     

    Borrower wishes to borrow funds from
time to time from Lenders, and Lenders desire to make loans, advances and other
extensions of credit, severally and not jointly, to Borrower from time to time
pursuant to the terms and conditions of this Agreement.

    


    AGREEMENT

     

    Loan
Parties, Agent and Lenders agree as follows:

    


    
      	
              1.  

            	
              DEFINITIONS.

            


    

     

    As used
in this Agreement, all capitalized terms shall have the definitions as provided
herein.  Any accounting term used but not defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States of America, as in effect from time to time (“GAAP”) and all
calculations shall be made in accordance with GAAP.  The term
“financial statements” shall include the accompanying notes and
schedules.  All other terms used but not defined herein shall have the
meaning given to such terms in the Uniform Commercial Code as adopted in the
State of New York, as amended and supplemented from time to time (the “UCC”).

     

    
      	
              2.  

            	
              LOANS
      AND TERMS OF PAYMENT.

            


    

     

    2.1. Promise to
Pay.  Borrower promises to pay Agent, for the ratable accounts
of Lenders, when due pursuant to the terms hereof, the aggregate unpaid
principal amount of all loans, advances and other extensions of credit made
severally by the Lenders to Borrower under this Agreement, together with
interest on the unpaid principal amount of such loans, advances and other
extensions of credit at the interest rates set forth herein.

     

    2.2. Term Loans.

     

    (a) Commitment.  Subject
to the terms and conditions hereof, each Lender, severally, but not jointly,
agrees to make term loans (each a “Term Loan” and
collectively, the “Term Loans”) to
Borrower from time to time on any Business Day (as defined below) during the
period from the Closing Date (as defined below) until December 12, 2008 (the
“Commitment
Termination Date”) in an aggregate principal amount not to exceed such
Lender’s commitment as identified on Schedule A hereto
(such commitment of each Lender as it may be amended to 

     

    
      
         

      

      
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    reflect
assignments made in accordance with this Agreement or terminated or reduced in
accordance with this Agreement, its “Commitment”, and the
aggregate of all such commitments, the “Commitments”).  Notwithstanding
the foregoing, the aggregate principal amount of the Term Loans made hereunder
shall not exceed $15,000,000 (the “Total
Commitment”).  Each Lender’s obligation to fund a Term Loan
shall be limited to such Lender’s Pro Rata Share (as defined below) of such Term
Loan.  Subject to the terms and conditions hereof, the initial Term
Loan shall be made on the Closing Date in an aggregate principal amount equal to
$7,500,000 (the “Initial Term
Loan”).   After the Initial Term Loan, Borrower may
request one (1) additional Term Loan, and such subsequent Term Loan (the “Subsequent Term
Loan”) must be in an amount equal to $7,500,000.  

     

    (b) Method of
Borrowing.  When Borrower desires a Term Loan, Borrower will
notify Agent (which notice shall be irrevocable) by facsimile (or by telephone,
provided that such telephonic notice shall be promptly confirmed in writing, but
in any event on or before the following Business Day) on the date that is ten
(10) Business Days prior to the day the Term Loan (other than the Initial Term
Loan) is to be made (or such shorter period of time as Agent may agree). Agent
and Lenders may act without liability upon the basis of such written or
telephonic notice believed by Agent to be from any authorized officer of
Borrower.  Agent and Lenders shall have no duty to verify the
authenticity of the signature appearing on any such written notice.

     

    (c) Funding of Term
Loans.  Promptly after receiving a request for a Term Loan,
Agent shall notify each Lender of the contents of such request and such Lender’s
Pro Rata Share of the requested Term Loan.  Upon the terms and subject
to the conditions set forth herein, each Lender, severally and not jointly,
shall make available to Agent its Pro Rata Share of the requested Term Loan, in
lawful money of the United States of America in immediately available funds, to
the Collection Account (as defined below) prior to 11:00 a.m. (New York time) on
the specified date.  Agent shall, unless it shall have determined that
one of the conditions set forth in Section 4.1 or 4.2, as applicable, has not
been satisfied, by 4:00 p.m. (New York time) on such day, credit the amounts
received by it in like funds to Borrower by wire transfer to, unless otherwise
specified in a Disbursement Letter (as defined below), the following deposit
account of Borrower (or such other deposit account as specified in writing by an
authorized officer of Borrower and acceptable to Agent) (the “Designated Deposit
Account”):

     

    Bank
Name:  U.S. Bank N.A.

    Bank
Address:  XXXXXXX

    ABA#: 
XXXXXXX

    Account
#:  XXXXXXX

    Account
Name:  Cytori

    Ref: 
XXXXXXX

     

    (d) Notes.  If
requested by a Lender, the Term Loans of such Lender shall be evidenced by a
promissory note substantially in the form of Exhibit A hereto
(each a “Note”
and, collectively, the “Notes”), and Borrower
shall execute and deliver a Note to such Lender.  Each Note shall
represent the obligation of Borrower to pay to such Lender the lesser of (a) the
aggregate unpaid principal amount of all Term Loans made by such Lender to or on
behalf of Borrower under this Agreement or (b) the amount of such Lender’s
Commitment, in each case together with interest thereon as prescribed in Section
2.3(a).

     

    (e) Agent May Assume
Funding.  Unless Agent shall have received notice from a Lender
prior to the date of any particular Term Loan that such Lender will not make
available to 

     

    
      
         

      

      
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    Agent
such Lender’s Pro Rata Share of such Term Loan, Agent may assume that such
Lender has made such amount available to it on the date of such Term Loan in
accordance with subsection (c) of this Section 2.2, and may (but shall not be
obligated to), in reliance upon such assumption, make available a corresponding
amount for the account of Borrower on such date.  If and to the extent
that such Lender shall not have so made such amount available to Agent, such
Lender and Borrower severally agree to repay to Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the day
such amount is made available to Borrower until the day such amount is repaid to
Agent, at (i) in the case of Borrower, a rate per annum equal to the interest
rate applicable thereto pursuant to Section 2.3(a), and (ii) in the case of such
Lender, a floating rate per annum equal to, for each day from the day such
amount is made available to Borrower until such amount is reimbursed to Agent,
the weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by Agent in its sole
discretion (the “Federal Funds Rate”)
for the first Business Day and thereafter, at the interest rate applicable to
such Term Loan.  If such Lender shall repay such corresponding amount
to Agent, the amount so repaid shall constitute such Lender’s loan included in
such Term Loan for purposes of this Agreement.

     

    2.3. Interest and
Repayment.

     

    (a) Interest.  Each
Term Loan shall accrue interest in arrears from the date made until
such Term Loan is fully repaid at a fixed per annum rate of interest equal to
10.58%.  All computations of interest and fees calculated on a per
annum basis shall be made by Agent on the basis of a 360-day year, in each case
for the actual number of days occurring in the period for which such interest
and fees are payable.  Each determination of an interest rate or the
amount of a fee hereunder shall be made by Agent and shall be conclusive,
binding and final for all purposes, absent manifest error.  As used
herein, the term “Treasury Rate” means a per annum rate of interest equal to the
rate published by the Board of Governors of the Federal Reserve System in
Federal Reserve Statistical Release H.15 entitled “Selected Interest Rates”
under the heading “U.S. Government Securities/Treasury Constant Maturities” as
the three year treasuries constant maturities rate.  In the event
Release H.15 is no longer published, Agent shall select a comparable publication
to determine the U.S. Treasury note yield to maturity.

     

    (b) Payments of Principal and
Interest.  For the Initial Term Loan, Borrower shall pay to the
Agent, for the ratable benefit of the Lenders, (i) one payment of interest only
(payable in arrears) for the period from the Closing Date to and including
October 31, 2008 at the rate of interest determined in accordance with Section
2.3(a), to be paid on November 1, 2008, (ii) three (3) consecutive payments
of interest only (payable in arrears) at the rate of interest determined in
accordance with Section 2.3(a) on the first day of each calendar month (a “Scheduled Payment
Date”) commencing on December 1, 2008 and (iii) thirty-three (33) equal
consecutive payments of principal and interest (payable in arrears) at the rate
of interest determined in accordance with Section 2.3(a) on each Scheduled
Payment Date commencing on March 1, 2009.  For the Subsequent Term
Loan, Borrower shall pay to the Agent, for the ratable benefit of the Lenders,
(i) one payment of interest only (payable in arrears) for the period from date
of funding such Subsequent Term Loan to and including the last day of the month
in which the Subsequent Term Loan was made at the rate of interest determined in
accordance with Section 2.3(a), to be paid on the first day of the calendar
month occurring after the month in which the Subsequent Term Loan was made, and
(ii) thirty-six (36) equal consecutive payments of principal and interest
(payable in arrears) at the rate of interest determined in accordance with
Section 2.3(a) on each Scheduled Payment Date commencing on the first day of the
second calendar month occurring after the month during which the Subsequent Term
Loan was made.  The amount of each such payment of principal and
interest with respect to each of the Initial Term Loan and the Subsequent Term


     

    
      
         

      

      
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    Loan
shall be calculated by the Agent and shall be sufficient to fully amortize the
principal and interest due with respect to the applicable Term Loan over such
repayment period.  Each scheduled payment of interest only or interest
and principal hereunder is referred to herein as a “Scheduled
Payment.”  Notwithstanding the foregoing, all unpaid principal
and accrued interest with respect to a Term Loan is due and payable in full to
Agent, for the ratable benefit of Lenders, on the earlier of (A) the first day
of the thirty-seventh month following the date such Term Loan was made or (B)
the date that such Term Loan otherwise becomes due and payable hereunder,
whether by acceleration of the Obligations (as defined below) pursuant to
Section 8.2 or otherwise (the earlier of (A) or (B), the “Applicable Term Loan
Maturity Date”). Each Scheduled Payment, when paid, shall be applied
first to the payment of accrued and unpaid interest on the applicable Term Loan
and then to unpaid principal balance of such Term Loan.  Without
limiting the foregoing, all Obligations shall be due and payable on the
Applicable Term Loan Maturity Date for the last Term Loan made.

     

    (c) No
Reborrowing.  Once a Term Loan is repaid or prepaid, it cannot
be reborrowed.

     

    (d) Payments.  All
payments (including prepayments) to be made by any Loan Party under any Debt
Document shall be made in immediately available funds in U.S. dollars, without
setoff or counterclaim to the Collection Account (as defined below) before 11:00
a.m. (New York time) on the date when due.  All payments received by
Agent after 11:00 a.m. (New York time) on any Business Day or at any time
on a day that is not a Business Day shall be deemed to be received on the next
Business Day.  Whenever any payment required under this Agreement
would otherwise be due on a date that is not a Business Day, such payment shall
instead be due on the next Business Day, and additional fees or interest, as the
case may be, shall accrue and be payable for the period of such
extension.  The payment of any Scheduled Payment prior to its due date
shall be deemed to have been received on such due date for purposes of
calculating interest hereunder.  All Scheduled Payments due
to Agent and Lenders under Section 2.3(b) shall be effected by automatic debit
of the appropriate funds from Borrower’s operating account specified on the EPS
Setup Form (as defined below). As used herein, the term
“Collection
Account” means the following account of Agent (or such other account as
Agent shall identify to Borrower in writing):

     

    Bank
Name: Deutsche Bank

    Bank
Address: XXXXXXX

    ABA
Number: XXXXXXX

    Account
Number: XXXXXXX

    Account
Name: GECC HH Cash Flow Collections

    Ref:
XXXXXXX

     

    (e) Withholdings and Increased
Costs.  All payments shall be made free and clear of any taxes,
withholdings, duties, impositions or other charges (other than taxes on the
overall net income of any Lender and comparable taxes), such that Agent and
Lenders will receive the entire amount of any Obligations, regardless of source
of payment.  If Agent or any Lender shall have reasonably determined
that the introduction of or any change in, after the date hereof, any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order reduces the rate of return on Agent or such Lender’s capital as a
consequence of its obligations hereunder or increases the cost to Agent or such
Lender of agreeing to make or making, funding or maintaining any Term Loan, then
Borrower shall from time to time upon demand by Agent or such Lender (with a
copy of such demand to Agent) promptly pay to Agent for its own account or for
the account of such Lender, as the case may be, additional amounts sufficient to
compensate Agent or such Lender for such reduction or for such increased
cost.  A certificate as to the amount of such 

     

    
      
         

      

      
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    reduction
or such increased cost submitted by Agent or such Lender (with a copy to Agent)
to Borrower shall be conclusive and binding on Borrower, absent manifest error,
provided that, neither Agent nor any Lender shall be entitled to payment of any
amounts under this Section 2.3(e) unless it has delivered such certificate to
Borrower within 180 days after the occurrence of the changes or events giving
rise to the increased costs to, or reduction in the amounts received by, Agent
or such Lender.  This provision shall survive the termination of this
Agreement. Any Lender claiming any additional amounts payable pursuant to this
Section 2.3(e)
shall use its reasonable efforts (consistent with its internal policies and
requirements of law) to change the jurisdiction of its lending office if such a
change would reduce any such additional amounts (or any similar amount that may
thereafter accrue) and would not, in the sole determination of such Lender, be
otherwise disadvantageous to such Lender. Each Lender organized under the laws
of a jurisdiction outside the United States as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and Agent a properly completed and executed IRS Form W 8ECI or Form W
8BEN or other applicable form, certificate or document prescribed by the IRS or
the United States.

     

    (f) Loan
Records.  Each Lender shall maintain in accordance with its
usual practice accounts evidencing the Obligations of Borrower to such Lender
resulting from such Lender’s Pro Rata Share of each Term Loan, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.  Agent shall maintain in accordance with
its usual practice a loan account on its books to record the Term Loans and any
other extensions of credit made by Lenders hereunder, and all payments thereon
made by Borrower.  The entries made in such accounts shall, to the
extent permitted by applicable law, be prima facie evidence of the existence and
amounts of the Obligations recorded therein absent manifest error; provided, however, that no
error in such account and no failure of any Lender or Agent to maintain any such
account shall affect the obligations of Borrower to repay the Obligations in
accordance with their terms.

     

    (g) Payment of
Expenses.  Agent is authorized to, and at its sole election
may, debit funds
from Borrower’s operating account specified on the EPS Setup Form (as defined
below) to pay all fees, expenses, costs and interest owing by Borrower
under this Agreement or any of the other Debt Documents if and to the extent
Borrower fails to pay any such amounts within three (3) Business Days of the
date when due.

     

    2.4. Prepayments.  Borrower
can voluntarily prepay, upon five (5) Business Days’ prior written notice to
Agent, any Term Loan in full, but not in part.  Upon the date of (a)
any voluntary prepayment of a Term Loan in accordance with the immediately
preceding sentence or (b) any mandatory prepayment of a Term Loan required under
this Agreement (whether by acceleration of the Obligations pursuant to Section
8.2 or otherwise, except to the extent that the sole basis for such acceleration
is the occurrence of an Event of Default under Section 8.1(h)), Borrower shall
pay to Agent, for the ratable benefit of the Lenders, a sum equal to (i) all
outstanding principal plus accrued interest with respect to such Term Loan,
(ii) the Final Payment Fee (as such term is defined in Section 2.7(d)) for
such Term Loan, and (iii) a prepayment premium (as yield maintenance for the
loss of a bargain and not as a penalty) equal to: (i) 4% of such prepayment
amount, if such prepayment is made on or before the one year anniversary of such
Term Loan, (ii) 3% of such prepayment amount, if such prepayment is made after
the one year anniversary of such Term Loan but on or before the two year
anniversary of such Term Loan, and (iii) 2% of such prepayment amount, if such
prepayment is made after the two year anniversary of such Term Loan but before
the first day of the thirty-seventh month following the date such Term Loan was
made.

     

    
      
         

      

      
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    2.5. Late Fees.  If Agent
does not receive any Scheduled Payment or other payment under any Debt Document
from any Loan Party within 5 days after its due date, then, at Agent’s election
or upon the request of the Requisite Lenders (as defined below), such Loan Party
agrees to pay to Agent for the ratable benefit of all Lenders, a late fee equal
to (a) 5% of the amount of such unpaid payment or (b) such lesser amount
that, if paid, would not cause the interest and fees paid by such Loan Party
under this Agreement to exceed the Maximum Lawful Rate (as defined below) (the
“Late
Fee”).

     

    2.6. Default Rate.  All
Term Loans and other Obligations shall bear interest, at the option of Agent or
upon the request of the Requisite Lenders, from and after the occurrence and
during the continuation of an Event of Default (as defined below), at a rate
equal to the lesser of (a) 5% above the rate of interest applicable to such
Obligations as set forth in Section 2.3(a) immediately prior to the occurrence
of the Event of Default and (b) the Maximum Lawful Rate (the “Default
Rate”).  The application of the Default Rate shall not be
interpreted or deemed to extend any cure period or waive any Default or Event of
Default or otherwise limit the Agent’s or any Lender’s right or remedies
hereunder.  All interest payable at the Default Rate shall be payable
on demand.

     

    2.7. Lender Fees.

     

    (a) Agency
Fee.  On the Closing Date, Borrower shall pay to Agent, for its
own account, a non-refundable agency fee in an amount equal to $175,000, which
fee shall be fully earned when paid.

     

    (b) Closing
Fee.  On the Closing Date, Borrower shall pay to Agent, for the
benefit of Lenders in accordance with their Pro Rata Shares, a non-refundable
closing fee in an amount equal to $300,000, which fee shall be fully earned when
paid.

     

    (c) Unused Line Fee. On the Commitment
Termination Date, Borrower shall pay to Agent, for the benefit of Lenders in
accordance with their Pro Rata Shares, a non-refundable unused line fee equal to
1.0% of the undrawn amount of the Total Commitment as of such date, which fee
shall be fully earned on the Commitment Termination Date, regardless of whether
the Subsequent Term Loan is advanced.

     

    (d) Final Payment
Fee. On the
date upon which the outstanding principal amount of any Term Loan is repaid in
full, or if earlier, is required to be repaid in full (whether by scheduled
payment, voluntary prepayment, acceleration of the Obligations pursuant to
Section 8.2 or otherwise), Borrower shall pay to Agent, for the ratable accounts
of Lenders, a fee equal to 5.0% of the original principal amount of such Term
Loan (the “Final
Payment Fee”), which Final Payment Fee shall be deemed to be fully-earned
on the Closing Date.

     

    2.8. Maximum Lawful
Rate. Anything herein, any Note or any other Debt Document (as
defined below) to the contrary notwithstanding, the obligations of Loan Parties
hereunder and thereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by Agent and Lenders would be contrary to the provisions
of any law applicable to Agent and  Lenders limiting the highest rate
of interest which may be lawfully contracted for, charged or received
by  Agent and Lenders, and in such event Loan Parties shall pay Agent
and Lenders interest at the highest rate permitted by applicable law (“Maximum Lawful
Rate”); provided, however, that if at
any time thereafter the rate of interest payable hereunder or thereunder is less
than the Maximum Lawful Rate, Loan Parties shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total interest
received by Agent and Lenders is equal to the total interest that would have
been received had the interest payable hereunder been (but for the operation of
this paragraph) the interest rate payable 

     

    
      
         

      

      
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    since the
making of the Initial Term Loan as otherwise provided in this Agreement, any
Note or any other Debt Document.

     

    2.9. Authorization and Issuance of the
Warrants.  Borrower has duly authorized the issuance to Lenders
(or their respective affiliates or designees) of stock purchase warrants
substantially in the form of the warrant attached hereto as Exhibit F
(collectively, the “Warrants”) evidencing
Lenders’ (or their respective affiliates or designees) right to acquire their
respective Pro Rata Share of up to 178,148 shares of common stock of Borrower at
an exercise price of $4.21 per share.  Subject to the terms and
conditions of the Warrants, the exercise period shall expire ten (10) years from
the date such Warrants are issued.

     

    
      	
              3.  

            	
              CREATION
      OF SECURITY INTEREST.

            


    

     

    3.1. Grant of Security
Interest.  As security for the prompt payment and performance,
whether at the stated maturity, by acceleration or otherwise, of all Term Loans
and other debt, obligations and liabilities of any kind whatsoever of Borrower
to Agent and Lenders under the Debt Documents whether for principal, interest,
fees, expenses, prepayment premiums, indemnities, reimbursements or other sums,
and whether or not such amounts accrue after the filing of any petition in
bankruptcy or after the commencement of any insolvency, reorganization or
similar proceeding, and whether or not allowed in such case or proceeding),
absolute or contingent, now existing or arising in the future, including but not
limited to the payment and performance of any outstanding Notes, and any
renewals, extensions and modifications of such Term Loans (such indebtedness
under the Notes, Term Loans and other debt, obligations and liabilities in
connection with the Debt Documents are collectively called the “Obligations”), and as
security for the prompt payment and performance by each Guarantor of the
Guaranteed Obligations as defined in the Guaranty (as defined below), each Loan
Party does hereby grant to Agent, for the benefit of Agent and Lenders, a
security interest in the property listed below (all hereinafter collectively
called the “Collateral”):

     

    All of
such Loan Party’s personal property of every kind and nature whether now owned
or hereafter acquired by, or arising in favor of, such Loan Party, and
regardless of where located, including, without limitation, all accounts,
chattel paper (whether tangible or electronic), commercial tort claims, deposit
accounts, documents, equipment, financial assets, fixtures, goods, instruments,
investment property (including, without limitation, all securities accounts),
inventory, letter-of-credit rights, letters of credit, securities, supporting
obligations, cash, cash equivalents, any other contract rights (including,
without limitation, rights under any license agreements), or rights to the
payment of money, and general intangibles (including Intellectual Property, as
defined in Section 3.3 below), and all books and records of such Loan Party
relating thereto, and in and against all additions, attachments, accessories and
accessions to such property, all substitutions, replacements or exchanges
therefor, all proceeds, insurance claims, products, profits and other rights to
payments not otherwise included in the foregoing (with each of the foregoing
terms that are defined in the UCC having the meaning set forth in the
UCC).

     

    Notwithstanding
the provisions of this Section 3.1 or Section 3.3 below, the grant of security
interest herein shall not extend to and the term “Collateral” shall not include:
(i) to the extent that Borrower would incur adverse tax consequences resulting
from a pledge of 100% of the shares of the outstanding capital stock of any
Subsidiary of Borrower that is incorporated or organized in a jurisdiction other
than the United States or any state or territory thereof (each, a “Foreign Subsidiary”),
more than 65% of the issued and outstanding voting capital stock of such Foreign
Subsidiary or Foreign Subsidiaries, as applicable (but the Collateral shall
still include 100% of the shares of the outstanding non-voting capital stock of
such Foreign Subsidiary or Foreign Subsidiaries, as applicable), (ii) any
license or contract (in each case to the extent such license or contract is not
prohibited by this Agreement), and the property 

     

    
      
         

      

      
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    subject
to such license or contract, to the extent and only to the extent that (A) the
granting of such security interest is prohibited by any applicable statute, law
or regulation, or would constitute a default under the license or contract, as
applicable, and (B) such prohibition or default is enforceable under applicable
law (including without limitation Sections 9-406, 9-407 and 9-408 of the UCC);
provided that
upon the termination or expiration of any such prohibition, such license,
contract and/or property, as applicable, shall automatically be subject to the
security interest granted in favor of the Agent hereunder and become part of the
“Collateral” or (iii) Borrower’s stock in Olympus-Cytori, Inc., a Delaware
corporation (such entity, “Olympus-Cytori” and
such stock, the “Olympus-Cytori
Stock”); provided that upon
the termination or expiration of all provisions in the Olympus Agreements (as
defined below) prohibiting the granting of a Lien in the Olympus-Cytori Stock,
the Olympus-Cytori Stock shall automatically be subject to the security interest
granted in favor of the Agent hereunder and become part of the
“Collateral.”

     

    Each Loan
Party hereby represents and covenants that such security interest constitutes a
valid, first priority security interest (subject only to Permitted Liens) in the
presently existing Collateral, and will constitute a valid, first priority
security interest (subject only to Permitted Liens) in Collateral acquired after
the date hereof.  Each Loan Party hereby covenants that it shall give
written notice to Agent promptly upon the acquisition by such Loan Party or
creation in favor of such Loan Party of any commercial tort claim after the
Closing Date.

     

    3.2. Financing
Statements.  Each Loan Party hereby authorizes Agent to file
UCC financing statements with all appropriate jurisdictions to perfect Agent’s
security interest (for the benefit of itself and the Lenders) granted
hereby.

     

    3.3. Grant of Intellectual Property
Security Interest.  The Collateral shall include all
intellectual property of each Loan Party, which shall be defined as any and all
copyright, trademark, servicemark, patent, design right, software, license,
trade secret and intangible rights of a Loan Party and any applications,
registrations, claims, products, awards, judgments, amendments, renewals,
extensions, improvements and insurance claims related thereto (collectively,
“Intellectual
Property”) now or hereafter owned or licensed by a Loan Party, together
with all accessions and additions thereto, proceeds and products thereof
(including, without limitation, any proceeds resulting under insurance
policies).  In order to perfect or protect Agent’s security interest
and other rights in Loan Party’s Intellectual Property, each Loan Party hereby
authorizes Agent to file one or more intellectual property security agreements,
substantially in the form executed and delivered to Agent on the Closing Date
(each an “Intellectual
Property Security Agreement” and collectively, the “Intellectual Property
Security Agreements”) with the United States Patent and Trademark Office
and/or United States Copyright Office, as each are applicable and required by
Agent.

     

    3.4. Termination of Security
Interest.  Upon the date on which all of the Obligations (other
than contingent indemnity obligations that survive the termination of this
Agreement and for which no claim has been asserted) are indefeasibly repaid in
full in cash, all of the Commitments hereunder are terminated, and this
Agreement shall have been terminated (the “Termination Date”),
and upon receipt of a payoff letter or termination agreement executed by the
Loan Parties in form and substance acceptable to Agent, Agent shall, at Loan
Parties’ sole cost and expense and without any recourse, representation or
warranty, release its Liens in the Collateral.

     

    
      	
              4.  

            	
              CONDITIONS
      OF CREDIT EXTENSIONS

            


    

     

    4.1. Conditions Precedent to Initial Term
Loan.  No Lender shall be obligated to make the Initial Term
Loan, or to take, fulfill, or perform any other action hereunder, until the
following have been delivered to the Agent and each Lender (the date on which
the Lenders make the Initial Term Loan after 

     

    
      
         

      

      
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    all such
conditions shall have been satisfied in a manner satisfactory to Agent or waived
in accordance with this Agreement, the “Closing
Date”):

     

    (a) a
counterpart of this Agreement duly executed by each Loan Party;

     

    (b) a
certificate executed by the Secretary of each Loan Party, the form of which is
attached hereto as Exhibit B (the “Secretary’s
Certificate”), providing verification of incumbency and attaching (i)
such Loan Party’s board resolutions approving the transactions contemplated by
this Agreement and the other Debt Documents and (ii) such Loan Party’s governing
documents;

     

    (c) Notes
duly executed by Borrower in favor of each applicable Lender (if requested by
such Lender);

     

    (d) filed
copies of UCC financing statements, collateral assignments, and terminations
statements, with respect to the Collateral, as Agent shall request;

     

    (e) certificates
of insurance evidencing the insurance coverage, and satisfactory additional
insured and lender loss payable endorsements, in each case as required pursuant
to Section 6.4 herein;

     

    (f) current
UCC lien, judgment, bankruptcy and tax lien search results demonstrating that
there are no other security interests or other Liens on the Collateral, other
than Permitted Liens (as defined below);

     

    (g) a Warrant
in favor of each Lender (or its affiliate or designee);

     

    (h) the
Intellectual Property Security Agreement required by Section 3.3 above, duly
executed by each Loan Party;

     

    (i) a
certificate of good standing of each Loan Party from the jurisdiction of such
Loan Party’s organization and a certificate of foreign qualification from each
jurisdiction where such Loan Party’s failure to be so qualified could reasonably
be expected to have a Material Adverse Effect (as defined below), in each case
as of a recent date acceptable to Agent;

     

    (j) a
landlord consent and/or bailee letter in favor of Agent executed by the landlord
or bailee, as applicable, for any third party location (other than a Permitted
Location as defined below) where (a) any Loan Party’s principal place of
business is located, (b) any Loan Party’s books or records are located or (c)
Collateral with an aggregate value in excess of $50,000 is located (each of the
locations described in the immediately preceding clauses (a), (b) and (c), a
“Collateral
Location”), a form of which is attached hereto as Exhibit C-1 and Exhibit C-2, as
applicable (each an “Access
Agreement”);

     

    (k) a legal
opinion of Loan Parties’ counsel, in form and substance satisfactory to
Agent;

     

    (l) a
completed EPS set-up form, a form of which is attached hereto as Exhibit E (the “EPS Setup
Form”);

     

    (m) a
completed perfection certificate, duly executed by each Loan Party (the “Perfection
Certificate”), a form of which Agent previously delivered to
Borrower;

     

    
      
         

      

      
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    (n) one or
more Account Control Agreements (as defined below), in form and substance
reasonably acceptable to Agent, duly executed by the applicable Loan Parties and
the applicable depository or financial institution, for each deposit and
securities account listed on the Perfection Certificate, to the extent required
pursuant to the terms and conditions of Section
7.10;

     

    (o) a pledge
agreement, in form and substance satisfactory to Agent, executed by each Loan
Party and pledging to Agent, for the benefit of itself and the Lenders, a
security interest in (a) 100% of the shares of the outstanding capital stock, of
any class, of each Subsidiary (as defined below) of each Loan Party that is not
a Foreign Subsidiary, (b) to the extent that Borrower would incur adverse tax
consequences resulting from a pledge of 100% of the shares of the outstanding
capital stock of any Foreign Subsidiary, 65% of the shares of the outstanding
voting capital stock and 100% of the shares of the outstanding non-voting
capital stock of each such Foreign Subsidiary and (c) any and all Indebtedness
(as defined in Section 7.2 below) owing to Loan Parties (the “Pledge
Agreement”);

     

    (p) a
guaranty agreement (together with any other guaranty that purports to provide
for a guaranty of the Obligation, the “Guaranty”), in form
and substance satisfactory to Agent, executed by each Guarantor;

     

    (q) a
disbursement instruction letter, in form and substance satisfactory to Agent,
executed by each Loan Party, Agent and each Lender (the “Disbursement
Letter”);

     

    (r) Borrower
shall have unrestricted balance sheet cash and Cash Equivalents (as defined
below) in one or more deposit accounts or securities accounts over which Agent
has obtained control under Section 7.10 of not less than the product of (i)
negative three (-3) times (ii) the Cash Burn Amount (as defined below) at such
time;

     

    (s) evidence
of the payment of all loans and other indebtedness, obligations and liabilities
of any kind whatsoever of Borrower to GECC in connection with (i) those two
certain promissory notes in the original principal amounts of $600,000 and
$1,380,467.48, respectively, made by Borrower in favor of GECC and (ii) that
certain Master Security Agreement dated as of October 1, 2001 by and between
Borrower and GECC (as amended, restated, supplemented or otherwise modified from
time to time, and together with all schedules attached thereto) (such loans,
indebtedness, obligations and liabilities, collectively, the (“GE Equipment
Indebtedness”);

     

    (t) all other
documents and instruments as Agent or the Lenders may reasonably deem necessary
or appropriate to effectuate the intent and purpose of this Agreement (together
with the Agreement, Note, Warrants, Intellectual Property Security Agreements,
the Perfection Certificate, the Pledge Agreement, the Guaranty, if any, the
Secretary’s Certificate and the Disbursement Letter, and all other agreements,
instruments, documents and certificates executed and/or delivered to or in favor
of Agent and/or the Lenders from time to time in connection with this Agreement
or the transactions contemplated hereby, the “Debt Documents”);
and

     

    (u) Agent and
Lenders shall have received the fees required to be paid by Borrower, if any, in
the respective amounts specified in Section 2.7, and Borrower shall have
reimbursed Agent and Lenders for all reasonable fees, costs and expenses of
closing presented as of the date of this Agreement.

     

    4.2. Conditions Precedent to All Term
Loans.  No Lender shall be obligated to make any Term Loan,
including the Initial Term Loan, unless the following additional conditions have
been satisfied:

     

    
      
         

      

      
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    (a) (i) all
representations and warranties in Section 5 below shall be true as of the date
of such Term Loan, except to the extent such representations and warranties
expressly refer to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date; (ii) no Event of
Default or any other event, which with the giving of notice or the passage of
time, or both, would constitute an Event of Default (such event, a “Default”) has
occurred and is continuing or will result from the making of any Term Loan, and
(iii) Agent shall have received a certificate from an authorized officer of each
Loan Party confirming each of the foregoing;

     

    (b) Agent
shall have received the redelivery or supplemental delivery of the items set
forth in the following sections to the extent circumstances have changed since
the Initial Term Loan:  Sections 4.1(b), (e), (f), (g), (i), (j), (k),
(m) and (q);

     

    (c) with
respect to the Subsequent Term Loan only, Agent shall have received evidence
satisfactory to Agent and the Lenders that Borrower has, at the time of and
after giving effect to such Term Loan, satisfied each of the following
conditions precedent:

     

    (i)  (A)  If
the Subsequent Term Loan is to be made on or prior to October 31, 2008, the
aggregate gross income from the sale of inventory of Borrower and its
consolidated Subsidiaries for the period of 3 consecutive months ending as of
September 30, 2008 shall not be less than $2,300,000; (B) if the Subsequent Term
Loan is to be made after October 31, 2008 but prior to November 30, 2008, the
aggregate gross income from the sale of inventory of Borrower and its
consolidated Subsidiaries for the period of 3 consecutive months ending as of
October 31, 2008 shall not be less than $3,100,000, and (C) if the Subsequent
Term Loan is to be made on or after November 30, 2008 but prior to the
Commitment Termination Date, the aggregate gross income from the sale of
inventory of Borrower and its consolidated Subsidiaries for the period of 3
consecutive months ending as of November 30, 2008 shall not be less than
$4,000,000;

     

    (ii)  (A)  If
the Subsequent Term Loan is to be made on or prior to October 31, 2008, the
aggregate expenses (excluding non-cash expenses relating to the granting of
stock options) and non-financed capital expenditures of Borrower and its
consolidated Subsidiaries for the period of 3 consecutive months ending as of
September 30, 2008 shall not be greater than $9,100,000; (B) if the Subsequent
Term Loan is to be made after October 31, 2008 but prior to November 30, 2008,
the aggregate expenses (excluding non-cash expenses relating to the granting of
stock options) and non-financed capital expenditures of Borrower and its
consolidated Subsidiaries for the period of 3 consecutive months ending as of
October 31, 2008 shall not be greater than $8,800,000, and (C) if the Subsequent
Term Loan is to be made on or after November 30, 2008 but prior to the
Commitment Termination Date, the aggregate expenses (excluding non-cash expenses
relating to the granting of stock options) and non-financed capital expenditures
of Borrower and its consolidated Subsidiaries for the period of 3 consecutive
months ending as of November 30, 2008 shall not be greater than
$8,600,000;

     

    (iii)  Borrower
shall have received at least $10,000,000 in unrestricted net cash proceeds from
the sale and issuance of Borrower’s equity securities after the Closing Date,
which equity issuance shall be on terms and conditions not otherwise prohibited
by any provision of this Agreement or the other Debt Documents;

     

    
      
         

      

      
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    (iv)  The
market capitalization of Borrower is not less than $100,000,000 based on the
10-day trailing average of Borrower’s common stock price, as determined as of
the close of business on the Business Day (as defined below) immediately prior
to the proposed date of the Subsequent Term Loan;

     

    (v)  Borrower
shall have unrestricted balance sheet cash and Cash Equivalents (as defined
below) in one or more deposit accounts or securities accounts over which Agent
has obtained control under Section 7.10 of not less than the product of (i)
negative six (-6) times (ii) the Cash Burn Amount (as such term is defined in
Section 7.12
below) at such time; and

     

    (vi)  Evidence
that all obligations set forth in that certain Post-Closing Obligations Letter
dated October 14, 2008 by and between Borrower and Agent have been satisfied;
and

     

    (d) Agent and
Lenders shall have received such other documents, agreements, instruments or
information as Agent or such Lender shall reasonably request.

     

    
      	
              5.  

            	
              REPRESENTATIONS
      AND WARRANTIES OF LOAN PARTIES.

            


    

     

    Each Loan
Party, jointly and severally, represents, warrants and covenants to Agent and
each Lender that:

     

    5.1. Due Organization and
Authorization.  Each Loan Party’s exact legal name is as set
forth in the Perfection Certificate (or as disclosed to and consented to by
Agent pursuant to Section 7.4) and each Loan Party is, and will remain, duly
organized, existing and in good standing under the laws of the State of its
organization as specified in the Perfection Certificate, has its chief executive
office at the location specified in the Perfection Certificate, and is, and will
remain, duly qualified and licensed in every jurisdiction wherever necessary to
carry on its business and operations, except where the failure to be so
qualified and licensed could not reasonably be expected to have a Material
Adverse Effect.  This Agreement and the other Debt Documents have been
duly authorized, executed and delivered by each Loan Party and constitute legal,
valid and binding agreements enforceable in accordance with their terms, subject
only to bankruptcy, moratorium, insolvency and other laws of general application
affecting secured creditors and general principles of equity.  The
execution, delivery and performance by each Loan Party of each Debt Document
executed or to be executed by it is in each case within such Loan Party’s
powers.

     

    5.2. Required
Consents.  No filing, registration, qualification with, or
approval, consent or withholding of objections from, any governmental authority
or instrumentality or any other entity or person is required with respect to the
entry into, or performance by any Loan Party of, any of the Debt Documents,
except any already obtained.

     

    5.3. No
Conflicts.  Except as described in the note to Item 8 in
Section D on Schedule
B hereto, the entry into, and performance by each Loan Party of, the Debt
Documents will not (a) violate any of the organizational documents of such Loan
Party, (b) violate any law, rule, regulation, order, award or judgment
applicable to such Loan Party, or (c) result in any breach of or constitute a
default under, or result in the creation of any Lien on any of such Loan Party’s
property (except for Liens in favor of Agent, on behalf of itself and Lenders)
pursuant to, any indenture, mortgage, deed of trust, bank loan, credit
agreement, or other Material Agreement (as defined below) to which such Loan
Party is a party.  As used herein, “Material Agreement”
means (i) any agreement or contract required to be filed by a Loan 

     

    
      
         

      

      
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    Party
with the Securities and Exchange Commission (“SEC”) pursuant to
Item 601(b)(10) of Regulation S-K (other than (x) employment or compensation
related agreements, including agreements relating to stock option grants to
employees, consultants and directors, and (y) agreements that have been filed
with the SEC but that have been assigned or terminated or as to which no Loan
Party has any continuing obligations and is owed no further consideration or
performance by the other parties thereto, in each case, prior to the date of
this Agreement) and (ii) the Olympus Agreements (as defined below).  A
list of all Material Agreements as of the Closing Date is set forth on Schedule B
hereto.  As used herein, the “Olympus Agreements”
means each of (1) that certain Joint Venture Agreement, dated as of November 4,
2005 (the “Joint
Venture Agreement”), between Borrower and Olympus Corporation, a Japanese
corporation (“Olympus”), (2) that
certain Shareholders Agreement, dated as of November 4, 2005 (the “Shareholders
Agreement”), between Borrower and Olympus, and (3) all other agreements,
documents and instruments executed or delivered in connection with the Joint
Venture Agreement or the Shareholders Agreement, in each case as the Joint
Venture Agreement, the Shareholders Agreement and such other agreements,
documents and instruments are amended, modified, restated or replaced from time
to time in accordance with the terms and conditions of this
Agreement.

     

    5.4. Litigation.  Except
as disclosed in the Perfection Certificate or as disclosed to Agent pursuant to
Section 6.2(d), there are no actions, suits, proceedings or investigations
pending against or affecting any Loan Party before any court, federal, state,
provincial, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any basis thereof,
the outcome of which could reasonably be expected to have a Material Adverse
Effect, or which questions the validity of the Debt Documents, or the other
documents required thereby or any action to be taken pursuant to any of the
foregoing, nor have any such actions, suits, proceedings or investigations been
threatened in writing.  As used in this Agreement, the term “Material Adverse
Effect” means a material adverse effect on any of (a) the operations,
business, assets, properties, or condition (financial or otherwise) of Borrower,
individually, or the Loan Parties, collectively, (b) the ability of a Loan Party
to perform any of its obligations under any Debt Document to which it is a
party, (c) the legality, validity or enforceability of any Debt Document, (d)
the rights and remedies of Agent or Lenders under any Debt Document or (e) the
validity, perfection or priority of any Lien in favor of Agent, on behalf of
itself and Lenders, on any of the Collateral.

     

    5.5. Financial
Statements.  All financial statements delivered to Agent and
Lenders pursuant to Section 6.3 have been prepared in accordance with GAAP
(subject, in the case of unaudited financial statements, to the absence of
footnotes and normal year end audit adjustments), and since the date of the most
recent audited financial statement, no event has occurred which has had or could
reasonably be expected to have a Material Adverse Effect.  There has
been no material adverse deviation from the most recent annual operating plan of
Borrower delivered to Agent and Lenders in accordance with Section
6.3.

     

    5.6. Use of
Proceeds.  The proceeds of the Term Loans shall be used to
repay in full the GE Equipment Indebtedness and for working capital, capital
expenditures and other general corporate purposes.

     

    5.7. Collateral.  Each
Loan Party is, and will remain, the sole and lawful owner, and in possession of,
the Collateral, and has the sole right and lawful authority to grant the
security interest described in this Agreement.  The Collateral is, and
will remain, free and clear of all liens, security interests, claims and
encumbrances of any kind whatsoever (each, a “Lien”), except for
(a) Liens in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations, (b) Liens (i) with respect to the payment of taxes, assessments or
other governmental charges or (ii) of suppliers, carriers, materialmen,
warehousemen, workmen or mechanics and other similar Liens, in each case imposed
by law and arising in the ordinary course of business, and securing amounts that
are not yet delinquent (in the case of taxes) or not yet due (with respect to
all cases described in the immediately preceding clauses (i) and (ii) other


     

    
      
         

      

      
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    than
taxes) or that in any case are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves or
other appropriate provisions are maintained on the books of the applicable Loan
Party in accordance with GAAP and which do not involve, in the judgment of
Agent, any risk of the sale, forfeiture or loss of any of the Collateral (a
“Permitted
Contest”), (c) Liens existing on the date hereof and set forth on Schedule B hereto,
(d) Liens securing Indebtedness (as defined in Section 7.2 below) permitted
under Section 7.2(c) below, provided that (i) such Liens exist prior to the
acquisition of, or attach substantially simultaneous with, or within 20 days
after the, acquisition, repair, improvement or construction of, such property
financed by such Indebtedness and (ii) such Liens do not extend to any property
of a Loan Party other than the property (and any attachments, additions,
accessions thereto and proceeds thereof) acquired or built, or the improvements
or repairs, financed by such Indebtedness, (e) licenses described in Section
7.3(c), (d) and (e) below and the rights and interests of licensors under
licenses where a Loan Party is the licensee (to the extent such licenses are
permitted under this Agreement), (f) zoning restrictions, easements, rights of
way, encroachments or other restrictions on the use of, and other minor defects
or irregularities in title with respect to, any real property of Borrower or its
Subsidiaries so long as the same do not materially impair the use of such real
property by Borrower or such Subsidiary, (g) purported Liens evidenced by the
filing of precautionary UCC financing statements relating solely to operating
leases of personal property entered into in the ordinary course of business, (h)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods,
(i) pledges or cash deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance or other types of
social security benefits (other than any Lien imposed by ERISA) that secure
amounts that are not past due, (j) bankers’ Liens or other set-off rights in
favor of other financial institutions arising in connection with the Loan
Parties’ deposit and securities accounts held at such institutions, to the
extent the same are permitted under the Account Control Agreement with respect
to such deposit or securities accounts, (k) Liens arising from judgments,
decrees or attachments that do not constitute an Event of Default hereunder, (l)
Liens of Silicon Valley Bank on a Certificate of Deposit in an aggregate amount
not to exceed $250,000 (the “SVB Certificate of
Deposit”) issued by Silicon Valley Bank to Borrower to secure Borrower’s
reimbursement obligations with respect to (i)  credit card, payroll
and foreign exchange services provided by Silicon Valley Bank to Borrower and
(ii) standby letters of credit issued by Silicon Valley Bank on behalf of
Borrower, in each case to the extent permitted under Section 7.2(g) (such
reimbursement obligations collectively hereinafter referred to as the “SVB Cash Management
Obligations”), and (m) Liens of landlords (i) arising by statute or under
any lease or related contractual obligation entered into in the ordinary course
of business, (ii) on fixtures and movable tangible property located on the real
property leased or subleased from such landlord, (iii) for amounts not yet due
or that are being contested in good faith by appropriate proceedings diligently
conducted, (iv) for which adequate reserves or other appropriate provisions are
maintained on the books of such Loan Party in accordance with GAAP and (v) which
Liens are subordinated to the security interests granted under Section 3.1
pursuant to an Access Agreement (all of such Liens described in the foregoing
clauses (a) through (m) are called  “Permitted
Liens”).

     

    5.8. Compliance with
Laws.

     

    (a) Each Loan
Party is and will remain in compliance in all respects with all laws, statutes,
ordinances, rules and regulations applicable to it, except to the extent that
any such non-compliance, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.

     

    (b) Without
limiting the generality of the immediately preceding clause (a), each Loan Party
further agrees that it 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-

     

    
      
         

      

      
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    money
laundering and counter-terrorism financing provisions of the Bank Secrecy Act
and the USA Patriot Act and all regulations issued pursuant to it.  No
Loan Party nor any of its subsidiaries, affiliates or joint ventures (A) is a
person or entity 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 or entity cannot deal with or otherwise engage in business
transactions, (B) is a person or entity who is otherwise the target of U.S.
economic sanctions laws such that a U.S. person or entity cannot deal or
otherwise engage in business transactions with such person or entity; or (C) 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 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 Debt Document
would be prohibited under U.S. law.  The SDN List is maintained by
OFAC and is available at:
http://www.ustreas.gov/offices/enforcement/ofac/sdn/.

     

    (c) Each Loan
Party has met the minimum funding requirements of the United States Employee
Retirement Income Security Act of 1974 (as amended, “ERISA”) with respect
to any employee benefit plans subject to ERISA.  No Loan Party is an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940.  No Loan Party is
engaged principally, or as one of the important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations T, U and X of the Board of Governors of the Federal
Reserve System (the “Federal Reserve
Board”).

     

    5.9. Intellectual
Property.  The Intellectual Property is and will remain free
and clear of all Liens, except for Permitted Liens described in clauses (b)(i),
(d) (to the extent consisting of software financed in connection with the
acquisition of related equipment) and (e) of Section 5.7.  No Loan
Party has nor will it enter into any other agreement or financing arrangement in
which such Loan Party has agreed that it will not grant a security interest in
such Loan Party’s Intellectual Property to any other party (other than
agreements with licensors that prohibit such Loan Party from encumbering or
assigning the license from such licensor or the Intellectual Property licensed
from such licensor, but only to the extent that such prohibition is not
enforceable under applicable law, including, without limitation, Sections 9-406,
9-407 and 9-408 of the UCC).  Except as disclosed in the Perfection
Certificate and except as disclosed to the Agent in writing after the Closing
Date, as of the Closing Date and each date a Term Loan is advanced to Borrower,
no Loan Party has any interest in, or title to any Intellectual Property that is
(i) a registered trademark, or a trademark for which an application has been
filed, (ii) a registered copyright, or a copyright for which an application has
been filed, or (iii) a registered patent or a patent
application.  Upon filing of the Intellectual Property Security
Agreements with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, and the filing of appropriate financing
statements, all action necessary or desirable to protect and perfect Agent’s
Lien on each Loan Party’s Intellectual Property that is registered or for which
an application has been filed shall have been duly taken.  Each Loan Party owns or
has rights to use all Intellectual Property material to the conduct of its
business as now conducted by it or proposed to be conducted by it, without any
actual or claimed infringement upon the rights of third parties.

     

    5.10. Solvency.  Both
before and after giving effect to each Term Loan, the transactions contemplated
herein, and the payment and accrual of all transaction costs in connection with
the foregoing, each Loan Party is and will be Solvent.  As used
herein, “Solvent” means, with
respect to a Loan Party on a particular date, that on such date (a) the fair
value of the property of such Loan Party (including intangible assets and
goodwill) is greater than the total amount of liabilities, including contingent
liabilities, of such Loan Party; (b) the present fair salable value of the
assets of such Loan Party is not less than the amount that will be required to
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    its debts
as they become absolute and matured; (c) such Loan Party does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Loan
Party’s ability to pay as such debts and liabilities mature; (d) such Loan Party
is not engaged in a business or transaction, and is not about to engage in a
business or transaction, for which such Loan Party’s property would constitute
an unreasonably small capital; and (e) such Loan Party is not “insolvent” within
the meaning of Section 101(32) of the United States Bankruptcy Code (11 U.S.C. §
101, et. seq), as amended from time to time.  The amount of contingent
liabilities (such as litigation, guaranties and pension plan liabilities) at any
time shall be computed as the amount that, in light of all the facts and
circumstances existing at the time, represents the amount that can be reasonably
be expected to become an actual or matured liability.

     

    5.11. Taxes; Pension.  All
federal (and all material state and local) tax returns, reports and statements,
including information returns, required by any governmental authority to be
filed by each Loan Party and its Subsidiaries have been filed with the
appropriate governmental authority and all federal (and all material state and
local) taxes, levies, assessments and similar charges have been paid prior to
the date on which any fine, penalty, interest or late charge may be added
thereto for nonpayment thereof (or any such fine, penalty, interest, late charge
or loss has been paid), excluding taxes, levies, assessments and similar charges
or other amounts which are the subject of a Permitted Contest.  Proper
and accurate amounts have been withheld by each Loan Party from its respective
employees for all periods in compliance with applicable laws and such
withholdings have been timely paid to the respective governmental
authorities.  Each Loan Party has paid all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms, and no Loan Party has withdrawn from participation
in, or has permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could
reasonably be expected to result in any liability of a Loan Party, including any
liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental authority.

     

    5.12. 
Full
Disclosure.  Loan Parties hereby confirm that all of the
information disclosed on the Perfection Certificate is true, correct and
complete as of the date of this Agreement and as of the date of each Term
Loan.  No representation, warranty or other statement made by or on
behalf of a Loan Party in any Debt Document or any document delivered by any
Loan Party in connection therewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading, it being recognized by Agent and Lenders that the projections and
forecasts provided by Loan Parties in good faith and based upon reasonable and
stated assumptions are not to be viewed as facts and that actual results during
the period or periods covered by any such projections and forecasts may differ
from the projected or forecasted results.

     

    
      	
              6.  

            	
              AFFIRMATIVE
      COVENANTS.

            


    

     

    6.1. Good Standing.  Each
Loan Party shall maintain its and each of its Subsidiaries’ existence and good
standing in its jurisdiction of organization and maintain qualification in each
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect.  Each Loan Party shall maintain, and
shall cause each of its Subsidiaries to maintain, in full force all licenses,
approvals and agreements, the loss of which could reasonably be expected to have
a Material Adverse Effect.  “Subsidiary” means,
with respect to a Loan Party, any entity the management of which is, directly or
indirectly controlled by, or of which an aggregate of more than 50% of the
outstanding voting capital stock (or other voting equity interest) is, at the
time, owned or controlled, directly or indirectly by, such Loan Party or one or
more Subsidiaries of such Loan Party, and, unless the contest otherwise requires
each reference to a Subsidiary herein shall be a reference to a Subsidiary of
Borrower.  For avoidance of doubt, Olympus-Cytori shall not be deemed
to be a Subsidiary of Borrower for so long as Borrower does 

     

    
      
         

      

      
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    not own
or control, directly or indirectly, more than 50% of the outstanding voting
capital stock of Olympus-Cytori.

     

    6.2. Notice to Agent and
Lenders.  Loan Parties shall provide Agent and Lenders with
(a) notice of any change in the accuracy of the Perfection Certificate or
any of the representations and warranties provided in Section 5 above,
immediately upon the occurrence of any such change, (b) notice of the occurrence
of any Default or Event of Default, promptly (but in any event within 3 Business
Days) after the date on which any executive officer of a Loan Party obtains
knowledge of the occurrence of any such event, (c) copies of all statements,
reports and notices made available generally by Borrower to its security holders
and notice of all filings on forms 10K, 10Q and 8K filed with the SEC or any
securities exchange or governmental authority exercising a similar function,
promptly, but in any event within 5 Business Days of delivering or receiving
such information to or from such persons, (d) a report of any legal actions
pending or threatened against Borrower or any Subsidiary that could reasonably
be expected to result in damages or costs to Borrower or any Subsidiary of
$250,000 or more promptly, but in any event within 5 Business Days, upon receipt
of notice thereof, (e) notice of any new applications or registrations that any
Loan Party has made or filed in respect of any Intellectual Property or any
material adverse change in status of any outstanding application or registration
within 20 Business Days of such receipt of confirmation of the filing of such
application or filing or receipt of notice of such change in status, and (f)
notices of all material statements, reports and notices delivered to or by a
Loan Party in connection with any Material Agreement promptly (but in any event
within 5 Business Days) upon receipt thereof, and copies of the same upon
Agent’s request.

     

    6.3. Financial
Statements.  If Borrower is a private company, it shall deliver
to Agent and Lenders (a) unaudited consolidated and, if available, consolidating
balance sheets, statements of operations and cash flow statements within 30 days
of each month end, in a form acceptable to Agent and Lenders and certified by
Borrower’s president, chief executive officer or chief financial officer, and
(b) its complete annual audited consolidated and, if available, consolidating
financial statements prepared under GAAP and certified by an independent
certified public accountant selected by Borrower and satisfactory to Agent and
Lenders within 120 days of the fiscal year end or, if sooner, at such time as
Borrower’s Board of Directors receives the certified audit.  If
Borrower is a publicly held company, it shall deliver to Agent and Lenders
quarterly unaudited consolidated and, if available, consolidating balance
sheets, statements of operations and cash flow statements and annual audited
consolidated and, if available, consolidating balance sheets, statements of
operations and cash flow statements, certified by a recognized firm of certified
public accountants, within 5 days after the statements are required to be
provided to the SEC, and if Agent requests, Borrower shall deliver to Agent and
Lenders monthly unaudited consolidated and, if available, consolidating balance
sheets, statements of operations and cash flow statements within 30 days after
the end of each month.  All such statements are to be prepared using
GAAP (subject, in the case of unaudited financial statements, to the absence of
footnotes and normal year end audit adjustments) and, if Borrower is a publicly
held company, are to be in compliance with applicable SEC
requirements.  All financial statements delivered pursuant to this
Section 6.3 shall be accompanied by a compliance certificate, signed by the
chief financial officer of Borrower, in the form attached hereto as Exhibit D, and a
management discussion and analysis that includes a comparison to budget for the
respective fiscal period and a comparison of performance for such fiscal period
to the corresponding period in the prior year.  Borrower shall deliver
to Agent and Lenders (i) as soon as available and in any event not later than 45
days after the end of each fiscal year of Borrower, an annual operating plan for
Borrower, on a consolidated and, if available, consolidating basis, approved by
the Board of Directors of Borrower, for the current fiscal year, in form and
substance approved by the Board of Directors of Borrower and (ii) such budgets,
sales projections, or other financial information as Agent or any Lender may
reasonably request from time to time generally prepared by Borrower in the
ordinary course of business.

     

    
      
         

      

      
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    6.4. Insurance. Borrower, at
its expense, shall maintain, and shall cause each Subsidiary to maintain,
insurance (including, without limitation, comprehensive general liability,
hazard, and business interruption insurance) with respect to all of its
properties and businesses (including, the Collateral), in such amounts and
covering such risks as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated and in any event
with deductible amounts, insurers and policies that shall be reasonably
acceptable to Agent.  Borrower shall deliver to Agent certificates of
insurance evidencing such coverage, together with endorsements to such policies
naming Agent as a lender loss payee or additional insured, as appropriate, in
form and substance satisfactory to Agent.  Each policy shall provide
that coverage may not be canceled or altered by the insurer except upon 30
days  prior written notice to Agent and shall not be subject to
co-insurance .  Borrower appoints Agent as its attorney-in-fact to
make, settle and adjust all claims under and decisions with respect to
Borrower’s policies of insurance, and to receive payment of and execute or
endorse all documents, checks or drafts in connection with insurance payments.
Agent shall not act as Borrower’s attorney-in-fact unless an Event of Default
has occurred and is continuing.  The appointment of Agent as
Borrower’s attorney in fact is a power coupled with an interest and is
irrevocable until all of the Obligations are indefeasibly paid in full. Proceeds
of insurance shall be applied, at the option of Agent, to repair or replace the
Collateral or to reduce any of the Obligations if (a) such proceeds are received
at any time that a Default or an Event of Default has occurred and is continuing
or (b) no Default or Event of Default has occurred and is continuing at the time
such proceeds are received but such proceeds exceed in the aggregate $250,000 in
any calendar year.

     

    6.5. Taxes.  Borrower
shall, and shall cause each Subsidiary to, timely file all federal (and all
material state and local) tax reports and pay and discharge all federal (and all
material state and local) taxes, assessments and governmental charges or levies
imposed upon it, or its income or profits or upon its properties or any part
thereof, before the same shall be in default and before the date on which
penalties attach thereto, except to the extent such taxes, assessments and
governmental charges or levies are the subject of a Permitted
Contest.

     

    6.6. Agreement with
Landlord/Bailee.  Unless otherwise agreed to by the Agent in
writing, and except with respect to Permitted Locations (as defined below), each
Loan Party shall obtain and maintain such Access Agreement(s) with respect to
any Collateral Location as Agent may require.  With respect to
Collateral Locations (other than locations of the type described in clauses (ii)
and (iii) of the definition of Permitted Location below) for which the Loan
Parties have not delivered a fully executed Access Agreement to Agent, upon
Agent’s request Borrower shall deliver to Agent evidence in form reasonably
satisfactory to Agent that rental payments owing by any Loan Party were made and
a certification that no default or event of default exists under such Loan
Party’s the lease or leases for such Collateral
Locations.  Notwithstanding anything in this Agreement to the
contrary, the failure to obtain a fully executed Access Agreement with respect
to a Collateral Location shall not constitute a Default or Event of Default
hereunder. As used herein, “Permitted Locations” means the following locations:
(i) facilities located outside of the United States at which a Loan Party
maintains Celution Systems (as defined below) in such Loan Party’s ordinary
course of business, (ii) locations where Celution Systems may be temporarily
located by a Loan Party for use in clinical trials by an unaffiliated third
party in such Loan Party’s ordinary course of business, (iii) locations where
Celution Systems may be temporarily located by a Loan Party with physicians for
demonstration, testing and product development purposes in such Loan Party’s
ordinary course of business, and (iv) locations where Collateral may be
temporarily located by a Loan Party for maintenance or repair in such Loan
Party’s ordinary course of business; provided, that with respect to the
locations described in the immediately preceding clauses (i) through and
including (iv), the book value of all Collateral at such locations shall at no
time be greater than $200,000 per location or $750,000 in the
aggregate.  As used herein, “Celution Systems” means the family of
products (600, 700, 800, 900/MB & next generation Celution device), which
processes patients’ cells at the bedside in real time separating a therapeutic
dose of stem and regenerative cells from a patient’s own fat tissue, including


     

    
      
         

      

      
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    a central
processing device, a related single-use consumable used for each patient
specific procedure, and supportive procedural components.

     

    6.7. Protection of Intellectual
Property.  Each Loan Party shall take all necessary actions to:
(a) protect, defend and maintain the validity and enforceability of its
Intellectual Property to the extent material to the conduct of its business now
conducted by it or proposed to be conducted by it, (b) promptly advise Agent and
Lenders in writing of material infringements of its Intellectual Property and,
should the Intellectual Property be material to such Loan Party’s business, take
all appropriate actions to enforce its rights in its Intellectual Property
against infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, (c) not allow any
Intellectual Property material to such Loan Party’s business to be abandoned,
forfeited or dedicated to the public without Agent’s written consent, except
that a Loan Party may abandon or forfeit registrations with respect to such
Intellectual Property in jurisdictions outside the United States where, in the
good faith business judgment of Borrower’s board of directors, the value of the
registrations of such Intellectual Property is outweighed by the cost of
maintaining such registrations in such jurisdiction, and (d) notify Agent
promptly, but in any event within 10 Business Days, if it knows or has reason to
know that any application or registration relating to any patent, trademark or
copyright (now or hereafter existing) material to its business may become
abandoned or dedicated, or if any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court) regarding such Loan Party’s ownership of any
Intellectual Property material to its business, its right to register the same,
or to keep and maintain the same.  Each Loan Party shall remain liable
under each of its Intellectual Property licenses pursuant to which it is a
licensee (“Licenses”) to observe
and perform all of the conditions and obligations to be observed and performed
by it thereunder, to the extent that such License is material to the Loan
Parties’ business.  None of Agent or any Lender shall have any
obligation or liability under any such License by reason of or arising out of
this Agreement, the granting of a Lien, if any, in such License or the receipt
by Agent (on behalf of itself and Lenders) of any payment relating to any such
License.  None of Agent or any Lender shall be required or obligated
in any manner to perform or fulfill any of the obligations of any Loan Party
under or pursuant to any License, or to make any payment, or to make any inquiry
as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any License, or to present or
file any claims, or to take any action to collect or enforce any performance or
the payment of any amounts which may have been assigned to it or which it may be
entitled at any time or times.

     

    6.8. Special
Collateral Covenants.

     

    (a) Each Loan
Party shall remain in possession of its respective Collateral solely at (1) the
location(s) specified on the Perfection Certificate, (2) Permitted Locations and
(3) locations where portable goods of a deminimis nature (such as laptops,
phones and other similar equipment) may be located with employees or consultants
of a Loan Party in such Loan Party’s ordinary course of business; except that
Agent, on behalf of itself and Lenders, shall have the right to possess (i) any
chattel paper or instrument that constitutes a part of the Collateral, (ii) any
other Collateral in which Agent’s security interest (on behalf of itself and
Lenders) may be perfected only by possession and (iii) any Collateral after the
occurrence of an Event of Default in accordance with this Agreement and the
other Debt Documents.  

     

    (b) Each Loan
Party shall (i) use the Collateral only in its trade or business, (ii) maintain
all of the Collateral in good operating order and repair, normal wear and tear
excepted, and (iii) use and maintain the Collateral only in compliance with
manufacturers’ recommendations or prudent industry practices and all applicable
laws, except where a failure to do so could not reasonably be expected to have a
Material Adverse Effect.

     

    
      
         

      

      
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    (c) Agent and
Lenders do not authorize and each Loan Party agrees it shall not (i) part with
possession of any of the Collateral (except in accordance with Section 6.8(a)
above, to Agent (on behalf of itself and Lenders), or for a Permitted
Disposition), or (ii) remove any of the Collateral from the continental United
States except as provided in clause (i) of the definition of “Permitted
Locations” in Section 6.6.

     

    (d) Each Loan
Party shall pay promptly when due all federal (and all material state and local)
taxes, license fees, assessments and public and private charges levied or
assessed on any of the Collateral, on its use, or on this Agreement or any of
the other Debt Documents, other than in connection with a Permitted
Contest.  At its option, Agent may, after good faith consultation with
Borrower (unless a Default or an Event of Default has occurred and is
continuing), discharge taxes, Liens, security interests or other encumbrances at
any time levied or placed on the Collateral and may pay for the maintenance,
insurance and preservation of the Collateral and effect compliance with the
terms of this Agreement or any of the other Debt Documents.  Each Loan
Party agrees to reimburse Agent, on demand, all costs and expenses incurred by
Agent in connection with such payment or performance and agrees that such
reimbursement obligation shall constitute Obligations.

     

    (e) Each Loan
Party shall, at all times, keep accurate and complete records of the
Collateral.

     

    (f) Each Loan
Party agrees and acknowledges that any third person who may at any time possess
all or any portion of the Collateral shall be deemed to hold, and shall hold,
the Collateral as the agent of, and as pledge holder for, Agent (on behalf of
itself and Lenders). Agent may at any time give notice to any third person
described in the preceding sentence that such third person is holding the
Collateral as the agent of, and as pledge holder for, Agent (on behalf of itself
and Lenders).

     

    (g) Each Loan
Party shall, during normal business hours, and in the absence of a Default or an
Event of Default, upon one Business Day’s prior notice, as frequently as Agent
determines to be appropriate: (i) provide Agent (who may be accompanied by
representatives of any Lender) and any of its officers, employees and agents
access to the properties, facilities, advisors and employees (including
officers) of each Loan Party and to the Collateral, (ii) permit Agent (who may
be accompanied by representatives of any Lender), and any of its officers,
employees and agents, to inspect, audit and make extracts from any Loan Party’s
books and records (or at the request of Agent, deliver true and correct copies
of such books and records to Agent), and (iii) permit Agent (who may be
accompanied by representatives of any Lender), and its officers, employees and
agents, to inspect, review, evaluate and make test verifications and counts of
the Collateral of any Loan Party; provided, however,
that absent the occurrence and continuance of a Default or Event of Default,
Borrower shall only be obligated to reimburse Agent for costs and expenses under
Section 10.5 with respect to four (4) such inspections and audits during any
calendar year.  Upon Agent’s request, each Loan Party will promptly
notify Agent in writing of the location of any Collateral (excluding the
portable goods of a deminimis nature described in Section
6.8(a)(3)).  If a Default or Event of Default has occurred and
is continuing or if access is necessary to preserve or protect the Collateral as
determined by Agent, each such Loan Party shall provide such access to Agent and
to each Lender at all times and without advance notice.  Each Loan
Party shall make available to Agent and its auditors or counsel, as quickly as
is possible under the circumstances, originals or copies of all books and
records that Agent or such Lender may reasonably
request.  Notwithstanding any other provision of this Agreement or any
other Debt Document, so long as no Default or Event of Default then exists, each
Loan Party shall have the right to deny or restrict the Agent, the Lenders and
their 

     

    
      
         

      

      
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    respective
representatives, access to highly confidential and proprietary scientific data
and specifications, in each case, solely to the extent pertaining to Celution
Systems.

     

    6.9. MacroPore
Dissolution.  On or prior to November 13, 2008, Borrower shall
deliver to Agent, in form and substance reasonably satisfactory to Agent,
evidence of the dissolution of MacroPore Biosurgery, Inc., a Delaware
corporation (such dissolution, the “MacroPore
Dissolution”).

     

    6.10. Further
Assurances.  Each Loan Party shall, upon request of Agent,
furnish to Agent such further information, execute and deliver to Agent such
documents and instruments (including, without limitation, UCC financing
statements) and shall do such other acts and things as Agent may at any time
reasonably request relating to the perfection or protection of the security
interest created by this Agreement or for the purpose of carrying out the intent
of this Agreement and the other Debt Documents.

     

    
      	
              7.  

            	
              NEGATIVE
      COVENANTS

            


    

     

    7.1. Liens.  No Loan
Party shall, and no Loan Party shall permit any of its Subsidiaries to, (a)
create, incur, assume or permit to exist any Lien on any Collateral, including,
without limitation, any Intellectual Property, except Permitted Liens or (b)
become a party to any agreement that would prohibit the granting of a security
interest in such Loan Party’s Collateral to Agent (other than agreements with
licensors that prohibit such Loan Party or Subsidiary from encumbering or
assigning the license from such licensor or the Intellectual Property licensed
from such licensor, but only to the extent that such prohibition is not
enforceable under applicable law, including, without limitation, Sections 9-406,
9-407 and 9-408 of the UCC).

     

    7.2. Indebtedness. No Loan
Party shall, and no Loan Party shall permit any of its Subsidiaries to, directly
or indirectly create, incur, assume, permit to exist, guarantee or otherwise
become or remain directly or indirectly liable with respect to, any Indebtedness
(as hereinafter defined), except for (a) the Obligations, (b) Indebtedness
existing on the date hereof and set forth on Schedule B to this Agreement, (c)
Indebtedness consisting of capitalized lease obligations and purchase money
Indebtedness, in each case incurred by Borrower or any of its Subsidiaries to
finance the acquisition, repair, improvement or construction of fixed or capital
assets of such person, provided that (i) the aggregate outstanding principal
amount of all such Indebtedness does not exceed $250,000 at any time and (ii)
the principal amount of such Indebtedness does not exceed the lower of the cost
or fair market value (plus taxes, shipping and installation expenses) of the
property so acquired or built or of such repairs or improvements financed with
such Indebtedness (each measured at the time of such acquisition, repair,
improvement or construction is made), (d) obligations under any foreign exchange
contract, currency swap agreement, interest rate swap, cap or collar agreement
or other similar agreement or arrangement entered into by a Loan Party in the
ordinary course of business and designed to alter the risks arising from
fluctuations in currency values or interest rates, but not for speculative
purposes, (e) guaranties by one or more Loan Parties of obligations or
liabilities of other Loan Parties, so long as no Default or Event of Default
would occur either before or after giving effect to any such guaranty, (f)
Indebtedness incurred by Foreign Subsidiaries from third party financial
institutions in an aggregate amount not in excess of $250,000; (g) Indebtedness
consisting of SVB Cash Management Obligations owing by Borrower to Silicon
Valley Bank in an amount not to exceed $250,000 in the aggregate at any time;
and (h) Indebtedness owing by any Loan Party to another Loan Party, provided
that (i) each Loan Party shall have executed and delivered to each other Loan
Party a demand note (each, an “Intercompany Note”)
to evidence such intercompany loans or advances owing at any time by each Loan
Party to the other Loan Parties, which Intercompany Note shall be in form and
substance reasonably satisfactory to Agent and shall be pledged and delivered to
Agent pursuant to the Pledge Agreement as additional Collateral for the
Obligations, (ii) any and all Indebtedness of any Loan Party to another Loan
Party shall be subordinated to the Obligations pursuant to the subordination
terms set forth in each Intercompany Note, and (iii) no Default or Event of
Default 

     

    
      
         

      

      
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    would
occur either before or after giving effect to any such Indebtedness. The
term “Indebtedness” means,
with respect to any person, at any date, without duplication, (i) all
obligations of such person for borrowed money, (ii) all obligations of such
person evidenced by bonds, debentures, notes or other similar instruments, or
upon which interest payments are customarily made, (iii) all obligations of such
person to pay the deferred purchase price of property or services, but excluding
obligations to trade creditors incurred in the ordinary course of business and
not past due by more than 90 days,  (iv) all capital lease obligations
of such person, (v) the principal balance outstanding under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product, (vi) all obligations of such person to purchase
securities (or other property) which arise out of or in connection with the
issuance or sale of the same or substantially similar securities (or property),
(vii) all contingent or non-contingent obligations of such person to reimburse
any bank or other person in respect of amounts paid under a letter of credit or
similar instrument, (viii) all equity securities of such person subject to
repurchase or redemption otherwise than at the sole option of such person, (ix)
all “earnouts” and similar payment obligations of such person, (x) all
indebtedness secured by a Lien on any asset of such person, whether or not such
indebtedness is otherwise an obligation of such person, (xi) all obligations of
such person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, and (xii) all obligations or liabilities of others guaranteed by such
person.

     

    7.3. Dispositions.  No
Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to,
convey, sell, rent, lease, sublease, mortgage, license, transfer or otherwise
dispose of (collectively, “Transfer”) any of the
Collateral or any Intellectual Property, except for the following (collectively,
“Permitted
Dispositions”): (a) sales of inventory in the ordinary course of
business; (b) dispositions by a Loan Party or any of its Subsidiaries of
tangible assets for cash and fair value that are no longer used or useful in the
business of such Loan Party or such Subsidiary so long as (i) no Default or
Event of Default exists at the time of such disposition or would be caused after
giving effect thereto and (ii) the fair market value of all such assets disposed
of does not exceed $75,000 in any calendar year; (c) non-exclusive licenses for
the use of any Loan Party’s Intellectual Property in the ordinary course of
business; (d) exclusive licenses for the use of any Loan Party’s Intellectual
Property in the ordinary course of business, so long as, with respect to each
such exclusive license, (i) no Default or Event of Default exists at the time of
such Transfer, (ii) the license constitutes an arms-length transaction made in
connection with a bona fide corporate collaboration, distribution agreement or
similar arrangement in the ordinary course of business and the terms of which,
on their face, do not provide for a sale or assignment of any Intellectual
Property, (iii) the applicable Loan Party delivers 30 days prior written notice
and a brief summary of the terms of the license to Agent, (iv) the applicable
Loan Party delivers to Agent copies of the final executed licensing documents in
connection with the license promptly upon consummation of the license, and (v)
all royalties, milestone payments or other proceeds arising from the licensing
agreement are paid to a deposit account that is governed by an Account Control
Agreement; (e) licenses of Intellectual Property pursuant to the terms and
conditions of the Olympus Agreements as they exist on the Closing Date; (f) the
sale by Borrower of all or substantially all of the assets related to the
SurgiWrap Thin Film business, so long as, with respect to such sale of assets,
(i) no Default or Event of Default exists at the time of such sale, (ii) such
sale constitutes an arms-length transaction with a non-affiliate, (iii) Borrower
delivers to Agent copies of the final executed sale agreement upon consummation
of the sale, (iv) Borrower shall receive net cash proceeds of at least
$1,000,000 from such sale and (v) all such cash proceeds are paid to a deposit
account that is governed by an Account Control Agreement; and (g) the MacroPore
Dissolution.

     

    7.4. Change in Name, Location or Executive
Office; Change in Business; Change in Fiscal Year.  No Loan
Party shall, and no Loan Party shall permit any of its Subsidiaries to, (a)
change its name or its state of organization without the prior written consent
of Agent (such consent not to be unreasonably withheld), (b) relocate its chief
executive office without 30 days prior written notification to 

     

    
      
         

      

      
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    Agent,
(c) engage in any business other than or reasonably related or incidental
to the businesses currently engaged in by the Loan Parties and their
Subsidiaries, (d) cease to conduct business substantially in the manner
conducted by the Loan Parties and their Subsidiaries as of the date of this
Agreement or (e) change its fiscal year end.

     

    7.5. Mergers or
Acquisitions.  No Loan Party shall merge or consolidate, and no
Loan Party shall permit any of its Subsidiaries to merge or consolidate, with or
into any other person or entity (other than mergers of a Subsidiary into a Loan
Party in which such Loan Party is the surviving entity, or mergers of a Loan
Party (other than Borrower) into another Loan Party) or acquire, or permit any
of its Subsidiaries to acquire, all or substantially all of the capital stock or
property of another person or entity or all or substantially all of the assets
constituting any line of business, division, branch, operating division or other
unit operation of another person or entity.  Notwithstanding the
foregoing, Borrower may acquire all or substantially all of the assets or stock
of another business entity (such business entity, the “Target”) so long as
(a) Agent and each Lender shall receive at least twenty (20) Business Days’
prior written notice of such proposed acquisition, which notice shall include a
reasonably detailed description of such proposed acquisition; (b) such
acquisition shall only involve assets located in the United States and comprise
a business, or those assets of a business, substantially of the type engaged in
by Borrower or its Subsidiaries and which business would not subject Agent or
any Lender to regulatory or third party approvals in connection with the
exercise of its rights and remedies under this Agreement or any other Debt
Documents other than approvals applicable to the exercise of such rights and
remedies with respect to Borrower prior to such acquisition; (c) such
acquisition shall be consensual and shall have been approved by Target’s board
of directors or similar governing body (as applicable); (d) the purchase price
paid and/or payable in cash or other property (other than capital stock) in
connection with all acquisitions (including all transaction costs and all
Indebtedness, liabilities and contingent obligations incurred or assumed in
connection therewith or otherwise reflected in a consolidated balance sheet of
Borrower and Target) shall not exceed $1,000,000 during the term of this
Agreement; (e) with respect to an acquisition paid for in whole or in part with
capital stock, such acquisition shall not result in any decrease in the Tangible
Net Worth (as defined below) of the Loan Parties; (f) the business and assets
acquired in such acquisition shall be free and clear of all Liens (other than
Permitted Liens); (g) at or prior to the closing of any acquisition, Agent will
be granted a first priority perfected Lien (subject to Permitted Liens), for the
ratable benefit of Agent and Lenders, in all assets or stock acquired pursuant
thereto and Borrower shall have executed such documents and taken such actions
as may be required by Agent in connection therewith; (h) at the time of such
acquisition and after giving effect thereto, no Default or Event of Default has
occurred and is continuing; and (i) immediately after the consummation of such
acquisition and after giving effect thereto, Borrower shall have unrestricted
balance sheet cash and Cash Equivalents in one or more deposit accounts or
securities accounts over which Agent has obtained control under Section 7.10 of
not less than the product of (x) negative twelve (-12) times (y) the Cash Burn
Amount (as such term is defined in Section 7.12 below) based on pro forma
financial statements that are delivered to and approved by Agent and
Lenders.  “Tangible Net Worth” means, on any date, the consolidated
total assets of the Loan Parties and their Subsidiaries minus, (x) any
amounts attributable to (1) goodwill, (2) intangible items such as unamortized
debt discount and expense, patents, trade and service marks and names,
copyrights and research and development expenses except prepaid expenses, and
(3) reserves not already deducted from assets, and (y) the obligations that
should, under GAAP, be classified as liabilities on Borrower’s consolidated
balance sheet, including all Indebtedness.

     

    7.6. Restricted
Payments.  No Loan Party shall, and no Loan Party shall permit
any of its Subsidiaries to, (a) declare or pay any dividends (other than the
payment of dividends to Borrower and the payment of dividends of a Subsidiary of
a Loan Party (other than Borrower) to such Loan Party) or make any other
distribution or payment on account of or redeem, retire, defease or purchase any
of its capital stock (including without limitation any repurchase of any shares
of Olympus-Cytori, whether pursuant to Section 8.3 of the Shareholders Agreement
or otherwise), (b) purchase, redeem, defease or prepay any 

     

    
      
         

      

      
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    principal
of, premium, if any, interest or other amount payable in respect of any
Indebtedness prior to its scheduled maturity, (c) make any payment in respect of
management fees or consulting fees (or similar fees) to any equityholder or
other affiliate of Borrower, or (d) be a party to or bound by an agreement that
restricts a Subsidiary from paying dividends or otherwise distributing property
to Borrower; provided, however,
the foregoing shall not restrict: (i) the declaration or payment of dividends,
or the making of distributions, payable solely in Borrower’s capital stock, (ii)
the conversion of debt securities into capital stock, or (iii) the issuance of
capital stock upon the exercise or conversion of warrants or
options.

     

    7.7. Investments.  No
Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to,
directly or indirectly (a) acquire or own, or make any loan, advance or capital
contribution (an “Investment”) in or to
any person or entity, (b) acquire or create any Subsidiary (other than in
connection with an acquisition permitted under the terms and conditions of
Section 7.5), or (c) engage in any joint venture or partnership with any other
person or entity, other than: (i) Investments existing on the date hereof
and set forth on Schedule B to this
Agreement, (ii) Investments in cash and Cash Equivalents (as defined
below), (iii) cash Investments by Borrower in Olympus-Cytori in an aggregate
amount in any calendar year not to exceed $350,000 for the purpose paying
operating expenses of Olympus-Cytori in the ordinary course of its business,
(iv) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss; (v) acquisitions
permitted under the terms and conditions of Section 7.5, (vi) Investments by a
Loan Party in any other Loan Party; (vi) loans or advances to employees of
Borrower or any of its Subsidiaries to finance travel, entertainment and
relocation expenses and other ordinary business purposes in the ordinary course
of business as presently conducted, provided that the aggregate outstanding
principal amount of all loans and advances permitted pursuant to this clause
(vi) shall not exceed $100,000 at any time; (vii) Investments in joint ventures
or strategic alliances in the ordinary course of the Loan Parties’ business
consisting of the licensing of technology, the development of technology or the
providing of support, provided that (I) any cash Investments by the Loan Parties
do not exceed $100,000 in the aggregate in any fiscal year and (II) no Default
or Event of Default exists at the time of such Investment or would be caused
after giving effect thereto, and (viii) Investments pursuant to Borrower’s
investment policy attached hereto as Exhibit G (but not
any changes to such policy unless approved by Agent) (collectively, the “Permitted
Investments”).  The term “Cash Equivalents”
means (v) any readily-marketable securities (i) issued by, or directly,
unconditionally and fully guaranteed or insured by the United States federal
government or (ii) issued by any agency of the United States federal
government the obligations of which are fully backed by the full faith and
credit of the United States federal government, (w) any readily-marketable
direct obligations issued by any other agency of the United States federal
government, any state of the United States or any political subdivision of any
such state or any public instrumentality thereof, in each case having a rating
of at least “A-1” from S&P or at least “P-1” from Moody’s, (x) any
commercial paper rated at least “A-1” by S&P or
“P-1” by
Moody’s and issued by any entity organized under the laws of any state of the
United States, (y) any U.S. dollar-denominated time deposit, insured certificate
of deposit, overnight bank deposit or bankers’ acceptance issued or accepted by
(i) Agent or (ii) any commercial bank that is (A) organized under the laws
of the United States, any state thereof or the District of Columbia, (B)
“adequately capitalized” (as defined in the regulations of its primary federal
banking regulators) and (C) has Tier 1 capital (as defined in such regulations)
in excess of $250,000,000 or (z) shares of any United States money market fund
that (i) has substantially all of its assets invested continuously in the types
of investments referred to in clause (v), (w), (x) or (y) above with
maturities as set forth in the proviso below, (ii) has net assets in excess of
$500,000,000 and (iii) has obtained from either S&P or Moody’s the highest
rating obtainable for money market funds in the United States; provided, however, that the
maturities of all obligations specified in any of clauses (v), (w), (x) and (y) above shall not
exceed 365 days.  For the avoidance of doubt, “Cash Equivalents” does
not include (and each Loan Party is prohibited from purchasing or purchasing
participations in) any auction rate securities or other corporate 

     

    
      
         

      

      
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    or
municipal bonds with a long-term nominal maturity for which the interest rate is
reset through a Dutch auction.

     

    7.8. Transactions with
Affiliates.  No Loan Party shall, and no Loan Party shall
permit any of its Subsidiaries to, directly or indirectly enter into or permit
to exist any transaction with any Affiliate (as defined below) of a Loan Party
or any Subsidiary of a Loan Party except for (a) sales of equity securities of
Borrower in bona fide equity financings for the purpose of raising capital; (b)
Investments by a Loan Party in its Subsidiaries to the extent permitted under
Section 7.7; (c) transactions among Loan Parties; and (d) transactions that are
in the ordinary course of such Loan Party’s or such Subsidiary’s business, upon
fair and reasonable terms that are no more favorable to such Affiliate than
would be obtained in an arm’s length transaction.  As used herein,
“Affiliate”
means, with respect to a Loan Party or any Subsidiary of a Loan Party, (i) each
person that, directly or indirectly, owns or controls 5% or more of the stock or
membership interests having ordinary voting power in the election of directors
or managers of such Loan Party or such Subsidiary, and (ii) each person that
controls, is controlled by or is under common control with such Loan Party or
such Subsidiary.

     

    7.9. Compliance.  No Loan
Party shall, and no Loan Party shall permit any of its Subsidiaries to, (a) fail
to comply with the laws and regulations described in clauses (b) or (c) of
Section 5.8 herein, (b) use any portion of the Term Loans to purchase or carry
margin stock (within the meaning of Regulation U of the Federal Reserve Board)
or (c) fail to comply in any material respect with, or violate in any material
respect any other law or regulation applicable to it.

     

    7.10.  Deposit Accounts and Securities
Accounts.  No Loan Party shall directly or indirectly maintain
or establish any deposit account or securities account, unless Agent, the
applicable Loan Party or Loan Parties and the depository institution or
securities intermediary at which the account is or will be maintained enter into
a deposit account control agreement or securities account control agreement, as
the case may be, in form and substance satisfactory to Agent (an “Account Control
Agreement”) (which agreement shall provide, among other things, that (i)
such depository institution or securities intermediary has no rights of setoff
or recoupment or any other claim against such deposit or securities account
(except as agreed to by Agent), other than for payment of its service fees and
other charges directly related to the administration of such account and for
returned checks or other items of payment, and (ii) such depository institution
or securities intermediary shall comply with all instructions of Agent without
further consent of such Loan Party or Loan Parties, as applicable, including,
without limitation, an instruction by Agent to comply exclusively with
instructions of the Agent with respect to such account (such notice, a “Notice of Exclusive
Control”)), prior to or concurrently with the establishment of such
deposit account or securities account (or in the case of any such deposit
account or securities account maintained as of the date hereof, on or before the
Closing Date).  Agent may only give a Notice of Exclusive Control with
respect to any deposit account or securities account at any time at which an
Event of Default has occurred and is continuing.  Notwithstanding the
provisions of this Section 7.10, Borrower shall designate one or more dedicated
deposit accounts to be used exclusively for payroll or withholding tax purposes,
and such dedicated deposit accounts shall not be subject to any Account Control
Agreement.

     

    7.11.  Amendments to Other
Agreements.  No Loan Party shall amend, modify or waive any
provision of (a) any Material Agreement or (b) any of such Loan Party’s
organizational documents, in each case, without the prior written consent of
Agent and the Requisite Lenders unless the net effect of such amendment,
modification or waiver is not adverse to any Loan Party, Agent or
Lenders.

     

    7.12.  Financial
Covenants.

     

    (a) Borrower
shall at all times have unrestricted balance sheet cash and Cash Equivalents in
one or more deposit accounts or securities accounts over which Agent has
obtained 

     

    
      
         

      

      
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    control
under Section 7.10 of not less than the product of (i) negative three (-3) times
(ii) the Cash Burn Amount at such time; provided, however, that at the time of
requesting the Subsequent Term Loan and at all times after the advance of the
Subsequent Term Loan, Borrower shall at all times have unrestricted balance
sheet cash and Cash Equivalents in one or more deposit accounts or securities
accounts over which Agent has obtained control under Section 7.10 of not less
than the product of (i) negative six (-6) times (ii) the Cash Burn Amount at
such time.

     

    (b) Borrower
shall at all times have unrestricted balance sheet cash and Cash Equivalents in
one or more deposit accounts or securities accounts maintained with Silicon
Valley Bank and over which Agent has obtained control under Section 7.10 of not
less than $1,000,000; provided, that any
funds in such deposit or securities accounts maintained with Silicon Valley Bank
under this clause (b) shall be included for purposes of determining compliance
with clause (a) above.

     

    (c) As used
in this Agreement, “Cash Burn Amount”
means, with respect to Borrower and its consolidated Subsidiaries, as of any
date of determination and based on the financial statements most recently
delivered to Agent and the Lenders in accordance with this Agreement, the
difference between:

     

    (1) the
product of (i) the sum of, without duplication, (A) net income (loss), plus (B)
depreciation, amortization and other non-cash charges (excluding accruals for
cash expenses made in the ordinary course of business), minus (C) non-financed
capital expenditures, minus (D) non-cash revenue, in each case of clauses (A),
(B), (C) and (D), for the immediately preceding six month period on a trailing
basis, divided
by (ii) six,

     

    minus

     

    (2)             the
product of (i) the current portion of interest bearing liabilities due and
payable in the immediately succeeding six months divided by (ii)
six.

     

     

    
      	
              8.  

            	
              DEFAULT
      AND REMEDIES.

            


    

     

    8.1. Events of
Default.  Loan Parties shall be in default under this Agreement
and each of the other Debt Documents if (each of the following, an “Event of
Default”):

     

    (a) Borrower
shall fail to pay (i) any principal when due, or (ii) any interest, fees or
other Obligations (other than as specified in clause (i)) within a period of 3
days after the due date thereof (other than on any Applicable Term Loan Maturity
Date);

     

    (b) any Loan
Party breaches any of its obligations under Section 6.1 (solely as it relates to
maintaining its existence), Section 6.2, Section 6.3, Section 6.4 or
Article 7;

     

    (c) any Loan
Party breaches any of its other obligations under any of the Debt Documents and
fails to cure such breach within 30 days after the earlier of (i) the date on
which an executive officer (including, without limitation, a president, chief
executive officer, chief financial officer, secretary, vice president or general
counsel) of such Loan Party becomes aware, or through the exercise of reasonable
diligence should have become aware, of such failure and (ii) the date on which
notice shall have been given to Borrower from Agent;

     

    
      
         

      

      
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    (d) any
warranty, representation or statement made or deemed made by or on behalf of any
Loan Party in any of the Debt Documents in connection with any of the
Obligations shall be false or misleading in any material respect when made or
deemed made;

     

    (e) any of
the Collateral with a value, individually or in the aggregate, in excess of
$50,000 is subjected to attachment, execution, levy, seizure or confiscation in
any legal proceeding or otherwise, or if any legal or administrative proceeding
is commenced against any Loan Party or any of the Collateral, which subjects any
of the Collateral with a value, individually or in the aggregate, in excess of
$50,000 to a material risk of attachment, execution, levy, seizure or
confiscation and no bond is posted or protective order obtained to negate such
risk;

     

    (f) one or
more judgments, orders or decrees shall be rendered against any Loan Party or
any Subsidiary of a Loan Party that exceeds by more than $100,000 any insurance
coverage applicable thereto (to the extent the relevant insurer has been
notified of such claim and has not denied coverage therefor) and either (i)
enforcement proceedings shall have been commenced by any creditor upon any such
judgment, order or decree or (ii) such judgment, order or decree shall not have
been vacated or discharged for a period of 30 consecutive days and there shall
not be in effect (by reason of a pending appeal or otherwise) any stay of
enforcement thereof;

     

    (g) (i) any
Loan Party or any Subsidiary of a Loan Party shall generally not pay its debts
as such debts become due, shall admit in writing its inability to pay its debts
generally, shall make a general assignment for the benefit of creditors, or
shall cease doing business as a going concern, (ii) any proceeding shall be
instituted by or against any Loan Party or any Subsidiary of a Loan Party
seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, composition of
it or its debts or any similar order, in each case under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or seeking the
entry of an order for relief or the appointment of a custodian, receiver,
trustee, conservator, liquidating agent, liquidator, other similar official or
other official with similar powers, in each case for it or for any substantial
part of its property and, in the case of any such proceedings instituted against
(but not by or with the consent of) such Loan Party or such Subsidiary, either
such proceedings shall remain undismissed or unstayed for a period of
45 days or more or any action sought in such proceedings shall occur or
(iii) any Loan Party or any Subsidiary of a Loan Party shall take any corporate
or similar action or any other action to authorize any action described in clause (i) or (ii)
above;

     

    (h) a
Material Adverse Effect shall have occurred;

     

    (i) (i) any
provision of any Debt Document shall fail to be valid and binding on, or
enforceable against, a Loan Party party thereto, or (ii) any Debt Document
purporting to grant a security interest to secure any Obligation shall fail to
create a valid and enforceable security interest on any Collateral purported to
be covered thereby or such security interest shall fail or cease to be a
perfected Lien with the priority required in the relevant Debt Document, or any
Loan Party shall state in writing that any of the events described in clause (i) or (ii) above shall have
occurred;

     

    (j) (i) any
Loan Party or any Subsidiary of a Loan Party defaults under any Olympus
Agreement or any other Material Agreement (after any applicable grace period
contained therein), (ii) (A) any Loan Party or any Subsidiary of a Loan Party
fails to make (after any applicable grace period) any payment when due (whether
due because of scheduled maturity, required prepayment provisions, acceleration,
demand or otherwise) on any Indebtedness (other than the Obligations) of such
Loan Party or such Subsidiary having an aggregate principal 

     

    
      
         

      

      
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    amount
(including undrawn committed or available amounts and including amounts owing to
all creditors under any combined or syndicated credit arrangement) of more than
$300,000 (“Material
Indebtedness”), (B) any other event shall occur or condition shall exist
under any contractual obligation relating to any such Material Indebtedness, if
the effect of such event or condition is to accelerate, or to permit the
acceleration of (without regard to any subordination terms with respect
thereto), the maturity of such Material Indebtedness or (C) any such Material
Indebtedness shall become or be declared to be due and payable, or be required
to be prepaid, redeemed, defeased or repurchased (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof, or (iii)
Borrower or any Subsidiary defaults (beyond any applicable grace period) under
any obligation for payments due under any lease agreement that meets the
criteria for the requirement of an Access Agreement under Section 6.6;
or

     

    (k) (i) any of the chief executive officer, the
chief financial officer or the president of Borrower as of the date hereof shall
cease to be involved in the day to day operations (including, with respect to
the chief scientific officer, research development) or management of the
business of Borrower, and a successor of such officer reasonably acceptable to
the Requisite Lenders is not appointed on terms reasonably acceptable to the
Requisite Lenders within 120 days of such cessation or involvement, (ii) the
acquisition, directly or indirectly, by any person or group (as such term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934) of more
than thirty-five percent (35%) of the voting power of the voting stock of
Borrower by way of merger or consolidation or otherwise, (iii) during any period
of twelve consecutive calendar months, individuals who at the beginning of such
period constituted the board of directors of Borrower (together with any new
directors whose election by the board of directors of Borrower or whose
nomination for election by the stockholders of Borrower was approved by a vote
of at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office, or (iv)
Borrower ceases to own and control, directly or indirectly, all of the economic
and voting rights associated with the outstanding voting capital stock (or other
voting equity interest) of each of its Subsidiaries, other than in connection
with a transaction expressly permitted by the terms of this Agreement;
or

     

    (l) Any event shall occur whereby Olympus obtains
the right under Section 8.3 of the Shareholders Agreement or under any other
Olympus Agreement to require Borrower to purchase or sell any shares of
Olympus-Cytori.

     

    8.2. Lender
Remedies.  Upon the occurrence of any Event of Default, Agent
shall, at the written request of the Requisite Lenders, terminate the
Commitments with respect to further Term Loans and declare any or all of the
Obligations to be immediately due and payable, without demand or notice to any
Loan Party and the accelerated Obligations shall bear interest at the Default
Rate pursuant to Section 2.6, provided that, upon the occurrence of any Event of
Default specified in Section 8.1(g) above, the Commitments shall be
automatically terminated and the Obligations shall be automatically
accelerated.  After the occurrence of an Event of Default, Agent shall
have (on behalf of itself and Lenders) all of the rights and remedies of a
secured party under the UCC, and under any other applicable law; provided, however, that Agent
shall not commence the exercise of such rights and remedies (whether arising
under this Agreement or any other Debt Document) without the prior written
request of Requisite Lenders.  Upon the exercise of such rights and
remedies, Agent shall consult with and keep the Lenders informed thereof at
reasonable intervals; provided, however, that notwithstanding any such
consultations and provision of information to the Lenders, Agent shall retain
the right to make all determinations in the event of disagreements between Agent
and Lenders.  Without limiting the foregoing, (1) Agent shall have the
right to, and at the written request of the Requisite Lenders shall, (a) notify
any account debtor of any 

     

    
      
         

      

      
        -28-

        
          

        

      

      
         

      

    

     

    Loan
Party or any obligor on any instrument which constitutes part of the Collateral
of the security interest of the Agent in the same (for the benefit of itself and
Lenders) and (b) with or without legal process, enter any premises where the
Collateral may be and inspect the Collateral; and (2) Agent shall, at the
written request of the Required Lenders, (x) notify any account debtor of any
Loan Party or any obligor on any instrument which constitutes part of the
Collateral to make payments to Agent (for the benefit of itself and Lenders),
(y) sell the Collateral at public or private sale, in whole or in part, and have
the right to bid and purchase at such sale, and (z) lease or otherwise dispose
of all or part of the Collateral, applying proceeds from any such disposition to
the Obligations in accordance with Section 8.4.  If requested by
Agent, Loan Parties shall promptly assemble the Collateral and make it available
to Agent at a place to be designated by Agent.  Agent may also render
any or all of the Collateral unusable at a Loan Party’s premises and may dispose
of such Collateral on such premises without liability for rent or
costs.  Any notice that Agent is required to give to a Loan Party
under the UCC of the time and place of any public sale or the time after which
any private sale or other intended disposition of the Collateral is to be made
shall be deemed to constitute reasonable notice if such notice is given in
accordance with this Agreement at least 5 days prior to such
action.  Effective only upon the occurrence and during the continuance
of an Event of Default, each Loan Party hereby irrevocably appoints Agent (and
any of Agent’s designated officers or employees) as such Loan Party’s true and
lawful attorney to: (i) take any of the actions specified above in this
paragraph; (ii) endorse such Loan Party’s name on any checks or other forms of
payment or security that may come into Agent’s possession; (iii) settle and
adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Agent determines to be reasonable; and
(iv) do such other and further acts and deeds in the name of such Loan Party
that Agent may deem necessary or desirable to enforce its rights in or to any of
the Collateral or to perfect or better perfect Agent’s security interest (on
behalf of itself and Lenders) in any of the Collateral.  The
appointment of Agent as each Loan Party’s attorney in fact is a power coupled
with an interest and is irrevocable until the Termination Date. Notwithstanding
any provision of this Section 8.2 to the contrary, upon the occurrence of any
Event of Default, Agent shall have the right to exercise any and all remedies
referenced in this Section 8.2 without the written consent of Requisite Lenders
following the occurrence of an Exigent Circumstance.  As used in the
immediately preceding sentence, “Exigent Circumstance” means any event or
circumstance that, in the reasonable judgment of Agent, imminently threatens the
ability of Agent to realize upon all or any material portion of the Collateral,
such as, without limitation, fraudulent removal, concealment, or abscondment
thereof, destruction or material waste thereof, or failure of any Loan Party
after reasonable demand to maintain or reinstate adequate casualty insurance
coverage, or which, in the reasonable judgment of Agent, could result in a
material diminution in value of the Collateral.

     

    8.3. Additional Remedies. In
addition to the remedies provided in Section 8.2 above, each Loan Party hereby
grants to Agent (on behalf of itself and Lenders) and any transferee of
Collateral, solely for purposes of exercising its remedies as provided herein,
an irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to any Loan Party) to use, license or sublicense any
Intellectual Property now owned or hereafter acquired by such Loan Party, and
wherever the same may be located, and including in such license access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof.
Such license rights shall be exercisable only during the continuance of an Event
of Default and in any event shall terminate on the Termination
Date.

     

    8.4. Application of
Proceeds.

     

    (a)           Proceeds
from any Transfer of the Collateral, including, without limitation, the
Intellectual Property (other than Permitted Dispositions) and all payments made
to or proceeds of Collateral received by Agent during the continuance of an
Event of Default shall be applied as follows: (a) first, to pay all
fees, costs, indemnities, reimbursements and expenses then due to Agent under
the 

     

    
      
         

      

      
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    Debt
Documents in its capacity as Agent under the Debt Documents, (b) second, to pay all
fees, costs, indemnities, reimbursements and expenses then due to Lenders under
the Debt Documents in accordance with their respective Pro Rata Shares, until
paid in full, (c) third, to pay all
interest on the Term Loans then due to Lenders in accordance with their
respective Pro Rata Shares, until paid in full (other than interest accrued
after the commencement of any proceeding referred to in Section 8.1(g) if a
claim for such interest is not allowable in such proceeding), (d) fourth, to pay all
principal on the Term Loans then due to Lenders in accordance with their
respective Pro Rata Shares, until paid in full, (e) fifth, to pay all
other Obligations then due to Lenders in accordance with their respective Pro
Rata Shares, until paid in full (including, without limitation, all interest
accrued after the commencement of any proceeding referred to in Section 8.1(g)
whether or not a claim for such interest is allowable in such proceeding), (f)
sixth, to
Borrower or as otherwise required by law.  Borrower shall remain fully
liable for any deficiency.

     

    (b)           Notwithstanding
anything in Section 8.4(a) to the contrary, proceeds from the SVB Certificate of
Deposit shall first be retained by Silicon Valley Bank for application to the
SVB Cash Management Obligations in an amount not to exceed $250,000, and then
any remaining proceeds of the SVB Certificate of Deposit shall be delivered by
Silicon Valley Bank to Agent for application to the Obligations in the order set
forth in Section 8.4(a).

     

    
      	
              9.  

            	
              THE
      AGENT.

            


    

     

    9.1. Appointment of
Agent.

     

    (a) Each
Lender hereby appoints GECC (together with any successor Agent pursuant to Section 9.9) as
Agent under the Debt Documents and authorizes the Agent to (a) execute and
deliver the Debt Documents and accept delivery thereof on its behalf from Loan
Parties, (b) take such action on its behalf and to exercise all rights, powers
and remedies and perform the duties as are expressly delegated to the Agent
under such Debt Documents and (c) exercise such powers as are reasonably
incidental thereto.  The provisions of this Article 9 are solely for
the benefit of Agent and Lenders and none of Loan Parties nor any other person
shall have any rights as a third party beneficiary of any of the provisions
hereof.  In performing its functions and duties under this Agreement
and the other Debt Documents, Agent shall act solely as an agent of Lenders and
does not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Loan Party or any other
person.  Agent shall have no duties or responsibilities except for
those expressly set forth in this Agreement and the other Debt
Documents.  The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Debt Document or otherwise a fiduciary or trustee
relationship in respect of any Lender.  Except as expressly set forth
in this Agreement and the other Debt Documents, Agent shall not have any duty to
disclose, and shall not be liable for failure to disclose, any information
relating to Borrower or any of its Subsidiaries that is communicated to or
obtained by GECC or any of its affiliates in any
capacity.  

     

    (b) Without
limiting the generality of clause (a) above, Agent shall have the sole and
exclusive right and authority (to the exclusion of the Lenders), and is hereby
authorized, to (i) act as the disbursing and collecting agent for the
Lenders with respect to all payments and collections arising in connection with
the Debt Documents (including in any other bankruptcy, insolvency or similar
proceeding), and each person making any payment in connection with any Debt
Document to any Lender is hereby authorized to make such payment to Agent, (ii)
file and prove claims and file other documents necessary or desirable to allow
the claims of Agent and Lenders with respect to any Obligation in any proceeding
described in any bankruptcy, insolvency or similar proceeding (but not to vote,
consent or otherwise act on behalf of such Lender), (iii) act as collateral
agent for Agent and each Lender for purposes of the perfection of all Liens
created by 

     

    
      
         

      

      
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    the Debt
Documents and all other purposes stated therein, (iv) manage, supervise and
otherwise deal with the Collateral, (v) take such other action as is necessary
or desirable to maintain the perfection and priority of the Liens created or
purported to be created by the Debt Documents, (vi) except as may be otherwise
specified in any Debt Document, exercise all remedies given to Agent and the
other Lenders with respect to the Collateral, whether under the Debt Documents,
applicable law or otherwise and (vii) execute any amendment, consent or waiver
under the Debt Documents on behalf of any Lender that has consented in writing
to such amendment, consent or waiver; provided, however, that Agent
hereby appoints, authorizes and directs each Lender to act as collateral
sub-agent for Agent and the Lenders for purposes of the perfection of all Liens
with respect to the Collateral, including any deposit account maintained by a
Loan Party with, and cash and cash equivalents held by, such Lender, and may
further authorize and direct the Lenders to take further actions as collateral
sub-agents for purposes of enforcing such Liens or otherwise to transfer the
Collateral subject thereto to Agent, and each Lender hereby agrees to take such
further actions to the extent, and only to the extent, so authorized and
directed.  Agent may, upon any term or condition it specifies,
delegate or exercise any of its rights, powers and remedies under, and delegate
or perform any of its duties or any other action with respect to, any Debt
Document by or through any trustee, co-agent, employee, attorney-in-fact and any
other person (including any Lender).  Any such person shall benefit
from this Article 9 to the extent provided by Agent. For the avoidance of
doubt, Agent hereby acknowledges and agrees that, with respect to the UCC
Financing Statements numbered 11540256, 32447855, 32823626, 40960056, 41365453,
42812172, 60048330, 11540264 and 0156611, each naming Borrower as debtor and
previously filed by General Electric Capital Corporation in the office of the
Secretary of State of the State of Delaware, such UCC Financing Statements are
maintained by General Electric Capital Corporation in its capacity as Agent for
the perfection of the Liens granted to Agent, for the benefit of itself and
Lenders, under this Agreement.

     

    (c) If Agent
shall request instructions from Requisite Lenders or all affected Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Debt Document, then Agent shall be entitled to refrain
from such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders or all affected Lenders, as the case may be,
and Agent shall not incur liability to any person by reason of so
refraining.  Agent shall be fully justified in failing or refusing to
take any action hereunder or under any other Debt Document (a) if such action
would, in the opinion of Agent, be contrary to law or any Debt Document, (b) if
such action would, in the opinion of Agent, expose Agent to any potential
liability under any law, statute or regulation or (c) if Agent shall not first
be indemnified to its satisfaction against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.  Without limiting the foregoing, no Lender shall have any
right of action whatsoever against Agent as a result of Agent acting or
refraining from acting hereunder or under any other Debt Document in accordance
with the instructions of Requisite Lenders or all affected Lenders, as
applicable.

     

    9.2. Agent’s Reliance,
Etc.  Neither Agent nor any of its affiliates nor any of their
respective directors, officers, agents, employees or representatives shall be
liable for any action taken or omitted to be taken by it or them hereunder or
under any other Debt Documents, or in connection herewith or therewith, except
for damages caused by its or their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.  Without
limiting the generality of the foregoing, Agent:  (a) may treat the
payee of any Note as the holder thereof until such Note has been assigned in
accordance with Section 10.1; (b) may consult with legal counsel, independent
public accountants and other experts, whether or not selected by it, and shall
not be liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts; (c) shall
not be responsible or otherwise incur liability for any action or omission taken
in reliance upon the instructions 

     

    
      
         

      

      
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    of the
Requisite Lenders, (d) makes no warranty or representation to any Lender and
shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Debt
Documents; (e) shall not have any duty to inspect the Collateral (including the
books and records) or to ascertain or to inquire as to the performance or
observance of any provision of any Debt Document, whether any condition set
forth in any Debt Document is satisfied or waived, as to the financial condition
of any Loan Party or as to the existence or continuation or possible occurrence
or continuation of any Default or Event of Default and shall not be deemed to
have notice or knowledge of such occurrence or continuation unless it has
received a notice from Borrower or any Lender describing such Default or Event
of Default clearly labeled “notice of default”; (f) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability,
effectiveness, genuineness, sufficiency or value of, or the attachment,
perfection or priority of any Lien created or purported to be created under or
in connection with, any Debt Document or any other instrument or document
furnished pursuant hereto or thereto; and (g) shall incur no liability under or
in respect of this Agreement or the other Debt Documents by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent or otherwise authenticated by the proper party or parties.

     

    9.3. GECC and
Affiliates.  GECC shall have the same rights and powers under
this Agreement and the other Debt Documents as any other Lender and may exercise
the same as though it were not Agent; and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated, include GECC in its individual
capacity.  GECC and its affiliates may lend money to, invest in, and
generally engage in any kind of business with, Borrower, any of Borrower’s
Subsidiaries, any of their Affiliates and any person who may do business with or
own securities of Borrower, any of Borrower’s Subsidiaries or any such
Affiliate, all as if GECC were not Agent and without any duty to account
therefor to Lenders.  GECC and its affiliates may accept fees and
other consideration from Borrower for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.  Each
Lender acknowledges the potential conflict of interest between GECC as a Lender
holding disproportionate interests in the Term Loans and GECC as Agent, and
expressly consents to, and waives, any claim based upon, such conflict of
interest.

     

    9.4. Lender Credit
Decision.  Each Lender acknowledges that it has, independently
and without reliance upon Agent or any other Lender and based on the financial
statements referred to in Section 6.3 and such other documents and information
as it has deemed appropriate, made its own credit and financial analysis of each
Loan Party and its own decision to enter into this Agreement.  Each
Lender also acknowledges that it will, independently and without reliance upon
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement.  Each Lender
acknowledges the potential conflict of interest of each other Lender as a result
of Lenders holding disproportionate interests in the Term Loans, and expressly
consents to, and waives, any claim based upon, such conflict of
interest.

     

    9.5. Indemnification.  Lenders
shall and do hereby indemnify Agent (to the extent not reimbursed by Loan
Parties and without limiting the obligations of Loan Parties hereunder), ratably
according to their respective Pro Rata Shares from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of this Agreement or any other Debt Document or any action taken or
omitted to be taken by Agent in connection therewith; provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent’s gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Without limiting the foregoing,
each Lender agrees to reimburse Agent promptly upon demand for its Pro Rata
Share of any out-of-pocket expenses (including reasonable counsel fees)


     

    
      
         

      

      
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    incurred
by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Debt Document,
to the extent that Agent is not reimbursed for such expenses by Loan
Parties.  The provisions of this Section 9.5 shall survive the
termination of this Agreement.

     

    9.6. Successor
Agent.  Agent may resign at any time by giving not less than 30
days’ prior written notice thereof to Lenders and Borrower.  Upon any
such resignation, the Requisite Lenders shall have the right to appoint a
successor Agent.  If no successor Agent shall have been so appointed
by the Requisite Lenders and shall have accepted such appointment within 30 days
after the resigning Agent’s giving notice of resignation, then the resigning
Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a
Lender, if a Lender is willing to accept such appointment, or otherwise shall be
a commercial bank or financial institution or a subsidiary of a commercial bank
or financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof
and has a combined capital and surplus of at least $300,000,000.  If
no successor Agent has been appointed pursuant to the foregoing, within 30 days
after the date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Agent as provided above.  Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent.  Upon the earlier of the
acceptance of any appointment as Agent hereunder by a successor Agent or the
effective date of the resigning Agent’s resignation, the resigning Agent shall
be discharged from its duties and obligations under this Agreement and the other
Debt Documents, except that any indemnity rights or other rights in favor of
such resigning Agent shall continue.  After any resigning Agent’s
resignation hereunder, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was acting
as Agent under this Agreement and the other Debt
Documents.  

     

    9.7. Setoff and Sharing of
Payments.  In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default and subject to
Section 9.8(e), each Lender is hereby authorized at any time or from time to
time upon the direction of Agent, without notice to Borrower or any other
person, any such notice being hereby expressly waived, to offset and to
appropriate and to apply any and all balances held by it at any of its offices
for the account of Borrower (regardless of whether such balances are then due to
Borrower) and any other properties or assets at any time held or owing by that
Lender or that holder to or for the credit or for the account of Borrower
against and on account of any of the Obligations that are not paid when
due.  Any Lender exercising a right of setoff or otherwise receiving
any payment on account of the Obligations in excess of its Pro Rata Share
thereof shall purchase for cash (and the other Lenders or holders shall sell)
such participations in each such other Lender’s or holder’s Pro Rata Share of
the Obligations as would be necessary to cause such Lender to share the amount
so offset or otherwise received with each other Lender or holder in accordance
with their respective Pro Rata Shares of the Obligations.  Borrower
agrees, to the fullest extent permitted by law, that (a) any Lender may exercise
its right to offset with respect to amounts in excess of its Pro Rata Share of
the Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in the Term
Loans made or other Obligations held by other Lenders or holders may exercise
all rights of offset, bankers’ lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender or holder were a direct holder
of the Term Loans and the other Obligations in the amount of such
participation.  Notwithstanding the foregoing, if all or any portion
of the offset amount or payment otherwise received is thereafter recovered from
the Lender that has exercised the right of offset, the purchase of
participations by that Lender shall be rescinded and the purchase price restored
without interest.  The term “Pro Rata Share”
means, with respect to any Lender at 

     

    
      
         

      

      
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    any time,
the percentage obtained by dividing (x) the Commitment of such Lender then in
effect (or, if such Commitment is terminated, the aggregate outstanding
principal amount of the Term Loans owing to such Lender) by (y) the Total
Commitment then in effect (or, if the Total Commitment is terminated, the
outstanding principal amount of the Term Loans owing to all
Lenders).

     

    9.8. Advances;
Payments; Non-Funding Lenders; Information; Actions in Concert.

     

    (a) Advances;
Payments.  If Agent receives any payment for the account of
Lenders on or prior to 11:00 a.m. (New York time) on any Business Day, Agent
shall pay to each applicable Lender such Lender’s Pro Rata Share of such payment
on such Business Day. If Agent receives any payment for the account
of Lenders after 11:00 a.m. (New York time) on any Business Day, Agent
shall pay to each applicable Lender such Lender’s Pro Rata Share of such payment
on the next Business Day. To the extent that any Lender has failed to fund any
such payments and Term Loans (a “Non-Funding Lender”),
Agent shall be entitled to set off the funding short-fall against that
Non-Funding Lender’s Pro Rata Share of all payments received from
Borrower.

     

    (b) Return of
Payments.

     

    (i)  If Agent
pays an amount to a Lender under this Agreement in the belief or expectation
that a related payment has been or will be received by Agent from a Loan Party
and such related payment is not received by Agent, then Agent will be entitled
to recover such amount (including interest accruing on such amount at the
Federal Funds Rate for the first Business Day and thereafter, at the rate
otherwise applicable to such Obligation) from such Lender on demand without
setoff, counterclaim or deduction of any kind.

     

    (ii)  If Agent
determines at any time that any amount received by Agent under this Agreement
must be returned to a Loan Party or paid to any other person pursuant to any
insolvency law or otherwise, then, notwithstanding any other term or condition
of this Agreement or any other Debt Document, Agent will not be required to
distribute any portion thereof to any Lender.  In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to a Loan Party or such other person, without setoff,
counterclaim or deduction of any kind.

     

    (c) Non-Funding
Lenders.  The failure of any Non-Funding Lender to make any
Term Loan or any payment required by it hereunder shall not relieve any other
Lender (each such other Lender, an “Other Lender”) of its
obligations to make such Term Loan, but neither any Other Lender nor Agent shall
be responsible for the failure of any Non-Funding Lender to make a Term Loan or
make any other payment required hereunder.  Notwithstanding anything
set forth herein to the contrary, a Non-Funding Lender shall not have any voting
or consent rights under or with respect to any Debt Document or constitute a
“Lender” (or be included in the calculation of “Requisite Lender” hereunder) for
any voting or consent rights under or with respect to any Debt
Document.  At Borrower’s request, Agent or a person reasonably
acceptable to Agent shall have the right with Agent’s consent and in Agent’s
sole discretion (but shall have no obligation) to purchase from any Non-Funding
Lender, and each Non-Funding Lender agrees that it shall, at Agent’s request,
sell and assign to Agent or such person, all of the Commitments and all of the
outstanding Term Loans of that Non-Funding Lender for an amount equal to the
principal balance of all Term Loans held by such Non-Funding Lender and all
accrued interest and fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment Agreement
(as defined below).

     

    
      
         

      

      
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    (d) Dissemination of
Information.  Agent shall use reasonable efforts to provide
Lenders with any notice of Default or Event of Default received by Agent from,
or delivered by Agent to Borrower, with notice of any Event of Default of which
Agent has actually become aware and with notice of any action taken by Agent
following any Event of Default; provided that Agent
shall not be liable to any Lender for any failure to do so, except to the extent
that such failure is attributable to Agent’s gross negligence or willful
misconduct as finally determined by a court of competent
jurisdiction.  Lenders acknowledge that Borrower is required to
provide financial statements to Lenders in accordance with Section 6.3 hereto and agree that
Agent shall have no duty to provide the same to Lenders.

     

    (e) Actions in
Concert.  Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement, the Notes or any other Debt Documents (including exercising any
rights of setoff) without first obtaining the prior written consent of Agent and
Requisite Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the Notes shall be taken in
concert and at the direction or with the consent of Agent and Requisite
Lenders.

     

    
      	
              10.  

            	
              MISCELLANEOUS.

            


    

     

    10.1. 
Assignment.  Subject
to the terms of this Section 10.1, any Lender may make an assignment to an
assignee of, or sell participations in, at any time or times, the Debt
Documents, its Commitment, Term Loans or any portion thereof or interest
therein, including any Lender’s rights, title, interests, remedies, powers or
duties thereunder.  Any assignment by a Lender shall: (i) except in
the case of an assignment to a Qualified Assignee (as defined below), require
the consent of each Lender (which consent shall not be unreasonably withheld,
conditioned or delayed), (ii) require the execution of an assignment agreement
in form and substance reasonably satisfactory to, and acknowledged by, Agent (an
“Assignment
Agreement”); (iii) be conditioned on such assignee Lender representing to
the assigning Lender and Agent that it is purchasing the applicable Commitment
and/or Term Loans to be assigned to it for its own account, for investment
purposes and not with a view to the distribution thereof; (iv) be in an
aggregate amount of not less than $1,000,000, unless such assignment is made to
an existing Lender or an affiliate of an existing Lender or is of the assignor’s
(together with its affiliates’) entire interest of the Term Loans or is made
with the prior written consent of Agent; and (v) include a payment to Agent of
an assignment fee of $3,500.  In the case of an assignment by a Lender
under this Section 10.1, the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as all other Lenders
hereunder.  The assigning Lender shall be relieved of its obligations
hereunder with respect to its Commitment and Term Loans, as applicable, or
assigned portion thereof from and after the date of such
assignment.  Borrower hereby acknowledges and agrees that any
assignment shall give rise to a direct obligation of Borrower to the assignee
and that the assignee shall be considered to be a “Lender”.  In the
event any Lender assigns or otherwise transfers all or any part of the
Commitments and Obligations, Agent shall so notify Borrower and Borrower shall,
upon the request of Agent, execute new Notes in exchange for the Notes, if any,
being assigned.  Agent may amend Schedule A to this Agreement to
reflect assignments made in accordance with this Section.

     

    As used
herein, “Qualified
Assignee” means (a) any Lender and any affiliate of any Lender and (b)
any commercial bank, savings and loan association or savings bank or any other
entity which is an “accredited investor” (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses,
including insurance companies, mutual funds, lease financing companies and
commercial finance companies, in each case, which has a rating of BBB or higher
from S&P and a rating of Baa2 or higher from Moody's at the date that it
becomes a Lender and in each case of clauses (a) and (b), which, through its
applicable lending office, is capable of lending to Borrower without the


     

    
      
         

      

      
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    imposition
of any withholding or similar taxes; provided that (i) no
person proposed to become a Lender after the Closing Date and determined by
Agent to be acting in the capacity of a vulture fund or distressed debt
purchaser shall be a Qualified Assignee, (ii) no person or Affiliate of such
person proposed to become a Lender after the Closing Date and that holds any
subordinated debt or stock issued by Borrower shall be a Qualified Assignee and
(iii) no person proposed to become a Lender after the Closing Date and that is a
direct business competitor of a Loan Party shall be a Qualified Assignee so long
as no Default or Event of Default exists at the time of the proposed
assignment.

     

    10.2. 
Notices.  All
notices, requests or other communications given in connection with this
Agreement shall be in writing, shall be addressed to the parties at their
respective addresses set forth on the signature pages hereto below such parties’
name or in the most recent Assignment Agreement executed by any Lender (unless
and until a different address may be specified in a written notice to the other
party delivered in accordance with this Section), and shall be deemed
given  (a) on the date of receipt if delivered by hand, (b) on
the date of sender’s receipt of confirmation of proper transmission if sent by
facsimile transmission, (c) on the next Business Day after being sent by a
nationally-recognized overnight courier, and (d) on the fourth Business Day
after being sent by registered or certified mail, postage prepaid.  As
used herein, the term “Business Day” means
and includes any day other than Saturdays, Sundays, or other days on which
commercial banks in New York, New York are required or authorized to be
closed.

     

    10.3. 
Correction of Debt
Documents.  Agent may correct patent errors and fill in all
blanks in this Agreement or the Debt Documents consistent with the agreement of
the parties.

     

    10.4. 
Performance.  Time
is of the essence of this Agreement.  This Agreement shall be binding,
jointly and severally, upon all parties described as the “Borrower” and their
respective successors and assigns, and shall inure to the benefit of Agent,
Lenders, and their respective successors and assigns.

     

    10.5. 
Payment of Fees and
Expenses.  Loan Parties agree, jointly and severally, to pay or
reimburse upon demand for all reasonable fees, costs and expenses incurred by
Agent and Lenders in connection with (a) the investigation, preparation,
negotiation, execution, administration of, or any amendment, modification,
waiver or termination of, this Agreement or any other Debt Document, (b) the
administration of the Loans and the facilities hereunder and any other
transaction contemplated hereby or under the Debt Documents and (c) the
enforcement, assertion, defense or preservation of Agent’s and Lenders’ rights
and remedies under this Agreement or any other Debt Document, in each case of
clauses (a) through (c), including, without limitation, reasonable attorney’s
fees and expenses, the allocated cost of in-house legal counsel, reasonable fees
and expenses of consultants, auditors and appraisers and UCC and other corporate
search and filing fees and wire transfer fees.  Borrower further
agrees that such fees, costs and expenses shall constitute
Obligations.  This provision shall survive the termination of this
Agreement.

     

    10.6. 
Indemnity. Each Loan Party
shall and does hereby jointly and severally indemnify and defend Agent, Lenders,
and their respective successors and assigns, and their respective directors,
officers, employees, consultants, attorneys, agents and affiliates (each an
“Indemnitee”)
from and against all liabilities, losses, damages, expenses, penalties, claims,
actions and suits (including, without limitation, related reasonable attorneys’
fees and the allocated costs of in-house legal counsel) of any kind whatsoever
arising, directly or indirectly, which may be imposed on, incurred by or
asserted against such Indemnitee as a result of or in connection with this
Agreement, the other Debt Documents or any of the transactions contemplated
hereby or thereby (the “Indemnified
Liabilities”); provided that, no Loan Party shall have any obligation to
any Indemnitee with respect to any Indemnified Liabilities to the extent such
Indemnified Liabilities arise from the gross negligence or willful misconduct of
such Indemnitee as 

     

    
      
         

      

      
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    determined
by a final non-appealable judgment of a court of competent
jurisdiction.  This provision shall survive the termination of this
Agreement.

     

    10.7. 
Rights
Cumulative.  Agent’s and Lenders’ rights and remedies under
this Agreement or otherwise arising are cumulative and may be exercised
singularly or concurrently.  Neither the failure nor any delay on the
part of Agent or any Lender to exercise any right, power or privilege under this
Agreement shall operate as a waiver, nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise of that or
any other right, power or privilege.  NONE OF AGENT OR ANY LENDER
SHALL BE DEEMED TO HAVE WAIVED ANY OF ITS RESPECTIVE RIGHTS UNDER THIS AGREEMENT
OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER SIGNED BY BORROWER UNLESS SUCH
WAIVER IS EXPRESSED IN WRITING AND SIGNED BY AGENT, REQUISITE LENDERS OR ALL
LENDERS, AS APPLICABLE.  A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any future
occasion.

     

    10.8. 
Entire Agreement; Amendments,
Waivers.

     

    (a) This
Agreement and the other Debt Documents constitute the entire agreement between
the parties with respect to the subject matter hereof and thereof and supersede
all prior understandings (whether written, verbal or implied) with respect to
such subject matter.  Section headings contained in this Agreement
have been included for convenience only, and shall not affect the construction
or interpretation of this Agreement.

     

    (b) Except
for actions expressly permitted to be taken by Agent, no amendment,
modification, termination or waiver of any provision of this Agreement or any
other Debt Document, or any consent to any departure by Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Agent, Borrower and Lenders having more than (x) 50.1% of the aggregate
Commitments of all Lenders or (y) if such Commitments have expired or been
terminated, 50.1% of the aggregate outstanding principal amount of the Term
Loans (the “Requisite
Lenders”).  Except as set forth in clause (c) below, all such
amendments, modifications, terminations or waivers requiring the consent of any
Lenders shall require the written consent of Requisite Lenders.

     

    (c) No
amendment, modification, termination or waiver of any provision of this
Agreement or any other Debt Document shall, unless in writing and signed by
Borrower, Agent and each Lender directly affected thereby: (i) increase or
decrease any Commitment of any Lender or increase or decrease the Total
Commitment (which shall be deemed to affect all Lenders), (ii) reduce the
principal of or rate of interest on any Obligation or the amount of any fees
payable hereunder (other than waiving the imposition of the Default Rate), (iii)
postpone the date fixed for or waive any payment of principal of or interest on
any Term Loan, or any fees hereunder, (iv) release all or substantially all of
the Collateral, except as otherwise expressly permitted in the Debt Documents
(which shall be deemed to affect all Lenders), (v) subordinate the Lien granted
in favor of the Agent securing the Obligations (which shall be deemed to affect
all Lenders), (vi) release a Loan
Party from, or
consent to a Loan Party’s assignment or delegation of, such Loan Party’s
obligations hereunder and under the other Debt Documents or any Guarantor from
its guaranty of the Obligations (which shall be deemed
to affect all Lenders) or (vii) amend, modify, terminate or waive Section 8.4,
9.7 or 10.8(b) or (c).

     

    (d) Notwithstanding
any provision in this Section 10.8 to the contrary, no amendment, modification,
termination or waiver affecting or modifying the rights or obligations of Agent
hereunder shall be effective unless signed by Borrower, Agent and Requisite
Lenders.

     

    
      
         

      

      
        -37-

        
          

        

      

      
         

      

    

     

    (e) Each
Lender hereby consents to the release by Agent of any Lien held by the Agent for
the benefit of itself and the Lenders in any or all of the Collateral to secure
the Obligations upon the termination of the Commitments and the payment and
satisfaction in full of the Obligations.

     

    10.9. 
Binding
Effect.  This Agreement shall continue in full force and effect
until the Termination
Date; provided,
however, that the provisions of Sections 2.3(e), 9.5, 10.5 and 10.6 and the
other indemnities contained in the Debt Documents shall survive the Termination
Date.  The surrender, upon payment or otherwise, of any Note or any of
the other Debt Documents evidencing any of the Obligations shall not affect the
right of Agent to retain the Collateral for such other Obligations as may then
exist or as it may be reasonably contemplated will exist in the
future.  This Agreement and the grant of the security interest in the
Collateral pursuant to Section 3.1 shall automatically be reinstated if Agent or
any Lender is ever required to return or restore the payment of all or any
portion of the Obligations (all as though such payment had never been
made).

     

    10.10. Use of Logo.  Each
Loan Party authorizes Agent and the Lenders to use its name, logo and/or
trademark without notice to or consent by such Loan Party, in connection with
certain promotional materials that Agent or a Lender may disseminate to the
public.  The promotional materials may include, but are not limited
to, brochures, video tape, internet website, press releases, advertising in
newspaper and/or other periodicals, lucites, and any other materials relating
the fact that Agent or a Lender has a financing relationship with Borrower and
such materials may be developed, disseminated and used without Loan Parties’
review.  Nothing herein obligates Agent or any Lender to use a Loan
Party’s name, logo and/or trademark, in any promotional materials of Agent or
any Lender.  Loan Parties shall not, and shall not permit any of its
respective Affiliates to, issue any press release or other public disclosure
(other than any document filed with any governmental authority relating to a
public offering of the securities of Borrower) using the name, logo or otherwise
referring to General Electric Capital Corporation, GE Healthcare Financial
Services, Inc. or of any of their affiliates, the Debt Documents or any
transaction contemplated herein or therein without at least two (2) Business
Days prior written notice to and the prior written consent of Agent unless, and
only to the extent that, Loan Parties or such Affiliate is required to do so
under applicable law and then, only after consulting with Agent prior
thereto.

     

    10.11. Waiver of Jury
Trial.  EACH OF LOAN PARTIES, AGENT AND LENDERS UNCONDITIONALLY
WAIVE ANY AND ALL RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF
THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS AMONG LOAN PARTIES, AGENT AND/OR
LENDERS RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED
TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED AMONG LOAN
PARTIES, AGENT AND/OR LENDERS.  THE SCOPE OF THIS WAIVER IS INTENDED
TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT.
THIS WAIVER IS IRREVOCABLE.  THIS WAIVER MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING.  THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER
DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION.  THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     

    10.12. Governing Law. THIS
AGREEMENT, THE OTHER DEBT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICT OF 

     

    
      
         

      

      
        -38-

        
          

        

      

      
         

      

    

     

    LAWS
PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL; PROVIDED, HOWEVER,
THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK SHALL GOVERN IN REGARD
TO THE VALIDITY, PERFECTION OR EFFECT OF PERFECTION OF ANY LIEN OR IN REGARD TO
PROCEDURAL MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN COLLATERAL, SUCH LAWS
OF SUCH OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO THAT
EXTENT.  IF ANY ACTION ARISING OUT OF THIS AGREEMENT OR ANY OTHER DEBT
DOCUMENT IS COMMENCED BY AGENT IN THE STATE COURTS OF THE STATE OF NEW YORK IN
THE COUNTY OF NEW YORK OR IN THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK, EACH LOAN PARTY HEREBY CONSENTS TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH ACTION AND TO THE LAYING OF VENUE IN THE STATE OF NEW
YORK.  NOTWITHSTANDING THE FOREGOING, THE AGENT AND LENDERS SHALL HAVE
THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY LOAN PARTY (OR ANY
PROPERTY) IN THE COURT OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY
FOR THE OBLIGATIONS.  ANY PROCESS IN ANY SUCH ACTION SHALL BE DULY
SERVED IF MAILED BY REGISTERED MAIL, POSTAGE PREPAID, TO LOAN PARTIES AT THEIR
ADDRESS DESCRIBED IN SECTION 10.2, OR IF SERVED BY ANY OTHER MEANS PERMITTED BY
APPLICABLE LAW.

     

    10.13. Confidentiality.  Agent
and each Lender agrees, as to itself, to use commercially reasonable efforts
(equivalent to the efforts Agent or such Lender, as the case may be, applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all confidential information provided to it by Borrower, any
other Loan Party or any of their respective Subsidiaries, and designated as
confidential, except that Agent and Lenders may disclose such information (a) to
persons employed by, or professionals engaged by, Agent or a Lender (it being
understood that the persons to whom such disclosure is made will be informed of
the confidential nature of such information and instructed to keep such
information confidential); (b) to any bona fide assignee or participant or
potential assignee or participant that has agreed to comply with the covenant
contained in this Section 10.13 (and any such bona fide 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 governmental authority or reasonably
believed by Agent or any Lender to be compelled by any court decree, subpoena or
legal or administrative order or process, provided that Agent and each Lender
shall use reasonable efforts to provide prior written notice to the Loan Parties
of such disclosure, unless such notice is prohibited by applicable law or an
order of a governmental authority; (d) as, on the advice of Agent’s or such
Lender’s counsel, required by law; (e) in connection with the exercise of
any right or remedy under the Debt Documents or in connection with any
litigation to which Agent or such Lender is a party or bound that relates to
this Agreement, any other Debt Document or the transactions contemplated hereby
or thereby; or (f) that ceases to be confidential through no fault of Agent or
such Lender.

     

    10.14. Counterparts. This
Agreement may be executed in any number of counterparts and by different parties
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same agreement.  Delivery of an executed signature page of this
Agreement by facsimile transmission or electronic transmission shall be as
effective as delivery of a manually executed counterpart hereof.

     

    [Signature Page Follows]

     

    
      
         

      

      
        -39-

        
          

        

      

      
         

      

    

    



    


    IN WITNESS WHEREOF, each Loan
Party, Agent and Lenders, intending to be legally bound hereby, have duly
executed this Agreement in one or more counterparts, each of which shall be
deemed to be an original, as of the day and year first aforesaid.

     

    BORROWER:

    


    


    CYTORI
THERAPEUTICS, INC.

     

    By:  /s/ Mark E. Saad                                                                    

    Name: Mark E. Saad

    Title:  Chief Financial
Officer

     

     

    Address
For Notices For All Loan Parties:

     

    Cytori
Therapeutics, Inc.

    3020
Callan Road

    San
Diego, California  92121

    Attention:
Mark E. Saad

    Phone:
(858) 458-0900

    Facsimile:
(858) 450-4355

    


    With a
copy to:

    


    Cytori
Therapeutics, Inc.

    3020
Callan Road

    San
Diego, California  92121

    Attention:
In-House Counsel

    Phone:
(858) 458-0900

    Facsimile:
(858) 450-4335

     

    
      
         

      

      
        SIGNATURE
PAGE 1

        
          

        

      

      
         

      

    

    
 

    AGENT
AND LENDER:

    


    GENERAL
ELECTRIC CAPITAL CORPORATION

     

    By:   
 /s/ Peter
Gibson                                                                    

    Name: Peter Gibson

    Title: Duly Authorized
Signatory

    


     

    Address
For Notices:

     

    General
Electric Capital Corporation

    c/o GE
Healthcare Financial Services, Inc., LSF

    83
Wooster Heights Road, Fifth Floor

    Danbury,
Connecticut 06810

    Attention:
Senior Vice President of Risk

    Phone:
(203) 205-5200

    Facsimile:
(203) 205-2192

     

    With a
copy to:

    


    General
Electric Capital Corporation

    c/o GE
Healthcare Financial Services, Inc.

    Two
Bethesda Metro Center, Suite 600

    Bethesda,  Maryland  20814

    Attention:
General Counsel

    Phone:
(301) 961-1640

    Facsimile:  (301)
664-9866



    
      
         

      

      
        SIGNATURE
PAGE 2

        
          

        

      

      
         

      

    

     

    LENDER:

    


    SILICON
VALLEY BANK

     

    By:       /s/ Andre P. Pelletier                                                                    

    Name: Andre P. Pelletier

    Title: Senior Relationship
Manager

    


    Address
For Notices:

     

    4370 La
Jolla Village Drive, Ste. 860

    San
Diego, CA 92122

    Attention:
Sarah Larson

    Phone:
858-784-3308

    Facsimile:
858-622-1424

    


    


    
      
         

      

      
        SIGNATURE
PAGE 3