Document:

Exhibit 4(b)

                        SUB-INVESTMENT ADVISORY AGREEMENT

      AGREEMENT dated September 29, 2006, between BlackRock Advisors, LLC, a
Delaware limited liability corporation (the "Advisor"), and BlackRock
Institutional Management Corporation, a Delaware corporation (the
"Sub-Advisor").

      WHEREAS, the Advisor has agreed to furnish investment advisory services to
the Merrill Lynch U.S.A. Government Reserves, a Massachusetts business trust
(the "Trust"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act");

      WHEREAS, the Advisor wishes to retain the Sub-Advisor to provide it with
certain sub-advisory services as described below in connection with Advisor's
advisory activities on behalf of the Trust;

      WHEREAS, the advisory agreement between the Advisor and the Trust, dated
September 29, 2006 (such agreement or the most recent successor agreement
between such parties relating to advisory services to the Trust is referred to
herein as the "Advisory Agreement") contemplates that the Advisor may
sub-contract investment advisory services with respect to the Trust to a
sub-advisor pursuant to a sub-advisory agreement agreeable to the Trust and
approved in accordance with the provisions of the 1940 Act; and

      WHEREAS, this Agreement has been approved in accordance with the
provisions of the 1940 Act, and the Sub-Advisor is willing to furnish such
services upon the terms and conditions herein set forth;

      NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:

      1. Appointment. The Advisor hereby appoints the Sub-Advisor to act as
sub-advisor with respect to the Trust and the Sub-Advisor accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.

      2. Services of the Sub-Advisor. Subject to the succeeding provisions of
this section, the oversight and supervision of the Advisor and the direction and
control of the Trustees, the Sub-Advisor will perform certain of the day-to-day
operations of the Trust, which may include one or more of the following
services, at the request of the Advisor: (a) acting as investment advisor for
and managing the investment and reinvestment of those assets of the Trust as the
Advisor may from time to time request and in connection therewith have complete
discretion in purchasing and selling such securities and other assets for the
Trust and in voting, exercising consents and exercising all other rights
appertaining to such securities and other assets on behalf of the Trust; (b)
arranging, subject to the provisions of paragraph 3 hereof, for the purchase and
sale of securities and other assets of the Trust; (c) providing investment
research and credit analysis concerning the Trust's investments, (d) assisting
the Advisor in determining what portion of the Trust's assets will be invested
in cash, cash equivalents and money market instruments, (e) placing orders for
all purchases and sales of such investments made for the Trust, and (f)
maintaining the books and records as are required to support Trust investment
operations. At the request of the Advisor, the Sub-Advisor will also, subject to
the oversight and

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supervision of the Advisor and the direction and control of the Trust's Board of
Trustees, provide to the Advisor or the Trust any of the facilities and
equipment and perform any of the services described in Section 3 of the Advisory
Agreement. In addition, the Sub-Advisor will keep the Trust and the Advisor
informed of developments materially affecting the Trust and shall, on its own
initiative, furnish to the Trust from time to time whatever information the
Sub-Advisor believes appropriate for this purpose. The Sub-Advisor will
periodically communicate to the Advisor, at such times as the Advisor may
direct, information concerning the purchase and sale of securities for the
Trust, including: (a) the name of the issuer, (b) the amount of the purchase or
sale, (c) the name of the broker or dealer, if any, through which the purchase
or sale is effected, (d) the CUSIP number of the instrument, if any, and (e)
such other information as the Advisor may reasonably require for purposes of
fulfilling its obligations to the Trust under the Advisory Agreement. The
Sub-Advisor will provide the services rendered by it under this Agreement in
accordance with the Trust's investment objectives, policies and restrictions (as
currently in effect and as they may be amended or supplemented from time to
time) as stated in the Trust's Prospectus and Statement of Additional
Information and the resolutions of the Trust's Board of Trustees.

      3. Covenants. (a) In the performance of its duties under this Agreement,
the Sub-Advisor shall at all times conform to, and act in accordance with, any
requirements imposed by: (i) the provisions of the 1940 Act and the Investment
Advisers Act of 1940, as amended (the "Advisers Act") and all applicable Rules
and Regulations of the Securities and Exchange Commission (the "SEC"); (ii) any
other applicable provision of law; (iii) the provisions of the Declaration of
Trust and By-Laws of the Trust, as such documents are amended from time to time;
(iv) the investment objectives and policies of the Trust as set forth in the
Registration Statement on Form N-1A and/or the resolutions of the Board of
Trustees; and (v) any policies and determinations of the Board of the Trustees
of the Trust and

            (b) In addition, the Sub-Advisor will:

                  (i) place orders either directly with the issuer or with any
            broker or dealer. Subject to the other provisions of this paragraph,
            in placing orders with brokers and dealers, the Sub-Advisor will
            attempt to obtain the best price and the most favorable execution of
            its orders. In placing orders, the Sub-Advisor will consider the
            experience and skill of the firm's securities traders as well as the
            firm's financial responsibility and administrative efficiency.
            Consistent with this obligation, the Sub-Advisor may select brokers
            on the basis of the research, statistical and pricing services they
            provide to the Trust and other clients of the Advisor or the
            Sub-Advisor. Information and research received from such brokers
            will be in addition to, and not in lieu of, the services required to
            be performed by the Sub-Advisor hereunder. A commission paid to such
            brokers may be higher than that which another qualified broker would
            have charged for effecting the same transaction, provided that the
            Sub-Advisor determines in good faith that such commission is
            reasonable in terms either of the transaction or the overall
            responsibility of the Advisor and the Sub-Advisor to the Trust and
            their other clients and that the total commissions paid by the Trust
            will be reasonable in relation to the benefits to the Trust over the
            long-term. Subject to the foregoing and the provisions of the 1940
            Act, the Securities Exchange Act of 1934, as amended, and other
            applicable provisions of law, the Sub-Advisor may select brokers and
            dealers with which it or the Trust is affiliated;

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                  (ii) maintain books and records with respect to the Trust's
            securities transactions and will render to the Advisor and the
            Trust's Board of Trustees such periodic and special reports as they
            may request;

                  (iii) maintain a policy and practice of conducting its
            investment advisory services hereunder independently of the
            commercial banking operations of its affiliates. When the
            Sub-Advisor makes investment recommendations for the Trust, its
            investment advisory personnel will not inquire or take into
            consideration whether the issuer of securities proposed for purchase
            or sale for the Trust's account are customers of the commercial
            department of its affiliates; and

                  (iv) treat confidentially and as proprietary information of
            the Trust all records and other information relative to the Trust,
            and the Trust's prior, current or potential shareholders, and will
            not use such records and information for any purpose other than
            performance of its responsibilities and duties hereunder, except
            after prior notification to and approval in writing by the Trust,
            which approval shall not be unreasonably withheld and may not be
            withheld where the Sub-Advisor may be exposed to civil or criminal
            contempt proceedings for failure to comply, when requested to
            divulge such information by duly constituted authorities, or when so
            requested by the Trust.

      4. Services Not Exclusive. Nothing in this Agreement shall prevent the
Sub-Advisor or any officer, employee or other affiliate thereof from acting as
investment advisor for any other person, firm or corporation, or from engaging
in any other lawful activity, and shall not in any way limit or restrict the
Sub-Advisor or any of its officers, employees or agents from buying, selling or
trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that the
Sub-Advisor will undertake no activities which, in its judgment, will adversely
affect the performance of its obligations under this Agreement.

      5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Advisor hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request. The
Sub-Advisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act (to the extent such books and records are not maintained by the
Advisor).

      6. Expenses. During the term of this Agreement, the Sub-Advisor will bear
all costs and expenses of its employees and any overhead incurred by the
Sub-Advisor in connection with its duties hereunder; provided that the Board of
Trustees of the Trust may approve reimbursement to the Sub-Advisor of the
pro-rata portion of the salaries, bonuses, health insurance, retirement benefits
and all similar employment costs for the time spent on Trust operations
(including, without limitation, compliance matters) (other than the provision of
investment advice and administrative services required to be provided hereunder)
of all personnel employed by the Sub-Advisor who devote substantial time to
Trust operations or the operations of other investment companies advised or
sub-advised by the Sub-Advisor.

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      7. Compensation.

            (a) The Advisor agrees to pay to the Sub-Advisor and the Sub-Advisor
agrees to accept as full compensation for all services rendered by the
Sub-Advisor as such, a monthly fee in arrears at an annual rate equal to the
amount set forth in Schedule A hereto. For any period less than a month during
which this Agreement is in effect, the fee shall be prorated according to the
proportion which such period bears to a full month of 28, 29, 30 or 31 days, as
the case may be.

            (b) For purposes of this Agreement, the net assets of the Trust
shall be calculated pursuant to the procedures adopted by resolutions of the
Trustees of the Trust for calculating the value of the Trust's assets or
delegating such calculations to third parties.

      8. Indemnity.

            (a) The Trust may, in the discretion of the Board of Trustees of the
Trust, indemnify the Sub-Advisor, and each of the Sub-Advisor's directors,
officers, employees, agents, associates and controlling persons and the
directors, partners, members, officers, employees and agents thereof (including
any individual who serves at the Sub-Advisor's request as director, officer,
partner, member, trustee or the like of another entity) (each such person being
an "Indemnitee") against any liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees (all as provided in accordance with applicable state law) reasonably
incurred by such Indemnitee in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which such Indemnitee may be or may have
been involved as a party or otherwise or with which such Indemnitee may be or
may have been threatened, while acting in any capacity set forth herein or
thereafter by reason of such Indemnitee having acted in any such capacity,
except with respect to any matter as to which such Indemnitee shall have been
adjudicated not to have acted in good faith in the reasonable belief that such
Indemnitee's action was in the best interest of the Trust and furthermore, in
the case of any criminal proceeding, so long as such Indemnitee had no
reasonable cause to believe that the conduct was unlawful; provided, however,
that (1) no Indemnitee shall be indemnified hereunder against any liability to
the Trust or its shareholders or any expense of such Indemnitee arising by
reason of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence or
(iv) reckless disregard of the duties involved in the conduct of such
Indemnitee's position (the conduct referred to in such clauses (i) through (iv)
being sometimes referred to herein as "disabling conduct"), (2) as to any matter
disposed of by settlement or a compromise payment by such Indemnitee, pursuant
to a consent decree or otherwise, no indemnification either for said payment or
for any other expenses shall be provided unless there has been a determination
that such settlement or compromise is in the best interests of the Trust and
that such Indemnitee appears to have acted in good faith in the reasonable
belief that such Indemnitee's action was in the best interest of the Trust and
did not involve disabling conduct by such Indemnitee and (3) with respect to any
action, suit or other proceeding voluntarily prosecuted by any Indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such Indemnitee was authorized by a majority
of the full Board of Trustees of the Trust.

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<PAGE>

            (b) The Trust shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Trust receives a written affirmation of the Indemnitee's
good faith belief that the standard of conduct necessary for indemnification has
been met and a written undertaking to reimburse the Trust unless it is
subsequently determined that such Indemnitee is entitled to such indemnification
and if the Trustees of the Trust determine that the facts then known to them
would not preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the Indemnitee shall provide a security for such
Indemnitee's undertaking, (B) the Trust shall be insured against losses arising
by reason of any unlawful advance, or (C) a majority of a quorum consisting of
Trustees of the Trust who are neither "interested persons" of the Trust (as
defined in Section 2(a)(19) of the 1940 Act) nor parties to the proceeding
("Disinterested Non-Party Trustees") or an independent legal counsel in a
written opinion, shall determine, based on a review of readily available facts
(as opposed to a full trial-type inquiry), that there is reason to believe that
the Indemnitee ultimately will be found entitled to indemnification.

            (c) All determinations with respect to the standards for
indemnification hereunder shall be made (1) by a final decision on the merits by
a court or other body before whom the proceeding was brought that such
Indemnitee is not liable by reason of disabling conduct, or (2) in the absence
of such a decision, by (i) a majority vote of a quorum of the Disinterested
Non-Party Trustees of the Trust, or (ii) if such a quorum is not obtainable or
even, if obtainable, if a majority vote of such quorum so directs, independent
legal counsel in a written opinion. All determinations that advance payments in
connection with the expense of defending any proceeding shall be authorized
shall be made in accordance with the immediately preceding clause (2) above.

      The rights accruing to any Indemnitee under these provisions shall not
exclude any other right to which such Indemnitee may be lawfully entitled.

      9. Limitation on Liability.

            (a) The Sub-Advisor will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Advisor or by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its duties under this Agreement. As used in this Section
9(a), the term "Sub-Advisor" shall include any affiliates of the Sub-Advisor
performing services for the Fund contemplated hereby and partners, directors,
officers and employees of the Sub-Advisor and such affiliates.

            (b) Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto acknowledge and agree that, as provided in Section
5.1 of the Declaration of Trust, this Agreement is executed by the Trustees
and/or officers of the Fund, not individually but as such Trustees and/or
officers of the Fund, and the obligations hereunder are not binding upon any of
the Trustees or Shareholders individually but bind only the estate of the Fund.

      10. Duration and Termination. This Agreement shall become effective as of
the date hereof and, unless sooner terminated with respect to the Trust as
provided herein, shall continue in effect for a period of two years. Thereafter,
if not terminated, this Agreement shall continue in effect with respect to the
Trust for successive periods of 12 months, provided such continuance is

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specifically approved at least annually by both (a) the vote of a majority of
the Trust's Board of Trustees or a vote of a majority of the outstanding voting
securities of the Trust at the time outstanding and entitled to vote and (b) by
the vote of a majority of the Trustees, who are not parties to this Agreement or
interested persons (as such term is defined in the 1940 Act) of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Trust or
the Advisor at any time, without the payment of any penalty, upon giving the
Sub-Advisor 60 days' notice (which notice may be waived by the Sub-Advisor),
provided that such termination by the Trust or the Advisor shall be directed or
approved by the vote of a majority of the Trustees of the Trust in office at the
time or by the vote of the holders of a majority of the voting securities of the
Trust at the time outstanding and entitled to vote, or by the Sub-Advisor on 60
days' written notice (which notice may be waived by the Trust and the Advisor),
and will terminate automatically upon any termination of the Advisory Agreement
between the Trust and the Advisor. This Agreement will also immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)

      11. Notices. Any notice under this Agreement shall be in writing to the
other party at such address as the other party may designate from time to time
for the receipt of such notice and shall be deemed to be received on the earlier
of the date actually received or on the fourth day after the postmark if such
notice is mailed first class postage prepaid.

      12. Amendment of this Agreement. This Agreement may be amended by the
parties only if such amendment is specifically approved by the vote of the Board
of Trustees of the Trust, including a majority of those Trustees who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval and, where
required by the 1940 Act, by a vote of a majority of the outstanding voting
securities of the Trust.

      13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding on, and shall inure to the
benefit of the parties hereto and their respective successors.

      14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York for contracts to be performed
entirely therein without reference to choice of law principles thereof and in
accordance with the applicable provisions of the 1940 Act. To the extent that
the applicable laws of the State of New York, or any of the provisions, conflict
with the applicable provisions of the 1940 Act, the latter shall control.

      15. Counterparts. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original counterpart, and all
of which, together, shall constitute one Agreement.

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<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers designated below as of the day and
year first above written.

                                  BLACKROCK ADVISORS, LLC

                                  By:
                                     -------------------------------------------
                                     Name:  Donald C. Burke
                                     Title: Managing Director

                                  BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION

                                  By:
                                     -------------------------------------------
                                     Name:
                                     Title:

AGREED AND ACCEPTED
as of the date first set forth above

MERRILL LYNCH U.S.A. GOVERNMENT RESERVES

By:
   -------------------------------
   Name: Donald C. Burke
   Title: Vice President

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                                   Schedule A

                           Sub-Investment Advisory Fee

59% of the monthly advisory fee received by the Advisor from the Trust.Exhibit 10.1

 

Exhibit 10.1

AMENDMENT TO LOAN DOCUMENTS

     THIS AMENDMENT to Loan Documents (this “Amendment”) is entered into as of December 22, 2006
(the “December 2006 Amendment Date”), by and between SILICON VALLEY BANK, a California corporation
(“Bank”), and ENDOCARE, INC., a Delaware corporation (“Borrower”), whose chief executive office is
located at 201 Technology Drive, Irvine, California 92618.

Recitals

     A. Borrower and Bank are parties to that certain Loan and Security Agreement, with an
Effective Date of October 26, 2005 (as amended, restated, supplemented or otherwise modified from
time to time, the “Loan Agreement”).

     B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

     C. Borrower has requested that Bank amend the Loan Agreement to, among other things: (i)
modify the Borrowing Base, as set forth in Section 2.1 below; (ii) modify Phase I and Phase II, as
set forth in Section 2.2 below; (iii) add a concentration limit exception, as set forth in Section
2.3 below; (iv) modify the interest rate, as set forth in Section 2.4 below; (v) modify a certain
provision relative to collections, as set forth in Section 2.5 below; (v) waive the Designated TNW
Default identified, and as set forth, in Section 2.6 below; and (vii) modify the Tangible Net Worth
financial covenant, as set forth in Section 2.7 below; in each case, all as more fully set forth
herein.

     D. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the
extent, in accordance with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth below.

Agreement

     Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to
be legally bound, the parties hereto agree as follows:

     1. Definitions. Capitalized terms used but not defined in this Amendment shall have the
meanings given to them in the Loan Agreement. The term “December 2006 Amendment Date” as defined
in the preamble to this Amendment hereby is incorporated into the Loan Agreement.

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     2. Amendments to Loan Documents.

          2.1 Modification of Borrowing Base. The definition of “Borrowing Base” set forth in Section
13.1 of the Loan Agreement hereby is amended and restated in its entirety to read as follows:

    “Borrowing Base” is (a) 85% of Eligible Accounts (subject to the following
proviso, the “A/R Borrowing Base Component”), plus (b) the lesser of 30% (subject
to the following proviso) of the value of Borrower’s Eligible Inventory (valued at
the lower of cost or wholesale fair market value) or $500,000, as determined by
Bank from Borrower’s most recent Borrowing Base Certificate; provided, however,
that Bank may decrease the foregoing percentages in its good faith business
judgment based on events, conditions, contingencies, or risks which, as determined
by Bank, may adversely affect Collateral.

          2.2 Modification of Phase I and Phase II; Acknowledgment.

               (a) Section 1A of the Loan Agreement hereby is amended and restated in its entirety to read as
follows:

    1A. PHASE I AND PHASE II

    As used herein, the term “Phase I” means: (a) the period commencing on the
December 2006 Amendment Date and ending on the day immediately preceding (if ever)
the first date after the December 2006 Amendment Date on which Bank receives the
most recent Transaction Report under Section 6.2(a) (each such date, an “A/R
Borrowing Base Component Determination Date”) indicating that the sum of (i) the
aggregate amount of outstanding Advances, plus (ii) any and all reserves that the
Bank has placed against loan availability in accordance with the terms and
conditions of this Agreement, exceeds 50% of the then extant A/R Borrowing Base
Component (the “Revolver Usage Threshhold”); and (b) with respect to any Phase I
Reset Date, the period commencing on such Phase I Reset Date and ending on the day
immediately preceding (if ever) the first A/R Borrowing Base Component
Determination Date after such Phase I Reset Date that the sum of (i) the aggregate
amount of outstanding Advances, plus (ii) any and all reserves that the Bank has
placed against loan availability in accordance with the terms and conditions of
this Agreement, again exceeds the Revolver Usage Threshhold.

    As used herein, the term “Phase II” means: (a) the period commencing on the
first A/R Borrowing Base Component Determination Date (if ever) after the December
2006 Amendment Date that the sum of (i) the aggregate amount of outstanding
Advances, plus (ii) any and all reserves that the Bank has placed against loan
availability in accordance with the terms and conditions of this Agreement,
exceeds the Revolver

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Usage Threshhold (the “Initial Phase II Trigger Date”) and ending on the
first A/R Borrowing Base Component Determination Date (if ever) following 1 entire
calendar month after the Initial Phase II Trigger Date during which the sum of (i)
the aggregate amount of outstanding Advances, plus (ii) any and all reserves that
the Bank has placed against loan availability in accordance with the terms and
conditions of this Agreement, at all times does not exceed the Revolver Usage
Threshhold (such first A/R Borrowing Base Component Determination Date, the
“Initial Phase I Reset Date”); and (b) with respect to any Phase I Reset Date, the
period commencing on the first A/R Borrowing Base Component Determination Date (if
ever) after such Phase I Reset Date that the sum of (i) the aggregate amount of
outstanding Advances, plus (ii) any and all reserves that the Bank has placed
against loan availability in accordance with the terms and conditions of this
Agreement, again exceeds the Revolver Usage Threshhold (such first A/R Borrowing
Base Component Determination Date, a “Subsequent Phase II Trigger Date”) and
ending on the first A/R Borrowing Base Component Determination Date (if ever)
following 1 entire calendar month after such Subsequent Phase II Trigger Date
during which the sum of (i) the aggregate amount of outstanding Advances, plus
(ii) any and all reserves that the Bank has placed against loan availability in
accordance with the terms and conditions of this Agreement, at all times does not
exceed the Revolver Usage Threshhold (such first A/R Borrowing Base Component
Determination Date, a “Subsequent Phase I Reset Date”).

    As used herein, the term “Phase I Reset Date” means, individually and
collectively, the Initial Phase I Reset Date and any Subsequent Phase I Reset
Date.

    As used herein, the term “Phase II Trigger Date” means, individually and
collectively, the Initial Phase II Trigger Date and any Subsequent Phase II
Trigger Date.

          (b) Without limiting the generality of Section 3.2 below, Borrower and Bank hereby acknowledge
and agree that the as-modified definitions of “Phase I” and “Phase II” effected by Section 2(a)
above shall apply to the following provisions of the Loan Agreement (as applicable): Section 2.3(g)
[regarding float]; Section 2.4(e) [regarding collateral monitoring fee]; Section 6.2(a)(i)
[regarding Transaction Reports]; and Section 6.3(c) [regarding collections].

3

 

          2.3 Addition of Concentration Limit Exception. Clause (d) of the Minimum Eligibility
Requirements set forth within the definition of “Eligible Accounts” in Section 13.1 of the Loan
Agreement hereby is amended and restated in its entirety to read as follows:

    (d) Accounts with respect to an Account Debtor (including Affiliates thereof)
whose total obligations owing to Borrower exceed twenty-five percent (25%) of all
Accounts owing to Borrower from all Account Debtors (including Affiliates
thereof), to the extent of the obligations owing by such Account Debtor (including
Affiliates thereof) in excess of such percentage, unless Bank approves in writing;
provided, however, that in the case of the Account Debtor known as Advanced
Medical Partners, Inc. (including Affiliates thereof), the foregoing percentage
shall be thirty-five percent (35%) before the excess would be deemed ineligible
under this clause (d);

          2.4 Modification of Interest Rate. Section 2.3(a) of the Loan Agreement hereby is amended and
restated in its entirety to read as follows:

    (a) Interest Rate; Obligations. Subject to Section
2.3(b), the amounts outstanding under the Revolving Line and the Term Loan shall
accrue interest at a per annum rate equal to the Loan Margin above the Prime Rate,
which interest shall be payable monthly. As used herein, the term “Loan Margin”
means, as of any date of determination, 1.50 percentage points.

          2.5 Modification regarding Collections. Section 6.3(c) of the Loan Agreement hereby is
amended and restated in its entirety to read as follows:

    (c) Collection of Accounts. Borrower shall have the right to collect
all Accounts, unless and until a Default or an Event of Default has occurred and
is continuing. Whether or not an Event of Default has occurred and is continuing,
Borrower shall hold all payments on, and proceeds of, Accounts in trust for Bank,
and, at all times during Phase II or upon the occurrence and during the
continuation of a Default or an Event of Default (and without limitation of all
rights and remedies of Bank upon the occurrence and during the continuation of a
Default or an Event of Default), Borrower shall immediately deliver all such
payments and proceeds to Bank in their original form, duly endorsed, to be applied
to the Obligations pursuant to the terms of Section 9.4 hereof. Bank may, in its
good faith business judgment, require that all proceeds of Accounts be deposited
by Borrower into a lockbox account, or such other “blocked account” as Bank may
specify, pursuant to a blocked account agreement in such form as Bank may specify
in its good faith business judgment. At all times during Phase I, and so long as
no Default or Event of Default has occurred and is continuing, Borrower shall have
the right to maintain access to the proceeds and payments on Accounts in its
deposit accounts at Bank in the ordinary course of business and such payments and
proceeds
will not be applied, as a matter of course, to the outstanding Obligations as
would otherwise apply thereto under all other circumstances hereunder.

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          2.6 Limited Waiver of Designated TNW Default. Bank and Borrower hereby agree that the failure
of Borrower to comply with the Minimum Tangible Net Worth financial covenant required under Section
6.9(a) of the Loan Agreement (as in effect immediately prior to the effectiveness of this
Amendment) solely for the months ended September 30, 2006, October 31, 2006, and November 30, 2006,
respectively (individually and collectively, the “Designated TNW Default”) hereby is waived. It is
understood, however, that the foregoing waiver of the Designated TNW Default does not constitute a
waiver of the aforementioned covenant with respect to any other date or time period, or of any
other provision or term of the Loan Agreement or any other Loan Document, nor an agreement to waive
in the future such covenant with respect to any other date or time period or any other provision or
term of the Loan Agreement or any other Loan Document.

          2.7 Modification of Tangible Net Worth Financial Covenant. Section 6.9(a) of the Loan
Agreement hereby is amended and restated in its entirety to read as follows:

    (a) Tangible Net Worth. A Tangible Net Worth of at least the sum of
the following (the “Required TNW Amount”): (a) the TNW Base Amount (as defined
below), plus (b) 25% of all consideration received after September 30, 2006 for
issuances of Endocare’s equity securities and the principal amount of Subordinated
Debt of the Borrower, plus (c) 25% of the Endocare’s positive consolidated Net
Income in each fiscal quarter ending after September 30, 2006.

As used herein, the term “TNW Base Amount” means, as of any date of determination:

(a) $2,500,000 with respect to the month ending November 30, 2006;

(b) $2,500,000 with respect to the month ending December 31, 2006;

(c) $1,500,000 with respect to the month ending January 31, 2007; and

(d) $1,000,000 with respect to the month ending February 28, 2007.

5

 

Increases in the Required TNW Amount based on consideration received for equity
securities and Subordinated Debt of the Borrower shall be effective as of the end
of the month in which such consideration is received, and shall continue effective
thereafter. Increases in the Required TNW Amount based on Net Income shall be
effective on the last day of the fiscal quarter in which such Net Income is
realized, and shall continue effective thereafter. In no event (except for
step-downs ( if any) in the TNW Base Amount as expressly set forth in the
definition thereof) shall the Required TNW Amount be decreased from one fiscal
period to another subsequent fiscal period.

     3. Limitation of Amendments.

          3.1 The amendments set forth in Section 2, above, are effective for the purposes set forth
herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any
amendment, waiver or modification of any other term or condition of any Loan Document, or (b)
otherwise prejudice any right or remedy which Bank may now have or may have in the future under or
in connection with any Loan Document.

          3.2 This Amendment shall be construed in connection with and as part of the Loan Documents and
all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan
Documents, as amended hereby (as applicable), are hereby ratified and confirmed and shall remain in
full force and effect.

     4. Representations and Warranties. To induce Bank to enter into this Amendment, Borrower
hereby represents and warrants to Bank as follows:

          4.1 Immediately after giving effect to this Amendment (a) the representations and warranties
contained in the Loan Documents are true, accurate and complete in all material respects as of the
date hereof (except to the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) no Event of Default has occurred and
is continuing;

          4.2 Borrower has the power and authority to execute and deliver this Amendment and to perform
its obligations under the Loan Documents, as amended by this Amendment;

          4.3 The organizational documents of Borrower delivered to Bank on the Effective Date remain
true, accurate and complete and have not been amended, supplemented or restated and are and
continue to be in full force and effect;

          4.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower
of its obligations under the Loan Documents, as amended by this Amendment, have been duly
authorized;

6

 

          4.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower
of its obligations under the Loan Documents, as amended by this Amendment, do not and will not
contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual
restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d)
the organizational documents of Borrower;

          4.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower
of its obligations under the Loan Documents, as amended by this Amendment, do not require any
order, consent, approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or authority, or subdivision
thereof, binding on Borrower, except as already has been obtained or made; and

          4.7 This Amendment has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to or affecting
creditors’ rights.

     5. Fee. In consideration for Bank entering into this Amendment, Borrower shall pay Bank a fee
of $2,000 concurrently with the execution and delivery of this Amendment, which fee shall be
non-refundable and in addition to all interest and other fees payable to Bank under the Loan
Documents. Bank is authorized to charge said fee to Borrower’s loan account.

     6. Counterparts. This Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same instrument.

     7. Effectiveness. This Amendment shall be deemed effective upon the due execution and
delivery to Bank of this Amendment by each party hereto.

[Remainder of page intentionally left blank; signature page immediately follows.]

7

 

     In Witness Whereof, the parties hereto have caused this Amendment to be duly executed
and delivered as of the date first written above.

	 	 	 	 	 
	ENDOCARE, INC.	 	 
	 
	 	 	 	 
	By

	 	/s/ Michael R. Rodriguez	 	 
	 

	 	 	 	 
	Name:

	 	Michael R. Rodriguez	 	 
	 

	 	 	 	 
	Title:

	 	SVP, Finance & Chief Financial Officer	 	 
	 

	 	 	 	 

	 	 	 	 	 
	SILICON VALLEY BANK	 	 
	 
	 	 	 	 
	By

	 	/s/ Derek R. Brunelle	 	 
	 

	 	 	 	 
	Name:

	 	Derek R. Brunelle	 	 
	 

	 	 	 	 
	Title:

	 	Vice President	 	 
	 

	 	 	 	 

8

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