Document:

kodiak10k123107ex10-2.htm

    
      

      

    

    Kodiak Energy, Inc.

     

    EXHIBIT 10.2

    

    UNITED
STATES

    SECURITIES
AND EXCHANGE COMMISSION

    WASHINGTON,
D.C. 20549

    

    Division
of

    Corporate
Finance

    Mail Stop
7010

    

    
      	 
      	
              December
      12, 2007

            

    

    

    William
Tighe

    Chief
Executive Officer

    Kodiak
Energy, Inc.

    734
7th
Avenue S.W.

    Calgary,
Alberta, Canada T2P 3P8

    

    
      	
               
      

            	
              Re:

            	
              Kodiak
      Energy, Inc.

            

    

    Registration
Statement on Form SB-2

    Filed
November 13, 2007

    File No.
333-147325

    

    Annual
Report on Form 10-KSB

    Filed
April 4, 2007

    File No.
333-82434

    

    Dear Mr.
Tighe:

    

    We have
limited our review of the above filings to those issues we have addressed in our
comments. Where indicated, we think you should revise your document in response
to these comments. If you disagree, we will consider your explanation as to why
our response is inapplicable. Please be as detailed as necessary in your
explanation. In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After reviewing this
information, we may raise additional comments.

    

    Please
understand that the purpose of our review is to assist you in your compliance
with the applicable disclosure requirements and to enhance the overall
disclosure in your filings. We look forward to working with you in these
respects. We welcome any questions you may have about our comments or any other
aspect of our review. Feel free to contact us at the telephone numbers listed at
the end of this letter.

    

    Form SB-2 filed November 13,
2007

    

    
      	
              1)

            	
              Please
      update your financial statements and other financial
      discussion.  Refer to Rule 3-12 of Regulation
    S-X.

            

    

     

    
      	
              2)

            	
              We
      note your announcement that, effective December 3, 2007, Mark Hlady
      resigned from the position of chief executive officer and William Tighe
      became your chief executive officer.  Please update the
      disclosure throughout your filing to reflect such
  changes.

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    Compensation discussion and
analysis, page 33

     

    
      	
              3)

            	
              You
      state that Sicamous Oil & Gas Consultants, Ltd., a company owned by
      Mr. Tighe, is paid Cdn. $10,000 per month pursuant to a consulting
      agreement.  Section 3.1 of your agreement with Sicamous Oil
      & Gas Consultations, Ltd. (filed  as Exhibit 10.8 to your
      registration statement), provides for payment of $5,000 per month for
      services provided by Mr. Tighe during the term of such
      agreement.  Please reconcile this apparent
      inconsistency.

            

    

     

    Signatures

     

    
      	
              4)

            	
              Identify
      each person occupying more than one of the specified capacities, and make
      clear who is signing in the capacity of your principal accounting officer
      or controller.  See Instructions 1 and 2 to Signatures, Form
      SB-2.

            

    

     

    Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2006

     

    General

     

    
      	
              5)

            	
              It
      appears that your public float as of December 31, 2006, exceeded $25
      million.  Please tell us how you have evaluated whether you
      remain eligible to continue to use the Small Business Issuer
      forms.  Refer to Item 10(a)(2) of Regulation S-B for additional
      guidance.

            

    

     

    Business, page
3

     

    
      	
              6)

            	
              Please
      clarify whether you have proved reserves as defined by Rule 4-10(a) of
      Regulation S-X, as of September 30, 2007 and December 31,
      2006.  To the extent you do not have any proved reserves,
      address the following:

            

    

     

    
      	
               
      

            	
              ·

            	
              Revise
      your filing throughout to label yourself as an exploration-stage company,
      not a development stage company;

            

    

    

    
      	
               
      

            	
              ·

            	
              Revise
      the caption on your statements of operations to characterize revenues as
      income during the evaluation period, as the use of revenues implied that
      amounts are derived from a proved
property;

            

    

    

    
      	
               
      

            	
              ·

            	
              Disclose
      in the footnotes to the financial statements that you will begin recording
      revenue once it has been determined that you have proved reserves;
      and

            

    

    

    
      	
               
      

            	
              ·

            	
              Clarify
      on page 13 with regards to the Province/Granlea property whether that
      property had been evaluated in light of its production during
      2006.

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
              7)

            	
              We
      note the disclosure under this section indicating that you are a
      development stage oil and gas company with no assets and
      liabilities.  However, your balance sheet as of December 31,
      2006, indicated that you have assets and liabilities.  Revise
      the disclosure under this section to resolve this apparent
      inconsistency.

            

    

     

    Description of Property,
page 8

    

    
      	
              8)

            	
              Explain
      to us where you have provided disclosure responsive to each of the items
      identified in Industry Guide 2.

            

    

    

    Management’s Discussion and
Analysis or Plan of Operation, page 12

    

    Province/Granlea – Southeast
Alberta, page 13

    

    
      	
              9)

            	
              We
      note that a substantial increase in water rates resulted in the well being
      shut in until it is re-evaluated.  If there is a reasonable
      likelihood that a material impairment will be recorded upon the
      re-evaluation of the Province/Granlea wells, please expand your MD&A
      to describe the impact an impairment would have on your financial
      statements.  Refer to FRC 501.12.b for additional
      guidance.

            

    

    

    
      	
              10)

            	
              We
      note on page 28 that you recorded a writedown of approximately $1.4
      million as a result of application of the ceiling test.  Please
      expand your MD&A to describe the specific reasons or factors
      underlying the impairment.

            

    

    

    Financial Statements, page
16

    

    
      	
              11)

            	
              Please
      provide the disclosures set forth by SFAS 69 to extent
      applicable.  For any disclosures that you do not believe are
      applicable, explain to us the reasons why you believe they do not apply to
      you.

            

    

    

    Consolidated Balance Sheets,
page 17

    

    
      	
              12)

            	
              We
      note that you have recorded at December 31, 2006, accounts receivable for
      $685,975.  Please expand your footnotes to describe what
      comprises your accounts receivable.  Note that this comment also
      applies to corresponding amounts appearing in your financial statements
      for the subsequent interim period.

            

    

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Consolidated Statements of
Operations, page 19

    

    
      	
              13)

            	
              We
      note that you presented stock-based compensation as a separate
      caption.  Please present the compensation expense on your
      statements of operations using the function of the expense (for example,
      general and administrative expense or operating expense).  Refer
      to SAB topic 14:F for additional
guidance.

            

    

    

    
      	
              14)

            	
              We
      note that you included a ceiling test impairment together with depletion,
      depreciation and accretion expense.  Please separately present
      the impairment expense or re-label the caption to more accurately reflect
      the nature of the expenses.

            

    

    

    
      	
              15)

            	
              Please
      present earnings per share on the face of the income
      statement.  See paragraph 36 of SFAS 128 for additional
      guidance.

            

    

    

    Consolidated Statements of
Cash Flows, page 20

    

    
      	
              16)

            	
              We
      note that you classified changes in non-cash working capital as investing
      and financing activities.  Please tell us what changes comprise
      these line items and how their classifications as investing and financing
      activities is more appropriate than classification as either an operating
      activity or a non-cash investing and financing activity.  Tell
      us whether the amounts presented as changes in non-cash working capital
      represent gross or net amounts of related receipts and payments and how
      their presentation is consistent with the guidance of paragraph 11 to 13
      of SFAS 95.

            

    

    

    Notes to Consolidated
Financial Statements, page 21

    

    Note 1. Organization, Basis
of Presentation and Going Concern Uncertainty, page 21

    

    
      	
              17)

            	
              We
      note disclosure in the first paragraph indicating that your consolidated
      financial statements are presented in accordance with generally accepted
      accounting principles in the United States of America, except as outlined
      in Note 2, which discloses the nature of restatements of previously issued
      financial statements.  Please revise this disclosure to include
      a clear and unqualified statement as to whether your consolidated
      financial statements as presented are prepared in accordance with U.S.
      GAAP.

            

    

    

    
      	
              18)

            	
              We
      note that you changed your policy for accounting for oil and gas
      properties from the successful efforts method to the full cost
      method.  Please tell us whether you obtained and filed a
      preferability letter in connection with this change.  See
      Exhibit 18 under term 601 of Regulation S-B and SAB Topic
      12:C.1.

            

    

    

    Note 6.  Capital
Assets, page 27

    

    Unproved Properties, page
28

    

    
      	
              19)

            	
              We
      note that included in oil and gas properties are costs of $1,430,987
      related to unproven properties, which exceeds the net book value of oil
      and gas properties of $1,270,253 as of December 31,
      2006.  Please reconcile this difference, and revise the notes to
      your consolidated financial statements as appropriate.  State
      separately on the face of the balance sheet the aggregate of capitalized
      costs of unproved properties and major development projects that are
      excluded from the capitalized costs being
  amortized.

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
              20)

            	
              Please
      revise to provide the disclosures required by Rule 4-10(c)(7)(ii) of
      Regulation S-X, including:

            

    

    

    
      	
               
      

            	
              ·

            	
              A
      description of the current status of the significant unproven properties,
      including the anticipated timing of the inclusion of the associated costs
      in the amortization computation;
and

            

    

    

    
      	
               
      

            	
              ·

            	
              A
      table showing by categories the costs making up the unproven oil and gas
      properties account balance.

            

    

    

    
      	
              21)

            	
              We
      note that you recorded an impairment under the ceiling test during
      2006.  Please clarify for us whether the impairment pertained to
      proved or unproved properties.  Please expand your footnotes to
      describe in reasonable detail the circumstances that led to the
      impairment.

            

    

    

    
      	
              22)

            	
              Provide
      us a reasonably detailed discussion of the drilling activates you have
      conducted during the two most recent fiscal years and through the date of
      your response.  As part of your response, describe the timing,
      type, location, results and current status of each
  well

            

    

    

    Note
7.  Convertible Debt, page 28

    

    
      	
              23)

            	
              We
      note that you issued convertible debt in 2005 as compensation for services
      received.  Please explain to us how you considered the guidance
      in EITF 01-01 in accounting for the issuance of convertible debt pursuant
      to the stock for services compensation
plan.

            

    

    

    Note 9.  Share
Capital, page 29

    

    
      	
              24)

            	
              We
      note that you issued 7,500,000 common shares to a non-employee and
      determined the value based on the invoices rendered for the services
      provided.  Paragraph 7 of SFAS 123(R) requires that a company
      use the fair value of goods or services received if it is more reliably
      measurable than the fair value of the equity instruments
      issued.  Please tell us why you believe the fair value of the
      services received was more reliable than the fair value of the common
      shares issued.  We generally believe the fair value of common
      stock issued is a more reliable measure.  Refer to paragraph A7
      of AFAS 123(R) for additional
guidance.

            

    

    

    
      	
              25)

            	
              Please
      clarify in the last paragraph on page 30 the percentage of your issued and
      outstanding common shared that may be issued under your stock option
      plan.

            

    

    

    Note
10.  Stock-Based Compensation, page 31

    

    
      	
              26)

            	
              Please
      explain to us how you addressed the disclosure requirements set forth by
      paragraphs A240 of SFAS 123(R).

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Note 12.  Loss Per
Share, page 32

    

    
      	
              27)

            	
              Please
      revise your computation of basic and diluted loss per share to adjust
      retroactively for all periods presented to reflect your stock
      splits.  In addition, disclosure that that the per share
      computations reflect such changes in the number of
      shares.  Refer to paragraph 54 of SFAS 128 for additional
      guidance.

            

    

    

    Note 14.  Related
Party Transactions, page 33

    

    
      	
              28)

            	
              We
      note that your officers and directors purchased 10.2 million shares of
      common stock on December 22, 2005, for $0.02 per share.  We
      further note that 1 million common shares were purchased on December 30,
      2005, for $0.50 per share.  Please address the following related
      to these transactions:

            

    

     

    
      	
               
      

            	
              ·

            	
              Explain
      to us the reasons for the difference in the purchase price per share
      between the December 22,  2005 and the December 30, 2005
      subscriptions;

            

    

    

    
      	
               
      

            	
              ·

            	
              Tell
      us how you considered the guidance in paragraph 7 of SFAS 123(R) in which
      a share-based payment transaction with employees shall be measured based
      on the fair value the equity instruments issued;
  and,

            

    

    

    
      	
               
      

            	
              ·

            	
              Tell
      us how you determined the fair value of the common shares issued to your
      officers and directors as part of the December 22, 2005
      purchase.

            

    

     

    
      	
              29)

            	
              We
      note that you issued 2 million common shares in consideration for
      corporate development services rendered by a related party and that you
      valued the shares at a market price of $0.05 per share.  We
      further note on page 11 that your lowest stock price during 2006 was
      $0.375 per share.  Please tell us how you determined the fair
      value of the shares issued, and describe the accounting principles that
      you applied in recording the expense at a value other than the observable
      market price.

            

    

    

    Item 8A.  Controls
and Procedures, page 35

    

    
      	
              30)

            	
              We
      note your disclosure in your annual report and your quarterly reports for
      the quarters ended March 31, 2007, June 30, 2007 and September 30, 2007
      regarding your conclusion that your disclosure controls and procedure were
      effective as of the date of each such
filing.

            

    

    

    Please
revise your annual report and each quarterly report to disclose the conclusions
of your principal executive and provincial financial officers, or persons
performing similar functions, regarding the effectiveness of your disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as
of the end of the period covered by each such report, based on the evaluation of
the controls and procedures required by Rule 13a-15(b).  See Item 307
of Regulation S-B.  For example, the conclusions of your principal
executive and principal financial officer regarding the effectiveness of your
internal controls and procedures should be as of December 31, 2006.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
              31)

            	
              Please
      revise your annual report and your quarterly reports for the quarters
      ended March 31, 2007, June 30, 2007, and September 30, 2007 to provide the
      information required by Item 308(c) of Regulation
  S-B.

            

    

    

    Form 10-Q For the Fiscal
Quarter Ended September 30, 2007

    

    Unaudited Consolidated
Statements of Cash Flows, page 5

    

    
      	
              32)

            	
              Please
      disclose information about your non-cash investing and financing
      activities.  The disclosures may be either narrative or
      summarized in a schedule, and they should clearly relate the cash and
      non-cash aspects of transactions involving similar items.  Refer
      to paragraph 32 of SFAS 95 for additional
  guidance.

            

    

    

    Note 8.  Share
Capital, page 11

    

    
      	
              33)

            	
              We
      note in footnote (m) on page 13 that you purchased certain undeveloped oil
      and gas properties in Canada and the United States.  Please
      clarify whether the properties were proved or unproved based in the
      definitions found in Rule 4-10(a) of Regulation
  S-X.

            

    

    

    Management’s Discussions and
Analysis or Plan of Operation, page 19

    

    Southeast Alberta –
Manyberries, page 21

    

    
      	
              34)

            	
              We
      note that you will release nine sections of undeveloped properties back to
      Crown and abandon wells in the fourth quarter of 2007. Please describe for
      us how you considered this abandonment in applying your full cost ceiling
      test and evaluating unproved properties as of September 30,
      2007.  To the extent that an impairment is not necessary during
      the nine months ended September 30, 2007, provide indicative value as to
      the impact that the abandonment of the wells will have on your financial
      statements.

            

    

    

    Website

    

    
      	
              35)

            	
              If
      you retain links to the reports by SISM, you should make clear that you
      are paying $42,000 to SISM and that therefore it is not providing
      “independent coverage” notwithstanding the assertions in the reports to
      that effect.

            

    

    

    ***

    

    Closing
Comments

    

    As
appropriate, please amend your filings in response to these comments. You may
wish to provide us with marked copies of the amendments to expedite our review.
Please furnish a cover letter with your amendments that keys your responses to
our comments and provides any requested information. Detailed cover letters
greatly facilitate our review. Please understand that we may have additional
comments after reviewing your amendments and responses to our
comments.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    We urge
all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes all information required
under the Securities Act of 1933 and that they have provided all information
investors require for an informed investment decision. Since the company and its
management are in possession of all facts relating to a company’s disclosure,
they are responsible for the accuracy and adequacy of the disclosures they have
made.

    

    Notwithstanding
our comments, in the event the company requests acceleration of the effective
date of the pending registration statement, it should furnish a letter, at the
time of such request, acknowledging that:

    

    
      	
               
      

            	
              ·

            	
              should
      the Commission or the staff, acting pursuant to delegated authority,
      declare the filing effective, it does not foreclose the Commission from
      taking any action with respect to the
filing;

            

    

    

    
      	
               
      

            	
              ·

            	
              the
      action of the Commission or the staff, acting pursuant to delegated
      authority, in declaring the filing effective, does not relieve the company
      from its full responsibility for the adequacy and accuracy of the
      disclosure in the filing; and

            

    

    

     

    
      	
               
      

            	
              ·

            	
              the
      company may not assert staff comments and the declaration of effectiveness
      as a defense in any proceeding initiated by the Commission or any person
      under the federal securities laws of the United
  States.

            

    

    

    In
addition, please be advised that the Division of Enforcement has access to all
information you provide to the staff of the Division of Corporation Finance in
connection with our review of your filing or in response to our comments on your
filing.

    

    We will
consider a written request for acceleration of the effective date of the
registration statement as confirmation of the fact that those requesting
acceleration are aware of their respective responsibilities under the Securities
Act of 1933 and the Securities Exchange Act of 1934 as they relate to the
proposed public offering of the securities specified in the above registration
statement. We will act on the request and, pursuant to delegated authority,
grant acceleration of the effective date.

    

    We direct
your attention to Rules 460 and 461 regarding requesting acceleration of a
registration statement. Please allow adequate time after the filing of any
amendment for further review before submitting a request for acceleration.
Please provide this request at least two business days in advance of the
requested effective date.

    

    You may
contact Ryan Milne at (202) 551-3680 or Brad Skinner, Senior Assistant Chief
Accountant, at (202) 551-3489 if you have any questions regarding comments on
the financial statements and related matters. Please contact Laura Nicholson at
(202) 551-3584 or, in her absence, Timothy Levenberg, Special Counsel, at (202)
551-3707 with other questions.

    

    

    
      	 
      	
              Sincerely,

            
	 
      	 
      
	 
      	
              H.
      Roger Schwall

            
	 
      	
              Assistant
      Director

            

    

    

    
      	
              Cc:

            	
              B.
      Skinner

            

    

    R.
Milne

    T.
Levenberg

    L.
Nicholson

    

    via
facsimile

    Andrew
Hudders, Esq.

    (212)
754-0330Exhibit 10.1

 

EXECUTION VERSION

 

AMENDED AND RESTATED

 

SENIOR SUBORDINATED REVOLVING CREDIT AGREEMENT

 

BY AND BETWEEN

 

CLARIENT, INC.

 

AND

 

SAFEGUARD DELAWARE, INC.

 

DATED AS OF MARCH 14, 2008

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  LOANS TO BORROWER; ISSUANCE OF WARRANTS

  	
  6

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1. Advances

  	
  6

  
	
   

  	
  2.2. Use of
  Proceeds

  	
  7

  
	
   

  	
  2.3. Interest

  	
  7

  
	
   

  	
  2.4. Extension
  Interest

  	
  7

  
	
   

  	
  2.5. Payments

  	
  7

  
	
   

  	
  2.6. Manner of
  Payment

  	
  7

  
	
   

  	
  2.7. Prepayments

  	
  8

  
	
   

  	
  2.8. Issuance of
  Warrants

  	
  8

  
	
   

  	
   

  	
   

  
	
  3.

  	
  CLOSING; DELIVERIES; CONDITIONS TO ADVANCE

  	
  9

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1. Closing
  Date

  	
  9

  
	
   

  	
  3.2. Closing
  Deliveries and Actions

  	
  9

  
	
   

  	
  3.3. Conditions
  to Advance

  	
  10

  
	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND WARRANTIES OF BORROWER

  	
  10

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1.
  Organization and Qualification

  	
  10

  
	
   

  	
  4.2. Power and
  Authority

  	
  10

  
	
   

  	
  4.3.
  Subsidiaries and Affiliates

  	
  11

  
	
   

  	
  4.4.
  Capitalization

  	
  11

  
	
   

  	
  4.5.
  Authorization

  	
  11

  
	
   

  	
  4.6. No
  Violations or Conflicts

  	
  11

  
	
   

  	
  4.7. Consents
  and Approvals

  	
  12

  
	
   

  	
  4.8. Financial
  Statements; Disclosure

  	
  12

  
	
   

  	
  4.9. Absence of
  Changes

  	
  12

  
	
   

  	
  4.10. Litigation

  	
  13

  
	
   

  	
  4.11. Intellectual
  Property

  	
  13

  
	
   

  	
  4.12. Title to
  Assets, Properties and Rights

  	
  13

  
	
   

  	
  4.13. Compliance
  with Laws; Legal Requirements

  	
  14

  
	
   

  	
  4.14. Employees
  and Labor Matters

  	
  14

  
	
   

  	
  4.15. Brokers
  and Finders

  	
  15

  
	
   

  	
  4.16. Tax
  Matters

  	
  15

  
	
   

  	
  4.17. Books and
  Records

  	
  16

  
	
   

  	
  4.18. Offering
  Valid

  	
  16

  
	
   

  	
   

  	
   

  
	
  5.

  	
  COVENANTS

  	
  16

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1. Negative
  Covenants

  	
  16

  
	
   

  	
  5.2. Affirmative
  Covenants

  	
  17

  
	
   

  	
  5.3. Right of
  First Offer and Refusal

  	
  18

  

 

i

 

	
   

  	
  5.4. No
  Third-Party Rights

  	
  19

  
	
   

  	
  5.5. Replacement
  Capital Facility; Capital Transaction

  	
  19

  
	
   

  	
   

  	
   

  
	
  6.

  	
  SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
  AGREEMENTS, ETC

  	
  19

  
	
   

  	
   

  	
   

  
	
  7.

  	
  EVENTS OF DEFAULT; REMEDIES

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1. Events of
  Default

  	
  19

  
	
   

  	
  7.2. Remedies

  	
  20

  
	
   

  	
   

  	
   

  
	
  8.

  	
  MISCELLANEOUS

  	
  21

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1. Governing Law;
  Submission to Jurisdiction

  	
  21

  
	
   

  	
  8.2. Assignments;
  Successors; Third Party Rights

  	
  21

  
	
   

  	
  8.3. Entire
  Agreement; Amendment

  	
  21

  
	
   

  	
  8.4. Notices

  	
  21

  
	
   

  	
  8.5. Failure or
  Indulgence Not Waiver; Remedies Cumulative

  	
  22

  
	
   

  	
  8.6.
  Severability

  	
  22

  
	
   

  	
  8.7. Section
  Headings; Construction

  	
  23

  
	
   

  	
  8.8.
  Counterparts

  	
  23

  
	
   

  	
  8.9. Fees and
  Expenses

  	
  23

  
	
   

  	
  8.10.
  Reinstatement

  	
  23

  
	
   

  	
  8.11. Payment on
  Non-Business Days

  	
  23

  
	
   

  	
  8.12. Time of
  Day

  	
  23

  
	
   

  	
  8.13. WAIVER OF
  JURY TRIAL

  	
  24

  
	
   

  	
   

  	
   

  
	
  9.

  	
  LENDER REPRESENTATIONS

  	
  24

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1. Lender
  Representations. Lender represents and warrants to the Borrower as follows:

  	
  24

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of Note

  	
   

  
	
  Exhibit B

  	
  -

  	
  Form of Warrant

  	
   

  
	
  Exhibit C

  	
  -

  	
  Form of Borrowing Request

  	
   

  
	
  Exhibit D

  	
  -

  	
  Form of Registration Rights Agreement

  	
   

  
	
  Exhibit E

  	
  -

  	
  Form of Cash Projection Schedule

  	
   

  
					

 

ii

 

THIS INSTRUMENT AND
THE RIGHTS EVIDENCED HEREBY ARE SUBJECT TO THE TERMS OF THAT CERTAIN
SUBORDINATION AGREEMENT, MADE AS OF MARCH 7, 2007, BY AND BETWEEN  SAFEGUARD DELAWARE, INC., AND COMERICA BANK,
AND ACKNOWLEDGED BY CLARIENT, INC., AS AMENDED, RESTATED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, AND ANY TRANSFEREE BY ACCEPTANCE OF SUCH
TRANSFER AGREES TO BE BOUND BY THE TERMS THEREOF.

 

AMENDED AND RESTATED

 

SENIOR SUBORDINATED REVOLVING CREDIT AGREEMENT

 

THIS AMENDED AND RESTATED SENIOR SUBORDINATED
REVOLVING CREDIT AGREEMENT (this “Agreement”)
is made and entered into as of March 14, 2008, by and among CLARIENT, INC,
a Delaware corporation (“Borrower”),
and SAFEGUARD DELAWARE, INC., a Delaware corporation (the “Lender”).

 

RECITALS:

 

WHEREAS, Lender provided to Borrower a
subordinated revolving credit facility in the initial maximum aggregate
principal amount of twelve million dollars ($12,000,000), on the terms and
conditions set forth in that certain Senior Subordinated Revolving Credit
Agreement dated as of March 7, 2007 (the “Prior
Mezzanine Facility”); and

 

WHEREAS, Borrower has requested, and Lender
has agreed, to amend and restate the terms of the Prior Mezzanine Facility, to (among
other things) increase the maximum aggregate principal amount of the Commitment
to twenty-one million dollars ($21,000,000), as set forth herein.

 

NOW, THEREFORE, in consideration of the
premises and mutual covenants and obligations hereafter set forth and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:

 

1.                                      DEFINITIONS.

 

For purposes of this Agreement, the following terms shall have the
following meanings:

 

“A/R and Asset Security
Interests” has the meaning set forth in Section 5.5.

 

“Advance”
and “Advances” have the respective meanings set forth in
Section 2.1(a) hereof.

 

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

 

“Balance Sheet Date” has the
meaning set forth in Section 4.8 hereof.

 

“Balance Sheet” has the
meaning set forth in Section 4.8 hereof.

 

“Bankruptcy Law” has the
meaning set forth in Section 7.1(b) hereof.

 

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

 

“Borrowing Request” means the
form to be provided by Borrower to Lender in connection with each requested
Advance, which shall be in the form of Exhibit C attached hereto.

 

 

“Business Day” means any day
other than a Saturday, Sunday or legal holiday in the State of Delaware or the
State of California.

 

“Capital Transaction” means
the issuance of debt (including debt convertible to equity) or equity by
Borrower which results in net proceeds to Borrower of at least fifteen million
dollars ($15,000,000).

 

 “Capitalized
Lease” means, with respect to any Person, any lease of such
Person as lessee that, in accordance with GAAP, is required to be classified
and accounted for as a capital lease on a balance sheet of that Person.

 

“Capitalized Lease Obligation”
means, with respect to any Capitalized Lease of any Person, the amount of the
obligation of the lessee of such Capitalized Lease that , in accordance with
GAAP, would appear on a balance sheet of such lessee in respect of such
Capitalized Lease.

 

“Closing” has the meaning set
forth in Section 3.1 hereof.

 

“Closing Date” has the meaning
set forth in Section 3.1 hereof.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and the rules and
regulations promulgated thereunder.

 

“Comerica Agreement” means
that certain Amended and Restated Loan Agreement by and between Borrower and
Comerica Bank dated as of February 28, 2008, as amended through the date
hereof, and all documents, instruments and agreements executed and delivered in
connection therewith and amended through the date hereof, as the same may be
further amended from time to time, with the prior written consent of Lender,
which consent shall not be unreasonably withheld or delayed.

 

“Commitment”  means the maximum aggregate
principal amount  which may be borrowed
hereunder (inclusive of those amounts borrowed under the Prior Mezzanine
Facility), being, as of the date hereof, twenty-one million dollars
($21,000,000), as the same may be reduced from time to time pursuant to and in
accordance with Section 2.7 hereof.

 

“Commitment Fee Warrants” has
the meaning set forth in Section 2.8(a) hereof.

 

“Common Stock”  means the common stock, par value
$0.01, of Borrower.

 

“Continuance Fee Warrants” has
the meaning set forth in Section 2.8(b) hereof.

 

“Default” means an event,
condition, or circumstance the occurrence of which would, with the passage of
time, the giving of notice, or both, constitute an Event of Default.

 

“Encumbrances” means all
claims, liens, charges, security interests, pledges, mortgages, or other
restrictions or encumbrances.

 

“Environmental Laws” means any
and all applicable federal, state, local, and foreign laws and regulations
relating to the protection of human health and safety or emissions, discharge,
releases, threatened releases, removal, remediation, or abatement of
pollutants, contaminants, chemicals, or industrial, hazardous, or toxic
substances or wastes into or in the environment (including, without limitation,
air, surface water, ground water, or land) or otherwise used in connection with
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, hazardous or toxic
substances or wastes, as defined under such applicable laws.

 

2

 

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

 

“Event of Default” means an
event described in Section 7.1 hereof.

 

“Financial Statements” has the
meaning set forth in Section 4.8 hereof.

 

“GAAP” means United States
generally accepted accounting principles applied on a consistent basis.

 

“GE Capital” means General
Electric Capital Corporation, a Delaware corporation.

 

“GE Capital Facility”  means, collectively, (a) that
certain Loan and Security Agreement, dated as of September 29, 2006, by
and among Borrower, Clarient Diagnostic Services, Inc., CLRT Acquisition,
LLC,  and GE Capital; and (b) (i) that
certain Master Lease Agreement, dated as of June 23, 2004, by and between
ChromaVision Oncology Services, Inc. (predecessor to Clarient Diagnostic
Services, Inc., an affiliate of Borrower) and GE Capital, and (ii) that
certain Master Security Agreement, dated as of July 15, 2003, by and
between Borrower and GE Capital, and, in each case, all documents, instruments
and agreements executed and delivered in connection therewith and all as
amended through the date hereof, as the same may be further amended from time
to time, with the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed.

 

“Governmental Authority” means
any court or any federal, state, municipal, or other domestic or foreign
government or governmental or regulatory department, commission, board bureau,
agency, authority, or instrumentality.

 

“Guaranteed Obligations” means
as to any Person, without duplication, any obligation of such Person
guaranteeing, providing comfort or otherwise supporting any Indebtedness,
lease, dividend, or other obligation (“primary obligation”)
of any other Person in any matter; provided that the term Guaranteed
Obligations shall not include endorsements for collection or deposit in the
ordinary course of business.  The amount
of any Guaranteed Obligation at any time shall be deemed to be an amount equal
to the lesser at such time of (x) the stated or determinable amount of the
primary obligation in respect to which such Guaranteed Obligation is incurred
and (y) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Obligation, or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.

 

“Intangible Assets” means all
assets of Borrower which would be classified in accordance with GAAP as
intangible assets, including without limitation, all franchises, licenses,
permits, patents, patent applications, copyrights, trademarks, trade-names,
goodwill, experimental or organization expenses and other like intangibles, the
cash surrender value and other like intangibles of any life insurance policy,
treasury stock and unamortized debt discount.

 

“Indebtedness” of a Person
means at any date, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, or upon which interest payments
are customarily made, (c) all obligations of such Person to pay the
deferred purchase price of property or services incurred in the ordinary course
of business if the purchase price is due more than six (6) months from the
date the obligation in incurred, (d) all Capitalized Lease Obligations of
such Person, (e) the principal balance outstanding under any synthetic
lease, tax retention, operating lease, off-balance sheet loan or similar
off-balance sheet financing product, (f) all obligations of such Person to
purchase securities (or other property) which arise out of or 

 

3

 

in connection with the issuance or sale of the same or
substantially similar securities (or property), (g) 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, (h) all
equity securities of such Person subject to repurchase or redemption otherwise
than at the sole option of such Person, (i) all “earnouts”
and similar payment obligations of such Person, (j) all Indebtedness
secured by a Lien on any asset of such Person, whether or not such Indebtedness
if otherwise an obligation of such Person, (k) 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, (l) all
Guaranteed Obligations of such Person; and (m) all obligations of such
Person to trade creditors incurred in the ordinary course of business and more
than ninety (90) days past due.

 

“Intellectual Property”
has the meaning set forth in Section 4.11(a) hereof.

 

“Laws” has
the meaning set forth in Section 4.13 hereof.

 

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

 

“Licenses and Permits”
has the meaning set forth in Section 4.13(b) hereof.

 

“Liquidity
Event” means (a) the liquidation, dissolution or winding up
of Borrower, whether voluntary or involuntary, (b) a sale of all or
substantially all of the assets of Borrower, or (c) a merger or
acquisition of Borrower by another Person by means of any transaction or series
of related transactions (including any reorganization, merger or consolidation,
but specifically excluding any Capital Transaction) where following such
transaction or series of transactions Lender and/or its affiliated entities
will own a minority of the voting securities of Borrower or the surviving
entity in such transaction or series of transactions.  Notwithstanding the foregoing, a Liquidity
Event shall not be deemed to have occurred in the event that Lender and/or its
affiliates negotiate a stand-alone transfer of their respective equity
interests (or a portion thereof) in the Borrower to a third party without the
involvement of Borrower’s stockholders generally.

 

“Loan”
means, collectively, the aggregate amount of all Advances from time to time
outstanding hereunder.

 

“Loan Documents”
means this Agreement, the Note, the Warrants, the Subordination Agreements, and
any other agreements, documents, instruments and writings now or hereafter
existing, creating, evidencing, guarantying, securing or relating to any of the
liabilities of Borrower to Lender pursuant to and in connection with this
Agreement, together with all amendments, modifications, renewals or extensions
thereof.

 

“Material Adverse Effect”
means a material adverse change in, or a material adverse effect on, the
business, operations, properties, assets, liabilities, financial condition or
results of operations of Borrower and/or its Subsidiaries, taken as a whole, or
Borrower’s ability to perform its obligations under this Agreement, the Note or
the Warrants.

 

“Maturity Date”
means the earlier of (a) April 15, 2009 or (b) the occurrence of
a Liquidity Event.

 

“Note” means
that certain subordinated Amended and Restated Revolving Credit Note issued by
Borrower in favor of Lender pursuant to this Agreement, in the form of Exhibit A
hereto.

 

4

 

“Order”
means any order, execution, writ, injunction, judgment, decree, ruling,
assessment, or arbitration award.

 

“Outstanding Amounts”
means the aggregate principal amount of Indebtedness, plus interest thereon,
outstanding hereunder and under the Note on any date of determination.

 

“Permitted Liens” means (a) deposits
or pledges to secure obligations under workmen’s compensation, social security
or similar laws, or under unemployment insurance, (b) deposits or pledges
to secure bids, tenders, contracts (other than contracts for the payment of
money), leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of business, (c) mechanic’s,
workmen’s materialmen’s or other like Encumbrances attaching only to equipment
and real property arising in the ordinary course of business with respect to
obligations which are not due, or which are being contested in good faith by
appropriate proceedings which suspend the collection thereof and in respect of
which adequate reserves have been made in accordance with GAAP (provided that
such proceedings, do not in Lender’s reasonable discretion, involve any
substantial risk of the sale, loss or forfeiture of such property or assets or
any interest therein), (d) Liens set forth in Schedule 4.12(a), (e) Encumbrances
being contested in good faith, (f) Liens created or assumed in connection
with the financing or acquisition of capital assets in an aggregate principal
amount outstanding not greater than five hundred thousand dollars ($500,000) at
any time; provided that such liens secure only such assets acquired and do not
exceed the purchase price of the subject assets; (g) attachment or
judgment Encumbrances which individually or when aggregated with all other
attachments and judgments exceed by more than fifty thousand dollars ($50,000)
any insurance coverage applicable thereto (and as to which the insurance
company has acknowledged coverage in writing), subject to customary deductibles
and continue unsatisfied or unstayed for a period of ten (10) days, and (h) liens
in respect of the A/R and Asset Security Interests which are imposed pursuant
to the closing of a Replacement Credit Facility.

 

“Person” means any
individual, partnership, corporation, limited liability company, association,
joint stock company, trust, joint venture, unincorporated organization or
governmental entity or any department, agency, or political subdivision
thereof.

 

“Prior Facility Warrants”
has the meaning set forth in Section 2.8(c) hereof.

 

“Replacement Capital
Facility” means any credit facility (which may include an
accounts receivable and/or capital leasing debt facility) provided by a third
party, which may be secured by all or a portion of the Borrower’s assets.

 

“Required Consents”
has the meaning set forth in Section 4.7 hereof.

 

“Returns”
has the meaning set forth in Section 4.16 hereof.

 

“SEC”
means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.

 

“Securities”
has the meaning set forth in Section 9.1(a) hereof.

 

 “Securities Act”
means the Securities Act of 1933, as amended.

 

“Securities Laws” means the
Securities Act, the Securities Exchange Act of 1934, Sarbanes-Oxley and the
applicable accounting and auditing principles, rules, standards and practices
promulgated, approved or incorporated by the SEC or the Public Company
Accounting Oversight Board, as each of the foregoing may be amended and in
effect on any applicable date hereunder.

 

5

 

“Subordination
Agreements” means, collectively, (a) that certain
Subordination  Agreement dated as of March 7,
2007, by and among Borrower, Comerica Bank, and Lender (as such may be amended
from time to time) (the “Comerica/Safeguard
Subordination Agreement”); and (b)  any subordination
agreement with a third-party lender entered in connection with any Replacement
Capital Facility (and any refinancings thereof) (as such may be amended from
time to time).

 

“Subsidiary”
means any
corporation, company or partnership in which (i) any general partnership
interest or (ii) more than fifty percent (50%) of the stock or other units
of ownership which by the terms thereof has the ordinary voting power to elect
the Board of Directors, managers or trustees of the entity, at the time as of
which any determination is being made, is owned by Borrower, either directly or
through another Subsidiary.

 

“Tax” as used in
this Agreement, the term “Tax” means any of the Taxes and the term “Taxes” means, with respect to any
Person, (i) all applicable domestic and foreign income taxes (including
any tax on or based upon net income, or gross income, or income as specially
defined, or earnings, or profits, or selected items of income, earnings or
profits) and all applicable domestic and foreign gross receipts, sales, use, ad
valorem, transfer, franchise, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, environmental, property or
windfall profits taxes, alternative or add-on minimum taxes, customs duties or
other taxes, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts imposed
by any taxing authority (domestic or foreign) on such Person and (ii) any
liability for the payment of any amount of the type described in the
immediately preceding clause (i) as a result of being a “transferee”
(within the meaning of Section 6901 of the Code or any other applicable
law) of another Person or a member of an affiliated, consolidated or combined
group.

 

“Warrants”
means, collectively, the Commitment Fee Warrants, the Continuance Fee Warrants
and the Prior Facility Warrants.

 

2.                                      LOANS
TO BORROWER; ISSUANCE OF WARRANTS.

 

2.1.  Advances.

 

(a)           Generally.  Subject to the terms and conditions of this
Agreement and the Subordination Agreements, including without limitation
receipt of the deliveries specified in Section 3.2 and the other
conditions specified in Section 3.3, Lender shall advance funds to
Borrower (each such advance, individually, an “Advance”,
and all such advances, the “Advances”)
by wire transfer of immediately available funds via Federal Reserve System to:

 

	
   

  	
  Recipient Bank:

  	
   

  	
  Comerica
  Bank

  
	
   

  	
   

  	
   

  	
  11512
  El Camino Real

  
	
   

  	
   

  	
   

  	
  Suite 350B

  
	
   

  	
   

  	
   

  	
  San
  Diego, CA 92130

  
	
   

  	
   

  	
   

  	
  858
  509-2399

  
	
   

  	
   

  	
   

  	
  Contact
  – Hang Landrum

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ABA#:

  	
   

  	
  121137522

  
	
   

  	
  Account Name:

  	
   

  	
  Clarient, Inc.
  - Money Market

  
	
   

  	
  Account#:

  	
   

  	
  1892035252

  

 

6

 

(b)          Advance Procedures.

 

(i)            Subject
to and upon the terms and conditions of this Agreement, including without
limitation the conditions specified in Section 3.3, Borrower may request
an Advance, in a minimum principal amount of one million dollars ($1,000,000)
(or the total remaining Commitment, if less), up to an aggregate outstanding
amount for all Advances not to exceed the Commitment.  Subject to the terms and conditions of this
Agreement, amounts borrowed pursuant to this Section 2.1 may be repaid and
reborrowed at any time prior to the Maturity Date, at which time all Advances
then outstanding shall be immediately due and payable.

 

(ii)           Whenever Borrower desires an Advance, Borrower will notify
Lender by facsimile transmission or email no later than 2:00 p.m. Eastern
time, not less than two (2) Business Days prior to the Business Day on
which the Advance is to be funded.  Each
such notification shall be in the form of a Borrowing Request in substantially
the form of Exhibit C hereto. 
Lender shall wire the amount of Advances made under this Section 2.1(b) to
the wire address set forth in Section 2.1(a), or to such other wire
address as Borrower has advised Lender in writing in connection with such
Borrowing Request.

 

(c)           Advances
Under Prior Mezzanine Facility. 
Outstanding Amounts owed pursuant to (and as defined under) the Prior
Mezzanine Facility on the date hereof shall be and continue as Outstanding
Amounts under (and as defined under) the terms of this Agreement.

 

2.2.  Use of
Proceeds.  The
proceeds from the Note shall be used by Borrower to repay the GE Capital Facility
and for general working capital and budgeted capital expenditures and budgeted
business purposes as approved by Borrower’s Board of Directors from time to
time.

 

2.3.  Interest.  Interest shall accrue on the unpaid principal balance of each Advance
at the rate of twelve percent (12%) per annum, accruing daily.  Interest shall be capitalized quarterly, and
shall otherwise be payable in the manner provided in Section 2.5
below.  Interest shall be cumulative and
shall be calculated on the basis of a year of 365 or 366 days, for the actual
number of days elapsed.

 

2.4.  Extension
Interest.  If and to
the extent that any Outstanding Amounts remain at any time after June 30,
2008, Borrower shall pay to Lender as additional interest an amount equal to 1%
per annum of such Outstanding Amounts, accruing daily.

 

2.5.  Payments.

 

(a)           Principal Generally.  Subject to the terms and conditions of the
Subordination Agreements and to Section 7 and Section 2.7(b) hereof,
the Outstanding Amounts shall be due and payable on the Maturity Date.

 

(b)           Interest.  Subject to the terms and conditions of the Subordination Agreements, payments of
accrued interest on the principal balance outstanding hereunder from time to
time, shall be made (i) on the Maturity Date, and (ii) if earlier,
immediately upon receipt by the Borrower of any proceeds of any Capital
Transaction, together with accrued and unpaid fees and costs incurred by Lender
in connection with this Agreement and the transactions contemplated hereby.

 

2.6.  Manner
of Payment.  All
payments and prepayments of principal and interest shall be made by wire of
immediately available funds as directed by Lender pursuant to written
instructions provided to Borrower from time to time.  If any payment of principal or interest
required hereunder is due on a day that is not a Business Day, such payment
shall be due on the next succeeding Business Day, and such extension of time
shall be taken into account in calculating the amount of interest payable
hereunder.  All payments and prepayments shall be
credited first to accrued and unpaid interest, and then to the outstanding
principal amount of Advances.

 

7

 

2.7.  Prepayments.

 

(a)           Optional Prepayments. 
Subject to the terms and conditions of the Subordination Agreements,
Borrower
may prepay all or any portion of the outstanding principal balance due under
the Note and any interest accrued thereon, at any time and from time to time,
without premium or penalty, provided that Borrower shall have given Lender not
less than five (5) Business Days prior written notice of its intent to so
prepay, and the amount of such prepayment. 
Any such prepayment shall not reduce the Commitment unless so requested
in writing by Borrower.

 

(b)           Mandatory Prepayments and Reduction of Commitment.  Subject to the terms and
conditions of the Subordination Agreements:

 

(i)            Immediately upon the closing of a Replacement Capital Facility,
Borrower shall cause to be paid to Lender a one-time payment in an amount equal
to the portion of the Outstanding Amounts reflecting amounts paid by or on
behalf of Borrower to terminate the GE Capital Facility.

 

(ii)           Immediately upon the closing of a Capital Transaction, Borrower shall
cause to be paid to Lender a one-time payment of the Outstanding Amounts.  Upon such occurrence the Commitment shall be
immediately and irrevocably reduced to six million dollars ($6,000,000).

 

(iii)          Immediately upon the prepayment in full of amounts owed under the
Comerica Agreement, the GE Capital Facility and the Replacement Capital
Facility (if any),  all Outstanding Amounts
shall be paid in full.

 

(iv)          Immediately upon the consummation of a Liquidity Event (other than a
Capital Transaction), all amounts outstanding hereunder shall be paid in full
and the Commitment shall be immediately and irrevocably terminated.

 

2.8.  Issuance
of Warrants.

 

(a)           Commitment
Fee Warrants.  Borrower shall issue
to Lender warrants (such warrants, the “Commitment Fee Warrants”)
at the Closing in the form of Exhibit B attached hereto, to
purchase shares of Common Stock, exercisable in the sole discretion of the
holder thereof.  Such Warrants shall
entitle, but not obligate, the holder thereof to purchase one million five
hundred fifty thousand (1,550,000) shares of Common Stock of Borrower at an
exercise price of $.01 per share.

 

(b)           Continuance
Fee Warrants.  So long as the
Commitment has not been terminated, Borrower shall issue to Lender on each of May 1,
2008, July 1, 2008, September 1, 2008 and November 1, 2008, a
warrant (such warrants, the “Continuance Fee Warrants”),
in the form of Exhibit B attached hereto, to purchase shares of
Common Stock, exercisable in the sole discretion of the holder thereof.  Each such Continuance Fee Warrant shall
entitle, but not obligate, the holder thereof to purchase five hundred fifty
thousand (550,000) shares of Common Stock of Borrower, at an exercise price of
$.01 per share.  Notwithstanding the
foregoing, (i) in the event that, on or prior to the date the applicable
Continuance Fee Warrant is otherwise to be issued, the Commitment is reduced to
six million dollars ($6,000,000) and the mandatory prepayment has been paid as
provided in Section 2.7(b)(i), then Borrower shall not be obligated to
issue such Continuance Fee Warrant(s), and (ii) in the event that on or
prior to May 1, 2008, Borrower has closed on a Replacement Capital
Facility, then Borrower shall not be obligated to issue the May 1, 2008
Continuance Fee Warrant, irrespective of the size of the Commitment on such
date.

 

8

 

(c)           Prior
Mezzanine Facility Warrants. 
Borrower shall issue to Lender warrants (such warrants, the “Prior Facility Warrants”) at the
Closing in the form of Exhibit B attached hereto, to purchase
shares of Common Stock, exercisable in the sole discretion of the holder
thereof.  Such Warrants shall entitle,
but not obligate, the holder thereof to purchase ninety-three thousand seven
hundred fifty (93,750) shares of Common Stock of Borrower at an exercise price
of $.01 per share.

 

(d)           Registrable
Securities.  All of the Common Stock
issuable upon the exercise of the Warrants shall constitute Registrable
Securities under the Registration Rights Agreement between Borrower and Lender
dated as of even herewith in substantially the form attached hereto as Exhibit D.

 

3.                                      CLOSING;
DELIVERIES; CONDITIONS TO ADVANCE.

 

3.1.  Closing
Date.  The closing of this Agreement
(the “Closing”) is taking place on
the date hereof (“Closing Date”) and is being
held at the offices of Safeguard Scientifics, Inc., 435 Devon Park Drive,
Building 800, Wayne, Pennsylvania, contemporaneously with the execution of this
Agreement.

 

3.2.  Closing
Deliveries and Actions.  The
parties shall make the following deliveries and take the following actions at
the Closing:

 

(a)           Borrower
shall deliver or caused to be delivered to Lender (i) a counterpart of
this Agreement, (ii) the Note, (iii) the Commitment Fee Warrants, (iv) the
Prior Facility Warrants, and (v) a counterpart to the Registration Rights
Agreement, each fully executed;

 

(b)           Counsel
to Borrower shall deliver to Lender a legal opinion in form and substance
reasonably acceptable to Lender

 

(c)           Lender
shall deliver or caused to be delivered to Borrower a fully executed
counterpart to this Agreement and the Registration Rights Agreement;

 

(d)           Borrower
shall deliver a certificate, executed on behalf of Borrower by the Secretary
thereof, dated as of the Closing, certifying the incumbency of each of the
officers of Borrower executing this Agreement, and all other documents,
instruments or certificates to be executed and delivered by Borrower in
connection therewith, and attaching certified copies of (i) the
resolutions of a special committee of the Board of Directors of Borrower
approving this Agreement, the Warrants, and the other transactions contemplated
hereby, (ii) true, complete, and accurate copies of each of (x) the
Certificate of Incorporation of Borrower, certified by the Secretary of State
of the State of Delaware, and (y) the Bylaws of Borrower, each of which
remain in full force and effect, without modification, as of the date of the
Closing, and (iii) a certificate of good standing, issued by the Secretary
of State of the States of Delaware and California, certifying that Borrower is
in good standing, as of a recent date prior to the Closing, in each such
jurisdiction;

 

(e)           Borrower
shall deliver a certificate, executed on behalf of Borrower by the Chief
Financial Officer thereof, dated as of the Closing, certifying that financial
statements delivered at or before Closing pursuant to this Agreement have been
prepared in accordance with GAAP;

 

(f)            Borrower,
Lender and Comerica shall have amended the Safeguard/Comerica Subordination
Agreement to contemplate the transactions contemplated herein; and

 

9

 

(g)           Borrower,
Lender and Safeguard Scientifics (Delaware), Inc. shall have delivered a
fully executed Second Amendment to Amended and Restated Reimbursement and
Indemnity Agreement in the form previously agreed by the parties.

 

3.3.  Conditions
to Advance.  It shall be
a condition to Lender’s funding Advances hereunder on or after the Closing Date
that:

 

(a)           Borrower
shall have delivered to Lender a Borrowing Request;

 

(b)           Borrower
shall have delivered to Lender a certificate, executed on behalf of Borrower by
an officer thereof, dated as of the date of such proposed Advance, certifying
that that no Default or Event of Default has occurred and is continuing on the
date of such Advance or will be caused by such Advance (after giving effect to
the application of the proceeds of such Advance); and that each of Borrower’s
representations and warranties made herein and in the other Loan Documents
shall be true and correct in all material respects as if remade on the date of
such Advance, after giving effect to the application of the proceeds of such
Advance (unless they relate to a specific date, in which case they shall be
true and correct in all material respects on and as of such date).

 

(c)           All
amounts (including, without limitation, fees) required to have been paid
pursuant to this Agreement, the Note and the Warrants (to the extent same are
permitted to be paid pursuant to the terms and conditions of the Subordination
Agreements), shall have been paid.

 

4.                                      REPRESENTATIONS
AND WARRANTIES OF BORROWER.

 

Borrower represents and warrants to, and
covenants with, Lender, that the following representations and warranties are
true and correct in all material respects, as of the date hereof.

 

4.1.  Organization
and Qualification.  Borrower is
a corporation, duly organized, validly existing and in good standing under the
laws of the State of Delaware.  Each
Subsidiary has been duly formed and is validly existing under the laws of the
jurisdiction of its formation.  Borrower
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as presently conducted, and to enter into and
carry out the transactions contemplated by this Agreement and the other
transactions contemplated hereby.  Except
as set forth on Schedule 4.1, Borrower is duly licensed or qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the ownership of property or the conduct of its business
requires such licensing or qualification, except for failures to be so licensed
or qualified which, when taken together with all other such failures, to be so
licensed or qualified would not reasonably be expected to have a Material
Adverse Effect.  Borrower has made
available to Lender true, complete, and accurate copies of its respective
formation documents, each as amended to, and as in effect on, the date hereof,
and its respective organizational documents, minutes, corporate records and
stock register and transfer records.

 

4.2.  Power
and Authority.  Borrower
has all the requisite legal and other power and authority to execute and
deliver this Agreement and the other Loan Documents to which it is a party, to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder, including the issuance, sale and delivery
of the Note and the Warrants. Each of the Loan Documents to which Borrower is a
party constitutes a legal, valid and binding obligation of Borrower,
enforceable against Borrower, in accordance with its terms, except as may be
limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to or affecting the enforcement of
creditors’ rights generally and (b) the effect of rules of law
governing the availability of equitable remedies.

 

10

 

4.3.  Subsidiaries
and Affiliates.  Borrower
does not own or control, directly or indirectly, any equity interest or
investment in any corporation, association, partnership, joint venture, limited
liability company, or other form of business or similar entity except as set
forth on Schedule 4.3.

 

4.4.  Capitalization.

 

(a)           Except
as set forth on Schedule 4.4(a), the capitalization of Borrower is as
set forth in its most recent applicable filings with the SEC.

 

(b)           Except
as set forth in its most recent applicable filings with the SEC and the
Warrants, there are no outstanding, issued or authorized options, warrants,
purchase agreements, participation agreements, subscription rights, conversion
rights, exchange rights or other securities, contracts, arrangements,
understandings or commitments that could require Borrower to issue, sell or
otherwise cause to become outstanding any of their respective authorized but
unissued shares or any securities convertible into, exchangeable for or
carrying a right or option to purchase any share, or to create, authorize,
issue, sell or otherwise cause to become outstanding any new class of stock.  Except for the Warrants and this Agreement,
there are no outstanding stockholders’ agreements, registration rights
agreements, or rights of first refusal pertaining to the shares of Borrower.
None of the issued and outstanding shares of Common Stock of Borrower have been
issued in violation of any rights of any Person or in violation of the
registration requirements of any applicable securities law.

 

(c)           All
shares and other securities issued by Borrower prior to the date hereof have
been issued in accordance with the requirements of the Securities Act, or in
transactions exempt from registration under the Securities Act, all applicable
state securities or “blue sky” laws, and any similar law, rule or
regulation of any other jurisdiction. 
Borrower has complied in all material respects with all applicable
provisions of the Securities Act, any applicable state securities or “blue sky”
laws, or any similar law, rule or regulation of any other jurisdiction in
connection with the issuance of any shares or other securities prior to the
date hereof.

 

4.5.  Authorization.

 

(a)           The
execution and delivery by Borrower of this Agreement and the other Loan
Documents to which it is a party, and the performance of its obligations
hereunder and thereunder, as applicable, have been duly authorized by all
requisite corporate action on the part of Borrower, and no further
authorization on the part of Borrower, its Board of Directors and stockholders
is necessary to authorize such execution, delivery and performance.

 

(b)           The
issuance, sale and delivery of the Warrants and the Note have been duly
authorized by all requisite corporate action on the part of Borrower and when
issued, sold and delivered in accordance with this Agreement, will be duly and
validly issued and outstanding and not subject to preemptive or any other
similar rights of the stockholders of Borrower or others.

 

4.6.  No
Violations or Conflicts.  The
execution and delivery of this Agreement and the other Loan Documents by
Borrower and the performance by it of its obligations hereunder and thereunder
do not and will not (a) violate any provision of law, statute, rule or
regulation, or any Order of any court, administrative agency or other
governmental body applicable to Borrower or any of its properties or assets, as
applicable; (b) except as set forth on Schedules 4.7 and 4.8(b),
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default (or an event which with notice or lapse
of time or both would become a default) or give rise to any right of
termination, cancellation or acceleration under or result in the creation of
any Encumbrances upon any of the properties or assets of Borrower under, (i) Borrower’s
organizational documents, or (ii) any note, 

 

11

 

indenture, mortgage, lease agreement, permit,
license, grant of authority or other contract, agreement or instrument to which
Borrower is a party or by which Borrower or any of its properties is bound or
affected, except where any such violation, conflict, breach or suspension
described in this subsection would not, individually or in the aggregate,
result in a Material Adverse Effect.

 

4.7.  Consents
and Approvals.  Except as
set forth on Schedule 4.7 (collectively, the “Required
Consents”), and except for filings required by applicable
securities laws, no consent, approval or authorization of, or declaration to or
filing or registration with, any Governmental Authority or other Person, is
required to be made or obtained by Borrower in connection with the valid
execution, delivery and performance of this Agreement and the other Loan
Documents, including the issuance, sale and delivery of the Warrants and the
shares issuable thereunder.

 

4.8.  Financial
Statements; Disclosure.

 

(a)           Borrower
has delivered to Lender true, complete and correct copies of the consolidated
balance sheet (“Balance Sheet”) of Borrower
as of December 31, 2007 (“Balance Sheet Date”)
and the related statements of operations and cash flows for the fiscal year
then ended (the “Financial Statements”).  Except as set forth on Schedule 4.8(a),
the unaudited Financial Statements fairly and accurately present in all
material respects the financial position, liabilities and obligations and the
results of operations as of the dates and for the periods indicated, and in
accordance with GAAP, subject to adjustments. 
Except as disclosed on the Balance Sheet or the Financial Statements or
on Schedule 4.8(a), as of the Balance Sheet Date and the date hereof (x) Borrower
has had no or has no liabilities (whether matured or unmatured, fixed or
contingent, liquidated or unliquidated or otherwise), or obligations, except as
may have been incurred in the ordinary course of business following the Balance
Sheet Date, and (y) Borrower had or has reserved or disclosed all
liability reserves that are required to be reserved or disclosed in accordance
with GAAP.

 

(b)           None
of the information (financial or otherwise) furnished by or on behalf of
Borrower to Lender hereunder or in connection with the Loan Documents or any of
the transactions contemplated hereby or thereby contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in the light of the
circumstances under which such statements were made.  Except as set forth on Schedule 4.8(b),
to the knowledge of Borrower, there are no facts that could result,
individually or in the aggregate, in a Material Adverse Effect and have not
been set forth in this Agreement, the other Loan Documents, or in other
documents delivered to Lender in connection herewith.

 

4.9.  Absence
of Changes.  Except as
set forth on Schedule 4.9, since the Balance Sheet Date to the date
hereof and other than pursuant to transactions contemplated by this Agreement
and the Related Agreements:

 

(a)           There
has been no action, event or occurrence which has had a Material Adverse
Effect;

 

(b)           Borrower
has not permitted any of its assets, tangible or intangible, to become subject
to any Encumbrances, except for (i) liens for current taxes and
assessments not yet due, (ii) Permitted Liens and (iii) other
Encumbrances which are not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect;

 

(c)           There
has been no sale, assignment, mortgage, pledge, license or transfer of any
tangible or intangible assets of Borrower except as not prohibited by this
Agreement;

 

12

 

(d)           Except
for (i) the indebtedness evidenced by the Note, the Comerica Agreement,
and the GE Capital Facility; and (b) liabilities incurred, and liabilities
under contracts or Capitalized Lease Obligations, in each case, entered into in
the ordinary course of business, Borrower has not incurred any Indebtedness to
any Person, or made any agreement or commitment therefor;

 

(e)           Since
December 31, 2007, there has been no change in the respective accounting
methods, practices or policies followed by Borrower, or any change in
depreciation or amortization policies or rates theretofore adopted unless
required by GAAP; and

 

(f)            Borrower
is not in default in any respect under any contract except where any such
default would not reasonably be expected to, individually or in the aggregate,
result in a Material Adverse Effect.

 

4.10.  Litigation.  Except as set forth in Schedule 4.10
or as described in filings with the SEC, there is no civil action, suit, claim,
hearing, investigation or proceeding pending (for which proper service has been
made) or, to the knowledge of Borrower, threatened against Borrower, or any
property or assets owned or possessed by Borrower, or, to the extent relating
in any manner to Borrower or the ability to consummate the transactions
hereunder, any of Borrower executives that is reasonably likely, either
individually or in the aggregate, to (a) adversely affect the validity of
this Agreement, the Note or the Warrants, or the transactions contemplated
hereby or thereby, or (b) have a Material Adverse Effect.

 

4.11.  Intellectual
Property.

 

(a)           Borrower
has good title and/or the right to use all intellectual property (including all
such property in which Borrower has an interest as licensee) necessary for the
conduct of its business (the “Intellectual Property”);

 

(b)           As
of the date hereof Borrower has not received any notice of any judicial,
administrative or arbitration proceeding instituted against any it, or of any
claim or threatened claim by any Person against it alleging that the conduct of
its business infringes any intellectual property rights of any other Person;
and

 

(c)           To
the best of Borrower’s knowledge, its use or enjoyment does not, or would note,
violate any intellectual property rights of a third party, and no third party
is infringing upon the Intellectual Property;

 

except,
in each case under clause (a), (b) and (c) of this Section 4.11,
as are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect.

 

4.12.  Title
to Assets, Properties and Rights.

 

(a)           Except
for Permitted Liens, Borrower has good and marketable title to all of its
respective properties, interests in properties and assets, real, personal and
mixed, tangible or intangible, that it owns or purports to own that is used or
useful in the conduct of its business, free and clear of any and all
Encumbrances, except for:  (i) liens,
if any, for current taxes and assessments not yet due, and (ii) minor
liens and encumbrances, in each case, which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.

 

(b)           With
respect to the property and assets leased or licensed by Borrower or its
Subsidiaries, Borrower or such Subsidiary, as applicable, is in compliance with
such leases or licenses and holds valid leasehold or other interests free and
clear of any Encumbrances, except as are not reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect.

 

13

 

(c)           Borrower has in full force and effect
fire and casualty insurance policies, and insurance against other hazards,
risks and liabilities to Persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated.  Borrower has made available to Lender a true,
complete and correct list, and a summary description of the coverage provided
thereby, of all liability insurance policies maintained by Borrower on its
assets or in relation to its business. 
All of such policies are in full force and effect.  All premiums due on such insurance policies
on or prior to the date hereof have been paid. 
As of the date hereof, there are no claims with respect to Borrower, nor
its respective assets, pending under any current or prior insurance policy.

 

4.13.  Compliance
with Laws; Legal Requirements.

 

(a)           Except as set forth on Schedule 4.13,
Borrower has complied, and is in compliance, in all material respects, with all
foreign, federal, state or local laws (including common law), statutes, codes,
ordinances, rules, regulations, and Orders of Governmental Authorities
applicable to or affecting them or their assets or businesses, including,
without limitation, ERISA and Environmental Laws (collectively, “Laws”), except for such
non-compliance which is not reasonably likely to have a Material Adverse
Effect.  Neither Borrower, nor any of its
senior officers, has received notice of any violation (or any investigation,
inspection, audit, or other proceeding by any Governmental Authority involving
an allegation of any violation) of any Law by or affecting Borrower, and to the
knowledge of Borrower, no investigation, inspection, audit, or other proceeding
by any Governmental Authority involving an allegation of violation of any Law is
threatened.

 

(b)           Borrower has obtained all of the
registrations, applications, filings, certifications, notices, Orders,
licenses, permits, approvals, consents, qualifications, authorizations and
waivers of any Governmental Authority (“Licenses and Permits”)
necessary to conduct its respective business as it is presently being conducted
and has been conducted and is in compliance with all such Licenses and Permits,
and such Licenses and Permits are validly issued and in full force and effect,
except where the failure to obtain, or to be in compliance with, such Licenses
and Permits or have in full force and effect is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.

 

4.14.  Employees
and Labor Matters.

 

(a)           To Borrower’s knowledge, none of Borrower’s
employees is bound by any agreement with any other Person that is violated or
breached by such employee performing the services he or she is currently
performing for Borrower.

 

(b)           Borrower is not delinquent (i) in
any payments to any of its respective employees or other personnel for any
wages, salaries, commissions, bonuses or other direct compensation, or (ii) in
any material respect, in any payments to consultants, independent contractors’
agents, or representatives, for any services performed by them in any capacity,
in each case, to the date hereof or for amounts required to be reimbursed to
any such Person to the date hereof.

 

(c)           As of the date hereof, there is no
collective bargaining agreement or union contract binding on Borrower, there
has not been any union organizing activity with respect to Borrower, and no
union vote is pending with respect to Borrower.

 

14

 

(d)           Except as would not reasonably be
expected to have a Material Adverse Effect, (i) there are no unfair labor
practice charges or complaints, minimum wage or overtime or equal pay charges
or complaints, occupational safety and health charges or complaints, wrongful
discharge charges or complaints, employee grievances, discrimination claims or
workers’ compensation claims pending or, to the knowledge of Borrower,
threatened against either of them before any Governmental Authority, and (ii) neither
Borrower nor any of its senior officers has received notice from any
Governmental Authority of any alleged violation of applicable law that remains
unresolved respecting employment and employment practices, terms and conditions
of employment, or wage and hours.

 

(e)           Borrower is in compliance in all material
respects with all federal, state, local and foreign laws, ordinances,
regulations and Orders with respect to the wages, hours and working conditions
of its respective employees.

 

(f)            Except as set forth in applicable filings
with the SEC or as otherwise disclosed to Lender, as of the date hereof, none
of Borrower’s executive officers has an employment or severance agreement with
Borrower, or any other agreement that provides for severance payments in excess
of $250,000 or other obligations material to the Borrower and its Subsidiaries
taken as a whole, upon termination of employment.

 

4.15.  Brokers
and Finders.  Neither
Borrower, nor any of its officers, directors, employees, agents or
representatives, has employed any broker, investment bank, financial advisor or
finder in connection with this Agreement, the other Loan Documents, or the
transactions contemplated hereby and thereby.

 

4.16.  Tax
Matters.  Other than with respect to
Taxes being contested in good faith as permitted under this Agreement, Borrower has timely filed all respective
federal, state, local and foreign tax returns, declarations of estimated tax,
tax reports, information returns and statements (collectively, the “Returns”) required to be filed by it
prior to the date hereof (other than those for which extensions shall have been
granted prior to the date hereof) relating to (i) any federal Taxes and (ii) any
other Taxes in any material amount.  The
Returns were complete and correct in all material respects and all Taxes shown
on the Returns to be due were timely paid.

 

(a)           As of the date hereof, there are no
pending or, to the best of Borrower’s knowledge, any threatened tax audits of
any Returns.

 

(b)           No tax Encumbrances (other than for
current Taxes not yet due and payable and Taxes being contested in good faith)
have been filed and no deficiency in Tax has been proposed, assessed or
asserted in writing against Borrower.

 

(c)           Borrower has timely withheld and paid all
Taxes required to have been withheld and paid by it in connection with any amounts
paid or owing to any employee of Borrower.

 

(d)           Borrower has never been a member of an
affiliated group within the meaning of Section 1504 of the Code, or filed
or been included in a combined, consolidated or unitary return other than an
affiliated group (and related return) in which Borrower is the common parent.

 

(e)           Borrower is not liable for Taxes of any
other Person (other than its Subsidiaries), and Borrower is not under any
contractual obligation to indemnify any Person with respect to Taxes, nor a
party to any tax sharing agreement or other agreement providing for payments by
Borrower with respect to Taxes.

 

(f)            Borrower is not a party to any joint
venture, partnership or other arrangement or contract that could be treated as
a partnership for federal income tax purposes.

 

15

 

4.17.  Books
and Records.  The books
and records of Borrower, including with respect to operations, employees and
properties, have been maintained in the usual, regular and ordinary manner, all
entries with respect thereto have been accurately made, and all transactions
have been accurately accounted for, except as could not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.

 

4.18.  Offering
Valid.  Assuming the accuracy of the
representations of Lender in Section 9 hereof, the offer, sale and
issuance of the Note and the Warrants will be exempt from the registration
requirements of the Securities Act and any similar law, rule or regulation
of any other jurisdiction and will have been registered or qualified (or are
exempt from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws.  Neither Borrower nor any agent on Borrower’s
behalf, has solicited or will solicit any offers to sell or has offered to sell
or will offer to sell all or any part of the Note or the Warrants so as to
bring the sale of such Note or Warrants within the registration provisions of
the Securities Act.

 

5.             COVENANTS.

 

5.1.  Negative
Covenants.  Borrower
covenants to Lender that at any time as there shall be any Outstanding Amount
or the Commitment has not been irrevocably terminated, unless Lender has first
consented thereto in writing, Borrower will not:

 

(a)           Incur or guarantee any Indebtedness other
than (without duplication):  (i) amounts
currently outstanding or available under the Comerica Agreement and GE Capital
Facility, and refinancings thereof (which refinancings shall be subject to the
prior written consent of Lender) or any Replacement Credit Facility (and
refinancings thereof); (ii) Indebtedness outstanding on the date hereof
and identified on Schedule 5.1(a) (and refinancings thereof); (iii) Indebtedness
incurred, and Indebtedness under contracts or Capitalized Lease Obligations, in
each case, entered into in the ordinary course of business; (iv) Indebtedness
owed to any Subsidiary of Borrower; (v) Indebtedness consisting of
guaranties for the benefit of Subsidiaries of Borrower; (vi) during the
term of the GE Capital Facility, other Indebtedness permitted under the GE
Capital Facility, as in effect on the date hereof; and (vii) if
applicable, Indebtedness issued in a Capital Transaction.

 

(b)           Sell, transfer or otherwise dispose of in
any transaction or series of related transactions during the term of this
Agreement any of Borrower’ assets (other than (i) sales of products or
Intellectual Property in the ordinary course of business; (ii) reinvestments
or conversions of cash equivalents to cash or other cash equivalents, (iii) dispositions
of assets that are no longer used or useful in its business and (iv) transfers
of assets to Subsidiaries).

 

(c)           Acquire any securities of, or other
ownership interest in, any Person in any transaction or series of transactions
(other than (i) reinvestments or conversions of cash equivalents and (ii) investments
in Subsidiaries);

 

(d)           Declare or pay any distributions on, or
make any redemptions of, any class or series of its shares (other than, so long
as no Default or Event of Default then exists or would result therefrom,
repurchases of Common Stock of Borrower from former employees, which shall not
exceed fifty thousand dollars ($50,000) in the aggregate in any fiscal year of
Borrower);

 

(e)           Enter into any agreement, arrangement or
transaction with any officer or key employee of Borrower, or any affiliate
(other than Lender and its affiliates), relative, beneficiary or employee of
the foregoing, on terms taken as a whole are less favorable to Borrower, as the
case may be, than would be available in an arm’s-length transaction between
willing parties (other than employment transactions in the ordinary course of
business);

 

16

 

(f)            Undertake or agree to undertake any
merger or consolidation, whether or not Borrower or a Subsidiary is the
surviving corporation (other than mergers and consolidations with any
Subsidiary in which Borrower is the surviving entity);

 

(g)           (i) Change the organic form of
Borrower from that of a corporation formed under Delaware law, or (ii) issue
additional shares of Borrower stock, other than as those shares described and
permitted to be issued to Lender under this Agreement and option and warrant
shares issued as a result of the exercise, in accordance with their respective
terms, of any options or warrants currently outstanding or permitted under this
Agreement; or

 

(h)           Change Borrower’s or any Subsidiary’s
general line of business.

 

5.2.  Affirmative
Covenants.  Borrower
covenants to Lender that at any time as there shall be any Outstanding Amount
and the Commitment has not been irrevocably terminated:

 

(a)           Financial Statements.  Borrower
shall deliver or cause to be delivered to Lender:

 

(i)            As soon as practicable (but in any event
not later than seventy-five (75) days after the end of each applicable fiscal
year of Borrower including and after 2008), the consolidated balance sheet of
Borrower, as at the end of such year, and the related consolidated and
consolidating statement of income and statement of cash flow, setting forth in
comparative form the figures for the previous fiscal year (if applicable) and
all such consolidated and consolidating statements to be in reasonable detail,
prepared in accordance with GAAP, together with the report of Borrower’s
independent certified public accountant reasonably acceptable to Lender;

 

(ii)           As soon as practicable and to the extent
possible within thirty (30) days after the end of each month, copies of
Borrower’s internally prepared consolidated balance sheet, each as at the end
of such month, and the related consolidated statement of income and statement
of cash flow for such month, all in reasonable detail and prepared in
accordance with GAAP with the exception of notes to the financial statements,
together with a certification by the chief financial officer of Borrower (in
his of her capacity as an officer of Borrower and without personal liability)
that the information contained in such financial statements fairly presents in
all material respects Borrower’s financial position on the date thereof
(subject to year end adjustments); and

 

(iii)          As
soon as available, but in any event not later than sixty (60) days after the
date hereof, of a business plan for such future periods, and including such
items, as is requested by lender, in form and substance reasonably satisfactory
to Lender;

 

(iv)          As soon as available (and unless
unreasonable, within thirty (30) days) after the end of each month, a cash
projection in a form consistent with the schedule shown on Exhibit E;
and

 

(v)           All other information reasonably
requested by Lender.

 

(b)           Existence.  Borrower will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence.

 

17

 

(c)           Compliance with Laws; Approvals and
Authority.  Except as is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect, Borrower
will comply with the applicable laws and regulations wherever its business is
conducted including, without limitation, ERISA and all Environmental Laws, and
all Orders of any tribunal under any such legislation that applies to the
conduct of operating and administering its business.

 

(d)           ERISA Compliance. 
Upon reasonable request of Lender, Borrower will (i) promptly upon
its filing the same, or as soon as possible after notification to Borrower of
the filing by another person of the same, with the Department of Labor or
Internal Revenue Service, furnish to Lender copies of the most recent actuarial
statement, if any, required to be submitted under §103(d) of ERISA and
Annual Report - Form 5500, with all required attachments, in respect of
each guaranteed pension plan, and (ii) promptly upon receipt or dispatch
by Borrower, or as soon as possible after notification to Borrower of receipt
or dispatch by another person, furnish to Lender any notice, report or demand
sent or received in respect of a guaranteed pension plan under §§302, 4041,
4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a
multiemployer plan, under §§4041A, 4202, 4219, 4242, or 4245 of ERISA which
involves a liability which is reasonably likely to result in a Material Adverse
Effect.

 

(e)           Insurance.  Borrower
shall maintain in full force and effect fire and casualty insurance policies,
and insurance against other hazards, risks and liabilities to Persons and
property to the extent and in the manner customary for companies in similar
businesses similarly situated.

 

(f)            Taxes.  Borrower will
duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue or subject to penalty or interest, all taxes, assessments
and other governmental charges imposed upon it and its real properties, sales
and activities, or any part thereof, or upon the income or profits therefrom;
provided that any such tax, assessment, or charge need not be paid if the
validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if such, Borrower shall have set aside on its books
adequate reserves with respect thereto.

 

(g)           Claims; Litigation. 
Borrower will inform Lender, promptly after receipt by Borrower of
notice of any material threatened or potential adverse claim, dispute,
litigation and governmental investigation or citation against Borrower that, if
adversely determined, is reasonably likely to result in a Material Adverse
Effect.

 

(h)           Notice of Failure to Comply with
Covenants.  Borrower shall promptly give prompt notice to
Lender of any Default or Event of Default.

 

(i)            Expenses.  Subject to
the terms and conditions of the Subordination Agreements, Borrower shall pay or
reimburse Lender for all reasonable out-of-pocket costs and expenses (including
but not limited to reasonable attorneys’ fees and disbursements) Lender may pay
or incur in connection with (i) the transactions contemplated hereby and (ii) the
collection or enforcement of this Agreement, the Note and the Warrants, and all
amendments in connection therewith and in all other documentation related
thereto made at Borrower’s request, and any and all waivers and consents,
including without limitation any fees and disbursements incurred in defense of
or to retain amounts of principal, interest or fees paid, and any claims,
damages, interest (including post-petition interest), judgments, costs, or
expenses awarded in respect thereof.  All
obligations provided for in this Section 5.2(i) shall survive any
termination of this Agreement and the repayment of the Loan.

 

5.3.  Right
of First Offer and Refusal.  So long
as the Commitment has not been terminated, Borrower shall notify Lender in
writing not less than thirty (30) days prior to its seeking any credit
arrangement intended to be subordinate to the GE Capital Facility, any
Replacement Capital Facility or the Comerica Agreement and shall accord Lender
the right of first offer with respect to such 

 

18

 

arrangements.  In the event Borrower does not reach
agreement with Lender on the terms of any such credit facility required by
Borrower and Borrower seeks third party financing, Borrower shall notify Lender
in writing, not less than five (5) Business Days prior to its acceptance
of any such alternate financing of the terms of such financing, and Lender
shall have the right to match such terms and provide such financing to
Borrower.

 

5.4.  No
Third-Party Rights.  Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy
or claim under or with respect to this Agreement or any provision of this
Agreement.

 

5.5.  Replacement
Capital Facility; Capital Transaction.  If Borrower uses an Advance to repay amounts
Borrower owes under the GE Capital Facility, upon termination of the GE Capital
Facility, at the request of Lender (but subject to the Subordination
Agreements) Borrower shall promptly and diligently take all reasonably
necessary actions to execute and deliver all instruments, financing statement
terminations, certificates, agreements or other documents to transfer to Lender
substantially the rights that GE Capital had to the assets of Borrower under
the GE Capital Facility (the “A/R and Asset Security
Interests”).  In
connection with the closing of a Replacement Capital Facility, and provided
that Borrower repays the portion of the Outstanding Amounts representing the
proceeds of this facility applied by Borrower to terminate the GE Capital
Facility, Lender shall likewise promptly and diligently take all actions
reasonably necessary to terminate all instruments, financing statements,
certificates, agreements or other documents and to release such A/R and Asset
Security Interests and execute appropriate subordination agreements and/or
amendments thereto and take such other actions as may be reasonably necessary
so as to enable Borrower to consummate the Replacement Capital Facility.  Borrower shall reimburse Lender for its
reasonable out-of-pocket expenses (including professional fees) relating to the
transfer of the A/R and Asset Security Interests.  Furthermore Lender agrees to cooperate in
good faith with Borrower so as to facilitate the completion of a Capital Raise
and/or a Replacement Capital Facility, including (by way of example), by
approving an amendment to Borrower’s certificate of incorporation to authorize
a reasonably sufficient number of additional shares of Borrower’s common stock,
providing waivers of preemptive rights, registration rights and/or advance
notification requirements in connection with such transactions.

 

6.             SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS,
ETC.

 

Except as expressly provided to the contrary,
all covenants and agreements contained in this Agreement shall survive the
Closing and shall remain in full force and effect as of the date when
made.  The representations and warranties
hereunder shall survive so long as any Indebtedness hereunder, or under any
Note, or any obligations under any Warrant remain outstanding.

 

7.             EVENTS OF DEFAULT; REMEDIES.

 

7.1.  Events
of Default.  The occurrence
of any one or more of the following events shall constitute an event of default
hereunder (“Event of Default”):

 

(a)           If Borrower shall fail to pay (i) as
and when due, any payment of principal under this Agreement or the Note, and (ii) any
payment of interest or expenses payable under this Agreement or the Note and
such failure to pay is not cured within ten (10) days following the date
such payment is due;

 

(b)           If,
pursuant to or within the meaning of the United States Bankruptcy Code or any
other federal, state, or applicable foreign law relating to insolvency or
relief of debtors (collectively, a “Bankruptcy Law”),
Borrower shall (i) commence a voluntary case or proceeding; (ii) consent
to the entry of an order for relief against it in an involuntary case; (iii) consent
to the appointment of a trustee, receiver, assignee, liquidator or similar
official; (iv) make an assignment for the benefit of its creditors; or
(v) admit in writing its inability to pay its debts as they become due;

 

19

 

(c)           If (i) a case is commenced against
Borrower pursuant to any Bankruptcy Law, or (ii) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that (A) is
for relief against Borrower in an involuntary case, (B) appoints a
trustee, receiver, assignee, liquidator or similar official for Borrower or
substantially all of the properties of any of Borrower, or (C) orders the
liquidation of Borrower, and, in each case, the case, order or decree is not
dismissed within sixty (60) days;

 

(d)           If Borrower shall fail to comply with or
perform (i) the covenants set forth in Section 5.1 hereof; or (ii) any
provision of the Warrants;

 

(e)           If Borrower shall fail to comply with or
perform any other covenant or other agreement set forth herein, or in any Note,
which failure is not cured within thirty (30) days after written notice from
Lender;

 

(f)            If any representation or warranty by
Borrower herein contained is false or misleading in any material respect when
made;

 

(g)           If any event of default shall have
occurred and be continuing with respect to the Comerica Agreement or the GE
Capital Facility (other than events of default described on Schedule 4.8(b),
including any cross-defaults arising therefrom), which event of default permits
Comerica or GE Capital, as applicable, to accelerate the Indebtedness under the
Comerica Agreement or the GE Capital Facility as applicable; or

 

(h)           If a Liquidity Event occurs.

 

7.2.  Remedies.

 

(a)           Upon the occurrence of an Event of
Default hereunder other than as provided in Sections 7.1(b) or (c) above
(unless cured by Borrower or waived by Lender), the entire unpaid principal
balance of the Note, together with all accrued interest thereon, may be declared
by Lender due and payable.  Upon the
occurrence of an Event of Default as provided in Section 7.1(b) or (c) above,
the entire unpaid principal balance outstanding hereunder and under the Note,
together with all accrued interest thereon, shall, subject to the terms and
conditions of the Subordination Agreements) be immediately due and payable
regardless of any prior forbearance. 
Notwithstanding anything to the contrary in this Agreement, in no event
shall the interest payable on the unpaid principal balance of the Loans exceed
the maximum rate permitted under applicable Laws.  In the event that such rate of interest
exceeds the maximum rate permitted under applicable Laws, such excess shall be
deemed additional principal payments under this Agreement and the Note.

 

(b)           In addition, upon the occurrence of an
Event of Default (unless cured by Borrower or waived by Lender) and for, but
only for, the period during which such Event of Default remains uncured or has
not been waived in writing by Lender, the interest due on the principal balance
outstanding hereunder shall, upon notice from Lender, accrue at a rate of
seventeen percent (17%) per annum (calculated in the same manner as provided
above) rather than the rate specified in the Note, in each of the Preamble and Section 1.1
thereto.

 

(c)           No failure or delay on the part of any
party hereto in the exercise of any right hereunder shall impair such right or
be construed to be a waiver of, or acquiescence in, any breach of any 

 

20

 

representation, warranty, covenant or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right.  All
rights and remedies of Lender existing pursuant to this Agreement or any other
Loan Document are cumulative to, and not exclusive of, any rights or remedies
otherwise available, whether by contract, at law, in equity or otherwise.

 

8.             MISCELLANEOUS.

 

8.1.  Governing
Law; Submission to Jurisdiction.

 

(a)           This Agreement and the documents and
instruments executed in connection herewith shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without regard
to principles of the conflict of laws thereof.

 

(b)           The parties hereto agree that any suit,
action or proceeding instituted against one or more of them with respect to
this Agreement (including any Exhibits hereto) shall be brought in any federal
or state court located in the State of Delaware or such other jurisdiction
agreed upon by the parties.  The parties
hereto, by the execution and delivery of this Agreement, irrevocably waive any
objection or defense to the institution of any action in Delaware based on
improper venue, the convenience of the forum or the jurisdiction of such
courts, or from the execution of judgments resulting therefrom, and the parties
hereto irrevocably accept and submit to the jurisdiction of the aforesaid
courts in any suit, action or proceeding and consent to the service of process
by certified mail at the address set forth in Section 8.4 hereof.

 

8.2.  Assignments;
Successors; Third Party Rights.  No party to this Agreement may assign any of
its rights under this Agreement without the prior written consent of the other
parties hereto which consent, in respect of any assignment by Lender, shall not
be unreasonably withheld; provided that Lender may assign its rights hereunder
to one or more affiliates without the consent of Borrower and provided further
that any such assignee agrees in writing to be subject to the terms and
conditions of each of the Subordination Agreements then in effect.  Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors, heirs, personal representatives, executors and
permitted assigns of the parties. 
Borrower shall maintain a registry of the owners of the Note in a manner
that complies with the book entry form of registration for purposes of Section 871(h) of
the Code.  Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the
parties to this Agreement any legal or equitable right, remedy or claim under
or with respect to this Agreement or any provision of this Agreement.

 

8.3.  Entire Agreement; Amendment.  This Agreement and the other Loan Agreements
constitute the full and entire understanding and agreement among the parties
with regard to the subjects hereof and thereof and they supersede, merge and
render void every other prior written and/or oral understanding or agreement
among or between the parties hereto including without limitation the Prior
Mezzanine Facility. This Agreement, the Note and the Warrants may not be
amended except by a written agreement executed by Borrower and Lender.

 

8.4.  Notices.  All notices, consents, waivers, or other
communications required or permitted under this Agreement shall be in writing
and shall be delivered or sent to the parties hereto at the following addresses
or fax numbers, or at such other address or fax number as Lender or Borrower
may give by notice to the other party and will be deemed to have been duly
given and received: (a) on the date of receipt if personally delivered, (b) five
days after being sent by mail, postage prepaid, (c) the date of receipt,
if sent by registered or certified mail, postage prepaid, (d) when sent by
facsimile or telecopier transmission if sent during normal business hours of
the recipient, if not, then on the next Business Day, 

 

21

 

provided, that confirmation or receipt by the
receiving party’s receiver can be documented, or (e) one Business Day
after having been sent by a recognized overnight courier service upon
confirmation of delivery by such courier service:

 

	
   

  	
  (a) 

  	
  If to Lender:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Safeguard Delaware, Inc.

  	
   

  
	
   

  	
  1105 N. Market Street

  	
   

  
	
   

  	
  Suite 1300

  	
   

  
	
   

  	
  Wilmington, DE 19801

  	
   

  
	
   

  	
  Fax:
  610.293.0601

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  with a courtesy copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Safeguard
  Scientifics, Inc.

  	
   

  
	
   

  	
  435 Devon Park
  Drive, Building 800

  	
   

  
	
   

  	
  Wayne, PA 19087

  	
   

  
	
   

  	
  Attention: Brian
  J. Sisko, Esquire

  	
   

  
	
   

  	
  Fax:
  610.482.9105

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  If to Borrower:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Clarient, Inc.

  	
   

  
	
   

  	
  31 Columbia

  	
   

  
	
   

  	
  Aliso Viejo, CA 92656

  	
   

  
	
   

  	
  Attention: James Agnello, Senior Vice President & 

  Chief Financial Officer

  	
   

  
	
   

  	
  Fax: 949.425.5863

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  with a courtesy copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Latham & Watkins LLP

  	
   

  
	
   

  	
  633 West Fifth Street, Suite 4000

  	
   

  
	
   

  	
  Los Angeles, CA 90071-2007

  	
   

  
	
   

  	
  Attention: W. Alex Voxman, Esquire

  	
   

  
	
   

  	
  Fax: 213.891.8763

  	
   

  
							

 

8.5.  Failure
or Indulgence Not Waiver; Remedies Cumulative.  No failure or delay on the part of any party
hereto in the exercise of any right hereunder shall impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty, covenant or agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof
or of any other right. All rights and remedies existing under this Agreement
are cumulative to, and not exclusive of, any rights or remedies otherwise
available, whether by contract, at law, in equity or otherwise.

 

8.6.  Severability.  If any provision of this Agreement or the
application of any such provision to any party or circumstance shall be
determined by any court of competent jurisdiction to be invalid or
unenforceable to any extent, the remainder of this Agreement, or the
application of such provision to any party or circumstance other than those to
which it is so determined to be invalid or unenforceable, shall not be affected
thereby, and each provision hereof shall be enforced to the fullest extent
permitted by law. If the final judgment of a court of competent jurisdiction
declares that any item or provision hereof is 

 

22

 

invalid or unenforceable, the parties hereto agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration or area of the term or provision,
or to delete specific words or phrases, and to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision, and this Agreement shall be enforceable as
so modified.

 

8.7.  Section Headings;
Construction.  The
headings in this Agreement are provided for convenience only and will not
affect its construction or interpretation. In this Agreement (a) words
denoting the singular include the plural and vice versa, (b) “it” or “its”
or words denoting any gender include all genders, (c) the word “including”
means “including, without limitation,” whether or not expressed and (d) any
reference herein to a Section, Article, Schedule or Exhibit refers to a Section or
Article of, or a Schedule or Exhibit to, this Agreement, unless
otherwise stated. Each party acknowledges that it has been advised and
represented by counsel in the negotiation, execution and delivery of this
Agreement and accordingly agrees that if an ambiguity exists with respect to
any provision of this Agreement, such provision shall not be construed against
any party because such party or its representatives drafted such provision.

 

8.8.  Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

8.9.  Fees
and Expenses.  Except as
otherwise expressly set forth herein, all fees, costs and expenses incurred by
Borrower or Lender and payable to third parties in connection with the
negotiation, execution and delivery of this Agreement or any amendment thereto
and the other Loan Documents and the performance of the transactions
contemplated hereby and thereby shall be paid by the party incurring such fees,
costs or expenses, except Borrower shall be responsible for the reasonable
fees, costs or expenses of Lender payable to third parties and incurred in
connection with any amendment of this Agreement made at Borrower’s request.

 

8.10.  Reinstatement.  Notwithstanding anything contained herein to
the contrary:  (a) this Agreement
and the other Loan Documents shall remain in full force and effect and continue
to be effective should any petition be filed by or against Borrower liquidation
or reorganization, should Borrower become insolvent or make an assignment for
the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of Borrower’s assets, and shall
continue to be effective or to be reinstated, as the case may be, if at any
time payment and performance of the obligations hereunder or under the Note, or
any part thereof, is, pursuant to applicable law, rescinded, avoided or reduced
in amount, or must otherwise be restored or returned by Lender, whether as a “voidable
preference,” “fraudulent transfer,” “fraudulent conveyance,” or otherwise, all
as though such payment or performance had not been made; and (b) in the
event that any payment, or any part thereof, is rescinded, avoided, reduced,
restored or returned, the Note shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, avoided, reduced, restored or returned.

 

8.11.  Payment
on Non-Business Days.  Whenever
any payment to be made hereunder shall be stated to be due on a day other than
a Business Day, such payment may be made on the next succeeding Business Day,
provided however that such extension of time shall be included in the
computation of interest due in conjunction with such payment or other fees due
hereunder, as the case may be.

 

8.12.  Time
of Day.  All time of day restrictions
imposed herein shall be calculated using Delaware local time.

 

23

 

8.13.  WAIVER
OF JURY TRIAL.  EACH OF THE
PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE
NOTE OR COLLATERAL SECURITY DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF LENDER.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR
LENDER’S ENTERING INTO THIS AGREEMENT.

 

9.             LENDER REPRESENTATIONS.

 

9.1.  Lender
Representations.  Lender represents and
warrants to the Borrower as follows:

 

(a)           Lender is acquiring the Warrants and the
Notes, and (if and when it exercises the Warrants) it will acquire the shares
of Common Stock underlying the Warrants (the “Warrant
Shares” and, together with the Warrants and the Notes, the “Securities”), for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and the Lender has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for the
disposition thereof.

 

(b)           Lender has made such inquiry concerning
the Borrower and its business and personnel as it has deemed appropriate and
has had the opportunity to discuss, ask questions and receive answers with
respect to the Borrower’s business, management and financial affairs with the
Borrower’s management; and Lender has sufficient knowledge and experience in
finance and business that it is capable of evaluating the risks and merits of
its funding of the Note and purchase of the Warrants.

 

(c)           Lender acknowledges that the Securities
have not been registered under the Securities Act and must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from
such registration is available.

 

[SIGNATURE PAGES FOLLOW]

 

24

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first written above.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  CLARIENT, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ James Agnello

  
	
   

  	
   

  	
  Name: 

  	
  James Agnello

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and
  Chief

  
	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  SAFEGUARD DELAWARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ Brian J. Sisko

  
	
   

  	
   

  	
  Name: 

  	
  Brian J. Sisko

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

Amended and Restated Senior
Subordinated Revolving Credit Agreement

Signature Page

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