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Exhibit 10.11    
    

 
 

CARDIONET, INC.    
    
    REGISTRATION RIGHTS AGREEMENT    
    

   TABLE OF CONTENTS  

	 
	 	 
	 	Page

	SECTION 1.    GENERAL	 	1
	 	
 1.1	
 	

Definitions	
 	

1
	

SECTION 2.    REGISTRATION; RESTRICTIONS ON TRANSFER	
 	

3
	 	
 2.1	
 	

Restrictions on Transfer	
 	

3
	 	
 2.2	
 	

Mandatory Registration	
 	

4
	 	
 2.3	
 	

Piggyback Registrations	
 	

5
	 	
 2.4	
 	

Form S-3 Registration	
 	

6
	 	
 2.5	
 	

Expenses of Registration	
 	

7
	 	
 2.6	
 	

Obligations of the Company	
 	

7
	 	
 2.7	
 	

Delay of Registration; Furnishing Information	
 	

8
	 	
 2.8	
 	

Indemnification	
 	

9
	 	
 2.9	
 	

Assignment of Registration Rights	
 	

10
	 	
 2.10	
 	

Amendment of Registration Rights	
 	

10
	 	
 2.11	
 	

"Market Stand-Off" Agreement; Agreement to Furnish Information	
 	

11
	 	
 2.12	
 	

Rule 144 Reporting	
 	

11
	

SECTION 3.    COVENANTS OF THE COMPANY	
 	

11
	 	
 3.1	
 	

Existence; Conduct of Business	
 	

11
	 	
 3.2	
 	

Compliance with Laws	
 	

12
	 	
 3.3	
 	

Basic Financial Information and Reporting	
 	

12
	 	
 3.4	
 	

Termination of Covenants	
 	

12
	

SECTION 4.    MISCELLANEOUS	
 	

12
	 	
 4.1	
 	

Governing Law	
 	

12
	 	
 4.2	
 	

Survival	
 	

13
	 	
 4.3	
 	

Successors and Assigns	
 	

13
	 	
 4.4	
 	

Entire Agreement	
 	

13
	 	
 4.5	
 	

Severability	
 	

13
	 	
 4.6	
 	

Amendment and Waiver	
 	

13
	 	
 4.7	
 	

Delays or Omissions	
 	

13
	 	
 4.8	
 	

Notices	
 	

13
	 	
 4.9	
 	

Attorneys' Fees	
 	

14
	 	
 4.10	
 	

Titles and Subtitles	
 	

14
	 	
 4.11	
 	

Counterparts	
 	

14

i

  

 
 

CARDIONET, INC.    
    
    REGISTRATION RIGHTS AGREEMENT    
    

        THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of March 8, 2007 by and among  CARDIONET,
 INC., a California corporation (the "Company"), the investors listed on  Exhibit A hereto (the "Initial Investors") and each person or entity that subsequently becomes a
party to this Agreement pursuant to, and in
accordance with, the provisions of Section 2.9 hereof (the "Investor Permitted Transferees" and together with the Initial Investors, the "Investors" and each individually as an "Investor"). 

RECITALS  

        WHEREAS, the Investors are purchasing shares of the Company's Mandatorily Convertible Preferred Stock (the
"Mandatorily Convertible Preferred Stock") pursuant to that certain Subscription Agreement (the "Subscription Agreement") of even date herewith (the "Financing"); 

        WHEREAS, the obligations in the Subscription Agreement are conditioned upon the execution and delivery of this Agreement; and 

        WHEREAS, in connection with the consummation of the Financing, the Company and the Investors have agreed to the registration rights and
other rights as set forth below. 

        NOW, THEREFORE, in consideration of these premises, and for other good and valid consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows: 

SECTION 1. GENERAL.  

        1.1    Definitions.    As used in this Agreement, the following terms
shall have the following respective meanings: 

        "Articles
of Incorporation" means the Amended and Restated Articles of Incorporation filed with the Secretary of State of the State of California in connection with the issuance of the
Mandatorily Convertible Preferred Stock. 

        "Converted
Liquidation Preference" means, with respect to any Registrable Securities, the Mandatorily Convertible Preferred Liquidation Preference (as defined in the Articles) of the
Mandatorily Convertible Preferred Stock that was converted to yield such Registrable Securities. 

        "Eligible
Market" means The New York Stock Exchange, Inc., the American Stock Exchange or the NASDAQ Global Market. 

        "Exchange
Act" means the Securities Exchange Act of 1934, as amended. 

        "Form S-3"
means such form under the Securities Act as in effect on the date hereof or any successor or similar registration form under the Securities Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC. 

        "Fundamental
Transaction" means that the Company shall, directly or indirectly, in one or more related transactions, (a) consolidate or merge with or into (whether or not the
Company is the surviving corporation) another Person, or (b) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to
another Person, or (c) be the subject of a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock (not including any
shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or
(d) consummate a stock purchase agreement or other business 

1

 

combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50%
of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons
making or party to, such stock purchase agreement or other business combination). 

        "Holder"
means any signatory to this Agreement owning of record Registrable Securities and any holder of record of Registrable Securities to whom the rights under Section 2 of
this Agreement have been duly and validly transferred in accordance with Section 2.9 of this Agreement. 

        "IPO
Date" has the meaning set forth in Section 2.2(b). 

        "Person"
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or
any department or agency thereof. 

        "Qualifying
IPO" shall have the meaning set forth in the Articles of Incorporation. 

        "Register,"
"registered," and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration
or ordering of effectiveness of such registration statement or document. 

        "Registrable
Securities" means (a) Common Stock of the Company issued or issuable upon conversion of the Mandatorily Convertible Preferred Stock; and (b) any Common Stock
of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, such above-described securities. Notwithstanding the foregoing, Registrable Securities shall not include any securities sold by a person to the public either pursuant to a
registration statement or Rule 144 or sold
in a private transaction in which the transferor's rights under Section 2 of this Agreement are not assigned or eligible to be sold pursuant to 144(k). 

        "Registrable
Securities then outstanding" shall be the number of shares determined by calculating the total number of shares of the Company's Common Stock that are Registrable Securities
and either (a) are then issued and outstanding or (b) are issuable pursuant to then exercisable or convertible securities. 

        "Registration
Expenses" shall mean all expenses incurred by the Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel for the Company, and one special counsel for the Holders, blue sky fees and expenses and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). 

        "SEC"
or "Commission" means the Securities and Exchange Commission. 

        "Securities
Act" shall mean the Securities Act of 1933, as amended. 

        "Selling
Expenses" shall mean all underwriting discounts and selling commissions applicable to the sale. 

        "Shares"
shall mean the Mandatorily Convertible Preferred Stock held by the Investors listed on Exhibit A hereto and their
permitted assigns. 

        "Special
Registration Statement" shall mean a registration statement relating to any employee benefit plan or with respect to any corporate reorganization or other transaction under
Rule 145 of the Securities Act. 

2

 

        "Subsidiary"
means with respect to any Person, any corporation, association or other business entity of which more than 50% of the total voting power of shares of capital stock entitled
(without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees or other governing body thereof is at the time owned or controlled by such Person
(regardless of whether such
equity is owned directly or through one or more other Subsidiaries of such Person or a combination thereof). 

SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER.  

        2.1    Restrictions on Transfer.    

        (a)   Each Holder agrees not to make any disposition of all or any portion of the Shares or Registrable Securities unless and
until: 

          (i)  There is then in effect a registration statement under the Securities Act covering such proposed disposition, such
disposition is made in accordance with such registration statement and such Holder has completed and returned a completed and executed copy of the Notice of Transfer of Securities attached as
Schedule A to the Selling Securityholder's Questionnaire attached hereto as Exhibit B; or 

         (ii)  (A) The transferee has agreed in writing to be bound by the terms of this Agreement, (B) such Holder shall have
notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (C) if reasonably
requested by the Company, such Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such
shares under the Securities Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. 

       (iii)  Notwithstanding the provisions of paragraphs (i) and (ii) above, no such registration statement or
opinion of counsel shall be necessary for a transfer by a Holder which is (A) a partnership to its partners or former partners in accordance with their partnership interests, (B) a
corporation to its shareholders in accordance with their interest in the corporation, (C) a limited liability company to its members or former members in accordance with their interest in the
limited liability company, (D) to a person for which the transfer does not involve a change of beneficial ownership or to the Holder's family member or trust for the benefit of an individual
Holder; provided that in each case the transferee will be subject to the terms of this Agreement to the same extent as if such transferee were an original Holder hereunder, (E) an entity to a
subsidiary, parent, or a sister entity with a common parent, or (F) transfers in compliance with Rule 144(k). 

        (b)   Each certificate representing Shares or Registrable Securities shall (unless otherwise permitted by the provisions of the
Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws): 

THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. 

        (c)   The Company shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if the
holder shall have obtained an opinion of counsel (which counsel may be 

3

 

counsel
to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification or legend. 

        (d)   Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer
instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal. 

        2.2    Mandatory Registration.    

        (a)   The Company will, at its expense, for the benefit of the Holders, prepare and file with the SEC a resale registration
statement on Form S-1 or S-3, or any successor form (or if such forms are not then available, on such form of registration statement as is then available to effect
registration of the Registrable Securities, subject to the consent of the Holders of 662/3% of the Registrable Securities, which consent will not be unreasonably withheld) covering
resale of the Registrable Securities (a "Registration Statement") within ninety (90) days after the IPO Date (as defined below). The Company will provide notice to all Holders of the filing and
effectiveness of the Registration Statement by notice in accordance with Section 4.8 hereof and release made to Bloomberg Financial Markets or other reasonable means of distribution. 

        (b)   The Company will use commercially reasonable best efforts to cause the Registration Statement to become effective within
180 days after the closing date of a sale by the Company of shares of Common Stock in a firm commitment, fully underwritten public offering conducted primarily in the United States through a
nationally recognized investment banking firm and pursuant to one or more registration statements under the Securities Act (the "IPO Date"), and to keep the Registration Statement effective until the
earlier of (i) the sale of all the Registrable Securities pursuant to Rule 144 under the Securities Act or an effective registration statement and (ii) the date on which all
Registrable Securities not theretofore sold pursuant to Rule 144 or the Registration Statement can be sold without restrictions pursuant to Rule 144(k) other than any Registrable
Securities held by affiliates of the Company. If the Registration Statement covering the Registrable Securities required to be filed by the Company pursuant to Section 2.2(a) hereof is not
filed in accordance with Section 2.2(a) or not declared effective by the SEC within 180 days after the IPO Date (each an "Initial Default"), then, in each case subject to
Section 2.2(d) below, the Company will make pro rata payments, as liquidated damages and not as a penalty, to such Holders of the Registrable Securities, in an amount equal to 0.5% of the
Converted Liquidation Preference for the initial occurrence of any Initial Default and 1.0% of the Converted Liquidation Preference for each 30-day period thereafter that the Initial
Default shall go uncured. The amounts payable as liquidated damages pursuant to this paragraph shall be paid, in cash in lawful money of the United States, within (3) business days of
(i) the occurrence of an Initial Default or (ii) the end of each such 30-day period during which no Registration Statement was filed with respect to the Registrable
Securities. 

        (c)   If following the effectiveness of the Registration Statement, the prospectus filed as part of the Registration Statement
is unavailable for use in connection with resale of Registrable Securities for any period other than as permitted in Section 2.2(d) below (each such occurrence, a "Registration Default"), but
excluding the inability of any Investor to sell the Registrable Securities covered thereby due to market conditions and except as excused in Section 2.2(d), then, in each case subject to
Section 2.2(d) below, the Company will make pro rata payments, as liquidated damages and not as a penalty, to such Holders of the Registrable Securities in an amount equal to 0.5% of the
Converted Liquidation Preference for the initial occurrence of each such Registration Default and 1.0% of the Converted Liquidation Preference for each 30-day period thereafter (each, a
"Subsequent Period") that the Registration Default shall go uncured. The amounts payable as Registration Default Damages shall be paid, in cash in lawful money of the United States, within
(3) business days of (i) the initial occurrence of each Registration Default or (ii) the end of each Subsequent Period during which no Registration Statement was filed with
respect to the Registrable Securities. 

4

 

        (d)   No Holder shall be entitled to a payment pursuant to this Section 2.2 if effectiveness of a Registration Statement
has been delayed or a prospectus has been unavailable as a result of (i) failure by such Holder to promptly provide upon request by the Company the information required under the Subscription
Agreement or this Agreement or as requested by the SEC as a condition to effectiveness of the Registration Statement; (ii) the provision of inaccurate or incomplete information by such Holder;
(iii) or a statement or determination of the SEC that any provision of the rights of the Holder under this Agreement are contrary to the provisions of the Securities Act. Notwithstanding
anything in this Agreement to the contrary, in the event (i) of any request by the SEC or any other federal or state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to a Registration Statement or related prospectus or for additional information; (ii) of the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation of
any proceeding for such purpose; (iv) of any event or circumstance which necessitates the making of any changes in the Registration Statement or related prospectus, or any document incorporated
or deemed to be incorporated therein by reference, so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or any omission to state a material
fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain any untrue statement of a material fact or
any omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or
(v) that the Board has made the good faith determination (A) that continued use by the selling Investors of the Registration Statement for purposes of effecting offers or sales of
Registrable Securities pursuant thereto would require, under the Securities Act, premature disclosure in the Registration Statement (or the prospectus relating thereto) of material, nonpublic
information concerning the Company, its business or prospects or any proposed material transaction involving the Company, (B) that such premature disclosure would be materially adverse to the
Company, its business or prospects or any such proposed material transaction or would make the successful consummation by the Company of any such material transaction significantly less likely and
(C) that it is therefore desirable to suspend the use by the Investors of such Registration Statement (and the prospectus relating thereto) for purposes of effecting offers or sales of
Registrable Securities pursuant thereto, then the Company shall furnish to the selling Investors a certificate signed by the President or Chief Executive Officer of the Company setting forth one or
more of the above described circumstances, and the right of the selling Investors to use the Registration Statement (and the prospectus relating thereto) shall be suspended for a period (the
"Suspension Period") of not more than thirty (30) days after delivery by the Company of the certificate referred to above in this Section 2.2(d); provided
that the Suspension Period(s) shall not exceed 30 days during any three (3) month period or ninety (90) days in the aggregate during any twelve
(12) month period; and provided further that there may only be three (3) Suspension Periods during any twelve (12) month period.
During the Suspension Period, none of the Investors shall offer or sell any Registrable Securities pursuant to or in reliance upon the Registration Statement (or the prospectus relating thereto) and
each of the Investors shall keep the fact of the above described certificate and its contents confidential. 

        2.3    Piggyback Registrations.    From and after the IPO Date, the
Company shall notify all Holders of Registrable Securities in writing at least twenty (20) days prior to the filing of any registration statement under the Securities Act for purposes of a
public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding Special Registration
Statements) and will use its commercially reasonable efforts to include in such registration statement all or part of such Registrable Securities held by any Holder that desires to include in any such
registration statement all or any part of such 

5

 

Holder's
Registrable Securities. Any Holder that so desires shall, within fifteen (15) days after the above-described notice from the Company, so notify the Company in writing. Such notice
shall state the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as
may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein. 

        (a)   If the registration statement under which the Company gives notice under this Section 2.3 is for an underwritten
offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to be included in a registration pursuant to this Section 2.3 shall be
conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to
distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by
the Company. Notwithstanding any other provision of the Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten,
the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second, to the Holders on a pro rata basis based on the total number of Registrable Securities
held by such Holders and requested to be included in such registration; and third, to any other shareholders of the Company (other than a Holder). If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the
registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. If shares are so withdrawn from the registration,
the Company shall then offer to all persons who have retained the right to include securities in the registration the right to include additional securities in the registration in an aggregate amount
equal to the number of shares so withdrawn, with such shares to be allocated among the persons requesting additional inclusion, in the manner set forth above. For any Holder which is a partnership or
corporation, the partners, retired partners and shareholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the
foregoing person shall be deemed to be a single "Holder," and any pro rata reduction with respect to such "Holder" shall be based upon the aggregate amount of shares carrying registration rights owned
by all entities and individuals included in such "Holder," as defined in this sentence. 

        (b)   The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.3
prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The Registration Expenses of such withdrawn registration shall be
borne by the Company in accordance with Section 2.5 hereof. All rights under this Section 2.3 shall terminate at such time as no shares of Registrable Securities remain outstanding. 

        2.4    Form S-3 Registration.    In case the
Company shall receive from any Holder or Holders of Registrable Securities a written request or requests that the Company effect a registration on Form S-3 (or any successor to
Form S-3) or any similar short-form registration statement and any related qualification or compliance with respect to all or a part of the Registrable Securities owned
by such Holder or Holders, the Company will: 

        (a)   promptly give written notice of the proposed registration, and any related qualification or compliance, to all other
Holders of Registrable Securities; and 

        (b)   as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and
as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or 

6

 

such
portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within twenty (20) days after receipt of such
written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4: 

          (i)  if Form S-3 is not available for such offering by the Holders, or 

         (ii)  if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than one million dollars ($1,000,000), or 

       (iii)  if within thirty (30) days of receipt of a written request from any Holder or Holders pursuant to this
Section 2.4, the Company gives notice to such Holder or Holders of the Company's intention to make a public offering within ninety (90) days, other than pursuant to a Special
Registration Statement, or 

        (iv)  if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board of Directors of the
Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for such Form S-3
registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than
ninety (90) days after receipt of the request of the Holder or Holders under this Section 2.4; provided, that such right to delay a request shall be exercised by the Company not more
than once in any twelve (12) month period, or 

         (v)  if the Company has, within the six (6) month period preceding the date of such request, already effected one
(1) registration on Form S-3 for the Holders pursuant to this Section 2.4, or 

        (vi)  in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or compliance. 

        (c)   Subject to the foregoing, the Company shall file a Form S-3 registration statement covering the
Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. 

        2.5    Expenses of Registration.    Except as specifically provided
herein, all Registration Expenses incurred in connection with any registration pursuant to this Section 2 shall be borne by the Company. All Selling Expenses incurred in connection with any
registrations hereunder, shall be borne by the holders of the securities so registered pro rata on the basis of the number of shares so registered. 

        2.6    Obligations of the Company.    In connection with the Company's
obligations under Section 2 hereof, the Company shall, at its expense and as expeditiously as reasonably possible: 

        (a)   Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration
statement for the period set forth in Section 2.2(b) above. 

        (b)   Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. 

        (c)   Use its best efforts to register and qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in
connection therewith or as a condition 

7

 

thereto
to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 

        (d)   Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the
circumstances then existing. The Company will use reasonable efforts to amend or supplement such prospectus in order to cause such prospectus not to include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. 

        (e)   Make available for inspection by each selling Holder and any attorney, accountant or other agent retained by such selling
Holder (an "Advisor") all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information
reasonably requested by any such selling Holder or Advisor, subject to, in the case of confidential information, such confidentiality agreements as are required by law or reasonably requested by the
Company. Notwithstanding the foregoing, the Company shall not be obligated under this Section 2.6(e) with respect to a competitor of the Company or such competitor's Advisors. 

        (f)    Use its commercially reasonable efforts to furnish, on the date that such Registrable Securities are delivered to the
underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and reasonably satisfactory to a majority in
interest of the Holders requesting registration of Registrable Securities and (ii) a "comfort" letter dated as of such date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters; 

        (g)   Otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission,
and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with
the first month after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act; and 

        (h)   Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed. 

        2.7    Delay of Registration; Furnishing Information.    

        (a)   No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2. 

        (b)   It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.2,
2.3 or 2.4 that the selling Holders shall furnish to the Company the Selling Securityholder's Questionnaire in substantially the form attached hereto as  Exhibit B and such information regarding
themselves, the Registrable Securities held by them and the intended method of disposition of such
securities as shall be reasonably requested by the Company in connection with the registration of Registrable Securities. 

8

 

        2.8    Indemnification.    In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4: 

        (a)   To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, officers,
directors and legal counsel of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make
the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such registration statement; and the Company will pay to each such Holder,
partner, officer, director, underwriter or controlling person any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in
connection with such registration by such Holder, partner, officer, director, underwriter or controlling person of such Holder. 

        (b)   To the extent permitted by law, each Holder will, severally and not jointly, if Registrable Securities held by such
Holder are included in the securities as to which such registration qualifications or compliance is being effected, indemnify and hold harmless the Company, each of its directors, its officers who
have signed the registration statement and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such
registration statement or any of such other Holder's partners, directors or officers or any person who controls such Holder, against any losses, claims, damages or liabilities (joint or several) to
which the Company or any such director, officer, controlling person, underwriter or other such Holder, or partner, director, officer or controlling person of such other Holder may become subject under
the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder under an instrument duly executed by
such Holder and stated to be specifically for use in connection with such registration; and each such Holder will pay any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other Holder, or partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided further, that in no event shall any indemnity
under this Section 2.8 exceed the net proceeds from the offering received by such Holder. 

9

 

        (c)   Promptly after receipt by an indemnified party under this Section 2.7 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, but the omission so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under this Section 2.8. 

        (d)   If the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) that resulted in such loss, claim,
damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by
reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party
or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any
contribution by a Holder hereunder exceed the net proceeds from the offering received by such Holder. 

        (e)   The obligations of the Company and Holders under this Section 2.8 shall survive completion of any offering of
Registrable Securities in a registration statement and the termination of this Agreement. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect to such claim or litigation. 

        2.9    Assignment of Registration Rights.    Subject to compliance
with Section 2.1 hereof, the rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned by a Holder to a transferee or assignee of
Registrable Securities which (a) is a subsidiary, parent, sister entity with a common parent, general partner, limited partner, retired partner, member or retired member of a Holder,
(b) is a Holder's family member or trust for the benefit of an individual Holder, or (c) acquires at least five hundred (500) shares of Registrable Securities (as adjusted for
stock splits and combinations); provided, however, (i) the transferor shall, within ten (10) days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned and (ii) such transferee shall agree in writing to be subject to all restrictions set forth in this Agreement. 

        2.10    Amendment of Registration Rights.    Any provision of this
Section 2 may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the
Company and the Holders of at 

10

 

least
two-thirds (662/3%)) of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with this Section 2.10 shall be binding upon
each Holder and the Company. 

        2.11    "Market Stand-Off" Agreement; Agreement to Furnish
Information.    Each Holder hereby agrees that, if requested by an underwriter of Common Stock (or other securities) of the Company, such Holder shall not sell,
transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any Common Stock (or other securities)
of the Company held by such Holder (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company
not to exceed one hundred eighty (180) days following the IPO Date; provided that: 

          (i)  such agreement shall apply only to the Company's Qualifying IPO; and 

         (ii)  all executive officers and directors of the Company and holders of at least one percent (1%) of the Company's voting
securities enter into similar agreements. 

Each
Holder agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give
further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, each Holder shall provide, within ten
(10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company's securities
pursuant to a registration statement filed under the Securities Act. The obligations described in this Section 2.11 shall not apply to a registration pursuant to a Special Registration
Statement. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period. Each Holder agrees that any transferee of any shares of Registrable Securities shall be bound by this Section 2.11. 

        2.12    Rule 144 Reporting.    With a view to making available
to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its best
efforts to: 

        (a)   Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any
similar or analogous rule promulgated under the Securities Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general
public; 

        (b)   File with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act;
and 

        (c)   So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: a written statement
by the Company as to its compliance with the reporting requirements of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become subject to such reporting
requirements); a copy of the most recent annual or quarterly report of the Company; and such other reports and documents as a Holder may reasonably request in availing itself of any rule or regulation
of the SEC allowing it to sell any such securities without registration. 

SECTION 3. COVENANTS OF THE COMPANY.  

        3.1    Existence; Conduct of Business.    The Company will, and will
cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges
and franchises material to the conduct of its 

11

 

business;
provided that the foregoing shall not prohibit a Fundamental Transaction approved by the Company's shareholders as and to the extent required by the Articles of Incorporation. 

        3.2    Compliance with Laws.    The Company will comply, and cause
each of its Subsidiaries to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities except where the necessity of
compliance therewith is being contested in good faith by appropriate proceedings. 

        3.3    Basic Financial Information and Reporting.    

        (a)   The Company will maintain true books and records of account in which full and correct entries will be made of all its
business transactions pursuant to a system of accounting established and administered in accordance with generally accepted accounting principles consistently applied, and will set aside on its books
all such proper accruals and reserves as shall be required under generally accepted accounting principles consistently applied. 

        (b)   As soon as practicable after the end of each fiscal year of the Company, and in any event within ninety (90) days
thereafter, the Company will furnish each Holder a balance sheet of the Company, as at the end of such fiscal year, and a statement of income and a statement of cash flows of the Company, for such
year, all prepared in accordance with generally accepted accounting principles consistently applied and setting forth in each case in comparative form the figures for the previous fiscal year, all in
reasonable detail. Such financial statements shall be accompanied by a report and opinion thereon by independent public accountants of national standing selected by the Company's Board of Directors.
Along with such annual financial statements, the Company shall also provide lists of the Company's shareholders and optionholders, as of the end of such fiscal year, showing the number of securities
held by each. 

        (c)   The Company will furnish each Holder, as soon as practicable after the end of the first, second and third quarterly
accounting periods in each fiscal year of the Company, and in any event within forty-five (45) days thereafter, to the extent requested by such Holder, a balance sheet of the
Company as of the end of each such quarterly period, and a statement of income and a statement of cash flows of the Company for such period and for the current fiscal year to date, prepared in
accordance with generally accepted accounting principles, with the exception that no notes need be attached to such statements and year-end audit adjustments may not have been made. 

        (d)   The Company will furnish each Holder, to the extent requested by such Holder, as soon as practicable after the end of
each month, and in any event within thirty (30) days thereafter, a balance sheet of the Company as of the end of each such month, and a statement of income and a statement of cash flows of the
Company for such month and for the current fiscal year to date, including a comparison to plan figures for such period, prepared in accordance with generally accepted accounting principles
consistently applied, with the exception that no notes need be attached to such statements and year-end audit adjustments may not have been made. 

        3.4    Termination of Covenants.    All covenants of the Company
contained in Section 3 of this Agreement shall expire and terminate when no shares of Mandatorily Convertible Preferred Stock are outstanding. In addition, the covenants of the Company
contained in Section 3.3 shall expire and terminate upon the IPO Date. 

SECTION 4. MISCELLANEOUS.  

        4.1    Governing Law.    This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California. 

12

 

        4.2    Survival.    The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument. 

        4.3    Successors and Assigns.    Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the
benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time; provided, however, that prior to the receipt by the Company of adequate written notice
of the transfer of any Registrable Securities specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as
the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price. 

        4.4    Entire Agreement.    This Agreement, the Exhibits and Schedules
hereto, the Subscription Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof
and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 

        4.5    Severability.    In the event one or more of the provisions of
this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 

        4.6    Amendment and Waiver.    

        (a)   Except as otherwise expressly provided, this Agreement may be amended or modified only upon the written consent of
(i) the Company and (ii) the holders of 662/3% of the Registrable Securities, voting together as a single class. 

        (b)   Except as otherwise expressly provided, the obligations of the Company and the rights of the Holders under this Agreement
may be waived only with the written consent of the holders of 662/3% of the Registrable Securities, voting together as a single class. 

        (c)   For the purposes of determining the number of Holders or Investors entitled to vote or exercise any rights hereunder, the
Company shall be entitled to rely solely on the list of record holders of its stock as maintained by or on behalf of the Company. 

        4.7    Delays or Omissions.    It is agreed that no delay or omission
to exercise any right, power, or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under this Agreement shall impair any such right, power, or remedy, nor shall
it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed
that any waiver, permit, consent, or approval of any kind or character on any Holder's part of any breach, default or noncompliance under the Agreement or any waiver on such Holder's part of any
provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or
otherwise afforded to Holders, shall be cumulative and not alternative. 

        4.8    Notices.    All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal
business hours of the recipient; if not, then on the 

13

 

next
business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set
forth on the signature pages hereof or at such other address as such party may designate by ten (10) days advance written notice to the other parties hereto. 

        4.9    Attorneys' Fees.    In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all
fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 

        4.10    Titles and Subtitles.    The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 

        4.11    Counterparts.    This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

14

        IN WITNESS WHEREOF, the parties hereto have executed this REGISTRATION RIGHTS AGREEMENT
effective as of the date set forth in the first paragraph hereof. 

	Company:	 	 
	

CARDIONET, INC., a California Corporation	
 	

 
	

By:	
 	

/s/  JAMES M. SWEENEY      
 James M. Sweeney

Chief Executive Officer	
 	

 
	

Address:	
 	

 
	

1010 2nd Avenue

Suite 700

San Diego, CA 92101

Attn: James M. Sweeney

         Chief Executive Officer	
 	

 

THE INITIAL INVESTOR'S SIGNATURE TO THE SUBSCRIPTION AGREEMENT DATED OF EVEN DATE HEREWITH SHALL CONSTITUTE THE INITIAL INVESTOR'S SIGNATURE TO THE REGISTRATION RIGHTS
AGREEMENT.

REGISTRATION
RIGHTS AGREEMENT

SIGNATURE PAGE 

  

 
 

EXHIBIT A    
    
    SCHEDULE OF INVESTORS    
    

	Purchaser
 
	 	Aggregate

Purchase Price
	 	Shares

Issued

	Sanderling V Limited Partnership	 	$	191,000.00	 	191
	Sanderling V Beteilingungs GmbH & Co KG	 	$	170,000.00	 	170
	Sanderling V Biomedical Co-Investment Fund L.P.	 	$	707,000.00	 	707
	Sanderling Venture Partners V Co-Investment Fund, L.P.	 	$	1,165,000.00	 	1,165
	Sanderling Ventures Management V	 	$	23,000.00	 	23
	Sanderling Venture Partners VI Co-Investment, L.P.	 	$	4,749,000.00	 	4,749
	Sanderling VI Beteiligungs GmbH & Co KG	 	$	92,000.00	 	92
	Sanderling VI Limited Partnership	 	$	109,000.00	 	109
	Sanderling Ventures Management VI	 	$	50,000.00	 	50
	Foundation Medical Partners L.P.	 	$	1,064,000.00	 	1,064
	H&Q Healthcare Investors	 	$	928,000.00	 	928
	H&Q Life Science Investors	 	$	635,000.00	 	635
	Peter J. Callahan Revocable Trust dated 2/28/02	 	$	1,456,000.00	 	1,456
	Deutsche Bank AG	 	$	15,000,000.00	 	15,000
	Stanfield Offshore Leveraged Assets, Ltd.	 	$	15,000,000.00	 	15,000
	Tempo Master Fund LP	 	$	10,000,000.00	 	10,000
	Ore Hill Hub Fund Ltd.	 	$	10,000,000.00	 	10,000
	Basso Holdings Ltd.	 	$	5,840,000.00	 	5,840
	Basso Fund Ltd.	 	$	480,000.00	 	480
	Basso Multi-Strategy Holding Fund Ltd.	 	$	1,680,000.00	 	1,680
	KBC Diversified Fund, A Segregated Portfolio of KBC AIM Master Fund SPC	 	$	4,400,000.00	 	4,400
	KBC Convertibles MAC 28 Ltd.	 	$	2,000,000.00	 	2,000
	Rhythm Fund, Ltd.	 	$	1,600,000.00	 	1,600
	Linden Capital L.P.	 	$	5,000,000.00	 	5,000
	Old Lane HMA Master Fund, LP	 	$	845,000.00	 	845
	Old Lane US Master Fund, LP	 	$	1,175,000.00	 	1,175
	Old Lane Cayman Master Fund, LP	 	$	2,980,000.00	 	2,980
	UBS AG London Branch	 	$	5,000,000.00	 	5,000
	Silver Oak Capital, L.L.C.	 	$	4,000,000.00	 	4,000
	Argent Classic Convertible Arbitrage Fund Ltd.	 	$	3,000,000.00	 	3,000
	Argent Classic Convertible Arbitrage Fund L.P.	 	$	1,000,000.00	 	1,000
	SuttonBrook Capital Portfolio, L.P.	 	$	4,000,000.00	 	4,000
	Whitebox Convertible Arbitrage Partners, LP	 	$	4,000,000.00	 	4,000
	DRW Securities, LLC	 	$	3,500,000.00	 	3,500
	Credit Suisse Securities (USA) LLC	 	$	3,000,000.00	 	3,000
	 	 	
	 	

	Totals:	 	$	114,839,000.00	 	114,839
	 	 	
	 	

A-1

 
 

EXHIBIT B    
    
    SELLING SECURITYHOLDER'S QUESTIONNAIRE    
    

  

 
 

CARDIONET, INC.    
    
    SELLING SECURITYHOLDER'S QUESTIONNAIRE    
    

        The undersigned holder (the "Selling Securityholder") of Common Stock of CardioNet, Inc. ("CardioNet" or the "Company") hereby provides you with the
following information in connection with the preparation and filing of a Registration Statement on Form S-[1] (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") covering the registration and resale of shares of the Company's Common Stock beneficially owned by the Selling Securityholder (collectively, the
"Shares"). The definitions of all bolded, italicized terms used in this questionnaire are set forth at the end of this questionnaire. Should you have
any questions concerning any part of the questionnaire, please call [                        ] at
(      )      -        .
 

        Upon
any sale of shares of Common Stock pursuant to the Registration Statement under the Securities Act of 1933, as amended (the "Securities Act"), the Selling Securityholder hereby
agrees to deliver to the Company the Notice of Transfer set forth in Schedule A attached hereto (completed and signed). 

        The
Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is accurate and complete: 

* * * * * * * * 

A.    GENERAL INFORMATION  

Please
provide the entity's complete business address, including email address and the name of the contact person: 

	 

	 

	 

1.     SECURITIES HOLDINGS  

	(a)
	Please fill in all blanks in the following questions related to the entity's beneficial
ownership of the Company's securities. Generally, the term "beneficial ownership" refers to any direct or indirect interest in
the securities which entitles the entity to any of the rights or benefits of ownership, even though it may not be the holder of record of the securities. For example, securities held in "street name"
over which the entity exercises voting or investment power would be considered beneficially owned by it. 

        If
the entity has any reason to believe that any interest in securities of the Company which it may have, however remote, is a beneficial interest, please describe such interest. For
purposes of responding to this questionnaire, it is preferable to err on the side of inclusion rather than exclusion. Where the SEC's interpretation of beneficial
ownership would require disclosure of the entity's interest or possible interest in certain securities of the Company, and you believe that it does not actually possess the
attributes of beneficial ownership, an appropriate response is to disclose the interest and at the same time disclaim beneficial ownership of the securities. 

	(i)
	As of the date hereof, the entity owned outright (including shares registered in its name individually or jointly with
others, shares held in the name of a bank, broker, nominee, depository or in "street name" for its account)
                        shares of the Company's capital stock. 

B-1

 

	(ii)
	In addition to the number of shares the entity owns outright as indicated by the answer to question B.1(a), as of the
date hereof, it had or shared voting power or investment power, directly or indirectly, through a contract, arrangement, understanding, relationship or
otherwise (e.g., shares subject to a written voting or investment arrangement, shares held by a corporate benefit plan over which it exercises control), over the following shares of the Company's
capital stock (none indicated by "0" above). With respect to those shares, provide the following information:

	(1)
	Number of shares with sole voting power:                        

	(2)
	Number of shares with shared voting power; with whom shared; and the nature of the relationship and any underlying voting trust
agreement, investment arrangement or the like: 

	Class
 
	 	Number of shares
	 	With whom shared
	 	Nature of

relationship

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

	(3)
	Number of shares with sole investment power:                        

	(4)
	Number of shares with shared investment power; with whom that power is shared; and the nature of the relationship and any underlying
voting trust agreement, investment arrangement or the like: 

	Class
 
	 	Number of shares
	 	With whom shared
	 	Nature of

relationship

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

	(iii)
	As of the date hereof, the following numbers of shares of the Company's capital stock were registered in the name of,
or beneficially owned by, the entity (none, indicated by "0" under the "Number of Shares" heading): 

	Name of person
 
	 	Relationship
	 	Class
	 	Number of

shares

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

	(iv)
	As of sixty days after the date hereof, the entity will have the right to
acquire indirectly, or to acquire "voting power" and/or "investment power" with respect to,
                        shares of the Company's capital stock, including, but not limited
to, any right to acquire shares (i) upon the exercise of any option, warrant or right; (ii) upon conversion of a security; (iii) pursuant to the power to revoke a trust,
discretionary account or similar arrangement; or (iv) pursuant to the automatic termination of a trust (none, indicated by "0" above). 

        If
the entity wishes to disclaim beneficial ownership of any of the shares described in question B.1(b), (c) or (d) above
for purposes other than for use in the Registration Statement, please indicate the number and class of shares being disclaimed and the reason therefor: 

	 

	 

	 

B-2

 

2.     RELATIONSHIP WITH THE COMPANY  

Please
disclose any office, position or material relationship that the entity or any of its principals has had with the Company or any of its affiliates during the last three years: 

	 

	 

	 

3.     SUPPLEMENTAL INFORMATION  

	(a)
	State whether the Selling Securityholder is a publicly-held entity or a subsidiary of a publicly-held entity
(i.e., an entity that has a class of securities registered under the Securities Exchange Act of 1934, as amended): 

Yes o    No o 

	 	If a subsidiary of a publicly-held entity, please identify the publicly-held parent entity:
	 	 

	 	 

	(b)
	State whether the Selling Securityholder is an investment company or a subsidiary of an investment company registered under the
Investment Company Act of 1940: 

Yes o    No o

	 	If a subsidiary of an investment company, please identify the investment company parent entity:
	 	 

	 	 

	(c)
	If you answered "No" to questions D.1 and D.2, state the number of natural persons,
publicly-held entities or investment companies who have or share voting or investment control over the
Shares:                        . 

If
your answer is 12 or fewer, please identify those natural persons, publicly-held entities or investment companies: 

	 	 

	 	 

	 	 

	 	 

Please note that the SEC requires that these persons or entities be named in the prospectus.

Please note that the SEC may deem short sales of securities covered by a registration statement prior to the effectiveness of such registration statement as a violation of
Section 5 of the Securities Act.

	(d)
	(a) State whether the Selling Securityholder is a registered broker-dealer. 

Yes o    No o 

B-3

 

	(b)
	State
whether the Selling Securityholder received the Shares as compensation for underwriting activities and, if so, provide a brief description of the transaction(s) involved. 

Yes o    No o 

	 	 

	 	 

The SEC requires that all Selling Securityholders that are broker-dealers and that did not receive the Shares as compensation for underwriting activities must be named as
underwriters in the prospectus for the Shares.

All Selling Securityholders, including those named as underwriters pursuant to the preceding sentence, must deliver copies of the prospectus to purchasers at or prior to the
time of any sale of the Shares.

	(c)
	State
whether the Selling Securityholder is an affiliate of a registered broker-dealer and if so, list the name(s) of the broker-dealer affiliate(s). 

Yes o    No o

	 	 

	 	 

If the answer is "Yes," you must answer question (d) below.

	(d)
	If
the Selling Securityholder is an affiliate of a registered broker-dealer:

	(i)
	Did
the Selling Securityholder acquire the Shares in the ordinary course of business? 

Yes o    No o 

If the answer is "No," to question (i) state any exceptions below: 

	 	 

	 	 

	(ii)
	At
the time of the acquisition of the Shares, did the Selling Securityholder have any agreements or understandings, directly or indirectly, with any person to
distribute the Shares? 

Yes o    No o

If the answer is "Yes" to question (ii), state any exceptions below: 

	 	 

	 	 

If
the answer is "No" to question (i) or "Yes" to question (ii), you will be named as an underwriter in the prospectus relating to the Shares. 

4.     GENERAL  

The
regulations of the SEC require that, if otherwise disclosable, the information the entity has furnished in response to the questions above be included in the Registration Statement. If you know of
any additional information necessary to make the answers you have given on behalf of the entity above 

B-4

 

not
misleading in the light of the circumstances under which your answers were made, please furnish below: 

	 

	 

	 

The answers to the foregoing questions are correctly stated to the best of my knowledge, information and belief. I hereby agree to notify the Company promptly of any changes in
the foregoing information. I understand and acknowledge that the Company will rely on the information set forth herein for purposes of the preparation and filing of the Registration Statement covering
the resale of the entity's Shares.

        By signing below, the undersigned acknowledges that it understands its obligations to comply with the provisions of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor
rules or regulations) and the provisions of the Securities Act, including without limitation those relating to prospectus delivery, in connection with any offering of Registrable Securities pursuant
to the Registration Statement.

        I further understand and acknowledge that the Company will rely upon the information provided herein with respect to securities of the Company beneficially owned
by the entity as of the date below for purposes of disclosing its beneficial ownership of securities of the Company as of a later date. Therefore, if the entity's beneficial ownership in securities of
the Company changes between the date hereof and the filing of the Registration Statement, I will notify the Company immediately.

	Dated:	 	                        	 	SELLING SECURITYHOLDER:
	

 	
 	

 	
 	

 

	 	 	 	 	By:	 	 

	 	 	 	 	Name:	 	 

	 	 	 	 	Title:	 	 

PLEASE RETURN THE COMPLETED AND EXECUTED SELLING SECURITYHOLDER

QUESTIONNAIRE TO THE COMPANY'S COUNSEL AT:

COOLEY
GODWARD KRONISH LLP

4401 Eastgate Mall

San Diego, CA 92121-1909

Attn: Christian V. Kuhlen

Direct: 858-550-6036            Fax: 858-550-6420 

5.     DEFINITIONS  

        Arrangement.    The term "arrangement" means any plan,
contract, agreement, authorization or arrangement, whether or not set forth in writing. 

        Beneficial Ownership.    The terms "beneficial
ownership" and "beneficially owned" as applied to an interest in securities describes any direct or indirect interest in the
securities which entitles the entity to any of the rights or benefits of ownership, even though it is not the holder or owner of record and whether it holds such securities for its own benefit or such
securities are held by others for its benefit, such as custodians, brokers, nominees, pledges, etc. Interests in securities held in an estate or trust in which it has an interest as a legatee or
beneficiary, or in a partnership of which it is a partner, or in a 

B-5

 

personal
holding company of which it is a stockholder, or by a nominee are examples of beneficially owned interests. "Beneficial
Ownership" includes having or sharing, directly or indirectly, through any contract, arrangement, understanding or otherwise: 

	(i)
	voting power which includes the power to vote, or to direct the voting of, such security; and/or

	(ii)
	investment power which includes the power to dispose, or to direct the disposition, of such security. 

        Any
person who, directly or indirectly, creates or uses a trust, proxy, power of attorney, pooling arrangement or any other contract,  arrangement
or device with the purpose or effect of divesting such person of beneficial ownership of a
security or preventing the vesting of such beneficial ownership as part of a plan or scheme to evade the reporting requirements of Section 13(d)
of the Exchange Act is deemed to be the beneficial owner of such security. The SEC has expressed the view that a person may be regarded as the beneficial
owner of securities which are held in the name of such person's spouse, minor children or other relatives (including relatives of such person's spouse) who share such person's
home if the relationship which exists results in such person obtaining benefits substantially equivalent to ownership of the securities. If the entity has any reason to believe that any interest in
securities of the Company, however remote, which you or the above-described relatives may have is a beneficial interest, please describe such interest. 

        Immediate Family.    The term "immediate family" means
such person's spouse, parents, children, siblings, mothers and fathers-in-law, sons and
daughters-in-law and brothers and sisters-in-law. 

        Relative.    The term "relative" means your spouse and
any relative of you or your spouse who resides in the same residence as you. 

        Right to Acquire.    The term "right to acquire" as
applied to beneficial ownership of securities means any right to acquire such beneficial ownership, including without limitation any right to acquire
such beneficial ownership (a) through the exercise of any option, warrant or right, (b) through the conversion of a security, (c) pursuant to the power to revoke a trust,
discretionary account or similar arrangement, or (d) pursuant to the automatic termination of a trust, discretionary account or similar arrangement. 

B-6

  

 
 

Schedule A    
    
    NOTICE OF TRANSFER OF SECURITIES PURSUANT TO
  REGISTRATION STATEMENT    
    

COOLEY
GODWARD KRONISH LLP

4401 EASTGATE MALL

SAN DIEGO, CA 92121-1909

ATTN:                         

FAX:                          

Re:    CardioNet, Inc. (the "Company") 

Ladies
and Gentlemen: 

        Please
be advised
that                                         
       has transferred                        shares (the "Shares") of Common Stock
on                        (date), pursuant to the Registration Statement on
Form S-[1] (SEC File No.                         ) filed by the Company: 

        We
hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied with respect to the transfer described above and that
the above-named beneficial owner of the Shares is named as a Selling Securityholder in the Prospectus
dated                        or in amendments or supplements thereto, and that the aggregate number of
shares of Common Stock transferred are [a portion of] the Common Stock listed in such owner's name. 

	Dated:	 	    
	 	 
	

 	
 	

 	
 	

Very truly yours,
	

 	
 	

 	
 	

    
 Name:

Title:

i

QuickLinks

Exhibit 10.11

CARDIONET, INC. REGISTRATION RIGHTS AGREEMENT

CARDIONET, INC. REGISTRATION RIGHTS AGREEMENT

EXHIBIT A SCHEDULE OF INVESTORS

EXHIBIT B SELLING SECURITYHOLDER'S QUESTIONNAIRE

CARDIONET, INC. SELLING SECURITYHOLDER'S QUESTIONNAIRE

Schedule A NOTICE OF TRANSFER OF SECURITIES PURSUANT TO REGISTRATION STATEMENTQuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

Exhibit 10.12    
    

 
 

LOAN AND SECURITY AGREEMENT    
    

        THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of
the Effective Date between SILICON VALLEY BANK, a California corporation ("Bank"), and
CARDIONET, INC., a California corporation ("Borrower"), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank.
The parties agree as follows: 

        1    ACCOUNTING AND OTHER TERMS    

        Accounting
terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the
extent such terms are defined therein. 

        2    LOAN AND TERMS OF PAYMENT    

        2.1    Promise to Pay.    Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all
Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement. 

        2.1.1    Revolving Advances.    

        (a)    Availability.    Subject to the terms and conditions of this Agreement, Bank shall make Advances not exceeding
the Availability Amount. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed without premium or penalty, subject to the applicable terms
and conditions precedent herein. 

        (b)    Termination; Repayment.    The Revolving Line terminates on the Revolving Line Maturity Date, when the
principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable. 

        2.1.2    Letters of Credit Sublimit.    

        (a)   As
part of the Revolving Line, Bank shall issue or have issued Letters of Credit for Borrower's account. The face amount of outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed $500,000 minus any amount outstanding under the Cash Management Services Sublimit. Such aggregate amounts
utilized hereunder shall at all times reduce the amount otherwise available for Advances under the Revolving Line. If, on the Revolving Maturity Date, there are any outstanding Letters of Credit, then
on such date Borrower shall provide to Bank cash collateral in an amount equal to 105% of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in
connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to said Letters of Credit. All Letters of Credit shall be in form and
substance acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank's standard Application and Letter of Credit Agreement (the "Letter
of Credit Application"). Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request. Borrower further agrees
to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Bank and opened for Borrower's account or by Bank's interpretations of any Letter of Credit
issued by Bank for Borrower's account, and Borrower understands and agrees that Bank shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following
Borrower's 

1

 

instructions
or those contained in the Letters of Credit or any modifications, amendments, or supplements thereto. 

        (b)   The
obligation of Borrower to immediately reimburse Bank for drawing made under Letters of Credit shall be absolute, unconditional, and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, such Letters of Credit, and the Letter of Credit Application. 

        (c)   Borrower
may request that Bank issue a Letter of Credit payable in a Foreign Currency. If a demand for payment is made under any such Letter of Credit, Bank shall treat
such demand as an Advance to Borrower of the equivalent of the amount thereof (plus fees and charges in connection
therewith such as wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to
the country issuing such Foreign Currency. 

        (d)   To
guard against fluctuations in currency exchange rates, upon the issuance of any Letter of Credit payable in a Foreign Currency, Bank shall create a reserve (the
"Letter of Credit Reserve") under the Revolving Line in an amount equal to ten percent (10%) of the face amount of such Letter of Credit. The amount of
the Letter of Credit Reserve may be adjusted by Bank from time to time to account for fluctuations in the exchange rate. The availability of funds under the Revolving Line shall be reduced by the
amount of such Letter of Credit Reserve for as long as such Letter of Credit remains outstanding. 

        2.1.3    Intentionally Omitted.    

        2.1.4    Cash Management Services Sublimit.    Borrower may use up to $500,000 minus any amounts outstanding under the
Letter of Credit Sublimit (the "Cash Management Services Sublimit") of the Revolving Line for Bank's cash management services which may include merchant
services, direct deposit of payroll, business credit card, and check cashing services identified in Bank's various cash management services agreements (collectively, the "Cash
Management Services"). Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for any Cash Management Services will be treated as Advances
under the Revolving Line and will accrue interest at the interest rate applicable to Advances. 

        2.1.5    Intentionally Omitted.    

        2.1.6    Term Loan.    

        (a)    Availability.    Bank shall make one (1) term loan available to Borrower in an amount up to the Term
Loan Amount on the Effective Date subject to the satisfaction of the terms and conditions of this Agreement. 

        (b)    Repayment.    Borrower shall repay the Term Loan in (i) 36 equal installments of principal (the  "Term Loan Payment"),
plus (ii) monthly payments of accrued interest, beginning on the first day of the first full month after the anniversary of
the Effective Date, and continuing on the same date of each month thereafter. Borrower's final Term Loan Payment, due on the Term Loan Maturity Date, shall include all outstanding principal and
accrued and unpaid interest under the Term Loan. 

        (c)    Prepayment.    At Borrower's option, so long as an Event of Default has not occurred and is not continuing,
Borrower shall have the option to prepay all, but not less than all, of the Term Loan Amount advanced by Bank under this Agreement, provided Borrower (a) provides
written notice to Bank of its election to prepay the Term Loan at least thirty (30) days prior to such prepayment, and (b) pays, on the date of the prepayment (i) all accrued and
unpaid interest with respect to the Term Loan through the date the prepayment is made; (ii) all unpaid principal with respect to the Term Loan; (iii) a premium equal to the
Make-Whole Premium; and (iv) all other 

2

 

sums,
if any, that shall have become due and payable hereunder with respect to this Agreement; provided that, in the event Borrower is not able to maintain the Quick Ratio covenant, Borrower will have
the ability to convert the outstanding balance under the Term Loan to a conforming asset based line of credit with Bank without incurring a prepayment or termination penalty hereunder. 

        2.2    Overadvances.    If, at any time, the Credit Extensions under Sections 2.1.1 and 2.1.2 exceed the lesser of
either (a) the Revolving Line or (b) the Borrowing Base, Borrower shall immediately pay to Bank in cash such excess. 

        2.3    Payment of Interest on the Credit Extensions.    

        (a)    Interest Rate.    

        (i)    Advances.    Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall
accrue interest at a floating per annum rate equal to 0.50 percentage points above the Prime Rate. 

        (ii)    Term Loan.    Subject to Section 2.3(b), the principal amount outstanding under the Term Loan shall
accrue interest at a per annum rate equal to the Basic Rate. 

        (b)    Default Rate.    Immediately upon the occurrence and during the continuance of an Event of Default, Obligations
shall bear interest at a rate per annum which is five percentage points above the rate effective immediately before the Event of Default (the "Default
Rate"). Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank. 

        (c)    Adjustment to Interest Rate.    Changes to the interest rate of any Credit Extension based on changes to the
Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change. 

        (d)    360-Day Year.    Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed. 

        (e)    Debit of Accounts.    Bank may debit any of Borrower's deposit accounts, including the Designated Deposit
Account, for principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off. 

        (f)    Payments.    Unless otherwise provided, interest is payable monthly on the first calendar day of each month.
Payments of principal and/or interest received after 12:00 p.m. Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is
not a Business Day, the payment is due the next Business Day and additional fees or interest, as applicable, shall continue to accrue. 

        2.4    Fees.    Borrower shall pay to Bank: 

        (a)    Facility Fee.    A fully earned, non-refundable facility fee of $7,500, on the Effective Date; 

        (b)    Success Fee.    If Borrower consummates a merger with another Person (other than a merger effected for the sole
purpose of changing the domicile of Borrower), is acquired by any Person or Borrower consummates an initial public offering of its equity securities, in each case within 5 years of the
Effective date, a fully-earned, non-refundable success fee of $200,000, payable within 5 Business Days of the date of consummation of such transaction; 

        (c)    Unused Revolving Line Facility Fee.    A fee (the "Unused Revolving Line Facility
Fee"), payable quarterly, in arrears, on a calendar year basis, in an amount equal to one quarter of one percent (0.25%) per annum of the average unused portion of the
Revolving Line, as determined by Bank. Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving 

3

 

Line
Facility Fee previously earned by Bank pursuant to this Section notwithstanding any termination of the Agreement or the suspension or termination of Bank's obligation to make loans and advances
hereunder; provided if Borrower terminates the Revolving Line prior to the Revolving Line Maturity date, the Unused Revolving Line Facility Fee will be prorated over the remaining term; and 

        (d)    Bank Expenses.    All Bank Expenses (including reasonable attorneys' fees and expenses plus expenses, for
documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due. 

        3    CONDITIONS OF LOANS    

        3.1    Conditions Precedent to Initial Credit Extension.    Bank's obligation to make the initial Credit Extension is
subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate, including, without limitation: 

        (a)   Borrower
shall have delivered duly executed original signatures to the Loan Documents to which it is a party; 

        (b)   Borrower
shall have delivered a duly executed Intellectual Property Security Agreement; 

        (c)   Borrower
shall have delivered its Operating Documents and a good standing certificate of Borrower certified by the Secretary of State of the State of California as of a
date no earlier than thirty (30) days prior to the Effective Date; 

        (d)   Borrower
shall have delivered duly executed original signatures to the completed Borrowing Resolution for Borrower; 

        (e)   Borrower
shall have delivered the Subordination Agreement duly executed by each subordinated creditor in favor of Bank; 

        (f)    Bank
shall have received certified copies, dated as of a recent date, of financing statement searches, as Bank shall request, accompanied by written evidence (including
any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be
terminated or released; 

        (g)   Borrower
shall have delivered the Perfection Certificate executed by Borrower; 

        (h)   Bank
shall have conducted an audit of the Collateral to Bank's satisfaction (provided however that this shall only be a condition precedent to the first Advance and not
the Term Loan); 

        (i)    Borrower
shall have delivered evidence satisfactory to Bank that the insurance policies required by Section 6.5 hereof are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured clauses or endorsements in favor of Bank; and 

        (j)    Borrower
shall have paid the fees and Bank Expenses then due as specified in Section 2.4 hereof. 

        3.2    Conditions Precedent to all Credit Extensions.    Bank's obligations to make each Credit Extension, including
the initial Credit Extension, is subject to the following: 

        (a)   except
as otherwise provided in Section 3.4(a), timely receipt of an executed Payment/Advance Form; 

        (b)   the
representations and warranties in Section 5 shall be true in all material respects on the date of the Payment/Advance Form and on the Funding Date of each
Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and 

4

 

warranties
that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no Default or Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit
Extension is Borrower's representation and warranty on that date that the representations and warranties in Section 5 remain true in all material respects; provided, however, that such
materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and 

        (c)   in
Bank's sole discretion, there has not been a Material Adverse Change. 

        3.3    Covenant to Deliver.    

        Borrower
agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition to any Credit Extension. Borrower expressly agrees that the extension of
a Credit Extension prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower's obligation to deliver such item, and any such extension in the absence of a
required item shall be in Bank's sole discretion. 

        3.4    Procedures for Borrowing.    

        (a)    Advances.    Subject to the prior satisfaction of all other applicable conditions to the making of an Advance
set forth in this Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or
telephone by 12:00 p.m. Pacific time on the Funding Date of the Advance. Together with any such electronic or facsimile notification, Borrower shall deliver to Bank by electronic mail or
facsimile a completed Payment/Advance Form executed by a Responsible Officer or his or her designee. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer
or designee. Bank shall credit Advances to the Designated Deposit Account. Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or
without instructions if the Advances are necessary to meet Obligations which have become due. 

        (b)    Term Loan.    Subject to the prior satisfaction of all other applicable conditions to the making of the Term
Loan set forth in this Agreement, if any portion of the proceeds of the Term Loan shall be used to purchase or finance Equipment, Borrower shall deliver to Bank by electronic mail or facsimile a copy
of the invoice for the Equipment to be purchased and the request for the Term Loan. 

        4    CREATION OF SECURITY INTEREST    

        4.1    Grant of Security Interest.    Borrower hereby grants Bank, to secure the payment and performance in full of
all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products
thereof. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral
(subject only to Permitted Liens that may have superior priority to Bank's Lien under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a
writing signed by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to Bank. 

5

 

        If
this Agreement is terminated, Bank's Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment
in full in cash of the Obligations and at such time as Bank's obligation to make Credit Extensions has terminated, Bank shall, at Borrower's sole cost and expense, release its Liens in the Collateral
and all rights therein shall revert to Borrower. 

        4.2    Authorization to File Financing Statements.    Borrower hereby authorizes Bank to file financing statements,
without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank's interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower
or any other Person, shall be deemed to violate the rights of Bank under the Code. 

        5    REPRESENTATIONS AND WARRANTIES    

        Borrower
represents and warrants as follows: 

        5.1    Due Organization and Authorization.    Borrower and each of its Subsidiaries are duly existing and in good
standing in their respective jurisdictions of formation and are qualified and licensed to do
business and are in good standing in any jurisdiction in which the conduct of their business or their ownership of property requires that they be qualified except where the failure to do so could not
reasonably be expected to have a material adverse effect on Borrower's business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate substantially in the form
attached hereto as Exhibit C signed by Borrower, entitled "Perfection Certificate". Borrower represents and warrants to Bank that (a) Borrower's exact legal name is that indicated on the
Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the
Perfection Certificate accurately sets forth Borrower's organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth
Borrower's place of business, or, if more than one, its chief executive office as well as Borrower's mailing address (if different than its chief executive office); (e) Borrower (and each of
its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and
(f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete. If Borrower is not now a Registered Organization
but later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with Borrower's organizational identification number. 

        The
execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower's organizational documents, nor constitute an event of default
under any material agreement by which Borrower is bound except to the extent that a consent or waiver of such conflict or default has been obtained prior to the Effective Date. Borrower is not in
default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrower's business. 

        5.2    Collateral.    Borrower has good title to, has rights in, and the power to transfer each item of the Collateral
upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no deposit accounts other than the deposit accounts with Bank, the deposit
accounts, if any, described in the Perfection Certificate delivered to Bank in connection herewith, or of which Borrower has given Bank notice and taken such actions as are necessary to give Bank a
perfected security interest therein. The Accounts are bona fide, existing obligations of the Account Debtors. 

        The
Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None of the components of the
Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as Borrower has given Bank notice pursuant to Section 7.2. In the event that Borrower, after
the date hereof, intends to store 

6

 

or
otherwise deliver any portion of the Collateral to a bailee, then Borrower will first receive the written consent of Bank and such bailee must execute and deliver a bailee agreement in form and
substance satisfactory to Bank in its sole discretion. 

        All
Inventory is in all material respects of good and marketable quality, free from material defects. 

        Borrower
is the sole owner of its intellectual property, except for non-exclusive licenses granted to its customers in the ordinary course of business. To Borrower's
knowledge, each patent is valid and enforceable, and no part of the intellectual property has been judged invalid or unenforceable, in whole or in part, and to the best of Borrower's knowledge, no
claim has been made that any part of the intellectual property violates the rights of any third party except to the extent such claim could not reasonably be expected to have a material adverse effect
on Borrower's business. Except as noted on the Perfection Certificate, Borrower is not a party to, nor is bound by, any material license or other material agreement with respect to which Borrower is
the licensee that prohibits or otherwise restricts Borrower from granting a security interest in Borrower's interest in such license or agreement or any other property. Borrower shall provide written
notice to Bank within twenty (20) days of entering or becoming bound by any such license or agreement which is reasonably likely to have a material impact on Borrower's business or financial
condition (other than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank requests to obtain the consent of, or
waiver by, any person whose consent or waiver is necessary for all such licenses or contract rights to be deemed "Collateral" and for Bank to have a security interest in it that might otherwise be
restricted or prohibited by law or by the terms of any such license or agreement (such consent or authorization may include a licensor's agreement to a contingent assignment of the license to Bank if
Bank determines that is necessary in its good faith judgment), whether now existing or entered into in the future. 

        5.3    Accounts Receivable.    For any Eligible Account in any Borrowing Base Certificate, all statements made and all
unpaid balances appearing in all invoices, instruments and other documents evidencing such Eligible Accounts are and shall be true and correct and all such invoices, instruments and other documents,
and all of Borrower's Books are genuine and in all respects what they purport to be. All sales and other transactions underlying or giving rise to each Eligible Account shall comply in all material
respects with all applicable laws and governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are an Eligible
Account in any Borrowing Base Certificate. To the best of Borrower's knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Eligible Accounts are
genuine, and all such documents, instruments and agreements are legally enforceable in accordance with their terms. 

        5.4    Litigation.    Except as set forth in the Perfection Certificate, there are no actions or proceedings pending
or, to the knowledge of the Responsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries involving more than $25,000. 

        5.5    No Material Deviation in Financial Statements.    All consolidated financial statements for Borrower and any of
its Subsidiaries delivered to Bank fairly present in all material respects Borrower's consolidated financial condition and Borrower's consolidated results of operations. There has not been any
material deterioration in Borrower's consolidated financial condition since the date of the most recent financial statements submitted to Bank (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as
facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results). 

        5.6    Solvency.    The fair salable value of Borrower's assets (including goodwill minus disposition costs) exceeds
the fair value of its liabilities; Borrower is not left with unreasonably small capital after 

7

 

the
transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature. 

        5.7    Regulatory Compliance.    Borrower is not an "investment company" or a company "controlled" by an "investment
company" under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of
Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably
be expected to have a material adverse effect on its business. None of Borrower's or any of its Subsidiaries' properties or assets has been used by Borrower or any Subsidiary or, to the best of
Borrower's knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained
all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently
conducted. 

        5.8    Subsidiaries; Investments.    Borrower does not own any stock, partnership interest or other equity securities
except for Permitted Investments. 

        5.9    Tax Returns and Payments; Pension Contributions.    Except as set forth in the Perfection Certificate, Borrower
has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower. Borrower may
defer payment of any contested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Bank in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to prevent the
governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a "Permitted Lien". Borrower is unaware of any claims or adjustments proposed
for any of Borrower's prior tax years which could result in additional taxes becoming due and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing
and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency. 

        5.10    Use of Proceeds.    Borrower shall use the proceeds of the Credit Extensions solely as working capital, and to
fund its general business requirements and not for personal, family, household or agricultural purposes. 

        5.11    Full Disclosure.    No written representation, warranty or other statement of Borrower in any certificate or
written statement given to Bank, as of the date such representations, warranties, or other statements were made, taken together with all such written certificates and written statements given to Bank,
contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by
Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected or forecasted results). 

        6    AFFIRMATIVE COVENANTS    

        Borrower
shall do all of the following: 

        6.1    Government Compliance.    Maintain its and all its Subsidiaries' legal existence and good standing in their
respective jurisdictions of formation and maintain qualification in each jurisdiction in 

8

 

which
the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower's business or operations. Borrower shall comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on Borrower's business. 

        6.2    Financial Statements, Reports, Certificates.    

        (a)   Deliver
to Bank: (i) as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance
sheet and income statement covering Borrower's and each of its Subsidiary's operations during the period certified by a Responsible Officer and in a form acceptable to Bank; (ii) as soon as
available, but no later than one hundred eighty (180) days after the last day of Borrower's fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied,
together with an unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Bank in its reasonable discretion; (iii) within five
(5) days of delivery, copies of all statements, reports and notices made available to Borrower's security holders or to any holders of Subordinated Debt, (iv) in the event that Borrower
becomes subject to the reporting requirements under the Securities Exchange Act of 1934, as amended, within five (5) days of filing, all reports on Form 10-K,
10-Q and
8-K filed with the Securities and Exchange Commission or a link thereto on Borrower's or another website on the Internet; (iv) a prompt report of any legal actions pending or
threatened against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of One Hundred Thousand Dollars ($100,000) or more;
(v) prompt notice of an event that materially and adversely affects the value of the intellectual property; (vi) as soon as available but in any case no later than forty-five
(45) days after the end of each calendar year, financial projections for the following year approved by Borrower's Board of Directors and (vii) such other budgets, sales projections,
operating plans and other financial information reasonably requested by Bank. 

        (b)   Within
twenty (20) days after the last day of each month, deliver to Bank a duly completed Borrowing Base Certificate signed by a Responsible Officer, with
(i) aged listings of accounts receivable and accounts payable (by invoice date). 

        (c)   Within
thirty (30) days after the last day of each month, deliver to Bank with the monthly financial statements, a duly completed Compliance Certificate signed by
a Responsible Officer setting forth calculations showing compliance with the financial covenants set forth in this Agreement. 

        (d)   Allow
Bank to audit Borrower's Collateral at Borrower's expense. Such audits shall be conducted no more often than once every twelve (12) months unless a Default
or an Event of Default has occurred and is continuing. 

        6.3    Inventory; Returns.    Keep all Inventory in good and marketable condition, free from material defects. Returns
and allowances between Borrower and its Account Debtors shall follow Borrower's customary practices as they exist at the Effective Date. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims that involve more than One Hundred Thousand Dollars ($100,000). 

        6.4    Taxes; Pensions.    Make, and cause each of its Subsidiaries to make, timely payment of all foreign, federal,
state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting pursuant to the terms of Section 5.9 hereof and except to the extent such failure would not
reasonably be expected to cause a Material Adverse Change) and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in accordance with their terms. 

9

 

        6.5    Insurance.    Keep its business and the Collateral insured for risks and in amounts standard for companies in
Borrower's industry and location and as Bank may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to Bank. All property policies
shall have a lender's loss payable endorsement showing Bank as an additional loss payee and waive subrogation against Bank, and all liability policies shall show, or have endorsements showing, Bank as
an additional insured. All policies (or the loss payable and additional insured endorsements) shall provide that the insurer must give Bank at least twenty (20) days notice before canceling,
amending, or declining to renew its policy. At Bank's request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy shall, at
Bank's option, be payable to Bank on account of the Obligations. Notwithstanding the foregoing, (a) so long as no Event of Default has occurred and is continuing, Borrower shall have the option
of applying the proceeds of any casualty policy up to $50,000, in the aggregate, toward the replacement or repair of destroyed or damaged property; provided that any such replaced or repaired property
(i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be deemed Collateral in which Bank has been granted a first priority security interest, and
(b) after the occurrence and during the continuance of an Event of Default, all proceeds payable under such casualty policy shall, at the option of Bank, be payable to Bank on account of the
Obligations. If Borrower fails to obtain insurance as required under this Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all
or part of such payment or obtain such insurance policies required in this Section 6.5, and take any action under the policies Bank deems prudent. 

        6.6    Operating Accounts.    Borrower shall at all times beginning on July, 31, 2006, maintain its and its
Subsidiaries' primary depository and operating accounts and securities accounts with Bank and Bank's affiliates which accounts shall represent at least 85% of the dollar value of Borrower's and such
Subsidiaries accounts at all financial institutions. Bank will not require account control agreements with respect to any accounts maintained outside of Bank, provided the first sentence of this
Section 6.6 is complied with no later than July 31, 2006. 

        6.7    Financial Covenants.    

        Borrower
shall maintain at all times, to be tested as of the last day of each month, unless otherwise noted, on a consolidated basis with respect to Borrower and its Subsidiaries: 

        (a)    Quick Ratio.    A ratio of Quick Assets to Current Liabilities of at least 1.0 to 1.0. 

        (b)    Performance to Plan.    As of the last day of each quarter, Borrower's revenue for such quarter shall be at
least seventy percent (70%) of Borrower's projected performance for such quarter as outlined in Borrower's business plan forecasts dated April 2006, which have been delivered to and approved by
Bank; and Borrower's maximum quarterly losses shall not exceed $3,000,000. Borrower's forecasts may updated from time to time by the Borrower provided such revised forecasts are approved by Borrower's
board of directors and have been approved in writing by Bank in its sole discretion. 

        6.8    Protection and Registration of Intellectual Property Rights.    Borrower shall: (a) protect, defend and
maintain the validity and enforceability of its intellectual property; (b) promptly advise Bank in writing of material infringements of its intellectual property; and (c) not allow any
intellectual property material to Borrower's business to be abandoned, forfeited or dedicated to the public without Bank's written consent. If Borrower decides to register any copyrights or mask works
in the United States Copyright Office, Borrower shall: (x) provide Bank with at least fifteen (15) days prior written notice of its intent to register such copyrights or mask works
together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security agreement or such
other documents as Bank may reasonably request to maintain the perfection and priority of Bank's security interest in the copyrights or mask works intended to be registered with the United States
Copyright Office; and (z) record such intellectual 

10

 

property
security agreement with the United States Copyright Office contemporaneously with filing the copyright or mask work application(s) with the United States Copyright Office. Borrower shall
promptly provide to Bank a copy of the application(s) filed with the United States Copyright Office together with evidence of the recording of the intellectual property security agreement necessary
for Bank to maintain the perfection and priority of its security interest in such copyrights or mask works. Borrower shall provide written notice to Bank of any application filed by Borrower in the
United States Patent and Trademark Office for a patent or to register a trademark or service mark within 30 days after any such filing. 

        6.9    Litigation Cooperation.    From the date hereof and continuing through the termination of this Agreement, make
available to Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrower's books and records, to the extent that Bank may deem them reasonably necessary to prosecute or
defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower. 

        6.10    Further Assurances.    Borrower shall execute any further instruments and take further action as Bank
reasonably requests to perfect or continue Bank's Lien in the Collateral or to effect the purposes of this Agreement. 

        7    NEGATIVE COVENANTS    

        Borrower
shall not do any of the following without Bank's prior written consent, which shall not be unreasonably withheld: 

        7.1    Dispositions.    Convey, sell, lease, transfer or otherwise dispose of (collectively,  "Transfer"), or permit any of its
Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in
the ordinary course of business; (b) of worn-out, surplus or obsolete Equipment; (c) in connection with Permitted Liens and Permitted Investments; (d) of
non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business and (e) of other property not to exceed $50,000 in the
aggregate in any fiscal year. 

        7.2    Changes in Business, Management, Ownership, Control, or Business Locations.    (a) Engage in or permit
any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or
dissolve; or (c) (i) have a change in its Key Person, whom is not replaced by a person reasonably acceptable to Bank within 90 days or (ii) permit or suffer any Change in Control.
Borrower shall not, without at least twenty five (25) days prior written notice to Bank: (1) add any new offices or business locations, including warehouses (unless such new offices or
business locations contain less than Ten Thousand Dollars ($10,000) in Borrower's assets or property), (2) change its jurisdiction of organization, (3) change its organizational
structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. 

        7.3    Mergers or Acquisitions.    Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate,
with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person. A Subsidiary may merge or consolidate into
another Subsidiary or into Borrower. 

        7.4    Indebtedness.    Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so,
other than Permitted Indebtedness. 

        7.5    Encumbrance.    Create, incur, or allow any Lien on any of its property, or assign or convey any right to
receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security
interest granted herein, or enter into any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the
effect 

11

 

of
prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower's or any Subsidiary's intellectual property,
except as is otherwise permitted in Section 7.1 hereof and the definition of "Permitted Lien" herein. 

        7.6    Maintenance of Collateral Accounts.    Maintain any Collateral Account except pursuant to the terms of
Section 6.6.(b) hereof. 

        7.7    Distributions; Investments.    (a) Directly or indirectly make any Investment other than Permitted
Investments, or permit any of its Subsidiaries to do so; or (b) pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock provided that (i) Borrower may convert any of its convertible securities into other securities pursuant to the terms of
such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends solely in common stock; and (iii) Borrower may repurchase the stock of former employees or
consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase, provided
such repurchase does not exceed in the aggregate of $100,000 per fiscal year. 

        7.8    Transactions with Affiliates.    Directly or indirectly enter into or permit to exist any material transaction
with any Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower's business, upon fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm's length transaction with a non-affiliated Person. 

        7.9    Subordinated Debt.    (a) Make or permit any payment on any Subordinated Debt, except under the terms of
the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would
increase the amount thereof or adversely affect the subordination thereof to Obligations owed to Bank. 

        7.10    Compliance.    Become an "investment company" or a company controlled by an "investment company", under the
Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as
defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse
effect on Borrower's business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including
any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 

        8    EVENTS OF DEFAULT    

        Any
one of the following shall constitute an event of default (an "Event of Default") under this Agreement: 

        8.1    Payment Default.    Borrower fails to (a) make any payment of principal or interest on any Credit
Extension on its due date, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable. During the cure period, the failure to cure the
payment default is not an Event of Default (but no Credit Extension will be made during the cure period); 

        8.2    Covenant Default.    

        (a)   Borrower
fails or neglects to perform any obligation in Sections 6.2, 6.6 or 6.7 or violates any covenant in Section 7; or 

12

 

        (b)   Borrower
fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement, any Loan Documents, and
as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten
(10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower
be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed
thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall
be made during such cure period). Grace periods provided under this section shall not apply, among other things, to financial covenants or any other covenants set forth in subsection (a) above; 

        8.3    Material Adverse Change.    A Material Adverse Change occurs; 

        8.4    Attachment.    (a) Any material portion of Borrower's assets is attached, seized, levied on, or comes
into possession of a trustee or receiver and the attachment, seizure or levy is not removed in ten (10) days; (b) the service of process upon Bank seeking to attach, by trustee or
similar process, any funds of Borrower or of any entity under control of Borrower (including a Subsidiary) on deposit with Bank; (c) Borrower is enjoined, restrained, or prevented by court
order from conducting a material part of its business; (d) judgment or other claim in excess of $50,000 becomes a Lien on any of Borrower's assets; or (e) a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency and not paid within ten (10) days after Borrower receives notice. These are not Events of Default if stayed or if a
bond is posted pending contest by Borrower (but no Credit Extensions shall be made during the cure period); 

        8.5    Insolvency.    (a) Borrower is unable to pay its debts (including trade debts) as they become due or
otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within thirty
(30) days (but no Credit Extensions shall be made while of any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed); 

        8.6    Other Agreements.    There is a default in any agreement to which Borrower or any Guarantor is a party with a
third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000) or that could reasonably be expected to have a material adverse effect on Borrower's or any Guarantor's business; 

        8.7    Judgments.    A judgment or judgments for the payment of money in an amount, individually or in the aggregate,
of at least One Hundred Thousand Dollars ($100,000) (not covered by independent third-party insurance) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten
Business Days after the entry thereof (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment); 

        8.8    Misrepresentations.    Borrower or any Person acting for Borrower makes any representation, warranty, or other
statement now or later in this Agreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such representation, warranty, or
other statement is incorrect in any material respect when made; 

        8.9    Subordinated Debt.    A default or breach occurs under any agreement between Borrower and any creditor of
Borrower that signed a subordination, intercreditor, or other similar agreement with Bank, or any creditor that has signed such an agreement with Bank breaches any terms of such agreement; or 

13

 

        9    BANK'S RIGHTS AND REMEDIES    

        9.1    Rights and Remedies.    While an Event of Default occurs and continues Bank may, without notice or demand, do
any or all of the following: 

        (a)   declare
all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable
without any action by Bank); 

        (b)   stop
advancing money or extending credit for Borrower's benefit under this Agreement or under any other agreement between Borrower and Bank; 

        (c)   demand
that Borrower (i) deposits cash with Bank in an amount equal to the aggregate amount of any Letters of Credit remaining undrawn, as collateral security for
the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all Letter of Credit fees scheduled to be
paid or payable over the remaining term of any Letters of Credit; 

        (d)   settle
or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, notify any Person owing Borrower
money of Bank's security interest in such funds, and verify the amount of such account; 

        (e)   make
any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble
the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its
premises, without charge, to exercise any of Bank's rights or remedies; 

        (f)    apply
to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or the account of
Borrower; 

        (g)   ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge, Borrower's labels, patents, copyrights, mask works, rights of use of any name, trade secrets, trade
names, trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and,
in connection with Bank's exercise of its rights under this Section, Borrower's rights under all licenses and all franchise agreements inure to Bank's benefit; 

        (h)   place
a "hold" on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to
any Control Agreement or similar agreements providing control of any Collateral; 

        (i)    demand
and receive possession of Borrower's Books; and 

        (j)    exercise
all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided under the Code (including disposal of
the Collateral pursuant to the terms thereof). 

        9.2    Power of Attorney.    Borrower hereby irrevocably appoints Bank as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower's name on any checks or other forms of
payment or security; (b) sign Borrower's name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the
Accounts directly with Account Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all claims under Borrower's insurance policies; (e) pay, contest
or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to 

14

 

the
Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the
Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower's name on any documents necessary to perfect or continue the perfection of any
security interest regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to make Credit Extensions hereunder.
Bank's foregoing appointment as Borrower's attorney in fact, and all of Bank's rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed
and Bank's obligation to provide Credit Extensions terminates. 

        9.3    Accounts Verification; Collection.    Following the occurrence and during the continuance of an Event of
Default, Bank may notify any Person owing Borrower money of Bank's security interest in such funds and verify the amount of such account. After the occurrence of an Event of Default, any amounts
received by Borrower shall be held in trust by Borrower for Bank, and, if requested by Bank, Borrower shall immediately deliver such receipts to Bank in the form received from the Account Debtor, with
proper endorsements for deposit. 

        9.4    Protective Payments.    If Borrower fails to obtain the insurance called for by Section 6.5 or fails to
pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document, Bank may obtain such insurance or make such payment, and
all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest applicable rate, and secured by the Collateral. Bank will make reasonable efforts to
provide Borrower with notice of Bank obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in
the future or Bank's waiver of any Event of Default. 

        9.5    Application of Payments and Proceeds.    Unless an Event of Default has occurred and is continuing, Bank shall
apply any funds in its possession, whether from Borrower account balances, payments, or proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, first, to
Bank Expenses, including without limitation, the reasonable costs, expenses, liabilities, obligations and attorneys' fees incurred by Bank in the exercise of its rights under this Agreement; second,
to the interest due upon any of the Obligations; and third, to the principal of the Obligations and any applicable fees and other charges, in such order as Bank shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other Persons legally entitled thereto; Borrower shall remain liable
to Bank for any deficiency. If an Event of Default has occurred and is continuing, Bank may apply any funds in its possession, whether from Borrower account balances, payments, proceeds realized as
the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations in such order as Bank shall determine in its sole discretion. Any surplus shall be
paid to Borrower or other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, in its good faith business judgment, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal
amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor. 

        9.6    Bank's Liability for Collateral.    So long as Bank complies with reasonable banking practices regarding the
safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss,
damage or destruction of the Collateral. 

15

   
        9.7    No Waiver; Remedies Cumulative.    Bank's failure, at any time or times, to require strict performance by
Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or
therewith. No waiver hereunder shall be effective unless signed by Bank and then is only effective for the specific instance and purpose for which it is given. Bank's rights and remedies under this
Agreement and the other Loan Documents are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank's exercise of one right or remedy is not an election, and
Bank's waiver of any Event of Default is not a continuing waiver. Bank's delay in exercising any remedy is not a waiver, election, or acquiescence. 

        9.8    Demand Waiver.    Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower
is liable. 

        10    NOTICES    

        All
notices, consents, requests, approvals, demands, or other communication (collectively, "Communication") by any party to this Agreement
or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days
after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile
transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change its address or facsimile
number by giving the other party written notice thereof in accordance with the terms of this Section 10. 

	If to Borrower:	 	CARDIONET, INC.

1010 Second Avenue, Suite 700

San Diego, CA 92101
	 	 	Attn:	 	Chief Financial Officer
	 	 	Fax:	 	(619) 243-7705
	 	 	Email:	 	droberts@cardionet.com
	

If to Bank:	
 	

Silicon Valley Bank

4445 Eastgate Mall, Suite 110

San Diego, CA 92121
	 	 	Attn:	 	Michael White
	 	 	Fax:	 	(858) 622-1424
	 	 	Email:	 	mwhite@svb.com

        11    CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE    

        California
law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in
Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in advance to such
jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other
process issued in such 

16

 

action
or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in Section 10 of
this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower's actual receipt thereof or three (3) days after deposit in the U.S. mails, proper
postage prepaid. 

        TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO
ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

        WITHOUT
INTENDING IN ANY WAY TO LIMIT THE PARTIES' AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable,
the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties
(or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant
to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby
submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure
§§ 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without limitation, entering temporary restraining
orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto shall be
permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures,
then such party may apply to the Santa Clara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the
rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and order applicable to judicial proceedings in the same manner as
a trial court judge. The parties agree
that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant
to the California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against
collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph. 

        12    GENERAL PROVISIONS    

        12.1    Successors and Assigns.    This Agreement binds and is for the benefit of the successors and permitted assigns
of each party. Borrower may not assign this Agreement or any rights or obligations under it without Bank's prior written consent (which may be granted or withheld in Bank's discretion). Bank has the
right, without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank's obligations, rights, and benefits under this
Agreement and the other Loan Documents. 

17

 

        12.2    Indemnification.    Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees,
agents, attorneys, or any other Person affiliated with or representing Bank harmless against: (a) all obligations, demands, claims, and liabilities (collectively, "Claims") asserted by any
other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or arising from transactions
between Bank and Borrower (including reasonable attorneys' fees and expenses), except for Claims and/or losses directly caused by Bank's gross negligence or willful misconduct. 

        12.3    Limitation of Actions.    Any claim or cause of action by Borrower against Bank, its directors, officers,
employees, agents, accountants, attorneys, or any other Person affiliated with or representing Bank based upon, arising from, or relating to this Loan Agreement or any other Loan Document, or any
other transaction contemplated hereby or thereby or relating hereto or thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted or suffered to be done by Bank, its directors,
officers, employees, agents, accountants or attorneys, shall be barred unless asserted by Borrower by the commencement of an action or proceeding in a court of competent jurisdiction by (a) the
filing of a complaint within one year from the earlier of (i) the date any of Borrower's officers or directors had knowledge of the first act, the occurrence or omission upon which such claim
or cause of action, or any part thereof, is based, or (ii) the date this Agreement is terminated, and (b) the service of a summons and complaint on an officer of Bank, or on any other
person authorized to accept service on behalf of Bank, within thirty (30) days thereafter. Borrower agrees that such one-year period is a reasonable and sufficient time for Borrower
to investigate and act upon any such claim or cause of action. The one-year period provided herein shall not be waived, tolled, or extended except by the written consent of Bank in its
sole discretion. This provision shall survive any termination of this Loan Agreement or any other Loan Document. 

        12.4    Time of Essence.    Time is of the essence for the performance of all Obligations in this Agreement. 

        12.5    Severability of Provisions.    Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision. 

        12.6    Amendments in Writing; Integration.    All amendments to this Agreement must be in writing signed by both Bank
and Borrower. This Agreement and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents. 

        12.7    Counterparts.    This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement. 

        12.8    Survival.    All covenants, representations and warranties made in this Agreement continue in full force until
this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of
this Agreement) have been satisfied. The obligation of Borrower in Section 12.2 to indemnify Bank shall survive until the statute of limitations with respect to such claim or cause of action
shall have run. 

        12.9    Confidentiality.    In handling any confidential information, Bank shall exercise the same degree of care that
it exercises for its own proprietary information, but disclosure of information may be made: (a) to Bank's Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any
interest in the Credit Extensions (provided, however, Bank shall use commercially reasonable efforts to obtain such prospective transferee's or purchaser's agreement to the terms of this provision);
(c) as 

18

 

required
by law, regulation, subpoena, or other order; (d) to Bank's regulators or as otherwise required in connection with Bank's examination or audit; and (e) as Bank considers
appropriate in exercising remedies under this Agreement. Confidential information does not include information that either: (i) is in the public domain or in Bank's possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank; or (ii) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the
information. 

        12.10    Attorneys' Fees, Costs and Expenses.    In any action or proceeding between Borrower and Bank arising out of
or relating to the Loan Documents, the prevailing party shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, in addition to any other relief to which it
may be entitled. 

        13    DEFINITIONS    

        13.1    Definitions.    As used in this Agreement, the following terms have the following meanings: 

        "Account" is any "account" as defined in the Code with such additions to such term as may hereafter be made, and includes, without
limitation, all accounts receivable and other sums owing to Borrower. 

        "Account Debtor" is any "account debtor" as defined in the Code with such additions to such term as may hereafter be made. 

        "Advance" or "Advances" means an advance (or advances) under the Revolving Line. 

        "Affiliate" of any Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled
by or is under common control with the Person, and each of that Person's senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person's managers
and members. 

        "Agreement" is defined in the preamble hereof. 

        "Availability Amount" is (a) the lesser of (i) the Revolving Line minus the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit Reserves, minus amounts used for Cash Management Services or (ii) the Borrowing Base minus
(b) the outstanding principal balance of any Advances. 

        "Bank" is defined in the preamble hereof. 

        "Bank Expenses" are all audit fees and expenses, costs, and expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan
Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower. 

        "Basic Rate" is the per annum rate of interest (based on a year of 360 days) equal to the sum of (a) the average of the U.S.
Treasury note yields to maturity for terms equal to the Treasury Note Maturities as quoted in The Wall Street Journal on the Funding Date, plus (b) the Loan Margin. 

        "Borrower" is defined in the preamble hereof 

        "Borrower's Books" are all Borrower's books and records including ledgers, federal and state tax returns, records regarding Borrower's
assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information. 

        "Borrowing Base" is 80% of Eligible Accounts as determined by Bank from Borrower's most recent Borrowing Base Certificate; provided,
however, that Bank may decrease the foregoing percentages in its good faith business judgment based on events, conditions, contingencies, or risks which, as determined by Bank, may adversely affect
Collateral upon written notice to Borrower. 

19

 

        "Borrowing Base Certificate" is that certain certificate in the form attached hereto as  Exhibit D. 

        "Borrowing Resolutions" are, with respect to any Person, those resolutions substantially in the form attached hereto as Exhibit E. 

        "Business Day" is any day that is not a Saturday, Sunday or a day on which Bank is closed. 

        "Cash Equivalents" means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency
or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and
having the highest rating from either Standard & Poor's Ratings Group or Moody's Investors Service, Inc., (c) Bank's certificates of deposit issued maturing no more than one
(1) year after issue; and (d) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses
(a) through (c) of this definition. 

        "Cash Management Services" is defined in Section 2.1.4. 

        "Cash Management Services Sublimit" is defined in Section 2.1.4. 

        "Change in Control" means any event, transaction, or occurrence as a result of which (a) any "person" (as such term is defined in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as an amended (the "Exchange Act")), other than a trustee or other fiduciary
holding securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of Borrower, representing twenty-five percent (25%) or more of the combined voting power of Borrower's then outstanding securities; or (b) during any
period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the Board of Directors of Borrower (together with any new directors whose election by the
Board of Directors of Borrower was approved by a vote of at least two-thirds of the directors then still in office who either were directions at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office. 

        "Code" is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of California; provided,
that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such
term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or
remedies with respect to, Bank's Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term  "Code" shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for purposes on the provisions thereof relating
to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions. 

        "Collateral" is any and all properties, rights and assets of Borrower described on  Exhibit A. 

        "Collateral Account" is any Deposit Account, Securities Account, or Commodity Account. 

        "Commodity Account" is any "commodity account" as defined in the Code with such additions to such term as may hereafter be made. 

        "Communication" is defined in Section 10. 

        "Compliance Certificate" is that certain certificate in the form attached hereto as  Exhibit F. 

        "Contingent Obligation" is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any
indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with 

20

 

recourse
by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent Obligation" does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the
stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person
in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement. 

        "Credit Extension" is any Advance, Letter of Credit, Term Loan, amount utilized for Cash Management Services or any other extension of
credit by Bank for Borrower's benefit. 

        "Current Liabilities" are all obligations and liabilities of Borrower to Bank, plus, without duplication, the aggregate amount of
Borrower's Total Liabilities that mature within one (1) year; in any event, excluding the Subordinated Debt. 

        "Default" means any event which with notice or passage of time or both, would constitute an Event of Default. 

        "Default Rate" is defined in Section 2.3(b). 

        "Deposit Account" is any "deposit account" as defined in the Code with such additions to such term as may hereafter be made. 

        "Designated Deposit Account" is Borrower's deposit account, account number 3300244686, maintained with Bank. 

        "Dollars," "dollars" and "$" each mean lawful money of the United States. 

        "Domestic Subsidiary" means a Subsidiary organized under the laws of the United States or any state or territory thereof or the District
of Columbia. 

        "Effective Date" is the date Bank executes this Agreement and as indicated on the signature page hereof. 

        "Eligible Accounts" are Accounts which arise in the ordinary course of Borrower's business that meet all Borrower's representations and
warranties in Section 5.3. Bank reserves the right, at any time and from time to time after the Effective Date, to adjust any of the criteria set forth below and to establish new criteria in
its good faith business judgment with written notice to Borrower. Unless Bank agrees otherwise in writing, Eligible Accounts shall not include: 

        (a)   Accounts
for which the Account Debtor has not been invoiced; 

        (b)   Accounts
that the Account Debtor has not paid within one hundred twenty (120) days of invoice date; 

        (c)   Accounts
owing from an Account Debtor, fifty percent (50%) or more of whose Accounts have not been paid within one hundred eighty (180) days of invoice date; 

        (d)   Credit
balances over one hundred (120) days from invoice date; 

        (e)   Accounts
owing from an Account Debtor, including Affiliates, whose total obligations to Borrower exceed twenty-five (25%) of all Accounts, for the amounts
that exceed that percentage, unless Bank approves in writing; 

        (f)    Accounts
owing from an Account Debtor which does not have its principal place of business in the United States except for Eligible Foreign Accounts; 

21

 

        (g)   Accounts
owing from an Account Debtor which is a federal, state or local government entity or any department, agency, or instrumentality thereof except for
(i) Accounts of the United States if Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended and
(ii) Medicare and Medicaid invoices; 

        (h)   Accounts
owing from an Account Debtor to the extent that Borrower is indebted or obligated in any manner to the Account Debtor (as creditor, lessor, supplier or
otherwise—sometimes called "contra" accounts, accounts payable, customer deposits or credit accounts), with the exception of customary credits, adjustments and/or discounts given to an
Account Debtor by Borrower in the ordinary course of its business; 

        (i)    Accounts
for demonstration or promotional equipment, or in which goods are consigned, or sold on a "sale guaranteed", "sale or return", "sale on approval", "bill and
hold", or other terms if Account Debtor's payment may be conditional; 

        (j)    Accounts
for which the Account Debtor is Borrower's Affiliate, officer, employee, or agent; 

        (k)   Accounts
in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business; 

        (l)    Accounts
owing from an Account Debtor with respect to which Borrower has received deferred revenue (but only to the extent of such deferred revenue); 

        (m)  Accounts
for which Bank in its reasonable good faith business judgment determines collection to be doubtful; and 

        (n)   other
Accounts Bank deems ineligible in the exercise of its reasonable good faith business judgment. 

        "Eligible Foreign Accounts" are Accounts for which the Account Debtor does not have its principal place of business in the United States
but are otherwise Eligible Accounts that are (a) covered by credit insurance satisfactory to Bank, less any deductible; (b) supported by letter(s) of credit acceptable to Bank; or
(c) that Bank approves in writing. 

        "Equipment" is all "equipment" as defined in the Code with such additions to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing. 

        "ERISA" is the Employment Retirement Income Security Act of 1974, and its regulations. 

        "Event of Default" is defined in Section 8. 

        "Foreign Currency" means lawful money of a country other than the United States. 

        "Foreign Subsidiary" means any Subsidiary which is not a Domestic Subsidiary. 

        "Funding Date" is any date on which a Credit Extension is made to or on account of Borrower which shall be a Business Day. 

        "GAAP" is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by
a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination. 

        "General Intangibles" is all "general intangibles" as defined in the Code in effect on the date hereof with such additions to such term as
may hereafter be made, and includes without limitation, all copyright rights, copyright applications, copyright registrations and like protections in each work of 

22

 

authorship
and derivative work, whether published or unpublished, any patents, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether
registered or not, any trade secret rights, including any rights to unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other tax refunds, security and other deposits, options to purchase or sell real or personal property, rights in all litigation
presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of
insurance and rights to payment of any kind. 

        "Indebtedness" is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and
other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and
(d) Contingent Obligations. 

        "Insolvency Proceeding" is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or
insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. 

        "Interest Expense" means for any fiscal period, interest expense (whether cash or non-cash) determined in accordance with GAAP
for the relevant period ending on such date, including, in any event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower and its Subsidiaries, including, without
limitation or duplication, all commissions, discounts, or related amortization and other fees and charges with respect to letters of credit and bankers' acceptance financing and the net costs
associated with interest rate swap, cap, and similar arrangements, and the interest portion of any deferred payment obligation (including leases of all types). 

        "Inventory" is all "inventory" as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such
inventory as is temporarily out of Borrower's custody or possession or in transit and including any returned goods and any documents of title representing any of the above. 

        "Investment" is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan,
advance or capital contribution to any Person. 

        "IP Agreement" is that certain Intellectual Property Security Agreement executed and delivered by Borrower to Bank dated as of the
Effective Date. 

        "Key Person" means Borrower's Chief Executive Officer and Chairman, presently James M. Sweeney. 

        "Letter of Credit" means a standby letter of credit issued by Bank or another institution based upon an application, guarantee, indemnity
or similar agreement on the part of Bank as set forth in Section 2.1.2. 

        "Letter of Credit Application" is defined in Section 2.1.2(a). 

        "Letter of Credit Reserve" has the meaning set forth in Section 2.1.2(d). 

        "Lien" is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. 

        "Loan Documents" are, collectively, this Agreement, the Perfection Certificate, the IP Agreement, the Subordination Agreement, any note,
or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement between Borrower any Guarantor and/or for the benefit of Bank in connection with this Agreement,
all as amended, restated, or otherwise modified. 

23

 

        "Loan Margin" is 350 basis points. 

        "Make-Whole Premium" is an amount equal to 3.00% of the outstanding Term Loan if the prepayment is made on or before the
second anniversary of the Effective Date; or 1.00% of the outstanding Term Loan if the prepayment is made after the second anniversary of the Effective Date but before the Term Loan Maturity Date. 

        "Material Adverse Change" is (a) a material impairment in the perfection or priority of Bank's Lien in the Collateral or in the
value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; (c) a material impairment of the prospect of
repayment of any portion of the Obligations; or (d) Bank determines, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower
shall fail to comply with one or more of the financial covenants in Section 6 during the next succeeding financial reporting period. 

        "Net Income" means, as calculated on a consolidated basis for Borrower and its Subsidiaries for any period as at any date of
determination, the net profit (or loss), after provision for taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period. 

        "Obligations" are Borrower's obligation to pay when due any debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank
now or later, whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, all obligations relating to letters of credit, cash management services, and foreign
exchange contracts, if any, and including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and the performance of Borrower's duties under the Loan Documents. 

        "Operating Documents" are, for any Person, such Person's formation documents, as certified with the Secretary of State of such Person's
state of formation on a date that is no earlier than 30 days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person
is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each
of the foregoing with all current amendments or modifications thereto. 

        "Payment/Advance Form" is that certain form attached hereto as Exhibit B. 

        "Perfection Certificate" is defined in Section 5.1. 

        "Permitted Indebtedness" is: 

        (a)   Borrower's
Indebtedness to Bank under this Agreement and the other Loan Documents; 

        (b)   Indebtedness
existing on the Effective Date and shown on the Perfection Certificate; 

        (c)   Subordinated
Debt; 

        (d)   unsecured
Indebtedness to trade creditors incurred in the ordinary course of business; 

        (e)   Indebtedness
incurred as a result of endorsing negotiable instruments received in the ordinary course of business; 

        (f)    Indebtedness
not to exceed $100,000 in the aggregate amount outstanding secured by a lien described in clauses (c) of the defined term "Permitted Liens"; 

        (g)   extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (f) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be. 

24

 

        "Permitted Investments" are: 

        (a)   Investments
shown on the Perfection Certificate and existing on the Effective Date; 

        (b)   (i) Cash
Equivalents, and (ii) any Investments permitted by Borrower's investment policy, as amended from time to time, provided that such investment
policy (and any such amendment thereto) has been approved by Bank; 

        (c)   Investments
consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower; 

        (d)   Investments
consisting of deposit accounts in which Bank has a perfected security interest or as otherwise permitted under Section 6.6; 

        (e)   Investments
accepted in connection with Transfers permitted by Section 7.1; 

        (f)    Investments
of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries not to exceed $25,000 in the aggregate in any fiscal
year; 

        (g)   Investments
consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and
(ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by
Borrower's Board of Directors; 

        (h)   Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent
obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; 

        (i)    Investments
consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary
course of business; provided that this paragraph (i) shall not apply to Investments of Borrower in any Subsidiary; and 

        (j)    joint
ventures or strategic alliances in the ordinary course of Borrower's business consisting of the non-exclusive licensing of technology, the development
of technology or the providing of technical support, provided that any cash investments by Borrower do not exceed $25,000 in the aggregate in any fiscal year. 

        "Permitted Liens" are: 

        (a)   Liens
existing on the Effective Date and shown on the Perfection Certificate, or arising under this Agreement and the other Loan Documents; 

        (b)   Liens
for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on its Books, if they have no priority over any of Bank's Liens; 

        (c)   Purchase
money Liens (or Liens incurred in connection with capital leases) (i) on Equipment acquired, leased or held by Borrower incurred for financing the
acquisition of the Equipment securing no more than $100,000 in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if
the Lien is confined to the property and improvements and the proceeds of the Equipment; 

        (d)   statutory
Liens securing claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other Persons imposed without action of such parties,
provided, they have no priority over any of Bank's Lien and the aggregate amount of such Liens does not at any time exceed $25,000; 

        (e)   Liens
to secure payment of workers' compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary
course of business, provided, they 

25

 

have
no priority over any of Bank's Liens and the aggregate amount of the Indebtedness secured by such Liens does not at any time exceed $25,000; 

        (f)    Liens
incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c),  but any extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the
indebtedness may not increase; 

        (g)   leases
or subleases of real property granted in the ordinary course of business, and leases, subleases, non-exclusive licenses or sublicenses of property
(other than real property or intellectual property) granted in the ordinary course of Borrower's business, if the leases, subleases, licenses and
sublicenses do not prohibit granting Bank a security interest; 

        (h)   non-exclusive
license of intellectual property granted to third parties in the ordinary course of business; 

        (i)    Liens
arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 or 8.7; 

        (j)    Liens
with respect to security deposits issued to Borrower's landlords; 

        (k)   Liens
with respect to Subordinated Debt; and 

        (l)    Liens
in favor of other financial institutions arising in connection with Borrower's deposit and/or securities accounts held at such institutions, provided that Bank has
a perfected security interest in the amounts held in such deposit and/or securities accounts or as otherwise permitted under Section 6.6. 

        "Person" is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated
organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency. 

        "Prime Rate" is Bank's most recently announced "prime rate," even if it is not Bank's lowest rate. 

        "Quick Assets" is, on any date, Borrower's consolidated, unrestricted cash, Cash Equivalents and net accounts receivable. 

        "Registered Organization" is any "registered organization" as defined in the Code with such additions to such term as may hereafter be
made 

        "Responsible Officer" is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower. 

        "Revolving Line" is an Advance or Advances in an aggregate amount of up to $2,000,000 outstanding at any time. 

        "Revolving Line Maturity Date" is the date 728 days from the Effective Date. 

        "Securities Account" is any "securities account" as defined in the Code with such additions to such term as may hereafter be made. 

        "Subordinated Debt" is indebtedness incurred by Borrower subordinated to all of Borrower's now or hereafter indebtedness to Bank (pursuant
to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into between Bank and the other creditor), on terms acceptable to Bank. 

        "Subsidiary" means, with respect to any Person, any Person of which more than 50% of the voting stock or other equity interests is owned
or controlled, directly or indirectly, by such Person or one or more Affiliates of such Person. 

26

 

        "Term Loan" is a loan made by Bank pursuant to the terms of Section 2.1.6 hereof. 

        "Term Loan Amount" is an aggregate amount equal to $3,000,000 outstanding at any time. 

        "Term Loan Maturity Date" is July    , 2010. 

        "Term Loan Payment" is defined in Section 2.1.6(b). 

        "Total Liabilities" is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower's consolidated balance
sheet, including all Indebtedness, and current portion of Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all other Subordinated Debt. 

        "Transfer" is defined in Section 7.1. 

        "Treasury Note Maturities" are thirty six (36) months and sixty (60) months. 

        "Unused Revolving Line Facility Fee" is defined in Section 2.4(c). 

        Signature
page follows. 

27

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date. 

	BORROWER:	 
	

CARDIONET, INC.	

 
	

By	
 	

/s/  MICHAEL FORESE      
	

 
	Name:	 	MICHAEL FORESE
	 
	Title:	 	CFO
	 
	

BANK:	

 
	

SILICON VALLEY BANK	

 
	

By	
 	

/s/  SUSAN L. WORSHAM      
	

 
	Name:	 	Susan L. Worsham
	 
	Title:	 	Deal Team Leader
	 

	

Effective Date:	
 	

	

 

EXHIBIT A  

        The Collateral consists of all of Borrower's right, title and interest in and to the following personal property: 

        All
goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise
agreements, General Intangibles, commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures,
letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned
or hereafter acquired, wherever located; and 

        all
Borrower's Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories,
accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing. 

        Notwithstanding
the foregoing, or anything to the contrary in the Loan Documents, the Collateral shall not include (i) any property that is nonassignable by its terms without the
consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, Sections 9406 and 9408 of the
California Uniform Commercial Code), or (ii) property, the granting of a security interest therein is contrary to applicable law, provided that upon the cessation of any such restriction or
prohibition, such property shall automatically become part of the Collateral. 

EXHIBIT B  

Loan Payment/Advance Request Form  

DEADLINE for Same DAY Processing is NOON P.S.T.*  

	Fax To:	 	 	 	Date:	 	

	
LOAN PAYMENT:	
 	

CARDIONET, INC.
	

From Account #	
 	

 (Deposit Account #)	
 	

To Account #	
 	

 (Loan Account #)
	

Principal $	
 	

	
 	

and/or Interest $	
 	

	

Authorized Signature:	
 	

	
 	

Phone Number:	
 	

	

Print Name/Title:	
 	

	
 	

 	
 	

 
	
LOAN ADVANCE:	
 	

 	
 	

 	
 	

 
	

Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.
	

From Account #	
 	

 (Loan Account #)	
 	

To Account #	
 	

 (Deposit Account #)
	

Amount of Advance $	
 	

	
 	

 	
 	

 
	

All Borrower's representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects on the date of the request for an advance; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate
and complete in all material respects as of such date:
	

Authorized Signature:	
 	

	
 	

Phone Number:	
 	

	

Print Name/Title:	
 	

	
 	

 	
 	

 

	
OUTGOING WIRE REQUEST:	
 	

 	
 	

 
	

Complete only if all or a portion of funds from the loan advance above is to be wired.

Deadline for same day processing is noon, P.S.T.
	

Beneficiary Name:	
 	

	
 	

Amount of Wire: $	
 	

	

Beneficiary Bank:	
 	

	
 	

Account Number:	
 	

	

City and State:	
 	

	
 	

 	
 	

 
	

Beneficiary Bank Transit (ABA) #:	
 	

	
 	

Beneficiary Bank Code (Swift, Sort, Chip, etc.):	
 	

	

 	
 	

 	
 	

(For International Wire Only)	
 	

 
	

Intermediary Bank:	
 	

	
 	

Transit (ABA) #:	
 	

	

For Further Credit to:	
 	

	

Special Instruction:	
 	

	
By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering
funds transfer service(s), which agreements(s) were previously received and executed by me (us).
	

Authorized Signature:	
 	

	
 	

2nd Signature (if required):	
 	

	

Print Name/Title:	
 	

	
 	

Print Name/Title:	
 	

	

Telephone #:	
 	

	
 	

Telephone #:	
 	

	*
	Unless
otherwise provided for an Advance bearing interest at LIBOR. 

EXHIBIT C  

        PERFECTION CERTIFICATE 

EXHIBIT D  

        BORROWING BASE CERTIFICATE  

Borrower: CARDIONET, INC.

Lender: Silicon Valley Bank

Commitment Amount: $2,000,000 

	ACCOUNTS RECEIVABLE	 	 	 
	1.	 	Accounts Receivable Book Value as of                         	 	$	 
	2.	 	Additions (please explain on reverse)	 	$	 
	3.	 	TOTAL ACCOUNTS RECEIVABLE	 	$	 
	

ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)	
 	
 	

 
	4.	 	Un-invoiced Accounts	 	$	 
	5.	 	Amounts over 120 days due	 	$	 
	6.	 	Balance of 50% over 180 day accounts	 	$	 
	7.	 	Credit balances over 90 days	 	$	 
	8.	 	Concentration Limits	 	$	 
	9.	 	Foreign Accounts	 	$	 
	10.	 	Governmental Accounts (other than Medicare or Medicade invoices)	 	$	 
	11.	 	Contra Accounts	 	$	 
	12.	 	Promotion or Demo Accounts	 	$	 
	13.	 	Intercompany/Employee Accounts	 	$	 
	14.	 	Disputed Accounts	 	$	 
	15.	 	Deferred Revenue	 	$	 
	16.	 	Other (please explain on reverse)	 	$	 
	17.	 	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS	 	$	 
	18.	 	Eligible Accounts (#3 minus #17)	 	$	 
	19.	 	ELIGIBLE AMOUNT OF ACCOUNTS (80% of #18)	 	$	 
	

BALANCES	
 	
 	

 
	20.	 	Maximum Loan Amount	 	$	 
	21.	 	Total Funds Available [Lesser of #20 or #19]	 	$	 
	22.	 	Present balance owing on Line of Credit	 	$	 
	23.	 	Outstanding under Sublimits (Letters of Credit and Cash Management Services)	 	$	 
	24.	 	RESERVE POSITION (#21 minus #22 & #23)	 	$	 

        The undersigned represents and warrants that this is true, complete and correct, and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the undersigned and Silicon Valley Bank.  

	COMMENTS:	 	 
	

By:	
 	

 Authorized Signer	
 	

 
	

Date:	
 	

	
 	

 

	 	 	BANK USE ONLY
	

 	
 	

Received by:	
 	

 AUTHORIZED SIGNER
	

 	
 	

Date:	
 	

	

 	
 	

Verified:	
 	

 AUTHORIZED SIGNER
	

 	
 	

Date:	
 	

	

 	
 	

Compliance Status:	
 	

Yes	
 	

No

EXHIBIT E  

 BORROWING RESOLUTIONS  

        [GRAPHIC] Silicon Valley Bank

CORPORATE BORROWING CERTIFICATE  

	BORROWER: CARDIONET, INC.	 	DATE:
	BANK: Silicon Valley Bank	 	 

        I
hereby certify as follows, as of the date set forth above: 

        1.     I
am the Secretary, Assistant Secretary or other officer of the Borrower. My title is as set forth below. 

        2.     Borrower's
exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of California. 

        3.     Attached
hereto are true, correct and complete copies of Borrower's Articles of Incorporation (including amendments), as filed with the Secretary of State of the state in
which Borrower is incorporated as set forth in paragraph 1 above. Such Articles of Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force
and effect as of the date hereof. 

        4.     The
following resolutions were duly and validly adopted by Borrower's Board of Directors at a duly held meeting of such directors (or pursuant to a unanimous written
consent or other authorized corporate action). Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and
Bank may rely on them until Bank receives written notice of revocation from Borrower. 

RESOLVED, that any one of the following officers or employees of Borrower, whose names, titles and
signatures are below, may act on behalf of Borrower: 

	Name
	 	Title
	 	Signature
	 	Authorized to Add or Remove Signatories

	

	
 	

	
 	

	
 	

/ /
	

	
 	

	
 	

	
 	

/ /
	

	
 	

	
 	

	
 	

/ /
	

	
 	

	
 	

	
 	

/ /

RESOLVED FURTHER, that any one of the persons designated above with a checked box beside his or her name
may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower. 

RESOLVED FURTHER, that such individuals may, on behalf of Borrower: 

Borrow Money.    Borrow money from Silicon Valley Bank ("Bank"). 

Execute Loan Documents.    Execute any loan documents Bank requires. 

Grant Security.    Grant Bank a security interest in any of Borrower's assets. 

Negotiate Items.    Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an
interest and receive cash or otherwise use the proceeds. 

Letters of Credit.    Apply for letters of credit from Bank. 

Foreign Exchange Contracts.    Execute spot or forward foreign exchange contracts. 

Further Acts.    Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including
documents or agreement that waive Borrowers right to a jury trial) they believe to be necessary to effectuate such resolutions. 

RESOLVED FURTHER, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified. 

        5.     The
persons listed above are Borrower's officers or employees with their titles and signatures shown next to their names. 

	 	 	By:	

	 	 	Name:	

	 	 	Title:	

        ***  If the Secretary, Assistant Secretary or other certifying officer executing above is designated by the resolutions set forth in
paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower.

	 	I, the	
 [print title]	of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

	 	 	By:	

	 	 	Name:	

	 	 	Title:	

EXHIBIT F  

 COMPLIANCE CERTIFICATE  

	TO: SILICON VALLEY BANK	 	Date:            
	FROM: CARDIONET, INC.	 	 

        The
undersigned authorized officer of CardioNet, Inc. ("Borrower") certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the
"Agreement"), (1) Borrower is in complete compliance for the period ending                        with all required covenants
except as noted below, (2) there are no Events of Default,
(3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required
tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to
the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of
which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in
accordance with generally GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be
requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is
delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement. 

Please indicate compliance status by circling Yes/No under "Complies" column.  

	Reporting Covenant
 
	 	Required
	 	Complies

	Monthly financial statements with Compliance Certificate	 	Monthly within 30 days	 	Yes	 	No
	Annual financial statement (CPA Audited) + CC	 	FYE within 150 days	 	Yes	 	No
	10-Q, 10-K and 8-K	 	Within 5 days after filing with SEC	 	Yes	 	No
	Borrowing Base Certificate A/R & A/P Agings	 	Monthly within 20 days	 	Yes	 	No
	Annual Financial Projections	 	45 days after FYE	 	Yes	 	No

        The
following Intellectual Property was registered after the Effective Date (if no registrations, state "None") 

	Financial Covenant
 
	 	Required
	 	Actual
	 	Complies

	Maintain on a Monthly Basis:	 	 	 	 	 	 	 	 	 	 
	Minimum Quick Ratio	 	 	1.00:1.00	 	 	:l.00	 	Yes	 	No
	

Measured on a Quarterly Basis	
 	
 	

 	
 	
 	

 	
 	

 	
 	

 
	Revenue to Plan;	 	 	70	%;	 	 	%	Yes	 	No
	Maximum Losses	 	$	3,000,000	 	$	 	 	Yes	 	No

        The
following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate. 

        The
following are the exceptions with respect to the certification above: (If no exceptions exist, state "No exceptions to note.") 

	

	

	

	

CARDIONET, INC.	
 	

 
	

By:	
 	

	
 	

 
	

Name:	
 	

	
 	

 
	

Title:	
 	

	
 	

 

	 	 	BANK USE ONLY
	

 	
 	

Received by:	
 	

 AUTHORIZED SIGNER
	

 	
 	

Date:	
 	

	

 	
 	

Verified:	
 	

 AUTHORIZED SIGNER
	

 	
 	

Date:	
 	

	

 	
 	

Compliance Status:	
 	

Yes	
 	

No

Schedule 1 to Compliance Certificate  

 Financial Covenants of Borrower  

Dated:

	I.	 	Quick Ratio (Section 6.7(a))
	

Required:	
 	

1.00:1.00	
 	

 	
 	
 	

 
	

Actual:	
 	

 	
 	

 	
 	

 	
 	
 	

 
	

A.	
 	

Aggregate value of the unrestricted cash and cash equivalents of Borrower and its Subsidiaries	
 	
$
	

	

B.	
 	

Aggregate value of the net billed accounts receivable of Borrower and its Subsidiaries	
 	
$
	

	

C.	
 	

Quick Assets (the sum of lines A plus B)	
 	
$
	

	

D.	
 	

Aggregate value of Obligations to Bank	
 	
$
	

	

E	
 	

Aggregate value of liabilities of Borrower and its Subsidiaries (including all Indebtedness) that matures within one (1) year (but excluding Subordinated Debt)	
 	
$
	

	

F.	
 	

Current Liabilities (the sum of lines D and E)	
 	
$
	

	

G.	
 	

Quick Ratio (line C divided by line F)	
 	
 	

	

Is line G equal to or greater than 1.00:1:00?	
 	
 	

 
	

 	
 	

	
 	

No, not in compliance	
 	

	
 	

Yes, in compliance =	
 	
 	

 
	

II.	
 	
Performance to Plan (Section 6.7(b))	
 	
 	

 
	

Required:	
 	

Net Income shall be 70% of Borrower's projected performance	
 	
 	

 
	

Actual:	
 	

 	
 	

 	
 	

 	
 	
 	

 
	

A.	
 	

Quarterly Net Income	
 	
$
	

	

Are the values of line A at least 70% of the value projected for such items in Borrower's business plan?	
 	
 	

 
	

 	
 	

	
 	

No, not in compliance	
 	

	
 	

Yes, in compliance =	
 	
 	

 

EXHIBIT E  

 BORROWING RESOLUTIONS  

 [GRAPHIC] Silicon Valley Bank  

 Corporate Borrowing Certificate  

	BORROWER: CARDIONET, INC.	 	DATE:            
	Bank: Silicon Valley Bank	 	 

        I
hereby certify as follows, as of the date set forth above: 

        1.     I
am the Secretary, Assistant Secretary or other officer of the Borrower. My title is as set forth below. 

        2.     Borrower's
exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of California. 

        3.     Attached
hereto are true, correct and complete copies of Borrower's Articles of Incorporation (including amendments), as filed with the Secretary of State of the state in
which Borrower is incorporated as set forth in paragraph 1 above. Such Articles of Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force
and affect as of the date hereof. 

        4.     The
following resolutions were duly and validly adopted by Borrower's Board of Directors at a duly held meeting of such directors (or pursuant to a unanimous written
consent or other authorized corporate action). Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and
Bank may rely on them until Bank receives written notice of revocation from Borrower. 

RESOLVED, that any one of the following officers or employees of Borrower, whose names, titles and
signatures are below, may act on behalf of Borrower: 

	Name
	 	Title
	 	Signature
	 	Authorized to Add or Remove Signatories

	

Michael Forese
	
 	

CFO
	
 	

/s/  MICHAEL FORESE      
	
 	

/ /
	

	
 	

	
 	

	
 	

/ /
	

	
 	

	
 	

	
 	

/ /
	

	
 	

	
 	

	
 	

/ /

        RESOLVED FURTHER, that any one of the persons designated above with a checked box beside
his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower. 

        RESOLVED FURTHER, that such individuals may, on behalf of Borrower: 

        Borrow Money.    Borrow money from Silicon Valley Bank ("Bank"). 

        Execute Loan Documents.    Execute any loan documents Bank requires. 

        Grant Security.    Grant Bank a security interest in any of Borrower's assets. 

        Negotiate Items.    Negotiate or discount all drafts, trade acceptances, promissory notes, or other 

        indebtedness
in which Borrower has an interest and receive cash or otherwise use the proceeds. 

        Letters of Credit.    Apply for letters of credit from Bank. 

        Foreign Exchange Contracts.    Execute spot or forward foreign exchange contracts. 

        Further Acts.    Designate other individuals to request advances, pay fees and costs and execute other documents or agreements
(including documents or agreements that waive Borrowers right to a jury trial) they believe to be necessary to effectuate such resolutions. 

        RESOLVED FURTHER, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified. 

        5.     The
persons listed above are Borrower's officers or employees with their titles and signatures shown next to their names. 

	 	 	By:	/s/  DOREEN ROBERTS      

	 	 	Name:	DOREEN ROBERTS

	 	 	Title:	CORP. SECRETARY

        *** If the Secretary, Assistant Secretary or other certifying officer executing above is designated by the resolutions set forth in paragraph 4 as one of
the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower.

	 	 	I, the	 	
 [print title]	 	of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

	 	 	By:	

	 	 	Name:	

	 	 	Title:	

QuickLinks

Exhibit 10.12

LOAN AND SECURITY AGREEMENT

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