Document:

Exhibit 10.3

 

SECOND AMENDED AND RESTATED

 

 

SENIOR SUBORDINATED REVOLVING CREDIT AGREEMENT

 

 

BY AND BETWEEN

 

 

CLARIENT, INC.

 

 

AND

 

 

SAFEGUARD DELAWARE, INC.

 

 

DATED FEBRUARY 27, 2009

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  LOANS TO BORROWER;
  ISSUANCE OF WARRANTS

  	
  7

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1. Advances

  	
  7

  
	
   

  	
  2.2. Use of Proceeds

  	
  7

  
	
   

  	
  2.3. Interest

  	
  8

  
	
   

  	
  2.4. Renewal Fee

  	
  8

  
	
   

  	
  2.5. Payments

  	
  8

  
	
   

  	
  2.6. Manner of Payment

  	
  8

  
	
   

  	
  2.7. Prepayments

  	
  8

  
	
   

  	
  2.8. Issuance of Warrants

  	
  9

  
	
   

  	
   

  	
   

  
	
  3.

  	
  CLOSING; DELIVERIES;
  CONDITIONS TO ADVANCE

  	
  9

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1. Closing Date

  	
  9

  
	
   

  	
  3.2. Closing Deliveries
  and Actions

  	
  9

  
	
   

  	
  3.3. Conditions to Advance

  	
  10

  
	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND
  WARRANTIES OF BORROWER

  	
  11

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1. Organization and
  Qualification

  	
  11

  
	
   

  	
  4.2. Power and Authority

  	
  11

  
	
   

  	
  4.3. Subsidiaries and
  Affiliates

  	
  11

  
	
   

  	
  4.4. Capitalization

  	
  11

  
	
   

  	
  4.5. Authorization

  	
  12

  
	
   

  	
  4.6. No Violations or
  Conflicts

  	
  12

  
	
   

  	
  4.7. Consents and
  Approvals

  	
  12

  
	
   

  	
  4.8. Financial Statements;
  Disclosure

  	
  13

  
	
   

  	
  4.9. Absence of Changes

  	
  13

  
	
   

  	
  4.10. Litigation

  	
  14

  
	
   

  	
  4.11. Intellectual Property

  	
  14

  
	
   

  	
  4.12. Title to Assets,
  Properties and Rights

  	
  14

  
	
   

  	
  4.13. Compliance with
  Laws; Legal Requirements

  	
  15

  
	
   

  	
  4.14. Employees and Labor
  Matters

  	
  15

  
	
   

  	
  4.15. Brokers and Finders

  	
  16

  
	
   

  	
  4.16. Tax Matters

  	
  16

  
	
   

  	
  4.17. Books and Records

  	
  16

  
	
   

  	
  4.18. Offering Valid

  	
  16

  
	
   

  	
   

  	
   

  
	
  5.

  	
  COVENANTS

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1. Negative Covenants

  	
  17

  
	
   

  	
  5.2. Affirmative Covenants

  	
  18

  

 

i

 

	
   

  	
  5.3. Right of First Offer
  and Refusal

  	
  19

  
	
   

  	
  5.4. No Third-Party Rights

  	
  19

  
	
   

  	
  5.5. Security Interests

  	
  19

  
	
   

  	
   

  	
   

  
	
  6.

  	
  SURVIVAL OF
  REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ETC

  	
  20

  
	
   

  	
   

  	
   

  
	
  7.

  	
  EVENTS OF DEFAULT;
  REMEDIES

  	
  20

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1. Events of Default

  	
  20

  
	
   

  	
  7.2. Remedies

  	
  21

  
	
   

  	
   

  	
   

  
	
  8.

  	
  MISCELLANEOUS

  	
  21

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1. Governing Law;
  Submission to Jurisdiction.

  	
  21

  
	
   

  	
  8.2. Assignments; Successors;
  Third Party Rights

  	
  21

  
	
   

  	
  8.3. Entire
  Agreement; Amendment

  	
  22

  
	
   

  	
  8.4. Notices

  	
  22

  
	
   

  	
  8.5. Failure or Indulgence
  Not Waiver; Remedies Cumulative

  	
  23

  
	
   

  	
  8.6. Severability

  	
  23

  
	
   

  	
  8.7.
  Section Headings; Construction

  	
  23

  
	
   

  	
  8.8. Counterparts

  	
  23

  
	
   

  	
  8.9. Fees and Expenses

  	
  23

  
	
   

  	
  8.10. Reinstatement

  	
  24

  
	
   

  	
  8.11. Payment on
  Non-Business Days

  	
  24

  
	
   

  	
  8.12. Time of Day

  	
  24

  
	
   

  	
  8.13. Waiver of Jury Trial

  	
  24

  
	
   

  	
   

  	
   

  
	
  9.

  	
  LENDER REPRESENTATIONS

  	
  24

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1. Lender
  Representations

  	
  24

  

 

	
  Exhibits

  	
   

  
	
   

  	
   

  
	
  Exhibit A
           -

  	
  Form of Note

  
	
  Exhibit B
           -

  	
  Form of Warrant

  
	
  Exhibit C
           -

  	
  Form of Borrowing Request

  
	
  Exhibit D
           -

  	
  Form of Amended and Restated Registration
  Rights Agreement

  
	
  Exhibit E
           -

  	
  Form of Cash Projection Schedule

  

 

ii

 

THIS INSTRUMENT AND THE RIGHTS EVIDENCED HEREBY
ARE SUBJECT TO THE TERMS OF (A) THAT CERTAIN SUBORDINATION AGREEMENT, MADE
AS OF MARCH 7, 2007, BY AND BETWEEN 
SAFEGUARD DELAWARE, INC., AND COMERICA BANK, AND ACKNOWLEDGED BY
CLARIENT, INC., AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM
TIME TO TIME AND (B) THAT CERTAIN AMENDED AND RESTATED SUBORDINATION
AGREEMENT DATED FEBRUARY 27, 2009 BY AND BETWEEN GEMINO HEALTHCARE FINANCE, LLC
AND SAFEGUARD DELAWARE, AMONG OTHERS, AS AMENDED, RESTATED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, AND ANY TRANSFEREE BY ACCEPTANCE OF SUCH
TRANSFER AGREES TO BE BOUND BY THE TERMS OF BOTH FOREGOING AGREEMENTS.

 

SECOND AMENDED AND RESTATED

 

SENIOR SUBORDINATED REVOLVING CREDIT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED SENIOR
SUBORDINATED REVOLVING CREDIT AGREEMENT (this “Agreement”)
is made and entered into February 27, 2009, by and among CLARIENT, INC, a
Delaware corporation (“Borrower”),
and SAFEGUARD DELAWARE, INC., a Delaware corporation (the “Lender”).

 

RECITALS:

 

WHEREAS, Lender provided to Borrower a
subordinated revolving credit facility in the maximum aggregate principal
amount of $21,000,000, on the terms and conditions set forth in that certain
Amended and Restated Senior Subordinated Revolving Credit Agreement dated as of
March 14, 2008, as amended by that certain First Amendment and Consent of
Amended and Restated Senior Subordinated Revolving Credit Agreement dated as of
July 31, 2008 (the “Prior Mezzanine Facility”);
and

 

WHEREAS, Borrower has requested, and Lender
has agreed, to amend and restate the terms of the Prior Mezzanine Facility, to
(among other things) increase the maximum aggregate principal amount of the
Commitment to $30,000,000), as set forth herein.

 

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

 

1.                                      DEFINITIONS.

 

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

 

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

 

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

 

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

 

“Available Amount” means, at
any time of determination, the Commitment less all Outstanding Amounts.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

“Capital Transaction”
means the issuance by Borrower of (x) debt from a single source (or
affiliated sources) or in a single syndicated facility,  (y) equity (including debt convertible
to equity) or (z) both (x) and (y) if the debt and equity are
from a single source or affiliated sources, whether in a single transaction or
series of directly related transactions, which results in net proceeds to
Borrower not less than $1,000,000.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Commitment”  means the maximum aggregate
principal amount  which may be borrowed
hereunder (inclusive of those amounts borrowed under the Prior Mezzanine
Facility), being, as of the date hereof, $30,000,000.

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“GE Capital Facility”  means, collectively, (a) that
certain Loan and Security Agreement, dated as of September 29, 2006, by
and among Borrower, Clarient Diagnostic Services, Inc., CLRT Acquisition,
LLC,  and GE Capital; and (b) (i) that
certain Master Lease Agreement, dated as of June 23, 2004, by and between
ChromaVision Oncology Services, Inc. (predecessor to Clarient Diagnostic
Services, Inc., an affiliate of Borrower) and GE Capital, and (ii) that
certain Master Security Agreement, dated as of July 15, 2003, by and between
Borrower and GE Capital, and, in each case, all documents, instruments and
agreements executed and delivered in connection therewith and all as amended
through the termination thereof.

 

“Gemino” means Gemino Healthcare Finance, LLC.

 

“Gemino Capital Facility” meant the debt facility established by
that certain Credit Agreement dated July 31, 2008 between Gemino and
Clarient, Inc., Clarient Diagnostic Services, Inc. and Chromavision
International, Inc, as amended through the date hereof, and all documents,
instruments and agreements executed and delivered in connection therewith, and
as the same may be further amended from time to time.

 

“Gemino/Safeguard
Subordination Agreement” means that certain Amended and Restated Subordination
Agreement dated February 27, 2009 in favor of Gemino by Lender, Safeguard
Scientifics (Delaware), Inc. and Safeguard Scientifics, Inc. as
amended from time to time.

 

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

 

“Guaranteed Obligations” means
as to any Person, without duplication, any obligation of such Person
guaranteeing, providing comfort or otherwise supporting any Indebtedness,
lease, dividend, or other obligation (“primary obligation”)
of any other Person in any matter; provided that the term 

 

3

 

Guaranteed Obligations shall not include endorsements
for collection or deposit in the ordinary course of business.  The amount of any Guaranteed Obligation at
any time shall be deemed to be an amount equal to the lesser at such time of (x) the
stated or determinable amount of the primary obligation in respect to which
such Guaranteed Obligation is incurred and (y) the maximum amount for
which such Person may be liable pursuant to the terms of the instrument
embodying such Guaranteed Obligation, or, if not stated or determinable, the
maximum reasonably anticipated liability (assuming full performance) in respect
thereof.

 

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

 

“Indebtedness” of a Person
means at any date, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, or upon which interest payments
are customarily made, (c) all obligations of such Person to pay the
deferred purchase price of property or services incurred in the ordinary course
of business if the purchase price is due more than six (6) months from the
date the obligation in incurred, (d) all Capitalized Lease Obligations of
such Person, (e) the principal balance outstanding under any synthetic
lease, tax retention, operating lease, off-balance sheet loan or similar
off-balance sheet financing product, (f) all obligations of such Person to
purchase securities (or other property) which arise out of or in connection
with the issuance or sale of the same or substantially similar securities (or
property), (g) all contingent or non-contingent obligations of such Person
to reimburse any bank or other Person in respect of amounts paid under a letter
of credit or similar instrument, (h) all equity securities of such Person
subject to repurchase or redemption otherwise than at the sole option of such
Person, (i) all “earnouts” and
similar payment obligations of such Person, (j) all Indebtedness secured
by a Lien on any asset of such Person, whether or not such Indebtedness if
otherwise an obligation of such Person, (k) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement
designed to alter the risks of that Person arising from fluctuations in
currency values or interest rates, in each case whether contingent or matured, (l) all
Guaranteed Obligations of such Person; and (m) all obligations of such
Person to trade creditors incurred in the ordinary course of business and more
than ninety (90) days past due.

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

“Maturity Date”
means the earliest of (a) April 1, 2010 or (b) the occurrence of
a Liquidity Event.

 

“Monthly
Warrant” has the meaning set forth in Section 2.8(c).

 

“New Warrants” means, collectively,
the Commitment Warrants, the Continuance Warrants and the Monthly Warrants.

 

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

 

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

 

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

 

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

 

5

 

“Registration
Rights Agreement” has the meaning set forth
in Section 2.8(e) hereof.

 

“Renewal Fee”
has the meaning set forth in Section 2.4.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Subordination
Agreements” means, collectively, (a) that certain
Subordination  Agreement dated as of March 7,
2007, by and among Borrower, Comerica Bank, and Lender (as such may be amended
from time to time) (the “Comerica/Safeguard
Subordination Agreement”); and (b) the Gemino/Safeguard
Subordination Agreement.

 

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

 

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

 

“Warrants”
means, collectively, the Prior Facility Warrants and the New Warrants.

 

6

 

2.                                      LOANS TO BORROWER; ISSUANCE OF WARRANTS.

 

2.1.  Advances.

 

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

 

	
  Recipient
  Bank:

  	
  Comerica Bank

  
	
   

  	
  75 E
  Trimble Road

  
	
   

  	
  MC
  4711

  
	
   

  	
  San
  Jose, CA 95131

  
	
   

  	
  Contact:

  	
  Kelly
  Rojas

  
	
   

  	
   

  	
  (408)
  556-5785

  
	
   

  	
   

  	
  krojas@comerica.com

  
	
   

  	
   

  	
   

  
	
  ABA#:

  	
  121137522

  
	
  Account
  Name:

  	
  Clarient, Inc.

  
	
  Account
  #:

  	
  1892035203

  

 

(b)           Advance Procedures.

 

(i)            Subject
to and upon the terms and conditions of this Agreement, including without
limitation the conditions specified in Section 3.3, Borrower may request
an Advance, in a minimum principal amount of $1,000,000 (or the Available
Amount, if less) but no Advance may be in an amount exceeding the Available
Amount.  Subject to the terms and
conditions of this Agreement, Outstanding Amounts may be repaid and reborrowed
at any time prior to the Maturity Date, at which time all Outstanding Amounts
shall be immediately due and payable.

 

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

 

(c)           Advances
Under Prior Mezzanine Facility; Other Debts.  Outstanding Amounts owed pursuant to (and as
defined under) the Prior Mezzanine Facility on the date hereof shall be and
continue as Outstanding Amounts under (and as defined under) the terms of this
Agreement.  In addition, any other
indebtedness of Borrower (or its affiliates) to Lender (or its affiliates)
which is not repaid in connection with the Closing shall be treated as an
Advance and become an Outstanding Amount hereunder.

 

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

 

7

 

2.3.  Interest.  Interest shall
accrue daily on the unpaid balance of all Advances at the rate of 14% per
annum, compounded monthly, on the basis of a year of 365 or 366 days, for the
actual number of days elapsed.

 

2.4.  Renewal
Fee.  Borrower shall pay Lender a “Renewal Fee” equal to 1.0% of
the Commitment, which amount shall be, at Borrower’s election, (i) paid in
cash at Closing, or (ii) be treated as an Advance and become an
Outstanding Amount hereunder.

 

2.5.  Payments.

 

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

 

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

 

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

 

2.7.  Prepayments.

 

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

 

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

 

(i)            [reserved]

 

(ii)           Immediately when Outstanding Amounts exceed the Commitment,
Borrower shall make prepayments of Outstanding Amounts as necessary to
reduce the Outstanding Amounts to be less than the Commitment.

 

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

 

8

 

(iv)          Immediately upon the consummation of a Liquidity Event or a Capital
Transaction, all Outstanding Amounts shall be paid in full and the Commitment
(and this Agreement) shall be immediately and irrevocably terminated.

 

(v)           Borrower shall at all times maximize its borrowings under the Gemino
Capital Facility and Comerica Agreement. 
From time to time, Borrower shall pay to Lender as a prepayment of
Outstanding Amounts any amount of unrestricted cash Borrower has on hand in
excess of $1,000,000; provided that Borrower shall not be obligated to make a
repayment from such excess to the extent that Borrower can demonstrate, to
Lender’s reasonable satisfaction, a need to maintain such excess.

 

2.8.  Issuance
of Warrants.

 

(a)           Commitment
Warrant.  Borrower shall issue Lender
a fully vested five-year warrant (the “Commitment Warrant”)
at the Closing in the form of Exhibit B attached hereto, to
purchase 500,000 shares of Common Stock at an exercise price per share equal to
the average of the Common Stock’s closing price on The Nasdaq Capital Market
for the 20 trading-day period ending February 6, 2009, or $1.376 per
share.

 

(b)           Continuance
Warrant.  Borrower shall issue Lender
a fully vested five year warrant (the “Continuance Warrant”)
on June 1, 2009, if Borrower has not, on or before May 31, 2009, (i) repaid
all Outstanding Amounts, (ii) terminated this Agreement and (iii) obtained
a full release of Lender as a guarantor of Borrower’s obligations under the
Comerica Agreement.  The Continuance
Warrant shall be exercisable for 750,000 shares of Common Stock at an exercise
price per share equal to 50% of the average of the Common Stock’s closing price
on The Nasdaq Capital Market for the 20 trading-day period ending May 31,
2009, and shall otherwise be in the form of Exhibit B attached
hereto.

 

(c)           Monthly
Warrant.  Borrower shall issue Lender
a fully vested five year warrant (each, a “Monthly Warrant”)
on the first day of each of the nine months beginning and including July 1,
2009, if Borrower has not, prior to end of the month preceding such issuance
date, (i) repaid all Outstanding Amounts, (ii) terminated this
Agreement and (iii) obtained a full release of Lender as a guarantor of
Borrower’s obligations under the Comerica Agreement.  Each Monthly Warrant shall be exercisable for
700,000 shares of Common Stock at an exercise price of $0.01 per share, and
shall otherwise be in the form of Exhibit B attached hereto.

 

(d)           Prior
Mezzanine Facility Warrants. 
Pursuant to the Prior Mezzanine Facility, Borrower issued to Lender
warrants (such warrants, the “Prior Facility Warrants”)
to purchase an aggregate of 3,843,750 shares of Common Stock at an exercise
price of $.01 per share.

 

(e)           Registrable
Securities.  The Registration Rights
Agreement between Borrower and Lender dated as of March 14, 2008 shall be
amended and restated (as amended and restated, the “Registration Rights Agreement”) in connection
with the Closing so that all of the Common Stock issuable upon the exercise of
the Warrants shall constitute Registrable Securities thereunder.

 

3.                                      CLOSING; DELIVERIES; CONDITIONS TO ADVANCE.

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)           Lender
and Safeguard Scientifics (Delaware), Inc. shall have delivered a fully
executed Affirmation of Guaranty in the form previously agreed by the parties
and Comerica Bank; and

 

(i)            Borrower,
Lender and Gemino shall have amended the Safeguard/Gemino Subordination
Agreement to contemplate the transactions contemplated herein.

 

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

 

(a)           Borrower
shall have delivered to Lender a Borrowing Request in accordance with Section 2.1(b);

 

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

 

10

 

application of the proceeds of such Advance (unless they relate to a
specific date, in which case they shall be true and correct in all material
respects on and as of such date).

 

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

 

4.                                      REPRESENTATIONS AND WARRANTIES OF BORROWER.

 

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

 

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

 

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

 

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

 

4.4.  Capitalization.

 

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

 

(b)           Except
as set forth in its most recent applicable filings with the SEC and the
Warrants, there are no outstanding, issued or authorized options, warrants,
purchase agreements, participation agreements, subscription rights, conversion
rights, exchange rights or other securities, contracts, arrangements,
understandings or commitments that could require Borrower to issue, sell or
otherwise cause to become outstanding any of their respective authorized but
unissued shares or any securities convertible into, exchangeable for or
carrying a right or option to purchase any share, or to 

 

11

 

create, authorize, issue, sell or otherwise cause to become outstanding
any new class of stock.  Except for the
Warrants and this Agreement, there are no outstanding stockholders’ agreements,
registration rights agreements, or rights of first refusal pertaining to the
shares of Borrower. None of the issued and outstanding shares of Common Stock
of Borrower have been issued in violation of any rights of any Person or in
violation of the registration requirements of any applicable securities law.

 

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

 

4.5.  Authorization.

 

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

 

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

 

4.6.  No
Violations or Conflicts.  The
execution and delivery of this Agreement and the other Loan Documents by
Borrower and the performance by it of its obligations hereunder and thereunder
do not and will not (a) violate any provision of law, statute, rule or
regulation, or any Order of any court, administrative agency or other
governmental body applicable to Borrower or any of its properties or assets, as
applicable; (b) except as set forth on Schedules 4.7 and 4.8(b), conflict
with or result in any breach of any of the terms, conditions or provisions of,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) or give rise to any right of termination, cancellation
or acceleration under or result in the creation of any Encumbrances upon any of
the properties or assets of Borrower under, (i) Borrower’s organizational
documents, or (ii) any note, indenture, mortgage, lease agreement, permit,
license, grant of authority or other contract, agreement or instrument to which
Borrower is a party or by which Borrower or any of its properties is bound or
affected, except where any such violation, conflict, breach or suspension
described in this subsection would not, individually or in the aggregate,
result in a Material Adverse Effect.

 

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

 

12

 

4.8.  Financial
Statements; Disclosure.

 

(a)           Borrower
has delivered to Lender true, complete and correct copies of the consolidated
balance sheet (“Balance Sheet”) of Borrower
as of December 31, 2008 (“Balance Sheet Date”)
and the related statements of operations and cash flows for the fiscal year
then ended (the “Financial Statements”).  Except as set forth on Schedule 4.8(a),
the unaudited Financial Statements fairly and accurately present in all
material respects the financial position, liabilities and obligations and the
results of operations as of the dates and for the periods indicated, and in
accordance with GAAP, subject to adjustments. 
Except as disclosed on the Balance Sheet or the Financial Statements or
on Schedule 4.8(a), as of the Balance Sheet Date and the date hereof (x) Borrower
has had no or has no liabilities (whether matured or unmatured, fixed or
contingent, liquidated or unliquidated or otherwise), or obligations, except as
may have been incurred in the ordinary course of business following the Balance
Sheet Date, and (y) Borrower had or has reserved or disclosed all
liability reserves that are required to be reserved or disclosed in accordance
with GAAP.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

4.11.  Intellectual
Property.

 

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

 

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

 

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

 

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

 

4.12.  Title
to Assets, Properties and Rights.

 

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

 

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

 

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

 

14

 

4.13.  Compliance
with Laws; Legal Requirements.

 

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

 

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

 

4.14.  Employees
and Labor Matters.

 

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

 

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

 

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

 

(d)           Except
as would not reasonably be expected to have a Material Adverse Effect and
except as set forth in Schedule 4.14, (i) there are no unfair labor
practice charges or complaints, minimum wage or overtime or equal pay charges
or complaints, occupational safety and health charges or complaints, wrongful
discharge charges or complaints, employee grievances, discrimination claims or
workers’ compensation claims pending or, to the knowledge of Borrower,
threatened against either of them before any Governmental Authority, and (ii) neither
Borrower nor any of its senior officers has received notice from any
Governmental Authority of any alleged violation of applicable law that remains
unresolved respecting employment and employment practices, terms and conditions
of employment, or wage and hours.

 

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

 

15

 

(f)            Except
(i) as set forth in applicable filings with the SEC, (ii) as
otherwise disclosed to Lender or (iii) as set forth in Schedule 4.14,
as of the date hereof, none of Borrower’s executive officers has an employment
or severance agreement with Borrower, or any other agreement that provides for
severance payments in excess of $250,000 or other obligations material to the
Borrower and its Subsidiaries taken as a whole, upon termination of employment.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4.18.  Offering
Valid.  Assuming the accuracy of the
representations of Lender in Section 9 hereof, the offer, sale and
issuance of the Note and the New Warrants will be exempt from the registration
requirements of the Securities Act and any similar law, rule or regulation
of any other jurisdiction and will have been registered or qualified (or are
exempt from registration and qualification) under the 

 

16

 

registration, permit or qualification requirements of
all applicable state securities laws. 
Neither Borrower nor any agent on Borrower’s behalf, has solicited or
will solicit any offers to sell or has offered to sell or will offer to sell
all or any part of the Note or the New Warrants so as to bring the sale of such
Note or New Warrants within the registration provisions of the Securities Act.

 

5.                                      COVENANTS.

 

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

 

(a)           Incur
or guarantee any Indebtedness other than (without duplication):  (i) amounts outstanding from time to
time under (x) the Comerica Agreement and refinancings thereof by Comerica
(which refinancings shall be subject to the prior written consent of Lender,
which consent shall not be unreasonably withheld, conditioned or delayed), or (y) the
Gemino Capital Facility and refinancings thereof by Gemino (which refinancings
shall be subject to the prior written consent of Lender, which consent shall
not be unreasonably withheld, conditioned or delayed); (ii) Indebtedness
outstanding on the date hereof and identified on Schedule 5.1(a) (and
refinancings thereof); (iii) Indebtedness incurred, and Indebtedness under
contracts or Capitalized Lease Obligations, in each case, entered into in the
ordinary course of business; (iv) Indebtedness owed to any Subsidiary of
Borrower; and (v) Indebtedness consisting of guaranties for the benefit of
Subsidiaries of Borrower.

 

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

 

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

 

(d)           Declare
or pay any distributions on, or make any redemptions of, any class or series of
its shares;

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

(v)           All
other information reasonably requested by Lender.

 

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

 

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

 

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

 

18

 

4068 of ERISA, or in respect of a multiemployer plan, under §§4041A,
4202, 4219, 4242, or 4245 of ERISA which involves a liability which is
reasonably likely to result in a Material Adverse Effect.

 

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

 

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

 

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

 

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

 

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

 

5.3.  Right
of First Offer and Refusal.  So long
as the Commitment has not been terminated, Borrower shall notify Lender in
writing not less than 30 days prior to its seeking any credit arrangement
intended to be subordinate to the Gemino Capital Facility or the Comerica
Agreement and shall accord Lender the right of first offer with respect to such
arrangements.  In the event Borrower does
not reach agreement with Lender on the terms of any such credit facility
required by Borrower and Borrower seeks third party financing, Borrower shall
notify Lender in writing, not less than five Business Days prior to its
acceptance of any such alternate financing of the terms of such financing, and
Lender shall have the right to match such terms and provide such financing to
Borrower.

 

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

 

5.5.  Security
Interests.  At the request of Lender
(but subject to the Subordination Agreements) Borrower shall promptly and
diligently take all reasonably necessary actions to execute and deliver all
instruments, financing statement terminations, certificates, agreements or
other documents to transfer to Lender substantially the rights that GE Capital
had to the assets of Borrower under the GE Capital 

 

19

 

Facility (the “A/R and Asset Security
Interests”) other than with respect to those assets in which
Borrower granted Gemino a lien and security interest in connection with the
Gemino Capital Facility.

 

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

 

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

 

7.                                      EVENTS OF DEFAULT; REMEDIES.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)           If
a Liquidity Event occurs; or

 

(i)            If
Borrower suffers a Material Adverse Effect.

 

20

 

7.2.  Remedies.

 

(a)           Upon
the occurrence of an Event of Default hereunder other than as provided in
Sections 7.1(b) or (c) above (unless cured by Borrower or waived by
Lender), the entire unpaid principal balance of the Note, together with all
accrued interest thereon, may be declared by Lender due and payable and Lender
shall not be required to make additional Advances.  Upon the occurrence of an Event of Default as
provided in Section 7.1(b) or (c) above, the entire unpaid
principal balance outstanding hereunder and under the Note, together with all
accrued interest thereon, shall, subject to the terms and conditions of the
Subordination Agreements) be immediately due and payable regardless of any
prior forbearance.  Notwithstanding
anything to the contrary in this Agreement, in no event shall the interest
payable on the unpaid principal balance of the Loans exceed the maximum rate
permitted under applicable Laws.  In the
event that such rate of interest exceeds the maximum rate permitted under
applicable Laws, such excess shall be deemed additional principal payments
under this Agreement and the Note.

 

(b)           In
addition, upon the occurrence of an Event of Default (unless cured by Borrower
or waived by Lender) and for, but only for, the period during which such Event
of Default remains uncured or has not been waived in writing by Lender, the
interest due on the principal balance outstanding hereunder shall, upon notice
from Lender, accrue at a rate of 19% per annum (calculated in the same manner
as provided above) rather than the rate specified in the Note, in each of the
Preamble and Section 1.1 thereto.

 

(c)           No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or acquiescence
in, any breach of any representation, warranty, covenant or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. 
All rights and remedies of Lender existing pursuant to this Agreement or
any other Loan Document are cumulative to, and not exclusive of, any rights or
remedies otherwise available, whether by contract, at law, in equity or
otherwise.

 

8.                                      MISCELLANEOUS.

 

8.1.  Governing
Law; Submission to Jurisdiction.

 

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

 

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

 

8.2.  Assignments;
Successors; Third Party Rights.  No
party to this Agreement may assign any of its rights under this Agreement
without the prior written consent of the other parties hereto which consent, in
respect of any assignment by Lender, shall not be unreasonably withheld;
provided that Lender may 

 

21

 

assign its rights hereunder to one or more affiliates
without the consent of Borrower and provided further that any such assignee
agrees in writing to be subject to the terms and conditions of each of the
Subordination Agreements then in effect. 
Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors,
heirs, personal representatives, executors and permitted assigns of the
parties.  Borrower shall maintain a
registry of the owners of the Note in a manner that complies with the book
entry form of registration for purposes of Section 871(h) of the
Code.  Nothing expressed or referred to
in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision of this Agreement.

 

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

 

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

 

(a)           If to Lender:

 

Safeguard Delaware, Inc.

1105 N. Market Street

Suite 1300

Wilmington, DE  19801

Fax:  610.293.0601

 

with
a courtesy copy to:

 

Safeguard Scientifics, Inc.

435 Devon Park Drive,
Building 800 

Wayne, PA  19087

Attention:  Brian J. Sisko, Esquire

Fax: 610.482.9105

 

(b)           If
to Borrower:

 

Clarient, Inc.

31
Columbia

Aliso
Viejo, CA  92656

Attention:  Ray Land, Senior Vice
President & Chief

Financial Officer

Fax:  949.425.5863

 

22

 

with
a courtesy copy to:

 

Stradling Yocca Carlson &
Rauth

660 Newport Center Drive, Suite 1600

Newport Beach CA  92660

Attention:  Shivbir Grewal, Esquire

Fax:  949.823.5119

 

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

 

8.6.  Severability.  If any provision of this Agreement or the
application of any such provision to any party or circumstance shall be
determined by any court of competent jurisdiction to be invalid or
unenforceable to any extent, the remainder of this Agreement, or the
application of such provision to any party or circumstance other than those to
which it is so determined to be invalid or unenforceable, shall not be affected
thereby, and each provision hereof shall be enforced to the fullest extent
permitted by law. If the final judgment of a court of competent jurisdiction
declares that any item or provision hereof is invalid or unenforceable, the
parties hereto agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration or area of
the term or provision, or to delete specific words or phrases, and to replace
any invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified.

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

9.                                      LENDER REPRESENTATIONS.

 

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

 

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

 

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

 

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

 

[SIGNATURE PAGE FOLLOWS]

 

24

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
  CLARIENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Raymond J. Land

  
	
   

  	
  Name:

  	
   

  	
  Raymond J. Land

  
	
   

  	
  Title:

  	
   

  	
  Sr. V.P. & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  SAFEGUARD DELAWARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Brian J. Sisko

  
	
   

  	
   

  	
  Name:

  	
  Brian J. Sisko

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
								

 

 

Second Amended and Restated
Senior Subordinated Revolving Credit Agreement

Signature Page

 

 

EXHIBIT A

FORM OF NOTE

 

A-1

 

EXHIBIT
B

FORM OF WARRANT

 

B-1

 

EXHIBIT
C

FORM OF

 

BORROWING
REQUEST

 

[DATE]

 

Reference is made to that certain Second Amended and Restated Senior
Subordinated Revolving Credit Agreement, dated February 27, 2009 (as the
same may be amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), between Clarient, Inc.,
a Delaware corporation (the “Borrower”),
and Safeguard Delaware, Inc. (the “Lender”).  Capitalized terms used in this Borrowing
Request without definition shall have the respective meanings set forth in the
Credit Agreement.

 

The Borrower hereby notifies Lender of its request for an Advance under
and in accordance with the terms of the Credit Agreement, as follows:

 

(a)           The date of the proposed Advance shall be [DATE] (the “Advance Date”).

 

(b)           The principal amount of the proposed Advance shall be
$                   .

 

(c)           After giving effect to such Advance, the Available
Amount will be $                   .

 

(d)           The payee and wire transfer instructions for the
disbursement of the proceeds of the Advance requested hereunder are [as
provided in Section 2.1(a) of the Agreement.] [are as follows:]

 

(e)           The resolutions of the Board of Directors of Borrower
approving the Agreement remain in full force and effect, without modification.

 

(f)            No Default or Event of Default has occurred and is
continuing on the date hereof or the Advance Date, or will be caused by such
Advance.

 

(g)           Each of Borrower’s representations and warranties of
Borrower made herein and in the other Loan Documents are true and correct as if
remade on the Advance Date (except those made as of an earlier date).

 

(h)           All amounts (including, without limitation, fees)
required to have been paid pursuant to the Credit Agreement, the Note and the
Warrants, have been paid as and when due.

 

The statements set forth therein are true and correct, both as of the
date hereof and as of the Advance Date.

 

	
   

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CLARIENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

C-1

 

EXHIBIT D

 

FORM OF AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

D-1

 

EXHIBIT E

 

FORM OF CASH PROJECTION SCHEDULE

 

Clarient, Inc.

Cash Analysis

Six Week Rolling
Forecast

 

	
   

  	
   

  	
  Actual

  	
   

  	
  Actual

  	
   

  	
  Actual

  	
   

  	
  Actual

  	
   

  	
  Actual

  	
   

  	
  Forecast

  	
   

  	
  Forecast

  	
   

  	
  Forecast

  	
   

  	
  Forecast

  	
   

  
	
   

  	
   

  	
  9-Jan-09

  	
   

  	
  16-Jan-09

  	
   

  	
  23-Jan-09

  	
   

  	
  30-Jan-09

  	
   

  	
  6-Feb-09

  	
   

  	
  13-Feb-09

  	
   

  	
  20-Feb-09

  	
   

  	
  27-Feb-09

  	
   

  	
  6-Mar-09

  	
   

  
	
  Sources
  of cash

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gemino Borrowing
  Base

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Gross A/R

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
  Multiplier to net
  eligible A/R

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  -

  	
  Unposted
  Collections

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  +

  	
  Posted
  Collections

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  -

  	
  Beginning Balance

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  =

  	
  Net Availability

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  -

  	
  Excess
  Availability

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  =

  	
  Drawdown

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Subtenant Rent -
  Zeiss

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CPS Management
  Fees

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating
  sources

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dispositions

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Investing
  sources

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Safeguard line of
  credit

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Comerica line of
  credit

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financing sources

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total sources

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Uses of
  cash

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounts payable

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit refunds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Legal fees

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounting fees

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rent

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Clarient
  Pathology Services

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payroll

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  401(k) Contribution

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest -
  Comerica

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Taxes

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MIP bonus payout

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating
  uses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tenant
  improvements

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lab equipment

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Computer
  equipment

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Investing
  uses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Repayments on SFE
  line

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Repayments on
  Comerica line

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Payments on
  capital lease obligations

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Other

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Financing
  uses

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Total
  uses

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Net
  increase / (decrease) in cash

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Beginning
  cash balance

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ending
  cash balance

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  

 

E-1Exhibit 10.4

 

AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT

 

This Amended
and Restated Registration Rights Agreement (this “Agreement”)
is entered into as of February 27, 2009, by and between Clarient. Inc., a
Delaware corporation (the “Company”), Safeguard
Delaware, Inc., a Delaware corporation (“SDI”),
Safeguard Scientifics, Inc., a Pennsylvania corporation (“SSI”), and Safeguard Scientifics (Delaware), Inc., a
Delaware corporation (“Safeguard Delaware”).  Each of SDI, SSI and Safeguard Delaware are referred
to herein as a “Safeguard Entity” and SDI, SSI and
Safeguard Delaware are referred to collectively herein as the “Safeguard Entities.”

 

WITNESSETH:

 

WHEREAS, SDI
provided to the Company a senior subordinated revolving credit facility in the
maximum aggregate amount of $21,000,000, on the terms and conditions set forth
in that certain Amended and Restated Senior Subordinated Revolving Credit
Agreement dated as of March 14, 2008, as amended by that certain First
Amendment and Consent of Amended and Restated Senior Subordinated Credit
Facility dated as of July 31, 2008 (the “Prior Loan
Agreement”);

 

WHEREAS, the
parties hereto entered into that certain Registration Rights Agreement dated as
of March 14, 2008 (the “Prior Registration Rights
Agreement”).

 

WHEREAS, the
Company entered into that certain Second Amended and Restated Senior
Subordinated Revolving Credit Agreement, dated as of February 27, 2009, by
and between SDI and the Company (the “Loan Agreement”),
pursuant to which, among other things, SDI extended the maturity date of its
senior subordinated revolving credit facility to the Company and increased the
size of such facility to a maximum aggregate amount of $30,000,000;

 

WHEREAS,
pursuant to the terms of, and in partial consideration for SDI’s agreement to
enter into the Loan Agreement, the Company has agreed to issue SDI various
warrants to purchase shares of the Company’s common stock (“Common Stock”), $0.01 par value (the “New Facility
Warrants”, and the shares of Common Stock issuable pursuant to the
New Facility Warrants, the “New  Facility Warrant Shares”);

 

WHEREAS, the
Company has previously issued the Safeguard Entities (i) shares of Common
Stock (the “Outstanding Shares”), (ii) warrants
to purchase shares of Common Stock (the “Outstanding Warrants,”
and the shares of Common Stock issuable pursuant to the Outstanding Warrants,
the “Outstanding Warrant Shares” and
collectively with the New Facility Warrant Shares and the Outstanding Shares,
the “Safeguard Shares”); and

 

WHEREAS,
pursuant to the terms of, and in partial consideration for SDI’s agreement to
enter into, the Loan Agreement, the Company has agreed to amend and restate the
Prior Registration Rights Agreement as set forth in this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Loan Agreement and this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each Safeguard
Entity hereby agrees as follows:

 

 

1.                                       Certain Definitions.  
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed thereto in the Loan Agreement. 
As used in this Agreement, the following terms shall have the following
respective meanings:

 

“Commission” or “SEC” shall mean
the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.

 

“Holder” and “Holders” shall
mean the applicable Safeguard Entity and any transferee of Registrable
Securities which have not been sold to the public to whom the registration
rights conferred by this Agreement have been transferred in compliance with
this Agreement.

 

“Registrable Securities” shall mean: (i) the Safeguard
Shares, (ii) securities issued or issuable upon any stock split, stock
dividend, recapitalization or similar event with respect to the Safeguard
Shares; and (iii) any other security issued as a dividend or other
distribution with respect to, in exchange for or in replacement of the
securities referred to in the preceding clauses.

 

The terms “register”,
“registered” and “registration” shall refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities
Act and applicable rules and regulations thereunder, and the declaration
or ordering of the effectiveness of such registration statement.

 

“Registration Expenses” shall mean all expenses to be
incurred by the Company in connection with each Holder’s registration rights
under this Agreement other than Selling Expenses, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, “blue sky” fees and expenses,
reasonable fees and disbursements of counsel to Holders (using a single counsel
selected by a majority in interest of the Holders if more than one Holder is
participating in a registration hereunder) for a “due diligence” examination of
the Company and review of the registration statement and related documents, 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).

 

“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 of Registrable Securities, and all
fees and disbursements of counsel for Holders not included within “Registration
Expenses.”

 

2.                                       Request for Registration.

 

(a)                                  If the Company receives from a
Holder or Holders of not less than 50% of the then outstanding Registrable
Securities a written request that the Company effect a registration with
respect to shares of Registrable Securities held by such Holder or Holders
having an aggregate price to the public (net of underwriters’ discounts and
commissions) of at least $500,000 or with respect to at least 300,000 shares of
Registrable Securities, the Company will, as soon as practicable, use
commercially reasonable efforts to effect such registration (including, without
limitation, appropriate qualification under applicable state securities laws as
Holders may request and appropriate compliance with applicable regulations
issued under the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the sale
and 

 

2

 

distribution, though negotiated, underwritten
or other transactions or through a combination of such methods of sale at the
election of such Holder(s), of all or such portion of such the Registrable
Securities as are specified in such request.

 

(b)                                 Notwithstanding Section 2(a),
the Company shall not be obligated to take any action to effect or complete any
such registration pursuant to this Section 2:

 

(i)                                     During the period starting with the
date ninety (90) days prior to the Company’s estimated date of filing of, and
ending on the date sixty (60) days immediately following the effective date of,
any registration statement pertaining to securities of the Company (other than
a registration of securities in a Rule 145 transaction or with respect to
an employee benefit plan), provided, that the Company gives notice of its
intention to file such registration statement to the Holder or Holders within
thirty (30) days of its request for such registration; and provided, further
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective; however, the Company may
not delay a requested registration under this paragraph if the Company’s
registration statement will include no equity securities or securities
convertible into equity securities and the requested registration will not be
part of an underwritten public offering; or

 

(ii)                                  After the Company has effected two (2) registrations
pursuant to this Section 2; provided that any registration request that (A) is
delayed by the Company pursuant to Section 2(b)(i) or (B) does
not result in a registration being effected, will not count towards such two (2) registration
limit; or

 

(iii)                               If the Holder requesting
registration is able to sell all of such Holder’s shares requested to be
registered under Rule 144 of the Securities and Exchange Commission
adopted under the Securities Act; or

 

(iv)                              If the Company shall furnish to the
Holder or Holders requesting registration a certificate signed by the President
of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be detrimental to the Company and its
stockholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than 120 days
after receipt of the request of the initiating Holders; provided, however, that
the Company may not utilize this right more than once in any 12-month period.

 

(c)                                  If the registration pursuant to this
Section 2 is effected through a firm commitment underwritten public
offering at the election of the Holder, the Company shall, together with such
Holder, enter into an underwriting agreement in customary form with a managing
underwriter selected by the Holder and reasonably acceptable to the
Company.  Notwithstanding any other
provision of this Section 2, if the managing underwriter advises the
Company in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the Company shall so advise the Holder and the
number of shares of Registrable Securities that may be included in the
registration and underwriting shall be limited to such amount; provided,
however, that in the event of such limitation on the number of shares to be
underwritten, no securities to be registered for sale by the Company shall be
included unless all shares of Registrable Securities requested by the Holder to
be included in such underwriting are so included.

 

3

 

3.                                       Company Registration.

 

(a)                                  If at any time or from time to time
the Company shall determine to register any of its equity securities, either
for its own account for the account of a Holder or the account of a stockholder
who is not a Holder, the Company shall:

 

(i)                                     promptly give the Holders (excluding
any such Holder for whose account the shares are determined to be registered)
written notice thereof; and

 

(ii)                                  include in such registration (and
any related qualifications including compliance with “blue sky” laws), and in
any underwriting involved therein, all the shares of Registrable Securities
specified in a written request or requests, made within 20 days after the date
of such written notice from the Company, by any such Holder.

 

(b)                                 If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise each Holder as a part of the written
notice given pursuant to Section 3(a)(i). 
In such event, the right of each Holder to registration pursuant to this
Section 3 shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of shares of Registrable Securities in the
underwriting shall be limited to the extent provided herein.  Each Holder shall (together with the Company
and the other stockholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.  Notwithstanding any other provision of this Section 3,
if the managing underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, no securities to be
registered for sale by Holders shall be included unless all shares to be
registered for sale by the Company (and for sale by any stockholder who is not
a Holder, if pursuant to the exercise of registrations rights granted in
connection with a Capital Transaction (as defined in the Loan Agreement)) to be
included in such underwriting are so included and any remaining securities to
be included in such registration shall be allocated pro rata among the Holders
and any other holders of “piggy-back” registration rights, based on the number
of shares requested to be included in such registration by all such
holders.  The Company shall so advise
each Holder and the number of shares of Registrable Securities to be included
in the registration and underwriting shall be so limited.

 

(c)                                  If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, all Holders shall provide upon request customary lock-up
agreements for themselves and their affiliates by which they agree not sell any
of their shares for a period of 180 days from the effective date of the
registration statement.

 

4.                                       Registration on Form S-3.

 

(a)                                  In case the Company shall receive
from a Holder or Holders of more than 50% of the then outstanding Registrable
Securities a written request that the Company file a registration statement on Form S-3
(or any successor form to Form S-3) for a public offering of shares of
Registrable Securities having an aggregate price to the public (net of
underwriters discounts and commissions) of at least $500,000 or a public
offering of at least 300,000 shares of Registrable Securities and the Company
is a registrant entitled to use Form S-3 to register the shares of
Registrable Securities for such an offering, the Company shall use commercially
reasonable efforts to cause such shares of Registrable Securities to be
registered for the offering on such form and to cause such shares of
Registrable Securities to be qualified in such jurisdictions as such Holder may

 

4

 

reasonably request.  If such offer is to be an underwritten
offering, the underwriters shall be selected by the Holder or Holders
requesting the registration and be reasonably acceptable to the Company.

 

(b)                                 There shall be no limit on the
number of registration requests by Holders pursuant to the preceding paragraph.

 

(c)                                  The provisions of Section 2(b)(i),
(iii), and (iv) and Section 2(c) shall apply to any request for
registration pursuant to Section 4(a).

 

5.                                       Registration Procedures.  
In connection with each registration effected pursuant to Section 2,
3 or 4, the Company shall, except as provided in Section 2(b) and
4(c):

 

(a)                                  Promptly prepare and file with the
SEC a registration statement and such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement, or prepare and file such additional registration
statements, 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 in accordance with the intended methods of disposition
by the seller thereof as set forth in the registration statement (and the
disposition of all shares of Registrable Securities as necessary to comply with
this Agreement) and notify each Holder of the filing and effectiveness of such
registration statement and any amendments or supplements thereto.  The Company shall promptly forward to each
participating Holder’s counsel a copy of any correspondence or other written
communications with the SEC or other regulatory authority, relating to the
registration statement or the shares of Registrable Securities.

 

(b)                                 After the registration, at a Holder’s
request, furnish to each participating Holder such number of copies of a
current prospectus conforming with the requirements of the Securities Act and
any other documents incident thereto, copies of the registration statement, any
amendment or supplement to such prospectus or registration statement and any
documents incorporated by reference therein and such other documents as such
Holder may from time to time reasonably request in order to facilitate the
disposition of the shares of Registrable Securities registered on behalf of
such Holder.

 

(c)                                  Use commercially reasonable efforts
to register and qualify the shares of Registrable Securities covered by such
registration statement under such other securities or “blue sky” laws of any
United States jurisdictions as the Holders may reasonably request (except in
any such jurisdiction where the registration and qualification of the
securities covered by such registration statement is exempt under the laws and
regulations of such jurisdiction); provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.

 

(d)                                 Notify the participating Holders
immediately of the happening of any event known to the Company (but not the
substance or details of any such event unless specifically requested by any
such Holder) as a result of which the prospectus (including any supplements
thereto or thereof and any information incorporated or deemed to be
incorporated by reference therein) included in such registration statement, as
then in effect, includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and use commercially reasonable efforts to promptly update and/or correct such
prospectus.  Notwithstanding the
foregoing, if the Company shall furnish to the Holder or Holders whose
Registrable Securities have been so registered

 

5

 

a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of Directors of
the Company it would be detrimental to the Company and its stockholders to
update and/or correct any such prospectus, the Company shall have the right to
defer updating or correcting such prospectus for a period of not more than 120
days after the notification to the Holders; provided, however, that the Company
may not utilize this right more than once in any 12-month period.  During any such 120-day or shorter period,
the Holders will not deliver any such prospectus or sell any Registrable
Securities in reliance thereon.

 

(e)                                  Notify each participating Holder
immediately of the issuance by the Commission or any state securities
commission or agency of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that
purpose.  The Company shall use its
commercially reasonable efforts to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible time.

 

(f)                                    Permit a single firm of counsel,
selected by the participating Holders, to review the registration statement and
all amendments and supplements thereto within a reasonable period of time prior
to each filing, and shall not file any document in a form to which such counsel
reasonably objects.

 

(g)                                 Use commercially reasonable efforts
to cause the shares of Registrable Securities registered by the registration statement
to be listed or quoted on each securities exchange and/or market on which the
Common Stock is then listed and/or quoted and prepare and file any required
filings with the Financial Industry Regulatory Authority or any exchange or
market where the Common Stock is then listed and/or traded.

 

(h)                                 If applicable, at a Holder’s
request, take all steps necessary to enable each participating Holder to avail
themselves of the prospectus delivery mechanism set forth in Rule 153 (or
successor thereto) under the Securities Act.

 

6.                                       Holder Deemed an Underwriter.  
In the event that a Holder selling Registrable Securities is deemed to
be an underwriter, the Company shall enter into such customary agreements with
such Holder as would customarily be entered into with an underwriter (excluding
provisions for the purchase and sale of the Common Stock and any discounts or
other consideration) and:

 

(a)                                  make such representations and
warranties to such Holder in form, substance and scope as are customarily made
by issuers to underwriters in secondary offerings;

 

(b)                                 cause to be delivered, if requested,
to such Holder opinions of independent counsel to the Company, on and dated as
of the effective day of the registration statement, and within 90 days
following the end of each fiscal year thereafter, which counsel and opinions
(in form, scope and substance) shall be reasonably satisfactory to such Holder
and their counsel and covering, without limitation, such matters as the due
authorization and issuance of the securities being registered and compliance
with securities laws by the Company in connection with the authorization,
issuance and registration thereof and other matters that are customarily given
to underwriters in underwritten offerings, addressed to such Holder;

 

(c)                                  cause to be delivered, immediately
prior to the effectiveness of the registration statement, and at the beginning
of each fiscal year following a year during which the Company’s independent
certified public accountants shall have reviewed any of the Company’s books

 

6

 

or records, a “comfort” letter from the
Company’s independent certified public accountants addressed to such Holder,
stating that such accountants are independent public accountants within the
meaning of the Securities Act and the applicable published rules and
regulations thereunder, and otherwise in customary form and covering such
financial and accounting matters as are customarily covered by letters of the
independent certified public accountants delivered in connection with secondary
offerings; such accountants shall have undertaken in each such letter to update
the same quarterly during each such fiscal year for which such books or records
are being reviewed so that each such letter shall remain current, correct and
complete as of the end of such accountant’s review of the Company’s quarterly
financial statements; and each such letter and update thereof, if any, shall be
reasonably satisfactory to such Holder(s);

 

(d)                                 shall include in such agreements
customary indemnification and contribution provisions to and from underwriters;
and

 

(e)                                  deliver such documents and
certificates as may be reasonably requested by the Holder to evidence
compliance with clause (a) above and with any customary conditions
contained in underwriting agreements, if any.

 

7.                                       Expenses of Registration.  
All Registration Expenses incurred in connection with any registration,
qualification or compliance with registration pursuant to this Agreement shall
be borne by the Company, and all Selling Expenses shall be borne by the Holder
or Holders.

 

8.                                       Registration on Form S-3; Other
Forms.   In connection with each registration
effected pursuant to this Agreement, the Company shall use commercially
reasonable efforts to qualify for registration on Form S-3 or any
comparable or successor form or forms, or in the event that the Company is
ineligible to use such form, such form as the Company is eligible to use under
the Securities Act.

 

9.                                       Registration Period.  
In the case of a registration effected by the Company pursuant to this
Agreement, the Company will use commercially reasonable efforts to keep such
registration effective at all times during the period commencing on the
effective date of the registration statement and continuing thereafter until
the all Registrable Securities covered by such registration have been sold
thereunder.

 

10.                                 Indemnification.

 

(a)                                  The Company Indemnity.  
The Company will indemnify each Holder, each of its officers, directors
and partners, and each person controlling each Holder, within the meaning of Section 15
of the Securities Act and the rules and regulations thereunder with
respect to which registration, qualification or compliance has been effected
pursuant to this Agreement, and each underwriter, if any, and each person who
controls, within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, any underwriter, including any of the foregoing
incurred in any litigation, commenced or threatened, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any violation by the Company of its representations to or covenants
with the Holders under this Agreement or any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document prepared by the Company (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make

 

7

 

the statements therein not misleading, or any
violation by the Company of the Securities Act or any state securities law or
in either case, any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will reimburse
each Holder, each of its officers, directors and partners, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action; provided that the Company will not be liable in any such
case to a Holder to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by such Holder or the
underwriter (if any) therefor and stated to be specifically for use
therein.  The indemnity agreement contained
in this Section 10(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 will not be
unreasonably withheld).

 

(b)                                 Holder Indemnity.  
Each Holder will, severally and not jointly, if Registrable Securities
held by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors, officers, partners, and each underwriter, if any, of the Company’s
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, each other Holder
(if any), and each of their officers, directors and partners, and each person
controlling such other Holder(s), against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
violation by the such Holder of its representations to or covenants with the
Company under this Agreement or any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, and will reimburse the
Company and such other Holder(s) and their directors, officers and
partners, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein, and provided that the maximum amount
for which such Holder shall be liable under this indemnity shall not exceed the
net proceeds received by such Holder from the sale or sales of the Registrable
Securities which gave rise to the claim for indemnification.  The indemnity agreement contained in this Section 10(b) shall
not apply to amounts paid in settlement of any such claims, losses, damages or
liabilities if such settlement is effected without the consent of such Holder
(which consent shall not be unreasonably withheld).

 

(c)                                  Procedure.  
Each party entitled to indemnification under this Section 10 (the “Indemnified Party”) shall give notice to
the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim in any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party’s expense; and provided further that

 

8

 

the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section except to the extent that the Indemnifying
Party is materially and adversely affected by such failure to provide
notice.  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.  Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.

 

11.                                 Contribution.

 

(a)                                  If the indemnification provided for
in Section 10 herein is unavailable to the Indemnified Parties in respect
of any losses, claims, damages or liabilities referred to herein (other than by
reason of the exceptions provided therein), then each such Indemnifying Party,
in lieu of indemnifying each of such Indemnified Parties, shall contribute to
the amount paid or payable by each such Indemnified Party as a result of such
losses, claims, damages or liabilities as between the Company on the one hand
and any Holder on the other, in such proportion as is appropriate to reflect
the relative fault of the Company and of such Holder in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.  The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.

 

(b)                                 In no event shall the obligation of
any Indemnifying Party to contribute under this Section 11 exceed the
amount that such Indemnifying Party would have been obligated to pay by way of
indemnification if the indemnification provided for under Section 10(a) or
10(b) hereof had been available under the circumstances.

 

(c)                                  The Company and the Holders agree
that it would not be just and equitable if contribution pursuant to this Section 11
were determined by pro rata allocation (even if the Holders or the underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraphs. 
The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim.  Notwithstanding the provisions
of this section, no Holder or underwriter shall be required to contribute any
amount in excess of the amount by which (i) in the case of any Holder, the
net proceeds received by such Holder from the sale of Registrable Securities
which gave rise to the necessity for contribution or (ii) in the case of
an underwriter, the amount by which the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such Holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

 

9

 

12.                                 Survival. 
The indemnity and contribution agreements contained in Sections 10 and
11 and the representations and warranties of the Company referred to in Section 6(a) shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement or the Loan Agreement or any underwriting
agreement, (ii) any investigation made by or on behalf of any Indemnified
Party or by or on behalf of the Company, and (iii) the consummation of the
sale or successive resales of the Safeguard Shares.

 

13.                                 Information by Holders.  
Each Holder shall furnish to the Company such information regarding such
Holder and the distribution and/or sale proposed by such Holder as the Company
may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Agreement.   The intended method or
methods of disposition and/or sale (Plan of Distribution) of such securities as
so provided by such Holder shall be included without alteration in the
registration statement covering the Safeguard Shares and shall not be changed
without written consent of such Holder, except that such Holder may not require
an intended method of disposition which, in the reasonable opinion of counsel to
the Company, violates applicable securities law.

 

14.                                 Replacement Certificates.  
The certificate(s) representing the Safeguard Shares held by a
Holder may be exchanged by such Holder at any time and from time to time for
certificates with different denominations representing an equal aggregate
number of Safeguard Shares, as reasonably requested by such Holder upon
surrendering the same.  No service charge
will be made for such registration or transfer or exchange.

 

15.                                 Transfer or Assignment. 
Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns.  The rights granted to the
Safeguard Entities by the Company under this Agreement to cause the Company to
register the Safeguard Shares may be transferred or assigned (in whole or in
part) to up to two (2) transferees or assignees of any Safeguard Shares,
and all other rights granted to the Safeguard Entities by the Company hereunder
may be transferred or assigned to up to two (2) transferees or assignees
of any Safeguard Shares; provided in each case that the Company must be given
written notice by the applicable Safeguard Entity at the time of or within a
reasonable time after said transfer or assignment, stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being transferred or assigned; and provided,
further, that the transferee or assignee of such rights agrees in writing to be
bound by the provisions of this Agreement.

 

16.                                 Miscellaneous.

 

(a)                                  Remedies. 
The Company and each Safeguard Entity acknowledges and agrees that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached.  It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or equity.

 

(b)                                 Notices. 
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing,
must be delivered by (i)

 

10

 

courier, mail or hand delivery or (ii) facsimile,
and will be deemed to have been delivered upon receipt.  The addresses and facsimile numbers for such
communications shall be:

 

	
  to the Company:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Clarient, Inc.

  	
   

  	
   

  
	
  31 Columbia

  	
   

  	
   

  
	
  Aliso Viejo, California 92656

  	
   

  	
   

  
	
  Facsimile: (949) 443-3366

  	
   

  	
   

  
	
  Attention: Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Stradling Yocca Carlson & Rauth

  	
   

  	
   

  
	
  660 Newport Center Drive, Suite 1600

  	
   

  	
   

  
	
  Newport Beach, California 92660

  	
   

  	
   

  
	
  Facsimile: (949) 823-5119

  	
   

  	
   

  
	
  Attention: Shivbir S. Grewal, Esq.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  to the Safeguard Entities:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Safeguard Delaware, Inc. and Safeguard Scientifics
  (Delaware), Inc.

  	
   

  	
   

  
	
  1105 N. Market Street, Suite 1300

  	
   

  	
   

  
	
  Wilmington, DE 19801

  	
   

  	
   

  
	
  Facsimile: (302) 427-4607

  	
   

  	
   

  
	
  Attention: Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Safeguard Scientifics, Inc.

  	
   

  	
   

  
	
  435 Devon Park Drive, 800 Building

  	
   

  	
   

  
	
  Wayne, Pennsylvania 19087

  	
   

  	
   

  
	
  Facsimile: (610) 482.9105

  	
   

  	
   

  
	
  Attention: General Counsel

  	
   

  	
   

  

 

Each party
shall provide five (5) days prior written notice to the other party of any
change in address, telephone number or facsimile number.  Written confirmation of receipt (i) given
by the recipient of such notice, consent, waiver or other communication, (ii) mechanically
or electronically generated by the sender’s facsimile machine containing the
time, date and recipient facsimile number or (iii) provided by a
nationally recognized overnight delivery service, shall be rebuttable evidence
of personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.

 

(c)                                  Waivers. 
No waiver by any party of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.  The
representations and warranties and the agreements and covenants of the Company
and the Safeguard Entities contained herein shall survive the Closing.

 

11

 

(d)                                 Counterparts. 
This Agreement may be executed in two or more counterparts, all of which
shall be considered one and the same agreement, it being understood that all
parties need not sign the same counterpart.

 

(e)                                  Entire Agreement. 
This Agreement, together with the Loan Agreement and the agreements and
documents contemplated hereby and thereby, contains the entire understanding
and agreement of the parties hereto and supersedes any prior understandings,
agreements, or representations by or among the parties hereto, written or oral,
including, without limitation, (i) each of the agreements listed on Exhibit 
A-1 hereto (which agreements shall be of no further force and effect after the
date hereof) and (ii) the applicable provisions for the granting of
registration rights contained in the agreements listed on Exhibit A-2
hereto (which provisions shall be of no further force and effect after the date
hereof), and may not be modified, amended or terminated except by a written
agreement signed by both parties. 
Without limiting the generality of the foregoing, each Safeguard Entity
acknowledges and agrees that it waives any right it may have to receive
liquidated damages (or any other damages) and any other remedies available to
it under any of the agreements listed on Exhibit A-1 or A-2 (whether
accruing prior to, on or after the date hereof) as a result of the Company’s
failure to date to maintain the effectiveness of registration statements
covering the Registrable Securities thereunder.

 

(f)                                    Jurisdiction. 
THE COMPANY AND EACH SAFEGUARD ENTITY (I) HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT,
COURTS OF THE STATE OF DELAWARE AND OTHER COURTS OF THE UNITED STATES SITTING
IN NEW CASTLE COUNTY, DELAWARE FOR THE PURPOSES OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II) HEREBY
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH SUIT ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER.  THE COMPANY AND EACH SAFEGUARD ENTITY CONSENTS
TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A
COPY THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER
THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING IN THIS PARAGRAPH SHALL AFFECT OR
LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

(g)                                 Governing Law. 
THIS AGREEMENT AND THE VALIDITY AND PERFORMANCE OF THE TERMS HEREOF
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE
PERFORMED ENTIRELY IN SUCH STATE.

 

(h)                                 Jury Trial. 
EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY.

 

(i)                                     Titles. 
The titles used in this Agreement are used for convenience only and are
not to be considered in construing or interpreting this Agreement.

 

12

 

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

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CLARIENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Raymond J. Land

  
	
   

  	
  Name:

  	
  Ray Land

  
	
   

  	
  Title:

  	
  Senior Vice President and

  
	
   

  	
   

  	
  Chief Financial officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SAFEGUARD ENTITIES:

  
	
   

  	
   

  
	
   

  	
  SAFEGUARD DELAWARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Brian J. Sisko

  
	
   

  	
  Name:

  	
  Brian J. Sisko Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SAFEGUARD SCIENTIFICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Brian J. Sisko

  
	
   

  	
  Name:

  	
  Brian J. Sisko

  
	
   

  	
  Title:

  	
  Senior Vice President and General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SAFEGUARD SCIENTIFICS

  
	
   

  	
  (DELAWARE), INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Brian J. Sisko

  
	
   

  	
  Name:

  	
  Brian J. Sisko Title: Vice President

  

 

13

 

Exhibit A-1

 

1.               Registration Rights
Agreement, dated as of June 6, 1996, by and among the Company and the
stockholders parties thereto.

 

2.               Registration Rights
Agreement, dated as of September 28, 2000, by and among the Company,
Safeguard Delaware, Inc., and incuVest, LLC.

 

3.               Registration Rights
Agreement dated as of July 10, 2001 by and among the Company, Safeguard
Delaware Inc. and other investors party thereto.

 

4.               Registration Rights
Agreement, dated as of June 13, 2002, by and between the Company and
Safeguard Delaware Inc.

 

5.               Registration Rights
Agreement, dated as of February 26, 2003, by and between the Company and
Safeguard Delaware Inc.

 

6.               Registration Rights
Agreement, dated as of February 10, 2004, by and between the Company and
Safeguard Delaware Inc.

 

7.               Registration Rights
Agreement, dated March 25, 2004, by and among the Company and the
investors signatory thereto.

 

8.               Registration Rights
Agreement, dated as of November 8, 2005, by and among the Company and the
investors signatory thereto.

 

9.               Registration Rights
Agreement, dated as of March 14, 2008, by and among the Company, SDI, SSI,
and Safeguard Delaware.

 

A-1

 

Exhibit A-2

 

1.                                       Securities
Purchase Agreement, dated as of June 13, 2002, by and among the Company,
Safeguard Delaware Inc. and Safeguard Scientifics, Inc.

 

2.                                       Securities
Purchase Agreement, dated as of September 22, 2006, by and between the
Company and Safeguard Delaware Inc.

 

3.                                       Senior
Subordinated Revolving Credit Agreement, dated as of March 7, 2007 between
the Company and Safeguard Delaware Inc.

 

4.                                       Amended
and Restated Senior Subordinated Revolving Credit Agreement dated as of March 14,
2008 by and between the Company and Safeguard Delaware Inc.

 

5.                                       Second
Amended and Restated Senior Subordinated Revolving Credit Agreement, dated as
of February 27, 2009 by and between the Company and Safeguard Delaware
Inc.

 

A-2

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