Document:

Exhibit 10.1

 

SINGULEX, INC.

 

FOURTH AMENDED AND RESTATED

 

REGISTRATION RIGHTS AGREEMENT

 

THIS FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made as of February 17, 2012, by and among Singulex, Inc., a Delaware corporation (the “Company”) and JAFCO Life Science No. 1 Investment Enterprise Partnership (“JAFCO No. 1”), JAFCO Super V3 Investment Limited Partnership (“JAFCO V3” and, together with JAFCO No. 1, “JAFCO”), OrbiMed Associates III, LP, a Delaware limited partnership (“OrbiMed Associates”), OrbiMed Private Investments III, LP, a Delaware limited partnership (“OrbiMed Investments” and, together with OrbiMed Associates, “OrbiMed”), Fisk Ventures, LLC, a Delaware limited liability company (“Fisk”), Prolog Capital A, L.P., a Missouri limited partnership (“Prolog A”), Prolog Capital B, L.P., a Missouri limited partnership (“Prolog B”), Prolog Capital III, L.P., a Missouri limited partnership (“Prolog III” and collectively with Prolog A and Prolog B, “Prolog”), and the other investors listed on the Schedule of Investors attached hereto (the “Investors”).

 

The parties hereto agree as follows:

 

1.             Demand Registrations.

 

(a)           Requests for Registration. At any time after the six month anniversary of the date on which the Company has completed its Initial Public Offering of the Company’s Common Stock, the holders of at least a majority of the Registrable Securities may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-1 or any similar long-form registration (“Long-Form Registrations”), and the holders of at least 20% of the Registrable Securities may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-3 or any similar short-form registration (“Short-Form Registrations”) if available.  All registrations requested pursuant to this paragraph 1(a) are referred to herein as “Demand Registrations”.  Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered and the anticipated per-share price range for such offering.  Within ten days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and, subject to the terms of paragraph (d) hereof, shall include in such registration (and in all related registrations and qualifications under state blue sky laws or in compliance with other registration requirements and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company’s notice.

 

(b)           Long-Form Registrations. Subject to paragraph 1(a), the holders of Registrable Securities shall be entitled to request not more than two Long-Form Registrations in the aggregate and the Company shall pay all Registration Expenses; provided that the aggregate offering value of the Registrable Securities requested to be registered in any Long-Form Registration must equal at least $1 million.  A registration shall not count as one of the permitted

 

 

Long-Form Registrations until it has become effective (unless such Long-Form Registration has not become effective due solely to the fault of the holders requesting such registration).

 

(c)           Short-Form Registrations. Subject to paragraph 1(a), in addition to the Long-Form Registrations provided pursuant to paragraph 1(b), the holders of Registrable Securities shall be entitled to request an unlimited number of Short-Form Registrations and the Company shall be obligated to pay all Registration Expenses with respect to five such Short Form Registrations; provided that the aggregate offering value of the Registrable Securities requested to be registered in any Short-Form Registration must equal at least $1 million and provided further that not more than two Short-Form Registrations may be requested in any twelve-month period.  Demand Registrations shall be Short-Form Registrations whenever the Company is permitted to use any applicable short form and if the managing underwriters (if any) agree to the use of a Short-Form Registration.  After the Company has become subject to the reporting requirements of the Securities Exchange Act, the Company shall use its best efforts to make Short-Form Registrations available for the sale of Registrable Securities.

 

(d)           Priority on Demand Registrations. The Company shall not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the holders of at least 75% of the Registrable Securities included in such registration.  If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold the Company shall include in such registration (i) first, the Senior Investor Registrable Securities requested to be included in such registration, pro rata among the holders thereof on the basis of the number of Senior Investor Registrable Securities owned by each such holder, (ii) second, the Junior Investor Registrable Securities requested to be included in such registration, pro rata among the holders thereof on the basis of the number of Junior Investor Registrable Securities owned by each such holder, and (iii) third, if permitted hereunder, other securities requested to be included in the registration.

 

(e)           Restrictions on Demand Registrations.  The Company shall not be obligated to effect any Demand Registration within 180 days after the effective date of a previous Long-Form Registration or a previous registration in which the holders of Registrable Securities were given piggyback rights pursuant to paragraph 2 and in which there was no reduction in the number of Registrable Securities requested to be included.  The Company may postpone for up to 120 days the filing or the effectiveness of a registration statement for a Demand Registration if the Company’s board of directors determines in its reasonable good-faith judgment that such Demand Registration would reasonably be expected to have a material adverse effect on the Company or any of its Subsidiaries; provided that in such event, the holders of Registrable Securities initially requesting such Demand Registration shall be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations hereunder and the Company shall pay all Registration Expenses in connection with such registration.  The Company may delay a Demand Registration hereunder only once in any twelve-month period.

 

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(f)            Selection of Underwriters. The holders of a majority of the Registrable Securities included in any Demand Registration shall have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the Company’s approval which shall not be unreasonably withheld, conditioned or delayed.

 

(g)           Other Registration Rights. The Company represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any other Person with respect to any securities of the Company.  Except as provided in this Agreement, the Company shall not grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into  or exercisable for such securities, without the prior written consent of the holders of at least 75% of the Registrable Securities.

 

2.             Piggyback Registrations.

 

(a)           Right to Piggyback. Whenever the Company proposes to register any of its securities under the Securities Act (other than pursuant to a Demand Registration) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice (in any event within three business days after its receipt of notice of any exercise of demand registration rights other than under this Agreement) to all holders of Registrable Securities of its intention to effect such a registration and, subject to the terms of paragraphs 2(c) and 2(d) hereof, shall include in such registration (and in all related registrations or qualifications under blue sky laws or in compliance with other registration requirements and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company’s notice.

 

(b)           Piggyback Expenses. The Registration Expenses of the holders of Registrable Securities shall be paid by the Company in all Piggyback Registrations.

 

(c)           Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Senior Investor Registrable Securities requested to be included in such registration, pro rata among the holders of such Senior Investor Registrable Securities on the basis of the number of Senior Investor Registrable Securities owned by each such holder, (iii) third, the Junior Investor Registrable Securities requested to be included in such registration, pro rata among the holders of such Junior Investor Registrable Securities on the basis of the number of Junior Investor Registrable Securities owned by each such holder and (iv) fourth, other securities requested to be included in such registration; provided, however, that in no event shall the amount of securities owned by the holders of Registrable Securities included in the registration be reduced below 20% of the total amount of securities included in such registration unless such offering is the Initial Public Offering.

 

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(d)           Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s securities, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company shall include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration (ii) second, the Senior Investor Registrable Securities requested to be included in such registration, pro rata among the holders of such Senior Investor Registrable Securities on the basis of the number of Senior Investor Registrable Securities owned by each such holder,  (iii) third, the Junior Investor Registrable Securities requested to be included in such registration, pro rata among the holders of such Junior Investor Registrable Securities on the basis of the number of Junior Investor Registrable Securities owned by each such holder and (iv) fourth, other securities requested to be included in such registration; provided, however, that in no event shall the amount of securities owned by the holders of Registrable Securities included in the registration be reduced below 20% of the total amount of securities included in the registration.

 

(e)           Selection of Underwriters. If any Piggyback Registration is an underwritten offering, the selection of investment banker(s) and manager(s) for the offering must be approved by the holders of a majority of the Registrable Securities included in such Piggyback Registration.  Such approval shall not be unreasonably withheld or delayed.

 

(f)            Other Registrations. If the Company has previously filed a registration statement with respect to Registrable Securities pursuant to paragraph 1 or pursuant to this paragraph 2, and if such previous registration has not been withdrawn or abandoned, the Company shall not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least 60 days has elapsed from the effective date of such previous registration.

 

3.             Holdback Agreements.

 

(a)           Each holder of Registrable Securities agrees not to sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to, any securities of the Company (other than those included in a registration or acquired in the public markets) for a period specified by the underwriters of securities of the Company not to exceed 180 days following the effective date of a registration statement of the Company filed under the Securities Act; provided that (i) the Company’s directors, officers and greater than 5% shareholders enter into similar agreements, (ii) any discretionary waiver or termination of the restrictions of such agreements by the Company or representatives of the underwriters shall apply to all persons subject to such agreements pro rata based on the number of shares subject to such agreements, and (iii) such agreement shall apply only to the Company’s Initial Public Offering.  Notwithstanding the foregoing, such period of 180 days period may be extended by up to 34 days as required to comply with NASD Rule 2711 (including, any successor rule thereto or any similar stock exchange rule).  Each holder of Registrable Securities agrees to execute and deliver

 

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such other agreements as may be reasonably requested by the Company or the underwriters which are consistent with the foregoing or which are necessary to give further effect thereto.  The Company may impose stop-transfer instructions with respect to the securities subject to the foregoing restriction until the end of the period of 180 days or longer described above.  The underwriters of the Company’s stock are intended third-party beneficiaries of this Section 3(a) and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

(b)           The Company shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 180-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration or pursuant to registrations on Form S-8 or any successor form), unless the underwriters managing the registered Public Offering otherwise agree.

 

4.             Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible:

 

(a)           prepare and file with the Securities and Exchange Commission a registration statement, and all amendments and supplements thereto and related prospectuses as may be necessary to comply with applicable securities laws, with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to the counsel selected by the holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel);

 

(b)           notify each holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than 180 days and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

 

(c)           furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

 

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(d)           use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction);

 

(e)           notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

 

(f)            cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed;

 

(g)           provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

 

(h)           enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including effecting a stock split or a combination of shares);

 

(i)            make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

 

(j)            otherwise use its best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158  thereunder;

 

(k)           permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the

 

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Company, to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included;

 

(l)            in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Common Stock included in such registration statement for sale in any jurisdiction, shall use its best efforts promptly to obtain the withdrawal of such order;

 

(m)          use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities; and

 

(n)           obtain a cold comfort letter from the Company’s independent public accountants and a legal opinion from the Company’s counsel, in customary form and covering such matters of the type customarily covered by cold comfort letters and legal opinions, as the case may be, as the holders of a majority of the Registrable Securities being sold reasonably request (provided that such Registrable Securities constitute at least 10% of the securities covered by such registration statement).

 

5.             Registration Expenses.

 

(a)           All expenses incident to the Company’s performance of or compliance with this Agreement, including without limitation all registration, qualification and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company (all such expenses being herein called “Registration Expenses”), shall be borne as provided in this Agreement, except that the Company shall, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed.

 

(b)           In connection with each Demand Registration and each Piggyback Registration, the Company shall reimburse the holders of Registrable Securities included in such registration for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities included in such registration.

 

(c)           To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder shall pay those Registration Expenses allocable to the registration of such holder’s securities so included, and any Registration Expenses not so allocable shall be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered.

 

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6.             Indemnification.

 

(a)           The Company agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities, its officers and directors and each Person who controls such holder (within the meaning of the Securities Act or the Exchange Act) against all losses, claims, actions, damages, liabilities and expenses (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law insofar as such losses, claims, actions, damages, liabilities or expenses arise out of or are based upon (i) any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law; and the Company will pay to each holder of Registrable Securities, its officers and directors and each Person who controls such holder (within the meaning of the Securities Act or Exchange Act), as incurred, any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, except (i) insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same and (ii) that the indemnity agreement contained in this Section 6(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld.  In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act or the Exchange Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities.

 

(b)           In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, shall indemnify the Company, its directors, each of its officers who has signed the registration statement and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) and any other holder of Registrable Securities selling securities in such registration statement and any controlling person of any such other holder, against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission occurs in reliance upon and in conformity with written information furnished by such holder expressly for use in connection with such registration; provided that the obligation to indemnify shall be individual, not joint and several, for each holder and shall be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement; provided,

 

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further, that the indemnity agreement contained in this Section 6(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of such holder, which consent shall not be unreasonably withheld.

 

(c)           Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party.  If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld).  An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.

 

(d)           If the indemnification provisions provided for herein are held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations; provided, that in no event shall any contribution by a holder of Registrable Securities under this Subsection (d) exceed the net proceeds from the offering received by such holder.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

 

(e)           The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities.

 

7.             Participation in Underwritten Registrations.  No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other

 

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documents required under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder and such holder’s intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Section 6 hereof.

 

8.             Definitions.

 

(a)           “Approving Holders” means the approval in writing by the holders of at least seventy percent (70%) of the outstanding shares of the Series F Preferred Stock, Series E Preferred Stock and Series D Preferred Stock, voting together as a separate class, on an as-converted basis.

 

(b)           “Common Stock” means the Company’s Common Stock, par value $.001 per share.

 

(c)           “Exchange Act” means the Securities Exchange Act of 1934, as amended (and any successor thereto) and the rules and regulations promulgated thereunder.

 

(d)           “Initial Public Offering” means the Company’s first underwritten public offering of its capital stock or equity securities to the public pursuant to an effective registration statement under the Securities Act of 1933, as then in effect, or any comparable statement under any similar federal statute then in force.

 

(e)           “Junior Investor Registrable Securities” means any Common Stock issued or issuable upon the conversion of any Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock.  As to any particular Junior Investor Registrable Securities, such securities shall cease to be Junior Investor Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force) or repurchased by the Company or any Subsidiary.  For purposes of this Agreement, a Person shall be deemed to be a holder of Junior Investor Registrable Securities, and the Junior Investor Registrable Securities shall be deemed to be in existence, whenever such Person has the right to acquire directly or indirectly such Junior Investor Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a holder of Junior Investor Registrable Securities hereunder.

 

(f)            “Public Offering” means any offering by the Company of its capital stock or equity securities to the public pursuant to an effective registration statement under the Securities Act of 1933, as then in effect, or any comparable statement under any similar federal statute then in force.

 

(g)           “Qualified Public Offering” shall have the meaning ascribed to it in the Company’s Restated Certificate.

 

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(h)           “Registrable Securities” means any Junior Investor Registrable Securities and any Senior Investor Registrable Securities.

 

(i)            “Restated Certificate” shall mean the Company’s Amended and Restated Certificate of Incorporation, as may be amended from time to time.

 

(j)            “Senior Investor Registrable Securities” means any Common Stock issued or issuable upon the conversion of any Series F Preferred Stock or Series E Preferred Stock.  As to any particular Senior Investor Registrable Securities, such securities shall cease to be Senior Investor Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force) or repurchased by the Company or any Subsidiary.  For purposes of this Agreement, a Person shall be deemed to be a holder of Senior Investor Registrable Securities, and the Senior Investor Registrable Securities shall be deemed to be in existence, whenever such Person has the right to acquire directly or indirectly such Senior Investor Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a holder of Senior Investor Registrable Securities hereunder.

 

(k)           “Series A Preferred Stock” means the Company’s Series A Preferred Convertible Stock, par value $.001 per share.

 

(l)            “Series B Preferred Stock” means the Company’s Series B Preferred Convertible Stock, par value $.001 per share.

 

(m)          “Series C Preferred Stock” means the Company’s Series C Preferred Convertible Stock, par value $.001 per share.

 

(n)           “Series D Preferred Stock” means the Company’s Series D Preferred Convertible Stock, par value $.001 per share.

 

(o)           “Series E Preferred Stock” means the Company’s Series E Preferred Convertible Stock, par value $.001 per share.

 

(p)           “Series F Preferred Stock” means the Company’s Series F Preferred Convertible Stock, par value $.001 per share.

 

(q)           Unless otherwise stated, other capitalized terms contained herein have the meanings set forth in the Purchase Agreement.

 

9.             Miscellaneous.

 

(a)           No Inconsistent Agreements. The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

 

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(b)           Adjustments Affecting Registrable Securities. The Company shall not take any action, or permit any change to occur, with respect to its securities which would adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability of such Registrable Securities in any such registration (including, without limitation, effecting a stock split or a combination of shares).

 

(c)           Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.  The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that, in addition to any other rights and remedies existing in its favor, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement.

 

(d)           Amendments and Waivers. Except as otherwise provided herein, the  provisions of this Agreement may be amended or waived only upon the prior written consent of the (i) Company, (ii) holders of at least 66-2/3% of the Series A Preferred Stock then outstanding, (iii) holders of at least 66-2/3% of the Series B Preferred Stock then outstanding, and (iv) the Approving Holders.  The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

 

(e)           Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not and the holders of Registrable Securities may assign their rights hereunder to any person to whom Registrable Securities are transferred.  In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities

 

(f)            Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

 

(g)           Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement.  Facsimile and electronic (i.e. PDF) signatures shall be as effective as original signatures.

 

12

 

(h)           Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

 

(i)            Governing Law. All questions concerning the construction, interpretation and validity of this Agreement shall be governed by and construed and enforced in accordance with the domestic laws of the State of California, without giving effect to any choice or conflict of law provision or rule (whether in the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California.  In furtherance of the foregoing, the internal law of the State of California will control the interpretation and construction of this Agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.  Notwithstanding the foregoing, those provisions of this Agreement that relate to the internal governance of the Company and are required by Delaware law to be governed by such, shall be governed by and construed and enforced in accordance with the internal laws of State of Delaware.

 

(j)            Notices.  Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by confirmed electronic mail or confirmed facsimile, or, if sent to a destination within the United States, mailed first class mail (postage prepaid), or, if sent to a destination outside the United States, mailed via mailing international priority (postage prepaid), or sent by reputable overnight courier service (charges prepaid) to the Company at the address set forth below and to any other recipient at the address indicated on the schedules hereto and to any subsequent holder of Stockholder Shares subject to this Agreement at such address as indicated by the Company’s records, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices shall be deemed to have been given hereunder when delivered personally; when sent by confirmed electronic mail or confirmed facsimile; if sent to a destination within the United States, three days after deposit in the U.S. mail; if sent to a destination outside the United States, seven days after deposit in the U.S. mail; and one day after deposit with a reputable overnight courier service.  The Company’s address is:

 

Singulex, Inc.

1650 Harbor Bay Parkway, Suite 200,

Alameda, California 94502
 Attn: Philippe Goix

 

(k)           Termination. The Company’s obligations pursuant to this Agreement shall terminate as to any holder of Registrable Securities on the earlier of: (i) the fifth anniversary of a Qualified Public Offering; (ii) the seventh anniversary of the Initial Public Offering and (iii) the date when such holder of Registrable Securities can sell all of his or its Registrable Securities pursuant to Rule 144 under the Securities Act.

 

13

 

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

 

	
 
    	
THE COMPANY:
    
	
 
    	
 
    
	
 
    	
SINGULEX, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Philippe Goix
    
	
 
    	
 
    	
   Philippe Goix
    
	
 
    	
 
    	
   Chief Executive Officer
    

 

SIGNATURE PAGE TO SINGULEX, INC.
 FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

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

 

	
 
    	
INVESTORS
    
	
 
    	
 
    
	
 
    	
JAFCO   SUPER V3 INVESTMENT LIMITED PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
By:
    	
JAFCO   Co., Ltd
    
	
 
    	
Its:
    	
General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Shinichi Fuki
    
	
 
    	
 
    	
Shinichi   Fuki,
    
	
 
    	
 
    	
President &   CEO
    
	
 
    	
 
    	
 
    
	
 
    	
JAFCO   LIFE SCIENCE NO. 1 INVESTMENT ENTERPRISE PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
By:
    	
JAFCO   Co., Ltd
    
	
 
    	
Its:
    	
Executive Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Shinichi Fuki
    
	
 
    	
 
    	
Shinichi   Fuki,
    
	
 
    	
 
    	
President &   CEO
    

 

SIGNATURE PAGE TO SINGULEX, INC.
 FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

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

 

	
 
    	
INVESTORS
    
	
 
    	
 
    
	
 
    	
ORBIMED ASSOCIATES III, LP
    
	
 
    	
 
    
	
 
    	
By: OrbiMed Advisors LLC, its General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Carl Gordon
    
	
 
    	
Name:
    	
Carl Gordon
    
	
 
    	
Title:
    	
General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
ORBIMED PRIVATE INVESTMENTS III, LP
    
	
 
    	
 
    
	
 
    	
By: OrbiMed Capital GP III, its General   Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Carl Gordon
    
	
 
    	
Name:
    	
Carl Gordon
    
	
 
    	
Title:
    	
General Partner
    

 

SIGNATURE PAGE TO SINGULEX, INC.
 FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

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

 

	
 
    	
INVESTORS
    
	
 
    	
 
    
	
 
    	
FISK VENTURES, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stephen Rose
    
	
 
    	
Name:
    	
Stephen Rose
    
	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ H. Fisk Johnson
    
	
 
    	
H. Fisk Johnson
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Stephen Rose
    
	
 
    	
Stephen L. Rose
    

 

SIGNATURE PAGE TO SINGULEX, INC.
 FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

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

 

	
 
    	
INVESTORS
    
	
 
    	
 
    
	
 
    	
PROLOG CAPITAL III, L.P.
    
	
 
    	
 
    
	
 
    	
By: Prolog Ventures III, LLC, its General   Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gregory R. Johnson
    
	
 
    	
Name:
    	
Gregory R. Johnson
    
	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
PROLOG CAPITAL A, L.P.
    
	
 
    	
 
    
	
 
    	
By: Prolog Ventures A, LLC, its General   Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gregory R. Johnson
    
	
 
    	
Name:
    	
Gregory R. Johnson
    
	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
PROLOG CAPITAL B, L.P.
    
	
 
    	
 
    
	
 
    	
By: Prolog Ventures B, LLC, its General   Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gregory R. Johnson
    
	
 
    	
Name:
    	
Gregory R. Johnson
    
	
 
    	
Title:
    	
Managing Director
    

 

SIGNATURE PAGE TO SINGULEX, INC.
 FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

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

 

	
 
    	
INVESTORS
    
	
 
    	
 
    
	
 
    	
ALAN C. & AGNÉS MENDELSON FAMILY TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Alan C. Mendelson
    
	
 
    	
Name:
    	
Alan C. Mendelson
    
	
 
    	
Title:
    	
Trustee
    

 

SIGNATURE PAGE TO SINGULEX, INC.
 FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

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

 

	
 
    	
INVESTORS
    
	
 
    	
 
    
	
 
    	
VP COMPANY INVESTMENTS 2008, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Alan C.   Mendelson
    
	
 
    	
Name:
    	
Alan C. Mendelson
    
	
 
    	
Title:
    	
Member of Management Committee
    

 

SIGNATURE PAGE TO SINGULEX, INC.
 FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

SCHEDULE OF INVESTORS

 

	
Name and Address
    	
 
    	
Shares of Series
   A Preferred
   Stock
    	
 
    	
Shares of Series
   B Preferred
   Stock
    	
 
    	
Shares of Series
   C Preferred
   Stock
    	
 
    	
Shares of Series
   D Preferred
   Stock
    	
 
    	
Shares of Series
   E Preferred
   Stock
    	
 
    	
Shares of Series
   F Preferred
   Stock
    	
 
    
	
JAFCO Life Science No.1   Investment Enterprise Partnership

Otemachi First Square

West Tower 11F

1-5-1 Otemachi, Chiyoda-ku

Tokyo 100-0004, JAPAN
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,730,503
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JAFCO Super V3 Investment   Limited Partnership

Otemachi First Square

West Tower 11F

1-5-1 Otemachi, Chiyoda-ku

Tokyo 100-0004, JAPAN
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
5,191,509
    	
 
    	
1,822,188
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
OrbiMed Associates III, LP

767 Third Avenue

30th Floor

New York, NY 10017
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
34,103
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
OrbiMed Private Investments III,   LP

767 Third Avenue

30th Floor

New York, NY 10017
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
7,843,137
    	
 
    	
4,614,675
    	
 
    	
3,580,780
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fisk Ventures, LLC

555 Main Street

Suite 500

Racine, Wisconsin 53403-4616

Attn: Stephen Rose
    	
 
    	
—
    	
 
    	
70,000
    	
 
    	
3,435,486
    	
 
    	
6,666,667
    	
 
    	
10,383,018
    	
 
    	
6,639,194
    	
 
    

 

 

	
Name and Address
    	
 
    	
Shares of Series
   A Preferred
   Stock
    	
 
    	
Shares of Series
   B Preferred
   Stock
    	
 
    	
Shares of Series
   C Preferred
   Stock
    	
 
    	
Shares of Series
   D Preferred
   Stock
    	
 
    	
Shares of Series
   E Preferred
   Stock
    	
 
    	
Shares of Series
   F Preferred
   Stock
    	
 
    
	
H. Fisk Johnson
    	
 
    	
125,069
    	
 
    	
96,707
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Stephen L. Rose
    	
 
    	
2,240
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Prolog Capital A, L.P.

c/o Prolog   Ventures,LLC

7733 Forsyth Blvd.

Suite 1440

St. Louis, Missouri 63105

Attn: Mr.  Greg Johnson
    	
 
    	
—
    	
 
    	
145,608
    	
 
    	
224,707
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Prolog Capital B, L.P.

c/o Prolog   Ventures. LLC

7733 Forsyth Blvd.

Suite 1440

St. Louis, Missouri 63105

Attn: Mr.  Greg Johnson
    	
 
    	
—
    	
 
    	
30,188
    	
 
    	
1,530,849
    	
 
    	
198,698
    	
 
    	
—
    	
 
    	
123,743
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Prolog Capital III, L.P.

c/o Prolog   Ventures. LLC

7733 Forsyth Blvd., Suite 1440

St. Louis, Missouri 63105

Attn: Mr.  Greg Johnson
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
945,443
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
The Alan C. & Agnés B.   Mendelson Family Trust

c/o Latham & Watkins LLP

140 Scott Drive

Menlo Park, CA 94025
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
34,004
    	
 
    

 

 

	
Name and Address
    	
 
    	
Shares of Series
   A Preferred
   Stock
    	
 
    	
Shares of Series
   B Preferred
   Stock
    	
 
    	
Shares of Series
   C Preferred
   Stock
    	
 
    	
Shares of Series
   D Preferred
   Stock
    	
 
    	
Shares of Series
   E Preferred
   Stock
    	
 
    	
Shares of Series
   F Preferred
   Stock
    	
 
    
	
VP Company Investments 2008,   LLC

c/o Latham & Watkins LLP

555 West Fifth Street

Suite 800

Los Angeles, CA 90013
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
34,004Exhibit 10.3(a)

 

VENTURE LOAN AND SECURITY AGREEMENT

 

Dated as of November 24, 2010

 

by and between

 

COMPASS HORIZON FUNDING COMPANY LLC,

a Delaware limited liability company

76 Batterson Park Road

Farmington, CT 06032

 

as Lender

 

And

 

SINGULEX, INC.,

a Delaware corporation

1650 Harbor Bay Parkway

Suite 200

Alameda, CA 94502

 

as Borrower

 

	
Commitment Amount Loan A:
    	
$3,000,000
    
	
 
    	
 
    
	
Commitment   Amount Loan B:
    	
$2,000,000
    
	
 
    	
 
    
	
Commitment   Termination Date Loan A:
    	
November 24,   2010
    
	
 
    	
 
    
	
Commitment   Termination Date Loan B:
    	
December 31,   2010
    

 

 

The Lender and Borrower hereby agree as follows:

 

AGREEMENT

 

1.              Definitions and Construction.

 

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

 

“Account Control Agreement” means an agreement acceptable to Lender which perfects via control Lender’s security interest in Borrower’s deposit accounts and/or accounts holding securities.

 

“Affiliate” means any Person that owns or controls directly or indirectly ten percent (10%) or more of the stock of another entity, any Person that controls or is controlled by or is under common control with such Persons or any Affiliate of such Persons and each of such Person’s officers, directors, managers, joint venturers or partners.

 

“Agreement” means this certain Venture Loan and Security Agreement by and between Borrower and Lender dated as of the date on the cover page hereto (as it may from time to time be amended or supplemented in writing signed by the Borrower and Lender).

 

“Borrower” means the Borrower as set forth on the cover page of this Agreement.

 

“Bridge Bank” means Bridge Bank, N.A., a national banking association.

 

“Bridge Bank LSA” means that certain Amended and Restated Loan and Security Agreement dated as of May 15, 2007 by and between Bridge Bank and the Borrower, as amended from time to time and in effect on the date hereof.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banking institutions are authorized or required to close in Connecticut or California.

 

“Claim” has the meaning given such term in Section 10.3 of this Agreement

 

“Code” means the Uniform Commercial Code as adopted and in effect in the State of New York, as amended from time to time; provided  that if by reason of mandatory provisions of law, the creation and/or perfection or the effect of perfection or non-perfection of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, the term “Code” shall also mean the Uniform Commercial Code as in effect from time to time in such jurisdiction for purposes of the provisions hereof relating to such creation, perfection or effect of perfection or non-perfection.

 

“Collateral” has the meaning given such term in Section 4.1 of this Agreement.

 

“Commitment Amount Loan A” and “Commitment Amount Loan B” have the meanings as set forth on the cover page of this Agreement.

 

1

 

“Commitment Fee” has the meaning given such term in Section 2.6(c) of this Agreement.

 

“Commitment Termination Date Loan A” and “Commitment Termination Date Loan B” have the meanings as set forth on the cover page of this Agreement.

 

“Default” means any event which with the passing of time or the giving of notice or both would become an Event of Default hereunder.

 

“Default Rate” means the per annum rate of interest equal to four percent (4%) over the Loan Rate, but such rate shall in no event be more than the highest rate permitted by applicable law to be charged on commercial loans in a default situation.

 

“Disclosure Schedule” means Exhibit A attached hereto.

 

“Environmental Laws” means all foreign, federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety and land use matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act and the Emergency Planning and Community Right-to-Know Act.

 

“Equity Securities” of any Person means (a) all common stock, preferred stock, participations, shares, partnership interests, membership interests or other equity interests in and of such Person (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing.

 

“ERISA” has the meaning given to such term in Section 7.12 of this Agreement.

 

“Event of Default” has the meaning given to such term in Section 8 of this Agreement.

 

“Final Payment” has the meaning set forth in Section 2.2(g) below.

 

“Funding Certificate” means a certificate executed by a Responsible Officer of Borrower substantially in the form of Exhibit B or such other form as Lender may agree to accept.

 

“Funding Date” means any date on which a Loan is made to or on account of Borrower under this Agreement.

 

“GAAP” means generally accepted accounting principles as in effect in the United States of America from time to time, consistently applied.

 

“Good Faith Deposit” has the meaning given such term in Section 2.6(a) of this Agreement.

 

“Governmental Authority” means (a) any federal, state, county, municipal or foreign government, or political subdivision thereof, (b) any governmental or quasi-governmental

 

2

 

agency, authority, board, bureau, commission, department, instrumentality or public body, (c) any court or administrative tribunal, or (d) with respect to any Person, any arbitration tribunal or other non-governmental authority to whose jurisdiction that Person has consented.

 

“Hazardous Materials” means all those substances which are regulated by, or which may form the basis of liability under, any Environmental Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or toxic substance, or petroleum or petroleum derived substance or waste.

 

“Indebtedness” means, with respect to Borrower or any Subsidiary, the aggregate amount of, 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, (c) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade payables aged less than one hundred eighty (180) days), (d) all capital lease obligations of such Person, (e) all obligations or liabilities of others secured by a Lien on any asset of such Person, whether or not such obligation or liability is assumed, (f) all obligations or liabilities of others guaranteed by such Person, and (g) any other obligations or liabilities which are required by GAAP to be shown as debt on the balance sheet of such Person (provided that accounts payable, accrued expenses and other liabilities arising in the ordinary course of business shall not constitute Indebtedness). Unless otherwise indicated, the term “Indebtedness” shall include all Indebtedness of Borrower and the Subsidiaries.

 

“Indemnified Person” has the meaning given such term in Section 10.3 of this Agreement.

 

“Intellectual Property” means all of Borrower’s right, title and interest in and to patents, patent rights (and applications and registrations therefor and divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same), trademarks and service marks (and applications and registrations therefor and the goodwill associated therewith), inventions, copyrights (including applications and registrations therefor and like protections in each work or authorship and derivative work thereof), mask works (and applications and registrations therefor), trade names, trade styles, software and computer programs, source code, object code, trade secrets, methods, processes, know how, drawings, specifications, descriptions, and all memoranda, notes, and records with respect to any research and development, all whether now owned or subsequently acquired or developed by Borrower and whether in tangible or intangible form or contained on magnetic media readable by machine together with all such magnetic media (but not including embedded computer programs and supporting information included within the definition of “goods” under the Code).

 

“Investment” means the purchase or acquisition of any capital stock, equity interest, or any obligations or other securities of, or any interest in, any Person, or the extension of any advance, loan, extension of credit or capital contribution to, or any other investment in, or deposit with, any Person.

 

“Landlord Agreement” means an agreement substantially in the form provided by Lender to Borrower or such other form as Lender may agree to accept.

 

3

 

“Lender” means the Lender as set forth on the cover page of this Agreement.

 

“Lender’s Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the preparation, negotiation, documentation, administration, perfection and funding of the Loan Documents; and Lender’s reasonable attorneys’ fees, costs and expenses incurred in drafting, amending, modifying, enforcing or defending the Loan Documents (including fees and expenses of appeal or review), including the exercise of any rights or remedies afforded hereunder or under applicable law, whether or not suit is brought, whether before or after bankruptcy or insolvency, including without limitation all fees and costs incurred by Lender in connection with Lender’s enforcement of its rights in a bankruptcy or insolvency proceeding filed by or against Borrower or its Property.

 

“Lien” means any voluntary or involuntary security interest, pledge, bailment, lease, mortgage, hypothecation, conditional sales and title retention agreement, encumbrance or other lien with respect to any Property in favor of any Person.

 

“Loan” means each advance of credit by Lender to Borrower under this Agreement and, “Loans” means, collectively all such advances of credit.

 

“Loan A” means the advance of credit by Lender to Borrower under this Agreement in the Commitment Amount Loan A.

 

“Loan B” means the advance of credit by Lender to Borrower under this Agreement in the Commitment Amount Loan B.

 

“Loan Documents” means, collectively, this Agreement, the Notes, the Warrant, any Landlord Agreement, any Account Control Agreement and all other documents, instruments and agreements entered into in connection with this Agreement, all as amended or extended from time to time.

 

“Loan Rate” means, with respect to each Loan, the per annum rate of interest (based on a year of twelve 30-day months) equal to the greater of (a) 11.0% or (b) 11.0% plus the excess, if any, of (i) the one month LIBOR Rate (rounded to the nearest one hundredth percent), as reported in the Wall Street Journal, on the date which is five (5) Business Days before the Funding Date for such Loan (or, if the Wall Street Journal is not published on such date, the next earlier date on which it is published) and (ii) 0.30%.  The Loan Rate shall be fixed for the term of the Loan.

 

“Maturity Date” means, with respect to each Loan, March 1, 2014, or if earlier, the date of acceleration of such Loan following an Event of Default or the date of prepayment, whichever is applicable.

 

“Note” means each promissory note executed in connection with a Loan in substantially the form of Exhibit C attached hereto, and, collectively, “Notes” means all such promissory notes.

 

4

 

“Obligations” means all debt, principal, interest, fees, charges, expenses and attorneys’ fees and costs and other amounts, obligations, covenants, and duties owing by Borrower to Lender of any kind and description (whether pursuant to or evidenced by the Loan Documents (other than the Warrant) and whether or not for the payment of money), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including all Lender’s Expenses.

 

“Officer’s Certificate” means a certificate executed by a Responsible Officer substantially in the form of Exhibit E or such other form as Lender may agree to accept.

 

“Payment Date” has the meaning given such term in Section 2.2(a) of this Agreement.

 

“Permitted Indebtedness” means and includes:

 

(a)         Indebtedness of Borrower to Lender;

 

(b)         Indebtedness of Borrower existing as of the date hereof and Indebtedness of Borrower incurred after the date hereof in an amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) per year, which, in both cases, is secured solely by Liens permitted under clause (e) of the definition of Permitted Liens;

 

(c)          Indebtedness arising from the endorsement of instruments in the ordinary course of business;

 

(d)         Indebtedness existing on the date hereof and set forth on the Disclosure Schedule;

 

(e)          Indebtedness of Borrower to Bridge Bank existing on the date hereof in a current aggregate outstanding principal amount of approximately One Million One Hundred Thousand Dollars consisting of Growth Capital Advances (as defined in the Bridge Bank LSA) pursuant to the terms of the Bridge Bank LSA;

 

(f)           In addition to clause (c) above, Indebtedness in an aggregate outstanding principal amount not exceeding Five Hundred Thousand Dollars ($500,000), consisting of a revolving credit facility from Bridge Bank in which the loans are limited to not more than Eighty Percent (80%) of Borrower’s Eligible Accounts (as defined in the Bridge Bank LSA) pursuant to the terms of the Bridge Bank LSA; provided that, if Borrower achieves trailing three month revenue in two consecutive months of not less than Four Million Dollars ($4,000,000), such Indebtedness may be in an aggregate outstanding principal amount not exceeding Five Million Dollars ($5,000,000);

 

(g)          Indebtedness consisting of security deposits and reimbursement obligations under letters of credit in favor of landlords and utilities in the ordinary course of business, in an amount not to exceed $100,000 in the aggregate at any time outstanding; and

 

(h)         Extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness above, provided that the principal amount thereof is not

 

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increased or its principal repayment modified or the terms thereof are not modified to impose more burdensome terms upon Borrower.

 

“Permitted Investments” means and includes any of the following Investments as to which Lender has a perfected security interest:

 

(a)         Deposits and deposit accounts with commercial banks organized under the laws of the United States or a state thereof to the extent: (i) the deposit accounts of each such institution are insured by the Federal Deposit Insurance Corporation up to the legal limit; and (ii) each such institution has an aggregate capital and surplus of not less than One Hundred Million Dollars ($100,000,000);

 

(b)         Investments in marketable obligations issued or fully guaranteed by the United States and maturing not more than one (1) year from the date of issuance;

 

(c)          Investments in open market commercial paper rated at least “A1” or “P1” or higher by a national credit rating agency and maturing not more than one (1) year from the creation thereof;

 

(d)         Investments pursuant to or arising under currency agreements or interest rate agreements entered into in the ordinary course of business; and

 

(e)          Other Investments aggregating not in excess of Two Hundred Fifty Thousand Dollars ($250,000) at any time.

 

“Permitted Liens” means and includes:

 

(a)         the Lien created by this Agreement;

 

(b)         Liens for fees, taxes, levies, imposts, duties or other governmental charges of any kind which are not yet delinquent or which are being contested in good faith by appropriate proceedings which suspend the collection thereof (provided  that such appropriate proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of Borrower);

 

(c)          Liens identified on the Disclosure Schedule;

 

(d)         carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Liens arising in the ordinary course of business and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings (provided  that such appropriate proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of Borrower);

 

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(e)          Liens upon any equipment or other personal property acquired by Borrower after the date hereof to secure (i) the purchase price of such equipment or other personal property, or (ii) lease obligations or indebtedness incurred solely for the purpose of financing the acquisition of such equipment or other personal property; provided  that (A) such Liens are confined solely to the equipment or other personal property so acquired and the amount secured does not exceed the acquisition price thereof, and (B) no such Lien shall be created, incurred, assumed or suffered to exist in favor of Borrower’s officers, directors or shareholders holding five percent (5%) or more of Borrower’s Equity Securities;

 

(f)           Liens granted in connection with Indebtedness permitted under subsections (e) and (f) of the definition of Permitted Indebtedness; and

 

(g)          non-exclusive licenses of Intellectual Property entered into in the ordinary course of business.

 

“Person” means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any domestic or foreign national, state or local government, any political subdivision thereof, and any department, agency, authority or bureau of any of the foregoing.

 

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, whether tangible or intangible.

 

“Responsible Officer” has the meaning given such term in Section 6.3 of this Agreement.

 

“Scheduled Payments” has the meaning given such term in Section 2.2(a) of this Agreement.

 

“Solvent” has the meaning given such term in Section 5.11 of this Agreement.

 

“Subsidiary” means any corporation or other entity of which a majority of the outstanding Equity Securities entitled to vote for the election of directors or other governing body (otherwise than as the result of a default) is owned by Borrower directly or indirectly through Subsidiaries.

 

“Third Party Equipment” has the meaning given such term in Section 4.8 of this Agreement.

 

“Transfer” has the meaning given such term in Section 7.4 of this Agreement.

 

“Warrant” means the separate warrant or warrants dated on or about the date hereof in favor of the Lender or its designees to purchase securities of Borrower.

 

1.2       Construction.  References in this Agreement to “Articles,” “Sections,” “Exhibits,” “Schedules” and “Annexes” are to recitals, articles, sections, exhibits, schedules and annexes herein and hereto unless otherwise indicated.  References in this Agreement and each of the other Loan Documents to any document, instrument or agreement shall include (a) all

 

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exhibits, schedules, annexes and other attachments thereto, (b) all documents, instruments or agreements issued or executed in replacement thereof, and (c) such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time.  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be.  The words “include” and “including” and words of similar import when used in this Agreement or any other Loan Document shall not be construed to be limiting or exclusive.  Unless otherwise indicated in this Agreement or any other Loan Document, all accounting terms used in this Agreement or any other Loan Document shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with GAAP, and all terms describing Collateral shall be construed in accordance with the Code. The terms and information set forth on the cover page of this Agreement are incorporated into this Agreement.

 

2.              Loans; Repayment.

 

2.1       Commitment.

 

(a)         The Commitment Amount.  Subject to the terms and conditions of this Agreement and relying upon the representations and warranties herein set forth as and when made or deemed to be made, Lender agrees to lend to Borrower prior to the Commitment Termination Date Loan A, Loan A.  Subject to the terms and conditions of this Agreement, including, without limitation Section 3.3 below, and relying upon the representations and warranties herein set forth as and when made or deemed to be made, Lender agrees to lend to Borrower prior to the Commitment Termination Date Loan B, Loan B.

 

(b)         The Loans and the Notes. The obligation of Borrower to repay the unpaid principal amount of and interest on each Loan shall be evidenced by a Note issued to Lender.

 

(c)          Use of Proceeds.  The proceeds of each Loan shall be used solely for working capital or general corporate purposes of Borrower.

 

(d)         Termination of Commitment to Lend.  Notwithstanding anything in the Loan Documents, Lender’s obligation to lend the undisbursed portion of the Commitment Amount Loan A or Commitment Amount Loan B to Borrower hereunder shall terminate on the earlier of (i) at Lender’s sole election, the occurrence of any Default or Event of Default hereunder, and (ii) with respect to Loan A, Commitment Termination Date Loan A and with respect to Loan B, Commitment Termination Date Loan B.  Notwithstanding the foregoing, Lender’s obligation to lend the undisbursed portion of the Commitment Amount Loan A or Commitment Amount Loan B to Borrower shall terminate if, in Lender’s sole judgment, there has been a material adverse change in the business, results of operations, condition (financial or otherwise) or prospects of Borrower, whether or not arising from transactions in the ordinary course of business.

 

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2.2       Payments.

 

(a)         Scheduled Payments.  Borrower shall make a payment of accrued interest only on the outstanding principal amount of each Loan on the first Business Day of each calendar month commencing on the first Business Day of the calendar month next following the calendar month in which the Loan is made and continuing through and including September 1, 2011, as specified in the Note applicable to such Loan and an equal payment of principal plus accrued interest on the outstanding principal amount of each Loan on the next thirty (30) Payment Dates as set forth in the Note applicable to such Loan (collectively, the “Scheduled Payments”).  Borrower shall make such Scheduled Payments commencing on the date set forth in the Note applicable to such Loan and continuing thereafter on the first Business Day of each calendar month (each a “Payment Date”) through the Maturity Date.  In any event, all unpaid principal and accrued interest shall be due and payable in full on the Maturity Date.

 

(b)         Interim Payment.  Unless the Funding Date for a Loan is the first day of a calendar month, Borrower shall pay the per diem interest (accruing at the Loan Rate from the Funding Date through the last day of that month) payable with respect to such Loan on the first Business Day of the next calendar month.

 

(c)          Payment of Interest.  Borrower shall pay interest on each Loan at a per annum rate of interest equal to the Loan Rate.  All computations of interest (including interest at the Default Rate, if applicable) shall be based on a year of twelve 30-day months.  Notwithstanding any other provision hereof, the amount of interest payable hereunder shall not in any event exceed the maximum amount permitted by the law applicable to interest charged on commercial loans.

 

(d)         Application of Payments.  All payments received by Lender prior to an Event of Default shall be applied as follows:  (1) first, to Lender’s Expenses then due and owing; and (2) second to all Scheduled Payments then due and owing (provided, however, if such payments are not sufficient to pay the whole amount then due, such payments shall be applied first to unpaid interest at the Loan Rate, then to the remaining amount then due).  After an Event of Default, all payments and application of proceeds shall be made as set forth in Section 9.7.

 

(e)          Late Payment Fee.  Borrower shall pay to Lender a late payment fee equal to six percent (6%) of any Scheduled Payment not paid when due.

 

(f)           Default Rate.  Borrower shall pay interest at a per annum rate equal to the Default Rate on any amounts required to be paid by Borrower under this Agreement or the other Loan Documents (including Scheduled Payments) that are not paid when due, payable with respect to any Loan, accrued and unpaid interest, and any fees or other amounts which remain unpaid after such amounts are due.  If an Event of Default has occurred and the Obligations have been accelerated (whether automatically or by Lender’s election), Borrower shall pay interest on the aggregate, outstanding accelerated balance hereunder from the date of the Event of Default until all Events of Default are cured, at a per annum rate equal to the Default Rate.

 

(g)          Final Payment. Borrower shall pay to Lender a payment in the amount of Ninety Thousand Dollars ($90,000) (the “Loan A Final Payment”) upon the earlier of (i)

 

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payment in full of the principal balance of Loan A, (ii) an Event of Default and demand by Lender of payment in full of Loan A or (iii) on the Maturity Date, as applicable. If Loan B is made, Borrower shall pay to Lender a payment in the amount of Sixty Thousand Dollars ($60,000) (the “Loan B Final Payment” and, collectively with Loan A, the “Final Payment”) upon the earlier of (i) payment in full of the principal balance of Loan B, (ii) an Event of Default and demand by Lender of payment in full of Loan B or (iii) on the Maturity Date, as applicable.

 

2.3  Prepayments.

 

(a)   Mandatory Prepayment Upon an Acceleration.  If the Loans are accelerated following the occurrence of an Event of Default pursuant to Section 9.1(a) hereof, then Borrower, in addition to any other amounts which may be due and owing hereunder, shall immediately pay to Lender the amount set forth in Section 2.3(b) below, as if the Borrower had opted to prepay on the date of such acceleration.

 

(b)   Optional Prepayment.  Upon ten (10) Business Days’ prior written notice to Lender, Borrower may, at its option, at any time, prepay all of the Loans by paying to Lender an amount equal to (i) any accrued and unpaid interest on the outstanding principal balance of the Loans; (ii) an amount equal to (A) if the Loan is prepaid within twelve (12) months from the Funding Date thereof, four (4%) percent of the then outstanding principal balance of the Loan, (B) if the Loan is prepaid more than twelve (12) months from the Funding Date thereof but less than twenty-four (24) months from the Funding Date, three (3%) percent of the then outstanding principal balance of the Loan, or (C) if the Loan is prepaid more than twenty-four (24) months from the Funding Date thereof, two (2%) percent of the then outstanding principal balance of the Loan; (iii) the outstanding principal balance of the Loans, (iv) the Final Payment and (v) all other sums, if any, that shall have become due and payable hereunder.

 

2.4  Other Payment Terms.

 

(a)   Place and Manner.  Borrower shall make all payments due to Lender in lawful money of the United States.  All payments of principal, interest, fees and other amounts payable by Borrower hereunder shall be made, in immediately available funds, not later than 12:00 noon Connecticut time, on the date on which such payment is due.  Borrower shall make such payments to Lender via wire transfer or ACH as follows:

 

	
Payment   via wire transfer or ACH to Compass Horizon:
    	
Compass   Horizon Funding Company 
    
	
Credit:
    	
LLC/Horizon   Credit I LLC 
    
	
Bank   Name:
    	
U.S.   Bank National Association
    
	
Bank   Address:
    	
P.O. Box   643857
    
	
 
    	
Cincinnati   OH 45264-3857 
    
	
Account   No.:
    	
Lockbox   No.: 153910632600
    
	
ABA   Routing No.:
    	
123000848
    
	
Reference:
    	
Singulex   Invoice #
    

 

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(b)   Date.  Whenever any payment is due hereunder on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.

 

2.5  Procedure for Making the Loans.

 

(a)   Notice.  Borrower shall notify Lender of the date on which Borrower desires Lender to make any Loan at least five (5) Business Days in advance of the desired Funding Date, unless Lender elects at its sole discretion to allow the Funding Date to be within five (5) Business Days of Borrower’s notice.  Borrower’s execution and delivery to Lender of a Note shall be Borrower’s agreement to the terms and calculations thereunder with respect to the Loan.  Lender’s obligation to make any Loan shall be expressly subject to the satisfaction of the conditions set forth in Section 3.

 

(b)   Loan Rate Calculation.  Prior to each Funding Date, Lender shall establish the Loan Rate with respect to such Loan, which shall be set forth in the Note to be executed by Borrower with respect to such Loan and shall be conclusive in the absence of a manifest error.

 

(c)   Disbursement. Lender shall disburse the proceeds of each Loan by wire transfer to Borrower at the account specified in the Funding Certificate for the Loan.

 

2.6  Good Faith Deposit; Legal and Closing Expenses; and Commitment Fee.

 

(a)   Good Faith Deposit.  Borrower has delivered to Lender a good faith deposit in the amount of Fifty Thousand Dollars ($50,000) (the “Good Faith Deposit”).  The Good Faith Deposit will be credited to the Commitment Fee. If the Funding Date does not occur, Lender shall retain the Good Faith Deposit as compensation for its time, expenses and opportunity cost.

 

(b)   Legal, Due Diligence and Documentation Expenses. Concurrently with its execution and delivery of this Agreement, Borrower shall pay to Lender Lender’s legal, due diligence and documentation expenses in connection with the negotiation and documentation of this Agreement and the Loan Documents in an amount not to exceed Twenty-One Thousand Dollars ($21,000).

 

(c)   Commitment Fee. Borrower shall pay Lender concurrently with its execution and delivery of this Agreement a commitment fee in the amount of Fifty Thousand Dollars ($50,000) (the “Commitment Fee”) less the amount credited pursuant to Section 2.6(a).  The Commitment Fee shall be retained by Lender and be deemed fully earned upon receipt.

 

3.     Conditions of Loan.

 

3.1  Conditions Precedent to Closing.  At the time of the execution and delivery of this Agreement, Lender shall have received, in form and substance reasonably satisfactory to Lender, all of the following (unless Lender has agreed to waive such condition or document, in which case such condition or document shall be a condition precedent to the making of any Loan and shall be deemed added to Section 3.2):

 

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(a)   Loan Agreement. This Agreement duly executed by Borrower and Lender.

 

(b)   Warrant. The Warrant duly executed by Borrower.

 

(c)   Secretary’s Certificate. A certificate of the secretary or assistant secretary of Borrower with copies of the following documents attached:  (i) the certificate of incorporation and bylaws of Borrower certified by Borrower as being complete and in full force and effect on the date thereof, (ii) incumbency and representative signatures, and (iii) resolutions authorizing the execution and delivery of this Agreement and each of the other Loan Documents.

 

(d)   Good Standing Certificates.  A good standing certificate from Borrower’s state of incorporation and the state in which Borrower’s principal place of business is located, each dated as of a recent date.

 

(e)   Certificate of Insurance.  Evidence of the insurance coverage required by Section 6.8 of this Agreement.

 

(f)    Consents.  All necessary consents of shareholders and other third parties with respect to the execution, delivery and performance of this Agreement, the Warrant and the other Loan Documents.

 

(g)   Legal Opinion.  A legal opinion of Borrower’s counsel covering the matters set forth in Exhibit D hereto.

 

(h)   Account Control Agreements.  Account Control Agreements for all of Borrower’s deposit accounts and accounts holding securities duly executed by all of the parties thereto, in the forms provided by or reasonably acceptable to Lender.

 

(i)    Other Documents. Such other documents and completion of such other matters, as Lender may reasonably deem necessary or appropriate.

 

3.2  Conditions Precedent to Making a Loan. The obligation of Lender to make each Loan is further subject to the following conditions:

 

(a)   No Default. No Default or Event of Default shall have occurred and be continuing.

 

(b)   Landlord Agreements. Borrower shall have provided Lender with a Landlord Agreement for each location where Borrower’s books and records and any material portion of the Collateral is located (unless Borrower is the fee owner thereof).

 

(c)   Note. Borrower shall have duly executed and delivered to Lender a Note in the amount of the Loan.

 

(d)   UCC Financing Statements.  Lender shall have received such documents, instruments and agreements, including UCC financing statements or amendments to UCC financing statements, as Lender shall reasonably request to evidence the perfection and

 

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priority of the security interests granted to Lender pursuant to Section 4. Borrower authorizes Lender to file any UCC financing statements, continuations of or amendments to UCC financing statements it deems necessary to perfect its security interest in the Collateral.

 

(e)   Funding Certificate.  Borrower shall have duly executed and delivered to Lender a Funding Certificate for such Loan.

 

(f)    Subordination Agreement. A Subordination Agreement with respect to the Indebtedness constituting Permitted Indebtedness under subsections (e) and (f) of the definition of Permitted Indebtedness, executed by the lender providing such Indebtedness.

 

(g)   Other Documents.  Such other documents and completion of such other matters, as Lender may reasonably deem necessary or appropriate.

 

3.3  Condition to Making of Loan B. Borrower shall not request, and Lender shall have no obligation to make, Loan B, unless and until Borrower provides Lender with evidence reasonably satisfactory to Lender that Borrower has achieved revenues in Borrower’s fiscal year 2010 of not less than Five Million Five Hundred Thousand Dollars ($5,500,000).

 

3.4  Covenant to Deliver.  Borrower agrees (not as a condition but as a covenant) to deliver to Lender each item required to be delivered to Lender as a condition to each Loan, if such Loan is advanced.  Borrower expressly agrees that the extension of such Loan prior to the receipt by Lender of any such item shall not constitute a waiver by Lender of Borrower’s obligation to deliver such item, and any such extension in the absence of a required item shall be in Lender’s sole discretion.

 

4.     Creation of Security Interest.

 

4.1  Grant of Security Interest.  Subject to Section 4.8, Borrower grants to Lender a valid, first priority, continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt, full and complete payment of any and all Obligations and in order to secure prompt, full and complete performance by Borrower of each of its covenants and duties under each of the Loan Documents (other than the Warrant). The “Collateral” shall mean and include all right, title, interest, claims and demands of Borrower in and to all personal property of Borrower, including without limitation, all of the following:

 

(a)   All goods (and embedded computer programs and supporting information included within the definition of “goods” under the Code) and equipment now owned or hereafter acquired, including, without limitation, all laboratory equipment, computer equipment, office equipment, machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;

 

(b)   All inventory now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returns upon any accounts or other

 

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proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower’s books relating to any of the foregoing;

 

(c)   All contract rights and general intangibles (except to the extent included within the definition of Intellectual Property), now owned or hereafter acquired, including, without limitation, goodwill, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, software, computer programs, computer disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payment intangibles, commercial tort claims, payments of insurance and rights to payment of any kind;

 

(d)   All now existing and hereafter arising accounts, contract rights, royalties, license rights, license fees and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower (subject, in each case, to the contractual rights of third parties to require funds received by Borrower to be expended in a particular manner), whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s books relating to any of the foregoing;

 

(e)   All documents, cash, deposit accounts, letters of credit (whether or not the letter of credit is evidenced by a writing), certificates of deposit, instruments, promissory notes, chattel paper (whether tangible or electronic) and investment property, including, without limitation, all securities, whether certificated or uncertificated, security entitlements, securities accounts, commodity contracts and commodity accounts, and all financial assets held in any securities account or otherwise, wherever located, now owned or hereafter acquired and Borrower’s books relating to the foregoing; and

 

(f)    Any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof, including, without limitation, insurance, condemnation, requisition or similar payments and proceeds of the sale or licensing of Intellectual Property to the extent such proceeds no longer constitute Intellectual Property; but

 

(g)   Notwithstanding the foregoing, the Collateral shall not include any Intellectual Property; provided, however, that the Collateral shall include all accounts receivables, accounts, and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”).  Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the date hereof, include the Intellectual Property to the extent necessary to permit perfection of Lender’s security interest in the Rights to Payment.

 

4.2  After-Acquired Property.  If Borrower shall at any time acquire a commercial tort claim, as defined in the Code, Borrower shall immediately notify Lender in writing signed by Borrower of the brief details thereof and grant to Lender in such writing a security interest

 

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therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Lender.

 

4.3  Duration of Security Interest.  Lender’s security interest in the Collateral shall continue until the payment in full and the satisfaction of all Obligations and termination of Lender’s commitment to fund the Loans, whereupon such security interest shall terminate.  Lender shall, at Borrower’s sole cost and expense, execute such further documents and take such further actions as may be reasonably necessary to make effective the release contemplated by this Section 4.3, including duly authorizing and delivering termination statements for filing in all relevant jurisdictions under the Code.

 

4.4  Location and Possession of Collateral.  The Collateral is and shall remain in the possession of Borrower at its location listed on the cover page hereof or as set forth in the Disclosure Schedule or such other locations which Borrower has identified in writing to Lender.  Borrower shall remain in full possession, enjoyment and control of the Collateral (except only as may be otherwise required by Lender for perfection of its security interest therein) and so long as no Event of Default has occurred, shall be entitled to manage, operate and use the same and each part thereof with the rights and franchises appertaining thereto; provided  that the possession, enjoyment, control and use of the Collateral shall at all time be subject to the observance and performance of the terms of this Agreement.

 

4.5  Delivery of Additional Documentation Required.  Borrower shall from time to time execute and deliver to Lender, at the request of Lender, all financing statements and other documents Lender may reasonably request, in form satisfactory to Lender, to perfect and continue Lender’s perfected security interests in the Collateral and in order to consummate fully all of the transactions contemplated under the Loan Documents.

 

4.6  Right to Inspect.  Lender (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time (but prior to a Default not more than one time per fiscal year at Borrower’s expense) during Borrower’s usual business hours, to inspect Borrower’s books and records and to make copies thereof and to inspect, test, and appraise the Collateral in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral.

 

4.7  Intellectual Property. Except as Borrower shall otherwise determine in its reasonable business judgment, Borrower shall (i) protect, defend and maintain the validity and enforceability of its Intellectual Property and promptly advise Lender in writing of material infringements, and (ii) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Lender’s written consent.

 

4.8  Lien Subordination.  Lender agrees that the Liens granted to it hereunder shall be subordinate to the Liens to secure the Indebtedness permitted under clauses (e) and (f) of the definition of Permitted Indebtedness.  Lender agrees that the Liens granted to it hereunder in Third Party Equipment shall be subordinate to the Liens of future lenders providing equipment financing and equipment lessors for equipment and other personal property acquired by Borrower after the date hereof (“Third Party Equipment”); provided  that in the case of equipment financings and leasing such Liens are confined solely to the equipment so financed

 

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and the proceeds thereof and are Permitted Liens.  Notwithstanding the foregoing, the Obligations hereunder shall not be subordinate in right of payment to any obligations to other equipment lenders or equipment lessors and Lender’s rights and remedies hereunder shall not in any way be subordinate to the rights and remedies of any such lenders or equipment lessors.  So long as no Event of Default has occurred, Lender agrees to execute and deliver such agreements and documents as may be reasonably requested by Borrower from time to time which set forth the lien subordination described in this Section 4.8 and are reasonably acceptable to Lender.  Lender shall have no obligation to execute any agreement or document which would impose obligations, restrictions or lien priority on Lender which are less favorable to Lender than those described in this Section 4.8.

 

5.     Representations and Warranties.  Except as set forth in the Disclosure Schedule, Borrower represents and warrants as follows:

 

5.1  Organization and Qualification.  Borrower is a corporation duly organized and validly existing under the laws of its state of incorporation and qualified and licensed to do business in, and is in good standing in, any state in which the conduct of its business or its ownership of Property requires that it be so qualified or in which the Collateral is located, except for such states as to which any failure to so qualify would not have a material adverse effect on Borrower.

 

5.2  Authority.  Borrower has all necessary power and authority to execute, deliver, and perform in accordance with the terms thereof, the Loan Documents to which it is a party.  Borrower has all requisite power and authority to own and operate its Property and to carry on its businesses as now conducted. Borrower has obtained all licenses, permits, approvals and other authorizations necessary for the operation of its business.

 

5.3  Conflict with Other Instruments, etc.  Neither the execution and delivery of any Loan Document to which Borrower is a party nor the consummation of the transactions therein contemplated nor compliance with the terms, conditions and provisions thereof will conflict with or result in a breach of any of the terms, conditions or provisions of the certificate of incorporation, the by-laws, or any other organizational documents of Borrower or any law or any regulation, order, writ, injunction or decree of any court or governmental instrumentality or any material agreement or instrument to which Borrower is a party or by which it or any of its Property is bound or to which it or any of its Property is subject, or constitute a default thereunder or result in the creation or imposition of any Lien, other than Permitted Liens.

 

5.4  Authorization; Enforceability.  The execution and delivery of this Agreement, the granting of the security interest in the Collateral, the incurring of the Loans, the execution and delivery of the other Loan Documents to which Borrower is a party and the consummation of the transactions herein and therein contemplated have each been duly authorized by all necessary action on the part of Borrower.  Except as contemplated by the Loan Documents, no authorization, consent, approval, license or exemption of, and no registration, qualification, designation, declaration or filing with, or notice to, any Person is, was or will be necessary to (i) the valid execution and delivery of any Loan Document to which Borrower is a party, (ii) the performance of Borrower’s obligations under any Loan Document, or (iii) the granting of the security interest in the Collateral, except for filings in connection with the

 

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perfection of the security interest in any of the Collateral or the issuance of the Warrant.  The Loan Documents have been duly executed and delivered and constitute legal, valid and binding obligations of Borrower, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application relating to or affecting the enforcement of creditors’ rights or by general principles of equity.

 

5.5  No Prior Encumbrances.  Borrower has good and marketable title to the Collateral, free and clear of Liens except for Permitted Liens. Borrower has good title and ownership of, or is licensed under, all of Borrower’s current Intellectual Property.  Borrower has not received any communications alleging that Borrower has violated, or by conducting its business as proposed, would violate any proprietary rights of any other Person.  Borrower has no knowledge of any infringement or violation by it of the intellectual property rights of any third party and has no knowledge of any violation or infringement by a third party of any of its Intellectual Property.  The Collateral and the Intellectual Property constitute substantially all of the assets and property of Borrower.

 

5.6  Name; Location of Chief Executive Office, Principal Place of Business and Collateral.  Borrower has not done business under any name other than that specified on the signature page hereof.  Borrower’s jurisdiction of incorporation, chief executive office, principal place of business, and the place where Borrower maintains its records concerning the Collateral are presently located in the state and at the address set forth on the cover page of this Agreement.  The Collateral is presently located at the address set forth on the cover page hereof or as set forth in the Disclosure Schedule.

 

5.7  Litigation.  There are no actions or proceedings pending by or against Borrower before any court or administrative agency in which an adverse decision could reasonably be expected to have a material adverse effect on Borrower or the aggregate value of the Collateral.  Borrower does not have knowledge of any such pending or threatened actions or proceedings.

 

5.8  Financial Statements. All financial statements relating to Borrower or any Affiliate that have been or may hereafter be delivered by Borrower to Lender present fairly in all material respects Borrower’s financial condition as of the date thereof and Borrower’s results of operations for the period then ended.

 

5.9  No Material Adverse Effect.  No event has occurred and no condition exists which could reasonably be expected to have a material adverse effect on the financial condition, business or operations of Borrower since December 31, 2009.

 

5.10      Full Disclosure.  Borrower’s representations, warranties or other statements in any Loan Document (including the Disclosure Schedule) or in any, certificate or written statement furnished to Lender when taken as a whole, do not contain any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading.  There is no fact known to Borrower which materially adversely affects, or which could in the future be reasonably

 

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expected to materially adversely affect, its ability to perform its obligations under this Agreement.

 

5.11      Solvency, Etc. Borrower is Solvent (as defined below) and, after the execution and delivery of the Loan Documents and the consummation of the transactions contemplated thereby, Borrower will be Solvent.  “Solvent” means, with respect to any Person on any date, that on such date (a) the fair value of the property of such Person is greater than the fair value of the liabilities (including, without limitation, contingent liabilities) of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital.

 

5.12      Subsidiaries. As of the date hereof, Borrower has no Subsidiaries.

 

5.13      Catastrophic Events; Labor Disputes. Neither Borrower nor its properties is or has been affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or other casualty that could reasonably be expected to have a  material adverse effect on the ability of Borrower to meet its Obligations.  There are no disputes presently subject to grievance procedure, arbitration or litigation under any of the collective bargaining agreements, employment contracts or employee welfare or incentive plans to which Borrower is a party, and there are no strikes, lockouts, work stoppages or slowdowns, or, to the knowledge of Borrower, jurisdictional disputes or organizing activity occurring or threatened which could reasonably be expected to have a  material adverse effect on the ability of Borrower to meet its Obligations.

 

5.14      Certain Agreements of Officers, Employees and Consultants.

 

(a)   No Violation. To the knowledge of Borrower, no officer, employee or consultant of Borrower is, or is now expected to be, in violation of any term of any employment contract, proprietary information agreement, nondisclosure agreement, noncompetition agreement or any other material contract or agreement or any restrictive covenant relating to the right of any such officer, employee or consultant to be employed by Borrower because of the nature of the business conducted or to be conducted by Borrower or relating to the use of trade secrets or proprietary information of others, and to Borrower’s knowledge, the continued employment of Borrower’s officers, employees and consultants does not subject Borrower to any material liability for any claim or claims arising out of or in connection with any such contract, agreement, or covenant.

 

(b)   No Present Intention to Terminate. To the knowledge of Borrower, no officer of Borrower, and no employee or consultant of Borrower whose termination, either individually or in the aggregate, could reasonably be expected to have a material adverse effect on the ability of Borrower to meet its Obligations, has any present intention of terminating his or her employment or consulting relationship with Borrower.

 

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6.     Affirmative Covenants.  Borrower, until the full and complete payment of the Obligations, covenants and agrees that:

 

6.1  Good Standing.  Borrower shall maintain its corporate existence and its good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to have a material adverse effect on the ability of Borrower to meet its Obligations.  Borrower shall maintain in force all licenses, approvals and agreements, the loss of which could reasonably be expected to have a material adverse effect on the ability of Borrower to meet its Obligations.

 

6.2  Government Compliance.  Borrower shall comply with all statutes, laws, ordinances and government rules and regulations, the noncompliance with which could reasonably be expected to materially adversely affect the ability of Borrower to meet its Obligations.

 

6.3  Financial Statements, Reports, Certificates.  Borrower shall deliver to Lender: (a) as soon as available, but in any event within thirty (30) days after the end of each month, a company prepared balance sheet, income statement and cash flow statement covering Borrower’s operations during such period, certified by Borrower’s president, treasurer or chief financial officer (each, a “Responsible Officer”); (b) as soon as available, but in any event within one hundred twenty (120) days after the end of Borrower’s fiscal year, audited financial statements of Borrower prepared in accordance with GAAP, together with an unqualified opinion on such financial statements of a nationally recognized or other independent public accounting firm reasonably acceptable to Lender; and (c) as soon as available, but in any event within ninety (90) days after the end of Borrower’s fiscal year or the date of Borrower’s board of directors’ adoption, Borrower’s operating budget and plan for the next fiscal year; and (d) such other financial information as Lender may reasonably request from time to time.  From and after such time as Borrower becomes a publicly reporting company, promptly as they are available and in any event:  (x) at the time of filing of Borrower’s Form 10-K with the Securities and Exchange Commission after the end of each fiscal year of Borrower, the financial statements of Borrower filed with such Form 10-K; and (y) at the time of filing of Borrower’s Form 10-Q with the Securities and Exchange Commission after the end of each of the first three fiscal quarters of Borrower, the financial statements of Borrower filed with such Form 10-Q.  In addition, Borrower shall deliver to Lender (i) promptly upon becoming available, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders; and (ii) immediately upon receipt of notice thereof, a report of any material legal actions pending or threatened against Borrower or the commencement of any action, proceeding or governmental investigation involving Borrower is commenced that is reasonably expected to result in damages or costs to Borrower of One Hundred Fifty Thousand Dollars ($150,000).

 

6.4  Certificates of Compliance.  Each time financial statements are furnished pursuant to Section 6.3 above, Borrower shall deliver to Lender an Officer’s Certificate signed by a Responsible Officer in the form of, and certifying to the matters set forth in Exhibit E hereto.

 

6.5  Notice of Defaults.  As soon as possible, and in any event within five (5) Business days after the discovery of a Default or an Event of Default, Borrower shall provide

 

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Lender with an Officer’s Certificate setting forth the facts relating to or giving rise to such Default or Event of Default and the action which Borrower proposes to take with respect thereto.

 

6.6  Taxes.  Borrower shall make due and timely payment or deposit of all federal, state, and local taxes, assessments, or contributions required of it by law or imposed upon any Property belonging to it, and will execute and deliver to Lender, on demand, appropriate certificates attesting to the payment or deposit thereof; and Borrower will make timely payment or deposit of all tax payments and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Lender with proof satisfactory to Lender indicating that Borrower has made such payments or deposits; provided  that Borrower need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings which suspend the collection thereof (provided  that such proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such amounts or reserves sufficient to discharge such amounts have been provided on the books of Borrower).

 

6.7  Use; Maintenance. Borrower shall keep and maintain all items of equipment and other similar types of personal property that form any significant portion or portions of the Collateral in good operating condition and repair, ordinary wear and tear excepted, and shall make all necessary replacements thereof and renewals thereto so that the value and operating efficiency thereof shall at all times be maintained and preserved.  Borrower shall not permit any such material item of Collateral to become a fixture to real estate or an accession to other personal property, without the prior written consent of Lender.  Borrower shall not permit any such material item of Collateral to be operated or maintained in violation of any applicable law, statute, rule or regulation, except as would not reasonably be expected to have a material adverse effect on the ability of Borrower to meet its Obligations.  With respect to items of leased equipment (to the extent Lender has any security interest in any residual Borrower’s interest in such equipment under the lease), Borrower shall keep, maintain, repair, replace and operate such leased equipment in accordance with the terms of the applicable lease, except as would not reasonably be expected to have a material adverse effect on the ability of Borrower to meet its Obligations.

 

6.8  Insurance. Borrower shall keep its business and the Collateral insured for risks and in amounts, as Lender may reasonably request.  Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to Lender.  All property policies shall have a lender’s loss payable endorsement showing Horizon Technology Finance Management LLC as an additional loss payee and all liability policies shall show Horizon Technology Finance Management LLC as an additional insured and all policies shall provide that the insurer must give Horizon Technology Finance Management LLC at least thirty (30) days notice before canceling its policy.  At Lender’s request, Borrower shall deliver certified copies of policies and evidence of all premium payments.  Proceeds payable under any property policy shall, at Lender’s option, subject to the rights of Bridge Bank, be payable to Horizon Technology Finance Management LLC on account of the Obligations.  Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, Borrower shall have the option of

 

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applying the proceeds of any property policy, toward the replacement or repair of destroyed or damaged property; provided that (i) any such replaced or repaired property (a) shall be of equal or like value as the replaced or repaired Collateral and (b) shall be deemed Collateral in which Lender has been granted a first priority security interest (subject to Section 4.8 herein) and (ii) after the occurrence and during the continuation of an Event of Default all proceeds payable under such property policy, subject to the rights of Bridge Bank, shall, at the option of Lender, be payable to Horizon Technology Finance Management LLC, on account of the Obligations.  If Borrower fails to obtain insurance as required under Section 6.8 or to pay any amount or furnish any required proof of payment to third persons and Lender, Lender may make all or part of such payment or obtain such insurance policies required in Section 6.8, and take any action under the policies Lender deems prudent. On or prior to the first Funding Date and prior to each policy renewal, Borrower shall furnish to Lender certificates of insurance or other evidence satisfactory to Lender that insurance complying with all of the above requirements is in effect.

 

6.9  Security Interest.  Assuming the proper filing of one or more financing statement(s) identifying the Collateral with the proper state and/or local authorities, the security interests in the Collateral granted to Lender pursuant to this Agreement (i) constitute and will continue to constitute first priority security interests (except to the extent any Permitted Liens may have a superior priority to Lender’s Lien under this Agreement) and (ii) are and will continue to be superior and prior to the rights of all other creditors of Borrower (except to the extent of such Permitted Liens).

 

6.10      Further Assurances.  At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Lender to make effective the purposes of this Agreement, including without limitation, the continued perfection and priority of Lender’s security interest in the Collateral.

 

6.11      Subsidiaries. Borrower, upon Lender’s request, shall cause any Subsidiary of Borrower to provide Lender with a guaranty of the Obligations and a security interest in such Subsidiary’s assets to secure such guaranty.

 

7.     Negative Covenants.  Borrower, until the full and complete payment of the Obligations, covenants and agrees that Borrower shall not:

 

7.1  Chief Executive Office.  Change its name, jurisdiction of incorporation, chief executive office, principal place of business or any of the items set forth in Section 1 of the Disclosure Schedule without thirty (30) days prior written notice to Lender.

 

7.2  Collateral Control.  Subject to its rights under Sections 4.4 and 7.4, remove any items of Collateral from Borrower’s facility located at the address set forth on the cover page hereof or as set forth on the Disclosure Schedule.

 

7.3  Liens.  Create, incur, assume or suffer to exist any Lien of any kind upon any of Borrower’s Property, whether now owned or hereafter acquired, except Permitted Liens.

 

7.4  Other Dispositions of Collateral.  Convey, sell, lease or otherwise dispose of all or any part of the Collateral to any Person (collectively, a “Transfer”), except for: (i) Transfers of inventory in the ordinary course of business; (ii) Transfers of worn-out or obsolete

 

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equipment; or (iii) Transfers permitted under subclauses (f) and (g) of the definition of Permitted Liens with respect to Collateral.

 

7.5  Distributions.  (i) Pay any dividends or make any distributions on its Equity Securities; (ii) purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Securities (other than repurchases pursuant to the terms of employee stock purchase plans, employee restricted stock agreements or similar arrangements in an aggregate amount not to exceed One Hundred Thousand Dollars ($100,000)); (iii) return any capital to any holder of its Equity Securities as such; (iv) make any distribution of assets, Equity Securities, obligations or securities to any holder of its Equity Securities as such; or (v) set apart any sum for any such purpose; provided, however, Borrower may pay dividends payable solely in Borrower’s common stock.

 

7.6  Mergers or Acquisitions.  Merge or consolidate with or into any other Person or acquire all or substantially all of the capital stock or assets of another Person.

 

7.7  Change in Ownership.  Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto or have a material change in its ownership of greater than forty nine and nine tenths percent (49.9%) (other than by the sale by Borrower of Borrower’s Equity Securities in a public offering or to venture capital investors so long as Borrower identifies to Lender the venture capital investors prior to the closing of the investment).

 

7.8  Transactions With Affiliates/Subsidiaries. (i) Enter into any contractual obligation with any Affiliate or engage in any other transaction with any Affiliate except upon terms at least as favorable to Borrower as an arms-length transaction with Persons who are not Affiliates of Borrower or (ii) create a Subsidiary, unless, at Lender’s election, such Subsidiary guarantees the Obligations and grants a security interest in its assets to secure such guaranty.

 

7.9  Indebtedness Payments. (i) Prepay, redeem, purchase, defease or otherwise satisfy in any manner prior to the scheduled repayment thereof any Indebtedness for borrowed money (other than amounts due or permitted to be prepaid under this Agreement or under any revolving credit agreement constituting Permitted Indebtedness under clause (e) of the definition of Permitted Indebtedness) or lease obligations, (ii) amend, modify or otherwise change the terms of any Indebtedness for borrowed money or lease obligations so as to accelerate the scheduled repayment thereof or (iii) repay any notes to officers, directors or shareholders.

 

7.10      Indebtedness.  Create, incur, assume or permit to exist any Indebtedness except Permitted Indebtedness.

 

7.11      Investments.  Make any Investment except for Permitted Investments.

 

7.12      Compliance.  Become an “investment company” or a company controlled by an “investment company” under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Loan for that purpose; fail to meet the minimum funding requirements of the Employment Retirement Income Security Act of 1974, and its regulations, as amended from

 

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time to time (“ERISA”), permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business or operations or could reasonably be expected to cause a material adverse change, or permit any of its Subsidiaries to do so.

 

7.13      Maintenance of Accounts.  (i) Maintain any deposit account or account holding securities owned by Borrower except accounts with respect to which Lender is able to take such actions as it deems necessary to obtain a perfected security interest in such accounts through one or more Account Control Agreements; or (ii) grant or allow any other Person (other than Lender) to perfect a security interest in, or enter into any agreements with any Persons (other than Lender) accomplishing perfection via control as to, any of its deposit accounts or accounts holding securities other than in favor of the lender providing Borrower with Indebtedness permitted under subsection (e) or (f) of the definition of Permitted Indebtedness. Notwithstanding anything contained in the foregoing to the contrary, Borrower shall not be required to obtain Account Control Agreements for its currently existing deposit accounts maintained at Midwest Bank Centre, so long as such accounts do not contain more than Fifty Thousand Dollars ($50,000) at any time and such accounts are closed no later than January 31, 2011.

 

7.14      Negative Pledge Regarding Intellectual Property.  Create, incur, assume or suffer to exist any Lien of any kind upon any Intellectual Property or Transfer any Intellectual Property, whether now owned or hereafter acquired, other than (i) non-exclusive licenses of Intellectual Property entered into in the ordinary course of business or (ii) a pledge by Borrower not to grant any Liens on its Intellectual Property made in favor of any parties providing Borrower with Indebtedness permitted under subsections (e) and (f) of the definition of Permitted Indebtedness.

 

8.     Events of Default.  Any one or more of the following events shall constitute an “Event of Default” by Borrower under this Agreement:

 

8.1  Failure to Pay.  If Borrower fails to pay when due and payable or when declared due and payable in accordance with the Loan Documents: (i) any Scheduled Payment on the relevant Payment Date or on the relevant Maturity Date, or (ii) any other portion of the Obligations within five (5) Business Days after receipt of written notice from Lender that such payment is due.

 

8.2  Certain Covenant Defaults.  If Borrower fails to perform any obligation under Section 6.8 or violates any of the covenants contained in Section 7 of this Agreement.

 

8.3  Other Covenant Defaults.  If Borrower fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained in this Agreement (other than as set forth in Sections 8.1, 8.2 or 8.4 through 8.13), in any of the other Loan Documents and Borrower has failed to cure such default within fifteen (15) days of the occurrence of such default.  During this fifteen (15) day period, the failure to cure the default is not an Event of Default (but no Loan will be made during the cure period).

 

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8.4  Material Adverse Change.  If there occurs a material adverse change in Borrower’s business, or if there is a material impairment of the prospect of repayment of any portion of the Obligations owing to Lender or a material impairment of the value or priority of Lender’s security interest in the Collateral.

 

8.5  Investor Abandonment.  If Lender determines in its good faith judgment, that it is the clear intention of Borrower’s investors not to continue to fund the Borrower in the amounts and within the timeframe necessary to enable Borrower to satisfy the Obligations as they become due and payable.

 

8.6  Seizure of Assets, Etc.  If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within twenty (20) days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within twenty (20) days after Borrower receives notice thereof; provided  that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower.

 

8.7  Service of Process.  The service of process upon Lender seeking to attach by a trustee or other process any funds of the Borrower on deposit or otherwise held by Lender, or the delivery upon Lender of a notice of foreclosure by any Person seeking to attach or foreclose on any funds of the Borrower on deposit or otherwise held by Lender, or the delivery of a notice of foreclosure or exclusive control to any entity holding or maintaining Borrower’s deposit accounts or accounts holding securities by any Person (other than Lender) seeking to foreclose or attach any such accounts or securities.

 

8.8  Default on Indebtedness.  One or more defaults shall exist under any agreement with any third party or parties which consists of the failure to pay any Indebtedness at maturity or which results in a right by such third party or parties, whether or not exercised, to accelerate the maturity of Indebtedness in an aggregate amount in excess of One Hundred Fifty Thousand Dollars ($150,000) or a default shall exist under any financing agreement with Lender or any of Lender’s Affiliates.

 

8.9  Judgments.  If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least One Hundred Fifty Thousand Dollars ($150,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of twenty (20) days or more.

 

8.10      Misrepresentations.  If any material misrepresentation or material misstatement exists now or in any future warranty, representation, statement, certification, or report made to Lender by Borrower or any officer, employee, agent, or director of Borrower.

 

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8.11      Breach of Warrant.  If Borrower shall breach any material term of the Warrant, which breach is not cured within thirty (30) days of Borrower becoming aware thereof.

 

8.12      Unenforceable Loan Document.  If any Loan Document shall in any material respect cease to be, or Borrower shall assert that any Loan Document is not, a legal, valid and binding obligation of Borrower enforceable in accordance with its terms.

 

8.13      Involuntary Insolvency Proceeding.  If a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee (or similar official) of Borrower or for any substantial part of its Property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting the relief sought in such proceeding.

 

8.14      Voluntary Insolvency Proceeding.  If Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or for any substantial part of its Property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action in furtherance of any of the foregoing.

 

9.     Lender’s Rights and Remedies.

 

9.1  Rights and Remedies.  Upon the occurrence and during the continuance of any Default or Event of Default, Lender shall not have any further obligation to advance money or extend credit to or for the benefit of Borrower.  In addition, upon the occurrence and during the continuance of an Event of Default, Lender shall have the rights, options, duties and remedies of a secured party as permitted by law and, in addition to and without limitation of the foregoing, Lender may, at its election, without notice of election and without demand, do any one or more of the following, all of which are authorized by Borrower:

 

(a)   Acceleration of Obligations.  Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, including (i) any accrued and unpaid interest, (ii) the amounts which would have otherwise come due under Section 2.3(b)(ii) if the Loans had been voluntarily prepaid, (iii) the unpaid principal balance of the Loans and (iv) all other sums, if any, that shall have become due and payable hereunder, immediately due and payable (provided  that upon the occurrence of an Event of Default described in Section 8.12 or 8.13 all Obligations shall become immediately due and payable without any action by Lender);

 

(b)   Protection of Collateral.  Make such payments and do such acts as Lender considers necessary or reasonable to protect Lender’s security interest in the Collateral.  Subject to Liens existing pursuant to clause (f) of the definition of Permitted Liens, Borrower

 

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agrees to assemble the Collateral if Lender so requires and to make the Collateral available to Lender as Lender may designate.  Borrower authorizes Lender and its designees and agents to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien which in Lender’s determination appears or is claimed to be prior or superior to its security interest and to pay all expenses incurred in connection therewith.  With respect to any of Borrower’s owned premises, Borrower hereby grants Lender a license to enter into possession of such premises and to occupy the same, without charge, for up to one hundred twenty (120) days in order to exercise any of Lender’s rights or remedies provided herein, at law, in equity, or otherwise;

 

(c)   Preparation of Collateral for Sale.  Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral.  Lender and its agents and any purchasers at or after foreclosure are hereby granted a non-exclusive, irrevocable, perpetual, fully paid, royalty-free license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s Intellectual Property, including without limitation, labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any Property of a similar nature, now or at any time hereafter owned or acquired by Borrower or in which Borrower now or at any time hereafter has any rights; provided  that such license shall only be exercisable in connection with the disposition of Collateral upon Lender’s exercise of its remedies hereunder;

 

(d)   Sale of Collateral.  Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s premises) as Lender determines are commercially reasonable; and

 

(e)   Purchase of Collateral.  Credit bid and purchase all or any portion of the Collateral at any public sale.

 

Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.

 

9.2  Set Off Right. Lender may set off and apply to the Obligations any and all indebtedness at any time owing to or for the credit or the account of Borrower or any other assets of Borrower in Lender’s possession or control.

 

9.3  Effect of Sale. Upon the occurrence and during the continuance of an Event of Default, to the extent permitted by law, Borrower covenants that it will not at any time insist upon or plead, or in any manner whatsoever claim or take any benefit or advantage of, any stay or extension law now or at any time hereafter in force, nor claim, take nor insist upon any benefit or advantage of or from any law now or hereafter in force providing for the valuation or appraisement of the Collateral or any part thereof prior to any sale or sales thereof authorized pursuant to any provision herein contained, or to the decree, judgment or order of any court of competent jurisdiction; nor, after such sale or sales, claim or exercise any right under any statute now or hereafter made or enacted by any state or otherwise to redeem the property so sold or any part thereof, and, to the full extent legally permitted, except as to rights expressly provided

 

26

 

herein, hereby expressly waives for itself and on behalf of each and every Person, except decree or judgment creditors of Borrower, acquiring any interest in or title to the Collateral or any part thereof subsequent to the date of this Agreement, all benefit and advantage of any such law or laws, and covenants that it will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any power herein granted and delegated to Lender, but will suffer and permit the execution of every such power as though no such power, law or laws had been made or enacted.  Any sale, whether under any power of sale hereby given or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Borrower in and to the Property sold, and shall be a perpetual bar, both at law and in equity, against Borrower, its successors and assigns, and against any and all Persons claiming the Property sold or any part thereof under, by or through Borrower, its successors or assigns.

 

9.4  Power of Attorney in Respect of the Collateral.  Borrower does hereby irrevocably appoint Lender (which appointment is coupled with an interest), the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name to file any notices of security interests, financing statements and continuations and amendments thereof pursuant to the Code or federal law, as may be necessary to perfect, or to continue the perfection of Lender’s security interests in the Collateral.  Borrower does hereby irrevocably appoint Lender (which appointment is coupled with an interest) on the occurrence and during the continuance of an Event of Default, and subject to the terms of the subordination agreement with Bridge Bank, the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name: (a) to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all rents, issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Section 4 with full power to settle, adjust or compromise any claim thereunder as fully as if Lender were Borrower itself; (b) to receive payment of and to endorse the name of Borrower to any items of Collateral (including checks, drafts and other orders for the payment of money) that come into Lender’s possession or under Lender’s control; (c) to make all demands, consents and waivers, or take any other action with respect to, the Collateral; (d) in Lender’s discretion to file any claim or take any other action or proceedings, either in its own name or in the name of Borrower or otherwise, which Lender may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Lender in and to the Collateral; (e) endorse Borrower’s name on any checks or other forms of payment or security; (f) sign Borrower’s name on any invoice or bill of lading for any account or drafts against account debtors; (g) make, settle, and adjust all claims under Borrower’s insurance policies; (h) settle and adjust disputes and claims about the accounts directly with account debtors, for amounts and on terms Lender determines reasonable; (i) transfer the Collateral into the name of Lender or a third party as the Code permits; and (j) to otherwise act with respect thereto as though Lender were the outright owner of the Collateral.

 

9.5  Lender’s Expenses.  If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Lender may do any or all of the following: (a) after five (5) Business Days prior written notice of Lender’s intention to do so, make payment of the same or any part thereof; or (b) obtain and maintain insurance policies of the type discussed in Section 6.8 of this Agreement, and take any action with respect to such policies as Lender deems prudent.  Any

 

27

 

amounts paid or deposited by Lender shall constitute Lender’s Expenses, shall be immediately due and payable, shall bear interest at the Default Rate and shall be secured by the Collateral.  Any payments made by Lender shall not constitute an agreement by Lender to make similar payments in the future or a waiver by Lender of any Event of Default under this Agreement.  Borrower shall pay all reasonable fees and expenses, including without limitation, Lender’s Expenses, incurred by Lender in the enforcement or attempt to enforce any of the Obligations hereunder not performed when due.

 

9.6  Remedies Cumulative. Lender’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative.  Lender shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity.  No exercise by Lender of one right or remedy shall be deemed an election, and no waiver by Lender of any Event of Default on Borrower’s part shall be deemed a continuing waiver.  No delay by Lender shall constitute a waiver, election, or acquiescence by it.

 

9.7  Application of Collateral Proceeds.  The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Lender, at the time of or received by Lender after the occurrence of an Event of Default hereunder) shall be paid to and applied as follows:

 

(a)   First, to the payment of reasonable out-of-pocket costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances, including reasonable legal expenses and attorneys’ fees, incurred or made hereunder by Lender, including, without limitation, Lender’s Expenses;

 

(b)   Second, to the payment to Lender of the amount then owing or unpaid on the Loans for any accrued and unpaid interest, the amounts which would have otherwise come due under Section 2.3(b)(ii), if the Loans had been voluntarily prepaid, the principal balance of the Loans, and all other Obligations with respect to the Loans (provided, however, if such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid upon the Loans, then to the unpaid interest thereon, then to the amounts which would have otherwise come due under Section 2.3(b)(ii), if the Loans had been voluntarily prepaid, then to the principal balance of the Loans, and then to the payment of other amounts then payable to Lender under any of the Loan Documents); and

 

(c)   Third, to the payment of the surplus, if any, to Borrower, its successors and assigns, or to the Person lawfully entitled to receive the same.

 

9.8  Reinstatement of Rights.  If Lender shall have proceeded to enforce any right under this Agreement or any other Loan Document by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, then and in every such case (unless otherwise ordered by a court of competent jurisdiction), Lender shall be restored to its former position and rights hereunder with respect to the Property subject to the security interest created under this Agreement.

 

28

 

10.  Waivers; Indemnification.

 

10.1      Demand; Protest.  Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Lender on which Borrower may in any way be liable.

 

10.2      Lender’s Liability for Collateral.  So long as Lender complies with its obligations, if any, under the Code, Lender shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause other than Lender’s gross negligence or willful misconduct; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever.  Subject to the foregoing and applicable law, all risk of loss, damage or destruction of the Collateral shall be borne by Borrower.

 

10.3      Indemnification and Waiver.  Whether or not the transactions contemplated hereby shall be consummated:

 

(a)   General Indemnity. Borrower agrees upon demand to pay or reimburse Lender for all liabilities, obligations and out-of-pocket expenses, including Lender’s Expenses and reasonable fees and expenses of counsel for Lender from time to time arising in connection with the enforcement or collection of sums due under the Loan Documents, and in connection with any amendment or modification of the Loan Documents or any “work-out” in connection with the Loan Documents.  Borrower shall indemnify, reimburse and hold Lender, and each of its respective successors, assigns, agents, attorneys, officers, directors, equity holders, servants, agents and employees (each an “Indemnified Person”) harmless from and against all liabilities, losses, damages, actions, suits, demands, claims of any kind and nature (including claims relating to environmental discharge, cleanup or compliance), all costs and expenses whatsoever to the extent they may be incurred or suffered by such Indemnified Person in connection therewith (including reasonable attorneys’ fees and expenses), fines, penalties (and other charges of any applicable Governmental Authority), licensing fees relating to any item of Collateral, damage to or loss of use of property (including consequential or special damages to third parties or damages to Borrower’s property), or bodily injury to or death of any person (including any agent or employee of Borrower) (each, a “Claim”), directly or indirectly relating to or arising out of the use of the proceeds of the Loans or otherwise, the falsity of any representation or warranty of Borrower or Borrower’s failure to comply with the terms of this Agreement or any other Loan Document.  The foregoing indemnity shall cover, without limitation, (i) any Claim in connection with a design or other defect (latent or patent) in any item of equipment or product included in the Collateral, (ii) any Claim for infringement of any patent, copyright, trademark or other intellectual property right, (iii) any Claim resulting from the presence on or under or the escape, seepage, leakage, spillage, discharge, emission or release of any Hazardous Materials on the premises owned, occupied or leased by Borrower, including any Claims asserted or arising under any Environmental Law, (iv) any Claim for negligence or strict or absolute liability in tort, or (v) any Claim asserted as to or arising under any Account Control Agreement or any Landlord Agreement; provided, however, Borrower shall not indemnify any Indemnified Person for any liability incurred by an Indemnified Person as a direct and sole result of an Indemnified Person’s gross negligence or willful misconduct.  Such indemnities shall continue in full force and effect,

 

29

 

notwithstanding the expiration or termination of this Agreement.  Upon Lender’s written demand, Borrower shall assume and diligently conduct, at its sole cost and expense, the entire defense of Lender, each of its members, partners, and each of their respective, agents, employees, directors, officers, equity holders, successors and assigns against any indemnified Claim described in this Section 10.3(a).  Borrower shall not settle or compromise any Claim against or involving Lender without first obtaining Lender’s written consent thereto, which consent shall not be unreasonably withheld.

 

(b)         Waiver. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES THAT IT SHALL NOT SEEK FROM LENDER UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.

 

(c)          Survival; Defense.  The obligations in this Section 10.3 shall survive payment of all other Obligations pursuant to Section 12.8.  At the election of any Indemnified Person, Borrower shall defend such Indemnified Person using legal counsel satisfactory to such Indemnified Person in such Person’s reasonable discretion, at the sole cost and expense of Borrower.  All amounts owing under this Section 10.3 shall be paid within thirty (30) days after written demand.

 

11.       Notices.  Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by certified mail, postage prepaid, return receipt requested, by prepaid nationally recognized overnight courier, or by prepaid facsimile to Borrower or to Lender, as the case may be, at their respective addresses set forth below:

 

	
If   to Borrower:
    	
Singulex, Inc.
   1650 Harbor Bay Parkway 
   Suite 200 
   Alameda, CA 94502 
   Attention: Jeff Anderson
   Fax: (510) 995-9092
   Ph: (510) 995-9000
    
	
If   to Lender:
    	
Compass   Horizon Funding Company LLC
   76 Batterson Park Road
   Farmington, CT 06032
   Attention: Legal Department
   Fax: (860) 676-8655
   Ph: (860) 676-8654
    

 

The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

 

30

 

12.       General Provisions.

 

12.1                  Successors and Assigns.  This Agreement and the Loan Documents shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, neither this Agreement nor any rights hereunder may be assigned by Borrower without Lender’s prior written consent, which consent may be granted or withheld in Lender’s sole discretion.  Lender shall have the right without the consent of or notice to Borrower to sell, transfer, assign, negotiate, or grant participations in all or any part of, or any interest in Lender’s rights and benefits hereunder, provided that prior to an Event of Default such sale, transfer, assignment, negotiation, or participation is not a competitor of the Borrower.  Lender may disclose the Loan Documents and any other financial or other information relating to Borrower or any Subsidiary to any potential participant or assignee of any of the Loans, provided  that such participant or assignee agrees to protect the confidentiality of such documents and information using the same measures that it uses to protect its own confidential information.  Borrower hereby authorizes and directs Lender, for and on behalf of the Borrower, to maintain a record of ownership of the Notes and any interest therein, which record, or “book-entry system”, shall identify the owner or owners of the Notes and any interests therein.  Notwithstanding any other provision of this Agreement or the Loan Documents, the right to the principal of, and stated interest on, the Notes may be transferred only through such book-entry system.

 

12.2                  Time of Essence.  Time is of the essence for the performance of all obligations set forth in this Agreement.

 

12.3                  Severability of Provisions.  Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

12.4                  Entire Agreement; Construction; Amendments and Waivers.

 

(a)         Entire Agreement.  This Agreement and each of the other Loan Documents dated as of the date hereof, taken together, constitute and contain the entire agreement between Borrower and Lender and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof.  Borrower acknowledges that it is not relying on any representation or agreement made by Lender or any employee, attorney or agent thereof, other than the specific agreements set forth in this Agreement and the Loan Documents.

 

(b)         Construction.  This Agreement is the result of negotiations between and has been reviewed by each of Borrower and Lender as of the date hereof and their respective counsel; accordingly, this Agreement shall be deemed to be the product of the parties hereto, and no ambiguity shall be construed in favor of or against Borrower or Lender.  Borrower and Lender agree that they intend the literal words of this Agreement and the other Loan Documents and that no parol evidence shall be necessary or appropriate to establish Borrower’s or Lender’s actual intentions.

 

31

 

(c)          Amendments and Waivers.  Any and all discharges or waivers of, or consents to any departures from any provision of this Agreement or of any of the other Loan Documents (excluding the Warrant, the provisions of which may be waived only in accordance with the terms thereof) shall not be effective without the written consent of Lender. Any and all amendments and modifications of this Agreement or of any of the other Loan Documents (excluding the Warrant, the provisions of which may be waived only in accordance with the terms thereof) shall not be effective without the written consent of Lender and Borrower. Any waiver or consent with respect to any provision of the Loan Documents (excluding the Warrant) shall be effective only in the specific instance and for the specific purpose for which it was given.  No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances.  Any amendment, modification, waiver or consent affected in accordance with this Section 12.4 shall be binding upon Lender and on Borrower.

 

12.5                  Reliance by Lender.  All covenants, agreements, representations and warranties made herein by Borrower shall be deemed to be material to and to have been relied upon by Lender, notwithstanding any investigation by Lender.

 

12.6                  No Set-Offs by Borrower.  All sums payable by Borrower pursuant to this Agreement or any of the other Loan Documents shall be payable without notice or demand and shall be payable in United States Dollars without set-off or reduction of any manner whatsoever.

 

12.7                  Counterparts.  This Agreement may be executed in any number of counterparts and by different parties on separate counterparts (including signatures delivered by facsimile or other electronic means), each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.

 

12.8                  Survival.  All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations or commitment to fund remain outstanding.  The obligations of Borrower to indemnify Lender with respect to the expenses, damages, losses, costs and liabilities described in Section 10.3 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Lender have run.

 

13.       Relationship of Parties.  Borrower and Lender acknowledge, understand and agree that the relationship between Borrower, on the one hand, and Lender, on the other, is, and at all time shall remain solely that of a borrower and lender.  Lender shall not under any circumstances be construed to be a partner or a joint venturer of Borrower or any of its Affiliates; nor shall Lender under any circumstances be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or any of its Affiliates, or to owe any fiduciary duty to Borrower or any of its Affiliates.  Lender does not undertake or assume any responsibility or duty to Borrower or any of its Affiliates to select, review, inspect, supervise, pass judgment upon or otherwise inform Borrower or any of its Affiliates of any matter in connection with its or their Property, any Collateral held by Lender or the operations of Borrower or any of its Affiliates.  Borrower and each of its Affiliates shall rely entirely on their own judgment with respect to such

 

32

 

matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by Lender in connection with such matters is solely for the protection of Lender and neither Borrower nor any Affiliate is entitled to rely thereon.

 

14.       Confidentiality.  All information (other than periodic reports filed by Borrower with the Securities and Exchange Commission) disclosed by Borrower to Lender in writing or through inspection pursuant to this Agreement that is marked confidential or a reasonable person would deem confidential shall be considered confidential.  Lender agrees to use the same degree of care to safeguard and prevent disclosure of such confidential information as Lender uses with its own confidential information, but in any event no less than a reasonable degree of care.  Lender shall not disclose such information to any third party (other than to Lender’s members, partners, attorneys, governmental regulators, or auditors, or to Lender’s subsidiaries and affiliates and prospective transferees and purchasers of the Loans, all subject to the same confidentiality obligation set forth herein or as required by law, regulation, subpoena or other order to be disclosed) and shall use such information only for purposes of evaluation of its investment in Borrower and the exercise of Lender’s rights and the enforcement of its remedies under this Agreement and the other Loan Documents.  The obligations of confidentiality shall not apply to any information that (a) was known to the public prior to disclosure by Borrower under this Agreement, (b) becomes known to the public through no fault of Lender, (c) is disclosed to Lender by a third party having a legal right to make such disclosure, or (d) is independently developed by Lender.  Notwithstanding the foregoing, Lender’s agreement of confidentiality shall not apply if Lender has acquired indefeasible title to any Collateral or in connection with any enforcement or exercise of Lender’s rights and remedies under this Agreement following an Event of Default, including the enforcement of Lender’s security interest in the Collateral.

 

15.       CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  EACH OF BORROWER AND LENDER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF CONNECTICUT.  BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.

 

[Remainder of page intentionally left blank.]

 

33

 

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

 

 

	
 
    	
BORROWER:
    
	
 
    	
SINGULEX, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Philippe Goix
    
	
 
    	
Name:
    	
Philippe   Goix
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LENDER:
    
	
 
    	
COMPASS   HORIZON FUNDING COMPANY LLC
    
	
 
    	
By:   Horizon Technology Finance Corporation, its sole member
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert D. Pomeroy, Jr.
    
	
 
    	
Name:
    	
Robert   D. Pomeroy, Jr.
    
	
 
    	
Title:
    	
Chief   Executive Officer
    

 

34

 

LIST OF EXHIBITS AND SCHEDULES

 

	
Exhibit A
    	
Disclosure   Schedule
    
	
Exhibit B
    	
Funding   Certificate
    
	
Exhibit C
    	
Form of   Note
    
	
Exhibit D
    	
Form of   Legal Opinion
    
	
Exhibit E
    	
Form of   Officer’s Certificate
    

 

 

EXHIBIT A

 

DISCLOSURE SCHEDULE

 

Borrower hereby certifies the following information to Lender:

 

Section 1.  Information For UCC Financing Statements and Searches and Deposit Accounts and Accounts Holding Securities.

 

(a)                                 The exact corporate name of Borrower as it appears in its Certificate of Incorporation, as amended to date is:  Singulex, Inc.

 

(b)         Borrower’s state of incorporation is: Delaware.

 

(c)          The organizational ID number of Borrower from its jurisdiction of incorporation is 2824201  8100.

 

(d)         Borrower’s taxpayer identification number is13-4213064.

 

(e)          The following is a list of all corporate names, dba or trade names used by Borrower in the past five years: Singulex, Inc. and BioProfile, LLC.

 

(f)           The following is a list of all Subsidiaries of Borrower: N/A.

 

(g)          The address of Borrower’s headquarters and chief executive office is:1650 Harbor Bay Parkway, Suite 200, Alameda, CA 94502.  The following is a list of all States where Borrower’s headquarters and chief executive office has been located in the past five years: CA, MO.

 

(h)         The following is a list of all States where Borrower’s property and assets have been located in the past five years: CA, MO.

 

(i)             The following is a list of all of Borrower’s deposit accounts (bank name, address and account names and numbers):

 

Bridge Bank

55 Almaden Blvd

San Jose, CA 95113

408-556-6516

Representative: Bella

CLIA Account: 0101111607

Operating Account: 0101092617

Money Market Account: 0101111342

SWIFT Code:  BBFXUS6S

ABA Routing # :  121143260

 

 

Midwest Bank Centre

2191 Lemay Ferry Road

St. Loius, MO  63125

800-894-1350

Representative: Any representative can assist

Checking Account: 4386017

Money Market Account: 4386025

 

(j)            The following is a list of all of Borrower’s accounts holding securities (broker/bank name, address and account names and numbers):

 

Capital Advisors Group

389 Passaic Ave

Fairfield, NJ  07004

973-808-0869

Representative: Brian

Account: 3560

 

 

EXHIBIT B

 

FUNDING CERTIFICATE

 

(Loan    )

 

The undersigned, being the duly elected and acting                                         of SINGULEX, INC., a Delaware corporation (“Borrower”), does hereby certify to COMPASS HORIZON FUNDING COMPANY LLC (the “Lender”) in connection with that certain Venture Loan and Security Agreement dated as of [Date] by and between Borrower and Lender (the “Loan Agreement”; with other capitalized terms used below having the meanings ascribed thereto in the Loan Agreement) that:

 

1.                                      The representations and warranties made by Borrower in Section 5 of the Loan Agreement and in the other Loan Documents are true and correct as of the date hereof.

 

2.                                      No event or condition has occurred that would constitute a Default or an Event of Default under the Loan Agreement or any other Loan Document.

 

3.                                      Borrower is in compliance with the covenants and requirements contained in Sections 4, 6 and 7 of the Loan Agreement.

 

4.                                      Unless expressly waived by Lender in writing, all conditions referred to in Section 3 of the Loan Agreement to the making of the Loan to be made on or about the date hereof have been satisfied.

 

5.                                      No material adverse change in the general affairs, management, results of operations, condition (financial or otherwise) or prospects of Borrower, whether or not arising from transactions in the ordinary course of business, has occurred.

 

6.                                      The proceeds for Loan     shall be disbursed as follows:

 

	
Disbursement   from Lender:
    	
 
    
	
Loan   Amount
    	
$
    
	
Less:
    	
 
    
	
Legal   Fees
    	
$
    
	
Balance   of Commitment Fee
    	
$
    
	
Net   Proceeds due from Lender:
    	
$
    

 

 

7.                                      The aggregate net proceeds of Loan     in the amount of $                                   shall be transferred to Borrower’s account as follows:

 

	
Bank   Name:
    	
Bridge   Bank
    
	
Bank   Address:
    	
55   Almaden Blvd
    
	
 
    	
San   Jose, CA 95113
    
	
Attention:
    	
Bella
    
	
Telephone:
    	
408-556-6516
    
	
Account   Number:
    	
0101092617
    
	
ABA   Number:
    	
121143260
    

 

Dated:                   , 2010

 

	
 
    	
BORROWER:
    
	
 
    	
SINGULEX, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

EXHIBIT C

 

SECURED PROMISSORY NOTE

 

(Loan   )

 

	
$  ,000,000.00
    	
Dated:                      , 2010
    

 

FOR VALUE RECEIVED, the undersigned, SINGULEX, INC., a Delaware corporation (“Borrower”), HEREBY PROMISES TO PAY to COMPASS HORIZON FUNDING COMPANY LLC, a Delaware limited liability company (“Lender”) the principal amount of [        ] Million Dollars ($[   ],000,000.00) or such lesser amount as shall equal the outstanding principal balance of the Loan [    ] (the “Loan”) made to Borrower by Lender pursuant to the Loan Agreement (as defined below), and to pay all other amounts due with respect to the Loan on the dates and in the amounts set forth in the Loan Agreement.

 

Interest on the principal amount of this Note from the date of this Note shall accrue at the Loan Rate or, if applicable, the Default Rate.  The Loan Rate for this Note is     % per annum based on a year of twelve 30-day months.  If the Funding Date is not the first day of the month, interim interest accruing from the Funding Date through the last day of that month shall be paid on the first Business Day of the next calendar month.  Commencing                     , 201 , through and including                 , 201 , on the first Business Day of each month (each an “Interest Payment Date”) Borrower shall make payments of accrued interest only on the outstanding principal amount of the Loan in the amount of                Dollars ($                ).  Commencing on                 , 2011, and continuing on the first Business Day of each month thereafter (each a “Principal and Interest  Payment Date” and, collectively with each Interest Payment Date, each a “Payment Date”), Borrower shall make to Lender                (    ) equal payments of principal plus accrued interest on the then outstanding principal amount due hereunder each in the amount of                Dollars ($                ). [On March 1, 2014, Borrower shall make a payment of [                                       and 00/100 Dollars ($            )] to Lender (the “Final Payment”).] If not sooner paid, all outstanding amounts hereunder and under the Loan Agreement shall become due and payable on March 1, 2014.

 

Principal, interest and all other amounts due with respect to the Loan, are payable in lawful money of the United States of America to Lender as set forth in the Loan Agreement.  The principal amount of this Note and the interest rate applicable thereto, and all payments made with respect thereto, shall be recorded by Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note.

 

This Note is referred to in, and is entitled to the benefits of, the Venture Loan and Security Agreement dated as of November     , 2010 by and between Borrower and Lender (the “Loan Agreement”).  The Loan Agreement, among other things, (a) provides for the making of a secured Loan to Borrower, and (b) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events.

 

This Note may not be prepaid, except as set forth in Section 2.3 of the Loan Agreement.

 

This Note and the obligation of Borrower to repay the unpaid principal amount of the Loan, interest on the Loan and all other amounts due Lender under the Loan Agreement is secured under the Loan Agreement.

 

 

Presentment for payment, demand, notice of protest and all other demands and notices of any kind in connection with the execution, delivery, performance and enforcement of this Note are hereby waived.

 

Borrower shall pay all reasonable fees and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred by Lender in the enforcement or attempt to enforce any of Borrower’s obligations hereunder not performed when due.  This Note shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.

 

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of its officers thereunto duly authorized on the date hereof.

 

	
 
    	
BORROWER:
    
	
 
    	
SINGULEX, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

EXHIBIT D

 

ITEMS TO BE COVERED BY OPINION OF BORROWER’S COUNSEL

 

1.             Borrower is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified and authorized to do business in the State of California.

 

2.             Borrower has the full corporate power, authority and legal right, and has obtained all necessary approvals, consents and given all notices to execute and deliver the Loan Documents and perform the terms thereof.

 

3.             The Loan Documents have been duly authorized, executed and delivered by Borrower and constitute valid, legal and binding agreements, and are enforceable in accordance with their terms.

 

4.             The Shares (as defined in the Warrant) issuable pursuant to exercise or conversion of the Warrant have been duly authorized and reserved for issuance by Borrower and, when issued in accordance with the terms thereof, will be validly issued, fully paid and nonassessable.

 

5.             The shares of Common Stock issuable upon conversion of the Shares have been duly authorized and reserved and, when issued in accordance with the terms of Borrower’s Certificate of Incorporation, as amended, will be validly issued, fully paid and nonassessable.

 

6.             The execution and delivery of the Loan Documents are not, and the issuance of the Shares upon exercise of the Warrant in accordance with the terms thereof will not be, inconsistent with Borrower’s Certificate of Incorporation, as amended, or Bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to Borrower, or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency or other person, except for the filing of notices pursuant to federal and state securities laws, which filings will be effected by the time required thereby.

 

 

EXHIBIT E

 

FORM OF OFFICER’S CERTIFICATE

 

TO:  COMPASS HORIZON FUNDING COMPANY LLC

 

Reference is made to the Venture Loan and Security Agreement dated as of November     , 2010 (the “Loan Agreement”) by and between SINGULEX, INC. (“Borrower”) and COMPASS HORIZON FUNDING COMPANY LLC (“Lender”).  Unless otherwise defined herein, capitalized terms have the meanings given such terms in the Loan Agreement.

 

The undersigned Responsible Officer of Borrower hereby certifies to Lender that:

 

1.             No Event of Default or Default has occurred under the Loan Agreement. (If a Default or Event of Default has occurred, specify the nature and extent thereof and the action Borrower proposes to take with respect thereto.)

 

2.             The information provided in Section 1 of the Disclosure Schedule is currently true and accurate, except as noted below.

 

3.             Borrower is in compliance with the provisions of Sections 4, 6 and 7 of the Loan Agreement, except as noted below.

 

4.             Attached herewith are the [monthly financial statements pursuant to Section 6.3(a) of the Loan Agreement/annual audited financial statements pursuant to Section 6.3(b) of the Loan Agreement].  These have been prepared in accordance with GAAP and are consistent from one period to the next except as noted below.

 

	
NOTES TO ABOVE CERTIFICATIONS:
    	
 
    

 

	
 
    	
BORROWER:
    
	
 
    	
SINGULEX, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:

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