Document:

Loan Agreement

 Exhibit 10.11 
 

 
 Associated Commercial Finance, Inc. 
 July 20, 2004 
 Virtual Radiologic Professionals, PLC 

5995 Opus Parkway, Suite 200 
 Minneapolis, MN 55343 
 Attention: Mr. Mark Marlow 
 Virtual Radiologic Consultants, Inc. 
 5995 Opus Parkway, Suite 200 
 Minneapolis, MN 55343 
 Attention: Mr. Mark Marlow 
 Ladies and Gentlemen: 
 Associated Commercial Finance, Inc. (the “Lender”) is pleased to advise
Virtual Radiologic Professionals, PLC, a Minnesota professional limited liability company (“VRP PLC”) and the successor by merger with Virtual Radiologic Consultants, LLC, a Delaware limited liability company (“VRC LLC”) and
Virtual Radiologic Consultants, Inc., a Minnesota corporation (“VRC INC”; and together with VRP PLC being sometimes hereinafter referred to collectively as the “Borrowers” and individually as a “Borrower”), that the
Lender hereby extends to the Borrowers, jointly and severally, a revolving line of credit of up to TWO MILLION AND NO/100THS DOLLARS ($2,000,000.00) (the “Line of Credit”) pursuant to which the Lender will make advances (the
“Advance(s)”) to the Borrowers for the Borrowers’ account upon the following terms and conditions: 
 1. Documents;
etc. The Borrowers have delivered, or will deliver, to the Lender before the initial Advance is made, the following documents (this Agreement together with each of the following defined documents and each other instrument, document, guaranty,
mortgage, deed of trust, chattel mortgage, pledge, power of attorney, consent, assignment, contract, notice, security agreement, lease, financing statement, patent, trademark or copyright registration, subordination agreement, trust account
agreement, or other agreement executed and delivered by any Loan Party with respect to this Agreement or to create or perfect any security interest in any collateral securing the payment of the Loan (collectively the “Collateral”) (in each
case as originally executed and as amended, modified or supplemented from time to time) being sometimes hereinafter referred to collectively as the “Loan Documents” and individually as a “Loan Document”) and other items, all
containing or to contain provisions acceptable to the Lender and its counsel: 
 (a) a Revolving Credit Note (such Revolving
Credit Note together with each renewal, replacement or substitute note therefor being the “Revolving Credit Note” or the “Note”) executed by the Borrowers; 
 401 East Kilbourn Avenue, Suite 350, Milwaukee, WI 53202 414-283-2367 

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 (b) a Security Agreement (the “VRP PLC Security Agreement”) executed by VRP
PLC granting to the Lender a security interest in the Collateral described therein to secure repayment of the Note and all present or future obligations of the Borrowers to the Lender together with Uniform Commercial Code Standard Form Financing
Statements sufficient to perfect the Lender’s security interests in such Collateral and UCC searches from the filing offices in all states required by the Lender which reflect that no other person holds a prior security interest in any such
Collateral except as permitted by Section 8(a); 
 (c) a Security Agreement (the “VRC INC Security Agreement”;
and together with the VRP PLC Security Agreement being sometimes hereinafter referred to collectively as the “Security Agreements” and individually as a “Security Agreement”) executed by VRC INC granting to the Lender a security
interest in the Collateral described therein to secure repayment of the Note and all present or future obligations of the Borrowers to the Lender together with Uniform Commercial Code Standard Form Financing Statements sufficient to perfect the
Lender’s security interests in such Collateral and UCC searches from the filing offices in all states required by the Lender which reflect that no other person holds a prior security interest in any such Collateral except as permitted by
Section 8(a); 
 (d) (i) a Support Agreement (each a “Support Agreement” and collectively the “Support
Agreements”) respectively executed by Sean O. Casey, MD (“Dr. Casey”), Mark Marlow (“Mr. Marlow”) and Lorna J. Lusic (“Ms. Lusic”); and (ii) a Third Party Beneficiary Agreement (each a “Third Party
Beneficiary Agreement” and collectively the Third Party Beneficiary Agreements”) respectively executed by the Borrowers and Dr. Casey, Mr. Marlow and Ms. Lusic and pursuant to which the Borrowers and such officers agree that
the Lender is a third party beneficiary of the respective non-compete agreements (each a “Non-Compete Agreement” and collectively the “Non-Compete Agreements”) between the Borrowers and such officers; 
 (e) the certified Operating Agreement, if any, Member Control Agreement and Articles of Organization for VRP PLC and the certified Bylaws
and Articles of Incorporation of VRC INC; 

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 (f) the resolutions of the members of VRP PLC and the Board of Directors of VRC INC
authorizing the execution, delivery and performance of the Loan Documents to which such Borrower is a party; 
 (g) a
certificate by the secretary or assistant secretary of each Borrower certifying the names of the managers or officers of such Borrower authorized to sign the Loan Documents to which such Borrower is a party on behalf of such Borrower together with a
sample of the true signatures of such managers or officers; 
 (h) Certificates of Good Standing for each Borrower of recent
date issued by the Secretary of State of the state of such Borrower’s organization and each other state required by the Lender; 
 (i) a favorable opinion of counsel to the Loan Parties; 
 (j) evidence of insurance required by any Loan Document;

 (k) an aggregate amount of $15,000.00 in immediately available funds as a non-refundable origination fee, which origination
fee is non-refundable and is earned upon the disbursement of the proceeds of the initial Advance regardless of whether the Borrowers obtain any subsequent Advance hereunder; 
 (l) an aggregate amount of $11,500 in immediately available funds to reimburse the Lender for its due-diligence and as a deposit against
legal fees and expenses payable by the Borrower pursuant to Section 7(e), which amount has been paid to the Lender; 
 (m) one or more Control Agreements appropriately completed and duly executed by Associated Bank Minnesota (“ABM”) and the relevant Borrower; 
 (n) (i) Pledge Agreements (each a “Pledge Agreement and collectively the “Pledge Agreements”) respectively executed by
Dr. Casey, Dr. Eduard Michel, Dr. David Hunter and Dr. Gary Weiss (each a “Pledgor” and collectively the “Pledgors”) (the Borrowers and the Pledgors are sometimes hereinafter referred to collectively as the
“Loan Parties” and individually as a “Loan Party”) and pursuant to which such members pledge their respective membership interests in VRP PLC to the Lender to secure repayment of the Note and all present or future obligations of
the Borrowers to the Lender together with Uniform Commercial Code Standard Form Financing Statements sufficient to perfect the Lender’s security interests in the Collateral described in the relevant Pledge Agreement and UCC searches from the
filing offices in all states required by the Lender which reflect that no other person holds a prior security interest in any such Collateral; and (ii) an Estoppel Certificate executed by VRP PLC and all of its members; 

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 (o) a Business Associate Agreement between VRP PLC and the Lender if the Collateral
covered by the Security Agreements involves the access, use and/or disclosure by the Lender of Protected Health Information (as defined 45 C.F.R. §164.501); 
 (p) a Collateral Account Agreement executed by VRC INC and ABM; 
 (q) a certified copy of the Management Agreement (the “Management Agreement”) between the Borrowers together with an Assignment
of Management Agreement appropriately completed and duly executed by the Borrowers; 
 (r) a Repurchase Obligation with
Respect to Accounts Receivable (the “Repurchase Obligation”) made by Dr. Casey and Dr. Eduard Michel in favor of VRP PLC and the Lender, and 
 (s) such other approvals, opinions or documents as the Lender may reasonably request, including without limitation, a borrowing base
certificate (the “Borrowing Base Certificate”) as of a recent date. 
 2. Revolving Credit Loan. 
 (a) Advances. The Lender has agreed, on the terms and conditions stated herein, to make Advances to the Borrower from time to time
on any business day during the period from the date hereof and ending on the earlier of July 19, 2007 (such date as it may be extended from time to time being the “Stated Termination Date”) or the date on which the Lender terminates
the Line of Credit pursuant to Section 9 hereof (such earlier date being the “Termination Date”); provided, however, that the Lender shall not be required to make an Advance if, after giving effect to such Advance, the
aggregate outstanding principal amount of the Advances (such aggregate amount being the “Revolving Credit Loan” or the “Loan”) would exceed the lesser at that time of the Line of Credit or the Borrowing Base. Within the limits
set forth above, the Borrower may obtain Advances from the Lender, prepay the Revolving Credit Note and reborrow pursuant to this Section. Each Advance shall be in the amount necessary to fund disbursements from controlled disbursement account
2283053136 maintained at ABM and the amount of the Advance requested by the Borrowing Agent to fund disbursements from the licensing/controlled disbursement account 2283049597 maintained at ABM. 

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 For purposes of this Agreement, the following terms shall have the following
meanings: 
 “Affiliate” shall mean, with respect to each Borrower, any person which directly or indirectly
controls, is controlled by, or is under common control with, such Borrower. One person shall be deemed to control another person if the controlling person owns directly or indirectly 10% or more of any class of voting stock of the controlled person
or possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the controlled person, whether through ownership of stock, by contract or otherwise. 
 “Borrowing Base” shall mean, at any date of determination, the result of: (a) 85% of VRP PLC’s Eligible
Accounts; minus (b) a reserve of $400,000.00; minus (c) reserves for taxes, assessments, charges and levies permitted by Section 7(d); provided, however, that the Lender reserves the right, in its
reasonable business judgment, to adjust such borrowing base percentage and to adjust or establish new reserves from time to time based on its periodic evaluation of the Collateral and the Borrowers’ respective business operations. The amount of
the Borrowing Base shall be determined periodically from the most recent Borrowing Base Certificate and supporting reports delivered to the Lender pursuant to Section 7(a). 
 “Eligible Accounts” of VRP PLC shall mean the United States dollar value (net of finance charges and/or service charges)
of only such accounts of such Borrower arising from the rendering of teleradiology services to radiology practices, hospitals and clinics in the ordinary course of business in which the Lender holds the only security interest and as to which the
Lender, in its reasonable business judgment, shall from time to time determine to be collectible in a timely manner in the ordinary course of business without dispute or set-off. Without limiting the Lender’s right, in its reasonable business
judgment, to consider any account not to be an Eligible Account, and by way of example only of types of accounts that the Lender will consider not to be Eligible Accounts, the Lender, notwithstanding any earlier classification of eligibility, may
consider any account not to be an Eligible Account if: (a) any warranty is breached as to the account or the account debtor disputes liability or makes any claim with respect to the account; (b) (i) the account is not paid by the
account debtor within the earlier of: (A) 60 days after the original due date of such account; or (B) 90 days after the original invoice relating thereto; or (ii) the account is owed by any account debtor who has not paid 10% or more
of such account debtor’s accounts within the time periods specified in subsection (b)(i) above; (c) a petition in bankruptcy or other application for relief under any insolvency law is filed with respect to the account debtor owing the
account, or the account debtor owing the account assigns for the benefit of creditors, becomes insolvent, fails, suspends, or goes out of business, or 

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the Lender, in its reasonable business judgment, shall become dissatisfied with the creditworthiness of an account debtor owing an account; (d) the
account arises from a sale to an account debtor outside the United States, unless the sale is on letter of credit, acceptance or other terms acceptable to the Lender; (e) the account debtor is an Affiliate, supplier or creditor of any Borrower;
(f) the account debtor is the United States of America or any agency or department thereof and the account is subject to the Assignment of Claims Act; (g) if the account arises under an agreement between VRP PLC and the relevant account
debtor pursuant to which VRP PLC provides radiology services to such account debtor (the “Client Agreement”) that does not contain a provision to the effect that such account debtor will pay the accounts arising under such Client Agreement
without set-off, counter-claim, recoupment or other defense (or words to similar effect) in form and substance reasonably satisfactory to the Lender and, if further requested by the Lender in writing, such account debtor does not enter into an
agreement with the Lender pursuant to which, among other things, such account debtor has agreed to pay its accounts owed to VRP PLC without set-off, counter-claim, recoupment or other defense (a “Non-Offset Agreement”); provided,
however, that if the Lender requests a Non-Offset Agreement from any such account debtor, then the Lender agrees that it will not exclude any of such account debtor’s Eligible Accounts that are included in the Borrowing Base at the time
of the Lender’s request for such account debtor’s Non-Offset Agreement because of VRP PLC’s failure to comply with this subsection (g) so long as: (i) such account arises pursuant to the un-expired term of any Client
Agreement in effect on the date of this Agreement without giving effect to any renewals or extensions thereof (such Client Agreement for its un-expired term being an “Existing Client Agreement”) and the account debtor on such account has
not exercised, and does not exercise, any set-off against VRP PLC with respect to any account owed to VRP PLC by such account debtor; or (ii) such account arises pursuant to any Client Agreement, other than an Existing Client Agreement, and:
(A) the account debtor on such account has not exercised, and does not exercise, any set-off against VRP PLC with respect to any account owed to VRP PLC by such account debtor; or (B) the Lender, in its reasonable business judgment, has
not determined that any such existing account is not collectible in a timely manner in the ordinary course of business without dispute or set-off; (h) the account is subject to the anti-assignment provisions under the Medicare or Medicaid
programs or any state statute or regulation limiting the assignment of health care receivables unless VRP PLC and the Lender have implemented collection procedures in compliance with such programs, statutes or regulations; (i) such account is
due from any natural person, rather than a radiology practice, hospital or clinic; or (j) such account results from the provision of professional services by a physician pursuant to an Independent Physician Agreement between such physician and

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VRP PLC that contains language that could be construed to provide that VRP PLC is billing for such physician’s professional services on behalf of such
physician unless such account is subject to the Repurchase Obligation. 
 (b) Revolving Credit Note. The Advances shall
be evidenced by, and be payable in accordance with the terms of, the Revolving Credit Note. The Lender shall maintain records of the amount of each Advance and of the amount of all payments on the Revolving Credit Note. The aggregate outstanding
principal amount of all Advances set forth on the records of the Lender shall be rebuttable presumptive evidence of the principal amount owing and unpaid on the Revolving Credit Note. 
 (c) Interest on the Advances. The Borrower agrees to pay interest on the outstanding principal amount of each Advance from the date
of such Advance until such Advance is paid at the rates and at the times specified in the Revolving Credit Note. 
 (d)
Borrowing Procedure. 
 (i) Advances. The “Borrowing Agent” (as defined below) shall give written or
telephonic notice (promptly confirmed in writing by the Borrowing Agent if requested by the Lender) to the Lender of each requested Advance by not later than 11:00 a.m. (Minneapolis time) on the business day on which such Advance is to be made;
provided, however, that no further notice needs to be given by the Borrowing Agent for any Advance that is made by the Lender to maintain any target balance in the Borrowers’ respective accounts at ABM in accordance with any cash
management agreement among the Borrowers and ABM and the Borrowers shall be jointly and severally liable for all such Advances. So long as the conditions precedent to such extension of credit set forth in this Section 2(a) and/or in
Section 5 are satisfied as of the requested Advance, the Lender shall make such Advance in accordance with the Cash Management Agreements or, if such Advance is not being made in accordance with the Cash Management Agreements, by transferring
the amount thereof in immediately available funds for credit to an account (other than a payroll account) maintained by VRP PLC at ABM or, if permitted by the Lender, in its reasonable business judgment, any other bank satisfactory to the Lender
that has executed a restricted account agreement in form and substance satisfactory to the Lender (ABM or any such other bank, as the case may be, being the “Depository Bank”). 
 (ii) Conditions Precedent. Each request for an Advance shall be deemed a representation and warranty that all conditions precedent
to such credit extension under Section 5 are satisfied as of the date of such request and as of the date of such extension. 

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 (iii) Borrowing Agent. Each Borrower hereby appoints VRC INC as the borrowing
agent (the “Borrowing Agent”) for the Borrowers and agrees that the Borrowers shall be jointly and severally liable for all Advances obtained by the Borrowing Agent. 
 (e) Prepayment. 
 (i) Voluntary. The Borrowers shall have the right, by giving written notice to the Lender by not later than 2:00 p.m. (Minneapolis time) on the business day of such payment, to voluntarily prepay the Revolving
Credit Loan in whole or in part at any time without premium or penalty except as provided in subsection 2(f) below. 
 (ii)
Mandatory. If, at any time, the Revolving Credit Loan exceeds the lesser of the Line of Credit or the Borrowing Base, then the Borrower, upon demand, shall prepay the Revolving Credit Loan by the amount of such excess together with interest
on the amount prepaid. 
 (f) Prepayment Fee. 
 (i) If, at any time prior July 19, 2005, the Borrowers voluntarily terminate the Line of Credit and prepay the Revolving Credit Note
and all other obligations arising under this Agreement or any other Loan Document, or if the Borrowers involuntarily prepay the Revolving Credit Note following the occurrence of an Event of Default, then the Borrower shall jointly and severally pay
to the Lender, upon demand, a prepayment fee (the “Prepayment Fee”) equal to 3% of the amount of the Line of Credit set forth in the first paragraph of this Agreement; provided, however, that no Prepayment Fee shall be
payable by the Borrowers if the Lender exercises its right to reduce the Borrowing Base percentage of Eligible Accounts to below 75% or to increase the reserves used in calculating the Borrowing Base to more than $500,000.00 (other than reserves
imposed pursuant to subpart (c) of the definition of “Borrowing Base”) except where the Lender has exercised such right in response to any material adverse change of circumstance in any Borrower’s business operations or prospects
(a “Change of Circumstance”) such as, but not limited to and by way of examples only: (x) a higher dilution rate in VRP PLC’s accounts or other material adverse changes in the quality or character of VRP PLC’s accounts as
Collateral for the Loan from those used by the Lender in underwriting the Loan; or (y) the imposition, or threatened imposition, of any material liability on any Borrower which could reasonably be determined to result in a Material Adverse
Occurrence. 

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 (ii) For purposes of this Agreement, “Loan Year” shall mean, with respect
to: (A) the first Loan Year, the period commencing on the date of this Agreement and ending on the day corresponding to the Stated Termination Date in the immediately following year (e.g. the first Loan Year ends on July 19, 2005); or
(B) any subsequent Loan Year, the 12 month period commencing on the day immediately following the day corresponding to the Stated Termination Date in such subsequent Loan Year (e.g. the second Loan Year begins on July 20, 2005).

 (g) Non-use Fee. The Borrowers shall jointly and severally pay to the Lender a fee (the “Non-use Fee”)
determined by applying a rate of one-half of one percent (0.50%) per annum to the average daily excess of: (a) the Line of Credit; over (b) the Revolving Credit Loan; provided, however, that the Non-Use Fee shall be reduced
to three-eights of one percent (0.375%) if the Lender exercises its right to reduce the Borrowing Base percentage of Eligible Accounts to below 75% or to increase the reserves used in calculating the Borrowing Base to more than $500,000.00 except
where the Lender has exercised such right in response to any Change of Circumstance. Such Non-use Fee accrued through a calendar month shall be payable to the Lender in arrears on the first day of the following calendar month, commencing
August 1, 2004 and any unpaid accrued Non-use Fee shall be payable on the Termination Date. 
 3. Payments. Any other provision
of this Agreement to the contrary notwithstanding, the Borrowers shall make all payments of interest on and principal of the Loan and all payments to the Lender with respect to payment of other fees, costs and expenses payable under any Loan
Document in immediately available funds to the Lender at its address for notices hereunder without setoff or counterclaim. Each Borrower authorizes the Lender to charge from time to time against such Borrower’s account with the Depository Bank
any such payments when due and Lender will use its reasonable efforts to notify such Borrower of such charges. The Borrowers hereby authorize the Lender to make an Advance, at the Lender’s sole discretion, to pay, on behalf of the Borrowers,
any amount due to the Lender under any Loan Document without further action on the part of the Borrowers and regardless of whether the Borrowers are able to comply with the terms, conditions and covenants of this Agreement at the time of such
Advance and Lender will use its reasonable efforts to notify the Borrowing Agent of such Advances except that no such notice shall be required for Advances made to pay interest, Non-Use Fees, examination fees or any other amount identified in any
statement delivered to any Borrower prior to the date of such Advance. Each payment received by the Lender may be applied to the Borrower’s obligations to the Lender under this Agreement or any other Loan Document in such order of application
as the Lender, in its sole discretion, may elect. 

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 4. Set-off, Etc. Upon the occurrence and during the continuance of an Event of Default, the
Lender and each of its affiliates including, without limitation, ABM, may offset any and all balances, credits, deposits (general or special, time or demand, provisional or final), accounts or monies of any Borrower then or thereafter with the
Lender or such affiliate, or any obligations of the Lender or such affiliate to such Borrower, against the obligations of the Borrowers arising under this Agreement or any other Loan Document. Each Borrower hereby grants to the Lender and each of
its affiliates a security interest in all such balances, credits, deposits, accounts or monies. 
 5. Conditions Precedent to All Credit
Extensions. The obligation of the Lender to extend any credit to the Borrowers shall be subject to the satisfaction of each of the following conditions, unless waived in writing by the Lender: 
 (a) The representations and warranties set forth in Section 6 shall be true and correct on the date of the requested credit extension
and after giving effect thereto except that, after the delivery of any financial statements to the Lender in accordance with Section (a)(i) or (ii), the representations and warranties set forth in Section 6(i) shall be deemed a reference to the
audited or unaudited financial statements of the Borrowers then most recently delivered to the Lender; and 
 (b) No Event of
Default or event which, with notice and/or lapse of time, would constitute an Event of Default (such event being a “Default”) shall have occurred and be continuing on the date of the requested credit extension or after giving effect
thereto. 
 6. Representations and Warranties. To induce the Lender to extend credit hereunder, the Borrowers jointly and severally
represent and warrant that: 
 (a) VRP PLC is a limited liability company and VRC INC is a corporation validly organized and
existing and in good standing under the laws of the state of its organization, has full power and authority to own its property and conduct its business substantially as presently conducted by it and is duly qualified to do business and is in good
standing in each jurisdiction where the nature of its business makes such qualification necessary and where the failure to so qualify would materially adversely affect such Borrower’s condition (financial or otherwise), business, properties or
assets; 
 (b) each Loan Party has full power and authority to enter into and to perform its, his or her obligations under the
Loan Documents to which such Loan Party is a party; 
 (c) the Loan Documents constitute the legal, valid, and binding
obligations of each Loan Party which is a party thereto and are enforceable against such Loan Party in 

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accordance with their respective terms subject only to bankruptcy, insolvency, reorganization, moratorium or similar laws at the time in effect affecting the
enforceability of rights of creditors generally and by general equitable principles which may limit the right to obtain equitable remedies; 
 (d) each Loan Party’s execution, delivery and performance of the Loan Documents to which such Loan Party is a party have been duly authorized by all necessary company or corporate action, do not require the
consent or approval of any person which has not been obtained, and do not conflict with any agreement binding upon such Loan Party or any of such Loan Party’s property; 
 (e) there is no litigation, bankruptcy proceeding, arbitration or governmental proceeding pending against any Loan Party or affecting the
business, property or operations of such Loan Party which, if determined adversely to such Loan Party, would have a material adverse effect on the condition (financial or otherwise), the business, property or operations of such Loan Party;

 (f) neither any Borrower nor any member of a group which is under common control with any Borrower (such Borrower’s
“ERISA Affiliates”) has maintained, established, sponsored or contributed to any employee benefit plan which is a defined benefit plan (“Plan”) covered by Title IV of the Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder (“ERISA”); 
 (g) the proceeds of the Revolving Credit Loan will be used to provide
working capital to the Borrowers, to refinance the Borrowers’ existing indebtedness and for the Borrowers’ general corporate purposes; no part of the proceeds of the Loan will be used by any Borrower for any purpose which violates, or
which is inconsistent with, any regulations promulgated by the Board of Governors of the Federal Reserve System; 
 (h)
(i) each Borrower is in compliance in all material respects with all federal, state and local laws, rules and regulations applicable to it including, without limitation, all pollution control and environmental regulations in each jurisdiction
where it is doing business; and (ii) no Borrower has any material liability for the release or threatened release of any toxic or hazardous waste, substance or constituent into the environment; 
 (i) VRC LLC’s annual unaudited financial statements dated December 31, 2003 and interim unaudited financial statements for the
period ended March 31, 2004, copies of which have been furnished to the Lender, have been prepared in accordance with generally accepted accounting principles (other than the omission of footnotes in the case of the interim unaudited financial
statements) consistently applied with those of the preceding fiscal year (such consistently applied generally accepted accounting principles 

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being “GAAP”) and present fairly the financial condition of the relevant Borrower as of such dates and the result of its operations for the periods
then ended; 
 (j) since the date of the annual financial statement described in Section 6(i), neither the condition
(financial or otherwise), the business, the properties nor the operations of any Borrower has been materially and adversely affected in any way; 
 (k) each Borrower has filed all Federal and State income tax and other tax returns which are required to be filed, and has paid all taxes as shown on said returns and all assessments received by such Borrower to the
extent that such taxes have become due; 
 (l) each Borrower possesses adequate licenses, permits, franchises, patents,
copyrights, trademarks and trade names, or rights thereto, to conduct its business substantially as now conducted and shall possess adequate licenses, permits, franchises, patents, copyrights, trademarks and trade names, or rights thereto, to
conduct its business substantially as proposed to be conducted except where the failure to do so could not reasonably be determined to materially adversely affect the business, condition (financial or otherwise) of such Borrower or the ability of
such Borrower to perform its obligations under the Loan Documents to which such Borrower is a party (any such adverse event being a “Material Adverse Occurrence”); 
 (m) no Loan Party is in default of a material provision under any material agreement, instrument, decree or order to which it is a party
or by which it or its property is bound or affected and assuming that this Agreement had been previously executed and delivered no Default or Event Default has occurred and is continuing hereunder; 
 (n) each Borrower has good title to all of its properties and assets, including, without limitation, the Collateral, free and clear of all
mortgages, security interests, liens and encumbrances, except as permitted by Section 8(a); 
 (p) (i) the Borrowers
make up a related organization of various entities constituting a single economic and business enterprise so that the Borrowers share an identity of interests such that any benefit received by any one of them benefits the others; (ii) certain
of the Borrowers render services to for the benefit of other Borrowers, purchase or sell and supply goods to or from or for the benefit of the others, make loans, advances and provide other financial accommodations to or for the benefit of the other
Borrowers; (iii) in some cases, the Borrowers have centralized accounting and legal service and common officers and directors; and (iv) while the Borrowers operate as a single economic enterprise, nothing contained in this
Section 7(p) should be construed or imply that the Borrowers are not separate legal entities; 

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 (q) (i) neither the execution of this Agreement nor the use of the proceeds of
the Loan violates the Trading with the Enemy Act of 1917, as amended, nor any of the foreign assets control regulations promulgated thereunder or the under the International Emergency Economic Powers Act or the U.N. Participation Act of 1945; and
(ii) neither any Borrower nor any person who owns a controlling interest in or otherwise controls such Borrower or any subsidiary of such Borrower is listed on the Specially Designated Nationals and Blocked Person List or other similar lists
maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders; and 
 (r) all representations and warranties contained in this Section 6 shall survive the delivery of the Loan Documents, the making of the Loan, and no investigation at any time made by or on behalf of Lender shall
diminish its rights to rely thereon. 
 7. Affirmative Covenants. The Borrowers jointly and severally covenant and agree with the
Lender that, for so long as the Loan remains unpaid or the Line of Credit is available to the Borrowers, the Borrowers shall: 
 (a) furnish to the Lender: 
 (i) as soon as available and in any event within 90 days after the end of each VRP
PLC’s fiscal years, a copy of the Borrowers’ combined annual report, including combined balance sheet and related combined statements of earnings, combined members’ or stockholders’ equity and combined cash flows for such fiscal
year, with comparative figures for the preceding fiscal year, prepared in accordance with GAAP and certified without qualification or exception by such Borrower’s current independent public accountants or other independent public accountants
satisfactory to the Lender and accompanied by: (A) the related combining statements for each Borrower; and (B) the management letter, if any, delivered by such independent public accountants to any Borrower and such Borrower’s
response thereto; 
 (ii) as soon as available and in any event within 30 days after the end of each month of VRP PLC’s
fiscal year, a copy of the Borrowers’ internally prepared combined financial statements, consisting of a combined balance sheet as of the close of such month and related combined statements of earnings for such month and from the beginning of
such fiscal year to the end of such month prepared in accordance with GAAP (other than the omission of footnotes) and certified as accurate by the Borrowing Agent’s chief executive officer, chief operating officer or chief financial officer and
accompanied by the related combining statements for each Borrower; 

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 (iii) with each financial statement required by Section 7(a)(i) or
(ii) above, a Compliance Certificate as of the end of the most recent reporting period in a form acceptable to the Lender and certified as accurate by the Borrowing Agent’s chief executive officer, chief operating officer or chief
financial officer; 
 (iv) with each financial statement required by Section 7(a)(i) or (ii) above, an accounts
payable aging of each Borrower in a form acceptable to the Lender and certified as accurate by such Borrower’s chief executive officer, chief operating officer or chief financial officer; 
 (v) with each financial statement required by Section 7(a)(i) above or as more frequently requested by the Lender, an account debtor
listing for each Borrower stating the name, address, contact information and other information requested by the Lender with respect to identifying such Borrower’s account debtor, all in a form acceptable to the Lender and certified as accurate
by such Borrower’s chief executive officer, chief operating officer or chief financial officer; 
 (vi) (A) by no
later than 11:00 a.m. (Minneapolis time) on the first business day of each week, a Borrowing Base Certificate showing the relevant information for VRP PLC as of the end of business on the last business day of the immediately preceding week; and
(C) by no later than the close of the Lender’s business on the 10th business day of each month of VRP
PLC’s fiscal year, a Borrowing Base Certificate showing the relevant information for such Borrower as of the end of business on the last business day of the then most recently month of such Borrower’s fiscal year; each Borrowing Base
Certificate shall be accompanied by such supporting reports such as, but not limited to, any accounts receivable aging, and sales reports and collection reports required by the Lender and the Borrowing Base Certificate and such supporting reports
shall be in a form acceptable to the Lender and certified as accurate by such Borrower’s chief executive officer, chief operating officer or chief financial officer; 
 (vii) as soon as available and in any event within 60 days after the beginning of VRP PLC’s then current fiscal year, projections for
VRP PLC’s immediately following fiscal year consisting of projected month-end combining and combined balance sheets and month-end and year-to-date combining and combined statements of earnings, all in a form acceptable to the Lender and
certified by the Borrowing Agent’s chief executive officer, chief operating officer or chief financial officer as having been prepared in good faith and representing the most probable course of the Borrowers’ business during such fiscal
year; 

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 (viii) within 10 days after the filing thereof, a copy of each Borrower’s income
tax returns and related schedules; and 
 (ix) within five days after any executive officer of any Borrower obtains knowledge
of any Default or Event of Default, a notice describing the nature thereof and what action the Borrowers have taken, is taking or propose to take with respect thereto; 
 (x) within five days after any executive officer of any Borrower obtains knowledge of the occurrence thereof, notice of the institution of
any litigation, arbitration or governmental proceeding against any Borrower or any of its property which, if determined adversely to such Borrower, could reasonably be expected to result in a Material Adverse Occurrence, and the steps being taken by
the Borrowers with respect thereto; 
 (xi) within five days after any executive officer of any Borrower obtains knowledge
that any federal or state taxing authority intends to audit any Borrower or has proposed to assess any tax against any Borrower, a notice describing the nature thereof and what action the Borrowers have taken, is taking or propose to take with
respect thereto; and 
 (xii) such other financial or other information or certification as the Lender may reasonably request;

 (b) maintain and preserve its company or corporate existence; 
 (c) maintain insurance of such types and in such amounts as are maintained by companies of similar size engaged in the same or similar
businesses and as may be required by any Loan Document; provided, however, that each policy insuring any Collateral securing the Loan shall name the Lender as the lender loss payee; 
 (d) file all federal and state income tax and other tax returns (including, without limitation, withholding tax returns) which are
required and make payments as required of such taxes; provided, however, that: (i) the foregoing items need not be paid if they are being contested in good faith by appropriate proceedings, and as long as the relevant
Borrower’s title to its property is not materially adversely affected, its use of such property in the ordinary course of its business is not materially interfered with and adequate reserves with respect thereto have been set aside on such
Borrower’s books in accordance with GAAP; and (ii) in all events, each Borrower shall pay or cause to be paid all taxes, assessments, charges or levies prior to the filing of any tax lien against any 

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Borrower with respect thereto; provided further, however, that, upon learning of any proposed assessment that exceeds the smallest
amount of the excess of the lesser of the Line or Credit or the Borrowing Base over the Revolving Credit Loan during the immediately preceding 90 days, the Lender, after consultation with the Borrowers, may impose reserves against the Borrowing Base
in the amount reasonably determined by the Lender in good faith (regardless of whether the Borrowers have agreed to such reserves) as being necessary to preserve sufficient liquidity for the Borrowers to pay such taxes, assessments, charges or
levies in the ordinary course of the Borrowers’ businesses prior to the filing of lien for such taxes, assessments, charges or levies. 
 (e) jointly and severally reimburse the Lender for reasonable expenses, fees and disbursements (including, without limitation, reasonable attorneys’ fees and legal expenses), incurred in connection with the
preparation or administration of this Agreement or any other Loan Document or the Lender’s enforcement of the obligations of the Borrower under any Loan Document, whether or not suit is commenced, which attorneys’ fees and legal expenses
shall include, but not be limited to, any attorneys’ fees and legal expenses incurred in connection with any appeal of a lower court’s judgment or order; provided, however that the Lender agrees that the Borrower’s
obligations to reimburse the Lender for its attorneys’ fees and legal expenses incurred in connection with the preparation of this Agreement and the other Loan Documents shall be limited to the sum of $15,000.00; 
 (f) permit the Lender and its representatives at reasonable times and intervals and upon reasonable notice to visit the Borrower’s
offices and inspect its books and records including, without limitation, permitting the Lender to examine any Collateral securing the Loan and jointly and severally pay an examination fee of $3,000.00 per calendar quarter (or portion thereof),
provided, however that: (i) such examination fee and reimbursement of expenses shall be paid in arrears, commencing with the calendar quarter ending September 30, 2004; (ii) if any Default or Event of Default has
occurred and is continuing, then any limitation on the Borrowers’ joint and several obligation to pay examination fees shall be terminated and the Borrowers further jointly and severally agree to reimburse the Lender for its out-of-pocket
expenses incurred in connection with any such examinations conducted after the occurrence and during the continuance of such Default or Event of Default; and (iii) neither the origination fee nor the due-diligence fee payable pursuant to
Section 1 of this Agreement shall be applied against any examination fees; 
 (g) maintain in full force and effect all
of its material rights, licenses, certifications, franchises and comply with all applicable laws and regulations necessary to enable it to conduct its business; 

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 (h) maintain all of its depository accounts with ABM; 
 (i) comply with all applicable Bank Secrecy Act (“BSA”) laws and regulations, as amended; 
 (j) sustain, at any Measurement Date during VRP PLC’s 2004 fiscal year (including, without limitation, any portion of VRC LLC’s
2004 fiscal year not included in VRP PLC’s 2004 fiscal year) a combined fiscal year-to-date net loss determined in accordance with GAAP of not more than (ie. a greater negative number than) $250,000.00; 
 (k) earn, at each Measurement Date occurring after the end of the VRP PLC’s 2004 fiscal year, at least $1.00 of Adjusted Net Income
during the fiscal quarter ending at such Measurement Date unless the Borrowers have received at least $1,000,000.00 of net cash proceeds from the issuance of equity interests in the Borrowers subsequent to the date of this Agreement; 
 (l) maintain, at each Measurement Date, the Borrowers’ Capital Base at not less than the sum of: (i) $900,000.00; plus
(ii) 50% of the increase in the Borrowers’ combined net worth or long term debt accounts from the issuance of equity interests in, or Subordinated Debt by, the Borrowers during the period commencing on the date of this Agreement to,
through and including the relevant Measurement; 
 where the following terms shall have the following meanings: 
 “Adjusted Net Income” shall mean, for any fiscal quarter, the Borrowers’ combined net income for such fiscal quarter
determined in accordance with GAAP period but excluding therefrom non-operating gains (including extraordinary or unusual gains, gains and losses from discontinuance of operations, gains arising from the sale of assets other than inventory and other
non-recurring gains) during such quarter; provided, however, that the net income used in calculating the Adjusted Net Income for any fiscal quarter shall be further adjusted to add back the origination fee, the due diligence fee and
the attorneys’ fee paid to the Lender or its counsel in connection with the closing of this Agreement, but only to the extent such amounts are deducted in calculating such net income. 
 “Capital Base” shall mean, at any date of determination, the sum of the Borrowers’: (a) Tangible Net Worth;
plus (b) the Subordinated Debt. 

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 “Measurement Date” shall mean the last day of each quarter of VRP
PLC’s fiscal year. 
 “Subordinated Debt” shall mean, at any date of determination, the outstanding
principal amount of any indebtedness owed by a Borrower for borrowed money which has been subordinated to the payment of the Loan pursuant to a subordination agreement (each a “Subordination Agreement”) in form and substance satisfactory
to the Lender, in it sole and absolute discretion. 
 “Tangible Net Worth” shall mean, at any date of
determination, the difference between: (a) the total assets appearing on the Borrowers’ combined balance sheet at such date prepared in accordance with GAAP after deducting adequate reserves in each case where, in accordance with GAAP, a
reserve is proper; and (b) the total liabilities appearing on such balance sheet (the “Total Liabilities”); excluding, however, from the determination of total assets: (i) goodwill, organizational expenses, research and
development expenses, trademarks, trade names, copyrights, patents, patent applications, licenses and rights in any thereof, covenants not to compete, training costs and other similar intangibles; (ii) all deferred charges or unamortized debt
discount and expense other than deferred income taxes; (iii) prepaid expenses; (iv) securities which are not readily marketable; (v) any write-up in the book value of any assets resulting from a reevaluation thereof subsequent to
December 31, 2003; (vi) accounts receivable, notes receivable or other receivables or amounts owed by officers or Affiliates; and (viii) any asset acquired subsequent to the date of this Agreement which the Lender, in its reasonable
business judgment, determines to be an intangible asset. 
 8. Negative Covenants. The Borrowers jointly and severally covenant and
agree with the Lender that, for so long as the Loan remains unpaid or the Line of Credit is available to the Borrowers, the Borrowers shall not, without the Lender’s prior written consent: 
 (a) create security interests or mortgages encumbering any Borrower’s assets except: (i) security interests in favor of the
Lender; (ii) other security interests described on Schedule 8(a) attached hereto and incorporated herein by reference; or (iii) security interests created after the date of this Agreement in connection with capitalized lease
obligations or other purchase money indebtedness incurred in connection with the acquisition of equipment, but only to the extent that: (A) such capital expenditures are permitted by Section 8(1); (B) the purchase money indebtedness
is permitted by Section 8(b); (C) such security interest attaches only to the equipment then being acquired by the Borrower, did not and does not attach to any Borrower’s current assets and does not secure any other indebtedness;
(D) no Default or Event of Default has occurred and is 

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continuing at the time of the proposed creation of such security interest or would result therefrom; and/or (E) no portion of the purchase price of the
relevant equipment has been funded by the trade-in or available proceeds arising from the sale or other disposition of any Borrower’s then, or previously, owned equipment; provided, however, that such permitted capitalized lease
obligations and purchase money security interests shall include capitalized lease obligations permitted by, and purchase money security interests securing indebtedness permitted by, the proviso clause to Section 8(b); 
 (b) create, incur, assume or suffer to exist any indebtedness except: (i) the indebtedness under this Agreement or any other Loan
Document; (ii) current liabilities (other than borrowed money) incurred in the ordinary course of business; (iii) other indebtedness described on Schedule 8(b) attached hereto and incorporated herein by reference; or
(iv) purchase money indebtedness (including the balance sheet amount of capitalized lease obligations) incurred after the date of this Agreement in connection with the acquisition of equipment so long as the relevant capital expenditure is
permitted by Section 8(1); provided, however, that such permitted purchase money indebtedness shall include purchase money indebtedness incurred by any Borrower within 180 days after the acquisition of the relevant items of
equipment to finance or refinance the Borrowers’ acquisition thereof and may finance or refinance, the Borrower’s acquisitions during such period so long as any purchase money indebtedness previously incurred by any Borrower in connection
with such acquisitions is paid in full from the proceeds of the subsequent purchase money indebtedness and all previously granted security interests covering the relevant items of equipment are released and the Lender agrees either to:
(i) subordinate its security interest in any such equipment in order to permit such financing or refinancing pursuant to a lien subordination agreement in form and substance reasonably satisfactory to the Lender; or (ii) release its
security interest in the relevant equipment if the Borrowers, through their good faith best efforts, are unable to obtain the consent of the lender providing such financing or refinancing to a subordinate security interest in favor the Lender;

 (c) lease or sell all or any substantial portion of its property and business to any other entity or entities, whether in
one transaction or a series of related transactions; 
 (d) consolidate with or merge into or with any other entity or
entities; 
 (e) declare or pay any dividends (except for stock dividends), purchase, redeem, retire or otherwise acquire for
value any of any Borrower’s membership interests or capital stock (or any warrant or option to purchase any such stock) now or hereafter outstanding, or return any capital to its members or stockholders as such except that, so long as no
Default or Event of Default has occurred and is continuing, either before or after giving effect to any of the following distributions, VRP PLC may 

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distribute capital to its members in the amount equal to such members’ federal and state income tax liability arising from their respective allocable
share of such Borrower’s taxable income so long as such Borrower is a pass-through entity under the Internal Revenue Code of 1986, as amended (the “Code”) (such distributions being the “Tax Distributions”); provided,
however, that: (A) such members’ federal and state income tax liability shall not exceed the highest marginal combined tax rate for individuals under the Code and Minnesota law; (B) Tax Distributions may only be paid in
estimated quarterly installments contemporaneously with such members’ obligations to pay estimated income taxes based upon such Borrower’s annualized income through the end of its fiscal month immediately preceding such tax
installment’s due date and also contemporaneously with any such members’ filing of his or her federal and state income tax returns if the estimated Tax Distributions paid for any of such Borrower’s fiscal years are not sufficient to
pay such members’ actual income tax liability arising from his or her share of such Borrower’s actual taxable income for such fiscal year as disclosed by copies of such Borrower’s tax returns and related Schedules K-1 for such fiscal
year delivered to the Lender pursuant to this Agreement; and (C) if the Tax Distributions actually paid with respect to any of the Borrower’s fiscal years exceed the Tax Distributions permitted by this Section based upon the
Borrower’s actual taxable net income as disclosed by copies of such tax returns and schedules described above, then the Borrower shall immediately recover the excess amount from the recipient and shall not pay any further Tax Distribution to
any person until such excess amount is recovered; 
 (f) acquire, make or hold any investment in, or purchase or acquire all
or substantially all of the assets or business of (whether in a single transaction or related series of transaction), any other person except: (i) cash and cash equivalents; and (ii) other investments described on Schedule 8(f)
attached hereto and incorporated herein by reference; 
 (g) assume, guarantee, endorse or otherwise become liable upon the
obligation of any person, firm or corporation except pursuant to the Loan Documents or by endorsement of negotiable instruments for deposit or collection in the ordinary course of business, nor sell any notes or accounts receivable with or without
recourse; 
 (h) engage in any business other than the business engaged in by the relevant Borrower on the date of this
Agreement; 
 (i) maintain, establish, sponsor or contribute to any Plan which is a defined benefit plan and shall not permit
any of its ERISA Affiliates to do so; 
 (j) make any loan or advance to, or otherwise extend any credit to, any
Borrower’s officers, directors, shareholders, partners, members, managers or Affiliates or 

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to any member of any such person’s immediate family except for advances to employees for business related expenses such as travel and entertainment so
long as: (i) such expenses are reimbursable by the relevant Borrower; and (ii) the aggregate outstanding amount of all such advances does not exceed $50,000.00 on a combined basis; 
 (k) change its fiscal year end; 
 (l) during any fiscal year, make any capital expenditure for fixed assets if, after giving effect to such capital expenditure, the sum of all capital expenditures (other than up to $100,000.00 of capital expenditures
for leasehold improvements at 5995 Opus Parkway, Suite 200, Minneapolis, MN) made by the Borrowers on a combined basis during such fiscal year would exceed $550,000.00 plus an additional aggregate amount equal to 50% of the aggregate net proceeds
received by the Borrowers in cash from the issuance of equity interests in the Borrowers or Subordinated Debt during such fiscal year (or if such additional amount is not expended in the fiscal year of receipt of such net proceeds, the remaining
balance of such additional amount may be carried over to the following fiscal year), where, for purposes of calculating this covenant, the value of any operating lease for equipment (but not real estate leases) shall be the purchase price of the
equipment subject to such lease and the purchase price shall be deemed to be a capital expenditure made in the year in which the relevant Borrower enters into such lease; 
 (n) except as permitted by the Subordination Agreement pertaining to an item of Subordinated Debt: (i) make any payment of, or
purchase, redeem, or acquire, any Subordinated Debt; (ii) give security for all or any part of any Subordinated Debt; (iii) take or omit to take any action whereby the subordination of any Subordinated Debt or any part thereof to the Note
might be terminated, impaired or adversely affected; (iv) settle, compromise, discharge or otherwise reduce the outstanding principal amount of any Subordinated Debt or exercise any right to convert the Subordinated Debt to equity; or
(v) omit to give the Lender prompt written notice of any default or event which, with the giving of notice or lapse of time, would constitute a default under any other agreement or instrument relating to any Subordinated Debt; 
 (p) amend, modify, or supplement any provision of, or waive any other party’s compliance with any of the terms of, the Management
Agreement in any manner which: (i) requires any Borrower to pay any additional consideration under the Management Agreement or otherwise imposes any financial obligation or burden on any Borrower; (ii) could reasonably be expected to
result in a Material Adverse Occurrence; or (iii) is adverse to the rights and benefits of the Lender under the Loan Documents; or 

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 (r) use or permit the use of the proceeds of the Loan to violate any of the foreign
asset control regulations of OFAC or any enabling statute or Executive Order relating thereto. 
 9. Event of Default. The occurrence
of any one or more of the following shall constitute an Event of Default (“Event of Default”) hereunder: 
 (a) the
Borrowers shall default in the due and punctual payment of: (i) any installment of principal on the Loan on the date when due; or (ii) any installment of interest on the Loan on the date when due, or in due and punctual payment of the
Non-use Fee or any other amount which is due and payable to the Lender under any Loan Document on the date when due and such default under this subsection (ii) shall continue for a period of 5 days after written notice from the Lender to the
Borrowers; 
 (b) the Borrower shall default in the due performance or observance of any covenant set forth in
Section 7(b), Section 7(c), Section 7(h) or in Section 8; 
 (c) (i) the Borrower shall default in the due
performance or observance of any covenant set forth in Section 7(i); (ii) the Borrower shall default in the due performance or observance of any covenant set forth in Section 7(j), Section 7(k) or Section 7(1) and such
default shall continue for a period of 30 days; or (iii) any Loan Party shall default (other than those defaults covered by other subsections of this Section 9) in the due performance or observance of any term, covenant, agreement or
warranty contained in any Loan Document on its part to be performed, and such default shall continue for a period of 30 days after written notice thereof from the Lender to the Borrowers; 
 (d) any Borrower shall default and fail to cure such default in the time provided therein, under the terms of any other agreement,
indenture, deed of trust, mortgage, promissory note or security agreement governing the borrowing of money in the aggregate amount of more than $50,000.00 for any or all Borrowers and: (i) the maturity of any amount owed under such document or
instrument is accelerated; or (ii) such default shall continue unremedied or unwaived for a period of time to permit such acceleration; 
 (e) any Loan Party shall become insolvent or generally fail to pay, or admit in writing such Loan Party’s inability to pay such Loan Party’s debts as they become due; or any Loan Party shall apply for,
consent to, or acquiesce in, the appointment of a trustee, receiver or other custodian for such Loan Party or for such Loan Party’s property, or make a general assignment for the benefit of creditors; or, in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian shall be appointed for any Loan Party or for a substantial part of such Loan Party’s property and 

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not be discharged within 60 days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or
any dissolution or liquidation proceeding shall be commenced in respect of any Loan Party or be consented to or acquiesced in by such Loan Party or remain for 60 days undismissed; or any Loan Party shall take any action to authorize any of the
foregoing; 
 (f) any judgments, writs, warrants of attachment, executions or similar process (not covered by insurance) shall
be issued against any Borrower or any of such Borrower’s assets where the aggregate amount of such judgments, writs, warrants of attachment, executions or similar process exceed $50,000.00 for any or all Borrowers and are not released, vacated,
suspended, stayed, abated or fully bonded prior to any sale and in any event within 30 days after its issue or levy; 
 (g)
either: 
 (i) Dr. Casey shall cease to: (A) own at least 51% of VRP PLC’s issued and outstanding members
interest; (B) have the power to elect a majority of such Borrower’s governors; or (C) direct such Borrower’s management policies and: (i) within 60 days after the occurrence of such event, Dr. Casey’s members
interest in VRP PLC is not acquired by a person who is acceptable to the Lender, in its sole discretion, and (ii) if an acceptable successor does not timely acquire Dr. Casey’s members interest, then the Borrowers fail to pay the
Loan, all unpaid accrued interest thereon, all unpaid Non-use Fees and all other obligations owing to the Lender under this Agreement or any other Loan Document in full and terminate this Agreement within 60 days after the Lender has notified the
Borrowing Agent that an acceptable successor has not acquired Dr. Casey’s members interest; provided, however, that the occurrence of such event shall constitute a Default during such period for purposes of Section 5(b);
or 
 (ii) the control group described on Schedule 9(g) attached hereto and incorporated herein by reference (the
“Control Group”) shall cease to individually or collectively: (A) own at least 51% of VRC INC’s issued and outstanding capital stock; (B) have the power to elect a majority of such Borrower’s directors; or
(C) direct such Borrower’s management policies 
 (h) the Lender, in its sole discretion, shall determine in good
faith that there has been a material adverse change in the condition (financial or otherwise), business or property of any Loan Party; 

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 (i) Mr. Marlow shall cease to be VRC INC’s chief financial officer or shall
cease to perform the duties that, as of the date of this Agreement, are associated with such office and: (i) within 60 days after the occurrence of such event, VRC INC fails to appoint a successor to Mr. Marlow who is acceptable to the
Lender, in its sole discretion, and (ii) if an acceptable successor is not timely appointed, then the Borrowers fail to pay the Loan, all unpaid accrued interest thereon, all unpaid Non-use Fees and all other obligations owing to the Lender
under this Agreement or any other Loan Document in full and terminate this Agreement within 60 days after the Lender has notified the Borrowing Agent that an acceptable successor has not been appointed; provided, however, that the
occurrence of such event shall constitute a Default during such period for purposes of Section 5(b); or 
 (j) any
representation or warranty set forth in this Agreement or any other Loan Document shall be untrue in any material respect on the date as of which the facts set forth are stated or certified; 
 (k) any Pledgor who is a natural person shall die or become incompetent and, within 30 days after the occurrence of such event, such
Pledgor’s personal representative or guardian, as the case may be, shall fail to assume such Pledgor’s obligations under the Pledge Agreement to which such Pledgor is a party pursuant to an assumption agreement reasonably satisfactory to
the Lender; provided, however, that: (i) the occurrence of such event shall constitute a Default during such period for purposes of Section 5(b); and/or (ii) with respect to Dr. Casey, the Default that arises, and
the Event of Default that may arise, under this subsection (k) are in addition to the Default that arises, and the Event of Default that may arise, under Section 9(g); 
 (l) any Loan Party shall seek to revoke, repudiate or disavow the enforceability of any Loan Document; or 
 (m) there is instituted against any Borrower any civil or criminal proceeding for which forfeiture of any material asset is a potential
penalty, or any Borrower is enjoined, restrained or in any way prevented by order of any governmental authority from conducting any material part of its business affairs and such order is not completely stayed, to the satisfaction of the Lender, or
dissolved within two business days from the effective date of such order. 
 Upon the happening of: (1) any Event of Default described in
Section 9(e), the full unpaid principal amount of the Note and all other obligations of the Borrowers to the Lender shall automatically be due and payable without any declaration, notice, presentment, protest or demand of any kind (all of which
are hereby waived) and the Line of Credit shall automatically terminate; or (2) any other Event of Default, the Lender, upon written notice, may terminate the 

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Line of Credit and may declare the outstanding principal amount of the Note and all other obligations of the Borrowers to the Lender to be due and payable
without other notice, presentment, protest or demand of any kind, whereupon the full unpaid amount of the Note and any and all other obligations, which shall be so declared due and payable, shall be and become immediately due and payable. In
addition, the Lender may exercise any right or remedy available to it pursuant to any Loan Document, at law or in equity. 
 10.
Miscellaneous. 
 (a) Notices. Any notices or demands required or contemplated hereunder shall be written and
shall be effective two days after the placing thereof in the United States mails postage prepaid, addressed to the relevant party at its address set forth on the signature page below or upon transmission by telecopy to the relevant party at the
telecopy number set forth on the signature page below and a confirmation is received or at any other address or telecopy number as may be designated by the party in a notice to the other parties provided, however, that any notice to
the Lender pursuant to Section 2(d) shall not be deemed given until received by the Lender. 
 (b) Governing Law.
This Agreement, the Note and each other Loan Document shall be governed by, interpreted and construed in accordance with the internal laws, but not the law of conflicts, of the State of Minnesota. 
 (c) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns, except that no Borrower may assign or transfer its rights hereunder without the prior written consent of Lender. 
 (d) Waivers, Amendments; etc. The provisions of this Agreement, or any other Loan Document, may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrowers and the Lender. 
 (e) Inconsistencies, etc. In the event of any conflict or
inconsistency between or among the provisions of this Agreement and any other Loan Document, it is intended that the provisions of this Agreement and such other Loan Document be enforceable except to the extent that the enforcement of such
provisions is irreconcilable and, in that event, the provisions of this Agreement shall be controlling. 
 (f) WAIVER OF
TRIAL BY JURY. THE BORROWERS AND THE LENDER EACH WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (i) UNDER THE LOAN DOCUMENTS OR UNDER ANY AMENDMENT, INSTRUMENT, 

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DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH OR (ii) ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 
 (g) Limitation of Liability. Neither the Lender nor any affiliate of the Lender shall have any liability with respect to, and each Borrower hereby waives, releases and agrees not to sue upon, any claim for any special, indirect or
consequential damages suffered by such Borrower in connection with, arising out of, or in any way related to, this Agreement, the Note or any other Loan Document, or the transactions contemplated and the relationship established hereby or thereby,
or any act, omission or event occurring in connection herewith or therewith. 
 (h) Venue. AT THE OPTION OF THE LENDER,
THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT TO WHICH THE BORROWER IS A PARTY MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND EACH BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY
SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THAT ANY BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE. 
 (i) Entire Agreement. This Agreement, the Note and
the other Loan Documents embody the entire agreement and understanding among the Borrowers and the Lender with respect to the subject matter hereof and thereof. This Agreement supersedes all prior agreements and understandings relating to the
subject matter hereof. 
 (j) Document Construction. This Agreement and each other Loan Document has been reviewed by
all the parties hereto and incorporates the requirements of such parties. Each party waives the rule of construction that any ambiguities are to be resolved against the party drafting the same and agrees such rules will not be employed in the
interpretation of this Agreement or any other Loan Document. 

 Virtual Radiologic Professionals, PLC 
 Virtual Radiologic Consultants, Inc. 
 July 20, 2004 
  Page
 27
 
  

 (k) Joint and Several Liability. Each Borrower acknowledges and agrees that it
is jointly and severally liable with the other Borrowers for all obligations, liabilities and indebtedness created or arising hereunder and the release or substitution of any other Borrower shall not release or diminish its liability hereunder. Each
Borrower agrees that all obligations, liabilities and indebtedness are joint and several and the primary obligations of each of them, enforceable against each Borrower separately or all or any combination of Borrowers together notwithstanding of any
right or power of any party to assert any claim or defense as to the invalidity or unenforceability of any such obligations, liabilities and indebtedness. Each Borrower hereby waives any defense it may claim as a guarantor, surety or accommodation
party. The Lender may, from time to time, without notice to any of the Borrowers, (i) obtain or release any security interest in any property to secure any of such obligations, liabilities and indebtedness; (ii) obtain or release the
primary or secondary liability of any party or parties with respect to any of such obligations, liabilities and indebtedness (including, without limitation, the liability of any other Borrower); (iii) extend or renew for any period, alter or
exchange any of such obligations, liabilities and indebtedness or release or compromise any of such obligations, liabilities and indebtedness of any obligor with respect to any thereof; or (iv) resort to any Borrower for payment of any such
obligations, liabilities and indebtedness whether or not the Lender shall have resorted to any Collateral or to any other Borrower or any other party primarily or secondarily liable with respect to any such obligations, liabilities and indebtedness.

 (l) Confidential Information. Subject to this Section, the Borrowers authorize the Lender to disclose to any
participant or assignee (each a “Transferee”) and any prospective Transferee any and all financial and other Confidential Information (as hereinafter defined) in the Lender’s possession concerning any Borrower or any other Loan Party
which has been delivered to the Lender by any Loan Party pursuant to this Agreement or any other Loan Document or which has been delivered to the Lender by any Loan Party in connection with the Lender’s credit evaluation of any Loan Party prior
to entering into this Agreement; provided however, that, as a condition to delivering such information, the Lender obtains such Transferee’s written agreement to be bound by the confidentiality provisions hereof. The Lender agree
that, except as may be required by applicable law or regulation, or by reason of subpoena after providing notice thereof and an opportunity to contest unless such notice is prohibited by the terms of the subpoena or applicable law, court order or
government action or as may be necessary or convenient for the enforcement of the Lender’ rights and remedies under the Loan Documents or applicable law after the occurrence of any Event of Default: (i) the Lender will not divulge, publish
or otherwise reveal, either directly or through another, to any person (other than a Transferee or prospective Transferee) any Confidential Information; (ii) the Lender will return all Confidential Information to the relevant Loan Party after
the termination of this Agreement and the payment in full of the Loan, all unpaid accrued 

 Virtual Radiologic Professionals, PLC 
 Virtual Radiologic Consultants, Inc. 
 July 20, 2004 
  Page
 28
 
  

 
interest thereon, all unpaid Non-use Fees and all other obligations owing to the Lender under this Agreement or any other Loan Document in full and terminate
this Agreement; and (iii) the Borrowers are entitled to injunctive relief restraining any disclosure of Confidential Information in contravention of the provisions of this Section without the prior written consent of the relevant Loan Party.
For purposes of this Agreement, “Confidential Information” shall mean any information delivered to, or received by, the Lender in connection with the Lender’s credit evaluation of any Loan Party prior to entering into this Agreement
or pursuant to 7(a) of this Agreement or otherwise pursuant to the transactions contemplated by this Agreement which the relevant Loan Parties have identified as being Confidential Information except for any such information which: (v) was
known to the public prior to the date of its disclosure to the Lender; (vi) becomes known to the public subsequent to the date of its disclosure by any Loan Party through no act of the Lender; or (vii) becomes known to the Lender on a
non-confidential basis from a source other than any Loan Party without a breach of any confidentiality agreement or duty binding upon such source. 
 (m) Customer Identification - USA Patriot Act Notice. The Lender hereby notifies the Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law
October 26, 2001) (the “Act”), and the Lender’s policies and practices, the Lender is required to obtain, verify and record certain information and documentation that identifies each Borrower, which information includes the name
and address of such Borrower and such other information that will allow the Lender to identify such Borrower in accordance with the Act. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

 Virtual Radiologic Professionals, PLC 
 Virtual Radiologic Consultants, Inc. 
 July 20, 2004 
  Page
 29
 
  

									
		 		 	Associated Commercial Finance, Inc.
					
		 		 		 	By	 	 /s/ Kevin M. Flaherty

		 		 		 	 Its
	 	 Relationship Manager

		 		 		 	
		 		 		 	 401 East Kilbourn Avenue, Suite 350

		 		 		 	 Milwaukee, WI 53202

		 		 		 	 Attention: Mr. Kevin Flaherty

		 		 		 	 Telecopy No.: (414) 283-2340

 Accepted, acknowledged and agreed to this          day of July,
2004. 
  

									
		 		 	Virtual Radiologic Professionals, PLC
					
		 		 		 	By	 	 /s/ Mark Marlow

		 		 		 	 Its
	 	 CFO/Treasurer

			
		 		 	Virtual Radiologic Consultants, Inc.
					
		 		 		 	By	 	 /s/ Mark Marlow

		 		 		 	 Its
	 	 CFO/Treasurer

  

					
	 Subscribed and sworn to by each
 of the foregoing before
me
 this 23rd day of
July, 2004
	 		 	 5995 Opus Parkway, Suite 200
 Minneapolis, MN 55343
 Attention: Mr. Mark Marlow
 Telecopy No.: (952) 943-2401

	 /s/ Jennyfer L. McDavitt
	 		 	 
	 Notary Public
	 		 	

 

 

 LIST OF SCHEDULES 
  

							
				
		 	Schedule 8(a)	  	Security Interests	  	
				
		 	Schedule 8(b)	  	Debt	  	
				
		 	Schedule 8(f)	  	Investments	  	
				
		 	Section 9(g)	  	Control Group	  	

  

 30 

 SCHEDULE 8(a) 
 EXISTING SECURITY INTERESTS 
  

	A.	Virtual Radiologic Consultants, Inc. 

 VIRTUAL RADIOLOGIC CONSULTANTS, INC. 
 UCC and State/Federal Tax Lien Search Results for 
 the Minnesota Secretary of State 
 Through JULY
15, 2004 
 (0 FILINGS) 
  

					
	 File Number/
 Date of Filing
	  	 Secured
 Party
	  	 Type of Filing/
 Collateral Description

  

	B.	Virtual Radiologic Consultants, LLC 

 VIRTUAL RADIOLOGIC CONSULTANTS, LLC 
 UCC and State/Federal Tax Lien Search Results for 
 the Minnesota Secretary of State 
 Through JULY
15, 2004 
 (0 FILINGS) 
  

					
	 File Number/
 Date of Filing
	  	 Secured
 Party
	  	 Type of Filing/
 Collateral Description

  

 31 

 VIRTUAL RADIOLOGIC CONSULTANTS, LLC 
 UCC and State/Federal Tax Lien Search Results for 
 the Delaware Secretary of State

 Through JULY 16, 2004 
 (6
FILINGS); and 
  

					
	 File Number/
 Date of Filing
	  	 Secured
 Party
	  	 Type of Filing/
 Collateral Description

			
	 20848428*
 03/12/02
	  	Private Bank Minnesota	  	Original/Blanket
			
	 33295204
 12/15/03
	  	Private Bank Minnesota	  	Amendment to 2084842 8
			
	 33287961
 12/15/03
	  	Data Sales Co., Inc.	  	Original/Lease
			
	 40410565
 02/13/04
	  	Data Sales Co., Inc.	  	Original/Lease
			
	 41252701
 05/05/04
	  	Data Sales Co., Inc.	  	Original/Lease
			
	 41961194
 7/13/04
	  	Data Sales Co., Inc.	  	Original/Lease

  

	*	To be terminated 

 VIRTUAL RADIOLOGIC CONSULTANTS, LLC

 UCC and State/Federal Tax Lien Search Results for 
 Kent County, Delaware 
 Through JULY 16, 2004 
 (0 FILINGS); and 
  

					
	 File Number/
 Date of Filing
	  	 Secured
 Party
	  	 Type of Filing/
 Collateral Description

  

 32 

	C.	Virtual Radiologic Consultants, PLLC 

 VIRTUAL RADIOLOGIC CONSULTANTS, PLLC 
 State/Federal Tax Lien Search Results for 
 KENT COUNTY, DELAWARE 
 Through JULY 13, 2004

 (0 FILINGS) 
  

					
	 File Number/
 Date of Filing
	  	 Secured
 Party
	  	 Type of Filing/
 Collateral Description

 VIRTUAL RADIOLOGIC CONSULTANTS, PLLC 
 UCC and Federal Tax Lien Search Results for 
 the Delaware Secretary of State 
 Through JULY 12, 2004 
 (6 FILINGS); and 
  

					
	 File Number/
 Date of Filing
	  	 Secured
 Party
	  	 Type of Filing/
 Collateral Description

			
	 20848428*
 03/12/02
	  	Private Bank Minnesota	  	Original/Blanket
			
	 33295204
 12/15/03
	  	Private Bank Minnesota	  	Amendment to 2084842 8
			
	 33287961
 12/15/03
	  	Data Sales Co., Inc.	  	Original/Lease
			
	 40410565
 02/13/04
	  	Data Sales Co., Inc.	  	Original/Lease
			
	 41252701
 05/05/04
	  	Data Sales Co., Inc.	  	Original/Lease
			
	 41961194
 7/13/04
	  	Data Sales Co., Inc.	  	Original/Lease

  

	*	To be terminated 

  

 33 

	D.	Virtual Radiologic Professionals, PLC 

 VIRTUAL RADIOLOGIC PROFESSIONALS, PLC 
 UCC and State/Federal Tax Lien Search Results for 
 the Minnesota Secretary of State 
 Through JULY
15, 2004 
 (0 FILINGS) 
  

					
	 File Number/
 Date of Filing
	  	 Secured
 Party
	  	 Type of Filing/
 Collateral Description

  

 34 

 SCHEDULE 8(b) 
 EXISTING INDEBTEDNESS 
 Indebtedness shown on each Borrower's June 30, 2004 balance sheet as such indebtedness may have
been reduced by payments thereon subsequent to that date. 
  

						
	 Data Sales Inc.
	  	$	362,109	    	Equipment Leases
	 GE Capital
	  	$	21,817	    	Equipment Leases
			
	 Dr. Sean Casey
	  	$	105,103	    	Short Term Note - Payable upon demand*

 To be paid from the proceeds of the initial Advance 
  

 35 

 SCHEDULE 8(f) 
 EXISTING INVESTMENTS 
 None. 
  

 36 

 SCHEDULE 9(g) 
 CONTROL GROUP 
 Dr. Sean Casey CEO 
 Lorna Lusic COO 
 Mark Marlow CFO 
 Dr. Eduard Michel – Partner and Board Member 
  

 37Security Agreement

 Exhibit 10.12 
 SECURITY AGREEMENT 
 (Grantor) 
 This SECURITY AGREEMENT is made as of July 20, 2004 (the “Agreement”), by Virtual Radiologic Professionals, PLC , a Minnesota professional
limited liability company and the successor by merger with Virtual Radiologic Consultants, LLC, a Delaware limited liability company, with its chief executive office at 5995 Opus Parkway, Suite 200, Minneapolis, MN 55343 (“Grantor”), in
favor of Associated Commercial Finance, Inc., with an office at 401 East Kilbourn Avenue, Suite 350, Milwaukee, WI 53202 (“Lender”). 
 RECITALS: 
 A. Grantor and another “Borrower” have requested extensions of credit from Lender pursuant to the terms of
that certain Letter Loan Agreement dated of even date herewith (the Letter Loan Agreement as it may be amended, modified, supplemented, increased or restated from time to time being the “Loan Agreement”) among Grantor, such other
“Borrower” party and Lender. 
 B. As a condition to such extensions of credit, Lender requires that Grantor grant a security
interest in its assets in accordance with this Agreement. 
 C. Grantor has determined that the execution, delivery and performance of this
Agreement are in its best business and pecuniary interest. 
 NOW, THEREFORE, for good and valuable consideration the receipt and adequacy of
which are hereby acknowledged by each of the parties hereto, it is agreed as follows: 
 ARTICLE I 
 DEFINITIONS 
 As used herein, the
following terms shall have the meanings set forth in this Section: 
 “Accounts” shall have the meaning provided in the UCC.

 “Chattel Paper” shall have the meaning provided in the UCC and shall include, without limitation, all Electronic Chattel
Paper and Tangible Chattel Paper. 
 “Collateral” shall mean all property in which a security interest is granted hereunder.

 “Commercial Tort Claim” shall have the meaning provided in the UCC. 
 “Controlled Property” shall mean property of every kind and description in which Grantor has or may acquire any interest, now or
hereafter at any time in the possession or control of Lender or any Lender Affiliate for any reason and all dividends and distributions on or other rights in connection with such property. 

 “Data Processing Records and Systems” shall mean all of Grantor’s now existing or
hereafter acquired electronic data processing and computer records, software (including, without limitation, all “Software” as defined in the UCC), systems, manuals, procedures, disks, tapes and all other storage media and memory.

 “Default” shall mean any event which if it continued uncured would, with notice or lapse of time or both, constitute an
Event of Default. 
 “Deposit Accounts” shall have the meaning provided in the UCC and shall include, without limitation,
any demand, time, savings, passbook or similar account maintained with a bank. 
 “Document” shall have the meaning provided
in the UCC. 
 “Electronic Chattel Paper” shall have the meaning provided in the UCC. 
 “Equipment” shall have the meaning provided in the UCC. 
 “Event of Default” shall have the meaning specified in Article VI hereof. 
 “Fixtures” shall have the meaning provided in the UCC. 
 “General Intangibles” shall have the
meaning provided in the UCC and shall include, without limitation, all Payment Intangibles. 
 “Goods” shall have the
meaning provided in the UCC and shall include embedded “Software” to the extent included in “Goods” as defined in the UCC. 
 “Grantor” shall have the meaning provided in the preamble hereto. 
 “Instruments” shall have the
meaning provided in the UCC. 
 “Insurance Proceeds” shall mean all proceeds of any and all insurance policies payable to
Grantor with respect to any Collateral, or on behalf of any Collateral, whether or not such policies are issued to or owned by Grantor. 
 “Inventory” shall have the meaning provided in the UCC. 
 “Investment Property” shall have the
meaning provided in the UCC. 
 “Lender” shall have the meaning provided in the preamble hereto. 
 “Lender Affiliate” shall mean any affiliate of the Lender which is party to a written agreement with Grantor or any other Loan Party
providing for any extension of credit to Grantor or any other Loan Party. 
  

 2 

 “Letter-of-Credit Rights” shall have the meaning provided in the UCC. 
 “Loan Agreement” shall have the meaning provided in the recitals hereto. 
 “Obligations” shall mean all loans (including the Loan(s)), advances, debts, liabilities, obligations, covenants and duties owing by any
Loan Party to the Lender or any Lender Affiliate of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, whether arising under the Loan Agreement, the other Loan Documents or under any other
agreement or by operation of law, whether or not for the payment of money, whether arising by reason of an extension of credit, opening, guarantying or confirming of a letter of credit, guaranty, indemnification or in any other manner, whether
joint, several or joint and several, direct or indirect (including those acquired by assignment or purchases), absolute or contingent, due or to become due, and however acquired. The term includes, but is not limited to, all principal, interest,
fees, charges, expenses, reasonable attorneys’ fees, and any other sum chargeable to any Loan Party under the Loan Agreement or any other Loan Document. 
 “Payment Intangibles” shall have the meaning provided in the UCC. 
 “Proceeds” shall have the meaning provided in the UCC. 
 “Products” shall mean any goods now or
hereafter manufactured, processed or assembled with any of the Collateral. 
 “Supporting Obligations” shall have the
meaning provided in the UCC. 
 “Tangible Chattel Paper” shall have the meaning provided in the UCC. 
 “UCC” shall mean the Uniform Commercial Code as enacted in the State of Minnesota, as amended from time to time; provided,
however, that: (a) to the extent that the UCC is used to define any term herein, and such term is defined differently in different Articles of the UCC, the definition of such term contained in Article 9 shall govern; and (b) if, by
reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, the Lender’s security interest in any Collateral is governed by the Uniform Commercial Code as enacted and in effect in
a jurisdiction other than the State of Minnesota, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment,
perfection or priority of, or remedies with respect to, the Lender’s security interest and for purposes of definitions related to such provisions. 
 Other terms defined herein shall have the meanings ascribed to them herein. All capitalized terms used herein, not specifically defined herein, shall have the meaning ascribed to them in the Loan Agreement.

  

 3 

 ARTICLE II 
 SECURITY INTERESTS 
 As security for the payment of all Obligations, Grantor hereby grants to Lender
and each Lender Affiliate a security interest in all of Grantor’s right, title and interest in and to the following, whether now owned or existing or hereafter acquired or arising: 
 Accounts; 
 Chattel Paper; 
 Commercial Tort Claims, if any, described on Exhibit B attached hereto and 
 incorporated herein by reference; 
 Controlled Property; 
 Deposit Accounts; 
 Documents; 
 Equipment and Fixtures; 
 General Intangibles;

 Instruments; 
 Inventory;

 Investment Property; 
 Letter-of-Credit Rights; 
 Proceeds (whether cash or non-cash Proceeds, including Insurance Proceeds and 
 non-cash Proceeds of all types); 
 Products of
all the foregoing; and 
 Supporting Obligations. 
 ARTICLE III 
 REPRESENTATIONS AND COVENANTS OF GRANTOR 
 Grantor represents, warrants and covenants that: 
 3.1 Authorization. The execution and performance of this Agreement have been duly authorized by all necessary action and do not and will not: (a) require any consent or approval of the stockholders or members of any entity, or
the consent of any governmental entity which has not been obtained; or (b) violate any provision of any indenture, contract, agreement or instrument to which it is a party or by which it is bound. 
 3.2 Title to Collateral. Grantor has good and marketable title to all of the Collateral and none of the Collateral is subject to any security
interest except for the security interest created pursuant to this Agreement or other security interests permitted by the Loan Agreement (such other security interests being “Permitted Liens”). 
 3.3 Disposition or Encumbrance of Collateral. Grantor will not encumber, sell or otherwise transfer or dispose of the Collateral without the prior
written consent of Lender except as provided in this Section or for Permitted Liens. Until a Default or Event of Default has occurred and is continuing, Grantor may: (a) sell Collateral consisting of: (i) Inventory in the ordinary course
of business provided that Grantor receives as consideration for such sale an 

  

 4 

 
amount not less than the fair market value of the Inventory at the time of such sale; and (ii) Equipment and Fixtures which in the judgment of Grantor
have become obsolete or unusable in the ordinary course of business, provided that all net Proceeds of such sales of Equipment and Fixtures are delivered directly to Lender for application to the Obligations in such order as the Lender may elect;
and (b) grant security interests in Equipment and Fixtures in order to secure permitted by the proviso clause to Section 8(b) of the Loan Agreement. 
 3.4 Validity of Accounts. Grantor warrants that all Collateral consisting of Accounts, Chattel Paper and Instruments included in Grantor’s schedules, financial statements or books and records are bona fide
existing obligations created by the sale and actual delivery of Inventory or the rendition of services to customers in the ordinary course of business, which Grantor then owns free and clear of any security interest other than the security interest
created by this Agreement or other Permitted Liens, and which are then unconditionally owing to Grantor without defenses, offset or counterclaim except those arising in the ordinary course of business that are immaterial in the aggregate and that
the unpaid principal amount of any such Chattel Paper or Instrument and any security therefor is and will be as represented to Lender on the date of the delivery thereof to Lender. 
 3.5 Maintenance of Tangible Collateral. Grantor will maintain the tangible Collateral in good condition and repair. At the time of attachment and
perfection of the security interest granted pursuant hereto and thereafter, all tangible Collateral will be located and will be maintained only at locations where the Lender can perfect its security interest by the filing of a financing statement
with the Minnesota Secretary of State. Except as otherwise permitted by Section 3.3 or by the proviso clause to this Section , Grantor will not remove such Collateral from such locations unless, prior to any such removal, Grantor has
given written notice to Lender of the location or locations to which Grantor desires to remove the Collateral, Lender has given its written consent to such removal, and Grantor has delivered to Lender acknowledgment copies of financing statements
(or comparable filings in Canada) filed where appropriate to continue the perfection of Lender’s security interest as a first priority security interest on such Collateral; provided, however, that Grantor may remove Equipment to
foreign jurisdictions (other than Canada) so long as the aggregate fair market value of all Equipment located in such foreign jurisdictions does not exceed $250,000.00 for the Borrowers on a combined basis. Lender’s security interest attaches
to all of the Collateral wherever located and Grantor’s failure to inform Lender of the location of any item or items of Collateral shall not impair Lender’s security interest thereon. 
 3.6 Notation on Chattel Paper. For purposes of the security interest granted pursuant to this Agreement, Lender has been granted a direct security
interest in all Chattel Paper constituting part of the Collateral and such Chattel Paper is not claimed merely as Proceeds of Inventory. Upon Lender’s request, Grantor will deliver to Lender the original of all Chattel Paper. Grantor will not
execute any copies of such Chattel Paper constituting part of the Collateral other than those which are clearly marked as a copy. Lender may stamp any such Chattel Paper with a legend reflecting Lender’s security interest therein. 

3.7 Instruments as Proceeds; Deposit Accounts. Notwithstanding any other provision in this Agreement concerning Instruments, Grantor covenants
that Instruments constituting cash 

  

 5 

 
Proceeds (for example, money and checks) shall be deposited in Deposit Accounts with the Depository Bank. Grantor has granted to the Lender a direct security
interest in all Deposit Accounts constituting part of the Collateral and such Deposit Accounts are not claimed merely as Proceeds of other Collateral. 
 3.8 Protection of Collateral. All expenses of protecting, storing, warehousing, insuring, handling and shipping of the Collateral, all costs of keeping the Collateral free of any liens, encumbrances and
security interests prohibited by this Agreement and of removing the same if they should arise, and any and all excise, property, sales and use taxes imposed by any state, federal or local authority on any of the Collateral or in respect of the sale
thereof, shall be borne and paid by Grantor and if Grantor fails to promptly pay any thereof when due, Lender may, at its option, but shall not be required to pay the same whereupon the same shall constitute Obligations and shall bear interest at
the Default Rate specified in the Revolving Credit Note (the “Interest Rate”) and shall be secured by the security interest granted hereunder. 
 3.9 Insurance. Grantor will procure and maintain, or cause to be procured and maintained, insurance issued by responsible insurance companies insuring the Collateral against damage and loss by theft, fire,
collision (in the case of motor vehicles), and such other risks as are usually carried by owners of similar properties or as may be requested by Lender in an amount equal to the replacement value thereof, and, in any event, in an amount sufficient
to avoid the application of any co-insurance provisions and payable, in the case of any loss in excess of $10,000.00, to Grantor and Lender jointly. All such insurance shall contain an agreement by the insurer to provide Lender with 30 days’
prior notice of cancellation and an agreement that the interest of Lender shall not be impaired or invalidated by any act or neglect of Grantor nor by the occupation of the premises wherein such Collateral is located for purposes more hazardous than
are permitted by said policy. Grantor will maintain, with financially sound and reputable insurers, insurance with respect to its properties and business against such casualties and contingencies of such types (which may include, without limitation,
public and product liability, larceny, embezzlement, business interruption or other criminal misappropriation insurance) and in such amounts as may from time to time be reasonably required by Lender. Grantor will deliver evidence of such insurance
and the policies of insurance or copies thereof to Lender upon request. 
 3.10 Compliance with Law. Grantor will not use the
Collateral, or knowingly permit the Collateral to be used, for any unlawful purpose or in violation of any federal, state or municipal law. 
 3.11 Books and Records; Access. 
 (a) Grantor will permit Lender and its representatives to examine
Grantor’s books and records (including Data Processing Records and Systems) with respect to the Collateral and make extracts therefrom and copies thereof at any time and from time to time, and Grantor will furnish such information and reports
to Lender and its representatives regarding the Collateral as Lender and its representatives may from time to time request. Grantor will also permit Lender and its representatives to inspect the 

  

 6 

 
Collateral at any time and from time to time as Lender and its representatives may request. 
 (b) Lender shall have authority, at any time, to place, or require Grantor to place, upon Grantor’s books and records relating to
Accounts, Chattel Paper and other rights to payment covered by the security interest granted hereby a notation or legend stating that such Accounts, Chattel Paper and other rights to payment are subject to Lender’s security interest.

 3.12 Notice of Default. Immediately upon any officer of Grantor becoming aware of the existence of any Default or Event of Default,
Grantor will give notice to Lender that such Default or Event of Default exists, stating the nature thereof, the period of existence thereof, and what action Grantor proposes to take with respect thereto. 
 3.13 Additional Documentation. Grantor will execute, from time to time, and authorizes Lender to execute from time to time as Grantor’s
attorney-in-fact and/or file, such financing statements, assignments, and other documents covering the Collateral, including Proceeds, as Lender may request in order to create, evidence, perfect, maintain or continue its security interest in the
Collateral (including additional Collateral acquired by Grantor after the date hereof), and Grantor will pay the cost of filing the same in all public offices in which Lender may deem filing to be appropriate and will notify Lender promptly upon
acquiring any additional Collateral that may require an additional filing. Upon request, Grantor will deliver to Lender all Grantor’s Documents, Chattel Paper and Instruments constituting part of the Collateral. 
 3.14 Chief Executive Office; State of Incorporation. The location of the chief executive office of Grantor is located in the State set forth in
the preamble hereto and will not be changed from such state without 30 days’ prior written notice to Lender. Grantor warrants that its books and records concerning Accounts and Chattel Paper constituting part of the Collateral are located at
its chief executive office. Grantor’s State of organization is the State set forth in the preamble hereto and such State has been its State of organization since the date of Grantor’s organization except as set forth on Exhibit A attached
hereto. Grantor will not change its State of organization from such State without 30 days’ prior written notice to Lender, Lender has given its written consent to such change, and Grantor has delivered to Lender acknowledgment copies of
financing statements filed where appropriate to continue the perfection of Lender’s security interest as a first priority security interest therein. 
 3.15 Name of Grantor. Grantor’s exact legal name and type of legal entity is as set forth in the preamble hereto. Grantor will not change its legal name without 30 days’ prior written notice to the
Lender, the Lender has given its written consent to such change, and Grantor has delivered to the Lender acknowledgment copies of financing statements filed where appropriate to continue the perfection of the Lender’s security interest as a
first priority security interest in the Collateral. Grantor has not used any other name within the past five years except those described on Exhibit A attached hereto. Neither Grantor nor, to Grantor’s knowledge, any predecessor in title to any
of the Collateral has executed any financing statements or security 

  

 7 

 
agreements presently effective as to the Collateral except those described on Exhibit A attached hereto. 
 3.16 Disputes, Etc. Grantor shall advise Lender promptly of Inventory in excess of $10,000.00 for any one customer in any fiscal year or in excess
of $25,000.00 in the aggregate for all customers in any fiscal year which are returned by a customer(s) or otherwise recovered from such customer(s) and unless instructed to deliver such Inventory to Lender, Grantor shall resell such Inventory for
Lender and assign or deliver to Lender the resulting Accounts or other Proceeds. Grantor shall also advise Lender promptly of all disputes and claims in excess of $10,000.00 for any one obligor on the Collateral in any fiscal year or in excess of
$25,000.00 in the aggregate for all obligors in any fiscal year and settle or adjust them at no expense to Lender. After the occurrence and during the continuance of an Event of Default, Lender may at all times settle or adjust such disputes and
claims directly with the customers for amounts and upon terms which Lender considers commercially reasonable. No discount, credit, allowance, adjustment or return shall be granted by Grantor to any customer without Lender’s written consent
other than discounts, credits, allowances, adjustments and returns made or granted by Grantor in the ordinary course of business prior to the occurrence and during the continuance of an Event of Default. 
 3.17 Power of Attorney. Grantor appoints Lender, or any other person whom Lender may from time to time designate, as Grantor’s attorney with
power, to: (a) endorse Grantor’s name on any checks, notes, acceptances, drafts or other forms of payment or security evidencing or relating to any Collateral that may come into Lender’s possession; (b) sign Grantor’s name
on any invoice or bill of lading relating to any Collateral, on drafts against customers, on schedules and confirmatory assignments of Accounts, Chattel Paper, Documents or other Collateral, on notices of assignment, financing statements under the
UCC and other public records, on verifications of accounts and on notices to customers; (c) notify the post office authorities to change the address for delivery of Grantor’s mail to an address designated by Lender; (d) receive and
open all mail addressed to Grantor; (e) send requests for verification of Accounts, Chattel Paper, Instruments or other Collateral to customers; and (f) do all things necessary to carry out this Agreement. Grantor ratifies and approves all
acts of the attorney taken within the scope of the authority granted; provided, however, that so long as no Event of Default has occurred and is continuing, Lender: (x) shall not exercise the powers granted pursuant to Section 3.17(c) or
(d); (y) shall exercise the power granted by Section 3.17(e) through Lender’s trade accounting firm name and not in any name identifying the verifying party as a bank, lender or other financial institution; and (z) shall exercise
the powers granted by Section 3.17(f) only upon Grantor’s failure to take action requested by Lender within five (5) business days after the Lender has requested that Grantor take the requested action. Neither Lender nor the attorney
will be liable for any acts of commission or omission, or for any error in judgment or mistake of fact or law. This power, being coupled with an interest, is irrevocable so long as any Obligation remains unpaid. Grantor waives presentment and
protest of all instruments and notice thereof, notice of default and dishonor and all other notices to which Grantor may otherwise be entitled. 
  

 8 

 3.18 Patents and Trademarks, Etc. Grantor agrees with Lender that, until the security interest
granted by this Agreement has been terminated in accordance with the terms hereof: 
 (a) Grantor will perform all acts and
execute all documents including, without limitation, grants of security interest, in form suitable for filing with the United States Patent and Trademark Office, reasonably requested by Lender at any time to evidence, perfect, maintain, record and
enforce Lender’s interest in the Collateral comprised of patents (collectively the “Patents”), patent applications (collectively the “Patent Applications”), trademarks or service marks (collectively the
‘Trademarks”) or of any applications therefor (collectively the “Trademark Applications”) or otherwise in furtherance of the provisions of this Agreement; 
 (b) Except to the extent that Lender shall consent in writing, Grantor (either itself or through licensees) will, unless Grantor shall
reasonably determine that a Trademark (or the use of a Trademark in connection with a particular class of goods or products) is not of material economic value to Grantor: (i) continue to use each Trademark on each and every trademark class of
goods in order to maintain each Trademark in full force free from any claim of abandonment for non-use; (ii) maintain as in the past the quality of products and services offered under each Trademark; (iii) employ each Trademark with the
appropriate notice of application or registration to the extent required by applicable law to maintain such Trademark; (iv) not use any Trademark except for the uses for which registration or application for registration of such Trademark has
been made, unless such use is otherwise lawful; and (v) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any Trademark may become invalidated; 
 (c) Except to the extent that Lender shall consent in writing, Grantor will not, unless Grantor shall reasonably determine that a Patent
is not of material economic value to Grantor, do any act, or not to do any act, whereby any Patent may become abandoned or dedicated; 
 (d) Unless Grantor shall reasonably determine that a Patent, Patent Application, Trademark or Trademark Application is not of material economic value to Grantor, Grantor shall notify Lender immediately if it knows, or
has reason to know, of any reason that any Patent, Patent Application, Trademark or Trademark Application may become abandoned or dedicated, or of any adverse determination or development (including, without limitation, the institution of, or any
such determination or development in, any proceeding in the United States Patent and Trademark Office or any court) regarding Grantor’s ownership of any Patent or Trademark, its rights to register the same, or to keep and maintain the same;

 (e) If Grantor, either itself or through any agent, employee, licensee or designee, shall file a Patent Application or
Trademark Application for the registration of any Trademark with the United States Patent and Trademark Office, or any similar office or agency in any other country or any political subdivision thereof, Grantor shall promptly inform Lender, and,
upon request of Lender, shall promptly execute and deliver any and all agreements, instruments, documents and papers as Lender may reasonably request to evidence Lender’s security interest in such Patent or Trademark and the goodwill and
general intangibles of Grantor relating thereto or represented thereby; 
  

 9 

 (f) Unless Grantor shall reasonably determine that a Patent Application or Trademark
Application is not of material economic value to Grantor, Grantor will take all necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue each Patent Application and Trademark Application (and to obtain the relevant registration) and to maintain each registration of the Patents and Trademarks, including, without
limitation, filing of applications for renewal and affidavits of use; 
 (g) Unless Grantor shall reasonably determine that a
Patent or Trademark is not of material economic value to Grantor, Grantor shall promptly notify Lender if any Patent or Trademark is infringed, misappropriated or diluted by a third party and either shall promptly sue for infringement,
misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, or take such other actions as Grantor shall reasonably deem appropriate under the circumstances to protect such Patent or Trademark;
and 
 (h) Grantor agrees that it will not enter into any agreement (for example, a license agreement) which is inconsistent
with Grantor’s obligations under this Agreement. 
 3.19 Copyrights. Grantor agrees with Lender that, until the security interest
granted by this Agreement has been terminated in accordance with the terms hereof: 
 (a) Grantor will perform all acts and
execute all documents including, without limitation, grants of security interest, in form suitable for filing with the United States Copyright Office, reasonably requested by Lender at any time to evidence, perfect, maintain, record and enforce
Lender’s interest in the Collateral comprised of copyrights or copyright applications (collectively the “Copyrights”) or otherwise in furtherance of the provisions of this Agreement; 
 (b) Except to the extent that the Lender shall consent in writing, Grantor (either itself or through licensees) will, unless Grantor shall
reasonably determine that a Copyright is not of material economic value to Grantor, publish the materials for which a Copyright has been obtained (the “Works”) with any notice of copyright registration required by applicable law to
preserve the Copyright; 
 (c) Unless Grantor shall reasonably determine that a Copyright is not of material economic value to
Grantor, Grantor shall notify the Lender immediately if it knows, or has reason to know, of any reason that any application or registration relating to any Copyright may become abandoned or dedicated or of any adverse determination or development
(including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Copyright Office or any court) regarding Grantor’s ownership of any Copyright, its right to register the same,
or to keep and maintain the same; 
  

 10 

 (d) If Grantor, either itself or through any agent, employee, licensee or designee, shall
file an application for the registration of any Copyright with the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, Grantor shall promptly inform Lender, and, upon request of
Lender, execute and deliver any and all agreements, instruments, documents and papers as Lender may request to evidence Lender’s security interest in such Copyright and the Works relating thereto or represented thereby; 
 (e) Unless Grantor shall reasonably determine that a Copyright is not of material economic value to Grantor, Grantor will take all
commercially reasonable steps, including, without limitation, in any proceeding before the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each registration of the Copyrights; 
 (f) In the event
that any Copyright is infringed by a third party, Grantor shall promptly notify Lender and shall, unless Grantor shall reasonably determine that such Copyright is not of material economic value to Grantor, promptly sue to recover any and all damages
or take such other actions as Grantor shall reasonably deem appropriate under the circumstances to protect such Copyright; and 
 (g) Grantor agrees that it will not enter into any agreement (for example, a license agreement) which is inconsistent with Grantor’s obligations under this Agreement. 
 3.20 Control. Grantor will cooperate with Lender in obtaining control with respect to Collateral consisting of Deposit Accounts, Investment
Property, Letter-of-Credit Rights, and Electronic Chattel Paper. Without limiting the foregoing, if Grantor becomes a beneficiary of a letter of credit, then Grantor shall promptly notify the Lender thereof and, if further requested by the Lender,
enter into a tri-party agreement with the Lender and the issuer and/or confirmation bank with respect to such letter of credit assigning the Letter-of-Credit Rights to the Lender and directing all payments thereunder to the Lender, all in form and
substance reasonably satisfactory to the Lender. 
 3.21 Further Acts. Where Collateral is in the possession of a third party, Grantor
will join with Lender in notifying such third party of Lender’s security interest and in obtaining an acknowledgment from such third party that it is holding such Collateral for the benefit of the Lender. 
 3.22 Commercial Tort Claims. Grantor shall promptly notify the Lender of any Commercial Tort Claim acquired by it and, unless otherwise consented
to by the Lender, Grantor shall promptly enter into a supplement to this Agreement granting to the Lender a security interest in such Commercial Tort Claim. 
  

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 ARTICLE IV 
 COLLECTIONS 
 Except as otherwise provided in this Article IV, Grantor shall continue to collect, at
its own expense, all amounts due or to become due to Grantor under the Accounts constituting part of the Collateral and all other Collateral. In connection with such collections, Grantor may take (and, at Lender’s direction given after the
occurrence and during the continuance of an Event of Default, shall take) such action as Grantor or Lender may deem necessary or advisable to enforce collection of the Accounts and such other Collateral; provided, however, that Lender
shall have the right at any time after the occurrence and during the continuance of an Event of Default, without giving written notice to Grantor of Lender’s intention to do so, to notify the account debtors under any Accounts or obligors with
respect to such other Collateral of the assignment of such Accounts and such other Collateral to Lender and to direct such account debtors or obligors to make payment of all amounts due or to become due to Grantor thereunder directly to Lender and,
upon such notification and at the expense of Grantor, to enforce collection of any such Accounts or other Collateral, and to adjust, settle or compromise the amount or payment thereof in the same manner and to the same extent as Grantor might have
done, but unless and until Lender does so or gives Grantor other instructions, Grantor shall make all collections for Lender. In addition to its rights under the preceding sentence to this Section, Lender, at any time after the occurrence and during
the continuance of a Default or Event of Default, may require that Grantor instruct all current and future account debtors and obligors on other Collateral to make all payments directly to a lockbox (the “Lockbox”) controlled by Lender.
All payments received in the Lockbox shall be transferred to a special bank account (the “Collateral Account”) maintained for the benefit of Lender subject to withdrawal by Lender only. Grantor shall immediately deposit in the Collateral
Account all full and partial payments on any Collateral received by Grantor to Lender in their original form, except for endorsements where necessary. Lender shall apply all collections on the Collateral delivered to it or deposited in the
Collateral Account as provided in the Collateral Account Agreement and any such amount applied to the payment of the Obligations may be applied in such order as Lender may elect; provided, however, that after an Event of Default has
occurred and is continuing, Lender shall apply all collections in accordance with Section 7.7. Until such payments are so delivered to Lender, such payments shall be held in trust by Grantor for and as Lender’s property, and shall not be
commingled with any funds of Grantor. Any application of any collection to the payment of any Obligation is conditioned upon final payment of any check or other instrument. 
 ARTICLE V 
 ASSIGNMENT OF INSURANCE 
 Grantor hereby assigns to Lender, as additional security for payment of the Obligations, any and all monies due or to become due under, and any and all
other rights of Grantor with respect to, any and all policies of insurance covering the Collateral. So long as no Default or Event of Default has occurred and is continuing, Grantor may itself adjust and collect for any losses of up to an aggregate
amount of $10,000.00 for all occurrences during any of Grantor’s fiscal years and Grantor may use the resulting Insurance Proceeds for the replacement, restoration or repair of the Collateral. After the occurrence and during the continuance of
a Default or an Event of Default, or after the aggregate amount of losses arising out of all occurrences during any of Grantor’s fiscal years exceeds $10,000.00, Lender may (but need not) 

  

 12 

 
in its own name or in Grantor’s name execute and deliver proofs of claim, receive such monies, and settle or litigate any claim against the issuer of
any such policy and Grantor directs the issuer to pay any such monies directly to Lender and Lender, at its sole discretion and regardless of whether Lender exercises its right to collect Insurance Proceeds under this Section, may apply any
Insurance Proceeds to the payment of the Obligations, whether due or not, in such order and manner as Lender may elect or may permit Grantor to use such Insurance Proceeds for the replacement, restoration or repair of the Collateral. 
 ARTICLE VI 
 EVENTS OF DEFAULT 

 The occurrence of any Event of Default as defined in the Loan Agreement shall constitute an Event of Default hereunder (“Event of
Default”). 
 ARTICLE VII 
 RIGHTS AND REMEDIES ON DEFAULT 
 Upon the occurrence of an Event of Default, and at any time thereafter until such Event of
Default is cured to the satisfaction of Lender, and in addition to the rights granted to Lender under Articles IV and V hereof, Lender may exercise any one or more of the following rights and remedies: 
 7.1 Acceleration of Obligations. Declare any and all Obligations to be immediately due and payable, and the same shall thereupon become
immediately due and payable without further notice or demand. 
 7.2 Right of Offset. Offset any deposits, including unmatured time
deposits, then maintained by Grantor with Lender, whether or not then due, against any indebtedness then owed by Grantor to Lender whether or not then due. 
 7.3 Deal with Collateral. In the name of Grantor or otherwise, demand, collect, receive and give receipt for, compound, compromise, settle and give acquittance for and prosecute and discontinue any suits or
proceedings in respect of any or all of the Collateral. 
 7.4 Realize on Collateral. Take any action which Lender may deem reasonably
necessary or desirable in order to realize on the Collateral, including, without limitation, the power to perform any contract, to endorse in the name of Grantor any checks, drafts, notes, or other instruments or documents received in payment of or
on account of the Collateral. Lender may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered adversely to affect the commercial reasonableness of any
sale of the Collateral. Lender may sell the Collateral without giving any warranties as to the Collateral. Lender may specifically disclaim any warranties of title or the like. This procedure will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral. 
  

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 7.5 Access to Property. Enter upon and into and take possession of all or such part or parts of
the properties of Grantor, including lands, plants, buildings, machinery, equipment, Data Processing Records and Systems and other property as may be necessary or appropriate in the reasonable judgment of Lender, to permit or enable Lender to store,
lease, sell or otherwise dispose of or collect all or any part of the Collateral, and use and operate said properties for such purposes and for such length of time as Lender may deem necessary or appropriate for said purposes without the payment of
any compensation to Grantor therefor. Grantor shall provide Lender with all information and assistance requested by Lender to facilitate the storage, leasing, sale or other disposition or collection of the Collateral after an Event of Default has
occurred and is continuing. 
 7.6 Other Rights. Exercise any and all other rights and remedies available to it by law or by
agreement, including rights and remedies under the UCC as adopted in the relevant jurisdiction or any other applicable law, or under the Loan Agreement and, in connection therewith, Lender may require Grantor to assemble the Collateral and make it
available to Lender at a place to be designated by Lender, and any notice of intended disposition of any of the Collateral required by law shall be deemed reasonable if such notice is mailed or delivered to Grantor at its address as shown on
Lender’s records at least 10 days before the date of such disposition. 
 7.7 Application of Proceeds. All Proceeds of Collateral
shall be applied in accordance with the UCC, and such Proceeds applied toward the Obligations shall be applied in such order as Lender may elect. 
 7.8 Patents and Trademarks. Upon the occurrence and during the continuance of an Event of Default: 
 (a)
Lender may, at any time and from time to time, upon thirty (30) days’ prior notice to Grantor, license or, to the extent permitted by an applicable license, sublicense, whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any Patent or Trademark, throughout the world for such term or terms, on such conditions, and in such manner, as Lender shall in its sole discretion determine; 
 (b) Lender may (without assuming any obligations or liability thereunder), at any time enforce (and shall have the exclusive right to
enforce) against any licensor, licensee or sublicensee all rights and remedies of Grantor in, to and under any one or more license or other agreements with respect to any Patent or Trademark and take or refrain from taking any action under any such
license or other agreement, and Grantor hereby releases Lender from, and agrees to hold Lender free and harmless from and against, any claims arising out of, any action taken or omitted to be taken with respect to any such license or agreement;

 (c) Any and all payments received by Lender under or in respect of any Patent or Trademark (whether from Grantor or
otherwise), or received by Lender by virtue of 

  

 14 

 
the exercise of the license granted to Lender by subsection (g) below, shall be applied to the Obligations in accordance with Section 7.7 hereof;

 (d) Lender may exercise in respect of the Patents and Trademarks, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC; 
 (e) In order
to implement the sale, lease, assignment, license, sublicense or other disposition of any of the Patents and Trademarks pursuant to this Section 7.8, Lender may, at any time, execute and deliver on behalf of Grantor one or more instruments of
assignment of the Patents and Trademarks (or any application or registration thereof), in form suitable for filing, recording or registration in any country. Grantor agrees to pay when due all reasonable costs incurred in any such transfer of the
Patents and Trademarks, including any taxes, fees and reasonable attorneys’ fees; 
 (f) In the event of any sale, lease,
assignment, license, sublicense or other disposition of any of the Patents or Trademarks pursuant to this Section, Grantor shall supply to Lender or its designee its know-how and expertise relating to the manufacture and sale of the products
relating to any Patent or Trademark subject to such disposition, and its customer lists and other records relating to such Patents or Trademarks and to the distribution of said products; and 
 (g) For the purpose of enabling Lender to exercise rights and remedies under this Agreement at such time as Lender shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose, Grantor hereby grants to Lender, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to Grantor) to use, license or sublicense
at such time any Patent or Trademark, now owned or hereafter acquired by Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to
all computer and automatic machinery software and programs used for the compilation or printout thereof. 
 7.9 Copyrights. Upon the
occurrence and during the continuance of an Event of Default: 
 (a) Lender may, at any time and from time to time, upon
thirty (30) days’ prior notice to Grantor, license or, to the extent permitted by an applicable license, sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any Copyright, for such term or
terms, on such conditions, and in such manner, as Lender shall in its sole discretion determine; 
 (b) Lender may (without
assuming any obligations or liability thereunder), at any time, enforce (and shall have the exclusive right to enforce) against any licensor, licensee or sublicensee all rights and remedies of Grantor in, to and under any one or more license or
other agreements with respect to any Copyright and take or refrain from taking any action under any such license or other agreement and Grantor hereby releases 

  

 15 

 
Lender from, and agrees to hold Lender free and harmless from and against, any claims arising out of, any action taken or omitted to be taken with respect to
any such license or agreement; 
 (c) Any and all payments received by Lender under or in respect of any Copyright (whether
from Grantor or otherwise), or received by Lender by virtue of the exercise of the license granted to Lender by subsection (f) below, shall be applied to the Obligations in accordance with Section 7.7; 
 (d) Lender may exercise in respect of the Copyrights, in addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the UCC; 
 (e) In order to implement the sale, lease,
assignment, license, sublicense or other disposition of any of the Copyrights pursuant to this Section 7.9, Lender may, at any time, execute and deliver on behalf of Grantor one or more instruments of assignment of the Copyrights (or any
application or registration thereof), in form suitable for filing, recording or registration in the Copyright Office or any country where the relevant Copyright is of material economic value to Grantor. Grantor agrees to pay when due all reasonable
costs incurred in any such transfer of the Copyrights, including any taxes, fees and reasonable attorneys’ fees; and 
 (f) For the purpose of enabling Lender to exercise rights and remedies under this Agreement at such time as Lender shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, Grantor hereby grants to Lender an
irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to Grantor) to use, license or sublicense any Copyright, now owned or hereafter acquired by Grantor, and wherever the same may be located, and including
in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer and automatic machinery software and programs used for the compilation or printout thereof. 
 ARTICLE VIII 
 MISCELLANEOUS 

 8.1 No Liability on Collateral. It is understood that Lender does not in any way assume any of Grantor’s obligations under any
of the Collateral. Grantor hereby agrees to indemnify Lender against all liability arising in connection with or on account of any of the Collateral, except for any such liabilities arising on account of Lender’s negligence or willful
misconduct. 
 8.2 No Waiver. Lender shall not be deemed to have waived any of its rights hereunder or under any other agreement,
instrument or paper signed by Grantor unless such waiver is in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver on any 

  

 16 

 
one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. 
 8.3 Remedies Cumulative. All rights and remedies of Lender shall be cumulative and may be exercised singularly or concurrently, at their option,
and the exercise or enforcement of any one such right or remedy shall not bar or be a condition to the exercise or enforcement of any other. 
 8.4 Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Minnesota, except to the extent that the perfection of the security
interest hereunder, or the enforcement of any remedies hereunder, with respect to any particular Collateral shall be governed by the laws of a jurisdiction other than the State of Minnesota. 
 8.5 Expenses. Grantor agrees to pay the reasonable attorneys’ fees and legal expenses incurred by Lender in the exercise of any right or
remedy available to it under this Agreement, whether or not suit is commenced, including, without limitation, attorneys’ fees and legal expenses incurred in connection with any appeal of a lower court’s order or judgment. 
 8.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of Grantor and Lender.

 8.7 Recitals. The above Recitals are true and correct as of the date hereof and constitute a part of this Agreement. 
 8.8 Severability. Wherever 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 shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. 
 8.9 No Obligation to Pursue Others. Lender has no obligation to attempt to satisfy the
Obligations by collecting them from any other person liable for them and Lender may release, modify or waive any Collateral provided by any other person to secure any of the Obligations, all without affecting Lender’s rights against Grantor.
Grantor waives any right it may have to require Lender to pursue any third person for any of the Obligations. 
 [REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK] 
  

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 IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date and year first above
written. 
  

			
	Virtual Radiologic Professionals, PLC
		
	By:	 	/s/ Mark Marlow
	Its:	 	CFO/Treasurer

  

	
	 Subscribed and sworn to before
 me this 23rd day of July, 2004.

	
	/s/ Jennyfer L. McDavitt
	Notary Public

 

 
  

 18 

 EXHIBIT A 
  

	I.	Financing Statements on File Listing Grantor or Any Predecessor in Title as Debtor 

 See Schedule 8(a) to the Loan Agreement which is incorporated herein by reference. 
  

	II.	Location of Inventory 

 Minnesota. 
  

	III.	Prior Names within the last five years. 

 Virtual
Radiologic Consultants, LLC 
 Virtual Radiologic Consultants, PLC 
  

	IV.	Prior States of Organization. 

 Delaware.

  

 19 

 EXHIBIT B 
 COMMERCIAL TORT CLAIMS 
 NONE 
  

 20

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