CLARIENT, INC. AMENDED AND RESTATED LOAN AGREEMENT
THIS INSTRUMENT OR CERTIFICATE AND THE RIGHTS EVIDENCED HEREBY ARE SUBJECT TO THE TERMS OF THAT
CERTAIN SUBORDINATION AGREEMENT, DATED SEPTEMBER 29, 2006, AMONG CLARIENT, INC., CLARIENT
DIAGNOSTIC SERVICES, INC. CLRT ACQUISITION, LLC, GENERAL ELECTRIC CAPITAL CORPORATION AND COMERICA
BANK, AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, AND ANY
TRANSFEREE BY ACCEPTANCE OF SUCH TRANSFER AGREES TO BE BOUND BY THE TERMS THEREBY.
This AMENDED AND RESTATED LOAN AGREEMENT (this “Agreement”) is entered into as of
February 28, 2008, by and between COMERICA BANK (“Bank”) and CLARIENT, INC. (“Borrower”).
Recitals
Borrower and Bank are parties to that certain Loan Agreement dated as of February 13, 2003, as
amended, including, without limitation, by that certain First Amendment to Loan Agreement dated as
of October 21, 2003, that certain Second Amendment to Loan Agreement dated as of January 22, 2004,
that certain Third Amendment to Loan Agreement dated as of January 31, 2005, that certain Fourth
Amendment to Loan Agreement dated as of March 11, 2005, that certain Consent and Waiver dated as of
July 13, 2005, that certain Waiver and Fifth Amendment to Loan Agreement dated as of August 1,
2005, that certain letter agreement dated as of January 26, 2006, that certain Sixth Amendment to
Loan Agreement dated as of February 28, 2006, that certain Seventh Amendment to Loan Agreement
dated as of January 17, 2007, that certain Waiver and Eighth Amendment to Loan Agreement dated as
of February 28, 2007, that certain Ninth Amendment to Loan Agreement dated as of March 15, 2007,
and that certain Tenth Amendment and Waiver to Loan Agreement dated as of November 1. 2007
(collectively, the “Original Agreement”). The parties desire to amend and restate the terms of the
Original Agreement and to evidence the obligations of Borrower to Bank. This Agreement sets forth
the terms on which Bank will advance credit to Borrower, and Borrower will repay the amounts owing
to Bank.
AGREEMENT
The parties agree as follows:
| 1. | DEFINITIONS AND CONSTRUCTION. |
1.1 Definitions. As used in this Agreement, the following terms shall have the following
definitions:
“Advance” or “Advances” means a cash advance or cash advances under the Revolving Facility.
“Affiliate” means, with respect to any Person, any Person that owns or controls directly or
indirectly such Person, any Person that controls or is controlled by or is under common control
with such Person, and each of such Person’s senior executive officers, directors, and partners.
“Bank Expenses” means all: reasonable costs or expenses (including reasonable attorneys’ fees
and expenses) incurred in connection with the preparation, negotiation, administration, and
enforcement of the Loan Documents; and Bank’s reasonable attorneys’ fees and expenses incurred in
amending, enforcing or defending the Loan Documents (including fees and expenses of appeal),
incurred before, during and after an Insolvency Proceeding, whether or not suit is brought.
“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in
the State of California are authorized or required to close.
“Change in Control” shall mean a transaction in which any “person” or “group” (within the
meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly
or indirectly, of a sufficient number of shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or
“group” to elect a majority of the Board of Directors of Borrower, who did not have such power
before such transaction.
1 .
“Closing Date” means the date of this Agreement.
“Code” means the California Uniform Commercial Code.
“Contingent Obligation” means, as applied to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend,
letter of credit or other obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly liable, provided
that Borrower’s obligation to indemnify or otherwise compensate Guarantor with respect to losses
and expenses as a result of guaranteeing the Obligations of Borrower shall not constitute a
Contingent Obligation unless and until any such losses and expenses have been incurred by
Guarantor; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards,
or merchant services issued or provided for the account of that Person; and (iii) all obligations
arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement,
interest rate collar agreement, or other agreement or arrangement designed to protect such Person
against fluctuation in interest rates, currency exchange rates or commodity prices; provided,
however, that the term “Contingent Obligation” shall not include endorsements for collection or
deposit in the ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such Person in good faith;
provided, however, that such amount shall not in any event exceed the maximum amount of the
obligations under the guarantee or other support arrangement.
“Credit Extension” means each Advance, or any other extension of credit by Bank for the
benefit of Borrower hereunder.
“Current Liabilities” means, as of any applicable date, all amounts that should, in accordance
with GAAP, be included as current liabilities on the consolidated balance sheet of Borrower and its
Subsidiaries, as at such date, plus, to the extent not already included therein, all outstanding
Credit Extensions made under this Agreement, including all Indebtedness that is payable upon demand
or within one year from the date of determination thereof unless such Indebtedness is renewable or
extendible at the option of Borrower or any Subsidiary to a date more than one year from the date
of determination.
“Daily Balance” means the amount of the Obligations owed at the end of a given day.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder.
“Event of Default” has the meaning assigned in Article 8.
“GAAP” means generally accepted accounting principles as in effect from time to time.
“Guarantor” means each of Safeguard Delaware, Inc. and Safeguard Scientifics (Delaware), Inc.
“Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of
property or services, including without limitation reimbursement and other obligations with respect
to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent Obligations.
“Insolvency Proceeding” means any proceeding commenced by or against any person or entity
under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy
or insolvency law, including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
“Investment” means any beneficial ownership of debt or equity securities (including stock,
partnership interest or other securities) issued by any Person, or any loan, advance or capital
contribution to any Person.
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“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
“Letter of Credit” means a standby letter of credit issued by Bank at Borrower’s request in
accordance with Section 2.2.
“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.
“Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower,
and any other agreement entered into in connection with this Agreement, all as amended or extended
from time to time.
“Material Adverse Effect” means a material adverse effect on (i) the business operations,
condition (financial or otherwise) or prospects of Borrower and its Subsidiaries taken as a whole
or (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under
the Loan Documents.
“Net Worth” means with respect to Borrower as of any date of determination, the sum of capital
stock and additional paid-in capital plus retained earnings (or minus accumulated deficit) of
Borrower and its Subsidiaries, minus intangible assets, on a consolidated basis determined in
accordance with GAAP.
“Obligations” means all debt, principal, interest, Bank Expenses and other amounts owed to
Bank by Borrower pursuant to this Agreement or any other agreement, whether absolute or contingent,
due or to become due, now existing or hereafter arising, including any interest that accrues after
the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise.
“Periodic Payments” means all installments or similar recurring payments that Borrower may now
or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any
instrument, or agreement now or hereafter in existence between Borrower and Bank.
“Permitted Indebtedness” means:
(a) Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan
Document;
(b) Indebtedness existing on the Closing Date and disclosed in the Schedule;
(c) Indebtedness in the form of equipment leases or purchase money financing for equipment,
provided the aggregate amount of such Indebtedness does not exceed $5,000,000;
(d) Subordinated Debt; and
(e) Extensions, renewals or refinancing of the Indebtedness described in clauses (a) through
(d) above, provided that the principal amount thereof is not increased or the terms thereof are not
modified to impose more burdensome terms upon Borrower.
“Permitted Investment” means:
(a) Investments existing on the Closing Date disclosed in the Schedule;
(b) (i) marketable direct obligations issued or unconditionally guaranteed by the United
States of America or any agency or any State thereof maturing within one (1) year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s
Corporation or ▇▇▇▇▇’▇ Investors Service, (iii) certificates of deposit maturing no more than one
(1) year from the date of investment therein issued by Bank and (iv) Bank’s money market accounts;
and
3 .
(c) Investments in joint ventures, strategic alliances or similar arrangements in the ordinary
course of Borrower’s business or approved by Borrower’s Board of Directors, provided that the cash
portion of such Investments not exceed $250,000 in the aggregate in any fiscal year.
“Permitted Liens” means the following:
(a) Any Liens existing on the Closing Date and disclosed in the Schedule or arising under this
Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental charges or levies, either not
delinquent or being contested in good faith by appropriate proceedings, provided the same have no
priority over any of Bank’s security interests;
(c) Liens (i) upon or in any equipment which was not financed by Bank acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such equipment or indebtedness
incurred solely for the purpose of financing the acquisition of such equipment, or (ii) existing on
such equipment at the time of its acquisition, provided that the Lien is confined solely to the
property so acquired and improvements thereon, and the proceeds of such equipment;
(d) Liens upon or in any accounts receivable or inventory of Borrower or any of its
Subsidiaries; and
(e) Liens incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clauses (a) through (d) above, provided that
any extension, renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced
does not increase.
“Person” means any individual, sole proprietorship, partnership, limited liability company,
joint venture, trust, unincorporated organization, association, corporation, institution, public
benefit corporation, firm, joint stock company, estate, entity or governmental agency.
“Prime Rate” means the variable rate of interest, per annum, most recently announced by Bank,
as its “prime rate,” whether or not such announced rate is the lowest rate available from Bank.
“Quick Assets” means, at any date as of which the amount thereof shall be determined, the
unrestricted cash and cash-equivalents, accounts receivable and investments with maturities not to
exceed 90 days, of Borrower determined in accordance with GAAP.
“Responsible Officer” means each of the Chief Executive Officer, the Chief Operating Officer,
the Chief Financial Officer and the Controller of Borrower.
“Revolving Facility” means the facility under which Borrower may request Bank to issue
Advances, as specified in Section 2.1(a) hereof.
“Revolving Line” means a credit extension of up to Nine Million Dollars ($9,000,000).
“Revolving Maturity Date” means February 26, 2009.
“Schedule” means the schedule of exceptions attached hereto and approved by Bank, if any.
“Subordinated Debt” means any debt incurred by Borrower that is subordinated to the debt owing
by Borrower to Bank on terms reasonably acceptable to Bank (and identified as being such by
Borrower and Bank).
“Subsidiary” means any corporation, company or partnership in which (i) any general
partnership interest or (ii) more than 50% of the stock or other units of ownership which by the
terms thereof has the ordinary voting
4 .
power to elect the Board of Directors, managers or trustees of the entity, at the time as of
which any determination is being made, is owned by Borrower, either directly or through an
Affiliate.
1.2 Accounting Terms. All accounting terms not specifically defined herein shall be construed
in accordance with GAAP and all calculations made hereunder shall be made in accordance with GAAP.
When used herein, the terms “financial statements” shall include the notes and schedules thereto.
| 2. | LOAN AND TERMS OF PAYMENT. |
2.1 Credit Extensions.
Borrower promises to pay to the order of Bank, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrower
hereunder. Borrower shall also pay interest on the unpaid principal amount of such Credit
Extensions at rates in accordance with the terms hereof.
(a) Revolving Advances.
(i) Subject to and upon the terms and conditions of this Agreement, Borrower may request and
Bank agrees to make Advances in an aggregate outstanding amount not to exceed the Revolving Line.
Subject to the terms and conditions of this Agreement, amounts borrowed pursuant to this Section
2.1(a) may be repaid and reborrowed at any time prior to the Revolving Maturity Date, at which time
all Advances under this Section 2.1(a) shall be immediately due and payable. Borrower may prepay
any Advances without penalty or premium.
(ii) Whenever Borrower desires an Advance, Borrower will notify Bank by facsimile transmission
or telephone no later than 3:00 p.m. Pacific time, on the Business Day that the Advance is to be
made. Each such notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of Exhibit B hereto. Bank is authorized to make Advances under this
Agreement, based upon instructions received from a Responsible Officer or a designee of a
Responsible Officer, or without instructions if in Bank’s discretion such Advances are necessary to
meet Obligations which have become due and remain unpaid. Bank shall be entitled to rely on any
telephonic notice given by a person who Bank reasonably believes to be a Responsible Officer or a
designee thereof, and Borrower shall indemnify and hold Bank harmless for any damages or loss
suffered by Bank as a result of such reliance. Bank will credit the amount of Advances made under
this Section 2.1(a) to Borrower’s deposit account.
2.2 Letters of Credit. In reliance on the representations and warranties of Borrower set
forth herein, at any time and from time to time from the date hereof through the Business Day
immediately prior to the Revolving Maturity Date, Bank shall issue for the account of Borrower a
standby letter of credit in an amount not to exceed $3,000,000 (the “Letter of Credit”) upon
receipt of a Standby Letter of Credit Application and Agreement, duly executed by Borrower. Any
amounts drawn under the Letter of Credit shall be charged as Advances against the Revolving Line
unless Borrower does not have sufficient borrowing availability under the Revolving Line, in which
case Borrower will immediately repay such amounts in immediately available good funds. The Letter
of Credit shall be in form and substance acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank’s form application and letter of credit agreement.
Borrower will pay any standard issuance and other fees that Bank notifies Borrower it will charge
for issuing and processing the Letter of Credit.
2.3 Interest Rates, Payments, and Calculations.
(a) Interest Rates. Except as set forth in Section 2.3(b), the Advances shall bear interest,
on the outstanding Daily Balance thereof, which shall be a Base Rate Option Advance or a LIBOR
Option Advance as elected by Borrower in accordance with the terms set forth in the LIBOR Addendum
to Amended and Restated Loan Agreement executed in connection herewith (“LIBOR Addendum”), and
shall bear interest on the outstanding Daily Balance thereof at the applicable rate set forth in
such LIBOR Addendum.
5 .
(b) Late Fee: Default Rate. If any payment is not made within ten (10) days after the date
such payment is due, Borrower shall pay Bank a late fee equal to the lesser of (i) five percent
(5%) of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under
applicable law. All Obligations shall bear interest, from and after the occurrence and during the
continuance of an Event of Default, at a rate equal to five (5) percentage points above the
interest rate applicable immediately prior to the occurrence of the Event of Default.
(c) Payments. Interest hereunder shall be due and payable on the thirteenth (13th) calendar
day of each month during the term hereof. Bank shall, at its option, charge such interest, all
Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts or against the
Revolving Line and, in the case of charges against the Revolving Line, those amounts shall
thereafter accrue interest at the rate then applicable hereunder. Any interest not paid when due
shall be compounded by becoming a part of the Obligations, and such interest shall thereafter
accrue interest at the rate then applicable hereunder. All payments shall be free and clear of any
taxes, withholdings, duties, impositions or other charges, to the end that Bank will receive the
entire amount of any Obligations payable hereunder, regardless of source of payment.
(d) Computation. In the event the Prime Rate is changed from time to time hereafter, the
applicable rate of interest hereunder shall be increased or decreased, effective as of the day the
Prime Rate is changed, by an amount equal to such change in the Prime Rate. All interest
chargeable under the Loan Documents shall be computed on the basis of a three hundred sixty (360)
day year for the actual number of days elapsed.
2.4 Crediting Payments. Prior to the occurrence of an Event of Default, Bank shall credit a
wire transfer of funds, check or other item of payment to such deposit account or Obligation as
Borrower specifies. After the occurrence of an Event of Default, the receipt by Bank of any wire
transfer of funds, check, or other item of payment shall be immediately applied to conditionally
reduce Obligations, but shall not be considered a payment on account unless such payment is of
immediately available federal funds or unless and until such check or other item of payment is
honored when presented for payment. Notwithstanding anything to the contrary contained herein, any
wire transfer or payment received by Bank after 12:00 noon Pacific time shall be deemed to have
been received by Bank as of the opening of business on the immediately following Business Day.
Whenever any payment to Bank under the Loan Documents would otherwise be due (except by reason of
acceleration) on a date that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for
the period of such extension.
2.5 Fees. Borrower shall pay to Bank the following:
(a) Facility Fee. On the Closing Date, a Facility Fee equal to Twenty Thousand Dollars
($20,000), which shall be nonrefundable; and
(b) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date,
including reasonable attorneys’ fees (billed at customary rates for Bank’s counsel) and expenses
and, after the Closing Date, all Bank Expenses, including reasonable attorneys’ fees (billed at
customary rates for Bank’s counsel) and expenses, as and when they become due. All such expenses
shall be payable only after Bank has delivered to Borrower statements in customary form showing in
reasonable detail the expenses being billed.
2.6 Additional Costs. In case any law, regulation, treaty or official directive or the
interpretation or application thereof first adopted or imposed after the date of this Agreement by
any court or any governmental authority charged with the administration thereof or the compliance
with any guideline or request of any central bank or other governmental authority (whether or not
having the force of law):
(a) subjects Bank to any tax with respect to payments of principal or interest or any other
amounts payable hereunder by Borrower or otherwise with respect to the transactions contemplated
hereby (except for taxes on the overall net income of Bank imposed by the United States of America
or any political subdivision thereof);
6 .
(b) imposes, modifies or deems applicable any deposit insurance, reserve, special deposit or
similar requirement against assets held by, or deposits in or for the account of, or loans by,
Bank; or
(c) imposes upon Bank any other condition with respect to its performance under this
Agreement,
and the result of any of the foregoing is to increase the cost to Bank, reduce the income
receivable by Bank or impose any expense upon Bank with respect to the Obligations, Bank shall
notify Borrower thereof. Borrower agrees to pay to Bank the amount of such increase in cost,
reduction in income or additional expense as and when such cost, reduction or expense is incurred
or determined, upon presentation by Bank of a statement of the amount and setting forth Bank’s
calculation thereof, all in reasonable detail, which statement shall be deemed true and correct
absent manifest error.
2.7 Term. This Agreement shall become effective on the Closing Date and, subject to Section
12.7, shall continue in full force and effect for so long as any Obligations remain outstanding or
Bank has any obligation to make Credit Extensions under this Agreement, whichever is longer.
Notwithstanding the foregoing, Bank shall have the right to terminate its obligation to make Credit
Extensions under this Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default.
| 3. | CONDITIONS OF LOANS. |
3.1 Conditions Precedent to Initial Credit Extension. The obligation of Bank to make the
initial Credit Extension is subject to the condition precedent that Bank shall have received, in
form and substance satisfactory to Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to incumbency and resolutions
authorizing the execution and delivery of this Agreement;
(c) a LIBOR Addendum to Amended and Restated Loan Agreement;
(d) an Affirmation of Guaranty from each Guarantor;
(e) an Affirmation of Subordination (Safeguard Delaware, Inc.);
(f) payment of the fees and Bank Expenses then due specified in Section 2.5 hereof;
(g) current financial statements of Borrower; and
(h) such other documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate.
3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit
Extension, including the initial Credit Extension, is further subject to the following conditions:
(a) timely receipt by Bank of the Payment/Advance Form as provided in Section 2.1; and
(b) the representations and warranties contained in Section 5 shall be true and correct in all
material respects on and as of the date of such Payment/Advance Form and on the effective date of
each Credit Extension as though made at and as of each such date, and no Event of Default shall
have occurred and be continuing, or would exist after giving effect to such Credit Extension
(provided, however, that those representations and warranties expressly referring to another date
shall be true, correct and complete in all material respects as of such date). The making of each
Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of
such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.
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| 4. | INTENTIONALLY OMITTED. | |
| 5. | REPRESENTATIONS AND WARRANTIES. |
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Except as disclosed on the Schedule, Borrower and
each Subsidiary is a corporation or other organization duly existing under the laws of its state of
formation and qualified and licensed to do business in any state in which the conduct of its
business or its ownership of property requires that it be so qualified.
5.2 Due Authorization; No Conflict. The execution, delivery, and performance of the Loan
Documents are within Borrower’s powers, have been duly authorized, and are not in conflict with nor
constitute a breach of any provision contained in Borrower’s Certificate of Incorporation or
Bylaws, nor, except as disclosed on the Schedule, will they constitute an event of default under
any material agreement to which Borrower is a party or by which Borrower is bound. Except as
disclosed on the Schedule, Borrower is not in default under any material agreement to which it is a
party or by which it is bound.
5.3 Name; Location of Chief Executive Office. Except as disclosed in the Schedule, Borrower
has not done business under any name other than that specified on the signature page hereof. The
chief executive office of Borrower is located at the address indicated in Section 10 hereof.
5.4 Litigation. Except as set forth in the Schedule, there are no actions or proceedings
pending by or against Borrower or any Subsidiary before any court or administrative agency in which
a likely adverse decision would reasonably be expected to have a Material Adverse Effect.
5.5 No Material Adverse Change in Financial Statements. All consolidated and consolidating
financial statements related to Borrower and any Subsidiary that Bank has received from Borrower
fairly present in all material respects Borrower’s financial condition as of the date thereof and
Borrower’s consolidated and consolidating results of operations for the period then ended. There
has not been a material adverse change in the consolidated or the consolidating financial condition
of Borrower since the date of the most recent of such financial statements submitted to Bank.
5.6 Solvency; Payment of Debts. Borrower is solvent and able to pay its debts (including
trade debts) as they mature.
5.7 Regulatory Compliance. Borrower and each Subsidiary have met the minimum funding
requirements of ERISA with respect to any employee benefit plans subject to ERISA, and no event has
occurred resulting from Borrower’s failure to comply with ERISA that could result in Borrower’s
incurring any material liability. Borrower is not an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment Company Act of 1940.
Borrower is not engaged principally, or as one of the important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within the meaning of
Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has
complied with all the provisions of the Federal Fair Labor Standards Act. Borrower has not
violated any statutes, laws, ordinances or rules applicable to it, violation of which could have a
Material Adverse Effect.
5.8 Environmental Condition. Except as disclosed in the Schedule, and except to the extent
which has not had and is not reasonably expected to have a Material Adverse Effect, none of
Borrower’s or any Subsidiary’s properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower’s knowledge, by previous owners or operators, in the
disposal of, or to produce, store, handle, treat, release, or transport, any hazardous waste or
hazardous substance other than in accordance with applicable law; to the best of Borrower’s
knowledge, none of Borrower’s properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a hazardous waste or hazardous substance
disposal site, or a candidate for closure pursuant to any environmental protection statute; no lien
arising under any environmental protection statute has attached to any revenues or to any real or
personal property owned by Borrower or any
8 .
Subsidiary; and neither Borrower nor any Subsidiary has received a summons, citation, notice,
or directive from the Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any Subsidiary resulting in
the releasing, or otherwise disposing of hazardous waste or hazardous substances into the
environment.
5.9 Taxes. Borrower and each Subsidiary have filed or caused to be filed all tax returns
required to be filed, and have paid, or have made adequate provision for the payment of, all taxes
reflected therein, except to the extent the same could not reasonably be expected to have a
Material Adverse Effect.
5.10 Subsidiaries. Borrower does not own any stock, partnership interest or other equity
securities of any Person, except for Permitted Investments.
5.11 Government Consents. Borrower and each Subsidiary have obtained all consents, approvals
and authorizations of, made all declarations or filings with, and given all notices to, all
governmental authorities that are necessary for the continued operation of Borrower’s business as
currently conducted, the failure to obtain which could reasonably be expected to have a Material
Adverse Effect.
5.12 Accounts. Except as set forth in the Schedule, and subject to Section 6.6 hereof, none
of Borrower’s nor any Subsidiary’s cash or securities is maintained or invested with a Person other
than Bank.
5.13 Full Disclosure. No representation, warranty or other statement made by Borrower in any
certificate or written statement furnished to Bank in connection with the Loan Documents contains
any untrue statement of a material fact or omits to state a material fact necessary in order to
make the statements contained in such certificates or statements not misleading.
| 6. | AFFIRMATIVE COVENANTS. |
Borrower covenants and agrees that, until payment in full of all outstanding Obligations, and
for so long as Bank may have any commitment to make a Credit Extension hereunder, Borrower shall do
all of the following:
6.1 Good Standing. Borrower shall maintain its and each of its Subsidiaries’ corporate
existence and good standing in its jurisdiction of incorporation and maintain qualification in each
jurisdiction in which it is required under applicable law, where the failure to be so qualified
could reasonably be expected to have a Material Adverse Effect. Borrower shall maintain, and shall
cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the
loss of which could reasonably be expected to have a Material Adverse Effect.
6.2 Government Compliance. Borrower shall meet, and shall cause each Subsidiary to meet, the
minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA.
Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws,
ordinances and government rules and regulations to which it is subject, noncompliance with which
could reasonably be expected to have a Material Adverse Effect.
6.3 Financial Statements, Reports, Certificates. Borrower shall deliver the following to
Bank: (a) as soon as available, but in any event within thirty (30) days after the end of each
calendar month, a company prepared consolidated balance sheet, income, and cash flow statement
covering Borrower’s consolidated operations during such period, prepared in accordance with GAAP
(except for the omission of footnotes), consistently applied, in a form acceptable to Bank and
certified by a Responsible Officer; (b) as soon as available, but in any event within ninety (90)
days after the end of Borrower’s fiscal year, audited consolidated financial statements of Borrower
prepared in accordance with GAAP, consistently applied, together with an unqualified opinion on
such financial statements of an independent certified public accounting firm reasonably acceptable
to Bank; (c) if applicable, copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders or to any holders of Subordinated Debt and all
reports on Forms 10-K (within ninety (90) days after the end of Borrower’s fiscal year end or, if
extended under SEC provisions) and 10-Q (within 45 days after the end of each quarter or, if
extended under SEC provisions) filed with the Securities and Exchange Commission; (d) promptly upon
receipt of notice thereof, a report of any legal actions pending or threatened against Borrower or
any
9 .
Subsidiary that could result in damages or costs to Borrower or any Subsidiary of Fifty
Thousand Dollars ($50,000) or more; and (e) such budgets, sales projections, operating plans or
other financial information as Bank may reasonably request from time to time generally prepared by
Borrower in the ordinary course of business.
Borrower shall deliver to Bank with the monthly financial statements a Compliance Certificate
signed by a Responsible Officer in substantially the form of Exhibit C hereto.
6.4 Taxes. Borrower shall make, and shall cause each Subsidiary to make, due and timely
payment or deposit of all material federal, state, and local taxes, assessments, or contributions
required of it by law, and will execute and deliver to Bank, on demand, appropriate certificates
attesting to the payment or deposit thereof; and Borrower will make, and will cause each Subsidiary
to make, timely payment or deposit of all material tax payments and withholding taxes required of
it by applicable laws, including, but not limited to, those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon request, furnish Bank
with proof satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or
deposits; provided that Borrower or a Subsidiary need not make any payment if the amount or
validity of such payment is contested in good faith by appropriate proceedings and is reserved
against (to the extent required by GAAP) by Borrower.
6.5 Insurance.
(a) Borrower, at its expense, shall keep its property insured against loss or damage by fire,
theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, as ordinarily
insured against by other owners in similar businesses conducted in the locations where Borrower’s
business is conducted on the date hereof. Borrower shall also maintain insurance relating to
Borrower’s business, ownership and use of the Borrower’s assets in amounts and of a type that are
customary to businesses similar to Borrower’s.
(b) Upon Bank’s request, Borrower shall deliver to Bank certified copies of such policies of
insurance and evidence of the payments of all premiums therefor.
6.6 Accounts. Borrower shall maintain and shall cause each of its Subsidiaries to maintain
its primary depository, operating, and investment accounts with Bank and/or Comerica Securities,
Inc.
6.7 [Intentionally Omitted.]
6.8 Net Worth. Borrower shall not, at any time during the periods set forth below, allow its
Net Worth to fall below the given amount:
| Period | Minimum Net Worth | |||
1/1/08 — 3/31/08 |
$ | (5,300,000 | ) | |
4/1/08 — 6/30/08 |
$ | (6,740,000 | ) | |
7/1/08 — 9/30/08 |
$ | (7,500,000 | ) | |
Covenant to be reset no later than 9/30/08.
6.9 Further Assurances. At any time and from time to time Borrower shall execute and deliver
such further instruments and take such further action as may reasonably be requested by Bank to
effect the purposes of this Agreement.
| 7. | NEGATIVE COVENANTS. |
Borrower covenants and agrees that, so long as any credit hereunder shall be available and
until payment in full of the outstanding Obligations or for so long as Bank may have any commitment
to make any Credit Extensions, Borrower will not do any of the following:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of (collectively, a
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any material part of its
business or property, including its
10 .
Intellectual Property, other than: (i) Transfers of Inventory in the ordinary course of
business; (ii) Transfers of non-exclusive licenses and similar arrangements for the use of the
property of Borrower or its Subsidiaries in the ordinary course of business; or (iii) Transfers of
worn-out or obsolete Equipment which was not financed by Bank.
7.2 Change in Business; Change in Control or Executive Office. Engage in any business, or
permit any of its Subsidiaries to engage in any business, other than the business of offering
systems, equipment, services and other items for diagnostic testing, and any business substantially
similar or related thereto (or incidental thereto); or cease to conduct business in the manner
conducted by Borrower as of the Closing Date; or without thirty (30) days prior written
notification to Bank, relocate its chief executive office or state of incorporation or change its
legal name; or without Bank’s prior written consent, which shall not be unreasonably withheld,
change the date on which its fiscal year ends.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge
or consolidate, with or into any other business organization, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or property of another
Person, except where no Event of Default has occurred, is continuing or would exist after giving
effect to the transactions.
7.4 Indebtedness. Create, incur, assume or be or remain liable with respect to any
Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness.
7.5 Encumbrances. Create, incur, assume or suffer to exist any Lien with respect to any of
its property, or assign or otherwise convey any right to receive income, including the sale of any
accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens. Agree with any
Person other than Bank or any creditor as permitted under this Agreement, not to grant a security
interest in, or otherwise encumber, any of its property, or permit any Subsidiary to do so, except
for Permitted Liens.
7.6 Distributions. Pay any dividends or make any other distribution or payment on account of
or in redemption, retirement or purchase of any capital stock, or permit any of its Subsidiaries to
do so, except that Borrower may repurchase the stock of employees and former employees pursuant to
stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase
or would not exist after giving effect to such repurchase.
7.7 Investments. Directly or indirectly acquire or own, or make any Investment in or to any
Person, or permit any of its Subsidiaries so to do, other than Permitted Investments; or maintain
or invest any of its property with a Person other than Bank or permit any of its Subsidiaries to do
so unless such Person has entered into an account control agreement with Bank in form and substance
satisfactory to Bank; or suffer or permit any Subsidiary to be a party to, or be bound by, an
agreement (other than this Agreement) that restricts such Subsidiary from paying dividends or
otherwise distributing property to Borrower.
7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any
material transaction with any Affiliate of Borrower except for transactions that are determined in
good faith by a disinterested majority of Borrower’s board of directors or committee thereof to be
on fair and reasonable terms and that are no less favorable to Borrower than would be obtained in
an arm’s length transaction with a non-affiliated Person. Notwithstanding the foregoing, Borrower
shall be permitted to enter into and carry out its obligations under that certain Reimbursement and
Indemnity Agreement with Guarantors, dated as of March 11, 2005, as amended from time to time.
7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt, or permit any of
its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated
Debt, or amend any provision contained in any documentation relating to the Subordinated Debt
without Bank’s prior written consent.
7.10 Compliance. Become an “investment company” or be controlled by an “investment company,”
within the meaning of the Investment Company Act of 1940, or become principally engaged in, or
undertake as one of its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or
11 .
use the proceeds of any Credit Extension for such purpose. Fail to meet the minimum funding
requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to
occur, fail to comply with the Federal Fair Labor Standards Act or violate any law or regulation,
except with respect to all of the foregoing to an extent which does not have a Material Adverse
Effect, or permit any of its Subsidiaries to do any of the foregoing.
7.11 Negative Pledge Agreements. Permit the inclusion in any contract to which it or a
Subsidiary becomes a party of any provisions that could restrict or invalidate the creation of a
security interest in any of Borrower’s or such Subsidiary’s property, except contracts relating to
Permitted Indebtedness or assets subject to Permitted Liens.
| 8. | EVENTS OF DEFAULT. |
Any one or more of the following events shall constitute an Event of Default by Borrower under
this Agreement:
8.1 Payment Default. If Borrower fails to pay, when due, any of the Obligations;
8.2 Covenant Default. If Borrower fails to perform any obligation under Article 6 or violates
any of the covenants contained in Article 7 of this Agreement, or fails or neglects to perform,
keep, or observe any other material term, provision, condition, covenant, or agreement contained in
this Agreement, in any of the Loan Documents, or in any other present or future agreement between
Borrower and Bank and as to any default under such other term, provision, condition, covenant or
agreement that can be cured, has failed to cure such default within fifteen (15) days after
Borrower receives notice thereof from Bank; provided, however, that if the default cannot by its
nature be cured within the fifteen (15) day period or cannot after diligent attempts by Borrower be
cured within such fifteen (15) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which shall not in any
case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time
period the failure to have cured such default shall not be deemed an Event of Default (provided
that no Credit Extensions will be required to be made during such cure period);
8.3 Material Adverse Effect. If there occurs any circumstance or circumstances that has or
have a Material Adverse Effect;
8.4 Attachment. If any portion of Borrower’s assets is attached, seized, subjected to a writ
or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or
person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10) days, or if Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct all or any material
part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon
any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower’s assets by the United States Government, or any department,
agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and
the same is not paid within ten (10) days after Borrower receives notice thereof, provided that
none of the foregoing shall constitute an Event of Default where such action or event is stayed or
an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit
Extensions will be required to be made during such cure period);
8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by
Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or
stayed within forty five (45) days (provided that no Credit Extensions will be made prior to the
dismissal of such Insolvency Proceeding);
8.6 Other Agreements. If there is a default or other failure to perform in any agreement to
which Borrower is a party or by which it is bound resulting in a right by a third party or parties,
whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of
Five Hundred Thousand Dollars ($500,000) or which could reasonably be expected to have a Material
Adverse Effect;
12 .
8.7 Subordinated Debt. If Borrower makes any payment on account of Subordinated Debt, except
to the extent such payment is allowed under any subordination agreement entered into with Bank;
8.8 Judgments. If a judgment or judgments for the payment of money in an amount, individually
or in the aggregate, of at least Five Hundred Thousand Dollars ($500,000) shall be rendered against
Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days (provided that no
Credit Extensions will be made prior to the satisfaction or stay of such judgment); or
8.9 Misrepresentations. If any material misrepresentation or material misstatement exists now
or hereafter in any warranty or representation set forth herein or in any certificate delivered to
Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.
8.10 Guaranty. If any guaranty of all or a portion of the Obligations (a “Guaranty”) ceases
for any reason to be in full force and effect, or any guarantor fails to perform any obligation
under any Guaranty or a security agreement securing any Guaranty (collectively, the “Guaranty
Documents”), or any event of default occurs under any Guaranty Document or any guarantor revokes or
purports to revoke a Guaranty, or any material misrepresentation or material misstatement exists
now or hereafter in any warranty or representation set forth in any Guaranty Document or in any
certificate delivered to Bank in connection with any Guaranty Document, or if any of the
circumstances described in Sections 8.3 through 8.8 occur with respect to any guarantor, or any
circumstances arise causing Bank, in good faith, to become insecure as to the satisfaction of any
of any guarantor’s obligations under the Guaranty Documents.
8.11 Letter of Credit Default. Borrower defaults under any reimbursement obligation or other
obligation of Borrower under the Standby Letter of Credit Application and Agreement or other
standard form letter of credit application and reimbursement agreement as may be in effect from
time to time.
| 9. | BANK’S RIGHTS AND REMEDIES. |
9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of
Default, Bank may, at its election, without notice of its election and without demand, do any one
or more of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event
of Default described in Section 8.5, all Obligations shall become immediately due and payable
without any action by Bank);
(b) Cease advancing money or extending credit to or for the benefit of Borrower under this
Agreement or under any other agreement between Borrower and Bank;
(c) Set off and apply to the Obligations any and all (i) balances and deposits of Borrower
held by Bank, or (ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank; and
(d) If an Event of Default has occurred pursuant to Section 8.10, demand that Borrower (i)
deposit cash with Bank in an amount equal to the amount of any Letters of Credit remaining undrawn,
as collateral security for the repayment of any future drawings under such Letters of Credit, and
(ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the remaining
term of the Letters of Credit, and Borrower shall promptly deposit and pay such amounts.
9.2 Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of
payment due to third persons or entities, as required under the terms of this Agreement, then Bank
may do any or all of the following after reasonable notice to Borrower: (a) make payment of the
same or any part thereof; (b) set up such reserves under a loan facility in Section 2.1 as Bank
deems necessary to protect Bank from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type discussed in Section 6.5 of this Agreement,
13 .
and take any action with respect to such policies as Bank deems prudent. Any amounts so paid
or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and
shall bear interest at the then applicable rate hereinabove provided. Any payments made by Bank
shall not constitute an agreement by Bank to make similar payments in the future or a waiver by
Bank of any Event of Default under this Agreement.
9.3 Remedies Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents,
and all other agreements shall be cumulative. Bank shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one
right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on
Borrower’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver,
election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written
document signed on behalf of Bank and then shall be effective only in the specific instance and for
the specific purpose for which it was given.
9.4 Demand; Protest. Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper,
and guarantees at any time held by Bank on which Borrower may in any way be liable.
| 10. | NOTICES. |
Unless otherwise provided in this Agreement, all notices or demands by any party relating to
this Agreement or any other agreement entered into in connection herewith shall be in writing and
(except for financial statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Borrower
or to Bank, as the case may be, at its addresses set forth below:
| If to Borrower: | CLARIENT, INC. | |||
| ▇▇ ▇▇▇▇▇▇▇▇ | ||||
| ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||
| Attn: Chief Financial Officer | ||||
| FAX: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| If to Bank: | Comerica Bank | |||
| ▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||
| FAX: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| with a copy to: | Comerica Bank | |||
| ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ | ||||
| ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||
| Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||||
| FAX: (▇▇▇) ▇▇▇-▇▇▇▇ |
The parties hereto may change the address at which they are to receive notices hereunder, by
notice in writing in the foregoing manner given to the other.
| 11. | CHOICE OF LAW AND VENUE: JURY TRIAL WAIVER. |
This Agreement shall be governed by, and construed in accordance with, the internal laws of
the State of California, without regard to principles of conflicts of law. Jurisdiction shall lie
in the State of California. THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED
BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE
14 .
MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN
THE UNDERSIGNED PARTIES.
| 12. | REFERENCE PROVISION. |
12.1 In the event the Jury Trial Waiver set forth above is not enforceable, the parties elect
to proceed under this Judicial Reference Provision.
12.2 With the exception of the items specified in Section 12.3, below, any controversy,
dispute or claim (each, a “Claim”) between the parties arising out of or relating to this Agreement
or any other document, instrument or agreement between the undersigned parties (collectively in
this Section, the “Loan Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure
(“CCP”), or their successor sections, which shall constitute the exclusive remedy for the
resolution of any Claim, including whether the Claim is subject to the reference proceeding.
Except as otherwise provided in the Loan Documents, venue for the reference proceeding will be in
the Superior Court in the County where the real property involved in the action, if any, is located
or in a County where venue is otherwise appropriate under applicable law (the “Court”).
12.3 The matters that shall not be subject to a reference are the following: (i) nonjudicial
foreclosure of any security interests in real or personal property, (ii) exercise of self help
remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv)
temporary, provisional or ancillary remedies (including, without limitation, writs of attachment,
writs of possession, temporary restraining orders or preliminary injunctions). This Agreement does
not limited the right of any party to exercise or oppose any of the rights and remedies described
in clauses (i) and (ii) or to seek or oppose from a court of competent jurisdiction any of the
items described in clauses (iii) and (iv). The exercise of, or opposition to, any of those items
does not waive the right of any party to a reference pursuant to this Agreement.
12.4 The referee shall be a retired Judge or Justice selected by mutual written agreement of
the parties. If the parties do not agree within ten (10) days of a written request to do so by any
party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the
Court (or his or her representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would result if ex parte
relief is not granted.
12.5 The parties agree that time is of the essence in conducting the reference proceedings.
Accordingly, the referee shall be requested, subject to change in the time periods specified herein
for good cause shown, to (i) set the matter for a status and trial-setting conference within
fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues
of law or fact within one hundred twenty (12)) days after the date of the conference and (iii)
report a statement of decision within twenty (20) days after the matter has been submitted for
decision.
12.6 The referee will have power to expand or limit the amount and duration of discovery. The
referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s
failure to provide requested discovery for any reason whatsoever. Unless otherwise ordered based
upon good cause shown, no party shall be entitled to “priority” in conducting discovery,
depositions may be taken by either party upon seven (7) days written notice, and all other
discovery shall be responded to within fifteen (15) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the referee whose decision
shall be final and binding.
12.7 Except as expressly set forth in this Agreement, the referee shall determine the manner
in which the reference proceeding is conducted including the time and place of hearings, the order
of presentation of evidence, and all other questions that arise with respect to the course of the
reference proceeding. All proceedings and hearings conducted before the referee, except for trial,
shall be conducted without a court reporter, except that when any party so requests, a court
reporter will be used at any hearing conducted before the referee, and the referee will be provided
a courtesy copy of the transcript. The party making such a request shall have the obligation to
15 .
arrange for and pay the court reporter. Subject to the referee’s power to award costs to the
prevailing party, the parties will equally share the cost of the referee and the court reporter at
trial.
12.8 The referee shall be required to determine all issues in accordance with existing case
law and the statutory laws of the State of California. The rules of evidence applicable to
proceedings at law in the State of California will be applicable to the reference proceeding. The
referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that
will be binding on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or summary adjudication. The
referee shall issue a decision at the close of the reference proceeding which disposes of all
claims of the parties that are the subject of the reference. Pursuant to CCP Section 644, such
decision shall be entered by the Court as a judgment or an order in the same manner as if the
action had been tried by the Court and any such decision will be final, binding and conclusive.
The parties reserve the right to appeal from the final judgment or order or from any appealable
decision or order entered by the referee. The parties reserve the right to findings of act,
conclusions of law, a written statement of decision, and the right to move for a new trial or a
different judgment, which new trial, if granted, is also to be a reference proceeding under this
provision.
12.9 If the enabling legislation which provides for appointment of a referee is repealed (and
no successor statute is enacted), any dispute between the parties that would otherwise be
determined by reference procedure will be resolved and determined by arbitration. The arbitration
will be conducted by a retired judge or Justice, in accordance with the California Arbitration Act
Section 1280 through Section 1294.2 of the CCP as amended from time to time. The limitations with
respect to discovery set forth above shall apply to any such arbitration proceeding.
12.10 THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED
UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY
KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE
PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR
IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
| 13. | GENERAL PROVISIONS. |
13.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the
respective successors and permitted assigns of each of the parties and shall bind all persons who
become bound as a debtor to this Agreement; provided, however, that neither this Agreement nor any
rights hereunder may be assigned by Borrower without Bank’s prior written consent, which consent
may be granted or withheld in Bank’s sole discretion. Bank shall have the right without the
consent of or notice to Borrower to sell, transfer, negotiate, or grant participation in all or any
part of, or any interest in, Bank’s obligations, rights and benefits hereunder.
13.2 Indemnification. Borrower shall defend, indemnify and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities
claimed or asserted by any other party in connection with the transactions contemplated by this
Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank, its
officers, employees and agents as a result of or in any way arising out of, following, or
consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise
(including without limitation reasonable attorneys fees and expenses), except for losses caused by
Bank’s gross negligence or willful misconduct.
13.3 Time of Essence. Time is of the essence for the performance of all obligations set forth
in this Agreement.
13.4 Severability of Provisions. Each provision of this Agreement shall be severable from
every other provision of this Agreement for the purpose of determining the legal enforceability of
any specific provision.
16 .
13.5 Amendments in Writing, Integration. All amendments to or terminations of this Agreement
or the other Loan Documents must be in writing. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with respect to the
subject matter of this Agreement and the other Loan Documents, if any, are merged into this
Agreement and the Loan Documents.
13.6 Counterparts. This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall constitute but one and the
same Agreement.
13.7 Survival. All covenants, representations and warranties made in this Agreement shall
continue in full force and effect so long as any Obligations remain outstanding or Bank has any
obligation to make any Credit Extension to Borrower. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described in Section 13.2
shall survive until all applicable statute of limitations periods with respect to actions that may
be brought against Bank have run.
13.8 Confidentiality. In handling any confidential information, Bank and all employees and
agents of Bank shall exercise the same degree of care that Bank exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any non-public
information thereby received or received pursuant to this Agreement except that disclosure of such
information may be made (i) to the subsidiaries or Affiliates of Bank in connection with their
present or prospective business relations with Borrower, (ii) to prospective transferees or
purchasers of any interest in the Loans, provided that they have entered into a comparable
confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as
required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may
be required in connection with the examination, audit or similar investigation of Bank and (v) as
Bank may determine in connection with the enforcement of any remedies hereunder. Confidential
information hereunder shall not include information that either: (a) is in the public domain or in
the knowledge or possession of Bank (which information was not previously disclosed to Bank by
Borrower pursuant to confidentiality protections) when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank through no fault of Bank; or (b) is disclosed to Bank by a
third party, provided Bank does not have actual knowledge that such third party is prohibited from
disclosing such information.
13.9 Effect of Amendment and Restatement. This Agreement is intended to and does completely
amend and restate, without novation, the Original Agreement. All Advances and Obligations
outstanding (and as defined under) the Original Agreement are deemed, respectively, Advances and
Obligations under (and as defined in) this Agreement.
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17 .
In Witness Whereof, the parties hereto have caused this Agreement to be executed as
of the date first above written.
| CLARIENT, INC. | ||||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||||
| Title: | Senior Vice President and Chief Financial Officer | |||||
| COMERICA BANK | ||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||||
| Title: | Vice President | |||||
18 .