Exhibit 10.8

 

Execution Version

 

CONFIDENTIAL TREATMENT REQUESTED

 

CREDIT AGREEMENT

 

dated as of April 18, 2013

 

by and between

 

NATERA, INC.,

 

as the Borrower,

 

and

 

ROS ACQUISITION OFFSHORE LP

 

as the Lender

 

 

TABLE OF CONTENTS

 

					Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS					1
	SECTION 1.1	Defined Terms			1
	SECTION 1.2	Use of Defined Terms			20
	SECTION 1.3	Cross-References			20
	SECTION 1.4	Accounting and Financial Determinations			20
	SECTION 1.5	Other Loan Documents			20
ARTICLE II COMMITMENT AND BORROWING PROCEDURES					20
	SECTION 2.1	Commitment			20
	SECTION 2.2	Borrowing Procedure			20
	SECTION 2.3	Funding			21
	SECTION 2.4	Reduction of the Commitment Amounts			21
ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES					21
	SECTION 3.1	Repayments and Prepayments; Application			21
	SECTION 3.2	Repayments and Prepayments			21
	SECTION 3.3	Application			21
	SECTION 3.4	Interest Rate			22
	SECTION 3.5	Default Rate			22
	SECTION 3.6	Payment Dates			22
	SECTION 3.7	Repayment Premium			22
ARTICLE IV LIBO RATE AND OTHER PROVISIONS					23
	SECTION 4.1	Increased Costs, Etc.			23
	SECTION 4.2	Increased Capital Costs			23
	SECTION 4.3	Taxes			23
	SECTION 4.4	Payments, Computations; Proceeds of Collateral, Etc.			24
	SECTION 4.5	Setoff			25
	SECTION 4.6	LIBO Rate Not Determinable			25
ARTICLE V CONDITIONS TO MAKING THE LOANS					26
	SECTION 5.1	Credit Extensions			26
	SECTION 5.2	Secretary’s Certificate, Etc.			26
	SECTION 5.3	Closing Date Certificate			26
	SECTION 5.4	Payment of Outstanding Indebtedness, Etc.			27
	SECTION 5.5	Delivery of Note			27
	SECTION 5.6	Financial Information, Etc.			27
	SECTION 5.7	[Intentionally Omitted]			27
	SECTION 5.8	Solvency, Etc.			27
	SECTION 5.9	Guarantee			27

 

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	SECTION 5.10	Security Agreements	27
	SECTION 5.11	Intellectual Property Security Agreements	28
	SECTION 5.12	Royalty Agreement	28
	SECTION 5.13	Warrant Agreement	28
	SECTION 5.14	Opinions of Counsel	28
	SECTION 5.15	Insurance	29
	SECTION 5.16	Closing Fees, Expenses, Etc.	29
	SECTION 5.17	Anti-Terrorism Laws	29
	SECTION 5.18	Satisfactory Legal Form	29
	SECTION 5.19	U.S. Panorama Net Sales	29
	SECTION 5.20	Disclosure Schedules	29
ARTICLE VI REPRESENTATIONS AND WARRANTIES			29
	SECTION 6.1	Organization, Etc.	30
	SECTION 6.2	Due Authorization, Non-Contravention, Etc.	30
	SECTION 6.3	Government Approval, Regulation, Etc.	30
	SECTION 6.4	Validity, Etc.	30
	SECTION 6.5	Financial Information	30
	SECTION 6.6	No Material Adverse Change	31
	SECTION 6.7	Litigation, Labor Matters and Environmental Matters	31
	SECTION 6.8	Subsidiaries	31
	SECTION 6.9	Ownership of Properties	31
	SECTION 6.10	Taxes	31
	SECTION 6.11	Benefit Plans, Etc.	32
	SECTION 6.12	Accuracy of Information	32
	SECTION 6.13	Regulations U and X	32
	SECTION 6.14	Solvency	32
	SECTION 6.15	Intellectual Property	32
	SECTION 6.16	Material Agreements	34
	SECTION 6.17	Permits	34
	SECTION 6.18	Regulatory Matters	35
	SECTION 6.19	Transactions with Affiliates	37
	SECTION 6.20	Investment Company Act	37
	SECTION 6.21	OFAC	37
	SECTION 6.22	Deposit and Disbursement Accounts	37
ARTICLE VII AFFIRMATIVE COVENANTS			38
	SECTION 7.1	Financial Information, Reports, Notices, Etc.	38
	SECTION 7.2	Maintenance of Existence; Compliance with Contracts, Laws, Etc.	40
	SECTION 7.3	Maintenance of Properties	40
	SECTION 7.4	Insurance	41
	SECTION 7.5	Books and Records	41
	SECTION 7.6	Environmental Law Covenant	42
	SECTION 7.7	Use of Proceeds	42
	SECTION 7.8	Future Guarantors, Security, Etc.	42

 

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	SECTION 7.9	Obtaining of Permits, Etc.	43
	SECTION 7.10	Product Licenses	43
	SECTION 7.11	Maintenance of Regulatory Authorizations, Contracts, Intellectual Property, Etc.	43
	SECTION 7.12	Inbound Licenses	43
	SECTION 7.13	Cash Management	44
	SECTION 7.14	Board Observation Rights	44
	SECTION 7.15	Product Agreements	45
	SECTION 7.16	Supply of Reagents	45
ARTICLE VIII NEGATIVE COVENANTS			46
	SECTION 8.1	Business Activities	46
	SECTION 8.2	Indebtedness	46
	SECTION 8.3	Liens	47
	SECTION 8.4	Minimum Liquidity	48
	SECTION 8.5	Investments	49
	SECTION 8.6	Restricted Payments, Etc.	50
	SECTION 8.7	Consolidation, Merger; Permitted Acquisitions, Etc.	50
	SECTION 8.8	Permitted Dispositions	50
	SECTION 8.9	Modification of Certain Agreements	51
	SECTION 8.10	Transactions with Affiliates	51
	SECTION 8.11	Restrictive Agreements, Etc.	51
	SECTION 8.12	Sale and Leaseback	52
	SECTION 8.14	Change in Name, Location or Executive Office or Executive Management; Change in Fiscal Year	52
	SECTION 8.15	Benefit Plans and Agreements	52
ARTICLE IX EVENTS OF DEFAULT			53
	SECTION 9.1	Listing of Events of Default	53
	SECTION 9.2	Action if Bankruptcy	55
	SECTION 9.3	Action if Other Event of Default	55
ARTICLE X MISCELLANEOUS PROVISIONS			56
	SECTION 10.1	Waivers, Amendments, Etc.	56
	SECTION 10.2	Notices; Time	56
	SECTION 10.3	Payment of Costs and Expenses	56
	SECTION 10.4	Indemnification	57
	SECTION 10.5	Survival	58
	SECTION 10.6	Severability	58
	SECTION 10.7	Headings	58
	SECTION 10.8	Execution in Counterparts, Effectiveness, Etc.	58
	SECTION 10.9	Governing Law; Entire Agreement	58
	SECTION 10.10	Successors and Assigns	58
	SECTION 10.11	Other Transactions	59
	SECTION 10.12	Forum Selection and Consent to Jurisdiction	59
	SECTION 10.13	Waiver of Jury Trial	59

 

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	SECTION 10.14	Confidentiality	60
	SECTION 10.15	Exceptions to Confidentiality	61

 

SCHEDULES:

 

Schedule 1.1		Competitors
Schedule 1.2		Tangible Fixed Assets
Schedule 6.6		Material Adverse Change
Schedule 6.7(a)		Litigation
Schedule 6.8		Existing Subsidiaries
Schedule 6.10		Taxes
Schedule 6.15(a)		Intellectual Property
Schedule 6.15(b)		Intellectual Property Exceptions
Schedule 6.15(b)(v)		Intellectual Property Sole Ownership Exceptions
Schedule 6.15(c)		Intellectual Property Infringement
Schedule 6.15(e)		Infringement Notices
Schedule 6.16		Material Agreements
Schedule 6.17		Permits
Schedule 6.18(b)		Regulatory Actions
Schedule 6.18(c)		Regulatory Compliance
Schedule 6.18(d)		Key Permit Matters
Schedule 6.18(e)		Certain Regulatory Enforcement Matters
Schedule 6.18(g)		Certain Regulatory Disclosure Matters
Schedule 6.18(h)		Studies, Tests and Clinical and Preclinical Trials
Schedule 6.19		Transactions with Affiliates
Schedule 6.22		Deposit and Disbursement Accounts
Schedule 7.7		Use of Proceeds

 

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Schedule 8.2(b)		Indebtedness to be Paid
Schedule 8.2(c)		Existing Indebtedness
Schedule 8.3(c)		Existing Liens
Schedule 8.5(a)		Investments
Schedule 10.2		Notice Information

 

EXHIBITS:

 

Exhibit A	-		Form of Promissory Note
Exhibit B	-		Form of Loan Request
Exhibit C	-		Form of Compliance Certificate
Exhibit D	-		Form of Guarantee
Exhibit E	-		Form of Security Agreement

 

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CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT dated as of April 18, 2013 (as amended, supplemented or otherwise modified from time to time, this “ Agreement ”), is by and between NATERA, INC., a Delaware corporation (the “ Borrower ”) and ROS ACQUISITION OFFSHORE LP, a Cayman Islands Exempted Limited Partnership (together with its Affiliates, successors, transferees and assignees, the “ Lender ”). The Borrower and the Lender are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties ”.

 

W I T N E S S E T H :

 

WHEREAS, the Borrower has requested that the Lender provide a senior term loan facility to the Borrower in an aggregate principal amount of $30,000,000 (with $20,000,000 available at the Closing and $10,000,000 available prior to December 31, 2014, subject to the terms and conditions set forth herein); and

 

WHEREAS, the Lender is willing, on the terms and subject to the conditions hereinafter set forth, to extend the Commitment and make the Loans to the Borrower;

 

NOW, THEREFORE, the parties hereto agree as follows.

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.1 Defined Terms . The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

 

“ Affiliate ” of any Person means any other Person which, directly or indirectly, Controls, is Controlled by or is under common Control with such Person. “ Control ” (and its correlatives) by any Person means the power of such Person, directly or indirectly, (i) to vote 10% or more of the Voting Securities (determined on a fully diluted basis) of another Person, or (ii) to direct or cause the direction of the management and policies of such other Person (whether by contract or otherwise).

 

“ Agreement ” is defined in the preamble.

 

“ Applicable Margin ” means 8.00%.

 

“ Authorized Officer ” means, relative to the Borrower or any of the Subsidiaries, those of its officers, general partners or managing members (as applicable) whose signatures and incumbency shall have been certified to the Lender pursuant to Section 5.2 .

 

“ Benefit Plan ” means any employee benefit plan, as defined in section 3(3) of ERISA, that either: (i) is a “multiemployer plan,” as defined in section 3(37) of ERISA, (ii) is subject to section 412 of the Code, section 302 of ERISA or Title IV of ERISA, or (iii) provides welfare

 

 

benefits to terminated employees, other than to the extent required by section 4980B(f) of the Code and the corresponding provisions of ERISA.

 

“ Borrower ” is defined in the preamble .

 

“ Borrower LDTs ” means the laboratory-developed tests and associated services or products developed, designed, validated, marketed, and performed by the Borrower and its Subsidiaries, including the Panorama test.

 

“ Borrower Medical Devices ” means any products researched, developed, marketed, manufactured, stored, distributed by or for the Borrower, including in vitro diagnostic medical devices, reagents, software, sample collection kits and any other device or accessory.

 

“ Business Day ” means any day which is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in New York, New York, Luxembourg or the Cayman Islands.

 

“ Capital Securities ” means, with respect to any Person, all shares of, interests or participations in, or other equivalents in respect of (in each case however designated, whether voting or non-voting), of such Person’s capital stock, whether now outstanding or issued after the Closing Date.

 

“ Capitalized Lease Liabilities ” means, with respect to any Person, all monetary obligations of such Person and its Subsidiaries under any leasing or similar arrangement which have been (or, in accordance with GAAP, should be) classified as capitalized leases, and for purposes of each Loan Document the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a premium or a penalty.

 

“ Cash Equivalent Investment ” means, at any time:

 

(a)                                  any direct obligation of (or unconditionally guaranteed by) the United States (or any agency or political subdivision thereof, to the extent such obligations are supported by the full faith and credit of the United States) maturing not more than one year after such time;

 

(b)                                  commercial paper maturing not more than one year from the date of issue, which is issued by a corporation (other than an Affiliate of the Borrower or any of its Subsidiaries) organized under the laws of any state of the United States or of the District of Columbia and rated A-1 or higher by S&P or P-1 or higher by Moody’s;

 

(c)                                   any domestic or Eurodollar certificate of deposit, demand or time deposit or bankers acceptance, maturing not more than 180 days after its date of issuance, issued or placed with any bank or trust company organized under the laws of the United States (or any state thereof) and which has (or is a subsidiary of a bank holding company which has) (x) a credit rating of A2 or higher from Moody’s or A or higher from S&P and (y) a combined capital and surplus greater than $500,000,000; or

 

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(d)                                  investments in money market mutual funds at least 95% of the assets of which are comprised of securities of the types described in clauses (a) through (c) of this definition.

 

“ Casualty Event ” means the material damage to, or destruction or condemnation of, as the case may be, property of any Person.

 

“ Change in Control ” means and shall be deemed to have occurred if (except if occurring in connection with an issuance by the Borrower of Capital Securities or other equity interests in connection with a public equity offering or a private equity offering primarily to venture investors for capital raising purposes) (i) any “person” or “group” (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the date hereof) shall own, directly or indirectly, beneficially or of record, determined on a fully diluted basis, more than 40% of the Voting Securities of the Borrower; (ii) a majority of the seats (other than vacant seats) on the board of directors (or equivalent) of the Borrower shall at any time be occupied by persons who were neither (x) nominated by the board of directors of the Borrower nor (y) appointed by directors so nominated, or (iii) the Borrower shall cease to directly own, beneficially and of record (other than director’s qualifying shares or investments by foreign nationals to the extent mandated by applicable laws), 100% of the issued and outstanding Capital Securities of the Subsidiaries.

 

“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (i) the adoption or taking effect of any law, rule, regulation or treaty, (ii) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“ CLIA ” means the Clinical Laboratory Improvement Amendments of 1988, as amended together with any rule, regulation, interpretation, guidance document, policy, judgment lawfully issued or promulgated thereunder by CMS (or any predecessor entity).

 

“ CLIA Accreditation ” means a certificate of compliance or certificate of accreditation from an accreditation program approved by CMS permitting a clinical laboratory to perform tests of high complexity.

 

“ Closing Date ” means the date of the making of the Initial Loan hereunder, which in no event shall be later than April 18, 2013.

 

“ Closing Date Certificate ” means a closing date certificate executed and delivered by an Authorized Officer of the Borrower in form and substance satisfactory to the Lender.

 

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“ CMS ” means the U.S. Center for Medicare and Medicaid Services.

 

“ Code ” means the Internal Revenue Code of 1986, and the regulations thereunder, in each case as amended from time to time.

 

“ Comerica ” means Comerica Bank, a Texas banking association (together with its successors and assigns).

 

“ Commitment ” means the Lender’s obligation (if any) to make Loans hereunder.

 

“ Commitment Amount ” means the Initial Commitment Amount plus the Delayed Draw Commitment Amount.

 

“ Competitor ” means any Person who competes with the Company in the general field of genetic testing for reproductive indications, including those Persons identified on Schedule 1.1 as updated from time to time.

 

“ Compliance Certificate ” means a certificate duly completed and executed by an Authorized Officer of the Borrower, substantially in the form of Exhibit C hereto, together with such changes thereto as the Lender may from time to time request for the purpose of monitoring the Borrower’s compliance with the financial covenants contained herein.

 

“ Confidential Information ” means any and all information or material (whether written or oral, or in electronic or other form) that, at any time before, on or after the Closing Date, has been or is provided or communicated to the Receiving Party by or on behalf of the Disclosing Party pursuant to this Agreement or in connection with the transactions contemplated hereby, and shall include the existence and terms of this Agreement, and shall include all information received from the Disclosing Party or any of its Affiliates relating to the Disclosing Party or its Affiliates, to their respective businesses, or to any Product, other than any such information that is available to the Receiving Party on a non-confidential basis prior to disclosure by the Disclosing Party.

 

“ Contingent Liability ” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the Indebtedness of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the Capital Securities of any other Person. The amount of any Person’s obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount of the debt, obligation or other liability guaranteed thereby.

 

“ Control ” is defined within the definition of “ Affiliate ”.

 

“ Controlled Account ” is defined in Section 7.13 .

 

“ Copyrights ” means all copyrights, whether statutory or common law, and all exclusive and nonexclusive licenses from third parties or rights to use copyrights owned by such third

 

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parties, along with any and all (i) renewals, revisions, extensions, derivative works, enhancements, modifications, updates and new releases thereof, (ii) income, royalties, damages, claims and payments now and hereafter due and/or payable with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (iii) rights to sue for past, present and future infringements thereof, and (iv) foreign copyrights and any other rights corresponding thereto throughout the world.

 

“ Copyright Security Agreement ” means any Copyright Security Agreement executed and delivered by the Borrower or any of the Subsidiaries in substantially the form of Exhibit C to the Security Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time.

 

“ Default ” means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default.

 

“ Delayed Draw Closing Date ” means the date of the making of the Delayed Draw Loan hereunder, which in no event shall be later than December 31, 2014.

 

“ Delayed Draw Commitment Amount ” means $10,000,000.

 

“ Delayed Draw Commitment Termination Date ” means the earliest to occur of (i) the Delayed Draw Closing Date (immediately after the making of the Delayed Draw Loan on such date), (ii) December 31, 2014, if the Delayed Draw Loan shall not have been made hereunder prior to such date and (iii) the Initial Commitment Termination Date, if the Initial Loan shall not have been made hereunder prior to or on such date.

 

“ Delayed Draw Loan ” is defined in Section 2.1 .

 

“ Designated Jurisdiction ” means any country or territory to the extent that such country or territory is the subject of any Sanction.

 

“ Device ” means any instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is (a) recognized in the official National Formulary, or the United States Pharmacopeia, or any supplement to them, (b) intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or (c) intended to affect the structure or any function of the body of man or other animals; and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes.

 

“ Device Approval Application ” means a premarket approval application (PMA) submitted under Section 515 of the FD&C Act (21 U.S.C. § 360e), a de novo request submitted under Section 513(f) of the FD&C Act (21 U.S.C. § 360c(f)), or premarket notification submitted under Section 510(k) of the FD&C Act (21 U.S.C. § 360(k)) (“510(k)”), as defined in the FD&C Act, or any corresponding foreign application in the Territory (as defined in the Royalty Agreement), including, with respect to the European Union, a submission to a Notified Body for a Certificate of Conformity with an applicable Council Directive.

 

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“ Disclosing Party ” means the Party disclosing Confidential Information.

 

“ Disposition ” (or similar words such as “ Dispose ”) means any sale, transfer, lease, license, contribution or other conveyance (including by way of merger) of, or the granting of options, warrants or other rights to, any of the Borrower’s or the Subsidiaries’ assets (including accounts receivable and Capital Securities of Subsidiaries) to any other Person (other than to the Borrower or any of its Subsidiaries) in a single transaction or series of transactions.

 

“ Disqualified Capital Securities ” shall mean any Capital Securities that, by their terms (or by the terms of any security or other Capital Securities into which they are convertible or for which they are exchangeable) or upon the happening of any event or condition, (a) mature or are mandatorily redeemable (other than solely for Qualified Capital Securities), pursuant to a sinking fund obligation or otherwise (except as a result of a Change in Control or asset sale so long as any rights of the holders thereof upon the occurrence of a Change in Control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitment), (b) are redeemable at the option of the holder thereof (other than solely for Qualified Capital Securities) (except as a result of a Change in Control or asset sale so long as any rights of the holders thereof upon the occurrence of a Change in Control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitment), in whole or in part, (c) provide for the scheduled payment of dividends in cash or (d) are or become convertible into or exchangeable for Indebtedness or any other Capital Securities that would constitute Disqualified Capital Securities, in each case, prior to the date that is one hundred and eighty-one (181) days after the Maturity Date; provided that if such Capital Securities are issued pursuant to a plan for the benefit of employees of the Borrower or any of its Subsidiaries, or by any such plan to such employees, such Capital Securities shall not constitute Disqualified Capital Securities solely because they may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.

 

“ EMA ” means the European Medicines Agency or any successor entity.

 

“ Environmental Laws ” means all federal, state, local or international laws, statutes, rules, regulations, codes, directives, treaties, requirements, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, natural resources, Hazardous Material or health and safety matters.

 

“ Environmental Liability ” means any liability, loss, claim, suit, action, investigation, proceeding, damage or commitment, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of or affecting the Borrower or any Subsidiary directly or indirectly arising from, in connection with or based upon (i) any Environmental Law or Environmental Permit, (ii) the generation, use, handling, transportation, storage, treatment, recycling, presence, disposal, Release or threatened Release of, or exposure to, any Hazardous Materials, or (iii) any contract, agreement, penalty, order, decree, settlement, injunction or other arrangement (including operation of law) pursuant to

 

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which liability is assumed, entered into, inherited or imposed with respect to any of the foregoing.

 

“ Environmental Permit ” is defined in Section 6.7 .

 

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

 

“ ERISA Affiliate ” means, as applied to any Person, (i) any corporation that is a member of a controlled group of corporations within the meaning of section 414(b) of the Code of which that Person is a member, (ii) any trade or business (whether or not incorporated) that is a member of a group of trades or businesses under common control within the meaning of section 414(c) of the Code of which that Person is a member, and (iii) any member of an affiliated service group within the meaning of section 414(m) or 414(o) of the Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member.

 

“ Event of Default ” is defined in Section 9.1 .

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Excluded Account ” is defined in Section 7.13 .

 

“ FATCA ” means Sections 1471 through 1474 of the Code, as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

“ FDA ” means the U.S. Food and Drug Administration and any successor entity.

 

“ FD&C Act ” means the U.S. Food, Drug and Cosmetic Act (or any successor thereto), as amended from time to time, and the rules, regulations, guidelines, guidance documents and compliance policy guides issued or promulgated thereunder.

 

“ Fiscal Month ” means a calendar month ending on the last Business Day of that calendar month.

 

“ Fiscal Quarter ” means a quarter ending on the last day of March, June, September or December.

 

“ Fiscal Year ” means any period of twelve consecutive calendar months ending on December 31; references to a Fiscal Year with a number corresponding to any calendar year ( e.g. , the “2012 Fiscal Year”) refer to the Fiscal Year ending on December 31 of such calendar year.

 

“ Foreign Lender ” means a Lender that is organized under the laws of a jurisdiction outside of the United States.

 

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“ F.R.S. Board ” means the Board of Governors of the Federal Reserve System or any successor thereto.

 

“ FTC Act ” means the Federal Trade Commission Act.

 

“ GAAP ” means generally accepted accounting principles in the United States.

 

“ Governmental Authority ” means any national, supranational, federal, state, county, provincial, local, municipal or other government or political subdivision thereof (including any Regulatory Agency), whether domestic or foreign, and any agency, authority, commission, ministry, instrumentality, regulatory body, court, tribunal, arbitrator, central bank or other Person exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to any such government.

 

“ Guarantee ” means the guarantee executed and delivered by each Guarantor, substantially in the form of Exhibit D hereto, as amended, supplemented, amended and restated or otherwise modified from time to time.

 

“ Guarantors ” means, collectively, the Subsidiaries existing on the Closing Date and each future Subsidiary required to execute a Guarantee pursuant to Section 7.8 .

 

“ Hazardous Material ” means any material, substance, chemical, mixture or waste which is capable of damaging or causing harm to any living organism, the environment or natural resources, including all explosive, special, hazardous, polluting, toxic, industrial, dangerous, biohazardous, medical, infectious or radioactive substances, materials or wastes, noise, odor, electricity or heat, and including petroleum or petroleum products, byproducts or distillates, asbestos or asbestos-containing materials, urea formaldehyde, polychlorinated biphenyls, radon gas, ozone-depleting substances, greenhouse gases, and all other substances or wastes of any nature regulated pursuant to any Environmental Law or as to which any Governmental Authority requires investigation, reporting or remedial action.

 

“ Hedging Obligations ” means, with respect to any Person, all liabilities of such Person under currency exchange agreements, interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates.

 

“ herein ”, “ hereof ”, “ hereto ”, “ hereunder ” and similar terms contained in any Loan Document refer to such Loan Document as a whole and not to any particular Section, paragraph or provision of such Loan Document.

 

“ IDE ” means an application, including an application filed with a Regulatory Authority, for authorization to commence human clinical studies, including (a) an Investigational Device Exemption as defined in the FD&C Act or any successor application or procedure filed with the FDA, (b) an abbreviated IDE as specified in FDA regulations in 21 C.F.R. § 812.2(b), (c) any equivalent of a United States IDE in other countries or regulatory jurisdictions, (d) all amendments, variations, extensions and renewals thereof that may be filed with respect to the foregoing and (e) all related documents and correspondence thereto, including documents and correspondence with Institutional Review Boards (IRBs).

 

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“ Illumina ” is defined in Section 7.16 .

 

“ Impermissible Qualification ” means any qualification or exception to the opinion or certification of any independent public accountant as to any financial statement of the Borrower (i) which is of a “going concern” or similar nature other than any such qualification in any opinion given in the Fiscal Year of the Maturity Date that is based solely on a determination that the Borrower may not have sufficient cash or other available resources to run the business for the Fiscal Year of the Maturity Date as a result of the Loans maturing during such Fiscal Year, (ii) which relates to the limited scope of examination of matters relevant to such financial statement, or (iii) which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause the Borrower to be in Default.

 

“ including ” and “ include ” means including without limiting the generality of any description preceding such term, and, for purposes of each Loan Document, the parties hereto agree that the rule of ejusdem generis shall not be applicable to limit a general statement, which is followed by or referable to an enumeration of specific matters, to matters similar to the matters specifically mentioned.

 

“ Indebtedness ” of any Person means:

 

(a)                                  all obligations of such Person for borrowed money or advances and all obligations of such Person evidenced by bonds, debentures, notes or similar instruments;

 

(b)                                  all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker’s acceptances issued for the account of such Person;

 

(c)                                   all Capitalized Lease Liabilities of such Person and all obligations of such Person arising under Synthetic Leases;

 

(d)                                  net Hedging Obligations of such Person;

 

(e)                                   all obligations of such Person in respect of Disqualified Capital Securities;

 

(f)                                    whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable in the ordinary course of business which are not overdue for a period of more than 90 days or, if overdue for more than 90 days, as to which a dispute exists and adequate reserves in conformity with GAAP have been established on the books of such Person), and indebtedness secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien on property owned or being acquired by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; and

 

(g)                                   all Contingent Liabilities of such Person in respect of any of the foregoing.

 

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The Indebtedness of any Person shall include the Indebtedness of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such Person, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

“ Indemnified Liabilities ” is defined in Section 10.4 .

 

“ Indemnified Parties ” is defined in Section 10.4 .

 

“ Infringement ” and “ Infringes ” mean the misappropriation or other violation of know-how, trade secrets, confidential information, and/or Intellectual Property.

 

“ Initial Commitment Amount ” means $20,000,000.

 

“ Initial Commitment Termination Date ” means the earliest to occur of (i) the Closing Date (immediately after the making of the Initial Loan on such date), and (ii) April 18, 2013, if the Initial Loan shall not have been made hereunder prior to such date.

 

“ Initial Loan ” is defined in Section 2.1.

 

“ Intellectual Property ” means all (i) Patents and all patent applications of any type, registrations and renewals, reissues, reexaminations and patent rights in any lawful form thereof; (ii) Trademarks and all applications, registrations and renewals thereof; (iii) Copyrights and other works of authorship (registered or unregistered), and all applications, registrations and renewals therefor; (iv) computer software, databases, data and documentation; (v) trade secrets and confidential business information, whether patentable or unpatentable and whether or not reduced to practice, know-how, inventions, manufacturing processes and techniques, research and development information, data and other information included in or supporting Regulatory Authorizations, including financial, marketing and business data, pricing and cost information, business, finance and marketing plans, customer and prospective customer lists and information, and supplier and prospective supplier lists and information; (vi) other intellectual property or similar proprietary rights; (vii) copies and tangible embodiments of any of the foregoing (in whatever form or medium); and (viii) any and all improvements to any of the foregoing.

 

“ Intercreditor Agreement ” means the Intercreditor Agreement, dated as of the date hereof, by and among Comerica, the Lender and ROS.

 

“ Interest Period ” means, (a) initially, the period beginning on (and including) the date on which the Initial Loan is made hereunder pursuant to Section 2.3 and ending on (and including) the last day of the Fiscal Quarter in which the Loan was made, and (b) thereafter, the period beginning on (and including) the first day of each succeeding Fiscal Quarter and ending on the earlier of (and including) (x) the last day of such Fiscal Quarter and (y) the Maturity Date.

 

“ Investment ” means, relative to any Person, (i) any loan, advance or extension of credit made by such Person to any other Person, including the purchase by such Person of any bonds, notes, debentures or other debt securities of any other Person, (ii) Contingent Liabilities in favor of any other Person, and (iii) any Capital Securities held by such Person in any other Person.

 

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The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property at the time of such Investment.

 

“ Joint Venture ” means a joint venture, partnership or other similar arrangement, in corporate, partnership or similar legal form.

 

“ Key Permits ” means all material Permits relating to the Products, including all Regulatory Authorizations.

 

“ knowledge ” of the Borrower means the actual knowledge of any officer of the Borrower after due inquiry.

 

“ Lender ” is defined in the preamble.

 

“ LIBO Rate ” means the three-month London Interbank Offered Rate for deposits in U.S. Dollars at approximately 11:00 a.m. (London, England time), quoted by the Lender from the appropriate Bloomberg or Telerate page selected by the Lender (or any successor thereto or similar source determined by the Lender from time to time), which shall be that three-month London Interbank Offered Rate for deposits in U.S. Dollars in effect two Business Days prior to the last Business Day of the relevant Fiscal Quarter, adjusted for any reserve requirement and any subsequent costs arising from a change in governmental regulation, such rate to be rounded up to the nearest 1/16 of 1% and such rate to be reset quarterly as of the first Business Day of each Fiscal Quarter. If the Initial Loan is advanced other than on the first Business Day of a Fiscal Quarter, the initial LIBO Rate shall be that three-month London Interbank Offered Rate for deposits in U.S. Dollars in effect two Business Days prior to the date of the Initial Loan, which rate shall be in effect until (and including) the last Business Day of the Fiscal Quarter next ending. The Lender’s internal records of applicable interest rates shall be determinative in the absence of manifest error.

 

“ Lien ” means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property, or other priority or preferential arrangement of any kind or nature whatsoever, to secure payment of a debt or performance of an obligation.

 

“ Liquidity ” means, at any time, an amount determined for the Borrower equal to the sum of unrestricted cash-on-hand and Cash Equivalent Investments of the Borrower, to the extent held in a Controlled Account located in the United States.

 

“ Loan Documents ” means, collectively, this Agreement, the Notes, the Security Agreement, the Royalty Agreement, the Warrant Agreement, each other agreement pursuant to which the Lender is granted a Lien to secure the Obligations (including any mortgages entered into pursuant to Section 7.9 ), the Guarantee, and each other agreement, certificate, document or instrument delivered in connection with any Loan Document, whether or not specifically mentioned herein or therein.

 

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“ Loan Request ” means a Loan request and certificate duly executed by an Authorized Officer of the Borrower substantially in the form of Exhibit B hereto.

 

“ Loans ” means the Initial Loan and the Delayed Draw Loan.

 

“ MAA ” means a marketing authorization application filed with any regulatory authority in the European Union.

 

“ Material Adverse Effect ” means a material adverse effect on (i) the business, condition (financial or otherwise), operations, or properties of the Borrower or of the Borrower and the Subsidiaries taken as a whole, (ii) the rights and remedies of the Lender under any Loan Document or (iii) the ability of the Borrower or of the Borrower and its Subsidiaries taken as a whole, to perform Obligations under any Loan Document.

 

“ Material Agreements ” means (i) each contract or agreement to which the Borrower or any Subsidiary is a party involving aggregate payments of more than $[*] in any Fiscal Year, whether such payments are being made by the Borrower or any Subsidiary to a non-Affiliated Person, or by a non-Affiliated Person to the Borrower or any Subsidiary; and (ii) all other contracts or agreements, individually or in the aggregate, material to the business, operations, properties or condition (financial or otherwise) of the Borrower or of the Borrower and its Subsidiaries taken as a whole.

 

“ Maturity Date ” means April 18, 2019.

 

“ Moody’s ” means Moody’s Investors Service, Inc.

 

“ Net Asset Sales Proceeds ” means, with respect to the Disposition (other than Dispositions permitted by Sections 8.8(i), (ii), (iii)  and (iv) ) after the Closing Date by the Borrower or any Subsidiary to any Person of any assets of the Borrower or its Subsidiaries, the excess of gross cash proceeds received by the Borrower from such Disposition over all reasonable and customary costs and expenses, and including Taxes payable by the recipient of such proceeds, incurred in connection with such Disposition which have not been paid to Affiliates of the Borrower in connection therewith.

 

“ Net Casualty Proceeds ” means, with respect to any Casualty Event, the amount of any insurance proceeds or condemnation awards received by the Borrower or any of the Subsidiaries in connection with such Casualty Event, other than proceeds that are used to repair or replace the assets subject to such Casualty Event within 180 days of receipt of such proceeds with respect to such Casualty Event with like or similar assets of substantially equal or better value and utility, in excess of $1,000,000 per occurrence, or $2,000,000 in the aggregate cumulatively through the Termination Date (in each case net of all reasonable and customary collection expenses thereof), but excluding any proceeds or awards required to be paid to a creditor (other than the Lender) which holds a first priority Lien permitted by clause (f) of Section 8.3 on the property which is the subject of such Casualty Event.

 

“ 956 Impact ” will be deemed to exist to the extent the issuance of a guaranty by, grant of a Lien by, or pledge of greater than two-thirds of the voting Capital Securities or similar equity interests of, a Subsidiary that is a “controlled foreign corporation” within the meaning of Section

 

[*] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

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957 of the Code, would result in incremental income tax liability as a result of the application of Section 956 of the Code, taking into account actual anticipated repatriation of funds, foreign tax credits and other relevant factors.

 

“ Net Revenue ” means net sales, distribution income, service payments, license income, and other forms of consideration made to Natera and its Subsidiaries related to all products and services (including all Products) and shall be determined in accordance with GAAP. Net Revenue shall be determined in a manner consistent with the methodologies, practices and procedures used in developing Natera’s audited financial statements.

 

“ Non-Excluded Taxes ” means any Taxes other than (a) Taxes imposed on or measured by a Person’s net income, and franchise Taxes with respect to the Lender imposed by any Governmental Authority under the laws of which the Lender is organized or in which it maintains its applicable lending office, (b) branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction described in paragraph (a) above and (c) (i) any withholding tax that is imposed by the United States on amounts payable to a Foreign Lender at the time such Foreign Lender first becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 4.3(a) or (ii) any U.S. federal withholding Taxes or other amounts imposed or payable under FATCA.

 

“ Note ” means a promissory note of the Borrower payable to the Lender, in the form of Exhibit A hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to the Lender resulting from the outstanding amount of the Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof.

 

“ Obligations ” means all obligations (monetary or otherwise, whether absolute or contingent, matured or unmatured) of the Borrower and each Subsidiary arising under or in connection with a Loan Document other than the Warrant Agreement and the principal of and premium, if any, and interest (including interest accruing during the pendency of any proceeding of the type described in Section 9.1(h) , whether or not allowed in such proceeding) on the Loans.

 

“ OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.

 

“ Organic Document ” means, relative to the Borrower or any Subsidiary, its certificate of incorporation, by-laws, certificate of partnership, partnership agreement, certificate of formation, limited liability agreement, operating agreement and all shareholder agreements, voting trusts and similar arrangements applicable to the Borrower’s or any Subsidiary’s Capital Securities.

 

“ Other Taxes ” means any and all stamp, documentary or similar Taxes, or any other excise or property Taxes or similar levies that arise on account of any payment made or required to be made under any Loan Document or from the execution, delivery, registration, recording or enforcement of any Loan Document (excluding, for the avoidance of doubt Taxes described in clauses (a), (b) or (c) of the definition of Non-Excluded Taxes).

 

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“ Other Administrative Proceeding ” means any administrative proceeding relating to a dispute involving a patent office or other relevant intellectual property registry which relates to validity, opposition, revocation, ownership or enforceability of the relevant Intellectual Property.

 

“ Panorama Net Revenue ” means Net Revenue from the sale of the Borrower’s non-invasive prenatal screening test for the determination of the sex of the fetus and the detection of denovo and inherited genetic abnormalities including, but not limited to, trisomy 21 (Down syndrome), trisomy 18 (Edwards syndrome), trisomy 13 (Patau syndrome), sex chromosome abnormalities, triploidy, micro deletions, microduplications, and disease-linked genetic mutations seen in parent blood samples that may be present in the child.

 

“ Parallel Entity ” means a Person for which the right to vote at least 30% or more of its Voting Securities is held, directly or indirectly, by (i) stockholders holding at least 50% of the Voting Securities of the Borrower or (ii) Dr. Matthew Rabinowitz and either or both of (a) Sequoia Capital XII and its Affiliates and (b) Claremont Creek Ventures, L.P. and its Affiliates.

 

“ Party ” and “ Parties ” have the meanings set forth in the preamble hereto.

 

“ Patent ” means any patent, any type of patent application or invention disclosure, including all divisions, continuations, continuations in-part, provisionals, continued prosecution applications, substitutions, reissues, reexaminations, renewals, extensions, restorations, supplemental protection certificates and patent rights in any form and other additions in connection therewith, whether in or related to the United States or any foreign country or other jurisdiction.

 

“ Patent Security Agreement ” means any Patent Security Agreement executed and delivered by the Borrower or any of the Subsidiaries in substantially the form of Exhibit A to the Security Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time.

 

“ Permits ” means all permits, licenses, registrations, certificates, orders, approvals, authorizations, consents, waivers, franchises, variances and similar rights issued by or obtained from any Governmental Authority or any other Person, including, without limitation, those relating to Environmental Laws.

 

“ Permitted Acquisition ” means the purchase or other acquisition of all of the Capital Securities (other than qualifying directors shares) in, or all or substantially all of the property of, or all or substantially all of any business or division of, any Person (other than any joint venture owned by another Person that is purchased or acquired) that, upon the consummation thereof, will be wholly-owned directly by the Borrower or one or more of its Wholly-Owned Subsidiaries (including as a result of a merger or consolidation); provided that, with respect to each Permitted Acquisition:

 

(a)                                  any such newly-created or acquired Subsidiary shall comply with the requirements of Section 7.8 and the Lender shall have received (or shall receive in connection with the closing of such acquisition) a first priority perfected security interest, subject only to Liens permitted under Section 8.3, in the property (including, without limitation, equity interests) acquired with respect to the entity acquired;

 

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(b)                                  the lines of business of the Person to be (or the property of which is to be) so purchased or otherwise acquired shall be permitted pursuant to Section 8.1;

 

(c)                                   in the case of a purchase or other acquisition of the Capital Securities of another Person, the board of directors (or other comparable governing body) of such other Person shall have duly approved such purchase or other acquisition;

 

(d)                                  the total cash and noncash consideration paid by or on behalf of the Borrower and its Subsidiaries for any such purchase or other acquisition, when aggregated with the consideration paid by or on behalf of the Borrower and its Subsidiaries for all other Permitted Acquisitions after the Closing Date shall not exceed the aggregate amount of $[*] in any Fiscal Year and an aggregate cumulative amount of $[*];

 

(e)                                   immediately before and after giving effect to any such purchase or other acquisition, no Default or Event of Default, shall exist or result therefrom; and

 

(f)                                    the Borrower shall have delivered to the Lender, at least 10 Business Days prior to the date on which any such purchase or other acquisition is to be consummated, a written notice describing such transaction, and thereafter, if requested by the Lender for any such transaction involving consideration in excess of $[*], (i) historical financial statements of or related to the Person or assets to be acquired, (ii) twelve month projections for such Person or assets to be acquired and for Borrower after giving effect to such transaction, and (iii) material documentation and other information relating to such transaction and reasonably requested by the Lender.

 

“ Permitted Joint Venture ” means any Investment in Joint Ventures customary in the Borrower’s industry; provided that, with respect to each Permitted Joint Venture:

 

(a)                                  the lines of business of the Joint Venture shall be permitted pursuant to Section 8.1;

 

(b)                                  other than as expressly permitted under clause (c) below, there shall be no recourse to the Borrower or any Subsidiary for any Indebtedness or obligations of the Joint Venture;

 

(c)                                   the sum of the aggregate cash amount (including any recourse or assumed Indebtedness referenced in clause (b)) plus the fair market value of tangible assets Invested in Permitted Joint Ventures, together with all Investments pursuant to Section 8.5(k), shall not exceed $[*]; provided that such sum shall not include any loan, advance or extension of credit that has been repaid; and

 

(d)                                  there shall be no transfer or license by the Borrower or any Subsidiary of assets to the Joint Venture other than tangible assets and Intellectual Property for use solely outside of the United States.

 

“ Permitted Subordinated Indebtedness ” means Indebtedness incurred after the Closing Date by the Borrower or the Subsidiaries that is (i) subordinated to the Obligations and all other

 

[*] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

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Indebtedness owing from the Borrower or the Subsidiaries to the Lender pursuant to a written subordination agreement satisfactory to the Lender in its sole discretion and (ii) in an amount and on terms approved by the Lender in its sole discretion.

 

“ Person ” means any natural person, corporation, limited liability company, partnership, joint venture, association, trust or unincorporated organization, Governmental Authority or any other legal entity, whether acting in an individual, fiduciary or other capacity.

 

“ Privacy Laws ” means all applicable security and privacy standards regarding protected health information under (i) the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, including the regulations promulgated thereunder (collectively “ HIPAA ”) and (ii) any applicable state privacy Laws.

 

“ Product ” means any service or product (including software products and services) designed, developed, manufactured, licensed, marketed, sold, performed, or otherwise commercialized by the Borrower or any of its Subsidiaries, including Borrower LDTs and Borrower Medical Devices and any such product in development.

 

“ Product Agreement ” means each agreement, license, document, instrument, interest (equity or otherwise) or the like under which one or more parties grants or receives any right, title or interest with respect to any Product Development and Commercialization Activities in respect of one or more Products specified therein or to exclude third parties from engaging in, or otherwise restricting any right, title or interest as to any Product Development and Commercialization Activities with respect thereto, including each contract or agreement with suppliers (including human tissue supply agreements), manufacturers, distributors, clinical research organizations, hospitals, group purchasing organizations, wholesalers, pharmacies or any other Person related to any such entity.

 

“ Product Development and Commercialization Activities ” means, with respect to any Product, any combination of research, development, manufacture, import, use, sale, importation, storage, labeling, marketing, promotion, supply, distribution, testing, packaging, purchasing or other commercialization activities, receipt of payment in respect of any of the foregoing, or like activities the purpose of which is to commercially exploit such Product.

 

“ Purchase Money Indebtedness ” means Indebtedness (1) consisting of the deferred purchase price for equipment incurred in connection with the acquisition of such equipment, where the amount of such Indebtedness does not exceed the greater of (a) the cost of the equipment being financed and (b) the fair market value of such equipment; and (2) incurred to finance such acquisition by the Borrower or a Subsidiary of such equipment.

 

“ Purchase Orders ” is defined in Section 7.16 .

 

“ Qualified Capital Securities ” shall mean any Capital Securities that are not Disqualified Capital Securities.

 

“ Receiving Party ” means the Party receiving Confidential Information.

 

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“ Recipient ” is defined in Section  10.14 .

 

“ Refinance ” means, in respect of any Indebtedness, to refinance, extend, renew, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness.

 

“ Regulatory Agencies ” means any Governmental Authority that is concerned with the use, control, safety, efficacy, reliability, manufacturing, marketing, distribution, sale or other Product Development and Commercialization Activities relating to any Product of the Borrower or any of the Subsidiaries, including CMS, FDA, and all similar agencies in other jurisdictions, and includes Standard Bodies.

 

“ Regulatory Authorizations ” means all approvals, clearances, notifications, authorizations, orders, exemptions, registrations, certifications, licenses and permits granted by, submitted to or filed with any Regulatory Agencies necessary for the manufacture, development, distribution, use, storage, import, export, transport, promotion, marketing, sale or other commercialization of any Product in any country or jurisdiction, including any Device Approval Application and CLIA Accreditation.

 

“ Related Parties ” means the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of the Borrower and the Subsidiaries.

 

“ Release ” means any releasing, disposing, discharging, injecting, spilling, leaking, leaching, pumping, pouring, dumping, depositing, emitting, escaping, emptying, seeping, dispersal, migrating or placing, including movement through, into or upon the environment or any natural or man-made structure.

 

“ Repayment Premium ” means a premium of ten percent (10%) of the principal amount of any prepayment or repayment of the Borrower on the Initial Loan or the Delayed Draw Loan, as applicable.

 

“ Restricted Payment ” means (i) the declaration or payment of any dividend on, or the making of any payment or distribution on account of, or setting apart assets for a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of, any class of Capital Securities of the Borrower or any Subsidiary or any warrants, options or other right or obligation to purchase or acquire any such Capital Securities, whether now or hereafter outstanding, or (ii) the making of any other distribution in respect of such Capital Securities, in each case either directly or indirectly, whether in cash, property or obligations of the Borrower or any Subsidiary or otherwise.

 

“ Revenue Base ” means, with respect to any period, the Net Revenue of all Products for such period.

 

“ ROS ” means Royalty Opportunities S.à r.l, a Luxembourg société à responsabilité limitée.

 

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“ Royalty Agreement ” means the Royalty Agreement, dated as of the date hereof, among the Borrower and ROS.

 

“ S&P ” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.

 

“ Sanctions ” means any international economic sanction administered or enforced by the United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.

 

“ SEC ” means the Securities and Exchange Commission.

 

“ Security Agreement ” means the Pledge and Security Agreement executed and delivered by each of the parties thereto, substantially in the form of Exhibit E hereto, as amended, supplemented, amended and restated or otherwise modified from time to time.

 

“ Solvent ” means, with respect to any Person on a particular date, that on such date (i) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (ii) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature, (iv) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which the property of such Person would constitute an unreasonably small capital and (v) such Person has not executed this Agreement or any other Loan Document, or made any transfer or incurred any obligations hereunder or thereunder, with actual intent to hinder, delay or defraud either present or future creditors. The amount of Contingent Liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, can reasonably be expected to become an actual or matured liability.

 

“ Standard Bodies ” means any of the organizations that create, sponsor or maintain safety, quality or other standards, including ISO, ANSI, CEN and SCC and the like.

 

“ Subsidiary ” means, with respect to any Person, any other Person of which more than 50% of the outstanding Voting Securities of such other Person (irrespective of whether at the time Capital Securities of any other class or classes of such other Person shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person. Unless the context otherwise specifically requires, the term “Subsidiary” shall be a reference to a Subsidiary of Borrower.

 

“ Synthetic Lease ” means, as applied to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) (i) that is not a capital lease in accordance with GAAP and (ii) in respect of which the lessee retains or obtains ownership of the property so leased for federal income tax purposes, other than any such lease under which that Person is the lessor.

 

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“ Tangible Fixed Assets “ means the equipment set forth on Schedule 1.2 hereto and other tangible fixed assets acquired with the proceeds of Indebtedness permitted pursuant to Section 8.2(e).

 

“ Taxes ” means all income, stamp or other taxes, duties, levies, imposts, charges, assessments, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, and all interest, penalties or similar liabilities with respect thereto.

 

“ Third Party ” means any Person other than the Borrower or any of its Subsidiaries.

 

“ Termination Date ” means the date on which all Obligations in respect of the Loans have been paid in full in cash and the Commitment shall have terminated.

 

“ Trademark ” means any trademark, service mark, trade name, logo, symbol, trade dress, domain name, corporate name or other indicator of source or origin, and all applications and registrations therefor, together with all of the goodwill associated therewith.

 

“ Trademark Security Agreement ” means any Trademark Security Agreement executed and delivered by the Borrower or any of the Subsidiaries substantially in the form of Exhibit B to any Security Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time.

 

“ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if, with respect to any financing statement or by reason of any provisions of law, the perfection or the effect of perfection or non-perfection of the security interests granted to the Lender pursuant to the applicable Loan Document is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of each Loan Document and any financing statement relating to such perfection or effect of perfection or non-perfection.

 

“ United States ” or “ U.S. ” means the United States of America, its fifty states and the District of Columbia.

 

“ Voting Securities ” means, with respect to any Person, Capital Securities of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.

 

“ Warrant Agreement ” means the Warrant Agreement, dated as of the date hereof, among the Borrower and Royalty Opportunities S.à r.l.

 

“ Wholly-Owned Subsidiary ” means any direct or indirect Subsidiaries of Borrower, all of the outstanding Capital Securities of which (other than any director’s qualifying shares or investments by foreign nationals mandated by applicable laws) is owned directly or indirectly by Borrower.

 

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SECTION 1.2 Use of Defined Terms . Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in each other Loan Document and the schedules attached hereto.

 

SECTION 1.3 Cross-References . Unless otherwise specified, references in a Loan Document to any Article or Section are references to such Article or Section of such Loan Document, and references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition.

 

SECTION 1.4 Accounting and Financial Determinations . Unless otherwise specified, all accounting terms used in each Loan Document shall be interpreted, and all accounting determinations and computations thereunder (including under Section 8.4 and the definitions used in such calculations) shall be made, in accordance with GAAP, as in effect from time to time; provided that, if either the Borrower or the Lender requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or the application thereof on the operation of such provision, regardless of whether any such notice is given before or after such change in GAAP or the application thereof, then such provision shall be interpreted on the basis of GAAP in effect and applied immediately before such change shall have become effective until such request shall have been withdrawn or such provision amended in accordance herewith. Unless otherwise expressly provided, all financial covenants and defined financial terms shall be computed on a consolidated basis for the Borrower and the Subsidiaries, in each case without duplication.

 

SECTION 1.5 Other Loan Documents . Notwithstanding anything in the Intercreditor Agreement or any other Loan Document to the contrary, nothing in the Intercreditor Agreement or any other Loan Document shall permit the Borrower to take any actions or omit to take any actions in violation of this Agreement.

 

ARTICLE II

COMMITMENT AND BORROWING PROCEDURES

 

SECTION 2.1 Commitment . On the terms and subject to the conditions of this Agreement, the Lender agrees to make a term loan (the “ Initial Loan ”) to the Borrower on the Closing Date in an amount equal to (but not less than) the Initial Commitment Amount. On the terms and subject to the conditions of this Agreement, the Lender agrees to make a term loan (the “ Delayed Draw Loan ”) to the Borrower on the Delayed Draw Closing Date in an amount equal to (but not less than) the Delayed Draw Commitment Amount. No amounts paid or prepaid with respect to the Loans may be reborrowed.

 

SECTION 2.2 Borrowing Procedure . The Borrower may irrevocably request that the Initial Loan be made by delivering to the Lender a Loan Request on or before 10:00 a.m. on a Business Day at least three Business Days prior to the proposed Closing Date. The Borrower may irrevocably request that the Delayed Draw Loan be

 

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made by delivering to the Lender a Loan Request on or before 10:00 a.m. on a Business Day at least three Business Days prior to the proposed Delayed Draw Closing Date.

 

SECTION 2.3 Funding . After receipt of the Loan Request for the Initial Loan, the Lender shall, on the Closing Date and subject to the terms and conditions hereof, make the requested proceeds of the Initial Loan available to the Borrower by wire transfer to the account the Borrower shall have specified in its Loan Request. After receipt of the Loan Request for the Delayed Draw Loan, the Lender shall, on the Delayed Draw Closing Date and subject to the terms and conditions hereof, make the requested proceeds of the Delayed Draw Loan available to the Borrower by wire transfer to the account the Borrower shall have specified in its Loan Request.

 

SECTION 2.4 Reduction of the Commitment Amounts . The Initial Commitment Amount shall automatically and permanently be reduced to zero on the Initial Commitment Termination Date. The Delayed Draw Commitment Amount shall automatically and permanently be reduced to zero on the Delayed Draw Commitment Termination Date.

 

ARTICLE III

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

 

SECTION 3.1 Repayments and Prepayments; Application . The Borrower agrees that the Loans, and any fees or interest accrued or accruing thereon, shall be repaid and prepaid solely in U.S. dollars pursuant to the terms of this Article III .

 

SECTION 3.2 Repayments and Prepayments . The Borrower shall repay in full the unpaid principal amount of the Loans on the Maturity Date. Prior thereto, payments and prepayments of the Loans shall be made as set forth below.

 

(a)                                  The Borrower shall have the right, with at least three Business Days’ notice to the Lender, at any time and from time to time to prepay any unpaid principal amount of the Loans, in whole or in part.

 

(b)                                  Within three Business Days of receipt by the Borrower of any (i) Net Casualty Proceeds or (ii) Net Asset Sales Proceeds, the Borrower shall notify the Lender thereof. If requested by the Lender, the Borrower shall within three Business Days of such request make a mandatory prepayment of the Loans, in an amount equal to 100% of such proceeds (or such lesser amount as the Lender may specify on the date of such request), to be applied as set forth in Section 3.3 and in Section 3.7.

 

(c)                                   The Borrower shall repay the Loans in full immediately upon any acceleration of the Maturity Date thereof pursuant to Section 9.2 or Section 9.3 , unless, pursuant to Section 9.3 , only a portion of the Loans is so accelerated (in which case the portion so accelerated shall be so repaid).

 

SECTION 3.3 Application . Except as provided in Section 4.4(b) , amounts repaid or prepaid in respect of the outstanding principal amount of the Loans pursuant

 

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to clauses (b) or (c) of Section 3.2 shall be applied pro rata to the Initial Loan and Delayed Draw Term Loan.

 

SECTION 3.4 Interest Rate . During any applicable Interest Period, the Loans shall accrue interest during such Interest Period at a rate per annum equal to the sum of (i) the Applicable Margin plus (ii) the higher of (x) the LIBO Rate for such Interest Period and (y) 1.00%. The interest rate shall be recalculated and, if necessary, adjusted for each Interest Period, in each case pursuant to the terms hereof.

 

SECTION 3.5 Default Rate . At all times commencing upon the date any Event of Default occurs, and continuing until such Event of Default is no longer continuing, the Applicable Margin shall be increased by 5% per annum.

 

SECTION 3.6 Payment Dates . Interest accrued on the Loans shall be payable in cash, without duplication:

 

(a)                                  on the Maturity Date therefor;

 

(b)                                  on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Loan on the principal amount so paid or prepaid;

 

(c)                                   on the last day of each Fiscal Quarter; provided that if such day is not a Business Day, then such payment shall be made on the next succeeding Business Day; and

 

(d)                                  on that portion of the Loans that is accelerated pursuant to Section 9.2 or Section 9.3 , immediately upon such acceleration.

 

Interest accrued on the Loans or other monetary Obligations after the date such amount is due and payable (whether on the Maturity Date, upon acceleration or otherwise) shall be payable upon demand.

 

SECTION 3.7 Repayment Premium . Any repayment of principal pursuant to this Article III (other than any repayments of principal due on the Maturity Date) shall be accompanied by the Repayment Premium; provided that, if the Maturity Date is accelerated pursuant to a breach of Section 8.4 (which breach constitutes an Event of Default under Section 9.1(c ), the Borrower shall not have to pay the Repayment Premium; and provided , further , that if any prepayment is required pursuant to Section 3.2(b) , the amount of the required principal prepayment shall be reduced such that the sum of such required principal prepayment plus the applicable Repayment Premium shall equal 100% of the Net Asset Sale Proceeds or the Net Casualty Sale Proceeds, as applicable (or such lesser amount as required to be prepaid by the Lender pursuant to Section 3.2(b) ).

 

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ARTICLE IV

LIBO RATE AND OTHER PROVISIONS

 

SECTION 4.1 Increased Costs, Etc . The Borrower agrees to reimburse the Lender for any increase in the cost to the Lender of, or any reduction in the amount of any sum receivable by the Lender in respect of, the Lender’s Commitment and the making, continuation or maintaining of the Loans hereunder that may arise in connection with any Change in Law, except for such changes with respect to increased capital costs and Taxes which are governed by Section 4.2 and Section 4.3 , respectively. The Lender shall notify the Borrower in writing of the occurrence of any such event, stating the reasons therefor and the additional amount required fully to compensate the Lender for such increased cost or reduced amount. Such additional amounts shall be payable by the Borrower directly to the Lender within ten Business Days of its receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrower. Failure or delay on the part of the Lender to demand compensation pursuant to this Section 4.1 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate the Lender pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

SECTION 4.2 Increased Capital Costs . If any Change in Law affects or would affect the amount of capital required or expected to be maintained by the Lender or any Person controlling the Lender, and the Lender determines (in good faith and in its reasonable discretion) that the rate of return on its or such controlling Person’s capital as a consequence of the Commitment or the Loans made by it hereunder is reduced to a level below that which the Lender or such controlling Person could have achieved but for the occurrence of any such circumstance, then upon notice from time to time by the Lender to the Borrower, the Borrower shall within ten Business Days following receipt of such notice pay directly to the Lender additional amounts sufficient to compensate the Lender or such controlling Person for such reduction in rate of return. A statement of the Lender as to any such additional amount or amounts shall, in the absence of manifest error, be prima facie evidence of the accuracy thereof. In determining such amount, the Lender may use any method of averaging and attribution that it (in its reasonable discretion) shall deem applicable.

 

SECTION 4.3 Taxes . The Borrower covenants and agrees as follows with respect to Taxes.

 

(a)                                  Any and all payments by the Borrower under each Loan Document shall be made without setoff, counterclaim or other defense, and free and clear of, and without deduction or withholding for or on account of, any Taxes. In the event that any Taxes are imposed and required to be deducted or withheld from any payment required to be made by the Borrower or any of the Subsidiaries to or on behalf of the Lender under any Loan Document, then:

 

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(i)                                       if such Taxes are Non-Excluded Taxes, the amount of such payment shall be increased as may be necessary so that such payment is made, after withholding or deduction for or on account of such Taxes, in an amount that is not less than the amount provided for in such Loan Document; and

 

(ii)                                    the Borrower shall withhold the full amount of such Taxes from such payment (as increased pursuant to clause (a)(i) and shall pay such amount to the Governmental Authority imposing such Taxes in accordance with applicable law.

 

(b)                                  In addition, the Borrower shall pay all Other Taxes imposed to the relevant Governmental Authority imposing such Other Taxes in accordance with applicable law.

 

(c)                                   As promptly as practicable after the payment of any Taxes or Other Taxes required to be paid by the Borrower under Section 4.3(a) , or (b) , and in any event within 45 days of any such payment being due (as may be extended by if contested in good faith by appropriate proceedings), the Borrower shall furnish to the Lender a copy of an official receipt (or a certified copy thereof) evidencing the payment of such Taxes or Other Taxes.

 

(d)                                  The Borrower shall indemnify the Lender for any Non-Excluded Taxes and Other Taxes levied, imposed or assessed on (and whether or not paid directly by) the Lender whether or not such Non-Excluded Taxes or Other Taxes are correctly or legally asserted by the relevant Governmental Authority. Promptly upon having knowledge that any such Non-Excluded Taxes or Other Taxes have been levied, imposed or assessed, and promptly upon notice thereof by the Lender, the Borrower shall pay such Non-Excluded Taxes or Other Taxes directly to the relevant Governmental Authority. In addition, the Borrower shall indemnify the Lender for any incremental Taxes that may become payable by the Lender as a result of any failure of the Borrower to pay any Taxes when due and for which it has received timely notice to the appropriate Governmental Authority or to deliver to the Lender, pursuant to clause (c) , documentation evidencing the payment of Taxes or Other Taxes. With respect to indemnification for Non-Excluded Taxes and Other Taxes actually paid by the Lender or the indemnification provided in the immediately preceding sentence, such indemnification shall be made within 30 days after the date the Lender makes written demand therefor. The Borrower acknowledges that any payment made to the Lender or to any Governmental Authority in respect of the indemnification obligations of the Borrower provided in this clause shall constitute a payment in respect of which the provisions of clause (a) and this clause shall apply.

 

SECTION 4.4 Payments, Computations; Proceeds of Collateral, Etc .

 

(a)                                  Unless otherwise expressly provided in a Loan Document, all payments by the Borrower pursuant to each Loan Document shall be made without setoff, deduction or counterclaim not later than 2:00 p.m. on the date due in same day or immediately available funds to such account as the Lender shall specify from time to time by notice to the Borrower. Funds received after 2:00 p.m. on any day shall be deemed to have been

 

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received by the Lender on the next succeeding Business Day. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days. Payments due on other than a Business Day shall be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees in connection with that payment.

 

(b)                                  All amounts received as a result of the exercise of remedies under the Loan Documents (including from the proceeds of collateral securing the Obligations) or under applicable law shall be applied upon receipt to the Obligations as follows: (i) first, to the payment in full in cash of all interest (including interest accruing after the commencement of a proceeding in bankruptcy, insolvency or similar law, whether or not permitted as a claim under such law) and fees owing under the Loan Documents, and all costs and expenses owing to the Lender pursuant to the terms of the Loan Documents, until paid in full in cash, (ii) second, after payment in full in cash of the amounts specified in clause (b)(i) , to the payment of the principal amount of the Loans then outstanding, (iii) third, after payment in full in cash of the amounts specified in clauses (b)(i) and (b)(ii) , to the payment of all other Obligations owing to the Lender, and (iv) fourth, after payment in full in cash of the amounts specified in clauses (b)(i) through (b)(iii) , and following the Termination Date, to the Borrower or any other Person lawfully entitled to receive such surplus.

 

SECTION 4.5 Setoff . The Lender shall, upon the occurrence and during the continuance of any Default described in clauses (i) through (iv) of Section 9.1(h) or, upon the occurrence and during the continuance of any other Event of Default, have the right to appropriate and apply to the payment of the Obligations owing to it (whether or not then due), and (as security for such Obligations) the Borrower hereby grants to the Lender a continuing security interest in, any and all balances, credits, deposits, accounts or moneys of the Borrower then or thereafter maintained with or on behalf of the Lender. The Lender agrees promptly to notify the Borrower after any such appropriation and application made by the Lender; provided that, the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Lender under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which the Lender may have.

 

SECTION 4.6 LIBO Rate Not Determinable . If prior to the commencement of any Interest Period, adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Interest Period, then the Lender shall give notice thereof to the Borrower as promptly as practicable. In the event of any such determination, the Loans shall, until the Lender has advised the Borrower that the circumstances giving rise to such notice no longer exist, bear interest at the interest rate in effect for the immediately preceding Interest Period.

 

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ARTICLE V

CONDITIONS TO MAKING THE LOANS

 

SECTION 5.1 Credit Extensions . The obligation of the Lender to make the Initial Loan shall be subject to the execution and delivery of this Agreement by the parties hereto, the delivery of a Loan Request as requested pursuant to Section 2.3 , and the satisfaction of each of the conditions precedent set forth below in this Article (other than Sections 5.19 and 5.20 ). The obligation of the Lender to make the Delayed Draw Loan shall be subject to the prior making of the Initial Loan, the delivery of a Loan Request as requested pursuant to Section 2.3 , and the satisfaction of each of the conditions precedent set forth below in Sections 5.3 , 5.8 , 5.19 and 5.20 .

 

SECTION 5.2 Secretary’s Certificate, Etc . The Lender shall have received from the Borrower and each Subsidiary party to a Loan Document, (i) a copy of a good standing certificate, dated a date reasonably close to the Closing Date, for each such Person and (ii) a certificate, dated as of the Closing Date, duly executed and delivered by such Person’s Secretary or Assistant Secretary, managing member or general partner, as applicable, as to

 

(a)                                  resolutions of each such Person’s Board of Directors (or other managing body, in the case of other than a corporation) then in full force and effect authorizing the execution, delivery and performance of each Loan Document to be executed by such Person and the transactions contemplated hereby and thereby;

 

(b)                                  the incumbency and signatures of those of its officers, managing member or general partner, as applicable, authorized to act with respect to each Loan Document to be executed by such Person; and

 

(c)                                   the full force and validity of each Organic Document of such Person and copies thereof;

 

upon which certificates the Lender may conclusively rely until it shall have received a further certificate of the Secretary, Assistant Secretary, managing member or general partner, as applicable, of any such Person canceling or amending the prior certificate of such Person.

 

SECTION 5.3 Closing Date Certificate . The Lender shall have received a Closing Date Certificate, dated as of the Closing Date or Delayed Draw Closing Date, as the case may be, and duly executed and delivered by an Authorized Officer of the Borrower, in which certificate the Borrower shall agree and acknowledge that the statements made therein shall be deemed to be true and correct representations and warranties of the Borrower as of such date, and, at the time such certificate is delivered, such statements shall in fact be true and correct, and such statements shall include that (i) the representations and warranties set forth in each Loan Document shall, in each case, be true and correct, (ii) no Default shall have then occurred and be continuing, or would result from the Loan to be advanced on the Closing Date or Delayed Draw Closing Date, as the case may be, and (c) all of the conditions set forth in this Article V have been satisfied. All documents and agreements required to be appended to the Closing Date Certificate, if any, shall be in form and substance satisfactory to the Lender, shall have been executed and delivered by the requisite parties, and shall be in full force and effect.

 

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SECTION 5.4 Payment of Outstanding Indebtedness, Etc . All Indebtedness identified in Schedule 8.2(b) , together with all interest, all prepayment premiums and all other amounts due and payable with respect thereto, shall have been paid in full from the proceeds of the Loan and the commitments in respect of such Indebtedness shall have been terminated, and all Liens securing payment of any such Indebtedness shall have been released and the Lender shall have received all Uniform Commercial Code Form UCC-3 termination statements or other instruments (including customary payoff letters) as may be suitable or appropriate in connection therewith.

 

SECTION 5.5 Delivery of Note . The Lender shall have received a Note duly executed and delivered by an Authorized Officer of the Borrower.

 

SECTION 5.6 Financial Information, Etc . The Lender shall have received

 

(a)                                  audited consolidated financial statements of the Borrower and the Subsidiaries for each of the fiscal years ended December 31, 2010 and December 31, 2011.

 

(b)                                  unaudited consolidated balance sheets of the Borrower and the Subsidiaries for each fiscal quarter ended after January 1, 2012 and prior to January 1, 2013, together with the related consolidated statement of operations, shareholder’s equity and cash flows for the twelve months then ended; and

 

(c)                                   such other financial information as to the Borrower and the Subsidiaries and their respective businesses, assets and liabilities as the Lender may reasonably request.

 

SECTION 5.7 Intentionally Omitted .

 

SECTION 5.8 Solvency, Etc . The Lender shall have received a solvency certificate duly executed and delivered by the chief financial or accounting Authorized Officer of the Borrower, dated as of the Closing Date or Delayed Draw Closing Date, as the case may be, in form and substance satisfactory to the Lender.

 

SECTION 5.9 Guarantee . The Lender shall have received executed counterparts of the Guarantee, dated as of the date hereof, duly executed and delivered by each Subsidiary.

 

SECTION 5.10 Security Agreements . The Lender shall have received executed counterparts of the Security Agreement, dated as of the date hereof, duly executed and delivered by the Borrower and each Subsidiary, together with

 

(a)                                  certificates (in the case of Capital Securities that are securities (as defined in the UCC)) evidencing all of the issued and outstanding Capital Securities owned by the Borrower or any Subsidiary in the Borrower and the Subsidiaries, which certificates in each case shall be accompanied by undated instruments of transfer duly executed in blank, or, in the case of Capital Securities that are uncertificated securities (as defined in the UCC), confirmation and evidence satisfactory to the Lender that the security interest

 

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therein has been transferred to and perfected by the Lender in accordance with Articles 8 and 9 of the UCC.

 

(b)                                  financing statements suitable in form for naming the Borrower and each Subsidiary as a debtor and the Lender as the secured party, or other similar instruments or documents to be filed under the UCC of all jurisdictions as may be necessary or, in the opinion of the Lender, desirable to perfect the security interests of the Lender pursuant to the Security Agreement;

 

(c)                                   UCC Form UCC-3 termination statements, if any, necessary to release all Liens and other rights of any Person (i) in any assets of the Borrower or any Subsidiary, and (ii) securing any of the Indebtedness identified in Schedule 8.2(b) , together with such other UCC Form UCC-3 termination statements as the Lender may reasonably request from the Borrower or any Subsidiary;

 

(d)                                  landlord access agreements and bailee letters in form and substance satisfactory to the Lender from each landlord to the Borrower or any Subsidiary and each other Person that has possession of any Collateral (as defined in the Security Agreement); and

 

(e)                                   evidence that all deposit accounts, lockboxes, disbursement accounts, investment accounts or other similar accounts of the Borrower and each Subsidiary are Controlled Accounts.

 

SECTION 5.11 Intellectual Property Security Agreements . The Lender shall have received a Patent Security Agreement, a Copyright Security Agreement and a Trademark Security Agreement, as applicable, each dated as of the Closing Date, duly executed and delivered by the Borrower or any Subsidiary that, pursuant to the Security Agreement, is required to provide such intellectual property security agreements to the Lender.

 

SECTION 5.12 Royalty Agreement . The Lender shall have received an executed counterpart of the Royalty Agreement, dated as of the date hereof, executed and delivered by an Authorized Officer of the Borrower.

 

SECTION 5.13 Warrant Agreement . The Lender shall have received an executed counterpart of the Warrant Agreement, dated as of the date hereof, executed and delivered by an Authorized Officer of the Borrower.

 

SECTION 5.14 Opinions of Counsel . The Lender shall have received opinions, dated the Closing Date and addressed to the Lender, from

 

(a)                                  Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, counsel to the Borrower and the Subsidiaries, in form and substance satisfactory to the Lender; and

 

(b)                                  Chapman and Cutler LLP counsel to the Borrower and the Subsidiaries, in form and substance satisfactory to the Lender.

 

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SECTION 5.15 Insurance . The Lender shall have received certified copies of the insurance policies (or binders in respect thereof), from one or more insurance companies satisfactory to the Lender, evidencing coverage required to be maintained pursuant to each Loan Document, with the Lender named as loss payee or additional insured, as applicable.

 

SECTION 5.16 Closing Fees, Expenses, Etc . The Lender shall have received for its own account all fees, costs and expenses due and payable pursuant to Section 10.3 .

 

SECTION 5.17 Anti-Terrorism Laws . The Lender shall have received, as applicable, all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the U.S.A. Patriot Act.

 

SECTION 5.18 Satisfactory Legal Form . All documents executed or submitted pursuant hereto by or on behalf of the Borrower or any Subsidiary shall be satisfactory in form and substance to the Lender and its counsel, and the Lender and its counsel shall have received all information, approvals, resolutions, opinions, documents or instruments as the Lender or its counsel may reasonably request.

 

SECTION 5.19 U.S. Panorama Net Revenue . The Lender shall be satisfied that the Panorama Net Revenue for sales in the United States for the twelve full calendar months prior to the Delayed Draw Closing Date was at least $[*]; provided that such Panorama Net Revenue will exclude any advancement of revenues due to changing any specific previously deferred revenue amounts to comply with GAAP and related deferral/cash accounting basis. For the avoidance of doubt, the measurement period will not include more than twelve months as the measurement period of Net Revenue.

 

SECTION 5.20 Disclosure Schedules . Immediately prior to the Delayed Draw Closing Date, the Borrower shall deliver to the Lender updates to Schedules 6.15(a) , 6.16 , 6.19 and 6.22 , each such updated Schedule to be complete and accurate as of the Delayed Draw Closing Date. The Borrower may update Schedule 1.1 from time to time with the consent of the Lender (such consent not to be unreasonably withheld or delayed).

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

 

In order to induce the Lender to enter into this Agreement and to make the Loans hereunder, the Borrower represents and warrants, in each case (unless otherwise stated) on the Closing Date and on the Delayed Drawing Closing Date, to the Lender as set forth in this Article. For the avoidance of doubt, no representation or warranty in this Article VI is made on the Delayed Drawing Closing Date until immediately prior to the making of the Delayed Draw Loan.

 

[*] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

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SECTION 6.1 Organization, Etc The Borrower and each Subsidiary (a) is validly organized and existing and in good standing under the laws of the jurisdiction of its incorporation or organization, is duly qualified to do business and is in good standing as a foreign entity in each jurisdiction where the nature of its business requires such qualification (unless the failure to so qualify as a foreign entity could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect), and (b) has full power and authority and holds all requisite governmental licenses, permits and other approvals required (i) to enter into and perform its Obligations under each Loan Document to which it is a party, and (ii) to own and hold under lease its property and to conduct its business in all material respects substantially as currently conducted by it.

 

SECTION 6.2 Due Authorization, Non-Contravention, Etc . The execution, delivery and performance by the Borrower and each Subsidiary of each Loan Document executed or to be executed by it are in each case within such Person’s powers, have been duly authorized by all necessary action, and do not

 

(a)                                  contravene (i) the Borrower’s or any Subsidiary’s Organic Documents, (ii) any court decree or order binding on or affecting the Borrower or any Subsidiary or (iii) any law or governmental regulation binding on or affecting the Borrower or any Subsidiary; or

 

(b)                                  result in (i) or require the creation or imposition of any Lien on the Borrower’s or any Subsidiary’s properties (except as permitted by this Agreement) or (ii) a default under any material contract, agreement, or instrument binding on or affecting the Borrower or any Subsidiary.

 

SECTION 6.3 Government Approval, Regulation, Etc . No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other Person (other than those that have been, or on the Closing Date will be, duly obtained or made and which are, or on the Closing Date will be, in full force and effect) is required for the due execution, delivery or performance by the Borrower or any Subsidiary of any Loan Document to which it is a party.

 

SECTION 6.4 Validity, Etc . Each Loan Document to which the Borrower or any Subsidiary is a party constitutes the legal, valid and binding obligations of such Person enforceable against such Person in accordance with its respective terms (except, in any case, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by principles of equity).

 

SECTION 6.5 Financial Information . The financial statements of the Borrower and the Subsidiaries furnished to the Lender pursuant to Sections 5.6 and 7.1 have been prepared in accordance with GAAP, consistently applied, and in all material respects present fairly the consolidated financial condition of the Persons covered thereby as at the dates thereof and the results of their operations for the periods then ended.

 

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SECTION 6.6 No Material Adverse Change . Except as set forth on Schedule 6.6 , there has been no material adverse change in the business, financial performance or condition, operations (including the results thereof), assets, or properties of the Borrower or any Subsidiary since December 31, 2012.

 

SECTION 6.7 Litigation, Labor Matters and Environmental Matters .

 

(a)                                  Except as described on Schedule 6.7(a) , there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary (i) as to which there is a reasonable likelihood of an adverse determination and that, if adversely determined, would reasonably be expected, individually or in the aggregate, to result in liabilities in excess of $[*] or (ii) that would reasonably be likely to adversely affect this Agreement or the transactions contemplated hereby.

 

(b)                                  There are no labor controversies pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary (i) that would reasonably be expected, individually or in the aggregate, to result in liabilities in excess of $[*] or (ii) that would reasonably be likely to adversely affect this Agreement or the transaction contemplated hereby.

 

(c)                                   Neither the Borrower nor any Subsidiary (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any Permit under or in connection with any Environmental Law (“ Environmental Permit ”), except to the extent that any such failure could not reasonably be expected to have or result in a Material Adverse Effect; or (ii) is or has been subject to any Environmental Liability, has received notice of any Environmental Liability, or knows of any basis for any Environmental Liability, except to the extent that the foregoing could not reasonably be expected to have or result in a Material Adverse Effect.

 

SECTION 6.8 Subsidiaries . The Borrower has no Subsidiaries except those Subsidiaries which are identified in Schedule 6.8 (which Schedule also identifies the direct and indirect owners of the Capital Securities of such Subsidiaries) or which are permitted to have been organized or acquired after the Closing Date in accordance with Section 8.5 or Section 8.7 .

 

SECTION 6.9 Ownership of Properties . The Borrower and each Subsidiary owns (i) in the case of owned real property, good and marketable fee title to, and (ii) in the case of owned personal property, good and valid title to, or, in the case of leased real or personal property, valid and enforceable leasehold interests (as the case may be) in, all of its material properties and assets, tangible and intangible, of any nature whatsoever, free and clear in each case of all Liens or claims, except for Liens permitted pursuant to Section 8.3 .

 

SECTION 6.10 Taxes . Except as set forth on Schedule 6.10 , the Borrower and each Subsidiary has filed all tax returns and reports required by law to have been filed by it and has paid all material Taxes due and owing, except any such Taxes

 

[*] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

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which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books.

 

SECTION 6.11 Benefit Plans, Etc . None of the Borrower or any of the Subsidiaries or any of their respective ERISA Affiliates sponsors, maintains, contributes to, is required to contribute to, or has any actual or potential liability with respect to, any Benefit Plan. None of the Borrower or any of the Subsidiaries is a party to any collective bargaining agreement, and none of the employees of the Borrower or any of the Subsidiaries (each in his or her capacity as an employee of the Borrower or a Subsidiary) are subject to any collective bargaining agreement. Each “employee benefit plan” as defined in section 3(3) of ERISA that provides retirement benefits and that is sponsored by the Borrower or any of their ERISA Affiliates intended to be tax qualified under section 401 or 501 of the Code has a determination letter or opinion letter from the Internal Revenue Service on which it is entitled to rely, and no assets of any such plan are invested in Capital Securities of the Borrower. Each employee benefit plan, program or arrangement sponsored, maintained, contributed to or required to be contributed to by the Borrower or any Subsidiary has complied in all material respects with its terms and applicable law.

 

SECTION 6.12 Accuracy of Information . None of the information heretofore or contemporaneously furnished in writing to the Lender by or on behalf of the Borrower or any Subsidiary in connection with any Loan Document or any transaction contemplated hereby contains any untrue statement of a material fact, or omits to state any material fact necessary to make any information, in light of the circumstances under which it is made, not misleading in any material respect as of the time when made or delivered.

 

SECTION 6.13 Regulations U and X . None of the Borrower or any Subsidiary is engaged in the business of extending credit for the purpose of buying or carrying margin stock, and no proceeds of the Loans will be used to purchase or carry margin stock or otherwise for a purpose which violates, or would be inconsistent with, F.R.S. Board Regulation U or Regulation X. Terms for which meanings are provided in F.R.S. Board Regulation U or Regulation X or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings.

 

SECTION 6.14 Solvency . The Borrower, individually, and the Borrower and its Subsidiaries taken as a whole, on a consolidated basis, both before and after giving effect to the Loans, are Solvent.

 

SECTION 6.15 Intellectual Property .

 

(a)                                  Schedule 6.15(a) sets forth a complete and accurate list as of the Closing Date or Delayed Draw Closing Date, as the case may be, of all (i) Patents including any Patent applications and other material so defined as Patents, (ii) registered and material unregistered Trademarks (including domain names) and any pending registrations for Trademarks, and (iii) any other registered Intellectual Property, in each case owned or

 

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licensed by the Borrower or any of the Subsidiaries and material to the business of the Borrower or such Subsidiary. For each item of Intellectual Property listed on Schedule 6.15(a) , the Borrower has, where relevant, indicated (A) the countries in each case in which such item is registered, (B) the application numbers, (C) the registration or patent numbers, (D) with respect to the Patents, the expected expiration date of the issued Patents, (E) the owner of such item of Intellectual Property and (F) with respect to material Intellectual Property owned by any Third Party, the agreement pursuant to which that Intellectual Property is licensed to the Borrower or any Subsidiary.

 

(b)                                  With respect to all Intellectual Property listed on Schedule 6.15(a) , except as set forth on Schedule 6.15(b) :

 

(i)                                       the Borrower or a Subsidiary owns, has a valid license or rights in any other form to all, rights associated with such Intellectual Property free and clear of any and all Liens other than Liens permitted pursuant to Section 8.3 , and all such Intellectual Property are in full force and effect, and have not expired, lapsed or been forfeited, cancelled or abandoned unless permitted hereunder, except, on the Delayed Draw Closing Date, where such event or circumstance is not reasonably expected to be material to the Borrower and its Subsidiaries;

 

(ii)                                    each of the Borrower and the Subsidiaries, as applicable, has taken commercially reasonable actions to maintain and protect such Intellectual Property and there are no unpaid maintenance or material renewal fees payable by the Borrower or any of the Subsidiaries that are currently overdue for any of such registered Intellectual Property;

 

(iii)                                 there is no proceeding challenging the validity or enforceability of any such Intellectual Property and none of the Intellectual Property is the subject of any Other Administrative Proceeding, except, on the Delayed Draw Closing Date, where such challenge is not reasonably expected to be material to the Borrower and its Subsidiaries;

 

(iv)                                to the knowledge of the Borrower, (A) such Intellectual Property is valid, enforceable and subsisting and (B) no event has occurred, and nothing has been done or omitted to have been done, that would affect the validity or enforceability of such Intellectual Property, except, on the Delayed Draw Closing Date, where such event is not reasonably expected to be material to the Borrower and its Subsidiaries; and

 

(v)                                   each of the Borrower and each Subsidiary is the sole and exclusive owner of all right, title and interest in and to all such Intellectual Property that is owned by it, except that Intellectual Property listed on Schedule 6.15(b)(v) and except, on the Delayed Draw Closing Date, for Dispositions permitted pursuant to Section 8.8 .

 

(c)                                   To the knowledge of the Borrower, except as set forth on Schedule 6.15(c) , no Third Party is committing any act of Infringement of any Intellectual Property

 

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listed on Schedule 6.15(a) , except, on the Delayed Draw Closing Date, where such Infringement is not reasonably expected to be material to the Borrower and its Subsidiaries.

 

(d)                                  With respect to each license agreement listed on Schedule 6.15(a) , (x) such license agreement (i) is in full force and effect and is binding upon and enforceable against the Borrower and the Subsidiaries party thereto and, to Borrower’s knowledge, all other parties thereto in accordance with its terms, (ii) has not been amended or otherwise modified, and (iii) no material default or breach by Borrower or its Subsidiaries, and to Borrower’s knowledge, any other party thereto, has occurred and is continuing thereunder, and (y) none of the Borrower or any of the Subsidiaries has to the knowledge of the Borrower taken any action that would permit any other Person party to any such license agreement to have, and to the knowledge of the Borrower no such Person otherwise has, any defenses, counterclaims or rights of setoff thereunder.

 

(e)                                   Except as set forth on Schedule 6.15(e) , none of the Borrower or any of the Subsidiaries has received written notice from any Third Party alleging that the conduct of its business (including the development, manufacture, use, sale or other commercialization of any Product) Infringes any Intellectual Property of that Third Party and, to the knowledge of the Borrower, the conduct of its business and the business of the Subsidiaries (including the development, manufacture, use, sale or other commercialization of any Product) does not Infringe any Intellectual Property of any Third Party.

 

(f)                                    The Borrower and the Subsidiaries have used commercially reasonable efforts and precautions to protect their respective commercially significant unregistered Intellectual Property.

 

SECTION 6.16 Material Agreements . Set forth on Schedule 6.16 is a complete and accurate list as of the Closing Date or Delayed Draw Closing Date, as the case may be, of all Material Agreements of the Borrower or any of the Subsidiaries, with an adequate description of the parties thereto, subject matter thereof and amendments and modifications thereto, and as of such dates, respectively, (a) each such Material Agreement (i) is in full force and effect and is binding upon and enforceable against the Borrower and the Subsidiaries party thereto and to Borrower’s knowledge all other parties thereto in accordance with its terms, (ii) has not been amended or otherwise modified and (iii) no material default or breach by Borrower or its Subsidiaries, and to Borrower’s knowledge, any other party thereto, has occurred and is continuing thereunder, and (b) none of the Borrower or any of the Subsidiaries has taken any action that to Borrower’s knowledge would permit any other Person party to any Material Agreement to have any defenses, counterclaims or rights of setoff thereunder.

 

SECTION 6.17 Permits . Except as set forth on Schedule 6.17 , the Borrower and the Subsidiaries have all material Permits, including material Environmental Permits, necessary or required for the ownership, operation and conduct of their

 

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business and the distribution of the Products. All such Permits are validly held and there are no material defaults thereunder.

 

SECTION 6.18 Regulatory Matters .

 

(a)                                  The Borrower and its Subsidiaries have conducted and conduct their business in material compliance with all applicable U.S. federal, state, local or foreign laws, statutes, ordinances, rules, regulations, judgments, orders, injunctions, decrees, arbitration awards and Key Permits issued by any Governmental Authority (collectively, “Laws”).

 

(i)                                      Borrower LDTs were researched, developed, designed, and validated solely by Borrower in material compliance with all applicable Laws, including the FDCA, CLIA, Privacy Laws and state laws, and have been and continue to be performed, marketed, and conducted in material compliance with all applicable Laws, including the FDCA, FTC Act, CLIA, Privacy Laws and state laws, including the laws of New York.

 

(ii)                                   Borrower Medical Devices have been and are being researched, developed, designed, investigated, manufactured, marketed, and distributed in material compliance with all applicable Laws, including the FDCA, the FTC Act, Privacy Laws and state laws.

 

(b)                                  Except as set forth on Schedule 6.18(b) , to the Borrower’s knowledge, (i) no investigation by any Governmental Authority with respect to the Borrower is pending or threatened, and (ii) the Borrower has not received any written communication from any Person (including any Governmental Authority) of any noncompliance with any Laws or any written communication from any Governmental Authority of any material issues, problems, or concerns regarding the quality or performance of the Products.

 

(c)                                   Except as set forth on Schedule 6.18(c) , the Borrower holds free and clear of all Liens, except those permitted pursuant to Section 8.3 , all Key Permits, including all authorizations under the FDCA, CLIA, and state laws, necessary for the research and development and commercialization of the Products and to carry on Borrower’s business with respect to the Products. All such Key Permits are valid, and in full force and effect and Borrower is in compliance with all material terms and conditions of such Key Permits. The Borrower has not received any written notice that any Key Permits have been or are being revoked, withdrawn, suspended or challenged.

 

(d)                                  Except as set forth on Schedule 6.18(d) , (i) the Borrower has made available to Lender all Key Permits and material written correspondence submitted to or received from FDA, CMS, or other Governmental Authority (including minutes and official contact reports relating to any material written communications with any Governmental Authority) in the Borrower’s possession or control, and (ii) there has been no material untrue statement of fact and no fraudulent statement made by the Borrower, any of the Subsidiaries, or any of their respective agents or representatives to the FDA,

 

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CMS, or any other Governmental Authority, and there has been no failure to disclose any material fact required to be disclosed to the FDA or any other Governmental Authority.

 

(e)                                   Except as set forth on Schedule 6.18(e) , no right of the Borrower to receive reimbursements pursuant to any government program or private program has ever been terminated or otherwise materially adversely affected as a result of any investigation or enforcement action, whether by any Governmental Authority or other Third Party, and the Borrower has not been the subject of any inspection, investigation, or audit, by any Governmental Authority for the purpose of any alleged improper activity.

 

(f)                                    To Borrower’s knowledge, there is no arrangement relating to the Borrower providing for any rebates, kickbacks or other forms of compensation that are unlawful to be paid to any Person in return for the referral of business or for the arrangement for recommendation of such referrals. All billings by the Borrower for its services have been true and correct in all material respects (other than any inadvertent errors corrected in the ordinary course of business) and, to the Borrower’s knowledge, are in compliance with all applicable Laws, including the Federal False Claim Act or any applicable state false claim or fraud Law.

 

(g)                                   Except as set forth on Schedule 6.18(g) , the Borrower has not, and to the knowledge of the Borrower, no officer, director, employee or agent of the Borrower has (i) been convicted of, charged with, or to the Borrower’s knowledge, investigated for any federal or state health program-related offense or any other offense related to healthcare or been excluded or suspended from participation in any such program; or within the past five (5) years, been convicted of, charged with or, to the Borrower’s knowledge, investigated for a violation of Laws related to fraud, theft, embezzlement, breach of fiduciary responsibility, financial misconduct, obstruction of an investigation or controlled substances, or been subject to any judgment, stipulation, order or decree of, or criminal or civil fine or penalty imposed by, any Governmental Authority related to fraud, theft, embezzlement, breach of fiduciary responsibility, financial misconduct, obstruction of an investigation or controlled substances; (ii) been convicted of any crime or engaged in any conduct for which debarment is mandated or permitted by 21 U.S.C. § 335a, and, to the Borrower’s knowledge, no such debarment proceedings or investigations are pending or threatened; or (iii) been convicted of any crime or engaged in any conduct for which such Person could be excluded from participating in the federal health care programs under Section 1128 of the Social Security Act or any similar applicable Law.

 

(h)                                  Except as set forth on Schedule 6.18(h) , all studies, tests and preclinical and clinical trials conducted relating to the Products, by or on behalf of the Borrower and the Subsidiaries and, to the knowledge of the Borrower, their respective licensees, licensors and Third Party services providers and consultants, have been conducted, and are currently being conducted, in all material respects, in accordance with all applicable Laws, procedures and controls pursuant to, where applicable, current good clinical practices and current good laboratory practices and other applicable laws, rules regulations. All results of such studies, tests and trials, and all other material information related to such studies, tests and trials, have been made available to the Lender as

 

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requested by it. To the extent necessary by applicable Law, the Borrower has obtained all necessary Regulatory Authorizations material to the conduct of its business required to be obtained by it, including an IDE for the conduct of any clinical investigations conducted by or on behalf of the Borrower.

 

(i)                                      To the Borrower’s knowledge, none of the clinical investigators in any clinical trial conducted by or on behalf of the Borrower has been or is disqualified or otherwise sanctioned by the FDA, the Department of Health and Human Services, or any Governmental Authority and, to the Borrower’s knowledge, no such disqualification, or other sanction of any such clinical investigator is pending or threatened. The Borrower has not received any written communication from the FDA or any other Governmental Authority requiring or threatening the termination or suspension of any clinical trials conducted by, or on behalf of, the Borrower.

 

(j)                                     The transactions contemplated by the Loan Documents (or contemplated by the conditions to effectiveness of any Loan Document) will not cause the Borrower or any of its Subsidiaries to require any Regulatory Authorizations relating to the Products not already required of the Borrower or its Subsidiaries.

 

SECTION 6.19 Transactions with Affiliates . Except as set forth on Schedule 6.19 , none of the Borrower or any Subsidiary has entered into, renewed, extended or been a part to, any transaction (including the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any of its Affiliates during the three-year period immediately prior to the Closing Date.

 

SECTION 6.20 Investment Company Act . None of the Borrower or any Subsidiary is an “investment company” or is “controlled” by an “investment company,” as such terms are defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.

 

SECTION 6.21 OFAC . None of the Borrower, any Subsidiary or, to the knowledge of the Borrower, any Related Party (a) is currently the subject of any Sanctions, (b) is located, organized or residing in any Designated Jurisdiction, or (c) is or has been (within the previous five (5) years) engaged in any transaction with any Person who is now or was then the subject of Sanctions or who is located, organized or residing in any Designated Jurisdiction. No Loan, nor the proceeds from any Loan, has been or will be used, directly or indirectly, to lend, contribute or provide to, or has been or will be otherwise made available to fund, any activity or business in any Designated Jurisdiction or to fund any activity or business of any Person located, organized or residing in any Designated Jurisdiction or who is the subject of any Sanctions, or in any other manner that will result in any violation by any Person (including the Lender and its Affiliates) of Sanctions.

 

SECTION 6.22 Deposit and Disbursement Accounts . Set forth on Schedule 6.22 is a complete and accurate list as of the Closing Date or Delayed Draw Closing Date, as the case may be, of all banks and other financial institutions at which the Borrower or any Subsidiary maintains deposit accounts, lockboxes, disbursement

 

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accounts, investment accounts or other similar accounts, such Schedule correctly identifies the name, address and telephone number of each bank or financial institution, the name in which each such account is held, the type of each such account, and the complete account number for each such account, and each such account is a Controlled Account as required pursuant to Section 7.13 .

 

ARTICLE VII

AFFIRMATIVE COVENANTS

 

The Borrower covenants and agrees with the Lender that until the Termination Date has occurred, the Borrower will, and will cause the Subsidiaries to, perform or cause to be performed the obligations set forth below.

 

SECTION 7.1 Financial Information, Reports, Notices, Etc . The Borrower will furnish the Lender copies of the following financial statements, reports, notices and information:

 

(a)                                  as soon as available and in any event within 30 days after the end of each Fiscal Month, in each case with supporting detail and certified as complete and correct by the chief financial or accounting Authorized Officer of the Borrower (subject to normal year-end audit adjustments), (i) unaudited reports of the Panorama Net Revenue and the Revenue Base for such Fiscal Month and the Liquidity of the Borrower at the end of such Fiscal Month and (ii) beginning with the Fiscal Month of April 2013, unaudited reports of (x) the Panorama Net Revenue and the Revenue Base for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Month, and including in comparative form the figures for the corresponding Fiscal Month in, and the year to date portion of, the immediately preceding Fiscal Year, with supporting detail and certified as complete and correct by the chief financial or accounting Authorized Officer of the Borrower (subject to normal year-end audit adjustments) and (y) the Liquidity of the Borrower for the corresponding Fiscal Month in the preceding Fiscal Year, in comparative form;

 

(b)                                  as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, an unaudited consolidated balance sheet of the Borrower and the Subsidiaries as of the end of such Fiscal Quarter and consolidated statements of income and cash flow of the Borrower and the Subsidiaries for such Fiscal Quarter and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, and including (in each case) in comparative form the figures for the corresponding Fiscal Quarter in, and the year to date portion of, the immediately preceding Fiscal Year, certified as complete and correct by the chief financial or accounting Authorized Officer of the Borrower (subject to normal year-end audit adjustments);

 

(c)                                   as soon as available and in any event not later than August 31, 2013, with respect to the Fiscal Year ended December 31, 2012, and as soon as available and in any event within 120 days after the end of each Fiscal Year beginning with the Fiscal Year ended December 31, 2013, a copy of the consolidated balance sheet of the Borrower and

 

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the Subsidiaries, and the related consolidated statements of income and cash flow of the Borrower and the Subsidiaries for such Fiscal Year, setting forth in comparative form the figures for the immediately preceding Fiscal Year, audited (without any Impermissible Qualification) by an independent accounting firm which is (i) registered with the Public Company Accounting Oversight Board (PCAOB) to audit public companies and (ii) reasonably acceptable to the Lender, which shall include a calculation of the financial covenant set forth in Section 8.4 and stating that, in performing the examination necessary to deliver the audited financial statements of the Borrower, no knowledge was obtained of any Event of Default;

 

(d)                                  concurrently with the delivery of the financial information pursuant to clauses (b) and (c) , a Compliance Certificate, executed by the chief financial or accounting Authorized Officer of the Borrower, (i) showing compliance with the financial covenants set forth in Section 8.4 and stating that no Default has occurred and is continuing (or, if a Default has occurred, specifying the details of such Default and the action that the Borrower or any of the Subsidiaries has taken or proposes to take with respect thereto), (ii) stating that no Subsidiary has been formed or acquired since the delivery of the last Compliance Certificate (or, if a Subsidiary has been formed or acquired since the delivery of the last Compliance Certificate, a statement that such Subsidiary has complied with Section 7.8 ) and (iii) stating that no real property has been acquired by the Borrower or any of the Subsidiaries since the delivery of the last Compliance Certificate (or, if any real property has been acquired since the delivery of the last Compliance Certificate, a statement that the Borrower has complied with Section 7.8 with respect to such real property);

 

(e)                                   as soon as possible and in any event within five Business Days after the Borrower obtains knowledge of the occurrence of a Default, a statement of an Authorized Officer of the Borrower setting forth details of such Default and the action which the Borrower or any of the Subsidiaries has taken or proposes to take with respect thereto;

 

(f)                                    as soon as possible and in any event within five Business Days after the Borrower obtains knowledge of (i) the occurrence of any material adverse development with respect to any litigation, action, proceeding or labor controversy described in Schedule 6.7 , (ii) the commencement of any litigation, action, proceeding or labor controversy of the type and materiality described in Section 6.7 , notice thereof and, to the extent the Lender requests, copies of all documentation relating thereto, and (iii) any return, recovery, dispute or claim related to Product or finished goods inventory that involves more than $250,000.

 

(g)                                   as soon as possible and in any event within five Business Days after the Borrower obtains knowledge of (i) any written claim that the Borrower, any of the Subsidiaries or one of their ERISA Affiliates has any liability under a Benefit Plan, (ii) any effort to unionize the employee of the Borrower or any Subsidiary, or (iii) written correspondence received from the Internal Revenue Service regarding the qualification of a retirement plan under Section 401(a) of the Code that could reasonably be expected to result in material liability to the Borrower.

 

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(h)                                  promptly after the sending or filing thereof, copies of all material reports, notices, prospectuses and registration statements which the Borrower or any of the Subsidiaries files with the SEC or any national securities exchange;

 

(i)                                      promptly upon receipt thereof, copies of all “management letters” (or equivalent) submitted to the Borrower or any of the Subsidiaries by the independent public accountants referred to in clause (b) in connection with each audit made by such accountants;

 

(j)                                     on the date that the Borrower furnishes unaudited reports to the Lender pursuant to Section 7.1(a)(i) , during the pendency of the following patent applications, a report providing an update on the status of the following patent applications, in form satisfactory to Lender: (i) U.S. Serial No. 11/603,406, filed 11-22-2006, titled “System and Method for Cleaning Noisy Genetic Data From Target Individuals Using Genetic Data from Genetically Related Individuals” and (ii) U.S. Serial No. 12/076,348, filed 03-17-2008, titled “System and Method for Cleaning Noisy Genetic Data and Determining Chromosome Copy Number”;

 

(k)                                  within 45 days after the end of each Fiscal Quarter for the Fiscal Quarter most recently ended, a report listing (i) all Material Agreements entered into during such Fiscal Quarter and (ii) all existing Material Agreements amended or terminated during such Fiscal Quarter, and (iii) revenue recognition audit notes as approved by the Borrower’s chief financial officer with respect to items listed in clause (i);

 

(l)                                      as soon as available, but in any event not later than January 31 of each calendar year, the Borrower’s financial and business projections and budget for such year, with evidence of approval thereof by Borrower’s board of directors; and

 

(m)                              such other financial and other information as the Lender may from time to time reasonably request (including information and reports in such detail as the Lender may request with respect to the terms of and information provided pursuant to the Compliance Certificate).

 

SECTION 7.2 Maintenance of Existence; Compliance with Contracts, Laws, Etc . Each of the Borrower, and each Subsidiary will preserve and maintain its legal existence (except as otherwise permitted by Section 8.7 ), perform in all material respects its obligations under Material Agreements to which the Borrower or any of the Subsidiaries is a party, and comply in all material respects with all applicable laws, rules, regulations and orders, including the payment (before the same become delinquent), of all Taxes, imposed upon the Borrower or any of the Subsidiaries or upon their property except to the extent being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside on the books of the Borrower or any of the Subsidiaries, as applicable.

 

SECTION 7.3 Maintenance of Properties . Each of the Borrower and the Subsidiaries will maintain, preserve, protect and keep its and their respective

 

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properties in good repair, working order and condition (ordinary wear and tear excepted), and make necessary repairs, renewals and replacements so that the business carried on by the Borrower or any of the Subsidiaries may be properly conducted at all times, unless the Borrower or any of the Subsidiaries determines in good faith that the continued maintenance of such property is no longer economically desirable, necessary or useful to the business of the Borrower or any of the Subsidiaries or the Disposition of such property is otherwise permitted by Section 8.7 or Section 8.8 .

 

SECTION 7.4 Insurance . Each of the Borrower and each of the Subsidiaries will maintain:

 

(a)                                  insurance on its property with financially sound and reputable insurance companies against business interruption, loss and damage in at least the amounts (and with only those deductibles) customarily maintained, and against such risks as are typically insured against in the same general area, by Persons of comparable size engaged in the same or similar business as the Borrower and the Subsidiaries; and

 

(b)                                  all worker’s compensation, employer’s liability insurance or similar insurance as may be required under the laws of any state or jurisdiction in which it may be engaged in business.

 

Without limiting the foregoing, all insurance policies required pursuant to this Section shall (i) name the Lender as mortgagee and loss payee (in the case of property insurance) and additional insured (in the case of liability insurance), as applicable, and provide that no cancellation or material modification as to the amount or scope of coverage of the policies will be made without the prior written notice to the Lender, and (ii) be in addition to any requirements to maintain specific types of insurance contained in the other Loan Documents.

 

SECTION 7.5 Books and Records . Each of the Borrower and each of the Subsidiaries will keep books and records in accordance with GAAP which accurately reflect all of its business affairs and transactions and permit the Lender or any of its representatives, at reasonable times and intervals (not to include the first 10 calendar days of any Fiscal Month unless explicitly permitted by the Borrower, except in the event that a Default or Event of Default has occurred or is continuing) upon reasonable notice to the Borrower, to visit the Borrower’s or any of the Subsidiaries’ offices, to discuss the Borrower’s or any of the Subsidiaries’ financial or other matters with its officers and employees, and its independent public accountants (and the Borrower hereby authorizes such independent public accountant to discuss the Borrower’s and any of the Subsidiaries’ financial and other matters with the Lender or its representatives whether or not any representative of the Borrower or any of the Subsidiaries is present) and to examine (and photocopy extracts from) any of its books and records. The Borrower shall pay any fees of such independent public accountant incurred in connection with the Lender’s exercise of its rights pursuant to this Section but unless a Default or Event of Default has occurred and is continuing at the time of such examination not more than once in any calendar year.

 

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SECTION 7.6 Environmental Law Covenant . Each of the Borrower and each of the Subsidiaries will (i) use and operate all of its and their businesses, facilities and properties in material compliance with all Environmental Laws, and keep and maintain all Environmental Permits and remain in compliance therewith, except to the extent that the failure to do so could not reasonably be expected to have or result in a Material Adverse Effect, and (ii) promptly notify the Lender of, and provide the Lender with copies of all written material claims, complaints, notices or inquiries relating to, any actual or alleged non-compliance with any Environmental Laws or Environmental Permits or any actual or alleged Environmental Liabilities that the Borrower reasonably determines has or could result in a Material Adverse Effect. The Borrower and each of the Subsidiaries will promptly resolve, remedy and mitigate any such non-compliance or Environmental Liabilities in accordance with reasonable business practices, and shall keep the Lender informed as to the progress of same.

 

SECTION 7.7 Use of Proceeds . The Borrower will apply the proceeds of the Loan according to the sources and uses table in Schedule 7.7 .

 

SECTION 7.8 Future Guarantors, Security, Etc . The Borrower and each Subsidiary will execute any documents, financing statements, agreements and instruments, and take all further action that may be required under applicable law, or that the Lender may reasonably request, in order to effectuate the transactions contemplated by the Loan Documents and in order to grant, preserve, protect and perfect the validity and first priority (subject to Liens permitted by Section 8.3 ) of the Liens created or intended to be created by the Loan Documents. The Borrower will promptly cause any subsequently acquired or organized Subsidiary to execute a supplement (in form and substance satisfactory to the Lender) to the Guarantee and each other applicable Loan Document in favor of the Lender; provided that (other than with respect to any Subsidiary formed or acquired in a Permitted Acquisition) the Borrower shall not, and no Subsidiary shall, be required to execute or cause the execution of any Guaranty or the pledge of any Collateral Securities if a 956 Impact would result therefrom. The Borrower will promptly notify the Lender of any subsequently acquired ownership interest in real property and will provide the Lender with a description of such real property, the acquisition date thereof and the purchase price therefor. In addition, from time to time, each of the Borrower and each of the Subsidiaries will, at its cost and expense, promptly secure the Obligations by pledging or creating, or causing to be pledged or created, perfected Liens with respect to such of its assets and properties as the Lender shall designate, it being agreed that it is the intent of the parties that the Obligations shall be secured by, among other things, substantially all the assets of the Borrower and the Subsidiaries (including real property and personal property acquired subsequent to the Closing Date). Such Liens will be created under the Loan Documents in form and substance satisfactory to the Lender, and the Borrower and each of the Subsidiaries shall deliver or cause to be delivered to the Lender all such instruments and documents (including mortgages, legal opinions, title insurance policies and lien searches) as the Lender shall reasonably request to evidence compliance with this Section.

 

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SECTION 7.9 Obtaining of Permits, Etc . With respect to Products, each of the Borrower and each of the Subsidiaries will obtain, maintain and preserve, and take all necessary action to timely renew all Permits and accreditations which are necessary and material in the proper conduct of its business.

 

SECTION 7.10 Product Licenses . The Borrower and each of the Subsidiaries shall (i) maintain each Permit, including each Regulatory Authorization, from, or file any notice or registration in, each jurisdiction in which the Borrower or any of the Subsidiaries are required to obtain any Permit or Regulatory Authorization or to file any notice or registration, in order to sell or distribute the Products and (ii) promptly provide evidence of same to the Lender.

 

SECTION 7.11 Maintenance of Regulatory Authorizations, Contracts, Intellectual Property, Etc . With respect to the Products, each of the Borrower and each of the Subsidiaries will (i) maintain in full force and effect all material Regulatory Authorizations, contract rights, authorizations or other rights necessary for the operations of its business; (ii) notify the Lender, promptly after learning thereof, of any material product recalls, safety alerts, corrections, withdrawals, marketing suspensions, removals or the like conducted, to be undertaken or issued, by the Borrower, any of the Subsidiaries or their respective suppliers whether or not at the request, demand or order of any Governmental Authority or otherwise with respect to any Product, or any basis for undertaking or issuing any such action or item; (iii) maintain in full force and effect or pursue the prosecution of, as the case may be, and pay all costs and expenses relating to, all Intellectual Property owned or controlled by the Borrower or any of the Subsidiaries and all Material Agreements, except in the event that the Borrower determines in its reasonable commercial judgment not to do so; (iv) notify the Lender, promptly after learning thereof, of any material Infringement or other violation by any Person of its Intellectual Property and aggressively pursue any such Infringement or other violation except in any specific circumstances where the Borrower or any of the Subsidiaries determines that it is not commercially reasonable to do so; (v) use commercially reasonable efforts to pursue and maintain in full force and effect legal protection for, and protect against Infringement with respect to, all Intellectual Property, including Patents, developed or controlled by the Borrower or any of the Subsidiaries, except in the event that the Borrower determines in its reasonable commercial judgment not to do so; and (vi) notify the Lender, promptly after learning thereof, of any material claim by any Person that the conduct of the Borrower’s or any of the Subsidiaries’ business (including the development, manufacture, use, sale or other commercialization of any Product) Infringes in any material respect any Intellectual Property of that Person and use commercially reasonable efforts to resolve such claim, except when the Borrower determines in its reasonable commercial judgment not to do so.

 

SECTION 7.12 Inbound Licenses; Product Agreements . Each of the Borrower and the Subsidiaries will make commercially reasonable efforts to exclude from (i) any material inbound licenses or similar agreements relating to Intellectual Property (other than over-the-counter or “open-source” software, or similar Intellectual Property, that is commercially available to the public) and (ii) any material Product

 

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Agreements entered into after the Closing Date, any provisions that would prohibit or restrict such license or agreement, or rights thereunder, from becoming subject to a security interest in favor of the Lender.

 

SECTION 7.13 Cash Management . Each of the Borrower and the Subsidiaries will:

 

(a)                                  maintain a current and complete list of all accounts (of the type initially set forth on Schedule 6.22 ) and promptly deliver any updates to such list to the Lender; execute and(other than accounts exclusively used for (i) payroll, payroll taxes and other employee wage and benefit programs to or for the benefit of the Borrower’s or a Subsidiary’s employees, which shall in no event hold in the aggregate more than the amount reasonably expected to meet such payroll expenses for the following calendar month, including bonuses and other payments to be paid within the following calendar month, (ii) the receipt of receivables solely funded by Medicare or Medicaid, which shall in no event hold in the aggregate more than $5,000 and whose total cash balances shall be automatically swept to a Controlled Account (as defined below), on a monthly basis and (iii) assets that are subject to a Permitted Lien pursuant to Section 8.3(m) (collectively, the “ Excluded Accounts ”)) maintain an account control agreement for each such account, in form and substance reasonably acceptable to the Lender (each such account, a “ Controlled Account ”);

 

(b)                                  deposit promptly after the date of receipt thereof in accordance with prudent business practices all cash, checks, drafts or other similar items of payment relating to or constituting payments made in respect of any and all accounts and other rights and interests into Controlled Accounts; and

 

(c)                                   at any time after the occurrence and during the continuance of an Event of Default, at the request of the Lender, promptly cause all payments constituting proceeds of accounts to be directed into lockbox accounts under agreements in form and substance satisfactory to the Lender.

 

SECTION 7.14 Board Observation Rights .

 

(a)                                  The Borrower shall permit one (1) person representing the Lender (the “ Observer ”) to attend and observe (but not vote) at all meetings of the Borrower’s (or its Subsidiaries, as applicable) board of directors and any committee thereof, whether in person, by telephone or otherwise. The Borrower shall notify the Observer in writing at least five (5) Business Days in advance of (i) the date and time for each general or special meeting of its board of directors or any committee thereof and (ii) the adoption of any resolutions or actions by written consent (describing, in reasonable detail, the nature and substance of such action). The general meetings shall take place on no less than a quarterly basis. The Borrower shall concurrently deliver to the Observer all notices and any materials delivered to the board of directors or any committees thereof in connection with a board meeting or action to be taken by written consent, including a draft of any material resolutions or actions proposed to be adopted by written consent. The Observer

 

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shall be free prior to such meeting or adoption by consent to contact the board of directors and discuss the pending actions to be taken.

 

(b)                                  The Borrower (or its Subsidiaries, as applicable) shall pay the Observer’s reasonable out-of-pocket expenses (including the cost of travel, meals and lodging) in connection with the attendance of such meetings.

 

(c)                                   If an issue is to be discussed or otherwise arises at any meeting of the board of directors of the Borrower or committee thereof which, in the reasonable good faith judgment of the board of directors, is not appropriate to be discussed in the presence of the Observer in order to avoid a conflict of interest on the part of such Observer or would result in disclosure of trade secrets or to preserve an attorney-client privilege, then such issue may be discussed without the Observer being present and any materials delivered to the board of directors pertaining to such issue need not be delivered to the Observer, so long as the Observer is given notice of the occurrence of such judgment by the board of directors, that the Observer is being excused, and that certain materials will not be delivered to the Observer.

 

(d)                                  The rights described in this Section 7.14 shall terminate and be of no further force or effect upon the assignment or transfer of the Lender’s rights and obligations hereunder or under any other Loan Document.

 

SECTION 7.15 Product Agreements . The Borrower and any of the Subsidiaries will make commercially reasonable efforts not to enter into any (i) amendment with respect to any existing Product Agreement or (ii) new Product Agreement that contains (a) any provision that permits any counterparty other than the Borrower or any of the Subsidiaries to terminate such Product Agreement for any reasons related to the insolvency or change of control of the Borrower or any of the Subsidiaries or assignment of such Product Agreement by the Borrower or any of the Subsidiaries, (b) any provision which restricts or penalizes a security interest in, or the assignment of, any Product Agreements, upon the sale, merger or other disposition of all or a material portion of a Product to which such Product Agreement relates, or (c) any other provision that has or is likely to adversely effect, in any material respect, any Product to which such agreement relates or to the Lender’s rights hereunder.

 

SECTION 7.16 Supply of Reagents . Borrower shall within three months of the Closing Date, either (i) enter into an agreement with Illumina, Inc. (“ Illumina ”) for a committed supply of reagents for commercial use at prices no more than [*] set forth on the Purchase Orders with Illumina dated March 20, 2013 (the “ Purchase Orders ”), copies of which have been provided to the Lender, or (ii) succeed in causing Illumina to provide the reagents to Borrower for commercial use in the amounts and on the prices set forth in the Purchase Orders, or (iii) whether through Illumina or alternative suppliers, achieve committed costs for at least one year for its NIPT test such that the sequencing component of the test is no more than [*] than the cost initially communicated to Lender (which was [*]).

 

[*] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

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ARTICLE VIII

NEGATIVE COVENANTS

 

The Borrower covenants and agrees with the Lender that until the Termination Date has occurred, the Borrower and the Subsidiaries will perform or cause to be performed the obligations set forth below.

 

SECTION 8.1 Business Activities . None of the Borrower or any of the Subsidiaries or any Permitted Joint Venture, will engage in any business activity except those business activities engaged in on the date of this Agreement and activities reasonably incidental thereto; provided that the foregoing shall not prohibit the Borrower or any Subsidiary from developing any new Products within or related to its general field of genetic testing for reproductive indications, utilizing newly developed technologies in such field or exploiting any existing Products in new territories or for different purposes.

 

SECTION 8.2 Indebtedness . None of the Borrower or any of the Subsidiaries will create, incur, assume or permit to exist any Indebtedness, other than:

 

(a)                                  Indebtedness in respect of the Obligations and Indebtedness arising under the Royalty Agreement;

 

(b)                                  until the Closing Date, Indebtedness that is to be repaid in full as further identified in Schedule 8.2(b) ;

 

(c)                                   Indebtedness existing as of the Closing Date which is identified in Schedule 8.2(c) , and Refinancing of such Indebtedness in a principal amount not in excess of that which is outstanding on the Closing Date (as such amount has been reduced following the Closing Date);

 

(d)                                  unsecured Indebtedness in respect of performance, surety or appeal bonds provided in the ordinary course of business in an aggregate amount at any time outstanding not to exceed $500,000;

 

(e)                                   Purchase Money Indebtedness and Capitalized Lease Liabilities, and Refinancings thereof, in a principal amount not to exceed $8,000,000 in the aggregate outstanding at any time, and, without duplication, Contingent Liabilities incurred in connection therewith;

 

(f)                                    Permitted Subordinated Indebtedness;

 

(g)                                   Indebtedness of any Subsidiary or the Borrower owing to the Borrower or any Subsidiary;

 

(h)                                  other Indebtedness of the Borrower and the Subsidiaries in an aggregate amount at any time outstanding not to exceed $100,000;

 

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

 

(j)                                     Indebtedness permitted to exist, and subject to the limitations, with respect to Permitted Joint Ventures; and

 

(k)                                  Indebtedness in respect of reimbursement obligations under letters of credit posted in the ordinary course of business to secure the Borrower’s or a Subsidiary’s real property lease obligations, not to exceed $1,000,000 in the aggregate.

 

provided that, no Indebtedness otherwise permitted by clauses (c), (e), (f), (g), (h) or ( j) shall be assumed, created or otherwise incurred if a Default has occurred and is then continuing or would result therefrom.

 

SECTION 8.3 Liens . None of the Borrower or any of the Subsidiaries will create, incur, assume or permit to exist any Lien upon any of its property (including Capital Securities of any Person), revenues or assets, whether now owned or hereafter acquired, except:

 

(a)                                  Liens securing payment of the Obligations;

 

(b)                                  until the Closing Date, Liens securing payment of Indebtedness of the type described in clause (b) of Section 8.2 ;

 

(c)                                   Liens existing as of the Closing Date and disclosed in Schedule 8.3(c) securing Indebtedness described in clause (c) of Section 8.2 , and Refinancings of such Indebtedness; provided that, no such Lien shall encumber any additional property and the amount of Indebtedness secured by such Lien is not increased from that existing on the Closing Date (as such Indebtedness may have been permanently reduced subsequent to the Closing Date);

 

(d)                                  Liens securing payment of Permitted Subordinated Indebtedness that are (i) subordinate to the Liens securing payment of the Obligations and all other Indebtedness owing from the Borrower or the Subsidiaries to the Lender and (ii) subject to a written subordination agreement satisfactory to the Lender in its sole discretion;

 

(e)                                   Liens securing Indebtedness of the Borrower or the Subsidiaries permitted pursuant to Section 8.2(e) ( provided that (i) such Liens shall be created within 180 days of the acquisition of the assets financed with such Indebtedness, (ii) such Liens do not at any time encumber any property other than the property so financed and other Tangible Fixed Assets, and (iii) such Liens on assets of the Borrower or the Subsidiaries, other than those referenced in clause (ii), that may come into existence after all of the Obligations and any successive Refinancings thereof have been paid and satisfied in full, and that shall not be evidenced by any UCC financing statements filed prior to their coming into existence;

 

(f)                                    Liens in favor of carriers, warehousemen, mechanics, materialmen and landlords granted in the ordinary course of business for amounts not overdue or being

 

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diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books;

 

(g)                                   Liens incurred or deposits made in the ordinary course of business in connection with worker’s compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, bids, leases or other similar obligations (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety and appeal bonds or performance bonds;

 

(h)                                  judgment Liens in existence for less than 45 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies and which do not otherwise result in an Event of Default under Section 9.1(f) ;

 

(i)                                      easements, rights-of-way, zoning restrictions, minor defects or irregularities in title and other similar encumbrances not interfering in any material respect with the value or use of the property to which such Lien is attached; and

 

(j)                                     Liens for Taxes not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books;

 

(k)                                  licenses and/or sublicenses of Intellectual Property otherwise permitted under this Agreement or the other Loan Documents, and restrictions under licenses of Intellectual Property entered into in the ordinary course of business pursuant to which a Borrower is a licensee;

 

(l)                                      banker’s liens, rights of setoff and Liens in favor of financial institutions incurred made in the ordinary course of business arising in connection with the Borrower’s or any Subsidiary’s deposit accounts or securities accounts held at such institutions to secure solely payment of fees and similar costs and expenses and provided such accounts are maintained in compliance with Section 7.13(a) hereof; and

 

(m)                              cash collateral pledged to secure Indebtedness in respect of letters of credit permitted pursuant to Section 8.2(k) or held as security deposits in respect of the Borrower’s or a Subsidiary’s real property lease obligations incurred in the ordinary course of business, not to exceed $1,000,000 in the aggregate.

 

The Lender agrees to execute and deliver such collateral subordination agreements and related documents as reasonably requested of it to confirm the priority of the Liens permitted pursuant to clauses (e) and (m) of Section 8.3.

 

SECTION 8.4 Minimum Liquidity . The Liquidity of the Borrower shall not at any time be less than (i) $5,000,000 if the Initial Loan, but not the Delayed Draw Loan, has been funded to the Borrower and (ii) $7,000,000 if both the Initial Loan and the Delayed Draw Loan have been funded to the Borrower. The Borrower shall maintain an

 

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amount equal to the amount required under this Section 8.4 , along with its other cash and Cash Equivalent Investments, in a Controlled Account as required pursuant to Section 7.13(a) hereof.

 

SECTION 8.5 Investments . None of the Borrower or any of the Subsidiaries will purchase, make, incur, assume or permit to exist any Investment in any other Person, except:

 

(a)                                  Investments existing on the Closing Date and identified in Schedule 8.5(a) ;

 

(b)                                  Cash Equivalent Investments;

 

(c)                                   Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

 

(d)                                  Investments consisting of any deferred portion of the sales price received by the Borrower or any of the Subsidiaries in connection with any Disposition permitted under Section 8.8 ;

 

(e)                                   Investments constituting (i) accounts receivable arising, (ii) trade debt granted, or (iii) deposits made in connection with the purchase price of goods or services, in each case in the ordinary course of business;

 

(f)                                    Investments consisting of travel advances and employee relocation loans, and other employee loans and advances in the ordinary course of business, not to exceed $100,000 in the aggregate outstanding at any given time;

 

(g)                                   Investments consisting of loans to employees, officers, or directors relating to the purchase of equity securities of the Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by the Borrower’s Board of Directors, not to exceed the aggregate amount of $250,000 in any Fiscal Year;

 

(h)                                  Investments permitted pursuant to the definition of Permitted Joint Ventures;

 

(i)                                      Investments of the Borrower, or of any Wholly-Owned Subsidiary, in any Wholly-Owned Subsidiary (including pursuant to a Permitted Acquisition) that is, at the time of such Investment, a Guarantor;

 

(j)                                     Permitted Acquisitions;

 

(k)                                  Investments in Subsidiaries that are not Guarantors, in an amount not to exceed, together with Investments in Permitted Joint Ventures, $5,000,000;

 

(l)                                      other Investments in an amount not to exceed $100,000 in the aggregate outstanding at any given time; and

 

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(m)          any Investment which when made complies with the requirements of the definition of the term “Cash Equivalent Investment” may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements.

 

SECTION 8.6 Restricted Payments, Etc . Without the prior written consent of the Lender, none of the Borrower or any of the Subsidiaries will declare or make a Restricted Payment, or make any deposit for any Restricted Payment, other than Restricted Payments made by the Borrower or Subsidiaries to the Borrower or any Subsidiaries.

 

SECTION 8.7 Consolidation, Merger; Permitted Acquisitions, Etc . None of the Borrower or any of the Subsidiaries will liquidate or dissolve, consolidate with, or merge into or with, any other Person, or purchase or otherwise acquire all or substantially all of the assets of any Person (or any division thereof) other than in connection with a Permitted Acquisition; provided that, so long as no Event of Default has occurred and is continuing (or would occur), any Subsidiary may liquidate or dissolve voluntarily into, and may merge with and into, the Borrower or any Subsidiary that is a Guarantor; and provided further, in connection with any Permitted Acquisition, the Borrower or any Subsidiary of the Borrower may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it, so long as (i) the Person surviving such merger with any Subsidiary shall be a direct or indirect Wholly-Owned Subsidiary of the Borrower and a Guarantor, and (ii) in the case of any such merger to which the Borrower is a party, the Borrower is the surviving Person.

 

SECTION 8.8 Permitted Dispositions . None of the Borrower or any of the Subsidiaries will Dispose of any of its assets (including accounts receivable and Capital Securities of Subsidiaries) to any Person in one transaction or series of transactions unless such Disposition (i) is inventory, and non-exclusive licenses of Intellectual Property in connection therewith, or obsolete, damaged, worn out or surplus property (including fixed assets no longer used or useful in the business of the Borrower and its Subsidiaries at the time of such Disposition) Disposed of in the ordinary course of its business, (ii) is a transaction permitted by Section 8.7 , (iii) is a license for the use of the Intellectual Property of the Borrower, or any of the Subsidiaries, in each instance that is approved by Borrower’s (or such Subsidiary’s) Board of Directors and which could not result in a legal transfer of title of the licensed property but that may be exclusive in respects other than territory, including but not limited to field of use, and that may be exclusive as to territory only as to discrete geographical areas outside of the United States, (iv) is pursuant to the definition of Permitted Joint Venture, or (v) (A) is on fair market value terms in an arms-length transaction; provided that in no event shall the aggregate cumulative amount of cash and noncash consideration payable in connection with Dispositions exceed $3,000,000, (B) not less than 75% of the aggregate sales price from any one such Disposition shall be paid in cash at the closing of such Disposition or within 30 days thereafter, (C) immediately prior to and immediately after giving effect to any such Disposition, there does not exist a Default, and (D) in connection with any Disposition permitted by this clause (vi) where the cash and noncash consideration (whether in one or a series of transactions) exceeds $100,000, an Authorized Officer of the Borrower

 

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delivers a certificate to the Lender to the effect that each of clauses (A) through C) of this definition has been satisfied.

 

SECTION 8.9 Modification of Certain Agreements . None of the Borrower or any of the Subsidiaries will consent to any amendment, supplement, waiver or other modification of, or enter into any forbearance from exercising any rights with respect to, the terms or provisions contained in (i) any Organic Documents of the Borrower or any of the Subsidiaries, if the result would have an adverse effect on the rights or remedies of the Lender under this Agreement, the Royalty Agreement or any Loan Document, or (ii) any agreement governing any Permitted Subordinated Indebtedness, if the result would shorten the maturity date thereof or advance the date on which any cash payment is required to be made thereon or would otherwise change any terms thereof in a manner adverse to the Lender.

 

SECTION 8.10 Transactions with Affiliates . Other than transactions that constitute Investments permitted pursuant to Sections 8.5(f)  or (g) , none of the Borrower or any of the Subsidiaries will enter into or cause or permit to exist any arrangement, transaction or contract (including for the purchase, lease or exchange of property or the rendering of services) with any of its Affiliates, unless:

 

(a) such arrangement, transaction or contract is:

 

(x)(i) between or among the Borrower or any of its Subsidiaries, (ii) provides normal and reasonable compensation, benefits, reimbursement of expenses and indemnification to officers and directors, (iii) is a cash Investment in the Borrower, or (iv) is between or among the Borrower or any of its Subsidiaries on the one hand and a Permitted Joint Venture on the other hand and is not otherwise prohibited hereunder, and

 

(y)(i) is on fair and reasonable terms no less favorable to the Borrower or any Subsidiary than it could obtain in an arm’s-length transaction with a Person that is not one of its Affiliates and (ii) is of the kind which would be entered into by a prudent Person in its position with a Person that is not one of its Affiliates; or

 

(b) such arrangement, transaction or contract is not between or among the Borrower and any Parallel Entity and the Borrower has:

 

(x) provided the Lender with not less than 20 days’ prior written notice of such arrangement, transaction or contract and (y) certified in writing to the Lender that such arrangement, transaction or contract (i) satisfies the requirements of clause (a)(y), and (ii) has been approved by the Borrower’s board of directors; or

 

(c) such arrangement, transaction or contract is approved by the Lender.

 

SECTION 8.11 Restrictive Agreements, Etc . None of the Borrower or any of the Subsidiaries will enter into any agreement prohibiting (i) the creation or

 

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assumption of any Lien upon its properties, revenues or assets, whether now owned or hereafter acquired, (ii) the ability of the Borrower or any of the Subsidiaries to amend or otherwise modify any Loan Document, or (iii) the ability of the Borrower or any Subsidiary to make any payments, directly or indirectly, to the Borrower, including by way of dividends, advances, repayments of loans, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments. The foregoing prohibitions shall not apply to restrictions contained (x) in any Loan Document, or (y) in the case of clause (i) , (A) contained in any agreement governing any Indebtedness permitted by clauses (e)  or (k)  of Section 8.2 as to the assets financed with the proceeds of such Indebtedness and secured by Liens permitted by clauses (e)  or (k)  of Section 8.3 , or (B) contained in any agreement governing an Indebtedness permitted by clause (j) of Section 8.2, or (C) with respect to restrictions on assignment customarily found in leases, licenses and other Contracts, or (z) in the case of clause (iii) , any Indebtedness permitted by clauses (e)  or (f)  of Section 8.2 .

 

SECTION 8.12 Sale and Leaseback . None of the Borrower or any of the Subsidiaries will directly or indirectly enter into any agreement or arrangement providing for the sale or transfer by it of any property (now owned or hereafter acquired) to a Person and the subsequent lease or rental of such property from such Person (other than Tangible Fixed Assets).

 

SECTION 8.13 Change in Name, Location or Executive Office or Executive Management; Change in Fiscal Year . None of the Borrower or any of the Subsidiaries will:

 

(a)           without 30 days’ prior written notice to the Lender, (i) change its legal name or any trade name used to identify it in the conduct of its business or ownership of its properties, (ii) relocate its chief executive office, principal place of business or any office in which it maintains books or records relating to its business (including the establishment of any new office or facility), or (iii) change its federal taxpayer identification number or organizational number (or equivalent);

 

(b)           replace its chief executive officer or chief financial officer without written notification to the Lender within 30 days thereafter;

 

(c)           change its jurisdiction of organization or legal structure; or

 

(d)           change its Fiscal Year or any of its Fiscal Quarters.

 

SECTION 8.14 Benefit Plans and Agreements . None of the Borrower or any Subsidiary will (i) become the sponsor of, incur any responsibility to contribute to or otherwise incur actual or potential liability with respect to, any Benefit Plan, (ii) allow any “employee benefit plan” as defined in section 3(3) of ERISA that provides retirement benefits and that is sponsored by the Borrower, any Subsidiary or any of their ERISA Affiliates intended to be tax qualified under section 401 or 501 of the Code to cease to be tax qualified, (iii) allow the assets of any tax qualified retirement plan to become invested in Capital Securities of the Borrower or any Subsidiary or (iv)

 

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allow any employee benefit plan, program or arrangement sponsored, maintained, contributed to or required to be contributed to by the Borrower or any Subsidiary to fail to comply in all material respects with its terms and applicable law.

 

ARTICLE IX

EVENTS OF DEFAULT

 

SECTION 9.1 Listing of Events of Default . Each of the following events or occurrences described in this Article shall constitute an “ Event of Default ”.

 

(a)           Non-Payment of Obligations . The Borrower shall default in the payment or prepayment when due of (i) any principal of or interest on any Loan, or (ii) any fee described in Article III or any other monetary Obligation, and in the case of clause (ii)  such default shall continue unremedied for a period of two Business Days after such amount was due.

 

(b)           Breach of Warranty . Any representation or warranty made or deemed to be made by the Borrower or any of the Subsidiaries in any Loan Document (including any certificates delivered pursuant to Article V ) is or shall be incorrect when made or deemed to have been made in any material respect.

 

(c)           Non-Performance of Certain Covenants and Obligations . The Borrower or any Subsidiary shall default in the due performance or observance of any of its obligations under (i)  Section 7.1(a), (b), (c), (d), (e), (j), (k)  or (l), Section 7.7 , or Article VIII, or (ii) any clause under Section 7.1 other than those referenced in the foregoing clause (i) and such default shall continue unremedied for a period of 10 days after the earlier to occur of (A) notice thereof given to the Borrower by the Lender or (B) the date on which the Borrower has knowledge of such default.

 

(d)           Non-Performance of Other Covenants and Obligations . The Borrower or any Subsidiary shall default in the due performance and observance of any other covenant, obligation or agreement contained in any Loan Document executed by it, and such default shall continue unremedied for a period of 30 days after the earlier to occur of (i) notice thereof given to the Borrower by the Lender or (ii) the date on which the Borrower has knowledge of such default.

 

(e)           Default on Other Indebtedness . A default shall occur in the payment of any amount when due (subject to any applicable grace period), whether by acceleration or otherwise, of any principal or stated amount of, or interest or fees on, any Indebtedness of the Borrower or any of the Subsidiaries having a principal or stated amount, individually or in the aggregate, in excess of $500,000, or a default shall occur in the performance or observance of any obligation or condition with respect to such Indebtedness if the effect of such default is to accelerate the maturity of any such Indebtedness or such default shall continue unremedied for any applicable period of time sufficient to permit the holder or holders of such Indebtedness, or any trustee or agent for such holders, to cause or declare such Indebtedness to become due and payable or to require such Indebtedness to be prepaid, redeemed, purchased or defeased, or require an

 

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offer to purchase or defease such Indebtedness to be made, prior to its expressed maturity.

 

(f)            Judgments . Any judgment or order for the payment of money individually or in the aggregate in excess of $500,000 (exclusive of any amounts fully covered by insurance (less any applicable deductible) and as to which the insurer has acknowledged its responsibility to cover such judgment or order) shall be rendered against the Borrower or any of the Subsidiaries and such judgment shall not have been vacated or discharged or stayed or bonded pending appeal within 30 days after the entry thereof or enforcement proceedings shall have been commenced by any creditor upon such judgment or order.

 

(g)           Change in Control . Any Change in Control shall occur.

 

(h)           Bankruptcy, Insolvency, Etc. The Borrower or (except as permitted pursuant to Section 8.7) any of the Subsidiaries shall

 

(i)            become insolvent or generally fail to pay, or admit in writing its inability or unwillingness generally to pay, debts as they become due;

 

(ii)           apply for, consent to, or acquiesce in the appointment of a trustee, receiver, sequestrator or other custodian for any substantial part of the property of any thereof, or make a general assignment for the benefit of creditors;

 

(iii)          in the absence of such application, consent or acquiescence in or permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 60 days; provided that, the Borrower and each Subsidiary hereby expressly authorizes the Lender to appear in any court conducting any relevant proceeding during such 60-day period to preserve, protect and defend its rights under the Loan Documents;

 

(iv)          permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law or any dissolution, winding up or liquidation proceeding, in respect thereof, and, if any such case or proceeding is not commenced by the Borrower or any Subsidiary, such case or proceeding shall be consented to or acquiesced in by the Borrower or such Subsidiary, as the case may be, or shall result in the entry of an order for relief or shall remain for 60 days undismissed; provided that, the Borrower and each Subsidiary hereby expressly authorizes the Lender to appear in any court conducting any such case or proceeding during such 60-day period to preserve, protect and defend its rights under the Loan Documents; or

 

(v)           take any action authorizing, or in furtherance of, any of the foregoing.

 

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(i)            Impairment of Security, Etc . Any Loan Document shall (except in accordance with its terms) terminate or the terms thereof shall cease to be the legally valid, binding and enforceable obligation of the Borrower or any Subsidiary thereto; the Borrower or any Subsidiary shall contest in any manner such validity, binding nature or enforceability; or, except as permitted under any Loan Document, any Lien securing any Obligation shall, in whole or in any material part, cease to be a perfected first priority Lien.

 

(j)            Key Permit Events . Any Key Permit or any of the Borrower’s or any Subsidiary’s material rights or interests thereunder is terminated or amended in any manner materially adverse to the Borrower or the Borrower and its Subsidiaries taken as a whole.

 

(k)           Material Adverse Change . Any circumstance occurs that has had or would reasonably be expected to cause a Material Adverse Effect.

 

(l)            Key Person Even t. If either of Dr. Matthew Rabinowitz or Jonathan Sheena ceases to be employed full time by the Borrower and actively working as the Chief Executive Officer and Chief Technology Officer, as applicable, unless within 180 days after such individual ceases to be employed full time and actively working the Borrower hires a replacement for such individual reasonably acceptable to the Lender.

 

(m)          Regulatory Matters . If any of the following occurs and has had or would reasonably be expected to have or result in a Material Adverse Effect: (i) the FDA, CMS, EMA or any other Governmental Authority (A) issues a letter or other communication asserting that any Product lacks a required Regulatory Authorization or (B) initiates enforcement action against, or issues a warning letter with respect to, the Borrower or any of the Subsidiaries, or any of their Products or the manufacturing facilities therefor, that causes the Borrower or such Subsidiary to discontinue marketing or withdraw any of its material Products, or causes a material delay in the manufacture or offering of any of its material Products, which discontinuance, withdrawal or delay could reasonably be expected to last for more than three months; (ii) a recall; or (iii) the Borrower or any of the Subsidiaries enters into a settlement agreement with the FDA, CMS, EMA or any other Governmental Authority.

 

SECTION 9.2 Action if Bankruptcy . If any Event of Default described in clauses (i) through (iv) of Section 9.1(h)  with respect to the Borrower shall occur, the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of the Loans and all other Obligations shall automatically be and become immediately due and payable, without notice or demand to any Person.

 

SECTION 9.3 Action if Other Event of Default . If any Event of Default (other than any Event of Default described in clauses (i) through (iv) of Section 9.1(h)) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Lender may, by notice to the Borrower declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the

 

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Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of the Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment, and the Commitments shall terminate.

 

ARTICLE X

MISCELLANEOUS PROVISIONS

 

SECTION 10.1 Waivers, Amendments, Etc . The provisions of each 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 Lender and the Borrower.

 

No failure or delay on the part of the Lender in exercising any power or right under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Borrower or any of the Subsidiaries in any case shall entitle it or any of them to any notice or demand in similar or other circumstances. No waiver or approval by the Lender under any Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.

 

SECTION 10.2 Notices; Time . All notices and other communications provided under any Loan Document shall be in writing or by facsimile and addressed, delivered or transmitted, if to the Borrower or the Lender, to the applicable Person at its address or facsimile number set forth on Schedule 10.2 hereto, or at such other address or facsimile number as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when the confirmation of transmission thereof is received by the transmitter. Documents required to be delivered pursuant to Section 7.1 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which (i) the Borrower posts such documents, or provides a link thereto on the Borrower’s website or the Internet at the following website address: [*], or (ii) such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which the Lender has access (whether a commercial or third-party website), and in each case an email with a link to such posting has been provided to the Lender’s email addresses set forth on Schedule 10.2 heretofore. Unless otherwise indicated, all references to the time of a day in a Loan Document shall refer to New York City time.

 

SECTION 10.3 Payment of Costs and Expenses . [*]

 

[*] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

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[*]

 

(a)           [*];

 

(b)           [*]; and

 

(c)           [*].

 

The Borrower further agrees to pay, and to hold the Lender harmless from all liability for, any stamp or other taxes which may be payable in connection with the execution or delivery of each Loan Document, the Loans or the issuance of the Note. The Borrower also agrees to reimburse the Lender upon demand for all reasonable out-of-pocket expenses (including reasonable attorneys’ fees and legal expenses of counsel to the Lender) incurred by the Lender in connection with (x) the negotiation of any restructuring or “work-out” with the Borrower, whether or not consummated, of any Obligations and (y) the enforcement of any Obligations.

 

SECTION 10.4 Indemnification . In consideration of the execution and delivery of this Agreement by the Lender, the Borrower hereby indemnifies, agrees to defend, exonerates and holds the Lender and each of its officers, directors, employees and agents (collectively, the “ Indemnified Parties ”) free and harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities, obligations and damages, and expenses incurred in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys’ and professionals’ fees and disbursements, whether incurred in connection with actions between the parties hereto or the parties hereto and third parties (collectively, the “ Indemnified Liabilities ”), including, without limitation, Indemnified Liabilities arising out of or relating to (i) the entering into and performance of any Loan Document by any of the Indemnified Parties (including any action brought by or on behalf of the Borrower as the result of any determination by the Lender pursuant to Article V not to fund any Loan as a consequence of the Borrower’s failure to satisfy the conditions set forth therein), and (ii) any Environmental Liability; provided that the Borrower shall have no obligation or liability under this Section 10.4 with respect to any Indemnified Liabilities that arise from or are the direct result of an Indemnified Party’s gross negligence or willful misconduct. If and to the extent that the foregoing indemnification may be unenforceable for any reason, the Borrower agrees to make the maximum contribution

 

[*] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

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to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

 

SECTION 10.5 Survival . The obligations of the Borrower under Section 4.1 , Section 4.2 , Section 4.3 , Section 10.3 and Section 10.4 , shall in each case survive any assignment by the Lender and the occurrence of the Termination Date. The representations and warranties made by the Borrower in each Loan Document shall survive the execution and delivery of such Loan Document.

 

SECTION 10.6 Severability . Any provision of any Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction.

 

SECTION 10.7 Headings . The various headings of each Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of such Loan Document or any provisions thereof.

 

SECTION 10.8 Execution in Counterparts, Effectiveness, Etc. . This Agreement may be executed by the parties hereto in several counterparts, each of which shall be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrower and the Lender, shall have been received by the Lender. Delivery of an executed counterpart of a signature page to this Agreement by email (e.g. “pdf” or “tiff”) or telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

 

SECTION 10.9 Governing Law; Entire Agreement . EACH LOAN DOCUMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). The Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter thereof and supersede any prior agreements, written or oral, with respect thereto.

 

SECTION 10.10 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; provided that, the Borrower may not assign or transfer its rights or obligations hereunder without the consent of the Lender; provided , further, that the Lender may not assign or transfer its rights or obligations hereunder or under the other Loan Documents to a Competitor of the Borrower without the prior written consent of the Borrower, except in the case that (i) an Event of Default has occurred and (ii) such

 

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Event of Default continues for [*] days after the Lender has notified the Borrower of its intent to make such an assignment or transfer to a Competitor.

 

SECTION 10.11 Other Transactions . Nothing contained herein shall preclude the Lender, from engaging in any transaction, in addition to those contemplated by the Loan Documents, with the Borrower or any of its Affiliates in which the Borrower or such Affiliate is not restricted hereby from engaging with any other Person.

 

SECTION 10.12 Forum Selection and Consent to Jurisdiction . ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER OR THE BORROWER IN CONNECTION HEREWITH OR THEREWITH SHALL BE BROUGHT AND MAINTAINED IN THE COURTS OF THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT, ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE LENDER’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE BORROWER AND THE LENDER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE ADDRESS FOR NOTICES SPECIFIED IN SECTION 10.2 . EACH OF THE BORROWER AND THE LENDER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT EITHER THE BORROWER OR THE LENDER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER AND THE LENDER, EACH ON ITS OWN BEHALF, HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS.

 

SECTION 10.13 Waiver of Jury Trial . THE LENDER AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF

 

[*] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

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DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER OR THE BORROWER IN CONNECTION THEREWITH. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THE LOAN DOCUMENTS.

 

SECTION 10.14 Confidential Information . Subject to the provisions of Section 10.15, at all times prior to the fifth anniversary of the Termination Date, the Receiving Party shall keep confidential and shall not publish or otherwise disclose any Confidential Information furnished to it by the Disclosing Party, except to those of the Receiving Party’s employees, advisors or consultants who have a need to know such information to assist such Party in the performance of such Party’s obligations or in the exercise of such Party’s rights hereunder and who are subject to obligations of confidentiality consistent with these provisions (collectively, “ Recipients ”). Notwithstanding anything to the contrary set forth herein, (a) the Lender may disclose this Agreement and the terms and conditions hereof and any information related hereto, other than to any Competitor of Natera or any of its Subsidiaries, to (i) its Affiliates, (ii) potential and actual assignees of any of the Lender’s rights hereunder and (iii) potential and actual investors in, or lenders to, the Lender (including, in each of the foregoing cases, such Person’s employees, advisors or consultants); provided that in each case, each such Recipient shall be subject to reasonable obligations of confidentiality; and (b) upon receiving consent from the Lender, which consent shall not be unreasonably withheld, delayed or conditioned, the Borrower may disclose this Agreement and the terms and conditions hereof and information related hereto, to potential or actual permitted acquirers or assignees, collaborators and other (sub)licensees, permitted subcontractors, investment bankers, investors, lenders (including, in each of the foregoing cases, such Person’s employees, advisors or consultants who have a need to receive and review such information); provided that in each case, each such Recipient shall be subject to reasonable obligations of confidentiality. In addition to the foregoing, the Receiving Party may disclose Confidential Information belonging to the Disclosing Party to the extent (and only to the extent) such disclosure is reasonably necessary in order to comply with applicable laws (including any securities law or regulation or the rules of a securities exchange) and with judicial process, if in the reasonable opinion of the Receiving Party’s counsel, such disclosure is necessary for such compliance, provided that the Receiving Party (x) will only disclose those portions of the Confidential Information that are necessary or required to be so disclosed, (y) to the extent legally permissible, will notify the Disclosing Party of the Receiving Party’s intent to make any disclosure pursuant thereto, and (z) to the extent reasonably practicable, the Receiving Party shall provide such notice in advance of the disclosure so as to allow the Disclosing Party an opportunity to seek (at the Disclosing Party’s sole expense) a protective order or other appropriate remedy; provided , however, that no such notice will be required in respect of disclosures of Confidential Information to regulatory authorities having or claiming to have jurisdiction over the Receiving Party in connection with routine regulatory examinations. In the event that no such protective order or other remedy is obtained or

 

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that the Disclosing Party waives compliance with the provisions hereof, the Receiving Party and its Representatives may disclose such Confidential Information as may be required or requested.

 

SECTION 10.15 Exceptions to Confidentiality . The Receiving Party’s obligations set forth in this Agreement shall not extend to any Confidential Information of the Disclosing Party:

 

(a)           that is or hereafter becomes part of the public domain (other than as a result of a disclosure by the Receiving Party or its Recipients in violation of this Agreement);

 

(b)           that is received from a Third Party without restriction on disclosure and without, to the knowledge of the Receiving Party, breach of any agreement between such Third Party and the Disclosing Party;

 

(c)           that the Receiving Party can demonstrate by competent evidence was already in its possession without any limitation on disclosure prior to its receipt from the Disclosing Party;

 

(d)           that is generally made available to Third Parties by the Disclosing Party without restriction on disclosure; or

 

(e)           that the Receiving Party can demonstrate by competent evidence was independently developed by the Receiving Party without use of or reference to the Confidential Information.

 

[ Signature Page Follows ]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

 

 

	NATERA, INC.,
	as the Borrower
	By:	/s/ Matthew Rabinowitz
		Name:	Matthew Rabinowitz
		Title:	Chief Executive Officer
	ROS ACQUISITION OFFSHORE LP,
	as the Lender
	By OrbiMed Advisors LLC,
	its investment manager
	By:
		Name:	Samuel D. Isaly
		Title:	Managing Member

 

[ Signature Page to Credit Agreement ]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

 

 

	NATERA, INC.,
	as the Borrower
	By:
		Name:	Matthew Rabinowitz
		Title:	Chief Executive Officer
	ROS ACQUISITION OFFSHORE LP,
	as the Lender
	By OrbiMed Advisors LLC,
	its investment manager
	By:	/s/ Samuel D. Isaly
		Name:	Samuel D. Isaly
		Title:	Managing Member

 

[ Signature Page to Credit Agreement ]

 

 

EXHIBIT A

FORM OF PROMISSORY NOTE

 

$30,000,000

April [ · ], 2013

 

FOR VALUE RECEIVED, NATERA, INC., a Delaware corporation (the “ Borrower ”), hereby promises to pay to the order of [ROS ACQUISITION OFFSHORE LP, a Cayman Islands Exempted Limited Partnership] (together with its Affiliates, successors, transferees and assigns, the “ Lender ”), on the Maturity Date the principal sum of [TWENTY MILLION DOLLARS ($20,000,000) or, if a Delayed Draw Loan is made to the Borrower, THIRTY MILLION DOLLARS ($30,000,000)] or, in either case if less, the aggregate unpaid principal amount of the Loans (and any continuation thereof) made (or continued) by the Lender pursuant to the Credit Agreement, dated as of April [ · ], 2013 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and between the Borrower and the Lender. Unless otherwise defined herein or the context otherwise requires, terms used in this Note have the meanings provided in the Credit Agreement.

 

The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity upon demand, until paid in full, at the rates per annum and on the dates specified in the Credit Agreement, as well as any other amounts that may be due to the Lender upon maturity (whether by acceleration or otherwise) under or in respect of this Note.

 

Payments of both principal and interest are to be made in U.S. Dollars in same day or immediately available funds to the account designated by the Lender pursuant to the Credit Agreement.

 

This Note is referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a description of the security and guarantee for this Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of the unpaid principal amount of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Any prepaid principal of this Note may not be reborrowed.

 

All parties hereto, whether as makers, endorsers or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor.

 

THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

 

[ Signature Page Follows ]

 

 

	NATERA, INC.
	By:
		Name:	[ · ]
		Title:	Chief Executive Officer

 

[ Signature Page to Promissory Note ]