AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

EXHIBIT 10.1

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “ Agreement ”) dated as of May 27, 2009 between (i) SILICON VALLEY BANK , a California corporation with a loan production office located at 100 Matsonford Road, Building 5, Suite 555, Radnor, Pennsylvania 19087 (“ Bank ”), and (ii) SAFEGUARD SCIENTIFICS, INC. , a Pennsylvania corporation (“ SFE ”), with offices located at 435 Devon Park Drive, Building 800, Wayne, Pennsylvania 19087, SAFEGUARD DELAWARE, INC. , a Delaware corporation and SAFEGUARD SCIENTIFICS (DELAWARE), INC. , a Delaware corporation, each with offices located at 1105 N. Market St., Suite 1300, Wilmington, DE 19801 (individually and collectively, the “ Borrower ”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. This Agreement supersedes in its entirety that certain Loan and Security Agreement between the parties dated February 6, 2009 (the “ Prior Agreement ”). The parties agree as follows:

1 ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Notwithstanding the foregoing, all financial covenant calculations shall be computed with respect to Borrower, on a consolidated basis but excluding all other Subsidiaries of Borrower. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

2 LOAN AND TERMS OF PAYMENT

2.1 Promise to Pay . Borrower hereby unconditionally, jointly and severally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement.

2.1.1 Revolving Advances .

(a)  Availability . Subject to the terms and conditions of this Agreement, Bank shall make Advances not exceeding the Availability Amount. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent herein.

(b)  Termination; Repayment . The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable.

(c)  Prepayment . At Borrower’s option, Borrower may prepay any or all of the Advances under this Agreement without premium or penalty.

2.1.2 Letters of Credit Sublimit .

(a) As part of the Revolving Line, Bank shall issue or have issued Letters of Credit for Borrower’s account. Such aggregate amounts utilized hereunder shall at all times reduce the amount otherwise available for Advances under the Revolving Line. The face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed Twenty Million Dollars ($20,000,000), inclusive of Credit Extensions relating to Section 2.1.4 and the FX Reduction Amount. If, on the Revolving Line Maturity Date, or the effective date of any termination of this Agreement by Borrower, there are any outstanding Letters of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to one hundred two percent (102%) of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to said Letters of Credit. All Letters of Credit shall be in form and substance acceptable to Bank in its sole but reasonable discretion and shall be subject to the terms and conditions of Bank’s standard Application and Letter of Credit Agreement (the “ Letter of Credit Application ”). Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request. Borrower further agrees to be bound by the regulations (as in effect on the date of issuance) and reasonable interpretations of the issuer of any Letters of Credit guaranteed by Bank and opened for Borrower’s account or by Bank’s reasonable interpretations of any Letter of Credit issued by Bank for Borrower’s account, and Borrower understands and agrees that Bank shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments, or supplements thereto.

(b) The obligation of Borrower to immediately reimburse Bank for drawings made under Letters of Credit shall be absolute, unconditional, and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, such Letters of Credit, and the Letter of Credit Application.

(c) Borrower may request that Bank issue a Letter of Credit payable in a Foreign Currency. If a demand for payment is made under any such Letter of Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent of the amount thereof (plus fees and charges in connection therewith such as wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.

(d) To guard against fluctuations in currency exchange rates, upon the issuance of any Letter of Credit payable in a Foreign Currency, Bank shall create a reserve (the “ Letter of Credit Reserve ”) under the Revolving Line in an amount equal to ten percent (10%) of the face amount of such Letter of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from time to time to account for fluctuations in the exchange rate. The availability of funds under the Revolving Line shall be reduced by the amount of such Letter of Credit Reserve for as long as such Letter of Credit remains outstanding.

2.1.3 Foreign Exchange Sublimit . As part of the Revolving Line, Borrower may enter into foreign exchange contracts with Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency (each, a “ FX Forward Contract ”) on a specified date (the “ Settlement Date ”). Each FX Forward Contract shall have a Settlement Date of at least one (1) FX Business Day after the contract date and shall be subject to a reserve of ten percent (10%) of the outstanding amount of the FX Forward Contract (the “ FX Reserve ”). The aggregate amount of FX Forward Contracts at any one time may not exceed Twenty Million Dollars ($20,000,000). The amount otherwise available for Credit Extensions under the Revolving Line shall be reduced by an amount equal to the aggregate FX Reserves for all outstanding FX Forward Contracts (the “ FX Reduction Amount ”). Any amounts needed to fully reimburse Bank will be treated as Advances under the Revolving Line and will accrue interest at the interest rate applicable to Advances.

2.1.4 Cash Management Services Sublimit . Borrower may use up to Twenty Million Dollars ($20,000,000), inclusive of Credit Extensions relating to Section 2.1.2 and the FX Reduction Amount, of the Revolving Line for Bank’s cash management services which may include merchant services, direct deposit of payroll, business credit card, and check cashing services identified in Bank’s various cash management services agreements (collectively, the “ Cash Management Services ”). Any amounts Bank pays on behalf of Borrower for any Cash Management Services will be treated as Advances under the Revolving Line and will accrue interest at the interest rate applicable to Advances.

2.2 Overadvances . If, at any time, the sum of (a) the outstanding principal amount of any Advances (including any amounts used for Cash Management Services), plus (b) the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve), plus (c) the FX Reduction Amount plus (d) the aggregate amount of all Borrower Guaranteed Amounts exceeds the lesser of either the Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank in cash such excess (the “Overadvance”). The Borrower shall not obtain any Credit Extension hereunder if the making of such Credit Extension shall result in an Overadvance.

2.3 Payment of Interest on the Credit Extensions .

(a)  Interest Rate . Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate, which interest shall be payable monthly in accordance with Section 2.3(f) below; provided , however , that at any time the Borrower is below the Liquidity Threshold, subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus one percent (1.00%), which interest shall be payable monthly in accordance with Section 2.3(f) below.

(b)  Default Rate . Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is three percentage points (3.00%) above the rate that is otherwise applicable thereto (the “ Default Rate ”). Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank. Bank shall endeavor to provide Borrower with prompt notice of any Event of Default of which it becomes aware (other than one of which Borrower has first notified Bank) and its accrual of interest at the Default Rate, but failure by Bank to provide such prompt notice shall not in any way be deemed a waiver of Bank’s rights and remedies hereunder.

(c)  Adjustment to Interest Rate . Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change.

(d)  360-Day Year . Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed.

(e)  Debit of Accounts . Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off.

(f)  Payments . Unless otherwise provided, interest is payable monthly on the Payment Date of each month. Payments of principal and/or interest received after 12:00 p.m. Pacific time are considered received at the opening of business on the next Business Day. When any payment is due on a day that is not a Business Day, the payment shall be due the next Business Day and all fees or interest, as applicable, shall continue to accrue until paid.

2.4 Fees . Borrower shall pay to Bank:

(a) [Intentionally omitted];

(b)  Anniversary Fee . A fully earned, non-refundable anniversary fee (the “ Anniversary Fee ”) of One Hundred Thousand Dollars ($100,000) shall be due and payable on the one (1) year anniversary of the Effective Date (the “ First Anniversary ”) and the Revolving Line Maturity Date; provided , however , that such Anniversary Fee shall not be earned or payable (in each case, as calculated on a pro-rated basis) to the extent that Borrower maintains, during the three hundred sixty-five (365) day period ending on the First Anniversary and on the Revolving Line Maturity Date (as applicable), an Average Daily Balance not less than the Minimum Required Balance.

(c)  Letter of Credit Fee . Bank’s customary fees and out-of-pocket expenses for the issuance or renewal of Letters of Credit, upon the issuance, each anniversary of the issuance, and the renewal of such Letter of Credit by Bank;

(d)  Unused Revolving Line Facility Fee . A fee (the “ Unused Revolving Line Facility Fee ”), which fee shall be paid quarterly, in arrears, on the last day of each fiscal quarter, in an amount equal to one quarter of one percent (0.25%) per annum of the average unused portion of the Revolving Line for such fiscal quarter; provided , however , that such Unused Revolving Line Facility Fee shall not be earned or payable (in each case, as calculated on a daily pro-rated basis) to the extent that Borrower maintains during such quarter an Average Daily Balance not less than the Minimum Required Balance. Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section 2.4(d) notwithstanding any termination of this Agreement, or suspension or termination of Bank’s obligation to make loans and advances hereunder; and

(e)  Bank Expenses . All Bank Expenses other than those incurred in connection with the amendment and restatement of the Prior Agreement by this Agreement incurred through and after the Effective Date, when due.

3 CONDITIONS OF LOANS

3.1 Conditions Precedent to Initial Credit Extension . Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:

(a) Duly executed original signatures to the Loan Documents to which it is a party;

(b) Duly executed original signatures to the Control Agreements, if any;

(c) Borrower’s Operating Documents and a good standing certificate of Borrower certified by the Secretary of State of the jurisdiction of incorporation of each Borrower as of a date no earlier than thirty (30) days prior to the Effective Date;

(d) Secretary’s Certificate with completed Borrowing Resolutions for Borrower;

(e) A duly executed Federal Reserve Form U-1 (Regulation U);

(f) Certified copies, dated as of a recent date, of financing statement searches, as Bank shall request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be terminated or released;

(g) The Perfection Certificate executed by Borrower, together with the duly executed original signatures thereto;

(h) A legal opinion of Borrower’s counsel dated as of the Effective Date together with the duly executed original signatures thereto; and

(i) Payment of the fees and Bank Expenses then due as specified in Section 2.4 hereof.

3.2 Conditions Precedent to all Credit Extensions . Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following conditions precedent:

(a) except as otherwise provided in Section 3.4(a), timely receipt of an executed Borrowing Base Certificate and Payment/Advance Form;

(b) the representations and warranties in Section 5 shall be true, accurate and complete in all material respects on the date of the Payment/Advance Form, the Borrowing Base Certificate and on the Funding Date of each Credit Extension; provided , however , that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided , further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in Section 5 remain true, accurate and complete in all material respects; provided , however , that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided , further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and

(c) in Bank’s sole discretion, there has not been any material impairment in the general affairs, management, results of operation, financial condition of the Borrower, taken as a whole, or the prospect of repayment of the Obligations, or any material adverse deviation by Borrower from the most recent business plan of Borrower, taken as a whole, presented to and accepted by Bank.

3.3 Covenant to Deliver .

Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit Extension in the absence of a required item shall be in Bank’s sole discretion.

3.4 Procedures for Borrowing . Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 noon Pacific time on the Funding Date of the Advance. Together with any such electronic or facsimile notification, Borrower shall deliver to Bank by electronic mail or facsimile a completed Payment/Advance Form executed by a Responsible Officer or his or her designee. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Bank shall credit Advances to the Designated Deposit Account. Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due.

4 CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest . Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that may have superior priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at Borrower’s sole cost and expense, release its Liens in the Collateral and all rights therein shall revert to Borrower.

4.2 Authorization to File Financing Statements . Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code. Such financing statements may indicate the Collateral as described on Exhibit A hereto.

5 REPRESENTATIONS AND WARRANTIES

Except as described in the Perfection Certificate, Borrower represents and warrants as follows:

5.1 Due Organization, Authorization; Power and Authority . Borrower is duly existing and in good standing as a Registered Organization in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by Borrower, entitled “Perfection Certificate”. Borrower represents and warrants to Bank that, as of the Effective Date, (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower is accurate and complete (it being understood and agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Effective Date to the extent permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational identification number.

The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect) or (v) constitute an event of default under any material agreement (as defined by the Securities Exchange Act of 1934, as amended) by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which Borrower or any of its Subsidiaries or any of their property or assets may be bound in which the default could reasonably be expected to have a material adverse effect on Borrower’s business.

5.2 Collateral . Borrower has good title to, has rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no deposit accounts other than the deposit accounts with Bank, the deposit accounts, if any, described in the Perfection Certificate delivered to Bank in connection herewith, or of which Borrower has given Bank notice and taken such actions as are necessary to give Bank a perfected security interest therein.

The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as permitted pursuant to Section 7.2. In the event that Borrower, after the date hereof, intends to store or otherwise deliver any portion of the Collateral to a bailee, then Borrower will first receive the written consent of Bank and such bailee must execute and deliver a bailee agreement in form and substance satisfactory to Bank in its sole discretion.

5.3 Litigation . As of the Effective Date and as and when required by Section 3.2 hereof, there are no actions or proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries involving more than Five Hundred Thousand Dollars ($500,000.00).

5.4 No Material Deterioration in Financial Condition; Financial Statements . As of the Effective Date and as and when required by Section 3.2 hereof, all consolidated financial statements of Borrower delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition, taken as a whole since the date of the most recent financial statements submitted to Bank.

5.5 Solvency . As of the Effective Date and as when required by Section 3.2 hereof, the fair salable value of Borrower’s assets (including goodwill minus disposition costs), taken as a whole, exceeds the fair value of its liabilities, taken as a whole; Borrower, taken as a whole, is not left with unreasonably small capital after the transactions in this Agreement; and Borrower, taken as a whole, is able to pay its debts (including trade debts) as they mature.

5.6 Regulatory Compliance . As of the Effective Date and as and when required by Section 3.2 hereof, Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower is not a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company” for purposes of and as each term is defined and used in the Public Utility Holding Company Act of 2005. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Government Authorities that are necessary to continue their respective businesses as currently conducted.

5.7 Subsidiaries; Investments . As of the Effective Date and as and when required by Section 3.2 hereof, Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments.

5.8 Tax Returns and Payments; Pension Contributions . Borrower and its Subsidiaries have timely filed all required tax returns and reports, and Borrower and its Subsidiaries have timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower. Borrower may defer payment of any contested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Bank in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to prevent the governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “ Permitted Lien ”. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any material liability of Borrower, including any material liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

5.9 Use of Proceeds . Borrower has not and shall not use the proceeds of the Credit Extensions for anything other than as working capital and to fund its general business requirements, and not for personal, family, household or agricultural purposes.

5.10 Full Disclosure . No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

6 AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1 Government Compliance .

(a) Borrower shall, and shall cause each of its Subsidiaries to, maintain its legal existence and good standing in its jurisdiction of formation and each jurisdiction in which the nature of its business requires them to be so qualified, except where the failure to take such action would not reasonably be expected to have a material adverse effect on Borrower’s and its Subsidiaries’ business or operations, taken as a whole; provided , that (a) the legal existence of any Subsidiary that is not a guarantor or Borrower may be terminated or permitted to lapse, and any qualification of such Subsidiary to do business may be terminated or permitted to lapse, if, in the good faith judgment of Borrower, such termination or lapse is in the best interests of Borrower and its Subsidiaries, taken as a whole, and (b) Borrower may not permit its qualification to do business in the jurisdiction of its chief executive office to terminate or lapse; and provided , further , that this Section 6.1 shall not be construed to prohibit any other transaction that is otherwise expressly permitted in Section 7 of this Agreement.

(b) Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Bank in all of its property. Borrower shall promptly provide copies of any such obtained Governmental Approvals to Bank.

6.2 Financial Statements, Reports, Certificates .

(a) Deliver to Bank:

(i) as soon as available, but no later than five (5) Business Days after filing with the Securities Exchange Commission (the “ SEC ”), SFE’s 10-K, 10-Q and 8-K reports,

(ii) together with SFE’s 10-K filing, its consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm,

(iii) a Compliance Certificate (delivered with the 10-K and 10-Q reports (as applicable));

(iv) within forty-five (45) days after the end of each fiscal year and upon any material amendment, cash projections for the following fiscal year (on a quarterly basis) as presented to SFE’s board of directors (the “ SFE Board ”);

(v) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of Five Hundred Thousand Dollars ($500,000.00) or more; and (vi) budgets, sales projections, operating plans or other financial information Bank reasonably requests.

Borrower’s 10-K, 10-Q, and 8-K reports and financial statements required to be delivered pursuant to Sections 6.2(a)(i) and (ii) shall be deemed to have been delivered on the date on which Borrower files such report with the SEC or provides a link thereto on Borrower’s or another website on the Internet.

(b) With each Advance request (and if any Advance has been taken and has not been repaid by Borrower in full, with the filing of SFE’s 10-K and 10-Q reports), deliver to Bank a duly completed Borrowing Base Certificate signed by a Responsible Officer.

(c) Within forty-five (45) days after the last day of each fiscal quarter, (i) quarterly cash flow projection reports, in form and substance acceptable to Bank, in its reasonable discretion; and (ii) quarterly Net Asset Value Reports.

(d) Allow Bank to audit the location and the composition of Borrower’s Collateral, at Borrower’s expense. Such audits shall be conducted no more often than once every twelve (12) months unless an Event of Default has occurred and is continuing; provided , however , Bank agrees that such audits will only be conducted while there are outstanding Advances under the Revolving Line.

6.3 Taxes; Pensions . Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.8 hereof, and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

6.4 Operating Accounts .

(a) Other than (i) its payroll account, (ii) a collateral account with Comerica Bank sufficient to secure the Clarient Guaranty and (iii) escrow accounts established from time to time in the ordinary course of business in connection with Permitted Investment transactions, maintain with Bank and/or Bank’s Affiliates (x) all depository and operating accounts and (y) not less than seventy-five percent (75%) (by value) of Borrower’s investment and securities accounts.

(b) Other than described in clause (a)(i), (a)(ii) and (a) (iii) above, provide Bank five (5) days prior-written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder, which Control Agreement may not be terminated without the prior written consent of the Bank. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such.

6.5 Financial Covenant; Delivery of Stock Certificates and Stock Powers. (a) Borrower shall maintain, at all times, the Liquidity Threshold; provided , however , that in the event Borrower does not maintain the Liquidity Threshold, and Borrower immediately provides Bank with evidence acceptable to Bank, in its sole discretion, that Borrower will meet or exceed the Liquidity Threshold within 180 days (the “ 180-day Cure Period ”), such failure to maintain the Liquidity Threshold shall not constitute an Event of Default or breach hereunder until the earlier to occur of (X) any other Default or Event of Default hereunder; or (Y) the one hundred eighty-first (181) consecutive day after such failure to maintain the Liquidity Threshold. Borrower is permitted no more than one 180-day Cure Period in any 365 day period beginning on the Effective Date; and

(b) Whether or not a 180-day Cure Period is in effect, immediately upon written request by Bank after Borrower falls below the Liquidity Threshold, Borrower shall (i) deliver the certificates representing all Publicly Traded Securities and any Private Securities which are part of the Collateral, together with stock powers therefor executed in blank, in form and substance reasonably acceptable to Bank; and (ii) if such equity interest is uncertificated, execute such other documents and agreements requested by Bank, in its reasonable discretion, to grant Bank “control” (within the meaning of the Code) over such securities owned by the Borrower. Bank shall, upon written request from Borrower, return to Borrower all items furnished by Borrower to Bank pursuant to this Section 6.5(b) no later than ten (10) Business Days after Borrower reasonably demonstrates that it again meets the Liquidity Threshold.

6.6 Litigation Cooperation . From the date hereof and continuing through the termination of this Agreement, make available to Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrower’s Books, to the extent that Bank may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower.

6.7 Further Assurances . Execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Bank, within five (5) days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law or that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries.

7 NEGATIVE COVENANTS

Borrower shall not do any of the following without Bank’s prior written consent:

7.1 Dispositions . Convey, sell, lease, transfer or otherwise dispose of (collectively “ Transfer ”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for:

(a) Transfers associated with the making or disposition of a Permitted Investment;

(b) Transfers to any Borrower from any other Borrower;

(c) Transfers of property in connection with sale-leaseback transactions;

(d) Transfers of property to the extent such property is exchanged for credit against, or proceeds are promptly applied to, the purchase price of other property used or useful in the business of Borrower;

(e) sales or discounting of delinquent accounts in the ordinary course of business;

(f) Transfers associated with the making or disposition of a Permitted Investment;

(g) Transfers in connection with a permitted acquisition of a portion of the assets or rights acquired; and

(h) Transfers of assets (other than assets consisting of Publically Traded Securities or the Private Securities Portfolio, for which this clause (i) shall not apply), provided , that the aggregate book value of all such Transfers by Borrower, shall not exceed, in any fiscal year, ten percent (10%) of Borrower’s consolidated total assets as of the last day of the fiscal year immediately preceding the date of determination.

Notwithstanding the foregoing or anything else in this Agreement to the contrary, Bank shall not have the right to notice or approval (provided, any time there are outstanding Credit Extensions, an Event of Default does not exist immediately prior to or would result in an Event of Default immediately thereafter), of (i) any acquisition or disposition of Publicly Traded Securities or Private Securities within the Private Securities Portfolio; (ii) payment of compensation to employees, consultants and directors or (iii) initiation or settlement of litigation or other legal recourse.

7.2 Changes in Business; Change in Control; Jurisdiction of Formation . Engage in any material line of business other than those lines of business conducted by Borrower and its Subsidiaries on the date hereof and any businesses reasonably related, complementary or incidental thereto