TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		1
Section 1.1. Defined Terms		1
Section 1.2. Accounting Terms and Determinations		13
Section 1.3. UCC Terms		14
Section 1.4. Other Definitional Provisions		14
ARTICLE II LOAN		14
Section 2.1. Revolving Loans		14
Section 2.2. Reserved		15
Section 2.3. Reserved		15
Section 2.4. Interest		16
Section 2.5. Fees		16
Section 2.6. Computation of Interest and Fees		17
Section 2.7. Payments/Termination		17
Section 2.8. General Provisions Regarding Payments		17
Section 2.9. Cash Management System		18
Section 2.10. Loan Account and Accounting		18
Section 2.11. Interest Rate Limitation		18
Section 2.12. Single Loan		19
Section 2.13. Use of Proceeds		19
Section 2.14. Appointment of Borrower Representative		19
ARTICLE III COLLATERAL		19
Section 3.1. Generally		19
Section 3.2. Lien Documents		21
Section 3.3. Collateral Administration		22
Section 3.4. Other Actions		23
Section 3.5. Searches		24
Section 3.6. Power of Attorney		24
Section 3.7. License to Intellectual Property		25
ARTICLE IV REPRESENTATIONS AND WARRANTIES		25

 

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Section 4.1. Organization and Good Standing		25
Section 4.2. Governmental Approvals, Compliance with Laws and Compliance with Agreements with Third Parties		25
Section 4.3. Organizational and Governmental Approvals; No Contravention		25
Section 4.4. Binding Effect; Liens.		26
Section 4.5. Financial Statements		26
Section 4.6. Material Adverse Effect		26
Section 4.7. Litigation		26
Section 4.8. Due Diligence; Full Disclosure		27
Section 4.9. Ownership of Property, Liens		27
Section 4.10. Environmental Laws		27
Section 4.11. ERISA		27
Section 4.12. Subsidiaries; Capitalization		27
Section 4.13. Government Regulations		28
Section 4.14. Margin Regulations		28
Section 4.15. Taxes		28
Section 4.16. Intellectual Property		28
Section 4.17. Solvency		28
Section 4.18. Brokers		29
Section 4.19. Patriot Act		29
Section 4.20. Places of Business		29
Section 4.21. Accounts		29
Section 4.22. Deposit and Disbursement Accounts		30
Section 4.23. Trestle Acquisition		30
ARTICLE V CLOSING AND CONDITIONS OF LENDING		31
Section 5.1. Conditions Precedent to Effectiveness of Agreement and Initial Extension of Credit		31
Section 5.2. Conditions Precedent to Each Extension of Credit		31
Section 5.3. Reserved.		31
ARTICLE VI REPORTING COVENANTS		31
Section 6.1. Financial Statements and Reports		31
Section 6.2. Collateral Reports		32
Section 6.3. Accuracy of Financial Statements and Information.		33
ARTICLE VII AFFIRMATIVE COVENANTS		33

 

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Section 7.1. Payment of Obligations		33
Section 7.2. Existence and Good Standing; Compliance with Laws; Government Approvals		34
Section 7.3. Taxes and Charges		34
Section 7.4. Insurance		34
Section 7.5. Inspection of Property, Books and Records		34
Section 7.6. Supplemental Disclosure		34
Section 7.7. Employee Benefit Plans		34
Section 7.8. Accreditation and Licensing		35
Section 7.9. Environmental Matters		35
Section 7.10. [Intentionally Omitted.]		36
Section 7.11. Landlord Agreements		36
Section 7.12. Places of Business		36
Section 7.13. Further Assurances		36
ARTICLE VIII NEGATIVE COVENANTS		37
Section 8.1. Indebtedness		37
Section 8.2. Liens; Negative Pledges		37
Section 8.3. Capital Stock; Nature of Business		38
Section 8.4. Restricted Payments		38
Section 8.5. No Restrictions on Subsidiary Distributions to Credit Parties		38
Section 8.6. ERISA		39
Section 8.7. Consolidations, Mergers and Sales of Assets		39
Section 8.8. Transactions with Affiliates.		39
Section 8.9. Amendments or Waivers		40
Section 8.10. Fiscal Year		40
Section 8.11. Financial Covenants		40
Section 8.12. Intellectual Property		40
Section 8.13. Real Property		40
ARTICLE IX EVENTS OF DEFAULT		40
Section 9.1. Events of Default		40
Section 9.2. Acceleration		43
Section 9.3. Remedies.		43
Section 9.4. Nature of Remedies		45
Section 9.5. Waivers by Credit Parties		45
ARTICLE X EXPENSES AND INDEMNITIES		45
Section 10.1. Expenses		45
Section 10.2. Indemnity		46
Section 10.3. Taxes		47
Section 10.4. Capital Adequacy; Increased Costs; Illegality; Funding Losses		47
ARTICLE XI MISCELLANEOUS		48

 

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Section 11.1. Entire Agreement; Amendments		48
Section 11.2. No Waiver; Cumulative Rights		49
Section 11.3. Notices		49
Section 11.4. Severability		50
Section 11.5. Successors and Assigns		50
Section 11.6. Counterparts		50
Section 11.7. Interpretation		50
Section 11.8. Survival of Terms		50
Section 11.9. Time		51
Section 11.10. Commissions		51
Section 11.11. Third Parties		51
Section 11.12. Discharge of Borrower’s Obligations		51
Section 11.13. Information to Participants		51
Section 11.14. Lender Approvals		52
Section 11.15. Choice of Law; Consent to Jurisdiction		52
Section 11.16. Use of Lender’s Name/Press Releases		52
Section 11.17. Confidentiality		52
Section 11.18. Waiver of Trial by Jury		53
Section 11.19. Reserved		53
Section 11.20. MyAccount SM		53
ARTICLE XII CROSS-GUARANTY		54
Section 12.1. Cross-Guaranty		54
Section 12.2. Waivers by Borrowers		54
Section 12.3. Benefit of Guaranty		54
Section 12.4. Subordination of Subrogation, Etc.		55
Section 12.5. Election of Remedies		55
Section 12.6. Limitation		55
Section 12.7. Contribution with Respect to Guaranty Obligations		56
Section 12.8. Liability Cumulative		56

 

Exhibit A		–		Form of Revolving Note
Exhibit B		–		Form of Borrowing Base Certificate
Exhibit C		–		Form of Secretary’s Certificate
Exhibit D		–		Form of Solvency Certificate
Exhibit E		–		Form of CFO Certificate
Annex I		–		Intentionally Omitted
Annex II		–		Intentionally Omitted
Annex III		–		Intentionally Omitted
Annex IV		–		Cash Management System
Annex V		–		Conditions Precedent to Effectiveness of Agreement and Initial Extension of Credit
Annex VI		–		Post Closing Obligations
Annex VII		–		Financial Statements, Reports and other Documents
Annex VIII		–		Collateral Reports
Annex IX		–		Insurance
Annex X		–		Financial Covenants

 

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Annex XI		–		My Account SM  Terms
Annex XII		–		Borrowing Base
Schedule 4.1		–		Organization and Good Standing
Schedule 4.5		–		Financial Statements
Schedule 4.7		–		Litigation
Schedule 4.10		–		Environmental Laws
Schedule 4.12		–		Subsidiaries; Capitalization
Schedule 4.16		–		Intellectual Property
Schedule 4.20		–		Places of Business
Schedule 4.22		–		Deposit and Disbursement Accounts
Schedule 8.1		–		Indebtedness
Schedule 8.2		–		Liens; Negative Pledges
Schedule 8.8		–		Purchase of Assets; Investments
Schedule 8.9		–		Transactions with Affiliates

 

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LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this “ Agreement ”) is made as of September 29, 2006, by and between CLARIENT, INC. , a Delaware corporation (“ Clarient ”), CLARIENT DIAGNOSTIC SERVICES, INC. , a Delaware corporation (“ Clarient Diagnostic ”), and CLRT ACQUISITION, LLC, a Delaware limited liability company (“ CLRT ”; Clarient, Clarient Diagnostic and CLRT collectively referred to herein as the “ Borrowers ” and individually as a “ Borrower ”), the other Credit Parties from time to time party hereto, and GENERAL ELECTRIC CAPITAL CORPORATION , a Delaware corporation (“ Lender ”).

RECITALS

WHEREAS , Borrowers desire to establish certain financing arrangements with and borrow funds from Lender, and Lender is willing to establish such arrangements for and make loans and extensions of credit to Borrowers, on the terms and conditions set forth below.

WHEREAS, the parties desire to define the terms and conditions of their relationship and to reduce their agreements to writing.

I.
DEFINITIONS

A.            Defined Terms .  As used in this Agreement and each other Loan Document, unless otherwise specified herein or therein, the following terms shall have the meanings set forth below:

“ Advance ” has the meaning set forth in Section 2.1(a) .

“ Affiliate ” means, with respect to any Person, (a) each Person that, directly or indirectly, owns or controls, whether beneficially or as a trustee, guardian or other fiduciary, ten percent (10%) or more of the Stock of such Person, (b) each Person that controls, is controlled by or is under common control with such Person, and (c) each of such Person’s officers, directors and joint venturers.  For the purposes of this definition, “ control ” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ” means this Loan and Security Agreement, as it may be amended, restated, increased, extended, renewed, modified or supplemented from time to time, together with all attachments, exhibits, schedules, annexes, riders and addenda, all of which are incorporated herein by this reference and made a part hereof.

 “ Applicable Margin ” means the interest rate margin applicable to a Base Rate Loan and LIBOR Loan, as the case may be.   The Applicable Margin for a Base Rate Loan shall be one-half of one percent (0.50%), and the Applicable Margin for a LIBOR Loan shall be three and one-quarter percent (3.25%).

“ Balance Sheet Cash ” has the meaning set forth in Annex X.

“ Base Rate ” means, for any day, a floating rate equal to the greater of (a) the rate published from time to time by The Wall Street Journal as the “ Prime Rate ” (or, if The Wall Street Journal ceases publishing a prime rate of the type described, the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled “ Selected Interest Rates ” as the bank prime loan rate or its equivalent), and (b) the Federal Funds Rate plus 50 basis points per

 

 

annum.  Any change in the Base Rate due to a change in the prime rate or the Federal Funds Rate shall be effective as of the opening of business on the effective day of such change in the prime rate or the Federal Funds Rate, respectively.

“ Base Rate Loan ” has the meaning set forth in Section 2.4 .

“ Blocked Account Agreement ” has the meaning set forth in Annex IV.

“ Blocked Accounts ” has the meaning set forth in Annex IV .

“ Books and Records ” means all books, records, board minutes, contracts, licenses, insurance policies, environmental audits, business plans, files, computer files, computer discs and other data and software storage and media devices, accounting books and records, financial statements (actual and pro forma), filings with Governmental Authorities and any and all records and instruments relating to the Collateral .

“ Borrower ” and “ Borrowers ” have the meanings set forth in the preamble to the Agreement.

“ Borrower Account ” has the meaning ascribed to it in Annex IV .

“ Borrower Representative ” means Clarient in its capacity as Borrower Representative pursuant to the provisions of Section 2.14 .

“ Borrowing Availability ” means, at any time, the Revolving Loan Limit minus the amount of the Revolving Loan at such time.

“ Borrowing Base ” has the meaning set forth in Annex XII .

“ Borrowing Base Certificate ” means a certificate to be executed and delivered from time to time by Borrower Representative in the form attached to this Agreement as Exhibit B .

“ Business Day ” means any day on which financial institutions are open for business in the State of New York, excluding Saturdays and Sundays and in the case of any LIBOR Loan, a day that is also a LIBOR Business Day.

“ Capital Lease ” means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person.

“ Capital Lease Obligation ” means, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease.

“ CHAMPVA ” means, the Civilian Health and Medical Program of the Department of Veteran Affairs, a program of medical benefits covering retirees and dependents of former members of the armed services administered by the United States Department of Veteran Affairs and all laws applicable thereto.

“ Change of Control ” means any event, transaction or occurrence as a result of which (a) Safeguard and other Permitted Holders cease to own and control all of the economic and voting rights associated with ownership of at least fifty-one percent (51%) of all classes of the outstanding capital Stock of Clarient on a fully diluted basis, (b) except pursuant to a merger of Clarient Diagnostic into Clarient as permitted by Section 8.7 , Clarient ceases to own and control all of the economic and voting rights associated with all of the outstanding capital Stock of Clarient Diagnostic, (c) except pursuant to a

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merger of a Subsidiary of any Borrower into such Borrower, as permitted by Section 8.7 , either Clarient or Clarient Diagnostic ceases to own and control all of the economic and voting rights associated with all of the outstanding capital Stock of any of its Subsidiaries that is a Credit Party hereunder, or (d) during any period of twelve consecutive calendar months, individuals (other than those directly appointed by Safeguard) who at the beginning of such period constituted the board of directors of Clarient (together with any new directors whose election by the board of directors of Clarient or whose nomination for election by the stockholders of Clarient was approved by a vote of a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office.

“ Clarient Guaranty ” means that certain Corporate Guaranty dated as of July 1, 2004, from Clarient in favor of General Electric Capital Corporation, as amended from time to time.

“ Client Bill Payor ” means any pathologist, oncologist or other medical or healthcare service provider through whom diagnostic services provided by Borrower are billed.

“ Closing ” and “ Closing Date ” mean the making of the initial Extension of Credit and the date on which such Extension of Credit is made, respectively.

“ Closing Fee ” has the meaning set forth in Section 2.5(a) .

“ CMS ” means the Centers for Medicare and Medicaid Services.

“ Collateral ” means the property covered by the grant of the security interest set forth in Section 3.1 , and any other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of the Lender to secure the Obligations.

“ Collateral Documents ” means the Pledge Agreement, the Guaranty, the Comerica Subordination Agreement, the Safeguard Subordination Agreement and all similar agreements entered into guaranteeing payment of, or granting a Lien upon property as security for payment of, the Obligations.

“ Collection Account ” has the meaning set forth in Annex IV .

“ Comerica Debt Documents ” means that certain Loan Agreement, dated as of February 13, 2003, by and between Clarient and Subordinated Lender, as amended from time to time (the “ Comerica Loan Agreement ”) and all other Loan Documents (as such term is defined in the Comerica Loan Agreement) entered into in connection with the Comerica Loan Agreement.

“ Comerica Reserve ” means a Reserve in the amount of $155,000 on the Closing Date, which Reserve relates to certain outstanding and unpaid checks drawn against account number 189-2036953 maintained by Comerica Bank and subject to Section 4(d) of that certain Government Receivables Lockbox Account Agreement, dated September 29, 2006, by and among Clarient Diagnostic, Lender and Comerica Bank; provided , however , that the Comerica Reserve shall be terminated on February 28, 2007 to the extent that Comerica Bank’s obligation to pay such checks terminates on such date pursuant to such Government Receivables Lockbox Account Agreement.

“ Comerica Subordination Agreement ” means that certain Subordination Agreement, dated as of the date hereof, between Lender, the Borrowers and Subordinated Lender.

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“ Commitment ” means the Lender’s Revolving Loan Commitment as set forth opposite the name of the Lender on the signature pages hereof.

“ Commitment Termination Date ” means the earliest of (a) September 29, 2008, (b) the date of termination of Lender’s obligation to make Advances or the date of acceleration of the maturity date of all or any portion of the Obligations, and (c) the date of indefeasible prepayment in full by Borrowers of the Loans and the permanent reduction of the Commitment to zero dollars ($0).

“ Controlled Group ” means all businesses that would be treated along with either Borrower as a single employer under Section 401(b) of ERISA.

“ Credit Parties ” means Borrowers and each Guarantor.

“ Default ” means any Event of Default or any event that, with the passage of time or the giving of notice or both, would become an Event of Default unless cured or waived.

“ Default Rate ” means, subject to Section 2.11 , the rate of interest otherwise applicable to an Obligation plus two percent (2.00%) per annum, or if no such rate is provided with respect to any Obligation, the Base Rate, plus the Applicable Margin for Base Rate Loans, plus two percent (2.00%) per annum.

“ EBITDA ” has the meaning set forth in Annex X.

“ Environmental Laws ” means all Federal, state and local laws, statutes, ordinances and regulations, now or hereafter in effect, relating to the regulation and protection of human health (other than Healthcare Laws), safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation).  Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et seq.) (“ CERCLA ”); the Hazardous Material Transportation Act (49 U.S.C. §§ 1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.); the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.) (“ RCRA ”); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq.); the Clean Air Act (42 U.S.C. §§ 740 et seq.); the Federal Water Pollution Control Act (33 U.S.C. §§_1251 et seq.); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.) (“ OSHA ”); and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.); and in the case of each of the foregoing, any and all regulations promulgated thereunder, all analogous state and local counterparts or equivalents and any transfer of ownership notification or approval statutes .

“ Environmental Liability ” means all liabilities, obligations, responsibilities, remedial actions, removal costs, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim, suit, action or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law (including any portion thereof arising under any Environmental Law, permit, order or agreement with any Governmental Authority) and which relate to any health or safety condition regulated under any Environmental Law, Environmental Permits or in connection with any Release, threatened Release, or the presence of a Hazardous Material.

“ Environmental Permits ” means all permits, licenses, authorizations, certificates, approvals or registrations issued or required by any Governmental Authority under any Environmental Laws.

“ Escrow Account ” means deposit account number 49508-0219COL, maintained by Comerica Bank and subject to that certain Escrow Agreement, dated March 9, 2006, by and among Med One Capital, Inc., a Utah corporation, Clarient and Comerica Bank.

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“ Extension of Credit ” means any and all extensions of credit to a Borrower under this Agreement, including without limitation all Advances.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulations promulgated thereunder.

“ Event of Default ” has the meaning set forth in Section 9.1 .

“ Facility ” means any of the leased or owned properties operated by any Borrower at which such Borrower or any of its employees performs Medical Services.

“ Fiscal Year ” means any of the annual accounting periods of Borrowers ending on December 31 of each year.

“ GAAP ” has the meaning set forth in Section 1.2 .

“ Government Account ” means any Account that is payable by a Government Payor pursuant to (a) Medicare, (b) Medicaid, (c) TRICARE, (d) CHAMPVA, or (e) any other governmental program reasonably acceptable to the Lender in its sole discretion.

“ Government Receivables Account Agreement ” has the meaning set forth in Annex IV .

“ Governmental Approval ” means an authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.

“ Governmental Authority ” means and includes any federal, state, District of Columbia, county, municipal, or other government and any political subdivision, department, commission, board, bureau, agency or instrumentality thereof, whether domestic or foreign.

“ Government Payor ” means any Government Authority or intermediary responsible for payment of an Account under Medicare, Medicaid, TRICARE, CHAMPVA, or any other governmental program.

“ Guaranteed Obligations ” means as to any Person, without duplication, any obligation of such Person guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease, dividend, or other obligation (“ primary obligation ”) of any other Person in any manner; provided that the term Guaranteed Obligations shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Guaranteed Obligation at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof.

“ Guarantors ” means each Person, other than Borrowers, if any, which executes a guaranty in respect of the Obligations, or other similar agreement in favor of Lender in connection with the transactions contemplated by this Agreement and the other Loan Documents.

“ Guaranty ” means any guaranty executed by any Guarantor after the Closing Date in favor of Lender in respect of the Obligations.

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“ Hazardous Material ” means any substances defined or designated as hazardous or toxic waste, hazardous or toxic material, hazardous or toxic substance, or similar term, by any Environmental Law or any Governmental Authority applicable to any Credit Party or its business, operations or assets.

“ Hazardous Waste ” has the meaning ascribed to such term in the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et. seq.) .

“ Healthcare Laws ” means, collectively, any and all federal, state or local laws, rules, regulations and administrative manuals, orders, guidelines and requirements issued under or in connection with Medicare, Medicaid or any other government payment program or any law governing the licensure of or regulating healthcare providers, the provision of management or administrative services in connection with the provision of services by healthcare providers, or the ownership or operation of a healthcare facility or payors or otherwise governing or regulating the provision of, or payment for, medical services, or the sale of medical supplies, including without limitation HIPAA.

“ Highest Lawful Rate ” means the maximum lawful rate of interest referred to in Section 2.11 that may accrue pursuant to this Agreement.

“ HIPAA ” means the Health Insurance Portability and Accountability Act of 1996, as amended or modified from time to time.

“ Indebtedness ” of a Person means at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, or upon which interest payments are customarily made, (c) all obligations of such Person to pay the deferred purchase price of property or services incurred in the ordinary course of business if the purchase price is due more than six (6) months from the date the obligation is incurred, (d) all Capital Lease Obligations of such Person, (e) the principal balance outstanding under any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product, (f) all obligations of such Person to purchase securities (or other property) which arise out of or in connection with the issuance or sale of the same or substantially similar securities (or property), (g) all contingent or non-contingent obligations of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit or similar instrument, (h) all equity securities of such Person subject to repurchase or redemption otherwise than at the sole option of such Person, (i) all “ earnouts ” and similar payment obligations of such Person, (j) all Indebtedness secured by a Lien on any asset of such Person, whether or not such Indebtedness is otherwise an obligation of such Person, (k) all obligations of such Person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, in each case whether contingent or matured, (l) all Guaranteed Obligations of such Person; and (m) all obligations of such Person to trade creditors incurred in the ordinary course of business and more than ninety (90) days past due.

“ Information ” means written data, reports, statements (including, but not limited to, financial statements delivered pursuant to or referred to in Annex VII ), documents and other information, whether, in the case of any such in writing, the same was prepared by a Borrower or any other Person on behalf of such Borrower.

“ Intellectual Property ” means all of the following now owned or hereafter adopted or acquired by any Credit Party:  all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, copyright applications, franchises, licenses, and all goodwill, licenses or other rights with respect to the foregoing.

“ Intercompany Note ” has the meaning ascribed to it in Section 8.1(d) .

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“ IRC ” means the Internal Revenue Code of 1986, as amended, and all regulations promulgated thereunder.

“ Lender ” has the meaning set forth in the preamble to the Agreement.

“ Lien ” means any mortgage, security deed, trust deed, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any lease having substantially the same practical effect as any of the foregoing).

“ LIBOR ” means for each day during any calendar month, a rate of interest determined by Lender equal to:

1.             the offered rate for deposits in Dollars for a period of one month that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the second full LIBOR Business Day next preceding the first day of such month (unless such date is not a Business Day, in which event the next succeeding Business Day will be used); divided by

2.             a number equal to 1.0 minus the aggregate (but without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on the day that is 2 LIBOR Business Days prior to the beginning of such month (including basic, supplemental, marginal and emergency reserves under any regulations of the Federal Reserve Board or other Governmental Authority having jurisdiction with respect thereto, as now and from time to time in effect) for Eurocurrency funding (currently referred to as “ Eurocurrency Liabilities ” in Regulation D of the Federal Reserve Board) that are required to be maintained by a member bank of the Federal Reserve System.

If such interest rates shall cease to be available from Telerate News Service, LIBOR shall be determined from such financial reporting service or other information as shall be determined by Lender.  Notwithstanding the foregoing, LIBOR for the initial monthly period commencing on the Closing Date and ending on the last day of the calendar month immediately following the Closing Date shall be determined as of the date that is not later than the second Business Day preceding the Closing Date based upon a one month LIBOR period commencing on the first day of the calendar month immediately following the Closing Date.

“ LIBOR Business Day ” means a Business Day on which banks in the City of London, England are generally open for interbank or foreign exchange transactions.

“ Liquidity Factors ” has the meaning set forth in Annex XII .

“ Litigation ” has the meaning ascribed to it in Section 4.7 .

“ Loans ” means the Revolving Loan.

“ Loan Documents ” means and includes this Agreement, each Collateral Document, each document listed on Annex V hereto and each and every other document or instrument now or hereafter delivered by the Borrowers or any other Credit Party to or at the request of the Lender in connection with this Agreement and the Obligations.

“ Loan Management Fee ” has the meaning set forth in Section 2.5(c) .

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“ Lockbox ” has the meaning set forth in Annex IV .

“ Lockbox Account ” means an account or accounts maintained at the Lockbox Bank into which all collections of Accounts are paid directly.

“ Lockbox Bank ” has the meaning set forth in Annex IV .

“ LSF Documents ” means the LSF Lease, the LSF Security Agreement, the Clarient Guaranty, the Reaffirmation Agreement and any other agreements and documents executed in connection therewith.

“ LSF Lease ” means that certain Master Lease Agreement, dated as of June 23, 2004, by and between Clarient Diagnostic and General Electric Capital Corporation, together with all amendments, schedules, addendums, other agreements and documents entered into from time to time in connection therewith, as the same may be amended, restated, supplemented or modified from time to time.

“ LSF Reserve ” means a Reserve in existence at all times in an amount equal to the lesser of (i) twenty percent (20%) of the then outstanding balance under the LSF Lease and (ii) one million dollars ($1,000,000).

“ LSF Security Agreement ” means that certain Master Security Agreement, dated as of July 15, 2003, by and between General Electric Capital Corporation and Clarient, together with any notes, schedules, amendments, addendums and other agreements or documents entered into from time to time in connection therewith, as the same may be amended, restated, supplemented or modified from time to time.

“ Material Adverse Effect ” means, with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any Litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences, whether or not related, a material adverse change in, or a material adverse effect upon, any of (a) the financial condition, operations, business, or properties of any Borrower individually or the Credit Parties taken as a whole, (b) the Lender’s ability to enforce its rights and remedies under the Loan Documents, or the ability of any Credit Party to perform its obligations under the Loan Documents to which it is a party, as applicable, (c) the legality, validity or enforceability of any Loan Document, or (d) the existence, perfection or priority of any Lien granted in the Collateral Documents or the value of the Collateral taken as a whole (including its value to the Lender as security for the Obligations).  If a fact or circumstance disclosed in the financial statements referred to in Section 4.5 or the Disclosure Schedules that, at the time of such disclosure, did not appear reasonably likely to have a Material Adverse Effect, should for any reason in the future have, or appear reasonably likely to have, a Material Adverse Effect, then a Material Adverse Effect shall be deemed to have occurred at such future time notwithstanding such prior disclosure.

“ Medicaid ” means, collectively, the healthcare assistance program established by Title XIX of the Social Security Act (42 U.S.C. §§1396 et seq.) and all laws applicable to such program  and plans for medical assistance enacted in connection with such program.

“ Medical Services ” means diagnostic or other healthcare services provided to a Patient, including, without limitation, diagnostic or other healthcare services provided to a Patient and performed by a Borrower which are covered by a policy of insurance issued by a Third Party Payor or billed through a Client Bill Payor.

“ Medicare ” means, the health insurance program for the aged and disabled established by Title XVIII of the Social Security Act (42 U.S.C. §§1395 et seq.) and all laws applicable to such program.

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“ Multiemployer Plan ” means any Plan that is a “multiemployer plan” as defined in Section 3(37) of ERISA.

“ Net Cash Proceeds ” means with respect to any Stock disposition by any Borrower, the cash proceeds of such transaction net of commissions and other reasonable and customary transaction costs, fees, taxes and expenses properly attributable to such transaction and payable by Borrowers in connection therewith.

“ Note ” means the Revolving Loan Note.

“ Obligations ” means all indebtedness, liabilities, obligations, covenants and duties of the Borrowers and the other Credit Parties to the Lender of every kind, nature and description, direct or indirect, absolute or contingent, due or not due, in contract or tort, liquidated or unliquidated, arising under this Agreement or under the other Loan Documents, by operation of law or otherwise in connection with the transactions contemplated hereby, now existing or hereafter arising, and whether or not for the payment of money or the performance or non-performance of any act, including, but not limited to, all damages that Borrowers or any other Credit Party may owe to the Lender by reason of any breach by either Borrower or any other Credit Party of any representation, warranty, covenant, agreement or other provision of this Agreement or any of the other Loan Documents.  This term includes all principal, interest (including all interest, fees, expenses and all other amounts that accrue after the commencement of any case or proceeding by or against Borrowers in bankruptcy, whether or not allowed in such case or proceeding), fees, charges, expenses, attorneys’ fees and any other sum chargeable to Borrower or any other Credit Party under this Agreement or any of the other Loan Documents, including, without limitation, the payment of all amounts advanced by Lender to preserve, protect, defend, and enforce its rights under this Agreement and in the Collateral in accordance with the terms of this Agreement, and the payment of all expenses incurred by Lender in connection therewith.

“ Olympus Agreement ” means that certain OEM Agreement, dated as of April 1, 2005, by and between Clarient and Olympus America, Inc., Scientific Equipment Products Group, as amended, restated or replaced with a successor agreement from time to time.

“ Olympus Obligations ” means all obligations of Clarient under the Olympus Agreement.

“ Olympus Reserve ” means, on any date when the aggregate Olympus Obligations exceed $25,000, a Reserve equal to the aggregate amount of Olympus Obligations in excess of $25,000.

“ Operating Cash Requirements ” has the meaning set forth in Annex X.

“ Organizational Documents ” means, for any corporation, the certificate or articles of incorporation, the bylaws, or other similar organizational documents, any certificate of designation or instrument relating to the rights of preferred shareholders of such corporation, and any shareholder rights agreement in each case, as amended, restated or modified from time to time, and, for any entity other than a corporation, the equivalent of the foregoing, including, without limitation, the partnership agreement and the operating agreement (or comparable agreement) of any partnership or limited liability company, respectively.

“ Outstanding Balance ” has the meaning set forth in Annex XII .

“ Patient ” means any Person receiving Medical Services from a Borrower and all Persons legally liable to pay Borrowers for such Medical Services other than Third Party Payors.

“ PBGC ” means the Pension Benefit Guaranty Corporation.

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“ Pension Plan ” means any Plan, other than a Multiemployer Plan, that is subject to Section 412 of the IRC or Section 302 of ERISA.

“ Permitted Contest ” means, with respect to any Credit Party, a good faith contest by such Credit Party, by appropriate proceedings, of the validity or amount of any taxes, assessments, charges, claims, obligations or liabilities of such Credit Party; provided that (a) such contest is maintained and prosecuted continuously and with diligence and operates to suspend collection or enforcement of such items, (b) no Lien shall be imposed to secure payment of such items (other than tax Liens mandatorily imposed by law during the pendency of a Permitted Contest, provided that no such Lien is superior to any of the Liens securing the Obligations), (c) none of the Collateral becomes subject to forfeiture or loss as a result of such contest, (d) such Credit Party shall promptly pay or discharge such contested items and all additional charges, interest, penalties and expenses, if such contest is terminated or discontinued adversely to such Credit Party or the conditions set forth above in clause (a), (b) and (c) of this definition are no longer met, and (e) the Lender has not advised Borrower in writing that the Lender reasonably believes that nonpayment or non-discharge thereof could have, or result in, a Material Adverse Effect.

“ Permitted Holders ” means Safeguard, Safeguard Delaware, Inc. and Safeguard Scientifics (Delaware), Inc.

“ Permitted Liens ” means (a) deposits or pledges to secure obligations under workmen’s compensation, social security or similar laws, or under unemployment insurance, (b) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the ordinary course of business, (c) mechanic’s, workmen’s, materialmen’s or other like Liens attaching only to Equipment and Real Property arising in the ordinary course of business with respect to obligations which are not due, or which are being contested in good faith by appropriate proceedings which suspend the collection thereof and in respect of which adequate reserves have been made in accordance with GAAP ( provided that such proceedings do not, in Lender’s sole discretion, involve any substantial risk of the sale, loss or forfeiture of such property or assets or any interest therein), (d) Liens and encumbrances in favor of Lender, (e) Liens expressly permitted under clauses (b) and (c) of Section 8.2 , (f) Liens permitted pursuant to the definition of “Permitted Contest,” ( provided that no such Lien is superior to any of the Liens securing the Obligations), (g) attachment or judgment Liens not constituting an Event of Default under Section 8.1(k), and (h) Liens arising from any precautionary UCC financing statements filed against any Credit Party in connection with any true operating lease of such Credit Party.

“ Person ” means an individual, partnership, corporation, trust, joint venture, joint stock company, limited liability company, association, unincorporated organization, trust, Governmental Authority, or any other entity.

“ Plan ” means an employee benefit plan subject to the Employee Retirement Income Security Act of 1974.

“ Pledge Agreement ” means the Pledge Agreement of even date herewith executed by each Credit Party signatory thereto in favor of Lender pledging all (or such lesser amount as agreed to by Lender in writing) Stock of such Credit Party’s Subsidiaries, if any, and all Indebtedness owing to or held by it, including, without limitation, the Intercompany Note and any other pledge agreement entered into after the Closing Date by any Credit Party (as required by this Agreement or any other Loan Document).

“ Private Third Party Payor ” means any Third Party Payor that is not a Governmental Authority.

“ Proceeds ” means “ proceeds ,” as such term is defined in the Uniform Commercial Code and, in any event, shall include: (a) any and all payments (in any form whatsoever) made or due and payable from

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time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any Collateral by any Governmental Authority and (b) any claim against third parties for past, present or future infringement or dilution of any Intellectual Property .

“ Prohibited Transaction ” means a “ prohibited transaction ” within the meaning of Section 406 of ERISA or Section 4975(c)(1) of the IRC that is not exempt under Section 407 or Section 408 of ERISA or Section 4975(c)(2) or (d) of the IRC or under a class exemption granted by the U.S. Department of Labor.

“ Qualified Account ” has the meaning given in Annex XII.

“ Reaffirmation Agreement ” means that certain Reaffirmation Agreement, dated as of  the date hereof, by and among the Borrowers and General Electric Capital Corporation.

“ Real Property ” means the real property owned, leased or subleased by any Credit Party.

“ Release ” means , as to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials in the indoor or outdoor environment by such Person, including the movement of Hazardous Materials through or in the air, soil, surface water, ground water or property .

“ Reportable Event ” means a “ reportable event ” as defined in Section 4043(c) of ERISA for which the notice requirements of Section 4043(a) of ERISA are not waived.

“ Reserves ” means the LSF Reserve, the Olympus Reserve (if applicable), the Comerica Reserve (if applicable) and any other reserves established by Lender against the Borrowing Base from time to time pursuant to Section 2.1(b) with respect to known or anticipated liabilities, offsets, or liquidity needs of Borrowers.

“ Responsible Officer ” means, with respect to any Person, any of the president, chief executive officer, chief financial officer or controller of such Person but, in any event, with respect to financial matters, any such officer that is responsible for preparing the financial statements delivered hereunder and, with respect to certain documents delivered on the Closing Date, the secretary or assistant secretary of such Person or any other duly elected officer responsible for maintaining the corporate and similar records of such Person.

“ Restricted Payment ” means, with respect to any Credit Party (a) any dividend, distribution, purchase or payment, or the incurrence of any liability to make any dividend, distribution, purchase or payment, of cash, property or assets in respect of Stock, including without limitation any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire Stock (but not including any issuance of Stock in connection with the exercise of any warrants or options so long as no payments are made by any Credit Party to the holder thereof in connection therewith, other than for the reasonable and customary transaction costs (if any) incurred by such holder and paid to a non-Affiliate of the Credit Parties in connection with such issuance); (b) any purchase of or payment on or with respect to any Subordinated Debt; or (c) any payment (including without limitation the payment of management fees or fees of a similar nature), loan, contribution, or other transfer of funds or other property to any Affiliate other than as expressly permitted hereunder.

“ Revolving Loan ” means, at any time, the sum of the aggregate amount of Advances outstanding to the Borrowers.

“ Revolving Loan Commitment ” means the commitment of the Lender to make Advances up to a maximum aggregate amount of $5,000,000.

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“ Revolving Loan Limit ” has the meaning set forth in Section 2.1(a) .

“ Revolving Loan Note ” has the meaning set forth in Section 2.1(c) .

“ Safeguard ” means Safeguard Scientifics, Inc., a Pennsylvania corporation.

“ Safeguard Reimbursement Agreement ” means that certain Reimbursement and Indemnity Agreement, dated as of August 1, 2005 by and between Safeguard and Clarient, in respect of certain Indebtedness owing to Safeguard by Clarient, as may be amended, restated, supplemented or otherwise modified, provided that the foregoing amendments, restatements, supplements or modifications are permitted by the Safeguard Subordination Agreement.

“ Safeguard Subordination Agreement ” means that certain Subordination Agreement, dated as of the date hereof, by and between Safeguard and Lender, in respect of Indebtedness owing to Safeguard by Borrowers.

“ Solvent ” means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonably small capital.  The amount of contingent liabilities (such as Litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can reasonably be expected to become an actual or matured liability.

“ Stock ” means all shares, options, warrants, general or limited partnership interests, membership interests, equity interests or similar rights and all rights to acquire the same in any entity.

“ Subordinated Debt ” means the Indebtedness of Clarient, evidenced by the Comerica Debt Documents, which Indebtedness is unsecured and subordinated to the Obligations pursuant to the Comerica Subordination Agreement.

“ Subordinated Lender ” means Comerica Bank.

“ Subsidiary ” means, with respect to any Person, (a) any corporation of which an aggregate of more than fifty percent (50%) of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of fifty percent (50%) or more of such Stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) or of which any such Person is a general partner or may exercise the powers of a general partner.  Unless the context otherwise requires, each reference to a Subsidiary shall be a reference to a Subsidiary of the Borrower.

“ Temporary Cash Investments ” means (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the

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date of creation thereof and currently having the highest rating obtainable from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (iii) certificates of deposit maturing no more than one year from the date of creation thereof issued by commercial banks incorporated under the laws of the United States of America, each having combined capital, surplus and undivided profits of not less than $300,000,000 and having a senior unsecured rating of “ A ” or better by a nationally recognized rating agency (an “ A Rated Bank ”), (iv) time deposits maturing no more than thirty (30) days from the date of creation thereof with A Rated Banks and (v) mutual funds that invest solely in one or more of the investments described in clauses (i) through (iv) above.

“ Term ” means the period from the Closing to the Commitment Termination Date.

“ Termination Fee ” means, in the event that this Agreement is terminated voluntarily, upon Default, or otherwise, a fee equal to (a) if the date of the termination of this Agreement occurs on or before the first anniversary of the Closing Date, two percent (2%) of the Commitment or (b) if the date of the termination of this Agreement occurs on or before the second anniversary of the Closing Date, one percent (1%) of the Commitment.

“ Third Party Payor ” means any Government Payor, Client Bill Payor, insurance company, health maintenance organization, professional provider organization or similar entity that is obligated to make payments on any Account.

“ Trestle ” means Trestle Holdings, Inc. and Trestle Acquisition Corp.

“ Trestle Acquisition ” means the acquisition of certain assets and the assumption of certain liabilities of Trestle, pursuant to that certain Asset Purchase Agreement dated as of June 19, 2006 (the “Trestle Purchase Agreement”), and the transactions contemplated in connection therewith.

“ TRICARE ” means, collectively, a program of medical benefits covering former and active members of the uniformed services and certain of their dependents, financed and administered by the United States Departments of Defense, Health and Human Services and Transportation, and all laws applicable to such programs.

“ UCC ” means the Uniform Commercial Code as the same may, from to time, be in effect in the State of New York; provided that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Lender’s Lien on the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “ UCC ” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Agreement or the other Loan Documents relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions; provided , further , that to the extent that the Uniform Commercial Code of a particular jurisdiction is used to define a term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of such Uniform Commercial Code, then the definition of such term contained in Article or Division 9 of such Uniform Commercial Code shall control.

“ Unused Line Fee ” has the meaning set forth in Section 2.5(b) .

B.            Accounting Terms and Determinations .  Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time in the United States (“ GAAP ”), applied on a basis consistent (except for changes concurred in by the Borrowers’ independent public accountants) with the most recent audited consolidated financial

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statements of the Borrowers delivered to the Lender; provided that, if:  (a) Borrower Representative notifies the Lender that the Borrowers wish to amend any provision of any Loan Document to eliminate the effect of any change in GAAP on the operation of such provision, or (b) the Lender notifies the Borrower Representative that the Lender wishes to amend any provision of any Loan Document for such purpose, then compliance with such provision shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such provision is amended in a manner satisfactory to the Borrowers and the Lender.

C.            UCC Terms .  Unless otherwise specified herein, the following term have the meanings ascribed to them in the UCC, provided that if such term shall be defined differently in multiple divisions or articles of the UCC, the definitions for such terms specified in Article or Division 9 of the UCC shall control:  “ Accounts ,” “ Account Debtor ,” “ Chattel Paper ,” “ Contracts ,” “ Deposit Accounts ,” “ Documents ,” “ Equipment ,” “Fixtures,” “ General Intangibles ,” “ Goods ,” “ Health-Care-Insurance Receivable ,” “ Instruments ,” “ Inventory ,” “ Investment Property ,” “ Letter-of-Credit Rights ,” “ Payment Intangible ,” “ Software ” and “ Supporting Obligations .”

D.            Other Definitional Provisions .  References in this Agreement to “ Articles ,” “ Sections ,” “ Annexes ” or “ Exhibits ” shall be to Articles, Sections, Annexes or Exhibits of or to this Agreement unless otherwise specifically provided.  Any of the terms defined in Section 1.1 may, unless the context otherwise requires, be used in the singular or plural depending on the reference.  “ Include ,” “ includes ” and “ including ” shall be deemed to be followed by “ without limitation ” whether or not they are in fact followed by such words or words of like import.  “ Writing ,” “ written ” and comparable terms refer to printing, typing and other means of reproducing words on paper.  Except as otherwise expressly provided herein, references to any agreement or contract are to such agreement or contract, together with all exhibits and schedules thereto, as the same may be amended, restated, increased, extended, renewed, modified or supplemented from time to time in accordance with the terms hereof and thereof.  References to any Person include the successors and permitted assigns of such Person; provided that no Credit Party may assign its rights or obligations under any Loan Document without the prior written consent of the Lender.  References “ from ,” “ through ” or “ to ” any date, unless otherwise specified, mean “ from and including ,” “ through and including ,” and “ to but excluding ,” respectively.  References to any statute shall include any related regulations now or hereafter in effect, and any applicable judicial or administrative interpretations thereof and all amendments, modifications and supplements of the same and any successor statutes, regulations and interpretations.

II.
LOAN

A.            Revolving Loans .

1.             Commitment to Lend and Revolving Loan Limit .  Upon the terms and subject to the conditions hereof, from time to time during the Term, Lender agrees to advance funds to the Borrowers (each an “ Advance ”); provided that immediately after each such Advance is made (and after giving effect to any substantially concurrent application of the proceeds thereof to repay outstanding Advances or Obligations) the aggregate outstanding amount of such Advances shall not exceed the lesser of:

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a.             the Revolving Loan Commitment, and

b.             the Borrowing Base,

(at any time, such lesser amount, the “ Revolving Loan Limit ”).  Within the limits and subject to the conditions specified in this Section 2.1 and elsewhere in this Agreement, the Borrower may borrow, repay Advances (without penalty or premium (except as set forth in Section 2.5(d) ) and reborrow .

2.             Determination of Revolving Loan Limit and Reserves .  The Lender shall determine the Revolving Loan Limit based upon the most recent Borrowing Base Certificate delivered by Borrower Representative and such other information as may be available to Lender.  Lender shall have the right to establish or modify Reserves against the Borrowing Base or any component thereof from time to time, to adjust any of the criteria used to determine eligibility of any component of the Borrowing Base, to establish new such criteria, to set or revise applicable Liquidity Factors, and to adjust the Advance rate, in each case, in its sole discretion.  Each determination or action by the Lender made in accordance with this subsection (b) shall be conclusive and binding on the Borrowers.

3.             Revolving Note .  The Revolving Loan shall be evidenced by a single revolving note, substantially in the form of Exhibit A hereto (the “ Revolving Loan Note ”), dated the Closing Date in an aggregate principal amount equal to the Revolving Loan Commitment.

4.             Method of Borrowing .  A request for an Advance shall be made, or shall be deemed to be made, in the following manner:  (i) Borrower Representative shall provide Lender with a duly executed and completed Borrowing Base Certificate in the form of Exhibit B hereto, together with such additional information as Lender may request, not later than 12:00 p.m. (New York City time) on (x) the first (1 st ) Business Day, in the case of a Base Rate Loan and (y) the first (1 st ) Business Day, in the case of LIBOR Loans, prior to the date of the proposed Advance; and (ii) the becoming due of any amount required to be paid under this Agreement, whether as principal, interest or for any other Obligation, which such arising and unpaid Obligation shall be deemed to be a request for an Advance on the day following the due date in the amount required to pay such principal, interest or other Obligation if such was not paid by Borrowers on the due date.  Each Borrowing Base Certificate given by the Borrower Representative shall be irrevocable.  Any Borrowing Base Certificate received on any day that is not a Business Day, or on any Business Day after 12:00 p.m. (New York City time), shall be deemed received on the next succeeding Business Day.

5.             Disbursement of Advances .  Borrowers hereby irrevocably authorize Lender to disburse the proceeds of each Advance requested, or deemed to be requested, as follows:  (i) the proceeds of each Advance requested under Section 2.1(d)(i) shall be disbursed by Lender to the Borrower Account; and (ii) the proceeds of each Advance deemed to be requested under Section 2.1(d)(ii) shall be disbursed by Lender by way of direct payment of the relevant principal, interest or other Obligation.

B.            Reserved .

C.            Reserved .

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D.            Interest .

1.             Accrual .  Each Loan shall bear interest on the outstanding principal amount thereof from the date of the applicable Loan until repaid in full, whether before or after default, judgment or the institution of proceedings under any bankruptcy, insolvency or other similar law.  Unless the Default Rate has been imposed, the Loans shall bear interest on the outstanding principal amount thereof at a rate per annum equal to (i) to the extent and so long as any Loan bears interest based on the Base Rate (a “ Base Rate Loan ”), the Base Rate as in effect from time to time plus the Applicable Margin, or (ii) to the extent and so long as any Loan bears interest based on LIBOR (a “ LIBOR Loan ”), LIBOR plus the Applicable Margin.

2.             Interest Options .  Subject to the provisions hereof, all or any portion of the Loans, upon written notice by the Borrower Representative, may be made as or converted into a Base Rate Loan or a LIBOR Loan; provided that the Borrower Representative shall no longer have the option to have the Loans bear interest based on LIBOR, and any outstanding LIBOR Loan shall be automatically converted into a Base Rate Loan at the end of the applicable interest period, if an Event of Default shall have occurred and be continuing and the Lender shall have determined in its sole discretion to suspend Borrowers’ LIBOR option.

3.             Post Default Interest .  During the period that any Event of Default shall have occurred and be continuing, at the election of the Lender, all Loans and other outstanding Obligations shall bear interest at the Default Rate.

4.             Payments .  Interest due pursuant to this Agreement shall be payable in arrears on the first Business Day of each month with respect to interest accrued through the last day of the preceding month, and when any portion of an Obligation shall be due (whether at maturity, by reason of prepayment or acceleration or otherwise), but only to the extent then accrued on the amount then so due.  Interest accruing at the Default Rate shall be payable on demand.

5.             Determination .  Each determination by Lender of the interest rate hereunder shall be conclusive and binding for all purposes.

E.             Fees .

1.             Borrowers unconditionally agree to pay to Lender, on the Closing Date, a non-refundable closing fee (the “ Closing Fee ”) equal to thirty-five thousand dollars ($35,000), which fee shall be fully-earned upon Closing.

2.             For each day during the Term, Borrowers unconditionally agree to pay to Lender, on a monthly basis and on the Commitment Termination Date, an unused line fee (the “ Unused Line Fee ”) at a rate per annum equal to 0.50% of the amount by which the Revolving Loan Commitment exceeds the aggregate outstanding principal balance of the Revolving Loans on each day of each calendar month hereunder.  The Unused Line Fee payable for any calendar month shall be payable in arrears on the first Business Day of the next succeeding calendar month.

3.             For so long as any Obligation remains outstanding, Borrowers unconditionally agree to pay to Lender in advance on the Closing Date and on each year anniversary thereafter, a loan management fee (the “ Loan Management Fee ”) in the amount of twelve thousand dollars ($12,000).

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4.             On the effective date of any termination of this Agreement (including any voluntary termination by Borrower or any termination by Lender due to the occurrence of an Event of Default), Borrowers unconditionally agree to pay Lender (in addition to the then outstanding principal, accrued interest and other Obligations owing under this Agreement and any other Loan Documents), as yield maintenance for the loss of bargain and not as a penalty, an amount equal to the applicable Termination Fee.

F.             Computation of Interest and Fees .  All interest accruing hereunder and under the Note, and all Unused Line Fees accruing pursuant to Section 2.5 , shall be calculated for any period on the basis of a 360-day year for the actual number of days elapsed during such period, including the first day but excluding the last day of such period.  All fees payable pursuant to Section 2.5 shall be fully earned when due and shall be non-refundable.

G.            Payments/Termination .

1.             Mandatory Prepayment .  The Obligations shall be due upon the earliest of: (a) the receipt by Borrowers or Lender of any payments on or proceeds from any of the Collateral or any Intellectual Property, to the extent of such payments or proceeds, (b) the Commitment Termination Date, and (c) the date that the aggregate outstanding principal balance of the Advances exceeds the Revolving Loan Limit, to the extent of such excess.

2.             Optional Prepayment/Termination .  Subject to the payment of the applicable Termination Fee, Borrower Representative may terminate the Revolving Loan Commitment at any time upon at least ten (10) Business Days (or such shorter period as Lender shall agree in writing) prior written notice to the Lender.

H.            General Provisions Regarding Payments .

1.             All payments (including prepayments) to be made by the Borrowers under any Loan Document, including payments of principal of and interest on the Note, fees, expenses and indemnities, shall be made without set-off or counterclaim and in immediately available funds to the Collection Account before 1:00 p.m. (New York City time) on the date when due.  If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.  Payments received prior to 1:00 p.m. (New York City time) on any Business Day shall be deemed to have been received on such Business Day.  Payments received after 1:00 p.m. (New York City time) on any Business Day, or at any time on a day that is not a Business Day, shall be deemed to have been received on the following Business Day.  For purposes of computing interest and fees hereunder, all payments received in the Collection Account (pursuant to the two preceding sentences) shall be subject to one (1) Business Day clearance period.

2.             So long as no Event of Default has occurred and is continuing, (i) payments consisting of proceeds of Accounts received in the ordinary course of business shall be applied to the Revolving Loan and (ii) payments matching specific scheduled payments then due shall be applied to those scheduled payments.  As to any other payment, and as to all payments made when an Event of Default has occurred and is continuing or following the Commitment Termination Date, Borrowers hereby irrevocably waive the right to direct the application of any and all payments received from or on behalf of Borrowers, and Borrowers hereby irrevocably agree that Lender shall

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have the continuing exclusive right to apply any and all such payments against the Obligations as Lender may deem advisable notwithstanding any previous entry by Lender in the Loan Account or any other books and records.  In the absence of a specific determination by Lender with respect thereto, payments shall be applied to amounts then due and payable in the following order: (1) to Fees and Lender’s expenses reimbursable hereunder; (2) to interest on the Loans, ratably in proportion to the interest accrued as to each Loan; (3) to principal payments on the Loans; and (4) to all other Obligations.

I.              Cash Management System .  The Credit Parties will establish and at all times maintain the cash management system described on Annex IV (the “ Cash Management System ”) and comply in all respects with the provisions thereof.  To the extent that any Credit Party receives Proceeds that are not deposited directly into the Lockbox Account, such Credit Party shall hold all such Proceeds in trust for Lender and shall promptly arrange for the deposit of such Proceeds into the Lockbox Account in accordance with the Cash Management System.

J.             Loan Account and Accounting .  The Lender shall maintain a loan account (the “ Loan Account ”) on its books to record all Advances, Loans, all payments made by the Borrowers, and all other debits and credits as provided in this Agreement with respect to the Loans or any other Obligations.  All entries in the Loan Account shall be made in accordance with the Lender’s customary accounting practices as in effect from time to time.  The balance in the Loan Account, as recorded on the Lender’s most recent printout or other written or electronic statement, shall, absent clear and convincing evidence to the contrary, be presumptive evidence of the amounts due and owing to Lender by the Borrowers; provided , however , that any failure to so record or any error in so recording shall not limit or otherwise affect the Borrowers’ duty to pay the Obligations.  The Lender shall render to the Borrower Representative a monthly accounting of transactions with respect to the Obligations setting forth the balance of the Loan Account.  Unless the Borrower Representative notifies the Lender in writing of any objection to any such monthly accounting (specifically describing the basis for such objection) within thirty (30) days after the date thereof, each and every such monthly accounting shall be deemed final, binding and conclusive upon the Borrowers in all respects as to all matters reflected therein.  Only those items expressly objected to in such notice shall be deemed to be disputed by the Borrowers.

K.            Interest Rate Limitation .  The parties intend to conform strictly to the applicable usury laws in effect from time to time during the Term.  Accordingly, notwithstanding any other provision of this Agreement, the aggregate of all interest that is contracted for, charged, or received under this Agreement or under any other Loan Document shall not exceed the maximum amount of interest allowed by applicable law (the “ Highest Lawful Rate ”), and any interest in excess of the Highest Lawful Rate shall be promptly credited to Borrowers by Lender (or, to the extent that such interest shall have been paid, such excess shall be promptly refunded to Borrowers by Lender).  All sums paid, or agreed to be paid, to Lender for the use, forbearance, and detention of the debt of Borrowers to Lender shall, to the extent permitted by applicable law, be allocated and spread on a pro rata basis throughout the full term of the Note.  If the rate of interest hereunder shall be limited to the Highest Lawful Rate pursuant to this Section 2.11 , any subsequent reductions in the Base Rate or LIBOR shall not reduce the interest to accrue pursuant to this Agreement below the Highest Lawful Rate until the total amount of interest accrued equals the amount of interest that would have accrued if a varying rate per annum equal to the interest rate under the Note had at all times been in effect.

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L.            Single Loan .  All Loans and other Extensions of Credit shall constitute one general Obligation of Borrowers, and shall be secured by Lender’s Lien upon all of the Collateral.

M.           Use of Proceeds .   The proceeds of Advances under the Loans shall be used solely for working capital and other general corporate purposes to the extent not prohibited by the terms of this Agreement.

N.            Appointment of Borrower Representative .   Each Borrower hereby designates Clarient as its representative and agent on its behalf for the purposes of issuing Advances and Borrowing Base Certificates, giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Loan Documents.  Borrower Representative hereby accepts such appointment.  Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice of communication from all Borrowers, and may give any notice or communication required or permitted to be given to any Borrower or Borrowers hereunder to Borrower Representative on behalf of such Borrower or Borrowers.  Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

III.
COLLATERAL

A.            Generally .   As security for the payment and performance of all Obligations, including, without limitation: (a) indebtedness evidenced under the Note, repayment of Revolving Loans, advances and other extensions of credit, all interest, fees and charges owing by Borrowers (including, without limitation, the Termination Fee) and all other liabilities and obligations of every kind or nature whatsoever of the Credit Parties to Lender, whether now existing or hereafter incurred, joint or several, matured or unmatured, direct or indirect, primary or secondary, related or unrelated, due or to become due, including, without limitation, any extensions, modifications, substitutions, increases and renewals thereof, and whether incurred or arising before or after the filing of any proceeding by or against Borrowers under the United States Bankruptcy Code (including, without limitation, any interest , fees, expenses and other amounts accruing after the commencement of any such proceeding without regard to whether or not such interest is an allowed claim in such proceeding), (b) the payment of all amounts advanced by Lender to preserve, protect, defend, and enforce its rights under this Agreement and in the following property in accordance with the terms of this Agreement, and (c) the payment of all expenses incurred by Lender in connection therewith, each Credit Party hereby assigns and grants to Lender a continuing Lien on and security interest in, upon and to all assets and personal property of such Borrower, including, without limitation, the following property whether now owned or hereafter acquired or arising (the “ Collateral ”):

a.             all of such Credit Party’s Accounts, and all of such Credit Party’s money, contract rights, chattel paper, documents, deposit accounts, operating accounts, bank accounts, securities, investment property and instruments with respect thereto, and all of

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such Credit Party’s rights, remedies, security, Liens and supporting obligations, in, to and in respect of the foregoing, including, without limitation, rights of stoppage in transit, replevin, repossession and reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, guaranties or other contracts of suretyship with respect to such Accounts, deposits or other security for the obligation of any Account Debtor, and credit and other insurance;

b.             to the extent not listed above, all of such Credit Party’s money, securities, investment property, deposit accounts, operating accounts, bank accounts, instruments and other property and the proceeds thereof that are now or hereafter held or received by, in transit to, in possession of, or under the control of Lender or a bailee or Affiliate of Lender, whether for safekeeping, pledge, custody, transmission, collection or otherwise;

c.             to the extent not listed above, all of such Credit Party’s now owned or hereafter acquired deposit accounts, operating accounts, bank accounts, into which Accounts or the proceeds of Accounts are deposited, including the Lockbox, the Lockbox Account or any other lockbox account or blocked account and any contract rights in the foregoing.

d.             all of such Credit Party’s right, title and interest in, to and in respect of all goods relating to, or which by sale have resulted in, Accounts, including, without limitation, all goods described in invoices or other documents or instruments with respect to, or otherwise representing or evidencing, any Account, and all returned, reclaimed or repossessed goods;

e.             all of such Credit Party’s general intangibles ( including , without limitation, payment intangibles but excluding all Intellectual Property) and other property of every kind and description with respect to, evidencing or relating to its Accounts, including, without limitation, all existing and future customer lists, choses in action, claims, books, records, ledger cards, contracts and contract rights, permits, formulae, tax and other types of refunds, returned and unearned insurance premiums, rights and claims under insurance policies, all licenses, certifications, authorizations and approvals, and the rights of such Credit Party thereunder, issued by any governmental, regulatory, or private authority, agency, or entity whether now owned or hereafter acquired, together with all cash and non-cash proceeds and products thereof, and computer programs, information, software, records, and data, in each case, as the same relates to the Accounts;

f.              all of such Credit Party’s other money, securities, investment property, deposit accounts (and all funds and other deposits therein), other bank accounts (and all funds and other deposits therein), instruments, documents, supporting obligations and chattel paper;

g.             all of such Credit Party’s letter-of-credit rights and commercial tort claims;

h.             all of such Credit Party’s now owned or hereafter acquired inventory of every description which is held by such Credit Party for sale or lease or is furnished by such Borrower under any contract of service or is held by such Credit Party as raw

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materials, work in process or materials used or consumed in a business, wherever located, and as the same may now and hereafter from time to time be constituted;

i.              all of such Credit Party’s now owned or hereafter acquired machinery, equipment, computer equipment, tools, tooling, furniture, fixtures, goods, supplies, materials, work in process, whether now owned or hereafter acquired, together with all additions, parts, fittings, accessories, special tools, attachments, and accessions now and hereafter affixed thereto and/or used in connection therewith, all replacements thereof and substitutions therefor; and

j.              to the extent not listed above as original collateral, all Proceeds (including, without limitation, insurance Proceeds) and products of any and all of the foregoing, and all accessions thereto, substitutions for or replacements of and rents and profits from any and all of the foregoing.

Notwithstanding anything herein to the contrary, this Section 3.1 shall not constitute a grant of a security interest in (a) any property that constitutes Hazardous Waste, (b) any inventory purchased by the Borrowers from Olympus America, Inc. Scientific Equipment Products Group pursuant to the Olympus Agreement (but only for so long a grant of a security interest in such inventory is prohibited by the Olympus Agreement), or (c) any lease, license, contract permit or agreement to the extent that such grant of a security interest is prohibited by or constitutes a breach or default under such lease, license, contract, permit or agreement, except to the extent that such term in such lease, license, contract, permit or agreement providing for such prohibition, breach or default is ineffective under applicable law (including, without limitation, sections 9-406, 9-407, 9-408 or 9-409 of the UCC); provided , however , that the limitation in the foregoing clause (b) shall not affect, limit, restrict or impair the grant by any Credit Party of a security interest pursuant to this Agreement in any Account or any money or other amounts due or to become due under any such lease, license, contract, permit or agreement or in the Proceeds from the sale or disposition of any such lease, license, contract, permit or agreement; and provided , further , that the limitation in the foregoing clause (b) shall be applicable only for so long as a grant of a security interest in any such lease, license, contract permit or agreement is prohibited by or constitutes a breach or default under such lease, license, contract, permit or agreement.

B.            Lien Documents .  At Closing and thereafter as Lender deems necessary in its sole discretion, the Credit Parties shall execute and deliver to Lender, or have executed and delivered (all in form and substance satisfactory to Lender in its sole discretion) any agreements, documents, instruments, and writings deemed necessary by Lender or as Lender may otherwise request from time to time in its sole discretion to evidence, perfect, or protect Lender’s Lien and security interest in the Collateral required under this Agreement.  Each Credit Party hereby authorizes Lender to file one or more financing statements and amendments thereto and continuation statements therefor covering the Collateral and naming each Credit Party as debtor and Lender as secured party.  Each Credit Party acknowledges that it is not authorized to file any financing statement or amendment or any termination statement with respect to any financing statement filed against such Credit Party by Lender and each Credit Party agrees that it will not do so without the prior written consent of Lender.

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C.            Collateral Administration .

1.             All Collateral (except deposit accounts) shall at all times be kept by each Credit Party at its principal office(s) or other locations as set forth on Schedule 4.20 and shall not be moved from such locations (other than in transit between any such locations or to a purchaser) without (i) providing prior written notice to Lender in accordance with Section 7.12 , and (ii) obtaining the prior written consent of Lender, which consent shall not be unreasonably withheld.

2.             The Credit Parties shall keep accurate and complete Books and Records of its Accounts and all payments and collections thereon and shall submit to Lender on such periodic basis as Lender shall reasonably request a sales and collections report for the preceding period, in form satisfactory to Lender.  In addition, if Accounts (as described in the most recently delivered Borrowing Base Certificate) in an aggregate face amount in excess of $100,000 become ineligible because they fall within one of the specified categories of ineligibility set forth in the definition of Qualified Accounts or otherwise, the Credit Parties shall notify Lender of such occurrence and the specified categories of ineligibility set forth in the definition of Qualified Accounts or otherwise within five (5) Business Days after any Responsible Officer of such Credit Party has knowledge of such occurrence and the Borrowing Base shall thereupon be adjusted to reflect such occurrence; provided , however , that without limiting the foregoing, in the event that the Credit Parties compromise or settle any claims in accordance with Section 4.21(i) hereof, the Credit Parties shall notify Lender of such occurrence and provide Lender an updated Borrowing Base Certificate within three (3) Business Days after any Responsible Officer of such Credit Party has knowledge of such occurrence, and the Borrowing Base shall thereupon be adjusted to reflect such occurrence

3.             Whether or not a Default has occurred, any of Lender’s officers, employees or agents shall have the right, at any time or times hereafter, in the name of Lender or any designee of Lender or the Credit Parties, to verify the validity, amount or any other matter relating to any Accounts by mail, telephone, telegraph or otherwise, and to communicate directly with the applicable regulatory agency and officials thereof for purposes of verifying same and informing said agency or official of any pending Default hereunder.  The Credit Parties shall cooperate fully with Lender in an effort to facilitate and promptly conclude such verification process.

4.             To expedite collection, the Credit Parties shall endeavor in the first instance to make collection of its Accounts for Lender.  Lender shall have the right, after the occurrence and during the continuance of an Event of Default, to notify Account Debtors (other than Government Payors) that Accounts have been pledged to Lender and that payment of such Accounts shall be made directly by such Account Debtors to Lender (and once such notice has been provided to an Account Debtor, the Credit Parties shall not provide any contrary instructions to such Account Debtor without Lender’s prior written consent).

5.             The Credit Parties shall bear the risk of loss on all Collateral, regardless of whether such Collateral is in the possession or control of any Credit Party, Lender, a bailee or any other Person; provided , however, that Lender shall use reasonable care with respect to the Collateral in its possession or under its control.  The Lender shall be deemed to have exercised reasonable care in the custody of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Lender accords its own property.

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D.            Other Actions .  In addition to the foregoing, each Credit Party:

1.             shall provide prompt written notice in form and substance reasonably satisfactory to Lender to each Private Third Party Payor that either is currently an Account Debtor or becomes an Account Debtor at any time following the date of this Agreement that directs each such Account Debtor to make payments into the appropriate Lockbox or Lockbox Account (as applicable), and hereby authorizes Lender, upon such Credit Party’s failure to send such notices within ten (10) days after the date of this Agreement (or ten (10) days after the date of this Agreement (or ten (10) days after the Private Third Party Payor becomes an Account Debtor), to send any and all similar notices to such Private Third Party Payors;

2.             shall do anything further that may be lawfully required by Lender to secure Lender and effectuate the intentions and objects of this Agreement, including, without limitation, the execution and delivery of lockbox agreements, account control agreements, pledge agreements, continuation statements, amendments to financing statements, and any other documents required under this Agreement;

3.             at Lender’s request, shall immediately deliver to Lender all items for which Lender must receive possession to obtain a perfected security interest (in each case, accompanied by stock powers, endorsements, allonges or other instruments of transfer duly executed in blank);

4.             shall, on Lender’s demand, deliver to Lender all notes, certificates, and documents of title, chattel paper, warehouse receipts, instruments, and any other similar instruments constituting Collateral;

5.             shall, on Lender’s request, where Collateral is in the possession of a third party, join with Lender in notifying the third party of Lender’s security interest and obtaining an acknowledgement from the third party that it is holding the Collateral for the benefit of Lender;

6.             shall cooperate with Lender in obtaining control (pursuant to written agreements establishing such control in form and substance reasonably satisfactory to Lender) with respect to Collateral consisting of items such as deposit accounts, investment property, letter of credit rights and electronic chattel paper for which control is required in order to perfect a security interest;

7.             shall not create any chattel paper without placing a legend on the chattel paper acceptable to Lender indicating that Lender has a security interest in the chattel paper; and

8.             shall promptly, and in any event within five (5) Business Days after the same is acquired by such Credit Party, notify Lender of any commercial tort claim acquired by such Credit Party which could reasonably be expected to result in the payment of damages to such Credit Party in excess of $25,000, and unless otherwise consented to in writing by Lender, such Credit Party shall enter into a written supplement to this Agreement (in form and substance satisfactory to Lender) granting to Lender a security interest in such commercial tort claim as additional Collateral for the Obligations.

Notwithstanding the foregoing, in no event shall any Credit Party be required to direct any Government Payor to make payment on any Government Account directly to Lender or

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to any Lockbox, Lockbox Account or other deposit account other than a Lockbox and Lockbox Account subject only to a Government Receivables Account Agreement.

E.             Searches .  Before Closing, and thereafter (as and when determined by Lender in its sole discretion, Lender shall be entitled to perform the searches described in clauses (a), (b) and (c) below against the Credit Parties (the results of which shall be consistent with the Credit Parties representations and warranties under this Agreement and otherwise acceptable to Lender), all at Credit Parties expense:

1.             UCC searches with the Secretary of State and local filing offices of each jurisdiction where any Credit Party maintains its executive offices, a place of business, or assets and the jurisdiction in which any Credit Party is organized;

2.             judgment, federal and state tax lien, and corporate and partnership tax lien searches, in each jurisdiction searched under clause (a) above; and

3.             searches of applicable corporate, limited liability company, partnership and related records to confirm the continued existence, organization and good standing of any Credit Party, and the exact legal name under which any Credit Party is organized.

F.             Power of Attorney .  Subject to any applicable Medicare/Medicaid laws, rules and regulations, each of the officers of Lender is hereby irrevocably made, constituted and appointed the true and lawful attorney for each Credit Party (without requiring any of them to act as such) with full power of substitution to do the following: (a) endorse the name of such Credit Party upon any and all checks, drafts, money orders, and other instruments for the payment of money that are payable to such Credit Party and constitute collections on such Credit Party’s Accounts; (b) execute in the name of such Credit Party any schedules, assignments, instruments, documents, and statements that such Credit Party is obligated to give Lender under this Agreement; (c) take any action such Credit Party is required to take under Section 3.4 above; and (d) do such other and further acts and deeds in the name of such Credit Party that Lender may deem necessary or desirable to enforce its rights in and to any Account or other Collateral or perfect Lender’s security interest or Lien in any Collateral.  In addition, if such Credit Party breaches its obligation to direct payments of the Account proceeds of other Collateral to the Lockbox Account as required by this Agreement, Lender, as the irrevocably made, constituted and appointed true and lawful attorney for such Borrower pursuant to this paragraph, may, by the signature or other act of any officers of Lender (without requiring any of them to do so), direct any federal, state or private payor or fiscal intermediary to pay proceeds of the Collateral to such Credit Party by directing payment to the Lockbox Account, subject to any applicable Medicare/Medicaid laws, rules and regulations.  On the Closing Date, each Credit Party shall execute and deliver a separate written power of attorney in form and substance reasonably satisfactory to Lender (the “ Power of Attorney ”), and the power of attorney granted pursuant to the Power of Attorney and all other powers of attorney granted in this Section 3.6 are powers coupled with an interest and shall be irrevocable so long as such Credit Party may borrow under this Agreement or any Obligations remain outstanding and unpaid.  The powers conferred on Lender under the Power of Attorney or this Section 3.6 are solely to protect Lender’s interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers.  Lender agrees and promises that (i) it shall not exercise any power or authority granted under the Power of Attorney or this Section 3.6 unless a Default has occurred and is continuing, and (ii) Lender shall only exercise the powers and authorities granted under the Power of Attorney or this Section 3.6 in respect of Collateral; provided , however , except as otherwise required by applicable

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law, Lender shall not have any duty as to any Collateral (other than as provided in Section 3.3(e) ) and Lender shall be accountable only for amounts that it actually receives as a result of the exercise of such powers or authorities.

G.            License to Intellectual Property .  For the purpose of enabling Lender to exercise its rights and remedies under the Loan Documents, each Credit Party hereby grants to Lender an irrevocable, non-exclusive license (exercisable upon the occurrence and during the continuance of an Event of Default without payment of royalty or other compensation to such Credit Party) to use, license or sublicense any Intellectual Property now owned, licensed to (but only to the extent that any such sub-license would not cause a breach of such license and such sub-license would be created without any additional effort by or cost to the Credit Parties), or hereafter acquired by such Credit Party, and wherever the same may be located, and including in such license access to all media in which any of such licensed items may be recorded or stored and to all computer and automatic machinery software and programs used for the compilation or printout thereof; provided , however , that such license will terminate upon the termination of the Lender’s Liens in the Collateral.

IV.
REPRESENTATIONS AND WARRANTIES

Each Credit Party hereby represents and warrants the following to Lender:

A.            Organization and Good Standing .  Each Credit Party (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) is duly qualified to conduct business and is in good standing in each other jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified would not result in a Material Adverse Effect, (c) has the requisite power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, (d) has all organizational powers necessary for the conduct of its business as now conducted or hereafter proposed to be conducted, and (e) is in full compliance with all provisions of its Organizational Documents.  The exact legal name (as set forth on the public record of such jurisdiction of organization that shows each Credit Party to have been organized), type of entity, jurisdiction of organization, federal tax identification number and fiscal year of Borrowers is as set forth on Schedule 4.1 .

B.            Governmental Approvals, Compliance with Laws and Compliance with Agreements with Third Parties .  Each Credit Party possesses in full force and effect all Governmental Approvals necessary for the conduct of its business and is in compliance in all material respects with all provisions of all applicable law, including Healthcare Laws.

C.            Organizational and Governmental Approvals; No Contravention .  The execution, delivery and performance by each Credit Party of the Loan Documents to which it is a party (a) are within its organizational powers, (b) have been duly authorized by all necessary organizational action, (c) require no Governmental Approval (other than the filing of UCC financing statements and such other filings as have been made and are in full force and effect), (d) do not contravene, or constitute a default under (i) any provision of applicable law, (ii) the Organizational Documents of such Credit Party or (iii) any agreement, judgment, injunction, order, decree or other instrument binding upon such Credit Party, and (e) do not result in the creation or

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imposition of any Lien (other than the Liens created by the Collateral Documents) on any asset of any such Credit Party.

D.            Binding Effect; Liens .

1.             Each Loan Document to which any Credit Party is a party constitutes a legal, valid and binding agreement of such Credit Party in each case enforceable in accordance with its terms, subject only to (i) the effect of any applicable bankruptcy, fraudulent transfer, moratorium, insolvency, reorganization or other similar laws affecting the rights of creditors generally and (ii) the effect of general principles of equity whether applied by a court of equity or law.

2.             The security interests granted pursuant to this Agreement, upon completion of the filings and other actions specified in Section 3.2 , will constitute valid, perfected security interests in all of the Collateral in favor of the Lender, prior to all other Liens other than Permitted Liens.

E.             Financial Statements .  All of the financial statements of Borrowers that have been previously delivered to Lender (i) present fairly, in all material respects and in accordance with GAAP consistently applied throughout the periods involved (except for such changes in GAAP as are disclosed therein), the consolidated and consolidating financial position of the Credit Parties as at their respective dates and the consolidated and consolidating income, shareholders’ equity, results of operations and cash flows of the Credit Parties for the respective periods to which such statements relate (except, in the case of unaudited interim financial statements, for the absence of footnotes and normally recurring year-end adjustments), (ii) present Information that is true, correct and complete in all material respects and (iii) reflect that, except as disclosed or reflected in such financial statements or as set forth on Schedule 4.5 , as at December 31, 2005, no Credit Party has any liabilities, contingent or otherwise, nor any unrealized or anticipated losses, that, singly or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect.

F.             Material Adverse Effect .  Since December 31, 2005, (a) no Credit Party has incurred any obligations, contingent or non-contingent liabilities, long-term leases or unusual forward or long-term Commitment that (i) as of the Closing Date, are not reflected in the financial statements delivered at Closing or (ii) as of any date after the Closing Date, are not reflected on the most recently delivered financial statements delivered after the Closing Date pursuant to clause (c) of Annex VII, and that, alone or in the aggregate, could reasonably be expected to have a Material Adverse Effect, (b) no contract, lease or other agreement or instrument has been entered into by any Credit Party or has become binding upon any Credit Party’s assets and no law or regulation applicable to any Credit Party has been adopted that has had or could reasonably be expected to have a Material Adverse Effect, (c) no Credit Party is in default and, to each Credit Party’s knowledge, no third party is in default under any material contract, material lease or other material agreement or material instrument, and (d) no event has occurred, that alone or together with other events, could reasonably be expected to have a Material Adverse Effect.

G.            Litigation .  Except as set forth on Schedule 4.7 , there is no action, claim, lawsuit, demand, investigation or proceeding (collectively, “ Litigation ”) pending against, or to the knowledge of any Credit Party, threatened against or affecting any Credit Party or its property, before any court or arbitrator or any Governmental Authority which, if adversely determined, could reasonably be expected to have a Material Adverse Effect.

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H.            Due Diligence; Full Disclosure .  None of the Information (financial or otherwise) furnished by or on behalf of any Credit Party to the Lender hereunder or in connection with the Loan Documents or any of the transactions contemplated here or thereby contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in the light of the circumstances under which such statements were made.

I.              Ownership of Property, Liens .  Each Credit Party is the lawful owner of, has good and marketable title to and is in lawful possession of, or has valid leasehold interests in, all properties and other assets (real or personal, tangible, intangible or mixed) purported to be owned or leased, as the case may be, by such Credit Party on the most recent balance sheet referred to in Section 4.5 or, if more recent, delivered pursuant to Annex VII , and none of such Credit Party’s properties or assets is subject to any Liens, except Permitted Liens.

J.             Environmental Laws .  Except as set forth on Schedule 4.10 , each Credit Party and its respective operations are (a) in compliance with the requirements of all Environmental Laws and (b) to such Credit Party’s knowledge, not the subject of any federal, state or local investigation evaluating whether any remedial action is needed to respond to a Release or the use of any Hazardous Materials in any of its products or manufacturing operations, which noncompliance or remedial action could reasonably be expected to have a Material Adverse Effect.

K.            ERISA .  Each member of the Controlled Group has fulfilled its obligations under the minimum funding standards of ERISA and the IRC with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the IRC with respect to each Plan.  No member of the Controlled Group has (i) sought a waiver of the minimum funding standard under Section 412 of the IRC in respect of any Pension Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could reasonably be expected to result in the imposition of a Lien or the posting of a bond or other security under ERISA or the IRC or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA.

L.            Subsidiaries; Capitalization .  No Credit Party has any Subsidiaries other than as set forth on Schedule 4.12 .  Schedule 4.12 sets forth the correct legal name and jurisdiction and type of organization of each Subsidiary of Credit Party.  The authorized Stock of each of the Credit Parties is as set forth on Schedule 4.12 .  All issued and outstanding Stock of each of the Credit Parties is duly authorized and validly issued, fully paid, non-assessable, free and clear of all Liens other than those in favor of Lender, and such Stock was issued in compliance with all applicable laws.  The identity of the holders of the Stock of each Credit Party, other than Clarient, and the percentage of their fully-diluted ownership of the Stock of each Credit Party is set forth on Schedule 4.12 .  Notwithstanding anything to the contrary in the foregoing, as of the Closing Date, Safeguard and the Permitted Holders own and control 51.7%, (or a variation thereof of no more than 0.1% less than or in excess of such percentage), of the outstanding Stock of Clarient on a fully-diluted basis.  No Stock of any Credit Party, other than that described above, is issued and outstanding.  Except as set forth on Schedule 4.12 , as of the Closing Date there are no preemptive or other outstanding rights, options, warrants, conversion rights or similar agreements or understandings for the purchase or acquisition from any Credit Party of any Stock of any such entity ( provided that the foregoing shall not preclude the exercise of any warrants by the holder thereof and any Credit Party’s compliance with such exercise so long as no payments are made by any Credit Party to the holder

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thereof in connection therewith (other than the reasonable and customary transaction costs (if any) incurred by such holder and paid to non-Affiliates of the Credit Parties, in connection with such exercise), in accordance with the terms of the respective warrant).  All outstanding Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing Date (except for the Obligations) is set forth on Schedule 8.1 ; provided , however , than an inaccuracy in the principal amounts of Indebtedness and Guaranteed Obligations disclosed on Schedule 8.1 that is less than $25,000 in the aggregate shall not constitute a Default under this Section 4.12 .

M.           Government Regulations .  No Credit Party is an “ investment company ” or an “ affiliated person ” of, or “ promoter ” or “ principal underwriter ” for, an “ investment company ,” as such terms are defined in the Investment Company Act of 1940.  No Credit Party is subject to regulation under the Federal Power Act, or any other federal or state statute that restricts or limits its ability to incur Indebtedness or to perform its obligations hereunder.

N.            Margin Regulations .  No Credit Party is engaged, nor will it engage, principally or as one of its activities, in the business of extending credit for the purpose of “ purchasing ” or “ carrying ” any “ margin stock ” as such terms are defined in Regulation U of the Federal Reserve Board as now and from time to time hereafter in effect (such securities being referred to herein as “ Margin Stock ”).  No Credit Party owns any Margin Stock and none of the proceeds from the Loans have been or will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any Margin Stock or for any other purpose which might cause any of the Loans under this Agreement to be considered a “ purpose credit ” within the meaning of Regulations T, U or X of the Board of Governors of the Federal Reserve Board.  No Credit Party will take or permit to be taken any action that might cause any Loan Document to violate any regulation of the Federal Reserve Board.

O.            Taxes .  All tax returns, reports and statements, including information returns, required by any Governmental Authority to be filed by any Credit Party have been filed with the appropriate Governmental Authority prior to delinquency, and all taxes, assessments and other charges have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof (or any such fine, penalty, interest, late charge or loss has been paid), excluding such amounts which are the subject of a Permitted Contest.  Proper and accurate amounts have been withheld by each Credit Party from its respective employees for all periods in compliance with applicable laws, and such withholdings have been timely paid to the respective Governmental Authorities.

P.            Intellectual Property .  Each Credit Party owns or has rights to use all Intellectual Property material to the conduct of its business as now conducted by it or proposed to be conducted by it without (to each Credit Party’s knowledge) actual or claimed infringement upon, in any material respect, the rights of third parties, and each patent, trademark, copyright and license for the same is set forth, together with application or registration numbers, as applicable, on Schedule 4.16 .

Q.            Solvency .  Both before and after giving effect to (a) the Extensions of Credit to be made on the Closing Date or such other date as an Extension of Credit requested hereunder is made and the pledge of assets as security therefor by the Borrowers, (b) the disbursement of the proceeds of such Extensions of Credit pursuant to the instructions of the Borrower Representative, (c) the consummation of the transactions contemplated herein, and (d) the payment and accrual of all

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transaction costs in connection with the foregoing, and taking into consideration all rights of contribution and reimbursement by and among the Credit Parties, each Credit Party is Solvent.

R.            Brokers .  No broker or finder acting on behalf of any Credit Party brought about the obtaining, making or closing of this Agreement and the credit provided thereunder, and no Credit Party has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith.

S.            Patriot Act .  The Borrowers, each Subsidiary of the Borrowers and (to each Credit Party’s knowledge) each of their Affiliates are in compliance with (a) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, (b) the Uniting And Strengthening America By Providing Appropriate Tools Required to Intercept And Obstruct Terrorism (USA Patriot Act of 2001, Pub. L. No. 107-56, 115 stat. 272 (2001)) and (c) other federal or state laws relating to “ know your customer ” and anti-money laundering rules and regulations.  No part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

T.            Places of Business .  As of the Closing Date, the only places of business of the Credit Parties (including the identity of the owner of record of each such premises), and the places where the Credit Parties keep and intend to keep the Collateral and records concerning the Collateral, are at the addresses set forth on Schedule 4.20 .  Each Credit Party’s chief executive office is located in the state and at the address shown on Schedule 4.20 .

U.            Accounts .  Lender may rely, in determining which Accounts are Qualified Accounts, on all statements and representations made by Borrowers with respect to any Account or Accounts.  Unless otherwise indicated in writing to Lender, with respect to each Qualified Account, each Borrower represents that:

1.             the Account is genuine and in all respects what it purports to be, and is not evidenced by a judgment;

2.             the Account arises out of a completed, bona fide sale and delivery of goods or rendition of Medical Services by such Borrower in the ordinary course of its business and in accordance with the terms and conditions of all purchase orders, contracts, certification, participation, Permit, or other documents relating thereto and forming a part of the contract between such Borrower and the Account Debtor;

3.             the Account is for a liquidated amount as stated in a claim or invoice covering such sale or rendition of Medical Services, a copy of which claim or invoice has been furnished or is available to Lender;

4.             there are no facts, events or occurrences which in any way impair the validity or enforceability of any Accounts or tend to reduce the amount payable thereunder from the face amount of the claim or invoice and statements delivered to Lender with respect thereto;

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5.             to the best of such Borrower’s knowledge, (i) the Account Debtor under the Account had the capacity to contract at the time any contract or other document giving rise to the Account was executed, and (ii) such Account Debtor is solvent;

6.             to the best of such Borrower’s knowledge, there are no proceedings or actions which are pending or threatened against any Account Debtor under the Account which could reasonably be expected to result in any material adverse change in such Account Debtor’s financial condition or the collectibility of such Account;

7.             the Account has been billed and forwarded to the Account Debtor for payment in accordance with applicable laws and compliance and conformance