THIRD AMENDED AND RESTATED
SUBORDINATED NOTE AND SECURITY AGREEMENT
||Dated as of February 22, 2011
FOR VALUE RECEIVED, OPKO Health, Inc., a Delaware corporation with offices at 4400 Biscayne
Blvd., Miami, Florida 33137 (Borrower), pursuant to this Third Amended and Restated
Subordinated Note and Security Agreement (this Third Amended and Restated Note), hereby
promises to pay to The Frost Group, LLC, a Florida limited liability company (Lender) at
such place as Lender may designate from time to time in writing, in lawful money of the United
States of America, the principal amount of $12,000,000, or such lesser amount as shall equal the
outstanding principal balance of the loan (the Loan) made to Borrower by Lender pursuant
to the Credit Agreement, dated as of March 27, 2007, as amended by that certain Amendment No. 1 to
Credit Agreement dated November 6, 2008, and Amendment No. 2 to Credit Agreement dated the date
hereof, by and among Borrower, Lender and OPKO Pharmaceuticals, LLC (formerly known as Acuity
Pharmaceuticals, LLC) (the Amended Credit Agreement), and to pay all other amounts due
with respect to the Loan on the dates and in the amounts set forth in the Amended Credit Agreement
and this Third Amended and Restated Note. This Third Amended and Restated Note amends, restates
and replaces in all respects the Subordinated Note and Security Agreement of Acuity
Pharmaceuticals, Inc., dated as of January 11, 2007, the obligations under which were assumed by
Borrower pursuant to the original Credit Agreement, as well as the Amended and Restated
Subordinated Note and Security Agreement dated as of March 27, 2007 and the Second Amended and
Restated Note and Security Agreement dated November 6, 2008.
1. Definitions. All capitalized terms used, but not defined herein, shall have the
meanings ascribed to them in the Amended Credit Agreement. In addition, the terms set forth below
shall have the following meanings:
(a) Affiliate means any Person that owns or controls directly or indirectly ten
percent (10%) or more of the stock of another entity, any Person that controls or is controlled by
or is under common control with such Persons or any Affiliate of such Persons and each of such
Persons officers, directors, joint venturers or partners.
(b) Code means the Uniform Commercial Code as adopted and in effect in the State of
Florida, as amended from time to time; provided that if by reason of mandatory provisions
of law, the creation and/or perfection or the effect of perfection or nonperfection of the
security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than Florida, the term Code shall also mean the Uniform Commercial
Code as in effect from time to time in such jurisdiction for purposes of the provisions hereof
relating to such creation, perfection or effect of perfection or non-perfection.
(c) Equity Securities of Borrower means (1) all common stock, preferred stock,
participations, shares, partnership interests, membership interests or other equity interests in
and of Borrower (regardless of how designated and whether or not voting or nonvoting) and (2) all
warrants, options and other rights to acquire any of the foregoing.
(d) Event of Default shall mean the occurrence of one or more of the following
(1) Borrower shall fail to make any payment due to Lender under this Third Amended and
Restated Note when the same shall become due and payable, whether at maturity, by acceleration or
otherwise, within five days after receipt of written notice from Lender that such payment is due
(2) Borrower violates any of the covenants contained in Sections 7 and 8 of this Third
Amended and Restated Note and fails to remedy such violation within ten (10) days after receipt of
written notice from Lender that such a violation has occurred.
(3) Any material portion of Borrowers assets is attached, seized, subjected to a writ or
distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or
person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10) days, or if Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct all or any material
part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon
any material portion of Borrowers assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrowers assets by the United States Government, or any
department, agency, or instrumentality thereof, or by any state, county, municipal, or
governmental agency, and the same is not paid within ten (10) days after Borrower receives notice
thereof; provided that none of the foregoing shall constitute an Event of Default where such
action or event is stayed or an adequate bond has been posted pending a good faith contest by
(4) One or more defaults shall exist under any agreement with any third party or parties
which consists of the failure to pay any Indebtedness at maturity or which results in a right by
such third party or parties, whether or not exercised, to accelerate the maturity of Indebtedness
in an aggregate amount in excess of One Hundred Fifty Thousand Dollars ($150,000).
(5) A judgment or judgments for the payment of money in an amount, individually or in the
aggregate, of at least One Hundred Fifty Thousand Dollars ($150,000) shall be rendered against
Borrower and shall remain unsatisfied and unstayed for a period often (10) days or more.
(6) Any material misrepresentation or material misstatement that exists now or hereafter in
any warranty, representation, statement, certification, or report made to Lender by Borrower or
any officer, employee, agent, or director of Borrower shall prove to have been false or misleading
in any material respect when made or furnished.
(7) Any document executed in connection with the Loan ceases to be, or Borrower asserts that
such document is not, in any material respect, a legal, valid and binding obligation of Borrower
enforceable in accordance with its terms.
(8) A proceeding shall have been instituted in a court having jurisdiction in the premises
seeking a decree or order for relief in respect of Borrower in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the
appointment of a receiver, liquidator, assignee, custodian, trustee (or similar official) of
Borrower or for any substantial part of its property, or for the winding-up or liquidation of its
affairs, and such proceeding shall remain undismissed or unstayed and in
effect for a period of sixty (60) consecutive days or such court shall enter a decree or
order granting the relief sought in such proceeding.
(9) Borrower commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, consents to the entry of an order for relief in an
involuntary case under any such law, or consents to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or for
any substantial part of its property, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall take any
corporate action in furtherance of any of the foregoing.
(e) Indebtedness means, with respect to Borrower, the aggregate amount of, without
duplication, (a) all obligations of Borrower for borrowed money, (b) all obligations of Borrower
evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of
Borrower to pay the deferred purchase price of property or services (excluding trade payables aged
less than one hundred eighty (180) days), (d) all capital lease obligations of Borrower, (e) all
obligations or liabilities of others secured by a Lien on any asset of Borrower, whether or not
such obligation or liability is assumed, (t) all obligations or liabilities of others guaranteed
by Borrower, and (g) any other obligations or liabilities which are required by GAAP to be shown
as debt on the balance sheet of Borrower.
(f) Intellectual Property means all of Borrowers right, title and interest in and
to patents, patent rights (and applications and registrations therefor), trademarks and service
marks (and applications and registrations therefor), inventions, copyrights, mask works (and
applications and registrations therefor), trade names, trade styles, software and computer
programs, source code, object code, trade secrets, methods, processes, know how, drawings,
specifications, descriptions, and all memoranda, notes, and records with respect to any research
and development, all whether now owned or subsequently acquired or developed by Borrower and
whether in tangible or intangible form or contained on magnetic media readable by machine together
with all such magnetic media (but not including embedded computer programs and supporting
information included within the definition of goods under the Code).
(g) Lien means any voluntary or involuntary security interest, pledge, bailment,
lease, mortgage, hypothecation, conditional sales and title retention agreement, encumbrance or
other lien with respect to any property of the Borrower in favor of any person.
(h) Permitted Indebtedness means and includes:
(1) Indebtedness of Borrower to Lender;
(2) Indebtedness arising from the endorsement of instruments in the ordinary course of
(3) Indebtedness existing on the date hereof and disclosed in the Schedule of Exceptions to
the Amended Credit Agreement or in the financial statements included with the Companys periodic
reports filed with the SEC;
(4) Indebtedness of Borrower in an aggregate original principal amount not to exceed $250,000
which is secured by Liens permitted under clause (5) of the definition of Permitted Liens;
(5) Other Indebtedness in an aggregate amount not exceeding $500,000 at any time; and
(6) Extensions, refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness above, provided that the principal amount thereof is not increased or the
terms thereof are not modified to impose more burdensome terms upon Borrower.
(i) Permitted Investments means and includes any of the following investments:
(1) Deposits and deposit accounts with commercial banks organized under the laws of the
United States or a state thereof to the extent: (i) the deposit accounts of each such institution
are insured by the Federal Deposit Insurance Corporation up to the legal limit; and (ii) each such
institution has an aggregate capital and surplus of not less than One Hundred Million Dollars
(2) Investments in marketable obligations issued or fully guaranteed by the United States and
maturing not more than one (l) year from the date of Issuance.
(3) Investments in open market commercial paper rated at least A1 or P1 or higher by a
national credit rating agency and maturing not more than one (1) year from the creation thereof.
(4) Investments pursuant to or arising under currency agreements or interest rate agreements
entered into in the ordinary course of business.
(5) Investments, not requiring the use of cash or the assumption of liabilities, in joint
ventures, partnerships or similar business arrangements entered into in the ordinary course of
business in substantially the same industry and growth stage as Borrower.
(6) Other investments aggregating not In excess of Five Hundred Thousand Dollars ($500,000)
at any time.
(j) Permitted Liens means:
(1) The Lien created by this Agreement.
(2) Liens for fees, taxes, levies, imposts, duties or other governmental charges of any kind
which are not yet delinquent or which are being contested in good faith by appropriate proceedings
which suspend the collection thereof (provided that such appropriate proceedings do not
involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral
or Collateral which in the aggregate is material to Borrower and that Borrower has adequately
bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of
(3) Liens existing as of the date of this Third Amended and Restated Note and identified in
the Schedule of Exceptions to the Amended Credit Agreement.
(4) carriers, warehousemens, mechanics, materialmens, repairmens or other similar Liens
arising in the ordinary course of business and which are not delinquent or remain payable without
penalty or which are being contested in good faith and by appropriate proceedings (provided
that such appropriate proceedings do not involve any substantial danger of the sale,
forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is
material to Borrower and that Borrower has adequately bonded such Lien or reserves sufficient to
discharge such Lien have been provided on the books of Borrower).
(5) Liens upon any equipment or other personal property acquired by Borrower after the date
hereof to secure (i) the purchase price of such equipment or other personal property, or (ii)
lease obligations or indebtedness incurred solely for the purpose of financing the acquisition of
such equipment or other personal property; provided that such Liens are confined solely to the
equipment or other personal property so acquired and the proceeds thereof and the amount secured
does not exceed the acquisition price thereof.
(6) licenses of Intellectual Property entered into in the ordinary course of business
(whether as licensor or licensee);
(7) bankers liens, rights of setoff and similar Liens incurred on deposits made in the
ordinary course of business and Liens in favor of financial institutions arising in connection
with Borrowers deposit accounts or securities accounts held at such institutions to secure
customary fees and charges;
(8) any judgment, attachment or similar Lien not resulting in an Event of Default hereunder;
(9) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described above but any extension, renewal or replacement Lien must be limited to the
property encumbered by the existing Lien and the principal amount of the indebtedness may not
(k) Person means and includes any individual, any partnership, any corporation, any
business trust, any joint stock company, any limited liability company, any unincorporated
association or any other entity and any domestic or foreign national, state or local government,
any political subdivision thereof, and any department, agency, authority or bureau of any of the
(l) Subsidiary means any corporation or other entity of which a majority of the
outstanding equity securities entitled to vote for the election of directors or other governing
body (otherwise than as the result of a default) is owned by Borrower directly or indirectly
(m) Warrant means the warrant to acquire 4,000,000 shares of Common Stock of
Borrower, dated as of March 27, 2007, issued to Lender.
2. Payments of Principal, Interest, Etc. The principal amount of the Loan evidenced
hereby, together with any accrued and unpaid interest, and any and all unpaid costs, fees and
expenses accrued, shall be due and payable on March 31, 2012 (the Maturity Date).
3. Interest. All amounts outstanding from time to time hereunder shall bear interest
until such amounts are paid, at the Interest Rate (as defined in the Amended Credit Agreement).
Following any Event of Default (including before or after any judgment is entered) and after the
Maturity Date, the principal balance outstanding hereunder, together with all such other amounts
outstanding hereunder, shall bear interest at a rate per annum equal to the Default Rate (as
defined in the Amended Credit Agreement).
4. Prepayments. Borrower may prepay in cash, at any time or from time to time, all or
any portion of the amounts due hereunder, without penalty or premium; provided, however, that any
prepayment (whether voluntary or involuntary) shall be applied first to accrued and unpaid
interest and second to outstanding principal and other sums due hereunder.
5. Security Interest.
(a) Grant of Security Interest. Borrower grants to Lender a valid and continuing
security interest in all presently existing and hereafter acquired or arising Collateral in order
to secure prompt, full and complete payment of the amounts due hereunder and in order to secure
prompt, full and complete performance by Borrower of each of its covenants and duties under the
Amended Credit Agreement and this Third Amended and Restated Note. The Collateral shall
mean and include all right, title, interest, claims and demands of Borrower in and to all personal
property of Borrower located within the United States, including without limitation, all of the
(1) All goods (and embedded computer programs and supporting information included within the
definition of goods under the Code) and equipment now owned or hereafter acquired, including,
without limitation, all laboratory equipment, computer equipment, office equipment, machinery,
fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located.
(2) All inventory now owned or hereafter acquired, including, without limitation, all
merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and
finished products including such inventory as is temporarily out of Borrowers custody or
possession or in transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrowers books relating to any of the
(3) All contract rights and general intangibles (except to the extent included within the
definition of Intellectual Property), now owned or hereafter acquired, including, without
limitation, goodwill, license agreements, franchise agreements, blueprints, drawings, purchase
orders, customer lists, route lists, infringements, claims, software, computer programs, computer
disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payment
intangibles, commercial tort claims, payments of insurance and rights to payment of any kind.
(4) All now existing and hereafter arising accounts, contract rights, royalties, license
rights, license fees and all other forms of obligations owing to Borrower arising out of the sale
or lease of goods, the licensing of technology or the rendering of services
by Borrower (subject, in each case, to the contractual rights of third parties to require
funds received by Borrower to be expended in a particular manner), whether or not earned by
performance, and any and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower and Borrowers books relating to any of the
(5) All documents, cash, deposit accounts, letters of credit (whether or not the letter of
credit is evidenced by a writing), certificates of deposit, instruments, promissory notes, chattel
paper (whether tangible or electronic) and investment property, including, without limitation, all
securities, whether certificated or uncertificated, security entitlements, securities accounts,
commodity contracts and commodity accounts, and all financial assets held in any securities
account or otherwise, wherever located, now owned or hereafter acquired and Borrowers books
relating to the foregoing.
(6) Any and all claims, rights and interests in any of the above and all substitutions for,
additions and accessions to and proceeds thereof, including, without limitation, insurance,
condemnation, requisition or similar payments and proceeds of the sale or licensing of
Intellectual Property to the extent such proceeds no longer constitute Intellectual Property.
(7) Notwithstanding the foregoing, the Collateral shall not include any Intellectual
Property; provided, however, that the Collateral shall include all accounts receivables,
accounts, and general intangibles that consist of rights to payment and proceeds from the sale,
licensing or disposition of all or any part, or rights in, the foregoing (the Rights to
Payment). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy
Court) holds that a security interest in the underlying Intellectual Property is necessary to have
a security interest in the Rights to Payment, then the Collateral shall automatically, and
effective as of the date hereof, include the Intellectual Property to the extent necessary to
permit perfection of Lenders security interest in the Rights to Payment.
(b) After-Acquired Property. If Borrower shall at any time acquire a commercial tort
claim, as defined in the Code, Borrower shall immediately notify Lender in writing signed by
Borrower of the brief details thereof and grant to Lender in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Third Amended and Restated Note,
with such writing to be in form and substance satisfactory to Lender.
(c) Duration of Security Interest. Lenders security interest in the Collateral shall
continue until the payment in full and the satisfaction of all obligations of Borrower under this
Third Amended and Restated Note, and the termination of any commitment to fund any Loan, whereupon
such security interest shall terminate. Lender shall, at Borrowers sole cost and expense, execute
such further documents and take such further actions as may be reasonably necessary to make
effective the release contemplated by this Section 5(c). including duly executing and delivering
termination statements for filing in all relevant jurisdictions under the Code.
(d) Location and Possession of Collateral. The Collateral is and shall remain in the
possession of Borrower at its locations at 4400 Biscayne Blvd., 15th Floor, Miami,
Florida, Hialeah, Florida, and Jupiter, Florida. Borrower shall remain in full possession,
enjoyment and control of the Collateral (except only as may be otherwise required by Lender for
perfection of its security interest therein) and so long as no Event of Default has occurred
and is continuing, shall be entitled to manage, operate and use the same and each part thereof
with the rights and franchises appertaining thereto; provided that the possession,
enjoyment, control and use of the Collateral shall at all time be subject to the observance and
performance of the terms of this Agreement.
(e) Delivery of Additional Documentation Required. Borrower shall from time to time
execute and deliver to Lender, at the request of Lender, all financing statements and other
documents Lender may reasonably request, in form satisfactory to Lender, to perfect and continue
Lenders perfected security interests in the Collateral and in order to consummate fully all of
the transactions contemplated under this Third Amended and Restated Note and the Amended Credit
(f) Right to Inspect. Lender (through any of its officers, employees, or agents)
shall have the right, upon reasonable prior notice, from time to time during Borrowers usual
business hours, to inspect Borrowers books and records and to make copies thereof and to inspect,
test, and appraise the Collateral in order to verify Borrowers financial condition or the amount,
condition of, or any other matter relating to, the Collateral.
(g) Protection of Intellectual Property. Borrower shall use its commercially
reasonable efforts to (i) protect, defend and maintain the validity and enforceability of its
material Intellectual Property and promptly advise Lender in writing of material infringements
which become known to Borrower, and (ii) not allow any Intellectual Property material to
Borrowers business to be abandoned, forfeited or dedicated to the public except in the ordinary
course of Borrowers business.
6. Subordination. Lender agrees that the Liens granted to it hereunder in equipment
and other personal property acquired by Borrower after the date hereof (Third Party
Equipment) which secure Indebtedness constituting Permitted Indebtedness under Subclause (4)
of the definition of Permitted Indebtedness shall be subordinate to the Liens of existing or
future lenders providing equipment financing and equipment lessors for Third Party Equipment or if
such lenders prohibit the granting of Liens to other lenders, Lender shall release its Lien on
such Third Party Equipment and the proceeds thereof; provided that such Liens are confined solely
to the equipment so financed and the proceeds thereof and are Permitted Liens. Upon the expiration
of the Liens of such other lenders or the termination of their prohibition of Liens in favor of
other Lenders, the Third Party Equipment shall automatically become part of the Collateral, and
Lender is authorized at that time to amend any filed financing statement(s) to reflect that
change. Notwithstanding the foregoing, the obligations hereunder shall not be subordinate in right
of payment to any obligations to other lenders, equipment lenders or equipment lessors, and
Lenders rights and remedies hereunder shall not in any way be subordinate to the rights and
remedies of any such lenders or equipment lessors.
7. Affirmative Covenants. Borrower covenants that, so long as any amounts are due and
payable hereunder to Lender or any commitment to make any Loan still exists, Borrower shall:
(a) Maintain its corporate existence and its good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the failure
to so qualify could reasonably be expected to have a material adverse effect on the financial
condition, operations or business of Borrower. Borrower shall maintain in force all licenses,
approvals and agreements, the loss of which could reasonably be expected to have a material
adverse effect on its financial condition, operations or business.
(b) Comply with all statutes, laws, ordinances and government rules and regulations to which
it is subject, noncompliance with which could reasonably be expected to materially adversely
affect the financial condition, operations or business of Borrower.
(c) Deliver to Lender, promptly as they are available and in any event: (i) at the time of
filing of Borrowers Form 10-K with the Securities and Exchange Commission after the end of each
fiscal year of Borrower, the financial statements of Borrower filed with such Form 10-K; and (ii)
at the time of filing of Borrowers Form 10-Q with the Securities and Exchange Commission after
the end of each of the first three fiscal quarters of Borrower, the financial statements of
Borrower filed with such Form 10-Q. If, at any time during which any Obligations are outstanding
under this Third Amended and Restated Note, Borrower ceases to be subject to the reporting
obligations of the Securities and Exchange Act of 1934, as amended, Borrower shall deliver to
Lender (w) as soon as available, but in any event within forty five (45) days after the end of
each month, a company prepared balance sheet, income statement and cash flow statement covering
Borrowers operations during such period, certified by Borrowers president, treasurer or chief
financial officer (each, a Responsible Officer); (x) as soon as available, but in any event
within one hundred twenty (120) days after the end of Borrowers fiscal year, audited financial
statements of Borrower prepared in accordance with GAAP, together with an unqualified opinion on
such financial statements of a nationally recognized or other independent public accounting firm
reasonably acceptable to Lender; (y) as soon as available, but in any event within ninety (90)
days after the end of Borrowers fiscal year or the date of Borrowers board of directors
adoption, Borrowers operating budget and plan for the next fiscal year; and (z) such other
financial information as Lender may reasonably request from time to time. In addition, Borrower
shall deliver to Lender (i) promptly upon becoming available, copies of all statements, reports
and notices sent or made available generally by Borrower to its security holders; (ii) immediately
upon receipt of notice thereof, a report of any material legal actions pending or threatened
against Borrower or the commencement of any action, proceeding or governmental investigation
involving Borrower is commenced that is reasonably expected to result in damages or costs to
Borrower of One Hundred Fifty Thousand Dollars ($150,000) or more; and (iii) such other financial
information as Lender may reasonably request from time to time.
(d) Each time financial statements are furnished pursuant to Section 7(c) above,
deliver to Lender an Officers Certificate signed by a Responsible Officer in form satisfactory to
Lender, certifying such financial statements, Borrowers compliance with the terms of this Third
Amended and Restated Note and that no default or Event of Default has occurred under this Third
Amended and Restated Note.
(e) As soon as possible, and in any event within five (5) days after the discovery of a
default or an Event of Default, provide Lender with an Officers Certificate setting forth the
facts relating to or giving rise to such default or Event of Default and the action which Borrower
proposes to take with respect thereto.
(f) Make due and timely payment or deposit of all federal, state, and local taxes,
assessments, or contributions required of it by law or imposed upon any property belonging to it,
and will execute and deliver to Lender, on demand, appropriate certificates attesting to the
payment or deposit thereof; and Borrower will make timely payment or deposit of all tax payments
and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request,
furnish Lender with proof satisfactory to Lender indicating that Borrower has made such payments
or deposits; provided that Borrower need not make any payment if the amount or validity of such
payment is contested in good faith by appropriate proceedings which suspend the collection thereof
(provided that such proceedings do not involve any substantial danger of the sale, forfeiture or
loss of any material item of Collateral or Collateral which in the aggregate is material to
Borrower and that Borrower has adequately bonded such amounts or reserves sufficient to discharge
such amounts have been provided on the books of Borrower).
(g) Keep and maintain all items of equipment and other similar types of personal property
that form any significant portion or portions of the Collateral in good operating condition and
repair and shall make all necessary replacements thereof and renewals thereto so that the value
and operating efficiency thereof shall at all times be maintained and preserved. Borrower shall
not permit any such material item of Collateral to become a fixture to real estate or an accession
to other personal property, without the prior written consent of Lender. Borrower shall not permit
any such material item of Collateral to be operated or maintained in violation of any applicable
law, statute, rule or regulation. With respect to items of leased equipment (to the extent Lender
has any security interest in any residual Borrowers interest in such equipment under the lease),
Borrower shall keep, maintain, repair, replace and operate such leased equipment in accordance
with the terms of the applicable lease.
(h) Keep its business and the Collateral insured for risks and in amounts, and as Lender may
reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are
satisfactory to Lender. All property policies shall have a lenders loss payable endorsement
showing Lender as an additional loss payee and all liability policies shall show Lender as an
additional insured and all policies shall provide that the insurer must give Lender at least
thirty (30) days notice before canceling its policy. At Lenders request, Borrower shall deliver
certified copies of policies and evidence of all premium payments. Subject to the rights of the
Senior Obligations, proceeds payable under any policy shall, at Lenders option, be payable to
Lender on account of the Obligations. Notwithstanding the foregoing, so long as no Event of
Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of
any casualty policy, toward the replacement or repair of destroyed or damaged property; provided
that (i) any such replaced or repaired property (a) shall be of equal or like value as the
replaced or repaired Collateral and (b) shall be deemed Collateral in which Lender has been
granted a security interest and (ii) subject to the rights of the Senior Obligations, after the
occurrence and during the continuation of an Event of Default all proceeds payable under such
casualty policy shall, at the option of Lender, be payable to Lender, on account of the
Indebtedness evidenced by this Third Amended and Restated Note and the Amended Credit Agreement.
If Borrower fails to obtain insurance as required under Section 7(h) or to pay any amount or
furnish any required proof of payment to third persons and Lender, Lender may make all or part of
such payment or obtain such insurance policies required in Section 7(h), and take any action under
the policies Lender deems prudent. On or prior to the
Initial Closing Date and prior to each policy renewal, Borrower shall furnish to Lender
certificates of insurance or other evidence satisfactory to Lender that insurance complying with
all of the above requirements is in effect.
(i) Assuming the proper filing of one or more financing statement(s) identifying the
Collateral with the proper state and/or local authorities, the security interests in the
Collateral granted to Lender pursuant to this Agreement (i) constitute and will continue to
constitute first priority security interests (except to the extent any Permitted Liens may have a
superior priority to Lenders Lien under this Agreement) and (ii) are and will continue to be
superior and prior to the rights of all other creditors of Borrower (except to the extent of such
(j) At any time and from time to time Borrower shall execute and deliver such further
instruments and take such further action as may reasonably be requested by Lender to make
effective the purposes of this Agreement, including without limitation, the continued perfection
and priority of Lenders security interest in the Collateral.
8. Negative Covenants. Borrower covenants that, so long as any amounts are due and
payable hereunder to Lender or any commitment to make any Loan still exists, without the prior
approval of Lender, Borrower shall not:
(a) Change its name, jurisdiction of incorporation, or principal place of business without
thirty (30) days prior written notice to Lender.
(b) Subject to its rights under Section 8(d), remove any items of Collateral from the
Collateral location(s) specified in this Third Amended and Restated Note.
(c) Create, incur, assume or suffer to exist any Lien of any kind upon any of Borrowers
property, whether now owned or hereafter acquired, except Permitted Liens.
(d) Convey, sell, lease or otherwise dispose of all or any part of the Collateral to any
Person (collectively, a Transfer), except for: (i) Transfers of inventory in the
ordinary course of business; or (ii) Transfers of worn-out or obsolete equipment.
(e) Except as set forth in the Schedule of Exceptions to the Amended Credit Agreement
delivered by Borrower as of the date hereof and pursuant to obligations under its Certificate of
Incorporation, (i) pay any dividends or make any distributions on its Equity Securities; (ii)
purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Securities
(other than repurchases pursuant to the terms of employee stock purchase plans, employee
restricted stock agreements or similar arrangements in an aggregate amount not to exceed One
Hundred Thousand Dollars ($100,000)); (iii) return any capital to any holder of its Equity
Securities as such; (iv) make any distribution of assets, Equity Securities, obligations or
securities to any holder of its Equity Securities as such; or (v) set apart any sum for any such
purpose; provided, however, Borrower may pay dividends payable solely in common
(f) Engage in or permit any of its Subsidiaries to engage in any business other than the
businesses currently engaged in by Borrower or reasonably related thereto.
(g) Enter into any contractual obligation with any Affiliate or engage in any other
transaction with any Affiliate except upon terms at least as favorable to Borrower as an
arms-length transaction with persons who are not Affiliates of Borrower.
(h) (i) Prepay, redeem, purchase, defease or otherwise satisfy in any manner prior to the
scheduled repayment thereof any Indebtedness for borrowed money (other than amounts due or
permitted to be prepaid under this Agreement) or lease obligations, (ii) amend, modify or
otherwise change the terms of any Indebtedness for borrowed money or lease obligations so as to
accelerate the scheduled repayment thereof or (iii) repay any notes to officers, directors or
(i) Create, incur, assume or permit to exist any Indebtedness except Permitted Indebtedness.
(j) Make any investment except for Permitted Investments.
(k) Become an investment company or a company controlled by an investment company under
the Investment Company Act of 1940 or undertake as one of its important activities extending
credit to purchase or carry margin stock, or use the proceeds of any Loan for that purpose; fail
to meet the minimum funding requirements of the Employment Retirement Income Security Act of 1974,
and its regulations, as amended from time to time (ERISA), permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor
Standards Act or violate any other law or regulation, if the violation could reasonably be
expected to have a material adverse effect on Borrowers business or operations or could
reasonably be expected to cause a material adverse change, or permit any of its Subsidiaries to do
(l) Create, incur, assume or suffer to exist any Lien of any kind upon any Intellectual
Property or Transfer any Intellectual Property, whether now owned or hereafter acquired, other
than licenses of Intellectual Property entered into in the ordinary course of business.
9. Lenders Rights and Remedies.
(a) Rights and Remedies. Upon the occurrence of an Event of Default, while such Event
of Default is continuing (provided that an Event of Default shall be continuing at all times after
any cure period therefor expires), Lender shall not have any further obligation to advance money
or extend credit to or for the benefit of Borrower. In addition, upon the occurrence and during
the continuance of an Event of Default, the entire unpaid principal sum hereunder, plus any and
all interest accrued thereon, plus all other sums due and payable to Lender hereunder shall, at
the option of Lender, become due and payable immediately without presentment, demand, notice of
nonpayment, protest, notice of protest, or other notice of dishonor, all of which are hereby
expressly waived by Borrower. Lender shall have the rights, options, duties and remedies of a
secured party as permitted by law and, in addition to and without limitation of the foregoing,
Lender may, at its election, without notice of election and without demand, do anyone or more of
the following, all of which are authorized by Borrower:
(1) Make such payments and do such acts as Lender considers necessary or reasonable to
protect Lenders security interest in the Collateral. Borrower agrees to assemble the Collateral
if Lender so requires and to make the Collateral available to Lender as Lender may designate.
Borrower authorizes Lender and its designees and agents to enter the premises where the Collateral
is located, to take and maintain possession of the Collateral, or any part of it, and to pay,
purchase, contest, or compromise any Lien which in Lenders determination appears or is claimed to
be prior or superior to its security interest and to pay all expenses incurred in connection
therewith. With respect to any of Borrowers owned premises, Borrower hereby grants Lender a
license to enter into possession of such premises and to occupy the same, without charge, for up
to one hundred twenty (120) days in order to exercise any of Lenders rights or remedies provided
herein, at law, in equity, or otherwise;
(2) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for
sale, and sell (in the manner provided for herein) the Collateral. Lender and its agents and any
purchasers at or after foreclosure are hereby granted a nonexclusive, irrevocable, perpetual,
fully paid, royalty-free license or other right, solely pursuant to the provisions of this Section
9, to use, without charge, Borrowers Intellectual Property, including without limitation, labels,
patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any property of a similar nature, now or at any time hereafter
owned or acquired by Borrower or in which Borrower now or at any time hereafter has any rights;
provided that such license shall only be exercisable in connection with the disposition of
Collateral upon Lenders exercise of its remedies hereunder;
(3) Sell the Collateral at either a public or private sale, or both, by way of one or more
contracts or transactions, for cash or on terms, in such manner and at such places (including
Borrowers premises) as Lender determines are commercially reasonable; and
(4) Credit bid and purchase all or any portion of the Collateral at any public sale.
Any deficiency that exists after disposition of the Collateral as provided above will be paid
immediately by Borrower.
(b) Set Off Right. Lender may set off and apply to the obligations hereunder any and
all indebtedness at any time owing to or for the credit or the account of Borrower or any other
assets of Borrower in Lenders possession or control.
(c) Effect of Sale. Upon the occurrence of an Event of Default and during the
continuation thereof, to the extent permitted by law, Borrower covenants that it will not at any
time insist upon or plead, or in any manner whatsoever claim or take any benefit or advantage of,
any stay or extension law now or at any time hereafter in force, nor claim, take nor insist upon
any benefit or advantage of or from any law now or hereafter in force providing for the valuation
or appraisement of the Collateral or any part thereof prior to any sale or sales thereof to be
made pursuant to any provision herein contained, or to the decree, judgment or order of any court
of competent jurisdiction; nor, after such sale or sales, claim or exercise any right under any
statute now or hereafter made or enacted by any state or otherwise to redeem the property so sold
or any part thereof, and, to the full extent legally permitted, except as to rights
expressly provided herein, hereby expressly waives for itself and on behalf of each and every
Person, except decree or judgment creditors of Borrower, acquiring any interest in or title to the
Collateral or any part thereof subsequent to the date of this Agreement, all benefit and advantage
of any such law or laws, and covenants that it will not invoke or utilize any such law or laws or
otherwise hinder, delay or impede the execution of any power herein granted and delegated to
Lender, but will suffer and permit the execution of every such power as though no such power, law
or laws had been made or enacted. Any sale, whether under any power of sale hereby given or by
virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and
demand whatsoever, either at law or in equity, of Borrower in and to the property sold, and shall
be a perpetual bar, both at law and in equity, against Borrower, its successors and assigns, and
against any and all Persons claiming the property sold or any part thereof under, by or through
Borrower, its successors or assigns.
(d) Power of Attorney in Respect of the Collateral. Borrower does hereby irrevocably
appoint Lender (which appointment is coupled with an interest), the true and lawful attorney in
fact of Borrower with full power of substitution, for it and in its name to file any notices of
security interests, financing statements and continuations and amendments thereof pursuant to the
Code or federal law, as may be necessary to perfect, or to continue the perfection of Lenders
security interests in the Collateral. Borrower does hereby irrevocably appoint Lender (which
appointment is coupled with an interest) on the occurrence of an Event of Default and during the
continuation thereof, the true and lawful attorney in fact of Borrower with full power of
substitution, for it and in its name: (a) to ask, demand, collect, receive, receipt for, sue for,
compound and give acquittance for any and all rents, issues, profits, avails, distributions,
income, payment draws and other sums in which a security interest is granted under Section
5 with full power to settle, adjust or compromise any claim thereunder as fully as if Lender
were Borrower itself; (b) to receive payment of and to endorse the name of Borrower to any items
of Collateral (including checks, drafts and other orders for the payment of money) that come into
Lenders possession or under Lenders control; (c) to make all demands, consents and waivers, or
take any other action with respect to, the Collateral; (d) in Lenders discretion to file any
claim or take any other action or proceedings, either in its own name or in the name of Borrower
or otherwise, which Lender may reasonably deem necessary or appropriate to protect and preserve
the right, title and interest of Lender in and to the Collateral; (e) endorse Borrowers name on
any checks or other forms of payment or security; (f) sign Borrowers name on any invoice or bill
of lading for any account or drafts against account debtors; (g) make, settle, and adjust all
claims under Borrowers insurance policies; (h) settle and adjust disputes and claims about the
accounts directly with account debtors, for amounts and on terms Lender determines reasonable; (i)
transfer the Collateral into the name of Lender or a third party as the Code permits; and G) to
otherwise act with respect thereto as though Lender were the outright owner of the Collateral.
10. Remedies Cumulative, Etc.
(a) No right or remedy conferred upon or reserved to Lender hereunder or now or hereafter
existing at law or in equity is intended to be exclusive of any other right or remedy, and each
and every such right or remedy shall be cumulative and concurrent, and in addition to every other
such right or remedy, and may be pursued singly, concurrently,
successively or otherwise, at the sole discretion of Lender, and shall not be exhausted by
anyone exercise thereof but may be exercised as often as occasion therefor shall occur.
(b) Borrower hereby waives presentment, demand, notice of nonpayment, protest, notice of
protest, notice of dishonor and any and all other notices in connection with any default in the
payment of, or any enforcement of the payment of, all amounts due under this Third Amended and
Restated Note. To the extent permitted by law, Borrower waives the right to any stay of execution
and the benefit of all exemption laws now or hereafter in effect.
(c) Costs and Expenses. Following the occurrence of any Event of Default, Borrower
shall pay upon demand all costs and expenses (including reasonable attorneys fees and expenses)
incurred by Lender in the exercise of any of its rights, remedies or powers under this Third
Amended and Restated Note and any amount thereof not paid promptly following demand therefor shall
be added to the principal sum hereunder and shall bear interest at the Default Rate from the date
of such demand until paid in full.
11. Indemnification and Waiver. Whether or not the transactions contemplated hereby
shall be consummated:
(a) General Indemnity. Borrower agrees upon demand to payor reimburse Lender for all
liabilities, obligations and out-of-pocket expenses, including Lenders expenses and reasonable
fees and expenses of counsel for Lender from time to time arising in connection with the
enforcement or collection of sums due under this Third Amended and Restated Note or the Amended
Credit Agreement, and in connection with any amendment or modification of such documents or any
work-out in connection with such documents. Borrower shall indemnify, reimburse and hold Lender,
and each of its respective successors, assigns, agents, attorneys, officers, directors,
shareholders, servants, agents and employees (each an Indemnified Person) harmless from
and against all liabilities, losses, damages, actions, suits, demands, claims of any kind and
nature (including claims relating to environmental discharge, cleanup or compliance), all costs
and expenses whatsoever to the extent they may be incurred or suffered by such Indemnified Person
in connection therewith (including reasonable attorneys fees and expenses), fines, penalties (and
other charges of any applicable governmental authority), licensing fees relating to any item of
Collateral, damage to or loss of use of property (including consequential or special damages to
third parties or damages to Borrowers property), or bodily injury to or death of any person
(including any agent or employee of Borrower) (each, a Claim), directly or indirectly relating
to or arising out of the use of the proceeds of the Loans or otherwise, the falsity of any
representation or warranty of Borrower or Borrowers failure to comply with the terms of this
Third Amended and Restated Note or the Amended Credit Agreement. The foregoing indemnity shall
cover, without limitation, (i) any Claim in connection with a design or other defect (latent or
patent) in any item of equipment or product included in the Collateral, (ii) any Claim for
infringement of any patent, copyright, trademark or other intellectual property right, (iii) any
Claim resulting from the presence on or under or the escape, seepage, leakage, spillage,
discharge, emission or release of any Hazardous Substances on the premises owned, occupied or
leased by Borrower, including any Claims asserted or arising under any environmental law, or (iv)
any Claim for negligence or strict or absolute liability in tort; provided,
however, Borrower shall not indemnify Lender for any liability incurred by Lender as a
direct and sole result of Lenders gross negligence or willful misconduct. Such indemnities shall
continue in full force and effect, notwithstanding the expiration or termination of this Third
Amended and Restated Note. Upon Lenders written demand, Borrower shall assume and diligently
conduct, at its sole cost and expense, the entire defense of Lender, each of its partners,
and each of their respective, agents, employees, directors, officers, shareholders,
successors and assigns against any indemnified Claim described in this Section. Borrower shall not
settle or compromise any Claim against or involving Lender without first obtaining Lenders
written consent thereto, which consent shall not be unreasonably withheld.
12. Notices. All notices required to be given to any of the parties hereunder shall
be in writing and shall be deemed to have been sufficiently given for all purposes when presented
personally to such party or sent by hand delivery, facsimile, courier service guaranteeing next
business day delivery, or overnight U.S. express mail, return receipt requested, to such party at
its address set forth in the Amended Credit Agreement with copies to the parties designated to
receive copies in the Amended Credit Agreement. Such notice shall be deemed to be given when
received. Any notice of any change in such address shall also be given in the manner set forth
above. Whenever the giving of notice is required, the giving of such notice may be waived in
writing by the party entitled to receive such notice.
13. Severability. In the event that any provision of this Third Amended and Restated
Note is held to be invalid, illegal or unenforceable in any respect or to any extent, such
provision shall nevertheless remain valid, legal and enforceable in all such other respects and to
such extent as may be permissible. Any such invalidity, illegality or unenforceability shall not
affect any other provisions of this Third Amended and Restated Note, but this Third Amended and
Restated Note shall be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.
14. Successors and Assigns. This Third Amended and Restated Note inures to the
benefit of Lender and binds Borrower, and their respective successors and assigns, and the words
Borrower and Lender whenever occurring herein shall be deemed and construed to include such
respective successors and assigns; provided, however, neither this Third Amended
and Restated Note nor any rights hereunder may be assigned by Borrower without Lenders prior
written consent, which consent may be granted or withheld in Lenders sole discretion.
15. Governing Law. This Third Amended and Restated Note shall be governed by and
construed in accordance with the laws of the State of Florida. Borrower agrees that any action or
proceeding against it to enforce the Third Amended and Restated Note may be commenced in state or
federal court in any county in the State of Florida, and Borrower waives personal service of
process and agrees that a summons and complaint commencing an action or proceeding in any such
court shall be properly served and shall confer personal jurisdiction if served by registered or
certified mail in accordance with the notice provisions set forth herein.
16. Entire Agreement; Construction; Amendments and Waivers.
(a) Entire Agreement. This Third Amended and Restated Note and each of the related
loan documents dated as of the date hereof, taken together, constitute and contain the entire
agreement between Borrower and Lender with respect to the subject matter hereof and supersede any
and all prior agreements, negotiations, correspondence, understandings and communications between
the parties, whether written or oral, with respect to such subject matter. Borrower acknowledges
that it is not relying on any representation or agreement made by Lender or any employee, attorney
or agent thereof, other than the specific agreements set forth in this Third Amended and Restated
Note and the related loan documents.
(b) Construction. This Third Amended and Restated Note is the result of negotiations
between and has been reviewed by each of Borrower and Lender as of the date hereof and their
respective counsel; accordingly, this Third Amended and Restated Note shall be deemed to be the
product of the parties hereto, and no ambiguity shall be construed in favor of or against Borrower
or Lender. Borrower and Lender agree that they intend the literal words of this Third Amended and
Restated Note and the related loan documents and that no parol evidence shall be necessary or
appropriate to establish Borrowers or Lenders actual intentions.
(c) Amendments and Waivers. Any and all amendments, modifications, discharges or
waivers of, or consents to any departures from any provision of this Third Amended and Restated
Note or of any of the related loan documents shall not be effective without the written consent of
Lender and Borrower. Any waiver or consent with respect to any provision of such loan documents
shall be effective only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on Borrower in any case shall entitle Borrower to any other or
further notice or demand in similar or other circumstances. Any amendment, modification, waiver or
consent affected in accordance with this Section shall be binding upon Lender and on Borrower.
17. Reliance by Lender. All covenants, agreements, representations and warranties
made herein by Borrower shall be deemed to be material to and to have been relied upon by Lender,
notwithstanding any investigation by Lender.
18. No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Third
Amended and Restated Note or any of the related loan documents shall be payable without notice or
demand and shall be payable in United States Dollars without set-off or reduction of any manner
19. Survival. All covenants, representations and warranties made in this Agreement
shall continue in full force and effect so long as any obligations hereunder or commitment to fund
remain outstanding. The obligations of Borrower to indemnify Lender with respect to the expenses,
damages, losses, costs and liabilities described in Section 11 shall survive until all applicable
statute of limitations periods with respect to actions that may be brought against Lender have
20. WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES HERETO HEREBY IRREVOCABL Y WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, Borrower has duly executed this Third Amended and Restated Note as of the
day and year first above written.
||OPKO HEALTH, INC.