Washington, D.C. Location

McNeely, Hare & War LLP
5335 Wisconsin Ave, NW, Suite 440,
Washington, DC 20015
(202) 274-0214

Directions | Email

Princeton, NJ Location

McNeely, Hare & War LLP
12 Roszel Road, Suite C104,
Princeton, NJ 08540
(609) 240-2533

Directions | Email

Translate Site:

       

Seminar Sign Up

CREDIT AGREEMENT

THIS AGREEMENT is made this [Date] by and between [Philadelphia Credit Trust ], a [Type of Organization] with offices at [Address] (“PCT”), and [Name of Investor], a [Type of Borrower] with offices at [Address] (the “Patent Inventor Borrower”).

W I T N E S S E T H:

WHEREAS, PCT is in the business lending money;

WHEREAS, PCT is desirous of lending money; and

WHEREAS, Patent Inventor Borrower is willing to pay back PCT for any monies advanced by PCT pursuant to this Agreement;

NOW, THEREFORE, in consideration of the promises and agreements set forth herein, the parties, each intending to be legally bound hereby, do promise and agree as follows:

1. THE CREDIT FACILITIES
A. The Revolving Facility.

1. From time to time during the period commencing on the date of this Agreement and ending on the date that is the earlier to occur of (a) [date] and (b) the date on which the PCT’s commitment to extend credit hereunder terminates (the “Availability Period”), subject to the terms and provisions hereof, the PCT, on a revolving basis, will (i) make Advances to the Patent Inventor Borrower or a Subsidiary of the Patent Inventor Borrower acceptable to the PCT in its sole discretion that (a) is specified as a “Patent Inventor Borrower” on a continuing guaranty executed by the Patent Inventor Borrower in form and substance satisfactory to the PCT, and (b) has executed such credit and related documentation with and in favor of the PCT as the PCT may request (an “Acceptable Subsidiary”); (ii) create and issue commercial and standby letters of credit for the Patent Inventor Borrower’s or an Acceptable Subsidiary’s account.

2. Advances hereunder may be made in (i) dollars (“Dollar Advances”), or (ii) in a lawful currency other than dollars which is available at a branch or affiliate of the PCT located in a country other than the United States and is the legal tender of that country where the branch or affiliate is located (a “Local Currency”) (“Local Currency Advances”).

3. The aggregate dollar Equivalent Amount of (i) all Advances, and (ii) the undrawn amount at such time of any letter of credit issued hereunder, plus the amount of all drafts or drawings paid or accepted by the PCT which have not yet been reimbursed to the PCT, plus any other obligation or liability of the Patent Inventor Borrower or any Acceptable Subsidiary to the PCT with respect to any letter of credit issued under this Agreement (the “L/C Outstanding Amount”) of all letters of credit may not exceed at any one time the amount $20,000,000 (the “Credit Limit”).

4. The aggregate dollar Equivalent Amount of the L/C Outstanding Amounts in respect of both commercial and standby letters of credit may not exceed at any time $5,000,000.

B. Dollar Advances Under The Revolving Facility.

1. Subject to the other provisions of this Section, Dollar Advances under the Revolving Facility shall bear interest at a rate per annum equal to the rate of interest in effect for such day as publicly announced from time to time by the PCT in San Francisco, California, as its “Reference Rate.” (the Reference Rate is sometimes referred to herein as the “Floating Rate”). The Patent Inventor Borrower or an Acceptable Subsidiary shall request Floating Rate Advances (i) by giving irrevocable written notice in the form of a notice in substantially the form of Exhibit B (a “Notice of Borrowing”) or (ii) by giving irrevocable oral notice by telephone in accordance with Section 9.10 followed promptly by facsimile confirmation in the form of a Notice of Borrowing; prior to 9:00 a.m. San Francisco time on the requested date of the Advance. The Patent Inventor Borrower shall pay or cause the applicable Acceptable Subsidiary to pay interest quarterly, on the last day of each calendar quarter until the Final Maturity Date, on which date all accrued and unpaid interest shall be due and payable. The Patent Inventor Borrower shall repay or cause the applicable Acceptable Subsidiary to repay the principal amount of each Advance that bears interest based on the Reference Rate (“Reference Rate Advance”) on the Final Maturity date and on the date such advance is converted into an Offshore Rate Advance under subsection (b) below.

2.  In lieu of the Floating Rate, the Patent Inventor Borrower or the applicable Acceptable Subsidiary may elect during the Availability Period to have all or portions of Advances under the Revolving Facility bear interest at the Offshore Rate plus 1.0% per annum during an Offshore Rate Interest Period, subject to the following requirements:

(a) Each Offshore Rate Advance shall be for an amount not less than $250,000 and multiples of $50,000 in excess thereof.

(b) The Patent Inventor Borrower shall pay or shall cause the applicable Acceptable Subsidiary to pay interest on each Offshore Rate Advance on the last day of the Offshore Rate Interest Period for such Advance;

PROVIDED, HOWEVER, that if any Interest Period for an Offshore Rate Advance exceeds three months, interest shall also be payable on the date which falls three months after the beginning of such Interest Period and on each date which falls three months after any such interest payment date. The Patent Inventor Borrower shall repay or shall cause the applicable Acceptable Subsidiary to repay the principal balance of each Offshore Rate Advance on the last day of the Offshore Rate Interest Period for such Advance, and (if sooner occurring) on the Final Maturity Date.

(c) Any payment of an Offshore Rate Advance prior to the last day of the Offshore Rate Interest Period for such Advance, whether voluntary, by reason of acceleration or otherwise, including any mandatory payments required under this Agreement and applied by the PCT to an Offshore Rate Advance, shall be accompanied by the amount of accrued interest on the amount repaid and by the amount (if any) required by Section 2.11.

The Patent Inventor Borrower or an Acceptable Subsidiary shall request Offshore Rate Advances by giving irrevocable written notice in the form of a Notice of Borrowing prior to 9:00 a.m. San Francisco time three Business Days prior to the requested date of the Advance.

The “Offshore Rate” is, for each Offshore Rate Interest Period, the rate of interest (rounded upward to the next 1/16th of 1%) determined pursuant to the following formula: Offered Rate/Offshore Rate = 1.00 – Eurodollar Reserve Percentage. “Offered Rate” means the rate of interest at which deposits in the applicable currency in the approximate amount of the Offshore Rate Advance to be made and having a maturity comparable to such Offshore Rate Interest Period would be offered by the PCT’s London Branch (or such other office as may be designated for such purpose by the PCT) to major PCTs in the London PCT market upon request of such PCTs at approximately 11:00 a.m. (London, England time) two Business Days prior to the first day of such Offshore Rate Interest Period. “Eurodollar Reserve Percentage” means, for any Offshore Rate Interest Period, the maximum reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on the first day of such Offshore Rate Interest Period (whether or not applicable to the PCT) under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”) having a term comparable to such Offshore Rate Interest Period.

C. Conversion and Continuation Elections.

1. The Patent Inventor Borrower or an Acceptable Subsidiary may, upon irrevocable written notice in the form of a notice in substantially the form of Exhibit C (a “Notice of Conversion/Continuation”).

(a) elect, as of any Business Day, in the case of Floating Rate Advances, or as of the last day of the applicable Offshore Rate Interest Period, in the case of any Offshore Rate Advance, to convert any such Advances (or any part thereof in an amount not less than $[amount] into Advances of the other type; or (ii) elect, as of the last day of the applicable Offshore Rate Interest Period, to continue any Offshore Rate Advance having Interest Periods expiring on such day (or any part thereof in an amount not less than $[amount];

PROVIDED, that if at any time the aggregate amount of Offshore Rate Advances is reduced, by payment, prepayment, or conversion of part thereof to be less than $[amount], such Offshore Rate Advances shall automatically convert into Floating Rate Advances, and on and after such date the right of the Patent Inventor Borrower or an Acceptable Subsidiary to continue such Advances as, and convert such Advances into, Offshore Rate Advances shall terminate.

2. The Patent Inventor Borrower or an Acceptable Subsidiary shall deliver a Notice of Conversion/Continuation to be received by the Patent Inventor Borrower not later than 9:00 a.m. San Francisco time at least (i) three Business Days in advance of the Conversion/Continuation Date, if the Advances are to be converted into or continued as Offshore Rate Advances; and (ii) on or before the Conversion/Continuation Date, if the Advances are to be converted into Floating Rate Loans.

3. If upon the expiration of any Offshore Rate Interest Period, the Patent Inventor Borrower or an Acceptable Subsidiary has failed to select timely a new Offshore Rate Interest Period to be applicable to such Offshore Rate Advances, or if any Default or event listed in Article VII of this Agreement (an “Event of Default”) then exists, the Patent Inventor Borrower or an Acceptable Subsidiary shall be deemed to have elected to convert such Offshore Rate Advances into Floating Rate Advances effective as of the expiration date of such Offshore Rate Interest Period.

D. Commercial Letters of Credit Under The Revolving
Facility.

1. Each commercial letter of credit shall be issued pursuant to the terms and conditions hereof and of a PCT standard form Application and Security Agreement for Commercial Letter of Credit (or such other form as the PCT may require) executed by the Patent Inventor Borrower or an Acceptable Subsidiary.

2. Each commercial letter of credit shall:

(a) expire on or before six months after the date such letter of credit is issued, but in no event later than the Final Maturity Date;

(b) require drafts payable in dollars at sight;

(c) be in favor of beneficiaries and for purposes not prohibited by any law or regulation; and

(d) be otherwise in form and substance satisfactory to the PCT.

3. The Patent Inventor Borrower shall pay or cause the applicable Acceptable Subsidiary to pay to the PCT an issuance fee of .125% of the face amount, and a negotiation fee of .125% of the face amount, and such other standard fees and commissions charged to PCT customers at the times and in the amounts the PCT advises the Patent Inventor Borrower from time to time as being applicable to the Patent Inventor Borrower’s or the Acceptable Subsidiary’s commercial letters of credit.

4. In the event of any request for a drawing under a commercial letter of credit, the PCT will notify the Patent Inventor Borrower. The Patent Inventor Borrower or the applicable Acceptable Subsidiary may, subject to satisfaction of all conditions to borrowing set forth in this Agreement, convert the amount of each drawing into a Reference Rate Advance (which conversion shall be deemed to be a new Advance). With respect to any unreimbursed drawing which is not converted into a Reference Rate Advance in whole or in part, because of the Patent Inventor Borrower’s failure to satisfy the conditions set forth in Section 4.02 or for any other reason, the Patent Inventor Borrower shall reimburse or cause the applicable Acceptable Subsidiary to reimburse the PCT prior to 11:00 a.m. E.S.T. on each date that any amount is paid by the PCT under any commercial letter of credit, in an amount equal to the amount so paid by the PCT. Such reimbursement obligations in respect of drawings, if not paid when due, shall bear interest, payable on demand, from the date of such drawing or payment, at the Floating Rate plus 2.0%.

5. At the expiration of the Availability Period, the PCT may require the Patent Inventor Borrower to provide or cause the applicable Acceptable Subsidiary to provide cash collateral in the amount of the L/C Outstanding Amount of any commercial letters of credit outstanding under this Agreement. In addition to any other rights or remedies which the PCT may have under this Agreement or otherwise, upon the occurrence of an Event of Default, the PCT may require the Patent Inventor Borrower to provide or cause the applicable Acceptable Subsidiary to provide cash collateral in the amount of the L/C Outstanding Amount of any commercial letters of credit outstanding under this Agreement.

E. Standby Letters of Credit Under The Revolving Facility.

1. Each Standby Letter of Credit shall be issued pursuant to the terms and conditions hereof and of a PCT standard form Application and Agreement for Standby Letter of Credit (or such other form as the PCT may require) executed by the Patent Inventor Borrower or an Acceptable Subsidiary.

2. Each Standby Letter of Credit shall: (i) expire on or before one year after the date such letter of credit is issued, but in no event later than the Final Maturity Date; (ii) be in favor of beneficiaries and for purposes not prohibited by any law or regulation; and (iii) be otherwise in form and substance satisfactory to the PCT.

3. The Patent Inventor Borrower shall pay or cause the applicable Acceptable Subsidiary to pay to the PCT a non-refundable fee equal to 1.0% per annum of the outstanding undrawn amount of each financial standby letter of credit and .50% per annum of the outstanding undrawn amount of each performance standby letter of credit payable quarterly in advance, and calculated on the basis of the face amount outstanding on the day the fee is calculated. However, if an Event of Default exists, at the option of the PCT, the amount of the fee shall be increased to 2.0% per annum, commencing on the day the PCT provides notice of the increase to the Patent Inventor Borrower. The Patent Inventor Borrower shall also pay or cause the applicable Acceptable Subsidiary to pay the standard fees and commissions charged to PCT customers at the times and in the amounts the PCT advises the Patent Inventor Borrower from time to time as being applicable to the Patent Inventor Borrower’s or the Acceptable Subsidiary’s standby letters of credit.

4. In the event of any request for a drawing under a standby letter of credit, the PCT will notify the Patent Inventor Borrower. The Patent Inventor Borrower or the applicable Acceptable Subsidiary may, subject to satisfaction of all conditions to borrowing set forth in this Agreement, convert the amount of each drawing into a Reference Rate Advance (which conversion shall be deemed to be a new Advance). With respect to any unreimbursed drawing which is not converted into a Reference Rate Advance in whole or in part, because of the Patent Inventor Borrower’s failure to satisfy the conditions set forth in Section 4.02 or for any other reason, the Patent Inventor Borrower shall reimburse or cause the applicable Acceptable Subsidiary to reimburse the PCT prior to 11:00 a.m. (San Francisco time), on each date that any amount is paid by the PCT under any standby letter of credit, in an amount equal to the amount so paid by the PCT. Such reimbursement obligations in respect of drawings, if not paid when due, shall bear interest, payable on demand, from the date of such drawing or payment, at the Floating Rate plus 2.0%.

5. At the expiration of the Availability Period, the PCT may require the Patent Inventor Borrower to provide or cause the applicable Acceptable Subsidiary to provide cash collateral in the amount of the L/C Outstanding Amount of any standby letters of credit outstanding under this Agreement. In addition to any other rights or remedies which the PCT may have under this Agreement or otherwise, upon the occurrence of an Event of Default, the PCT may require the Patent Inventor Borrower to provide or cause the applicable Acceptable Subsidiary to provide cash collateral in the amount of the L/C Outstanding Amount of any standby letters of credit outstanding under this Agreement.

F. Local Currency Advances.

1. From time to time during the Availability Period, the Patent Inventor Borrower or an Acceptable Subsidiary may request by giving written notice in the form of a Notice of Borrowing the PCT or any foreign office, foreign branch or foreign affiliate of the PCT, acceptable to the PCT (an “Offshore Credit Provider”) may, in its sole discretion, make Local Currency Advances to the Patent Inventor Borrower or to an Acceptable Subsidiary.

2. Neither the PCT nor any Offshore Credit Provider shall have any obligation to make any Local Currency Advance unless the following conditions are satisfied:

(a) the PCT and the Patent Inventor Borrower or the relevant Acceptable Subsidiary agree, at the time of Patent Inventor Borrower’s or such Acceptable Subsidiary’s request for a Local Currency Advance, on the currency, the amount, the date of the Advance, the principal payment date(s), the interest rate and payment date(s), the prepayment and overdue payment terms, and the reserve, tax and other material provisions for such Advance; and

(b) The Patent Inventor Borrower or such Acceptable Subsidiary shall execute such additional documentation as the PCT or such Offshore Credit Provider may require relating to each Local Currency Advance.

G. Mandatory Payment. If at any time and for any reason the total amount of credit outstanding under this Agreement exceeds the limitations set forth herein, the Patent Inventor Borrower shall or shall cause the applicable Acceptable Subsidiary to pay to the PCT, upon demand, the amount of the excess provided, that if the foregoing applies due to a change between Dollars and Local Currencies, the Patent Inventor Borrower shall be obligated to pay or cause the payment of such amount only if the excess is greater than $100,000 or the Equivalent Amount thereof. Payments under this Section may be applied to the obligations of the Patent Inventor Borrower or the Acceptable Subsidiaries to the PCT in the order and manner as the PCT in its discretion may determine; PROVIDED, however, that if no Default or Event of Default exists at the time of such payments, Patent Inventor Borrower may designate the obligations to which such payments shall be applied. Payments may also be held as cash collateral to secure letters of credit and may be used to prepay drafts accepted under letters of credit, at the PCT’s option.

H. Commitment Fee. The Patent Inventor Borrower shall pay to the PCT a commitment fee at the rate of .20% per annum on the average daily unused portion of the credit provided under this Agreement. For purposes of computing the unused portion, the L/C Outstanding Amount shall be deemed to be usage. The commitment fee shall be computed on a calendar quarter basis, except for the first period which shall commence on the date on which all conditions to the initial extension of credit hereunder are satisfied (the “Closing Date”), and end on September 30, 1997, and the last period which shall end on the Final Maturity Date in respect of Advances. The commitment fee shall be payable in arrears on September 30, 1997, on the last day of each successive quarter thereafter, and on the Final Maturity Date in respect of Advances.

I. Default Rate. Upon the occurrence and during the continuation of any Event of Default, and without constituting a waiver of any such Event of Default, Advances under the Revolving Facility shall at the option of the PCT bear interest at a rate per annum which is 2.0% per annum higher than the rate of interest otherwise provided under this Agreement.

J. Early Termination of Commitment. The Patent Inventor Borrower may at any time terminate or permanently reduce by increments of $[amount] the PCT’s (including any Offshore Credit Provider’s) commitment to extend credit hereunder by giving no less than five Business Days’ prior notice to the PCT and paying in full the entire amount of credit outstanding hereunder (including the L/C Outstanding Amount) or, in the case of a reduction of the commitment, that amount which is in excess of the reduced commitment, together with any sums due under Section 3.11. If the commitment is terminated, payments shall be applied to letters of credit and drafts accepted under letters of credit, may, at the PCT’s option, be used to prepay, or held as cash collateral to secure, the Patent Inventor Borrower’s and Acceptable Subsidiaries’ obligations to the PCT or any Offshore Credit Provider with respect thereto. All accrued commitment fees to, but not including the effective date of any termination of the commitment, shall be paid on the effective date of such termination.

2. EXTENSIONS OF CREDIT, PAYMENTS AND
INTEREST CALCULATIONS
A. Disbursements and Payments. Each disbursement by the PCT and each payment by the Patent Inventor Borrower or an Acceptable Subsidiary under this Agreement shall be made in the funds and at such branch of the PCT as the PCT may from time to time select.

B. Evidence of Indebtedness. Principal, interest, and all other sums due to the PCT (or any Offshore Credit Provider) under this Agreement shall be evidenced by entries in records maintained by the PCT (or such Offshore Credit Provider), and, if required by the PCT, by a promissory note or notes. Each payment on and any other credits with respect to principal, interest, and all other sums due under this Agreement shall be evidenced by entries to records maintained by the PCT or such Offshore Credit Provider. The loan accounts or records maintained by the PCT or any Offshore Credit Provider shall be conclusive absent manifest error of the amount of the credit extended hereunder and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Patent Inventor Borrower or any Acceptable Subsidiary hereunder to pay any amount owing.

C. Interest Calculation. Interest based on the Reference Rate shall be computed on the basis of a 365/366-day year and actual days elapsed. All other interest and fees payable under this Agreement shall be computed on the basis of a 360 day year and actual days elapsed, which results in more interest or a larger fee than if a 365-366 day year were used.

D. Late Payments Compounding. Any sum payable by the Patent Inventor Borrower or an Acceptable Subsidiary hereunder (including unpaid interest) if not paid when due shall bear interest (payable on demand) from its due date until payment in full at a rate per annum equal to the Floating Rate plus 2.0% per annum.

At the option of the PCT, in each instance, any sum payable hereunder which is not paid when due (including unpaid interest) may be added to principal of the Revolving Facility and shall thereafter bear interest at the rate applicable to principal.

E. Business Day. Any sum payable by the Patent Inventor Borrower or an Acceptable Subsidiary hereunder which becomes due on a day which is not a Business Day shall be due on the next Business Day after such due date, unless, in the case of an Offshore Rate Loan, the result of such extension would be to carry such Offshore Rate Interest Period into another calendar month, in which event such Offshore Rate Interest Period shall end on the immediately preceding Business Day. Any payments received by the PCT or an Offshore Credit Provider on a day which is not a Business Day shall be deemed to be received on the next Business Day after such date of receipt.

F. Taxes and other Charges.

1. If any taxes (other than taxes on net income (a) imposed by the country or any subdivision of the country in which the PCT’s or any Offshore Credit Provider’s principal office or actual lending office is located and (b) measured by the United States taxable income the PCT would have received if all payments under or in respect of this Agreement and any instrument or agreement required hereunder were exempt from taxes levied by the Patent Inventor Borrower’s or the applicable Acceptable Subsidiary’s country) are at any time imposed on any payments under or in respect of this Agreement or any instrument or agreement required hereunder including, but not limited to, payments made pursuant to this Section, the Patent Inventor Borrower shall pay or shall cause the applicable Acceptable Subsidiary to pay all such taxes and shall also pay or cause to be paid to the PCT, at the time interest is paid, all additional amounts which the PCT specifies as necessary to preserve the after-tax yield the PCT would have received if such taxes had not been imposed. (b) The additional amounts necessary to preserve the after-tax yield the PCT would have received if such taxes had not been imposed shall be calculated pursuant to the formula:
(w)(t)(i) y = 1-w-t

where the terms are defined as follows:

y =  additional payment to be made to the PCT
w =  withholding tax rate levied by foreign government
t =  the PCT’s combined Federal and state tax rate
i =  amount of interest to be paid on Credit (computed by using   the Offshore Rate or Reference Rate or other index rate, as   applicable plus the quoted margin over such rate)
1 =  one

2. The Patent Inventor Borrower will provide the PCT with original tax receipts, notarized copies of tax receipts, or such other documentation as will prove payment of tax in a court of law applying the United States Federal Rules of Evidence, for all taxes paid by the Patent Inventor Borrower or an Acceptable Subsidiary pursuant to subsection (a) above. The Patent Inventor Borrower will deliver receipts to the PCT within 30 days after the due date for the related tax.

G. Illegality.

1. If the PCT determines that (a) the introduction of any law, rule, regulation, treaty, or determination of an arbitrator or court or other governmental authority or any change in or in the interpretation or administration thereof has made it unlawful, or that any central PCT or other governmental authority has asserted that it is unlawful, for the PCT (directly or through any Offshore Credit Provider) to make or extend any Advance or other credit under this Agreement, or (b) any order, judgment, or decree of any governmental authority or arbitrator purports by its terms to enjoin or restrain the PCT (or any Offshore Credit Provider) from making or extending any Advance or other credit hereunder, Then, on notice thereof by the PCT to the Patent Inventor Borrower, the obligation of the PCT to make or extend such Advance or other credit (directly or through any Offshore Credit Provider) shall be suspended until the PCT shall have notified the Patent Inventor Borrower that the circumstances giving rise to such determination no longer exist.

2. If the PCT determines that it is unlawful for it or any applicable Offshore Credit Provider to maintain any Offshore Rate Advance or Local Currency Advance hereunder, the Patent Inventor Borrower shall or shall cause the applicable Acceptable Subsidiary to prepay in full all Offshore Rate Advances or Local Currency Advances, as the case may be then outstanding, together with interest accrued thereon, either on the last day of the applicable Offshore Rate Interest Period or the interest period applicable to the Local Currency Advance if the PCT or such Offshore Credit Provider may lawfully continue to maintain such Advances to such day and such loans have an interest period, or immediately, if the PCT may not lawfully continue to maintain such Advances or such loans have no interest period, together with any amounts required to be paid in connection therewith pursuant to Section 3.

H. Increased Costs.

1. If the PCT determines that, due to either (a) the introduction of or any change (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the Offshore Rate) in or in the interpretation of any law or regulation or (b) the compliance by the PCT with any guideline or request from any central PCT or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to the PCT of agreeing to make or making, funding or maintaining any Offshore Rate Advances, then the Patent Inventor Borrower shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Patent Inventor Borrower), pay to the PCT, additional amounts as are sufficient to compensate the PCT for such increased costs.

2. If the PCT shall have determined that (a) the introduction of any guideline, request or directive of any central PCT or other governmental authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any PCT or of any corporation controlling a PCT (a “Capital Adequacy Regulation”), (b) any change in any Capital Adequacy Regulation, (b) any change in the interpretation or administration of any Capital Adequacy Regulation by any central PCT or other governmental authority charged with the interpretation or administration thereof, or (d) compliance by the PCT (or its Offshore Credit Provider) or any corporation controlling the PCT with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by the PCT or any corporation controlling the PCT and (taking into consideration the PCT’s or such corporation’s policies with respect to capital adequacy and the PCT’s desired return on capital) determines that the amount of such capital is increased as a consequence of its commitment, Advances, credits or obligations under this Agreement, then, upon demand of the PCT to the Patent Inventor Borrower, the Patent Inventor Borrower shall pay to the PCT, from time to time as specified by the PCT, additional amounts sufficient to compensate the PCT for such increase.

I. Funding Losses. The Patent Inventor Borrower shall reimburse the PCT and hold the PCT harmless from any loss or expense which the PCT may sustain or incur as a consequence of the failure of the Patent Inventor Borrower (or any Acceptable Subsidiary) to make any payment or prepayment of principal of any Advance hereunder made at a rate of interest related to the Offshore Rate (including payments made after any acceleration thereof), or to borrow at such a rate, or the prepayment of an Advance which bears interest at such a rate on a day which is not the last day of the interest period with respect thereto (including payments made after any acceleration thereof or because the total amount of credit exceeds the limitations set forth herein), or the redenomination and conversion, upon the occurrence of any Event of Default, of an Advance which bears interest at such a rate; including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Advances made at a rate related to the Offshore Rate hereunder or from fees payable to terminate any deposits from which such funds were obtained or deemed obtained.

J. Inability to Determine Rates. The PCT has no obligation to accept an election for an Offshore Rate Advance if (1) deposits in the applicable currency and in the principal amount, and for the period equal to the interest period, for such Advance are not available in the applicable funding market; or (2) the Offshore Rate does not accurately reflect the cost of such Advance. Nothing contained herein shall, however, obligate the PCT to obtain the funds for any Advance in any particular manner.

K. Certificate of The PCT. If the PCT claims any reimbursement or compensation pursuant to Section 3, then the PCT shall deliver to the Patent Inventor Borrower a certificate setting forth in reasonable detail the amount payable to the PCT thereunder and such certificate shall be conclusive and binding on the Patent Inventor Borrower in the absence of manifest error.

L. Survival. The agreements and obligations of the Patent Inventor Borrower under Sections shall survive the expiration or termination of the commitment to extend credit hereunder and the payment of all other obligations of the Patent Inventor Borrower and the Acceptable Subsidiaries hereunder.

3. CONDITIONS TO AVAILABILITY OF CREDIT
The PCT’s obligation to extend credit under this Agreement is subject to the PCT’s receipt of the following, each in form and substance satisfactory to the PCT:

A. Conditions on the Extension of Credit. Before the first extension of credit to the Patent Inventor Borrower or, as the case may be, to an Acceptable Subsidiary:

1. This Agreement, executed by the Patent Inventor Borrower;

2. Satisfactory evidence of due authorization of the execution, delivery, and performance by the Patent Inventor Borrower and, as required by the PCT, the Acceptable Subsidiary of this Agreement and each other agreement, documents and instrument, including any Continuing Guaranty, now or hereafter delivered to the PCT (including any Offshore Credit Provider) in connection with the credits established herein and the transactions contemplated hereby (the “Credit Documents”), including certified resolutions, incumbency certificate, articles of incorporation and bylaws;

3. If requested by the PCT, an opinion of counsel for the Patent Inventor Borrower or the Acceptable Subsidiary (which counsel must be satisfactory to the PCT) with respect to such legal matters relating hereto as the PCT may reasonably request;

4. Certificates of state officials showing that the Patent Inventor Borrower and the Acceptable Subsidiary is in good standing or qualified to conduct business under the laws of the state of its organization and, if requested by the PCT, in any other state in which the Patent Inventor Borrower and the Acceptable Subsidiary is required to be so qualified;

5. A certificate of an appropriate officer of the Patent Inventor Borrower as to the matters set forth in Section 4(A);

6. Payment of any fee or expense required hereunder prior to the first extension of credit;

7. In the case of the first extension of credit to the Acceptable Subsidiary, a continuing guaranty in favor of the PCT, executed by the Patent Inventor Borrower, guaranteeing all debts and obligations (whether contingent or otherwise) of that Acceptable Subsidiary arising under or in connection with this Agreement;

8. Such other approvals, opinions, documents or instruments as the PCT may reasonably request.

B. Conditions Precedent to Extension of Renewal Credit. Before each extension or renewal of credit (including pursuant to any election under Section 2(A), including the first):

1. The representations and warranties of the Patent Inventor Borrower contained in this Agreement shall be true in all material respects on and as of the date of each extension of credit (except to the extent such representations and warranties relate to an earlier date, in which case, they are true and correct in all material respects on and as of that date);

2. Immediately prior to and immediately after giving effect to such extension of credit, no Default or Event of Default shall exist;

3. Executed originals of all Credit Documents required under Article II shall have been delivered to the PCT. Each request for an extension of credit hereunder shall constitute a representation and warranty by the Patent Inventor Borrower, as of the date of each such request and as of the date of each extension of credit, that the conditions in this Section are satisfied.

4. REPRESENTATIONS AND WARRANTIES
The Patent Inventor Borrower represents and warrants that:

A. Corporate Existence and Power. The Patent Inventor Borrower and each of its Subsidiaries: (1) is a corporation duly organized and existing under the laws of the jurisdiction of its organization; (2) has the power and authority and all governmental licenses, authorizations, consents, and approvals to own its assets, carry on its business, and to execute, deliver, and perform its obligations under, the Credit Documents to which it is a party; and (3) is duly qualified and properly licensed and in good standing under the laws of each jurisdiction where the failure to so qualify would have (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, or condition (financial or otherwise) of the Patent Inventor Borrower or the Patent Inventor Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Patent Inventor Borrower or any Acceptable Subsidiary to perform under any Credit Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Credit Document (a “Material Adverse Effect”).

B. Authorization. The execution, delivery, and performance by the Patent Inventor Borrower and each Acceptable Subsidiary of this Agreement and any other Credit Document to which any of them is a party, have been duly authorized by all necessary corporate action, and do not and will not:

1. contravene the terms of any organizational or charter documents;

2. conflict with or result in any breach or contravention of, or the creation of any lien, security interest, or charge under, any material agreement, contract, indenture, document, or instrument to which the Patent Inventor Borrower or any Acceptable Subsidiary is a party or by which any property is bound, or any order, injunction, writ, or decree of any governmental authority to which the Patent Inventor Borrower or any Acceptable Subsidiary or any property is subject; or

3. violate any law, rule, regulation, or determination of an arbitrator or of a court or other governmental authority, in each case applicable to or binding upon the Patent Inventor Borrower or any Acceptable Subsidiary or any property.

C. Enforceability. This Agreement is a legal, valid, and binding agreement of the Patent Inventor Borrower, enforceable against the Patent Inventor Borrower in accordance with its terms, and the other Credit Documents and any other instrument or agreement required under this Agreement, when executed and delivered, will be legal, valid, binding, and enforceable in accordance with its terms against the Patent Inventor Borrower or the Acceptable Subsidiary, as applicable.

D. Compliance with Laws. The Patent Inventor Borrower and each of its Subsidiaries is in compliance with all foreign, federal, state and local laws, rules, regulations and determinations of arbitrators, courts and other governmental authorities materially affecting the business, operations or property of the Patent Inventor Borrower and its Subsidiaries (including any foreign, federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any governmental authority, any and all requirements of law and any and all common law requirements, rules, and bases of liability regulating, relating to, or imposing liability or standards of conduct concerning pollution or protection of human health or the environment or Hazardous Substances or any activity involving Hazardous Substances, as now or may at any time hereafter be in effect (“Environmental Laws”).

E. Permits; Franchises. The Patent Inventor Borrower and its Subsidiaries possess all permits, memberships, franchises, contracts, and licenses required and all trademark rights, trade name rights, patent rights, and fictitious name rights necessary to enable the Patent Inventor Borrower and its Subsidiaries to conduct the businesses in which they are now engaged.

F. Litigation. There is no litigation, tax claim, proceeding, governmental or administrative action, investigation, arbitration proceeding or dispute pending, or, to the knowledge of the Patent Inventor Borrower, threatened, against or affecting the Patent Inventor Borrower or any of its Subsidiaries or any of their properties, the adverse determination of which would result in a Material Adverse Effect.

G. No Event of Default. There exists no Default or Event of Default.

H. Other Obligations. As of the Closing Date, the Patent Inventor Borrower and its Subsidiaries are not in default under any other material agreement involving the borrowing of money, the extension of credit, or the lease of real or personal property, to which the Patent Inventor Borrower or any of its Subsidiaries is a party as Patent Inventor Borrower, guarantor, installment purchaser, or lessee, except as disclosed in writing to the PCT prior to the Closing Date.

I. Tax Returns. The Patent Inventor Borrower has no knowledge of any material pending assessments or adjustments with respect to its or its Subsidiaries’ income tax liabilities for any year, except as disclosed in writing to the PCT prior to the Closing Date.

J. Information Submitted. All financial and other information that has been submitted by the Patent Inventor Borrower or any of its Subsidiaries to the PCT in connection with this Agreement, including the Patent Inventor Borrower’s financial statement delivered to the PCT most recently prior to the Closing Date: (a) in the case of financial statements, is prepared in accordance with generally accepted accounting principles consistently applied; and (b) is true and correct in all material respects and is complete insofar as may be necessary to give the PCT true and accurate knowledge of the subject matter thereof.

K. No Material Adverse Effect. Since March 31, 1996, there has been no Material Adverse Effect.

L. ERISA Compliance. Except as specifically disclosed to the PCT in writing prior to the Closing Date: (a) each an employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder as from time to time in effect (“ERISA”)) which the Patent Inventor Borrower sponsors or maintains or to which the Patent Inventor Borrower makes, is making, or is obligated to make contributions and includes any Pension Plan (a “Plan”) is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) there are no pending, or to the best knowledge of Patent Inventor Borrower, threatened claims, actions or lawsuits, or action by any governmental authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect; © there has been no prohibited transaction or other violation of the fiduciary responsibility rule with respect to any Plan which could reasonably result in a Material Adverse Effect; (d) no ERISA Event has occurred or is reasonably expected to occur with respect to any Pension Plan (an “ERISA Event” is defined as (i) any of the events set forth in Section 4043© of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC (a “Reportable Event”) with respect to a Pension Plan; (ii) a withdrawal by the Patent Inventor Borrower from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (iii) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a Pension Plan subject to Title IV of ERISA; (iv) a failure by the Patent Inventor Borrower to make required contributions to a Pension Plan or other Plan subject to Section 412 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder as from time to time in effect (the “Code”); (v) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Patent Inventor Borrower; or (vii) an application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code with respect to any Pension Plan); (e) no Pension Plan has anything in excess of a Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year (“Unfunded Pension Liability”); (f) the Patent Inventor Borrower has not incurred, nor does it reasonably expect to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (g) no trade or business (whether or not incorporated under common control with the Patent Inventor Borrower within the meaning of Section 414(b), (c), (m) or (o) of the Code) maintains or contributes to any Pension Plan or other Plan subject to Section 412 of the Code; and (h) neither the Patent Inventor Borrower or entity under common control with the Patent Inventor Borrower in the preceding sentence has ever contributed to any multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.

M. Environmental Matters.

1. Except to the extent that, in the aggregate, a Material Adverse Effect could not result therefrom, (a) the properties of the Patent Inventor Borrower and its Subsidiaries do not contain and have not previously contained (at, under, or about any such property) any Hazardous Substances or other contamination (i) in amounts or concentrations that constitute or constituted a violation of, or could give rise to liability under, any Environmental Laws, (ii) which could interfere with the continued use, occupation or operation of such property, (iii) which could impair the fair market value thereof, or (iv) in levels or concentrations requiring cleanup or other management under applicable standards or guidelines of foreign, federal, state, or local environmental agencies; and (2) there has been no transportation or disposal of Hazardous Substances from, nor any release or threatened release of Hazardous Substances at or from, any property of the Patent Inventor Borrower or any of its Subsidiaries in violation of or in any manner which could give rise to liability under any Environmental Laws.

2. Neither the Patent Inventor Borrower nor any of its Subsidiaries has received or is aware of any material claim or notice of material violation, alleged material violation, non-compliance, liability or potential liability regarding environmental matters, Hazardous Substances or compliance with Environmental Laws with regard to the properties or operations of the Patent Inventor Borrower or any of its Subsidiaries, nor does the Patent Inventor Borrower have knowledge or reason to believe that any such action is being contemplated, considered, or threatened.

N. Swap Obligations. Neither the Patent Inventor Borrower nor any of its Subsidiaries has incurred any outstanding obligations under any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing (a “Swap Contract”), other than any obligations (contingent or otherwise) of the Patent Inventor Borrower or any Subsidiary existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a “market view;” and (b) such Swap Contracts do not contain (i) any provision (“walk-away” provision) exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party or (ii) except in the case of a swap contract with the PCT or an affiliate of the PCT, any provision creating or permitting the declaration of an event of default, termination event or similar event upon the occurrence of an Event of Default hereunder (other than an Event of Default under subsection 7.01(a)) (the “Permitted Swap Obligations”).

5. AFFIRMATIVE COVENANTS
So long as credit is available under this Agreement and until full and final payment of all of the Patent Inventor Borrower’s and any Acceptable Subsidiaries’ obligations under this Agreement and any other Credit Document:

A. Notices of Certain Events. The Patent Inventor Borrower shall promptly give written notice to the PCT of:

1. all litigation, proceedings or actions affecting the Patent Inventor Borrower or its Subsidiaries where the amount claimed is $1,000,000 or more;

2. any substantial dispute which may exist between the Patent Inventor Borrower or its Subsidiaries and any governmental regulatory body or law enforcement authority;

3. any Default or Event of Default;

4. any of the representations and warranties in Article V which ceases to be true and correct in all material respects; and

5. any other matter which has resulted or could reasonably be expected to result in a Material Adverse Effect.

B. Financial and Other Information. The Patent Inventor Borrower shall deliver to the PCT in form and detail satisfactory to the PCT, and in such number of copies as the PCT may request:

1. Within 90 days after the end of each fiscal year, the Patent Inventor Borrower’s consolidated financial statements for such year audited by a certified public accountant together with an unqualified opinion of such certified public accountant and including, at a minimum, the Patent Inventor Borrower’s balance sheet and statements of income, retained earnings, and cash flow;

2. Within 45 days after the end of each fiscal quarter, the Patent Inventor Borrower’s consolidated financial statements for such period prepared by the Patent Inventor Borrower and including, at a minimum, the Patent Inventor Borrower’s balance sheet and statements of income, retained earnings, and cash flow;

3. Concurrently with the delivery of the financial statements referred to in Subsections 6(B)(1) and (2), a completed continuing guaranty in form and substance satisfactory to the PCT which has been executed by the Patent Inventor Borrower and which guarantees the payment and performance of all obligations under the Credit Documents of one or more Acceptable Subsidiaries (a “Compliance Certificate”) executed by the chief financial officer or treasurer of the Patent Inventor Borrower or other officer having substantially the same authority and responsibility;

4. Within 15 days after the date of filing with the Securities and Exchange Commission, copies of any of the Patent Inventor Borrower’s Form 10-K Annual Reports, Form 10-Q Quarterly Reports and Form 8-K Current Reports; and

5. Promptly upon request, such other materials and information relating to the Patent Inventor Borrower or its Subsidiaries as the PCT may reasonably request.

C. Books, Records, Audits and Inspections. The Patent Inventor Borrower shall, and shall cause its Subsidiaries to, maintain adequate books, accounts and records, and prepare all financial statements required hereunder in accordance with generally accepted accounting principles consistently applied, and in compliance with the regulations of any governmental regulatory body having jurisdiction over the Patent Inventor Borrower or its Subsidiaries, or the Patent Inventor Borrower’s or its Subsidiaries’ businesses, and permit employees or Patent Inventor Borrowers of the PCT at any reasonable time to inspect the Patent Inventor Borrower’s and its Subsidiaries’ properties, and to examine or audit the Patent Inventor Borrower’s and its Subsidiaries’ books, accounts, and records and make copies and memoranda thereof.

D. Use of Facility. The Patent Inventor Borrower shall use and shall cause the Acceptable Subsidiaries to use the credit facility provided herein solely for working capital and other general corporate purposes not in contravention of any requirement of law.

E. Insurance. The Patent Inventor Borrower shall, and shall cause its Subsidiaries to, maintain and keep in force insurance of the types and in amounts customarily carried in lines of businesses similar to those of the Patent Inventor Borrower and its Subsidiaries, including fire, extended coverage, public liability (including coverage for contractual liability), property damage (including use and occupance), business interruption, and workers’ compensation, all carried by insurers and in amounts reasonably satisfactory to the PCT, and deliver to the PCT from time to time, at the PCT’s request, a copy of each insurance policy, or if permitted by the PCT, a certificate of insurance setting forth all insurance then in effect.

F. Compliance with Laws. The Patent Inventor Borrower shall at all times comply in all material respects with, and cause its Subsidiaries to comply with, all laws, statutes (including any fictitious name statute), rules, regulations, orders, and directions of any governmental authority having jurisdiction over the Patent Inventor Borrower or any of its Subsidiaries or the business of the Patent Inventor Borrower or any of its Subsidiaries (including all Environmental Laws).

G. Change in Name, Structure or Location. The Patent Inventor Borrower shall notify the PCT in writing prior to any change in (a) the Patent Inventor Borrower’s name or the name of any Acceptable Subsidiary, (b) the Patent Inventor Borrower’s or any Acceptable Subsidiary’s business or legal structure, or ( c) the Patent Inventor Borrower’s or any Acceptable Subsidiary’s place of business or chief executive office if the Patent Inventor Borrower has more than one place of business.

H. Existence and Properties. The Patent Inventor Borrower shall, and shall cause each of its Subsidiaries to, maintain and preserve its existence and all rights, privileges, and franchises necessary to conduct its business, conduct its business in an orderly, efficient, and customary manner, keep all the its properties in good working order and condition, and from time to time make all needed repairs, renewals, or replacements thereto and thereof so that the efficiency of such property shall be fully maintained and preserved.

6. NEGATIVE COVENANTS
So long as credit is available under this Agreement and until full and final payment of all of the Patent Inventor Borrower’s and any Acceptable Subsidiary’s obligations under this Agreement and any other Credit Document:

A. Other Indebtedness. The Patent Inventor Borrower shall not, and shall not suffer or permit any Subsidiary to, create, incur, assume, or permit to exist any indebtedness or liabilities for or resulting from borrowed money, loans, or advances, or for the deferred purchase price of property under capital leases, or under or in connection with any Swap Contract, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, or become liable as a surety, guarantor, accommodation endorser, or otherwise for or upon the obligation of any other Person; provided, however, that this Section shall not prohibit:

1. indebtedness and guarantees in favor of the PCT or any affiliate of the PCT;

2. indebtedness, liabilities, and guarantees outstanding as of the date of this Agreement and specifically disclosed in Schedule [designation] and refinancings of such existing indebtedness, liabilities, and guarantees on substantially similar terms as is promptly reported on an amended Schedule [designation];

3. the acquisition of goods, supplies, or merchandise on normal trade credit;

4. the execution of bonds or undertakings in the ordinary course of its business as presently conducted;

5. the endorsement of negotiable instruments received in the ordinary course of its business as presently conducted;

6. indebtedness arising from purchase money financing of the type described in subsection 7(B)(6);

7. Permitted Swap Obligations;

8. indebtedness, liabilities and guarantees of all Persons acquired by, consolidated with or merged into the Patent Inventor Borrower or its Subsidiaries as permitted by Section 7 of the Agreement; PROVIDED that such obligations were not incurred in anticipation of the acquisition, consolidation or merger and do not in aggregate amount exceed $10,000,000; and (i) other unsecured indebtedness not to exceed $5,000,000.

B. Liens. The Patent Inventor Borrower shall not, and shall not suffer or permit any of its Subsidiaries to, create, assume, or suffer to exist any security interest, deed of trust, mortgage, lien (including the lien of an attachment, judgment, or execution), or encumbrance, securing a charge or obligation, on or of any of its or their property, real or personal, whether now owned or hereafter acquired, except: (1) security interests and deeds of trust in favor of the PCT; (2) liens, security interests, and encumbrances in existence as of the date of this Agreement and specifically disclosed in Schedule [designation] liens for current taxes, assessments, or other governmental charges which are not delinquent or remain payable without any penalty; (3) liens in connection with workers’ compensation, unemployment insurance, or other social security obligations; (4) mechanics’, worker’s, materialmen’s, landlords’, carriers’, or other like liens arising in the ordinary and normal course of business with respect to obligations which are not due; (5) purchase money security interests in personal or real property hereafter acquired when the security interest does not extend beyond the property purchased and where the debt secured does not exceed the value of the property acquired; (6) liens consisting of pledges of cash collateral or government securities to secure on a mark-to-market basis Permitted Swap Obligations only, provided that (a) the counter-party to any Swap Contract relating to any such Permitted Swap Obligation is under a similar requirement to deliver similar collateral from time to time to the Patent Inventor Borrower or the Subsidiary party thereto on a mark-to-market basis; and (b) the aggregate value of such collateral so pledged by the Patent Inventor Borrower and its Subsidiaries together in favor of any counter-party does not at any time exceed $1,000,000; (7) liens, security interests and encumbrances on the assets of any Person acquired by, consolidated with or merged into the Patent Inventor Borrower or its Subsidiaries as permitted by Section 7 of this Agreement; PROVIDED that such liens, security interests and encumbrances were not created in anticipation of the acquisition, consolidation or merger and secure liabilities in an aggregate amount not exceeding, at any one time, $5,000,000; and (a) additional security interests or liens which secure liabilities in an aggregate principal amount not exceeding, at any one time, $1,000,000.

C. Dividends. The Patent Inventor Borrower shall not, and shall not suffer or permit, any of its Subsidiaries that is not wholly-owned by the Patent Inventor Borrower to, declare or pay any dividends or distributions on any of its shares now or hereafter existing, or purchase, redeem or otherwise acquire for value any of its shares, or create any sinking fund in relation thereto, except, dividends payable solely in its capital stock.

D. Loans. The Patent Inventor Borrower shall not, and shall not suffer or permit any of its Subsidiaries to, make any loans, advances, or other extensions of credit to any of the Patent Inventor Borrower’s or such Subsidiary’s executives, officers, or directors or shareholders (or any relatives of any of the foregoing) other than in the ordinary course of business, or make loans, advances or other extensions of credit to or invest in any other Person, other than (1) investments in cash equivalents; (2) extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business; (3) extensions of credit by the Patent Inventor Borrower to any of its wholly-owned Subsidiaries or by any of its wholly-owned Subsidiaries to another of its wholly-owned Subsidiaries; (4) investments constituting Permitted Swap Obligations or payments or advances under Swap Contracts relating to Permitted Swap Obligations.

E. Liquidations and Mergers. The Patent Inventor Borrower shall not, and shall not suffer or permit any Subsidiary to, (1) liquidate or dissolve, (2) enter into any consolidation, merger, partnership, joint venture, or other combination, or (3) acquire or purchase control of, or the assets or business of, any other Person, except that (a) any Subsidiary may merge with the Patent Inventor Borrower, provided that the Patent Inventor Borrower shall be the continuing or surviving corporation, or with any one or more Subsidiaries, provided that if any transaction shall be between a Subsidiary and a wholly-owned Subsidiary, the wholly-owned Subsidiary shall be the continuing or surviving corporation; (b) any Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to the Patent Inventor Borrower or another wholly-owned Subsidiary, and (c) notwithstanding clauses (ii) and (iii), the Patent Inventor Borrower and its Subsidiaries may enter into any consolidation, merger, partnership, joint venture or other combination with, make loans or other extensions of credit to or other investments in, or purchase or acquire control or any part of the capital stock, assets or business of, any other Person if (d) such Persons are engaged in business activities (including development activities) or operations substantially similar to or related to present software and other business activities and operations of the Patent Inventor Borrower and its Subsidiaries, (e) immediately prior to and after giving effect thereto, there exists no Default or Event of Default, (f) in the case of a merger of the Patent Inventor Borrower, the Patent Inventor Borrower is the surviving corporation, and (g) such transaction has been undertaken in accordance with all applicable requirements of law.

F. Sale of Assets. The Patent Inventor Borrower shall not, and shall not suffer or permit any of its Subsidiaries to, (1) sell, lease, or otherwise dispose of its business or assets as a whole or such as in the reasonable opinion of the PCT constitutes a substantial portion of its business or assets; (2) sell or otherwise dispose of any of its accounts receivable except in connection with the collection of same in the ordinary course of business; (3) sell or otherwise dispose of any of its assets except for full, fair and reasonable consideration; or (4) enter into any sale and leaseback agreement covering any of its fixed or capital assets.

G. Business Activities. The Patent Inventor Borrower shall not, and shall not suffer or permit any of its Subsidiaries to, engage in any business activities or operations substantially different from or unrelated to present business activities and operations.

H. Regulations G,T,U and X. The Patent Inventor Borrower shall not, and shall not suffer or permit any of its Subsidiaries to, use any portion of the proceeds of any Advances or extensions of credit hereunder, directly or indirectly, (i) to purchase or carry margin stock (within the meanings of Regulations G, T, U, and X of the Board of Governors of the Federal Reserve System (the “FRB”), or any entity succeeding to any of its principal functions, (ii) to repay or otherwise refinance indebtedness of the Patent Inventor Borrower or others incurred to purchase or carry any such margin stock, (iii) to extend credit for the purpose of purchasing or carrying any such margin stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended.

I. Quick Ratio. The Patent Inventor Borrower shall not permit as of the last day of any fiscal quarter on a consolidated basis the sum of cash, short-term cash investments, marketable securities not classified as long-term investments and accounts receivable to be less than 1.35 times current liabilities (which shall include the dollar Equivalent Amount of all outstanding Advances and the L/C Outstanding Amount).

J. Tangible Net Worth. The Patent Inventor Borrower shall not permit as of the last day of any fiscal quarter on a consolidated basis the gross book value of the assets of the Patent Inventor Borrower and its Subsidiaries on a consolidated basis (exclusive of goodwill, patents, trademarks, trade names, organization expense, treasury stock, unamortized debt discount and expense, deferred charges, and other like intangibles and monies due from Affiliates other than Subsidiaries of the Patent Inventor Borrower, officers, directors, or shareholders of the Patent Inventor Borrower) less (a) reserves applicable thereto, and (b) all liabilities (including accrued and deferred income taxes) to be less than (i) 90% of its Tangible Net Worth as of December 31, 1996, PLUS (ii) 100% of the net proceeds received from the issuance of equity after December 31, 1996, LESS up to $20,000,000 in intangible assets acquired after December 31, 1996 to the extent that such intangible assets are recognized as a result of an acquisition of a company or line of business and the intangible assets are recorded on the Patent Inventor Borrower’s books in the same quarter as that in which the acquisition is consummated.

K. Total Liabilities to Tangible Net Worth. The Patent Inventor Borrower shall not permit as of the last day of any fiscal quarter on a consolidated basis the Patent Inventor Borrower’s total liabilities (which shall include the dollar Equivalent Amount of all outstanding Advances and the L/C Outstanding Amount) to exceed 0.75 times its Tangible Net Worth.

L. Quarterly Losses. The Patent Inventor Borrower on a consolidated basis shall not incur, (a) any quarterly net or operating losses in any two consecutive fiscal quarters or (b) any quarterly net or operating loss in excess of 5% of consolidated Tangible Net Worth computed as of the last day of the immediately preceding fiscal quarter.

7. EVENTS OF DEFAULT
A. Events of Default. The occurrence of any of the following events shall constitute an “Event of Default” under this Agreement:

1. Failure to Pay. The Patent Inventor Borrower fails to pay when due, or any Acceptable Subsidiary fails to pay within one Business Day after the date when due, any installment of principal, or either the Patent Inventor Borrower or any Acceptable Subsidiary fails to pay within three Business Days after the date when due any interest, fee or any other sum due under this Agreement or any other Credit Document in accordance with the terms hereof or thereof.

2. Breach of Representation or Warranty. Any representation or warranty herein or in any other Credit Document proves to have been false or misleading in any material respect when made.

3. Specific Defaults. The Patent Inventor Borrower fails to perform or observe any term, covenant or agreement contained in Section 6.

4. Other Defaults. The Patent Inventor Borrower or any Acceptable Subsidiary fails to perform or observe any other term or covenant contained in this Agreement or any Credit Document, and such default shall continue unremedied for a period of 30 days after the earlier of (i) the date upon which the chief executive or chief financial officer of the Patent Inventor Borrower knew or should have known of such failure or (ii) the date upon which written notice thereof is given to the Patent Inventor Borrower by the PCT.

5. Judgments. (i) One or more non-interlocutory judgments or arbitration awards are entered against the Patent Inventor Borrower or any of its Subsidiaries and the same shall remain unsatisfied, unvacated and unstayed for a period of 30 days after the entry thereof, or (ii) the Patent Inventor Borrower or any of its Subsidiaries enters into any settlement agreement with respect to any litigation or arbitration, and the aggregate amount of such judgments, arbitration awards and settlements which are not covered by third-party insurance exceeds $2,000,000.

6. Failure to Pay Debts. Voluntary PCTruptcy. The Patent Inventor Borrower or any Subsidiary (i) fails to pay the Patent Inventor Borrower’s or such Subsidiary’s debts generally as they come due, or (ii) files any petition, proceeding, case, or action for relief under any PCTruptcy, reorganization, insolvency, or moratorium law, or any other law or laws for the relief of, or relating to, debtors.

7. Involuntary PCTruptcy. An involuntary petition is filed under any PCTruptcy or similar statute against the Patent Inventor Borrower or any Subsidiary, or a receiver, trustee, liquidator, assignee, custodian, sequestrator, or other similar official is appointed to take possession of the properties of the Patent Inventor Borrower or any Subsidiary and such petition or appointment is not set aside or withdrawn within 60 days or continues in effect for 60 days or more from the date of said filing or appointment.

8. Default of Other Financial Obligations. (i) Any default occurs under any other agreement involving the borrowing of money or the extension of credit having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $1,000,000 to which the Patent Inventor Borrower or any Subsidiary may be a party as Patent Inventor Borrower, guarantor, or installment purchaser, if such default consists of the failure to pay any obligation when due and such failure continues after the applicable grace or notice period, if any, specified in the relevant document or if such default gives to the holder of the obligation concerned the right to accelerate the obligation or (ii) there occurs under any Swap Contract an Early Termination Date resulting from (1) any event of default under such Swap Contract as to which the Patent Inventor Borrower or any Subsidiary is the Defaulting Party or (2) any Termination Event as to which the Patent Inventor Borrower or any Subsidiary is an Affected Party, and, in either event, the Swap Termination Value owed by the Patent Inventor Borrower or such Subsidiary as a result thereof is greater than $1,000,000 (for purposes of this clause (ii), the terms “Early Termination Date”, “Defaulting Party”, “Termination Event”, and “Affected Party” shall have the meanings assigned to them in the relevant Swap Contract, it being understood that such definitions contemplate Swap Contracts documented on International Swaps and Derivatives Association (“ISDA”) standard forms; if such Swap Contract is not documented on an ISDA standard form, such terms shall be given similar or analogous meanings as used in such non-ISDA standard agreements).

9. Default Of Other PCT Obligations. Any default occurs under any other obligation of the Patent Inventor Borrower or any Subsidiary to the PCT or to any affiliate of the PCT and such default continues after the applicable grace or notice period.

10. Material Adverse Effect. There occurs a Material Adverse Effect.

11. ERISA. (i) An ERISA Event shall occur with respect to a Pension Plan which has resulted or could reasonably be expected to result in liability of the Patent Inventor Borrower under Title IV of ERISA to the Pension Plan or the Pension Benefit Guaranty Corporation (the “PBGC”) or any entity succeeding to any of its principal functions under ERISA in an aggregate amount in excess of $500,000; (ii) the commencement or increase of contributions to, or the adoption of or the amendment of a Pension Plan by the Patent Inventor Borrower which has resulted or could reasonably be expected to result in an increase in Unfunded Pension Liability among all Pension Plans in an aggregate amount in excess of $500,000; or (iii) any of the representations and warranties contained in Section 5.12 shall cease to be true and correct which, individually or in combination, has resulted or could reasonably be expected to result in a Material Adverse Effect.

12. Change of Control. (i) any Person or two or more Persons acting in concert shall acquire beneficial ownership, directly or indirectly, of securities of the Patent Inventor Borrower (or other securities convertible into such securities) representing 40% or more of the combined voting power of all securities of the Patent Inventor Borrower entitled to vote in the election of directors; or (ii) during any period of up to 12 consecutive months, commencing after the Closing Date, individuals who at the beginning of such 12-month period were directors of the Patent Inventor Borrower shall cease for any reason to constitute a majority of the Board of Directors of the Patent Inventor Borrower unless the persons replacing such individuals were nominated by the Board of Directors of the Patent Inventor Borrower; or (iii) any Person or two or more Persons acting in concert acquiring by contract or otherwise, or entering into a contract or arrangement which upon consummation will result in its or their acquisition of, or control over, securities of the Patent Inventor Borrower (or other securities convertible into such securities) representing 40% or more of the combined voting power of all securities of the Patent Inventor Borrower entitled to vote in the election of directors.

B. Remedies. If any Event of Default occurs,

1. any indebtedness of the Patent Inventor Borrower or of any Acceptable Subsidiary under any of the Credit Documents, any term thereof to the contrary notwithstanding, shall at the PCT’s option (but automatically upon the occurrence of an Event of Default described in subsection 8.01(f)(ii) or subsection 8.01(g)) and without notice become immediately due and payable without presentment, demand, protest, or notice of dishonor, or any other notice, all of which are hereby expressly waived by the Patent Inventor Borrower to the full extent permitted by law, and the PCT may declare an amount equal to the maximum aggregate amount that is or at any time thereafter may become available for drawing under any then-outstanding letters of credit, (whether or not any beneficiary shall have presented, or be entitled at such time to present, the drafts or other documents required to draw under such letters of credit) to be immediately due and payable;

2. the obligation, if any, of the PCT (including through any Offshore Credit Provider) to make further loans or extensions of credit hereunder shall immediately cease and terminate, and

3. the PCT and each Offshore Credit Provider shall have all rights, powers, and remedies available under each of the Credit Documents, or accorded by law, including the right to resort to any or all security for any credit accommodation described herein, and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law.

All rights, powers, and remedies of the PCT and each Offshore Credit Provider may be exercised at any time by the PCT or such Offshore Credit Provider and from time to time after the occurrence of an Event of Default. All rights, powers, and remedies of the PCT and any Offshore Credit Provider in connection with each of the Credit Documents are cumulative and not exclusive and shall be in addition to any other rights, powers, or remedies provided by law or equity.

8. TERMINATION
This Agreement may be terminated by either party upon thirty (30) days written notice to the other party in the event of a breach of a material provision of this Agreement by the other party, provided that, during the thirty (30) days period, the breaching party fails to cure such breach.

9. EFFECT OF TERMINATION
A. Upon termination or expiration of this Agreement as it relates to the Properties, all rights granted to Patent Inventor Borrower relative to the Properties shall forthwith revert to the PCT who shall be free to contract with others to commercialize such Properties subject to the provisions of this Agreement subject to the post-termination provisions of this Agreement. Patent Inventor Borrower shall, thereafter, refrain from further efforts to commercialize the Properties.

B. Upon termination or expiration of this Agreement, PCT may request that the Patent Inventor Borrower provide it within sixty (60) days of such notice with a complete schedule of all prospective Manufacturers contacted on behalf of the PCT relative to the Properties as well as returning all materials relating to the Properties.

10. FORCE MAJEURE
Neither party will be liable for, or will be considered to be in breach of or default under this Agreement on account of, any delay or failure to perform as required by this Agreement as a result of any causes or conditions that are beyond such Party’s reasonable control and that such Party is unable to overcome through the exercise of commercially reasonable diligence. If any force majeure event occurs, the affected Party will give prompt written notice to the other Party and will use commercially reasonable efforts to minimize the impact of the event.

11. NOTICE AND PAYMENT
A. Any notice required to be given under this Agreement shall be in writing and delivered personally to the other designated party at the above stated address or mailed by certified, registered or Express mail, return receipt requested or by Federal Express.

B. Either party may change the address to which notice or payment is to be sent by written notice to the other under any provision of this paragraph.

12. JURISDICTION/DISPUTES
This Agreement shall be governed in accordance with the laws of the State of [State]. All disputes under this Agreement shall be resolved by litigation in the courts of the State of [State] including the federal courts therein and the Parties all consent to the jurisdiction of such courts, agree to accept service of process by mail, and hereby waive any jurisdictional or venue defenses otherwise available to it.

13. AGREEMENT BINDING ON SUCCESSORS
The provisions of the Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, their heirs, administrators, successors and assigns.

14. ASSIGNABILITY
Neither party may assign this Agreement or the rights and obligations thereunder to any third party without the prior express written approval of the other party which shall not be unreasonably withheld.

15. WAIVER
No waiver by either party of any default shall be deemed as a waiver of prior or subsequent default of the same of other provisions of this Agreement.

16. SEVERABILITY
If any term, clause or provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other term, clause or provision and such invalid term, clause or provision shall be deemed to be severed from the Agreement.

17. INTEGRATION
This Agreement constitutes the entire understanding of the Parties, and revokes and supersedes all prior agreements between the Parties and is intended as a final expression of their Agreement. It shall not be modified or amended except in writing signed by the Parties hereto and specifically referring to this Agreement. This Agreement shall take precedence over any other documents which may conflict with this Agreement.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have each caused to be affixed hereto its or his/her hand and seal the day indicated.

[Name of PCT]    [Name of Patent Inventor Borrower]

By:       By:
Title:      Title:
Date:      Date: