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Sorrento TherapeuticsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K ýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018OR¨TRANSITION REPORT PURSUANT TO SECTION 13 Or 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the transition period from ______ to______Commission file number: 001-35980 NANOSTRING TECHNOLOGIES, INC.(Exact name of registrant as specified in its charter) Delaware 20-0094687(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification Number)530 Fairview Avenue NorthSeattle, Washington 98109(Address of principal executive offices)(206) 378-6266(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Exchange on Which RegisteredCommon Stock, $0.0001 par value per share The NASDAQ Stock Market LLC(The NASDAQ Global Market)Securities registered pursuant to Section 12(g) of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes ¨ No ýIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ý No ¨Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. ýIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, oremerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer¨Accelerated filerýNon-accelerated filer¨Smaller reporting company¨Emerging growth company¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying withany new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). (Check one): Yes ¨ No ýThe aggregate market value of the voting and non-voting stock held by non-affiliates of the Registrant, based on the closing sale price of theRegistrant’s common stock on the last business day of its most recently completed second fiscal quarter, as reported on The NASDAQ Global Market, wasapproximately $295.2 million. Shares of common stock held by each executive officer and director and by each other person who may be deemed to be anaffiliate of the Registrant, have been excluded from this computation. The determination of affiliate status for this purpose is not necessarily a conclusivedetermination for other purposes.There were 31,085,236 shares of the Registrant’s common stock, $0.0001 par value per share, outstanding on February 28, 2019.DOCUMENTS INCORPORATED BY REFERENCENone. NANOSTRING TECHNOLOGIES, INC.ANNUAL REPORT ON FORM 10-KFOR THE FISCAL YEAR ENDED DECEMBER 31, 2018TABLE OF CONTENTS Page PART I3 Item 1.Business3 Item 1A.Risk Factors22 Item 1B.Unresolved Staff Comments45 Item 2.Properties45 Item 3.Legal Proceedings45 Item 4.Mine Safety Disclosures45PART II46 Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities46 Item 6.Selected Financial Data48 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations49 Item 7A.Quantitative and Qualitative Disclosures About Market Risk64 Item 8.Financial Statements and Supplementary Data66 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure96 Item 9A.Controls and Procedures96 Item 9B.Other Information97PART III98 Item 10.Directors, Executive Officers and Corporate Governance98 Item 11.Executive Compensation105 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters122 Item 13.Certain Relationships and Related Transactions and Director Independence124 Item 14.Principal Accountant Fees and Services125PART IV 126 Item 15.Exhibits, Financial Statement Schedules126 Item 16.Form 10-K Summary129SIGNATURES130-1- Special Note Regarding Forward-Looking InformationThis Annual Report on Form 10-K, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” sectionin Item 7, and other materials accompanying this Annual Report on Form 10-K contain forward-looking statements that are based on our management’sbeliefs and assumptions and on information currently available. The statements contained in this Annual Report on Form 10-K that are not purely historicalare forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Actof 1934, as amended.Forward-looking statements can be identified by words such as “believe,” “anticipate,” “could,” “continue,” “depends,” “expect,” “expand,”“forecast,” “intend,” “predict,” “plan,” “rely,” “should,” “will,” “may,” “seek,” or the negative of these terms and other similar expressions, although not allforward-looking statements contain these words. You should read these statements carefully because they discuss future expectations, contain projections offuture results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives,expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements include, but are notlimited to:•our expectations regarding our future operating results and capital needs, including our expectations regarding instrument, consumable andtotal revenue, operating expenses, sufficiency of cash on hand and operating and net loss;•our ability to successfully launch and commercialize our Digital Spatial Profiling and Hyb & Seq platforms;•the success, costs and timing of implementation of our business model, strategic plans for our business and future product developmentplans;•the regulatory regime and our ability to secure and maintain regulatory clearance or approval or reimbursement for the clinical use of ourproducts, domestically and internationally;•our ability to realize the potential payments set forth in our collaboration agreements;•our strategic relationships, including with patent holders of our technologies, manufacturers and distributors of our products, collaborationpartners and third parties who conduct our clinical studies;•our intellectual property position;•our ability to attract and retain key scientific or management personnel;•our expectations regarding the competitive position, market size and growth potential for our business; and•our ability to sustain and manage growth, including our ability to expand our customer base, develop new products, enter new markets andhire and retain key personnel.All forward-looking statements are based on information available to us on the date of this Annual Report on Form 10-K and we will not update anyof the forward-looking statements after the date of this Annual Report on Form 10-K, except as required by law. Our actual results could differ materially fromthose discussed in this Annual Report on Form 10-K. The forward-looking statements contained in this Annual Report on Form 10-K, and other written andoral forward-looking statements made by us from time to time, are subject to certain risks and uncertainties that could cause actual results to differ materiallyfrom those anticipated in the forward-looking statements, and you should not regard these statements as a representation or warranty by us or any otherperson that we will achieve our objectives and plans in any specified time frame, or at all. Factors that might cause such a difference include, but are notlimited to, those discussed in the following discussion and within Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K. In this report, “we,”“our,” “us,” “NanoString,” and “the Company” refer to NanoString Technologies, Inc. and its subsidiaries.In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are basedupon information available to us as of the date of this Annual Report on Form 10-K, and although we believe such information forms a reasonable basis forsuch statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted a thoroughinquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to undulyrely upon these statements.-2- PART I Item 1. BusinessOverviewWe develop, manufacture and sell products that unlock scientifically valuable and clinically actionable information from minute amounts ofbiological material. Our core technology is a unique, proprietary optical barcoding chemistry that enables the labeling and counting of single molecules.This proprietary chemistry may reduce the number of steps required to conduct certain types of scientific experiments and allow for multiple experiments tobe conducted at once. As a result, we are able to develop tools that are easier for researchers to use and that may generate faster and more consistent scientificresults.We use our technology to develop tools for scientific research, primarily in the fields of genomics and proteomics, and also to develop clinicaldiagnostic tests. We currently have one commercially available product platform, our nCounter Analysis System instruments and related consumables.nCounter can be used to analyze the activity of up to 800 genes in a single experiment. nCounter is also used by clinicians to analyze gene activity relevantfor diagnostic applications. Our proprietary nCounter-based Prosigna assay analyzes the activity of 50 genes to assess the risk of recurrence in breast cancerpatients previously treated with radiation therapy. As of December 31, 2018, we had an installed base of approximately 730 nCounter systems, which ourcustomers have used to publish more than 2,300 peer-reviewed scientific papers.We have discovered other novel applications that utilize our proprietary barcoding chemistry, and we have two new product platforms underdevelopment. Following completion of product development, each of these new systems is expected to be commercialized as a new instrument along withassociated consumables.The first new platform, our GeoMx Digital Spatial Profiling, or DSP system, is designed to enable the field of spatial genomics. While nCounter andother existing technologies analyze gene activity as a whole throughout the totality of a biological sample, GeoMx DSP is used to analyze specificallyselected regions of a biological sample in order to see how gene activity or protein levels might vary across those regions or in certain cell types. In advanceof the launch of the commercial version of GeoMx DSP, we have provided early access to the system’s capabilities by offering selected customers theopportunity to send biological samples to our Seattle facility to be tested by us on prototype instruments. To date, we have conducted over 70 projects forapproximately 50 customers pursuant to this Technology Access Program, or TAP. In addition, in the third quarter of 2018 we announced the GeoMx PrioritySite, or GPS, Program. The GPS Program is designed to provide customers the opportunity to be among the first to receive a GeoMx DSP instrument followingits commercial launch, as well as advanced service and support. Inclusion in the GPS Program has also provided researchers the opportunity to begingenerating data on samples through our TAP service. As of December 31, 2018, we have received over 30 orders for GeoMx DSP pursuant to our GPSProgram. The full commercial launch of GeoMx DSP instruments and consumables is expected to commence during the first half of 2019, with installationsof commercial instruments expected to commence in the second half of 2019.The second new platform, our Hyb & Seq molecular profiling system, is designed to use a modified version of our proprietary chemistry to determineand analyze gene sequences within a biological sample, or to potentially profile the activity of an even greater number of genes as compared to our nCounterAnalysis System. Hyb & Seq is designed to determine gene sequences using a work flow with fewer steps as compared to currently available gene sequencingtechnologies. Hyb & Seq is expected to become commercially available during 2021.New discoveries in genetics have generated a significant amount of scientific information and medical advancement. The decoding of the humangenome, and the subsequent generation of large amounts of gene sequence data, has led to the emergence of pathway-based biology whereby researchers seekto understand how networks of genes may work together to produce a biological function or condition. The desire to interpret gene sequence data and mapbiological pathways has led to demand for technologies that can precisely and efficiently measure the activation state of hundreds of genes simultaneously.Demand for these new or improved technologies has been driven by researchers in disease areas such as cancer, immunology and neurology.Researchers in these fields are increasingly attempting to determine which sequences of genes or mutations are important in disease-related biologicalpathways so that new potential treatments might be developed. For example, in the field of cancer, researchers and clinicians have learned that cancer cellbehavior is impacted by multiple genes and proteins, and that analysis of these factors together may be important in determining whether or not a cancermight be responsive to a certain treatment. In addition, more cancers are being detected earlier and tumor samples are becoming smaller and smaller. Tumorsamples are often stored in a format known as formalin-fixed paraffin embedded, or FFPE, which complicates subsequent analysis of genetic material.Researchers and clinicians may face similar challenges with analysis of biological samples in other therapeutic areas of interest.Our proprietary chemistry, which has been incorporated into our nCounter product platform and our two product platforms in development,addresses many of the fundamental challenges of genetic and molecular profiling and biological-3- pathway research. The sensitivity and precision of our chemistry allows the measurement of subtle changes in the activity of multiple genes from minuteamounts of a biological sample. Our chemistry is particularly compatible with FFPE, increasing its popularity among cancer researchers. Our chemistry alsosupports product configurations that are easy to use with simple workflow as compared to many other scientific platforms used for genetic and proteomicresearch, including absence of library preparation and amplification steps that can be cumbersome or time consuming or that may introduce the possibility ofmeasurement errors. The sensitivity and workflow efficiency of our product platforms also allows for testing of many different samples in a single day,enabling our products to be potentially useful in hospital or similar settings to conduct clinical diagnostic tests.We market and sell our systems and related consumables to researchers in academic, government and biopharmaceutical laboratories for research useand to clinical laboratories and medical centers for diagnostic use, both through our direct sales force and through selected distributors in certaininternational markets. We generated revenue of $106.7 million, $114.9 million, and $86.5 million in 2018, 2017, and 2016, respectively, while incurring netlosses of $77.4 million, $43.6 million, and $47.1 million in 2018, 2017, and 2016, respectively.We are organized as, and operate in, one reportable segment. For additional information, see Note 2 of the Notes to Consolidated FinancialStatements under Item 8 of this report. For financial information regarding our business, see Part II, Item 7 “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” of this report and our audited consolidated financial statements and related notes included elsewhere in thisreport.We were incorporated in Delaware in June 2003. Our principal executive offices are located at 530 Fairview Avenue, North, Seattle, Washington98109 and our telephone number is (206) 378-6266. Our common stock trades on The Nasdaq Global Market under the symbol “NSTG.”This Annual Report on Form 10-K includes our trademarks and registered trademarks, including “NanoString,” “NanoString Technologies,”“nCounter,” “Prosigna,” “nCounter Elements,” “nCounter SPRINT,” “Vantage 3D,” “3D Biology,” “Hyb & Seq,” and “GeoMx.” Each other trademark, tradename or service mark appearing in this Annual Report on Form 10-K belongs to its holder.Our Market OpportunityEvery living organism has a genome that contains a full set of biological instructions required to build and maintain life. A gene is a specific set ofinstructions embedded in the DNA of a cell. For a gene to be “turned on,” or “expressed,” the cell must first transcribe a copy of its DNA sequence intomolecules of messenger RNA. Then, the cell translates the expressed information contained in the RNA into proteins that control most biological processes.In addition to the translated RNAs, there are many types of non-coding RNAs that are involved in many cellular processes and the control of gene expression,including microRNA, or miRNA.By analyzing the variations in genomes, genes, gene activity or expression and proteins in and between organisms, researchers can determine theirfunctions and roles in health and disease. An improved understanding of the genome and its functions allows researchers to drive advancements in scientificdiscovery. As they make scientific discoveries, researchers have been able to translate some of these findings into clinical applications that improve patientcare.Biological pathways are the networks of tens or hundreds of genes that work together to produce a biological function. Understanding the activationstate of pathways and disruptions in individual elements provides significant insight into the fundamental basis of health and disease and facilitates datadriven treatment decisions. As a result, pathway-based biology has become a widely adopted paradigm that researchers use to understand biologicalprocesses and has assisted them in the development of diagnostic tests and drugs to treat disease.Understanding biological pathways has become particularly important in cancer research and treatment. Cancer is a disease generally caused bygenetic mutations in cells. The behavior of cancer cells is extremely complex and depends on the activity of many different genes and proteins. It is oftenimpossible for researchers to identify a single gene or protein that adequately predicts a more or less aggressive type of cancer. In some cases, researchers havebeen able to identify more or less aggressive types of cancer through gene expression analysis of biological pathways, enabling oncologists to determinewhich specific treatments are most likely to be effective for an individual patient, monitor a patient’s response to those treatments and determine thelikelihood of recurrence. Recently cancer researchers, in part based on their research of biological pathways and gene expression, have begun to demonstratethe potential of harnessing a patient’s immune system to fight cancer. A new class of therapeutics, referred to generally as immuno-oncology drugs, havebegun to come to market with the promise of long-term remissions, or even cures, in certain types of cancer.As interest in understanding biological pathways that may be relevant to medicine has increased, academic, government and biopharmaceuticalcompany researchers have aspired to perform analyses of a larger number of genes and samples and are seeking new methods of interrogation that wouldallow them to:-4- •increase the number of molecular targets that can be analyzed simultaneously in order to understand the complete biological pathway involvingmultiple genes;•provide more reliable, precise and reproducible data about targeted genes and biological pathways;•maximize the amount of biologic information extracted from precious tissue or other biological samples;•minimize the computational intensity of complex genomic and proteomic analysis;•process difficult-to-work-with specimens, such as tumor biopsies stored in FFPE format;•improve the overall efficiency of their laboratories by simplifying workflow and accelerating the rate of successfully completing their research; and•create more systematic and reliable ways to help transition their research discoveries into future clinical products.The interest in new methods of interrogation has led to the development of new research technologies. The newest technologies to experience rapidadoption have been focused primarily on determining the sequence of a person’s or organism’s DNA, in order to assess how differences among individualsmight be predictive of certain aspects of health or disease. In particular, a technology known as next generation sequencing, or NGS, has become widelyadopted. In recent years NGS use has accelerated, as the technology has improved and the cost to sequence DNA using NGS has declined. As of December 31,2018, there were approximately 18,000 NGS systems installed in laboratories globally.While NGS has revolutionized researchers’ ability to generate gene sequence data rapidly and cost effectively on large numbers of biologicalsamples, other aspects of examining biological pathways are still done using legacy techniques or new technologies that have proved less capable ofproviding multiplexed experimentation, ease of use and low cost. Together with determining a gene sequence via NGS, pathway-based research requiresfurther analysis of the activity of multiple genes and sensitivity to small changes in expression, which can be challenging for traditional scientific tools.Researchers interested in multiplex gene expression or biological pathway analysis have traditionally performed experiments using microarrays orquantitative polymerase chain reaction, or qPCR, and protein expression experiments using flow cytometry, mass spectrometry, immunohistochemistry orenzyme-linked immunosorbent assay, or ELISA, assays. These techniques have been available for decades, and while suitable for analyzing the expression ofa smaller number of genes may not be cost effective or scalable enough to study biological pathways. While these types of experiments could be repeated toanalyze expression of multiple genes, they are often destructive of biological samples, creating limitations given the amounts of biological sample that maybe available. These types of experiments may also involve library preparation and amplification steps that can be cumbersome or time consuming or that mayintroduce the possibility of measurement errors.More recently, RNA sequencing, or RNA-Seq, which is done using NGS technology, has enabled researchers to look at the entirety of the geneexpression within a single sample, and enhanced researchers’ ability to discover patterns of gene expression that have biological meaning. NGS systems havea more complex and time-consuming workflow than traditional methods of analyzing gene or protein expression however, and RNA-Seq generates largeamounts of data that may be expensive to store and may not have relevance to the scientific question being explored.In both life sciences research and clinical medicine, there is a growing need for improved technologies that can precisely and rapidly measure theactivation state of hundreds of genes simultaneously across a large number of precious samples. Furthermore, there is an untapped opportunity fortechnologies capable of simultaneously profiling the activity of genes and related proteins, which ultimately dictate biological activity.Our SolutionWe believe our proprietary chemistry and product platforms provide novel features that address the challenges and technology needs of researchersworking to analyze and interpret the increasing amounts of data being generated by NGS and understand biological pathways. Our products supportexperiments that typically take fewer steps as compared to traditional techniques, perform multiplexed experiments in a single run and have been shown togenerate consistent and accurate results from a variety of biological samples, including FFPE imbedded cancer tissue.Our technology and product platforms offer a number of compelling advantages, including:•Optimized for Pathway-Based Biology and Development of Multiplexed Biomarkers. Our nCounter Analysis System can profile the activity of up to800 genes in a single experiment, which allows customers to analyze interactions among hundreds of genes or proteins that mediate biologicalpathways. Our GeoMx DSP System is designed to enable the multiplex profiling of protein and RNA targets in specifically selected regions of abiological sample.•Digital Precision. Our molecular barcodes hybridize directly to target molecules in a sample, allowing them to be counted. This generates digitaldata (1 molecule = 1 count) of excellent quality over a wide dynamic range of measurements and provides excellent reproducibility.•Simple Workflow. Our systems are designed to offer minimal sample preparation and automated workflow, which enables the simultaneous analysisof hundreds of genes and proteins in approximately 24 hours between the time a-5- sample is loaded and results are obtained. Our systems can generate data that customers can evaluate without the use of complex bioinformatics.•Flexible Sample Requirements. Our systems are designed to unlock biologic information from minute amounts of a variety of challenging tissuesamples, including FFPE samples, cell lysates and single cells.•Efficient Sample Requirements. Our systems also can generate scientific results using very small amounts of biological material, which may beimportant in settings, such as pharmaceutical product development, where multiple researchers may desire access to samples.•Versatility. The FLEX configuration of our nCounter Analysis System provides clinical laboratories a single platform with the flexibility to supportboth clinical testing, by running Prosigna or Laboratory Developed Tests, and research, by processing translational research experiments andmultiplexed assays using our research reagents.Our Products and TechnologyWe currently have one commercially available product platform based on our technology, our nCounter Analysis System and related consumables.We also have two new product platforms under development enabled by our technology, our GeoMx DSP system and our Hyb & Seq molecular profilingsystem.nCounter Analysis SystemOur nCounter Analysis System is an automated, multi-application, digital detection and counting system which directly profiles hundreds ofmolecules simultaneously, using our proprietary optical barcoding chemistry that is powerful enough for use in research, yet simple enough for use in clinicallaboratories. Our nCounter Analysis System is based on automated instruments that prepare and analyze tissue samples using proprietary reagents, which canonly be obtained from us. Our research customers purchase instruments from us and then purchase our reagents and related consumables for the specificexperiment they wish to conduct. Our clinical laboratory customers typically purchase instruments from us and also purchase our reagents and relatedconsumables, including Prosigna, for tests that they intend to run.Our nCounter Analysis System is capable of supporting a number of applications including:•Gene Expression. Researchers can use the nCounter Analysis System to measure the degree to which individual genes in pathways are turned “on” or“off” by simultaneously quantifying the amount of messenger RNA, or mRNA, associated with each of up to 800 genes.•Protein Expression. Today, researchers can use the nCounter Analysis System to simultaneously measure up to 30 proteins. Ultimately, we intend toexpand this capability to an increased number of protein targets, limited only by the 800 target capacity of an assay and the number of antibodiesthat can be sourced and combined without cross-reaction.•Gene Mutations. In late 2016, we launched our first assay to detect a particular type of gene mutation, known as single nucleotide variations. Ourinitial panel, targeting solid tumors, gives researchers the power to measure 104 different gene mutations simultaneously, at the same time asmeasuring the expression of other genes and proteins.•miRNA Expression. Researchers can use the nCounter Analysis System to measure the simultaneous expression levels of up to 800 different miRNAs.The nCounter Analysis System is capable of highly multiplexed, direct digital detection and counting of miRNAs in a single reaction withoutamplification, thereby delivering high levels of sensitivity, specificity, precision, and linearity.•Copy Number Variation. Researchers can use the nCounter Analysis System to probe for structural variations that result in cells having an abnormalnumber of copies of one or more sections of the DNA. Researchers are able to conduct large-scale, statistically-powered studies of these copy numbervariations by leveraging the nCounter Analysis System’s multiplexing capacity to assay up to 800 DNA regions in a single tube, with as little as 300ng of DNA.•Gene Fusions. Researchers can use the nCounter Analysis System to detect gene fusion events that occur when one gene fuses to another gene. Anumber of design options are available for developing assays for these complex structural variants which have been shown to be important in anumber of cancers.•Molecular Diagnostics. Our nCounter Analysis System has the ability to simultaneously quantify gene expression on tens or hundreds of genes fromminimal amounts of FFPE tissue, which makes it well suited for profiling pathway activation in tumor samples. Identifying whether certain genes areactive in a biological sample may prove useful in the diagnosis of disease or disease progression, or in determining whether a certain drug therapymay be more or less effective in a given patient. In addition, nCounter has the precision, reproducibility, and simple workflow required oftechnologies used in clinical laboratories.-6- nCounter Instrument PlatformsWe currently offer three versions of our nCounter analysis system for commercial sale. In 2008, we began marketing a research use only version ofthe system, and since that time we have expanded our product line to include three instruments, each targeted at a distinct user segment. Our nCounterSPRINT is designed to appeal to individual researchers running relatively smaller experiments. Our nCounter MAX is a higher throughput instrument withfeatures appealing to larger core laboratories serving multiple researchers. Our nCounter FLEX, which is targeted toward clinical laboratories, is a version ofour MAX system that has been 510(k) cleared by the FDA and CE marked by European regulatory authorities. nCounter FLEX is enabled to run ourproprietary Prosigna breast cancer assay, as well as other proprietary or laboratory developed tests, or LDTs, that may be developed. nCounter SPRINT nCounter MAX nCounter FLEXTarget customerIndividual researchers Core research labs Clinical labsThroughput (samples per day)24 48 48Expandable with additional prep station (1)No Yes YesDiagnostic menuNo No YesU.S. list price$149,000 $235,000 $265,000(1) nCounter MAX and FLEX throughput may be increased to up to 96 samples per day by adding a second prep station.The nCounter MAX and FLEX systems comprise a Prep Station and a Digital Analyzer. The Prep Station is the automated liquid handlingcomponent that processes samples after they are hybridized and prepares the samples for data collection on the Digital Analyzer. The Digital Analyzercollects data from samples by taking images of the immobilized fluorescent reporters in the sample cartridge and processing the data into output files, whichinclude the target identifier and related count numbers along with a broad set of internal controls that validate the precision of each assay. The nCounterMAX and FLEX systems employ a simple three-step workflow that takes approximately 24 hours and requires approximately 15 minutes of hands-on time bythe user. When run in research mode, a user can process up to 48 samples per day by installing one Prep Station with a single Digital Analyzer. One canincrease the number of samples analyzed to 96 samples per day on a single Digital Analyzer if it is coupled with two Prep Stations. This throughput can bequadrupled using sample multiplexing for experiments targeting 200 genes or fewer. For Prosigna, a clinical laboratory can process up to 30 samples per dayon an nCounter FLEX system. The nCounter FLEX system was designed and is manufactured under ISO 13485:2003, the current quality standard for in vitrodiagnostic platforms and medical devices.The nCounter SPRINT Profiler is a single instrument targeted to individual researchers that combines the liquid handling steps and the digitalanalysis through use of a special microfluidic cartridge. The nCounter SPRINT Profiler employs an even more streamlined two-step workflow that requiresonly 10 minutes of hands-on time by the user and can process up to 24 samples per day.nCounter instrument platforms also include our nSolver Analysis Software, a data analysis program that offers researchers the ability to quickly andeasily quality check, normalize, and analyze their data without having to use any additional software for data analysis. The FLEX system, in addition torunning any of our research applications, can also be enabled with software that runs Prosigna to generate individualized patient reports.nCounter ConsumablesAll three nCounter instruments are capable of running our research consumable products and provide comparable, high-quality data. The majority ofour nCounter consumables sold are standardized off-the-shelf “panel” products that represent important gene signatures for certain disease areas, and alsoinclude our proprietary Prosigna breast cancer assay. nCounter consumables can also be customized to a specific set of genes at a customer’s request. PanelsWe offer more than 30 gene expression and analysis panels for use with a broad range of sample types and species, including human, mouse, non-human primate and other. These pre-manufactured CodeSets include highly-curated content relevant to a particular research area. In certain cases, nCounterpanels may be partially customized to address individual research interests with the purchase of an optional Panel Plus CodeSet. Our most significant currentnCounter panel offerings include:•Pan Cancer Gene Expression Panels. A portfolio of panels designed to comprehensively analyze genes driving the growth of cancer cells, theimmune system’s response, and the progression of the cancer, including:-7- •Pathways. A novel set of 770 essential genes representing the signaling pathways implicated in cancer, including key driver genes, selectedusing a data-driven approach to identifying the genes most relevant to cancer biology.•Immune Profiling. A novel set of 770 genes designed in collaboration with cancer immunologists around the globe, combining markers for24 different immune cell types and populations, 30 common cancer antigens and genes that represent all known categories of immuneresponse including key checkpoint blockade genes.•Progression. A novel set of 770 genes addressing the key questions of what happens when cancer metastasizes, including genes for thestudy of angiogenesis, epithelial mesenchymal transition, extracellular matrix formation, and metastasis.•PanCancer RNA: Protein Immune Profiling Panels. Two panels that combine gene expression analysis of the 770 genes contained in the PanCancerImmune Profiling Gene Expression Panel with the analysis of up to 30 proteins of interest in measuring the immune system’s response to cancer orintracellular signaling.•360 Gene Expression Panels. These panels include our IO 360 and Breast Cancer 360 and represent a series of next generation panels that combineclinically actionable content for evaluating the tumor microenvironment and immune response along with validated signatures such as theCompany's Tumor Inflammation Signature and PAM 50 (breast cancer subtyping) along with up to 30 additional signatures encompassing allaspects of the cancer. These panels may be combined with our 360 Data Analysis Service to provide access to propriety signature algorithms.•CAR-T Characterization Panel. A new panel developed in collaboration with leaders in the CAR-T field for use throughout the CAR-T workflow(development, manufacturing and monitoring post-infusion clinical trials). The panel represents a step toward standardization by providingmolecular characterization for 8 essential components of CAR-T biology using 780 genes with a customizable feature to allow for measurement ofthe transgene insert that creates the CAR-T cell.•Neuropathology and Neuroinflammation Gene Expression Panels. Two panels built in collaboration with leading drug developers, have beendesigned to address the growing biomarker needs in the field of neuroscience. These panels, which analyze approximately 770 genes profilemechanisms for neurodegenerative diseases as well as neuropsychiatric disorders.•Mouse-AD Panel. A new panel developed for use with Alzheimer’s Disease, or AD, research in mouse models. The panel, created in collaborationwith The Jackson Laboratories and MODEL-AD Consortium allows for more reliable pre-clinical translational studies by incorporating gene contentfor 30 clinically derived AD associated gene modules for measuring AD phenotypes and disease progression that were discovered as part of aconsortium study of human brain tissue.•Autoimmune Disease Gene Expression Panels. Two panels created to address the specific challenges of autoimmune disease research and assist withthe understanding of the underlying mechanisms of autoimmune disease and for identification of potential responders and non-responders to drugtreatments.•miRNA Expression Panels. A family of panels that provide a cost-effective profiling solution capable of highly multiplexed, direct digital detectionand counting of up to 800 miRNAs in a single reaction without amplification.Custom CodeSetsWe work with our customers to design and develop custom gene expression CodeSets to enable them to evaluate specific genes that are the subjectof their study. Our customers provide us a list of targets for which we subsequently build a unique CodeSet to their specifications. Our design processleverages full length sequences for the DNA or RNA molecules that our customers are interested in detecting and prevents cross hybridization to non-targetmolecules in the sample. The custom CodeSet design process occurs in four distinct steps: (1) the customer selects the genes of interest, (2) we design probesand provide a design report to the customer, (3) the customer reviews and approves the design report, and (4) we manufacture, test and ship the CodeSet to thecustomer. The manufacturing process typically takes from three to five weeks, depending on the number of genes targeted and samples to be processed by thecustomer.Master Kits, Cartridges and ReagentsFor our nCounter MAX or FLEX systems, the Master Kit includes all of the ancillary reagents and plasticware required for our customers to be ableto setup and process samples in the nCounter Prep Station and nCounter Digital Analyzer. The components of the Master Kit include the sample cartridge,strip tubes, tips, buffers, and reagent plates. For our nCounter SPRINT Profiler, customers purchase microfluidic cartridges and separate bottles of reagentswhich together provide the ancillary components for processing samples with CodeSets and Panels.-8- Molecular DiagnosticsOur nCounter Analysis System has the ability to simultaneously quantify gene expression on tens or hundreds of genes from minimal amounts ofFFPE tissue, which makes it well-suited for profiling pathway activation in tumor samples. In addition, it has the precision, reproducibility, and simpleworkflow required of technologies used in clinical laboratories. Our clinical laboratory customers use the nCounter Analysis System and in vitro diagnostickits to provide clinical diagnostic services. Currently, Prosigna is the only in vitro diagnostic kit available for use on our nCounter Analysis System. Overtime, we intend to develop, obtain regulatory authorization for, and sell additional in vitro diagnostic kits.We believe that the attributes that make the nCounter Analysis System attractive to researchers also make the system attractive to hospitals andclinical laboratories that desire to conduct molecular diagnostic tests. We believe the precision, ease of use and flexibility of the nCounter Analysis Systemmay allow medical technicians to conduct complex molecular diagnostic tests with minimal training. Our clinical laboratory customers use the nCounterFLEX system and in vitro diagnostic kits to provide clinical diagnostic services. Currently, Prosigna is the only in vitro diagnostic kit available for use onour nCounter FLEX system. We have one additional in vitro diagnostic test, our proprietary LymphMark assay, under development pursuant to acollaboration with Celgene Corporation, or Celgene.•Prosigna. Prosigna, our first in vitro molecular diagnostic test, is based on a collection of 50 genes known as the PAM50 gene signature, which wasdiscovered by several of our research customers. Prosigna can provide a breast cancer patient and physician with a subtype classification based onthe fundamental biology of the patient’s tumor, as well as a prognostic score that indicates the probability of cancer recurrence over 10 years.Physicians use Prosigna to help guide therapeutic decisions so that patients receive a therapeutic intervention, such as chemotherapy, only ifclinically warranted. Prosigna is regulated as an in vitro diagnostic test and we distribute it as a kit for use on our nCounter FLEX system in clinicallaboratories. In September 2013, we received 510(k) clearance from the FDA to market in the United States a version of Prosigna providing aprognostic indicator for distant recurrence-free survival at 10 years, which is indicated for postmenopausal women with Stage I/II lymph node-negative or Stage II lymph node-positive (one to three positive nodes) hormone receptor-positive breast cancer who have undergone surgery inconjunction with locoregional treatment consistent with standard of care. For each patient, the Prosigna report includes the Prosigna Score, which isreferred to as the ROR Score in the scientific literature and outside the United States, and a risk category based on both the Prosigna Score and nodalstatus. Node-negative patients are classified as low, intermediate or high risk, while node-positive patients are classified as low or high risk. Prosignacompetes with other tests that are currently available as services from specialized central laboratories. In September 2012, we obtained CE markdesignation for Prosigna for use as a semi-quantitative in vitro diagnostic assay using the gene expression profile of cells found in FFPE breast tumortissue to assess the 10-year risk of distant recurrence in postmenopausal women with HR+ early stage breast cancer treated with endocrine therapyalone. This CE-marked product is indicated for use in patients with either node-negative or node-positive disease and provides physicians and theirpatients with the intrinsic subtype of a patient’s breast cancer tumor, ROR score, and risk category (high/intermediate/low). In early 2013, we beganmarketing this test in Europe and Israel. We sell Prosigna kits to our lab customers on a fixed dollars-per-kit basis. These customers are responsiblefor providing the testing service and contracting and billing payors. Accordingly, we are not directly exposed to third-party payor reimbursementrisk.•LymphMark. Our proprietary LymphMark assay, an in vitro molecular diagnostic test candidate under development, is intended to identify the cell-of-origin subtype of a tumor for patients with diffuse large B-Cell lymphoma, or DLBCL, a form of blood cancer. LymphMark is designed to aid inthe disease characterization of patients newly diagnosed with DLBCL to support disease management in conjunction with other clinical andpathological information. DLBCL is a heterogeneous group of cancers that represents the most common form of Non-Hodgkin Lymphoma.According to the National Cancer Institute, there were approximately 70,000 new cases of Non-Hodgkin Lymphoma in the United States in 2015.DLBCL is the most common type of Non-Hodgkin Lymphoma, representing approximately 1 out of every 3 cases. The subtypes of DLBCL havelong been known to have varying prognoses. In January 2014, certain of our research customers published a paper in the journal Blood describingthe development and validation of a biomarker assay based on a 20-gene expression DLBCL subtype classifier using our nCounter Analysis System.LymphMark is currently being specifically investigated as an aid for identifying DLBCL patients that may be most likely to benefit from treatmentwith Celgene’s drug REVLIMID. Under our collaboration with Celgene, we have delivered an in vitro companion diagnostic test that was used tosubtype and screen patients who enrolled in a pivotal study of REVLIMID for the treatment of DLBCL. The results of Celgene’s study are expectedto be announced in 2019, after which we may file for regulatory approval with the FDA to market and sell LymphMark.•Laboratory Developed Tests. Clinical laboratories can use our custom manufacturing services to supply reagents to create LDTs, which arediagnostic tests that are developed, validated and performed by a single laboratory. These reagents enable assays for gene expression, copy numbervariation and gene fusions. Clinical laboratories can use-9- these reagents to develop assays to replace tests currently performed using fluorescence-based in situ hybridization, or FISH.GeoMx DSPOur second product platform, GeoMx DSP, is currently under development. Our GeoMx DSP system is designed to enable the field of spatialgenomics.nCounter and other existing technologies typically analyze gene activity throughout the totality of a biological sample, using “grind and bind”approaches that analyze average gene expression levels across an entire sample. GeoMx DSP is designed to allow researchers to explore and quantify how theactivity of large numbers of proteins or genes vary spatially in different selected regions of interest across the landscape of a heterogeneous tissue biopsy,retaining spatial information and providing high-plex assays that target different regions in the same sample.The commercial launch of the GeoMx DSP instrument and consumables is expected to commence during the first half of 2019, with installations ofcommercial instruments expected to commence in the second half of 2019.Many of the current technologies used to analyze gene activity in selected parts of a biological sample are many decades old. These technologiesinclude primarily immunohistochemistry, or IHC, which is used to estimate amounts of protein, and in-situ hybridization, or ISH, which is used to estimateamounts of RNA. Both IHC and ISH typically use stains that provide the ability to identify typically less than four proteins or RNAs based on assignedcolors. The colors aid researchers in identifying where certain proteins or RNA may reside in a sample and provide a visual approximation of amounts. Thesetechniques are limited however in their ability to only look at four proteins or RNAs at a time, with no ability to precisely quantify the amounts present inany given region or cell type. These limitations may lead to misleading or incomplete scientific conclusions as to the most relevant biological pathways inany given sample.GeoMx DSP is designed to allow researchers to address important questions regarding how protein and gene expression vary spatially acrossmultiple specific regions of interest across the landscape of a heterogeneous tissue biopsy. Our GeoMx DSP instruments are expected to image slide-mountedtissue biopsies, allow selection of regions of interest, and automate the preparation of samples from selected regions for molecular profiling using either annCounter system or NGS. GeoMx DSP technology is expected to offer a number of advantages compared to traditional technologies, including the ability toprofile a larger number of different genes or proteins in each region, more flexibility on the selection of regions, and processing of a larger number of samplesper day.GeoMx DSP InstrumentOur GeoMx DSP instruments use specialized optics and software to image slide-mounted tissue biopsies that have been prepared using IHC or ISHtechnology that is typically available in research or commercial laboratories. GeoMx then allows a researcher to select regions of interest for analysis onscreen, and then prepares samples from selected regions of interest for molecular profiling using either an nCounter system or next generation gene sequencer.GeoMx DSP ConsumablesThe initial portfolio of GeoMx DSP consumables at launch is expected to focus on protein and RNA analysis for immuno-oncology applications,and protein analysis for neurobiology applications. GeoMx DSP consumables expected to be available at the commercial launch date will be designed tosupport the profiling of biological activity, after regions of interest have been identified and samples have been prepared using GeoMx DSP, using ournCounter Analysis System. We have additional GeoMx DSP consumable products under development that are expected to enable profiling of larger numbersof RNA in selected regions of interest using an NGS system. We expect these NGS-enabled consumable products to be commercially available in 2020.GeoMx DSP consumable products are currently designed as standardized panel products that represent important content for certain disease areas, withan initial “core” panel offered for purchase, and an option for researchers to add content to that core depending on the area of interest or desired number oftargets for analysis. Our initial GeoMx DSP consumable product offering is expected to include:•Immuno-Oncology Panels. An immuno-oncology-focused panel menu that is expected to comprise up to 90 protein targets and 84 RNA targets foranalyzing the tumor and tumor microenvironment compartments in human tissue samples. The standard or core panel offering is expected tocomprise of 20 targets, and researchers will then have the option of adding over 40 additional targets for analysis, with sets of additional targetsfocused on specific applications such as immuno-oncology drug target proteins, or human immune activation proteins. We also expect to offer panelcontent to allow for the analysis of up to 84 immune pathways RNA. Additionally, 30 protein targets are expected to be released for analyzingmouse samples for pre-clinical applications.-10- •Neurobiology Panels. A neurobiology-focused menu that is expected to comprise up to 40 protein targets to profile neural cells in human tissue.The standard or core panel offering is expected to comprise of 20 targets, and researchers will then have the option of adding up to 20 additionaltargets for analysis, with sets of additional targets focused on specific applications such as proteins implicated in AD or Parkinson’s disease.Hyb & Seq Molecular ProfilerOur third product platform, our Hyb & Seq molecular profiling system, is currently under development. Hyb & Seq is designed to use a modifiedversion of our proprietary chemistry to determine and analyze gene sequences within a biological sample, or to potentially profile the activity of an evengreater number of genes.While currently available NGS technology has become widely used for research, challenges relating to complex workflow and the need for a largecentral laboratory to batch process samples to reduce cost have limited broader NGS adoption for use in clinical diagnostic applications to date.Hyb & Seq is designed to use a modified version of our proprietary chemistry to determine sequence data similar to NGS. As our chemistry does notrequire amplification, enzyme application or library preparation, Hyb & Seq may offer a faster, easier to use way of determining gene sequences as comparedto existing NGS technologies. Hyb & Seq's simple workflow and compatibility with a variety of sample types may offer the potential for a sample-to-answersolution for clinical sequencing. Hyb & Seq may also offer the ability to rapidly detect and quantify a large number of RNA or DNA targets in parallel.Potential applications of this capability could include gene expression measurement, or infectious disease testing.Hyb & Seq is expected to become commercially available in 2021.CollaborationsLam Research CorporationIn August 2017, we entered into a collaboration agreement with Lam Research Corporation, or Lam, to develop our Hyb & Seq sequencing platformand related assays. Under the terms of the agreement, Lam will contribute up to an aggregate of $50.0 million towards the project. The development fundingis non-refundable, unless the parties determine that completion of development of the product will not continue, in which case any funds advanced to us byLam that have not been committed or spent will be refunded to Lam. We will reimburse Lam for the cost of up to 10 full-time Lam employees each year inaccordance with the product development plan. Lam is eligible to receive certain single-digit percentage royalty payments from us on net sales of certainproducts and technologies developed under the agreement, if any such net sales are recorded. The maximum amount of royalties we may pay to Lam will becapped at an amount up to three times the amount of development funding actually provided by Lam. We retain exclusive rights to obtain regulatoryapproval, manufacture and commercialize any Hyb & Seq products.All intellectual property made or conceived solely by us pursuant to the collaboration will be owned by us and licensed to Lam solely for thepurposes of the collaboration. All intellectual property made or conceived solely by Lam pursuant to the collaboration will be owned by Lam and, subject tocertain restrictions on use with Lam competitors, licensed to us for the purposes of the collaboration and further development and commercialization of ourHyb & Seq platform, as well as certain other products and technologies resulting from the collaboration in the field of molecular profiling. Jointly createdintellectual property will be jointly owned, provided that neither we nor Lam use such jointly owned intellectual property in the other party’s competitivefield.The collaboration agreement establishes a joint steering committee to oversee, review and coordinate our and Lam’s activities under thecollaboration agreement and monitor progress and expenditures against the associated development plan. The joint steering committee is comprised of threeemployees from each of us and Lam, and will be chaired by one of our employees. We will have final decision-making authority on the joint steeringcommittee, subject to certain exceptions for decisions regarding development failure, material changes to the development plan, budget, and the Hyb & Seqproduct being developed under the agreement, and intellectual property ownership, which require consensus of the parties. The collaboration agreement alsocontains customary representations, warranties, covenants, indemnities and other obligations of the parties.The term of the collaboration agreement is 15 years. Either we or Lam may terminate the collaboration agreement in the case of a material breach bythe other party after providing notice and an opportunity to cure or in the case of bankruptcy or insolvency of the other party. The joint steering committeemay also terminate the collaboration agreement if development is discontinued in the case of a development failure. Lam may also terminate thecollaboration agreement on or after the first anniversary in the event we undergo a change of control.In connection with the execution of the collaboration agreement, we issued Lam a warrant to purchase up to 1.0 million shares of our common stockwith the number of underlying shares exercisable at any time proportionate to the amount of the $50.0 million commitment that has been provided by Lam.The exercise price of the warrant is $16.75 per share, and it-11- will expire on the seventh anniversary of the issuance date. The warrant was determined to have a fair value of $6.7 million upon issuance, which will berecorded as additional paid in capital proportionately from the quarterly collaboration payments made by Lam.In connection with the entry into the collaboration agreement and issuance of the warrant, we and Lam have agreed, subject to certain exceptionsapplicable to Lam, to be bound by certain “standstill” provisions. Pursuant to the “standstill” provisions, until the third anniversary of the entry into thecollaboration agreement, we, Lam and our respective officers, directors, employees or contractors acting on their behalf will not (1) acquire, offer to acquire,agree to acquire or publicly propose or offer to acquire, securities, indebtedness, businesses, properties or assets of the other party or any subsidiary ordivision thereof; (2) initiate, induce or attempt to induce any other person or group to initiate any transaction referred to in clause (1), any stockholderproposal regarding the other party or call hold or convene a stockholders’ meeting of the other party; (3) make or participate in any solicitation of proxies tovote or seek to advise or influence any person with respect to the voting of any voting securities of the other party; (4) make any public announcement withrespect to, or submit a proposal or offer for any extraordinary transaction involving the other party or any of its securities or assets; (5) form, join or in anyway participate in a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, in connection with any of the foregoingprohibited activities; (6) act or seek to control or influence the management, board of directors or policies of the other party; (7) take any action that couldreasonably be expected to require the other party to make a public announcement regarding the possibility of any of the prohibited activities described inclauses (1) through (6) or (8) advise, assist or encourage any other person in connection with any of the foregoing prohibited activities.In addition, Lam has agreed, subject to certain exceptions, not to offer, sell or transfer any of our common stock or securities convertible into orexchangeable or exercisable for our common stock, for three years after the entry into the collaboration agreement without first obtaining our consent, whichwe may withhold in our sole discretion, unless the collaboration agreement has been terminated, in which case our consent may not be unreasonablywithheld.Celgene CorporationIn March 2014, we entered into a collaboration agreement with Celgene to develop, seek regulatory approval for, and commercialize a companiondiagnostic assay using the nCounter Analysis System to identify a subset of patients with DLBCL, who are believed to be the most likely to benefit fromtreatment with Celgene’s drug REVLIMID. Under the terms of the collaboration agreement, we will develop, seek regulatory approval for, and commercializethe diagnostic test, and we retain the flexibility to independently develop and commercialize additional indications for the test. Pursuant to our agreement, asamended in February 2018, we are eligible to receive payments from Celgene totaling up to $24.8 million, of which $5.8 million was received as an upfrontpayment and $19.0 million is for development funding and potential success-based developmental and regulatory milestones. In February 2018, Celgeneagreed to provide us with additional funding for work intended to enable a subtype and prognostic indication for the test being developed under theagreement. In connection with this amendment, we agreed to remove the right to receive payments from Celgene in the event commercial sales of thecompanion diagnostic test do not exceed certain pre-specified minimum annual revenues during the first three years following regulatory approval. Inaddition, the amendment allows Celgene, at its election, to use trial samples with additional technologies for companion diagnostics.Under the collaboration agreement with Celgene, we have delivered an in vitro companion diagnostic test that was used to subtype and screenpatients who enrolled in a pivotal study of REVLIMID for the treatment of DLBCL. The upfront payment, a portion of the success-based milestone paymentsand the payments related to the subsequent amendments, totaling $14.5 million, have been received from Celgene to date, and we are using these funds inpart to cover our costs for clinical development of the test.Merck & Co., Inc.In May 2015, we entered into a clinical research collaboration agreement with Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc., orMerck, to develop an assay intended to optimize immune-related gene expression signatures and evaluate the potential to predict benefit from Merck’s anti-PD-1 therapy, KEYTRUDA, in multiple tumor types. In February 2016, we expanded our collaboration with Merck by entering into a new developmentcollaboration agreement to clinically develop, seek regulatory approval for, and commercialize a companion diagnostic test to predict response toKEYTRUDA in multiple tumor types. In connection with the execution of the development collaboration agreement, we and Merck terminated our May2015 clinical research collaboration and moved all remaining activities under such clinical research collaboration work plan to the new developmentcollaboration agreement. In October 2017, we were notified by Merck of the decision not to pursue regulatory approval of the companion diagnostic test forKEYTRUDA. As a result, in August 2018, we and Merck agreed to mutually terminate our development collaboration agreement, effective as of September30, 2018, following the completion of certain close-out activities.-12- Medivation, Inc. and Astellas Pharma, Inc.In January 2016, we entered into a collaboration with Medivation, Inc., or Medivation, and Astellas Pharma Inc., or Astellas, to pursue thetranslation of a novel gene expression signature algorithm discovered by Medivation into a companion diagnostic assay using the nCounter AnalysisSystem. In September 2016, Medivation was acquired by Pfizer, Inc., or Pfizer, and became a wholly owned subsidiary of Pfizer. In May 2017, we receivednotification from Pfizer and Astellas terminating the collaboration agreement as a result of a decision to discontinue the related clinical trial.Intellectual PropertyWe must develop and maintain protection on the proprietary aspects of our technologies in order to remain competitive. We rely on a combinationof patents, copyrights, trademarks, trade secret and other intellectual property laws and confidentiality, material transfer agreements, licenses, inventionassignment agreements and other contracts to protect our intellectual property rights.As of December 31, 2018, we owned or exclusively licensed 27 issued U.S. patents and approximately 36 pending U.S. patent applications,including provisional and non-provisional filings. We also owned or licensed approximately 266 pending and granted counterpart applications worldwide,including 118 country-specific validations of 13 European patents. The issued U.S. patents that we own or exclusively license are expected to expire betweenJuly 3, 2021 and February 6, 2033. We have either sole or joint ownership positions in all of our pending U.S. patent applications. Where we jointly owncases, we typically have negotiated license or assignment provisions to obtain exclusive rights. For our material nCounter Analysis System and Prosignaproduct rights, we are the exclusive licensee. We also generally protect our newly developed intellectual property by entering into confidentialityagreements that include intellectual property assignment clauses with our employees, consultants and collaborators. Our patent applications generally relateto the following main areas:•our nCounter Analysis System biology, chemistry, methods and hardware;•specific applications for our nCounter Analysis System technology;•our gene expression markers, methods and gene signatures for recurrence and drug response in certain forms of cancer;•biological and chemical compositions, methods and hardware for enzyme and amplification free sequencing; and•biological and chemical compositions, methods and hardware for multiplexed detection and quantification of protein and/or nucleic acid expressionin a defined region of a tissue or cell.We intend to file additional patent applications in the United States and abroad to strengthen our intellectual property rights; however, our patentapplications may not result in issued patents, and we cannot assure investors that any patents that have issued or might issue will protect our technology. Wehave received notices of claims of potential infringement from third parties and may receive additional notices in the future. When appropriate, we havetaken a license to the intellectual property rights from such third parties. For additional information, see the section of this report captioned “Risk Factors —Risks Related to Intellectual Property.”We own a number of trademarks and develop names for our new products and as appropriate secure trademark protection for them, including domainname registration, in relevant jurisdictions.License AgreementsWe have relied, and expect to continue to rely, on strategic collaborations and licensing agreements with third parties. For example, our basemolecular barcoding technology is in-licensed from the Institute for Systems Biology and the intellectual property that forms the basis of Prosigna is in-licensed from Bioclassifier, LLC. In addition to the licenses with the Institute for Systems Biology and Bioclassifier, we have licensed technology related tothe DLBCL assay from the National Institutes of Health, and we rely on other license and supply arrangements for proprietary components which require us topay royalties on the sale of our products. Other research customers are using our nCounter Analysis System to discover gene expression signatures that webelieve could form the basis of future diagnostic products. In the future, we may consider these gene signatures for in-licensing. Our licensing arrangementswith the Institute for Systems Biology and Bioclassifier are discussed below in greater detail.Institute for Systems BiologyIn 2004, we entered into an agreement with the Institute for Systems Biology pursuant to which the Institute granted to us an exclusive, subject tocertain government rights, worldwide license, including the right to sublicense, to the digital molecular barcoding technology on which our nCounterAnalysis System is based, including 13 patents and patent applications. Pursuant to the terms of the amended license agreement, we are required to pay theInstitute for Systems Biology royalties on net sales of products sold by us, or our sublicensees, at a low single digit percentage rate, which was reduced by50% in the-13- third quarter of 2016 for the remainder of the license term due to the achievement of a cumulative sales threshold. Through December 31, 2018, we have paidaggregate royalties of $5.7 million under the license agreement. Unless terminated earlier in accordance with the terms of the amended license agreement, theagreement will terminate upon the expiration of the last to expire patent licensed to us. The Institute for Systems Biology has the right to terminate theagreement under certain situations, including our failure to meet certain diligence requirements or our uncured material breach of the agreement.Bioclassifier, LLCIn July 2010, we entered into an exclusive license agreement with Bioclassifier, LLC, pursuant to which Bioclassifier granted to us an exclusive,subject to certain government rights, worldwide license, with the right to sublicense, to certain intellectual property rights and technology, including eightnon-provisional patent applications, related to the PAM50 gene signature in the field of research products and prognostic and/or diagnostic tests for cancer,including Prosigna. Bioclassifier has licensed these rights from the academic institutions that employed the cancer researchers that discovered or wereinvolved in the initial development of PAM50. Pursuant to the agreement, we are required to pay Bioclassifier the greater of certain minimum royaltyamounts and mid-single digit to low double digit percentage royalties on net sales of products and/or methods sold by us that are covered by patent rights orinclude, use or are technology licensed to us. Our obligation to pay royalties to Bioclassifier expires on a country-by-country basis upon the expiration of thelast patent licensed or, if a product or method includes, uses or is technology licensed to us but is not covered by a patent licensed to us, ten years after thefirst commercial sale of the product or method in such country. We are also required to pay Bioclassifier a percentage of any income received by us from thegrant of a sublicense to the patents or technology licensed to us under the agreement. In July 2018, we agreed to amend our license agreement withBioclassifier to increase the current royalty rate paid to Bioclassifier on sales of licensed products in the United States to an upper-single digit percentage,which became effective January 1, 2018. The agreement specifies that we will control and be responsible for the costs of prosecuting and enforcing theintellectual property licensed in certain major market countries. The agreement also includes customary rights of termination for Bioclassifier, including forour uncured material breach or our bankruptcy. Through December 31, 2018, we have paid Bioclassifier $2.2 million.Research and DevelopmentWe have committed, and expect to continue to commit, significant resources to developing new technologies and products, improving productperformance and reliability and reducing costs. We are continuously seeking to improve our product platforms, including the technology, software,accessibility and overall capability. We also seek to develop additional research consumable content, and new potential molecular diagnostic tests. We haveassembled experienced research and development teams at our Seattle, Washington location with the scientific, engineering, software and process talent thatwe believe is required to successfully grow our business.As of December 31, 2018, we had 173 employees in research and development, of which 58 hold a Ph.D. degree and one holds an M.D. degree.Sales and MarketingWe began selling nCounter Analysis Systems to researchers in 2008 and began sales efforts in the clinical laboratory market in 2013. We sell ourinstruments and related products primarily through our own sales force in North America and through a combination of direct and distributor channels inEurope, the Middle East, Asia Pacific and South America. We have agreements with 28 distributors, each of which is specific to a certain territory. In theevent a distributor does not meet minimum performance requirements, we may terminate the distribution agreement or convert from an exclusive to non-exclusive arrangement within the territory, allowing us to enter into arrangements with other distributors for the territory.For additional information regarding geographic distribution of revenue, see Note 16 of the Notes to Consolidated Financial Statements under Item8 of this report. For the year ended December 31, 2018, our collaborator, Lam, represented 17% of our total revenue. For the year ended December 31, 2017,two customers/collaborators, Merck, and Medivation, Inc. and Astellas Pharma Inc., represented 25% and 10%, respectively, of our total revenue. For the yearended December 31, 2016, Merck represented 13% of our total revenue.Instrumentation and Research ConsumablesOur sales and marketing efforts for instrumentation and in the life sciences research market are targeted at department heads, research or clinicallaboratory directors, principal investigators, core facility directors, and research scientists and pathologists at leading academic institutions,biopharmaceutical companies, publicly and privately-funded research institutions and contract research organizations. We seek to increase awareness of ourproducts among our target customers through direct sales calls, trade shows, seminars, academic conferences, web presence and other forms of internetmarketing.Our instruments require a significant capital investment or commitment to a lease or reagent rental agreement. Accordingly, our sales processinvolves numerous interactions with multiple people within an organization, and often includes-14- in-depth analysis by potential customers of our products, proof-of-principle studies, preparation of extensive documentation and a lengthy review process. Asa result of these factors, the large capital investment required in purchasing our instruments and the budget cycles of our customers, the time from initialcontact with a customer to our receipt of a purchase order can vary significantly and be up to 12 months or longer. Given the length and uncertainty of oursales cycle, we have in the past experienced, and likely will in the future experience, fluctuations in our instrument sales on a period-to-period basis.We have continued to invest in our commercial channel to increase our reach and productivity. During 2017 and 2018, we added staff focused onsales of our consumable products to support our existing instrument-focused sales staff. We believe these investments helped to drive the growth of ourinstalled instrument base, and the continued utilization of our consumables by our installed base of instrument users.Molecular DiagnosticsThe commercialization of Prosigna kits involves a three-pronged effort. First, we seek to establish third-party reimbursement and patient access forclinical testing services that our clinical laboratory customers will provide based upon our products by gaining inclusion in influential treatment guidelinesand educating third-party payors regarding the clinical utility and health economic value of the clinical tests enabled by our technology. Second, we seek toestablish an installed base of nCounter Analysis Systems by selling or leasing instruments to select clinical laboratories, with initial sales efforts directed atlaboratories, hospitals, networks or practices that test or treat a high volume of breast cancer patients. Third, we intend to drive physician demand for clinicaltesting services enabled by our diagnostic products, and direct test orders toward those laboratories which have adopted our technology. Where appropriate,we intend to coordinate commercial efforts with the sales and marketing personnel of the clinical laboratories offering clinical testing services based on ourdiagnostic products.Manufacturing and SuppliersWe use third-party contract manufacturers to produce our instruments and certain raw materials for our consumables. We build our consumables,including our Panels, Custom CodeSets and reagent packages at our Seattle, Washington facility.InstrumentsWe outsource manufacturing of our instruments. Precision System Science, Co., Ltd. of Chiba, Japan, or PSS, is our sole source supplier for thenCounter Prep Station. Korvis Automation Inc., or Korvis, is our sole source supplier for our nCounter Digital Analyzers and our GeoMx DSP instrument at itsfacility in Corvallis, Oregon. Paramit Corporation, or Paramit, is our sole source supplier for our nCounter SPRINT Profiler at its facility in Morgan Hill,California.The facilities at which our instruments are built have been certified to ISO 13485:2003 standards. Our contracts with these instrument suppliers donot commit them to carry inventory or make available any particular quantities. Under the terms of the three instrument supply agreements, we are required toplace binding purchase orders for instruments that will be delivered to us by the supplier three to six months from the date of placement of the purchase order.Although qualifying alternative third-party manufacturers could be time consuming and expensive, our instruments’ design is similar to other instrumentsand we believe that alternatives would be available if necessary. However, if our instrument suppliers terminate our relationship with them or if they giveother customers’ needs higher priority than ours, then we may not be able to obtain adequate supplies in a timely manner or on commercially reasonableterms.ConsumablesWe manufacture our consumables in our Seattle, Washington facility which has been certified to ISO 13485:2003 standards. We expanded ourmanufacturing capacity in 2015 by relocating certain research and development functions and converting the space to incremental manufacturing labs andoffices. In the future, should additional space become necessary, we believe that there will be space available near our existing facility that we believe we cansecure; however, we cannot predict that this space will be available if and when it is needed.We rely on a limited number of suppliers for certain components and materials used in the manufacture of our consumables. Some of thesecomponents are sourced from a single supplier. For example, Cidra Precision Services, LLC, of Wallingford, Connecticut, part of IDEX Health & Science, isthe sole supplier of the microfluidic cartridge for our nCounter SPRINT Profiler. For some components, we have qualified second sources for several of ourcritical reagents, including oligonucleotides, adhesives and dyes. We believe that having dual sources for our components helps reduce the risk of aproduction delay caused by a disruption in the supply of a critical component. We continue to pursue qualifying additional suppliers, but cannot predict howexpensive, time-consuming or successful these efforts will be. If we were to lose one or more of our suppliers, it may take significant time and effort to qualifyalternative suppliers.-15- CompetitionIn the life sciences research market, we compete with companies such as Agilent Technologies, Becton-Dickinson, Bio-Rad, Bio-Techne, Fluidigm,HTG Molecular Diagnostics, Illumina, Luminex, Merck Millipore, O-Link, Perkin Elmer, Qiagen, Roche Applied Science, Thermo Fisher Scientific, and 10xGenomics, some of which also offer diagnostic applications of their technologies. These competitors and others have products for gene and proteinexpression analysis that compete in certain segments of the market in which we sell our products. In addition, there are a number of new market entrants in theprocess of developing novel technologies for the life sciences market.In the breast cancer diagnostics market, we compete with Genomic Health’s Oncotype Dx, a service for gene expression analysis performed in acentral laboratory in Redwood City, California. We also face competition from companies such as Agendia and bioTheranostics, which also offer centralizedlaboratories that profile gene or protein expression in breast cancer. Outside the United States, we also face regional competition from Myriad Genetics, andits product EndoPredict, a distributed test for breast cancer recurrence.We believe that we have multiple competitive advantages in the research market, including the automated nature of our systems with simple, rapidand efficient workflow that requires very limited human intervention or labor; the multiplexing capability of our technology to analyze significantly moretarget molecules in a single tube without amplification, representing multiple biological pathways; the ability to analyze combinations of DNA, RNA andproteins simultaneously in a single experiment; compatibility with many sample types, including difficult samples such as FFPE; and the ability to analyzesmall sample inputs, in some cases down to a single cell, from a wide variety of sample types.In the diagnostics market, we believe our competitive advantages include the compelling evidence of Prosigna’s ability to inform major medicaltreatment decisions, including results from our studies; the quality of our nCounter Analysis System, which enables consistent and reproducible results indecentralized laboratories; and the improved convenience for physicians and patients, including more rapid test result turnaround time.While we believe that we compete favorably based on the factors described above, many of our competitors enjoy other competitive advantagesover us, including:•greater name and brand recognition, financial and human resources;•broader product lines;•larger sales forces and more established distributor networks;•substantial intellectual property portfolios;•larger and more established customer bases and relationships; and•better established, larger scale and lower cost manufacturing capabilities.For additional information, see the section of this report captioned “Risk Factors - The life sciences research and diagnostics markets are highlycompetitive. If we fail to compete effectively, our business and operating results will suffer.”Government RegulationMedical Device RegulationUnited StatesIn the United States, medical devices, including in vitro diagnostics, are subject to extensive regulation by the U.S. Food and Drug Administration,or FDA, under the Federal Food, Drug, and Cosmetic Act, or FDC Act, and its implementing regulations, and other federal and state statutes and regulations.The laws and regulations govern, among other things, medical device development, testing, labeling, storage, premarket clearance or approval, advertisingand promotion and product sales and distribution.A medical device is an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, includingany component part or accessory, which is (1) intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, orprevention of disease, in man or other animals, or (2) intended to affect the structure or any function of the body of man or other animals, and which does notachieve any of its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon beingmetabolized for the achievement of any of its primary intended purposes. In vitro diagnostics are a type of medical device, and are tests that can be used inthe screening or diagnosis and/or detection of diseases, conditions or infections, including, without limitation, the presence of certain chemicals, genetic orother biomarkers.-16- Medical devices to be commercially distributed in the United States must receive from the FDA either clearance of a premarket notification, or510(k), or premarket approval of a premarket approval application, or PMA, pursuant to the FDC Act prior to marketing, unless subject to an exemption.Devices deemed to pose relatively low risk are placed in either Class I or II. Placement of a device into Class II generally requires the manufacturer to submitto the FDA a 510(k) seeking clearance for commercial distribution; this is known as the 510(k) clearance process. Class III devices that were on the marketbefore May 28, 1976 and for which FDA has not yet required submission of PMAs are also required to submit a 510(k) to FDA. Most Class I devices areexempted from this premarket submission requirement. Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting orimplantable devices and some diagnostic tests, are placed into Class III requiring PMA approval. Devices deemed not substantially equivalent to apreviously 510(k)-cleared device or novel devices for which no predicate device exists are placed into Class III, but may be reclassified by FDA into Class Ior Class II upon the submission by the manufacturer of a de novo reclassification application. A clinical trial is almost always required to support a PMAapplication or de novo application, and in many cases is required for a 510(k) application. All clinical studies of investigational devices must be conductedin compliance with applicable FDA or Institutional Review Board, or IRB, regulations.510(k) Clearance Pathway. To obtain 510(k) clearance, a manufacturer must submit a premarket notification demonstrating to the FDA’ssatisfaction that the proposed device is substantially equivalent in intended use and in technological characteristics to a previously 510(k) cleared device ora device that was in commercial distribution before May 28, 1976, for which the FDA has not yet called for submission of PMA applications. The previouslycleared device is known as a predicate. The FDA’s 510(k) clearance pathway usually takes from six to 12 months, but it can take significantly longer,particularly for a novel type of product. The FDA will also not begin a substantive review of the filing until it verifies the application contains all necessaryinformation required to commence a substantive review. If the application does not contain all required information, the FDA will not file the application andreturn it to the submitter, highlighting the deficiencies in the application.After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a majorchange in its intended use, requires a new 510(k) clearance or could require a PMA approval. The FDA requires each manufacturer to make this determinationin the first instance, but the FDA can review any such decision. If the FDA disagrees with a manufacturer’s decision not to seek a new 510(k) clearance, theagency may require the manufacturer to seek 510(k) clearance or PMA approval. If the modified device has been commercialized, the FDA also can requirethe manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or PMA approval is obtained.PMA Approval Pathway. The PMA approval pathway requires a demonstration of reasonable assurance of safety and effectiveness of the device tothe FDA’s satisfaction. The PMA approval pathway is costly, lengthy and uncertain.A PMA application must provide extensive preclinical and clinical trial data and also information about the device and its components regarding,among other things, device design, manufacturing and labeling. As part of the PMA review, the FDA will typically inspect the manufacturer’s facilities forcompliance with Quality System Regulation, or QSR, requirements, which impose stringent testing, control, documentation and other quality assuranceprocedures.Upon submission, the FDA determines if the PMA application is sufficiently complete to permit a substantive review, and, if so, the application isaccepted for filing. The FDA then commences an in-depth review of the PMA application. The PMA approval process typically takes one to three years, butmay last longer. The review time is often significantly extended as a result of the FDA asking for more information or clarification of information alreadyprovided. The FDA also may respond with a “not approvable” determination based on deficiencies in the application and require additional clinical studiesthat are often expensive and time consuming and can delay approval for months or even years. During the review period for a new type of device, an FDAadvisory committee, a panel of external experts, likely will be convened to review the application and recommend to the FDA whether, or upon whatconditions, the device should be approved. Although the FDA is not bound by the advisory panel decision, the panel’s recommendation is important to theFDA’s overall decision making process.If the FDA’s evaluation of the PMA application is favorable, the FDA typically issues an “approvable letter” requiring the applicant’s agreement tospecific conditions, such as changes in labeling, or specific additional information such as submission of final labeling, in order to secure final approval ofthe PMA application. Once the approvable letter is satisfied, the FDA will issue an approval for specific indications, which can be more limited than thoseoriginally sought by the manufacturer. The PMA can include post-approval conditions that the FDA believes necessary to ensure the safety and effectivenessof the device including, among other things, post-approval studies and restrictions on labeling, promotion, sale and distribution. Failure to comply with theconditions of approval can result in material adverse enforcement action, including the loss or withdrawal of the approval or placement of restrictions on thesale of the device until the conditions are satisfied.Even after approval of a PMA, a new PMA or PMA supplement may be required in the event of a modification to the device, its labeling or itsmanufacturing process. Supplements to a PMA may require the submission of the same type of information required for an original PMA, except that thesupplement is generally limited to that information needed to support the proposed change from the product covered by the original PMA.-17- De Novo Pathway. If no predicate can be identified, the product is automatically classified as Class III, requiring a PMA. However, the FDA canreclassify, or use “de novo classification” for, a device for which there was no predicate device if the device is low or moderate risk. A device company cansubmit a de novo application at the outset, rather than submitting a 510(k) application for its particular product. When granting a de novo application theFDA will establish special controls that other applicants for the same device type must satisfy, which often includes labeling restrictions and datarequirements. Subsequent applicants can rely upon the de novo product as a predicate for a 510(k) clearance. The de novo route has been used for many invitro diagnostic products.Postmarket. After a device is placed on the market, numerous regulatory requirements apply. These include: the quality manufacturing requirementsset forth in the QSR, labeling regulations, the FDA’s general prohibition against promoting products for unapproved or “off label” uses, registration andlisting, the Medical Device Reporting, or MDR, regulation (which requires that manufacturers report to the FDA if their device may have caused orcontributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were torecur), and the Reports of Corrections and Removals regulation (which requires manufacturers to report recalls and field actions to the FDA if initiated toreduce a risk to health posed by the device or to remedy a violation of the FDC Act).The FDA enforces these requirements by unannounced inspection, market surveillance, and other means. If the FDA finds a violation, it can institutea wide variety of enforcement actions, ranging from an untitled regulatory letter or a warning letter, to more severe sanctions such as fines, injunctions, andcivil penalties; recall or seizure of products; operating restrictions, partial suspension or total shutdown of production; refusing requests for 510(k) clearanceor PMA approval of new products; withdrawing 510(k) clearance or PMA approvals already granted; and criminal prosecution. For additional information,see the section of this report captioned “Risk Factors — Risks Related to Government Regulation and Diagnostic Product Reimbursement.”Products Labeled for Research Use Only. In essence, RUO products are not regulated as medical devices and are therefore not subject to theregulatory requirements enforced by the FDA. The products must bear the statement: “For Research Use Only. Not for Use in Diagnostic Procedures.” RUOproducts cannot make any claims related to safety, effectiveness or diagnostic utility, and they cannot be intended for human clinical diagnostic use. InNovember 2013, the FDA issued a final guidance on products labeled RUO, which, among other things, reaffirmed that a company may not make any clinicalor diagnostic claims about an RUO product. The FDA will also evaluate the totality of the circumstances to determine if the product is intended fordiagnostic purposes. If FDA were to determine, based on the totality of circumstances, that our products labeled and marketed for RUO are intended fordiagnostic purposes, they would be considered medical devices that will require clearance or approval prior to commercialization.Dual-Use Instruments. Dual-use instruments are subject to FDA regulation since they are intended, at least in part, for use by customers performingclinical diagnostic testing. In November 2014, FDA issued a guidance that described FDA’s approach to regulating molecular diagnostic instruments thatcombine in a single molecular instrument both approved/cleared device functions and device functions for which approval/clearance is not required.Laboratory Developed Tests. Laboratory Developed Tests, or LDTs, are developed, validated and used within a single laboratory. In the past, theFDA generally exercised its enforcement discretion for LDTs and did not require clearance or approval prior to marketing. On October 3, 2014, FDA issuedtwo draft guidances that proposed to actively regulate LDTs using a risk-based approach, and would have required 510(k)s or PMAs for certain “moderate” or“high” risk devices. However, in late November 2016, FDA announced that it would not be finalizing the 2014 draft LDT Guidances.Companion Diagnostics. In August 2014, FDA issued a companion diagnostics final guidance stating that if the device is essential to the safety orefficacy of the drug, FDA will generally require approval or clearance for the device at the time when FDA approves the drug. Most companion diagnosticswill require PMA approval.InternationalInternational sales of medical devices are subject to foreign government regulations, which vary substantially from country to country. TheEuropean Commission is the legislative body responsible for directives under which manufacturers selling medical products in the European Union, or EU,and the European Economic Area, or EEA, must comply. The EU includes most of the major countries in Europe, while other countries, such as Switzerland,are part of the EEA and have voluntarily adopted laws and regulations that mirror those of the EU with respect to medical devices. The EU has adopteddirectives that address regulation of the design, manufacture, labeling, clinical studies and post-market vigilance for medical devices. Devices that complywith the requirements of a relevant directive will be entitled to bear the CE conformity marking, indicating that the device conforms to the essentialrequirements of the applicable directives and, accordingly, can be marketed throughout the EU and EEA.In September 2012, Prosigna was CE-marked for compliance with IVDD 98/79/EC for use in conjunction with a diagnostic version of our nCounterAnalysis System in the EU to assess a breast cancer patient's risk of distant recurrence.-18- Outside of the EU, regulatory approval needs to be sought on a country-by-country basis in order to market medical devices. Although there is atrend towards harmonization of quality system standards, regulations in each country may vary substantially, which can affect timelines of introduction.ReimbursementOur nCounter FLEX Analysis Systems are purchased or leased by clinical laboratories, which use our diagnostic products as the basis for testingpatients’ samples. These customers can use our products to enable commercial testing services, and generate revenue for their laboratories for this service. Inorder to collect payment for testing services based upon our diagnostic products, our clinical laboratory customers may bill third parties, including publicand private payors. The demand for our diagnostic products will depend indirectly upon the ability for our customers to successfully bill for and receivereimbursement from third-party payors for the clinical testing services based on our products. Therefore, we intend to work with third-party payors in marketswhere we intend to sell our diagnostic products to ensure that testing services based on our products are covered and paid.The decision of payors to cover and pay for a specific testing service is driven by many factors, including: •strong clinical and analytical validation data;•acceptance into major clinical guidelines, including the National Comprehensive Cancer Network, or NCCN, the American Society ofClinical Oncologists, or ASCO, and the St. Gallen Consensus guidelines;•health economic studies that may indicate that the test improves quality-adjusted survival and leads to reduced costs; and•decision impact studies that show the test leads to better treatment decisions.We have generated dossiers for submission to payors in support of reimbursement for testing services based upon our initial diagnostic product,Prosigna. The dossiers typically contain data from studies supporting the analytical and clinical validity of Prosigna, as well as health economic analyses thatexamine whether the clinical information supplied by Prosigna changes medical practice in a way that leads to benefit for both the patients and the payors. Insome cases, these health economic analyses may be supported by the results of clinical studies of Prosigna’s impact on adjuvant treatment decisions in earlystage breast cancer called decision impact studies. We developed a clinical protocol for Prosigna decision impact studies in collaboration with two Europeancooperative groups, and based on this protocol we have completed three studies to date.United StatesIn the United States, clinical laboratory revenue is derived from various third-party payors, including insurance companies, health maintenanceorganizations, or HMOs, and government healthcare programs, such as Medicare and Medicaid. Clinical laboratory testing services are paid through variousmethodologies when covered by third-party payors, such as prospective payment systems and fee schedules. For any new clinical test, payment for theclinical laboratory service requires a decision by the third-party payor to cover the particular test, the establishment of a reimbursement rate for the test andthe identification of one or more Current Procedural Terminology, or CPT, codes that accurately describe the test.The American Medical Association, or AMA, has issued a set of CPT codes for billing and reimbursement of complex genomic tests that are basedon information from multiple analytes or genes. These new MAAA, or Multianalyte Assays with Algorithmic Analyses, codes are intended to capture testssuch as Prosigna and are divided into two categories of unique codes. Category 1 MAAA codes are intended for tests that AMA’s CPT Editorial Panel hasvetted and found to meet a certain set of criteria, such as demonstrated clinical validity and utility, as well as current national utilization thresholds. MAAAcodes issued to complex genomic tests that have not met all Category 1 coding criteria are referred to as administrative MAAA codes. Assignment of eitherunique reimbursement code to a particular test may facilitate claims processing by payors; however, assignment of a unique reimbursement code alone doesnot guarantee favorable reimbursement decisions by payors. A genomic test with an assigned MAAA code must still be vetted and approved by individualpayors for coverage and payment before reimbursement is achieved. Given the more stringent requirements for receipt of a Category 1 MAAA, includingdemonstrated clinical validity and utility and satisfaction of national utilization thresholds, we believe that certain payors may more readily render favorablereimbursement decisions for genomic tests with a Category 1 MAAA rather than an administrative MAAA.In October 2016, we applied for and received a Category 1 MAAA code for Prosigna. The code was published in the CPT code book in late August2017, with an effective date of January 1, 2018.The Centers for Medicare & Medicaid Services, or CMS, administers the Medicare and Medicaid programs, which provide health care to almost onein every three Americans. For any particular geographic region, Medicare claims are processed at the local level by Medicare Administrative Contractors, orMACs. New diagnostic tests typically follow one of three routes to coverage via CMS: National Coverage Determinations, or NCDs, Local CoverageDeterminations, or LCDs, or simply payment of claims by a MAC. The NCD applies to Medicare beneficiaries living throughout the United States. Due to-19- cost and CMS bandwidth limitations there are generally few NCDs. The LCD process applies to only beneficiaries in the coverage area of a single MAC,requiring multiple LCDs to cover the testing throughout the United States. Due to the cost of developing an LCD, contractors tend to develop a relativelysmall number and prefer to tacitly cover services by paying claims. There is also a subset of NCDs known as Coverage with Evidence Development, or CED,that allow a technology (service or procedure) to be covered while evidence of clinical utility is collected through a registry or a study to answer outstandingquestions on outcomes. Some MACs have developed Coverage with Data Development, or CDD, policies for the same purpose, which are administered at thelocal level.Over the past three years, we have pursued Medicare coverage for Prosigna by working with MACs to obtain favorable LCDs. In 2016, Prosignaachieved Medicare coverage in all 50 states through this process.For Medicare, the reimbursement rates for individual tests are established under the Clinical Laboratory Fee Schedule (local fee schedules foroutpatient clinical laboratory services) or the Physician Fee Schedule, depending on the amount of physician work involved in the test. Molecular diagnostictests, such as Prosigna, are paid under the Clinical Laboratory Fee Schedule. For additional information, see the section of this report captioned “Risk Factors— Risks Related to Government Regulation and Diagnostic Product Reimbursement.”With respect to private insurance coverage, we have made significant progress in obtaining third-party reimbursement for the use of tests thatincorporate new technology, such as Prosigna. Over the past three years, we have pursued coverage with all of the large private payers to facilitatereimbursement of Prosigna testing. In 2016, coverage policies were adopted by Cigna and Aetna and, in early 2017, Humana adopted a positive coveragepolicy. Additionally, the Blue Cross and Blue Shield, or BCBS, Association Evidence Street recently published a positive assessment of Prosigna. Mostindividual BCBS entities have updated their coverage policies to include Prosigna based on this evaluation.Outside the United StatesIn Europe, governments are primarily responsible for reimbursing diagnostic testing services. A relatively small portion of the market is made up ofprivate payors and cash-pay patients. The primary barrier of adoption of a new in vitro diagnostic test is often reimbursement, and public reimbursement cantake several years to achieve, depending on the country. Public reimbursement for genomic testing for breast cancer is available in Canada, Ireland, France,Greece, Switzerland, Denmark and the United Kingdom. Selected private coverage for testing is available in the United Kingdom, Germany, Spain, France,the UAE and Hungary. Reimbursement approval in some countries, such as Spain and Italy, is managed at the regional level. Israel is a market in whichgenomic testing for breast cancer is widely reimbursed by all four major Sick Funds, the third-party payors that cover a substantial majority of the population.Our market access approach in Europe is similar to that in the United States and involves data driving clinical and economic publications to supportguideline inclusion. Initially, we have targeted the private and cash pay market in Europe. In parallel, we are seeking to establish public reimbursement ofProsigna by national and regional governments in Europe.Other RegulationsOur operations in the United States and abroad are subject to various fraud and abuse laws, including, without limitation, the federal anti-kickbackstatute and state and federal marketing compliance laws in the United States. These laws may impact our operations directly, or indirectly through ourcustomers, and may impact, among other things, our proposed sales, marketing and education programs. In addition, we may be subject to patient privacyregulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include thefollowing federal laws and their counterparts at the state level:•the Federal Anti-kickback Law and state anti-kickback prohibitions;•the Federal physician self-referral prohibition, commonly known as the Stark Law, and state equivalents;•the Federal Health Insurance Portability and Accountability Act of 1996, as amended;•the Medicare civil money penalty and exclusion requirements;•the Federal False Claims Act civil and criminal penalties and state equivalents;•the Foreign Corrupt Practices Act, which applies to our international activities;•the Physician Payment Sunshine Act; and•the European Union's General Data Privacy Regulations, or GDPR.-20- EmployeesAs of December 31, 2018, we had 476 employees, of which 115 work in manufacturing, 141 in sales, marketing and business development, 173 inresearch and development, and 47 in general and administrative. None of our U.S. employees are represented by a labor union or are the subject of acollective bargaining agreement. As of December 31, 2018, of our 476 employees, 432 were employed in the United States and 44 were employed outside theUnited States.Environmental MattersOur operations require the use of hazardous materials (including biological materials) which subject us to a variety of federal, state and localenvironmental and safety laws and regulations. Some of the regulations under the current regulatory structure provide for strict liability, holding a partypotentially liable without regard to fault or negligence. We could be held liable for damages and fines as a result of our, or others’, business operations shouldcontamination of the environment or individual exposure to hazardous substances occur. We cannot predict how changes in laws or development of newregulations will affect our business operations or the cost of compliance.Where You Can Find Additional InformationWe make available free of charge through our investor relations website, www.nanostring.com, our annual reports, quarterly reports, current reports,proxy statements and all amendments to those reports as soon as reasonably practicable after such material is electronically filed or furnished with the SEC.These reports may also be obtained without charge by contacting Investor Relations, NanoString Technologies, Inc., 530 Fairview Avenue, North, Seattle,Washington 98109, e-mail: investorrelations@nanostring.com. Our Internet website and the information contained therein or incorporated therein are notintended to be incorporated into this Annual Report on Form 10-K. In addition, the SEC maintains an Internet site that contains reports, proxy andinformation statements, and other information regarding reports that we file or furnish electronically with them at www.sec.gov.-21- Table of ContentsItem 1A. Risk FactorsYou should carefully consider the following risk factors, in addition to the other information contained in this report, including the section of thisreport captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and relatednotes. If any of the events described in the following risk factors and the risks described elsewhere in this report occurs, our business, operating results andfinancial condition could be seriously harmed. This report on Form 10-K also contains forward-looking statements that involve risks and uncertainties. Ouractual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewherein this report.Risks Related to Our Business and StrategyWe have incurred losses since we were formed and expect to incur losses in the future. We cannot be certain that we will achieve or sustain profitability.We have incurred losses since we were formed and expect to incur losses in the future. We incurred net losses of $77.4 million, $43.6 million, and$47.1 million for the years ended December 31, 2018, 2017, and 2016, respectively. As of December 31, 2018, we had an accumulated deficit of $391.3million. We expect that our losses will continue for at least the next several years as we will be required to invest significant additional funds toward ongoingdevelopment and commercialization of our technology. We also expect that our operating expenses will continue to increase as we grow our business, butthere can be no assurance that our revenue and gross profit will increase sufficiently such that our net losses decline, or we attain profitability, in the future.Our ability to achieve or sustain profitability is based on numerous factors, many of which are beyond our control, including the market acceptance of ourproducts, future product development and our market penetration and margins. We may never be able to generate sufficient revenue to achieve or sustainprofitability.Our financial results may vary significantly from quarter to quarter which may adversely affect our stock price.Investors should consider our business and prospects in light of the risks and difficulties we expect to encounter in the new, uncertain and rapidlyevolving markets in which we compete. Because these markets are new and evolving, predicting their future growth and size is difficult. We expect that ourvisibility into future sales of our products, including volumes, prices and product mix between instruments and consumables, and the amount and timing ofpayments pursuant to collaboration agreements will continue to be limited and could result in unexpected fluctuations in our quarterly and annual operatingresults.Numerous other factors, many of which are outside our control, may cause or contribute to significant fluctuations in our quarterly and annualoperating results. These fluctuations may make financial planning and forecasting difficult. In addition, these fluctuations may result in unanticipatedchanges in our available cash, which could negatively affect our business and prospects. Factors that may contribute to fluctuations in our operating resultsinclude many of the risks described in this section. Also, one or more of such factors may cause our revenue or operating expenses in one period to bedisproportionately higher or lower relative to the others. For example, in May 2017, our collaboration with Medivation, Inc. and Astellas Pharma Inc., orAstellas Pharma, was terminated, resulting in the recognition of $11.3 million of collaboration revenue during the second quarter of 2017. In October 2017,Merck notified us of the decision to not continue to pursue regulatory approval of the companion diagnostic for their product, KEYTRUDA, under ourcollaboration, resulting in the recognition of $11.6 million of collaboration revenue during the fourth quarter of 2017. In August 2018, we and Merck agreedto mutually terminate our development collaboration agreement, effective as of September 30, 2018, following the completion of certain close-out activities.Furthermore, our instruments involve a significant capital commitment by our customers and accordingly involve a lengthy sales cycle. We may expendsignificant effort in attempting to make a particular sale, which may be deferred by the customer or never occur. Accordingly, comparing our operating resultson a period-to-period basis may not be meaningful, and investors should not rely on our past results as an indication of our future performance. If suchfluctuations occur or if our operating results deviate from our expectations or the expectations of securities analysts, our stock price may be adverselyaffected.If we do not achieve, sustain or successfully manage our anticipated growth, our business and growth prospects will be harmed.We have experienced significant revenue growth in recent periods and we may not achieve similar growth rates in the future. Investors should notrely on our operating results for any prior periods as an indication of our future operating performance. If we are unable to maintain adequate revenue growth,our financial results could suffer and our stock price could decline. Furthermore, growth will place significant strains on our management and our operationaland financial systems and processes. For example, the commercial launch of our GeoMx DSP, which we anticipate will occur in 2019, is a key element of ourgrowth strategy and will require us to hire and retain additional sales and marketing personnel and resources. If we do not successfully generate demand forour GeoMx DSP instrument, other new product offerings, or manage our anticipated-22- expenses accordingly, our operating results will be harmed.Our future success is dependent upon our ability to expand our customer base and introduce new applications and products.Our current customer base is primarily composed of academic and government research laboratories, biopharmaceutical companies and clinicallaboratories (including physician-owned laboratories) that perform analyses using our nCounter Analysis Systems. Our success will depend, in part, upon ourability to increase our market penetration among all of these customers and to expand our market by developing and marketing new research applications,new instruments, and new diagnostic products. During 2017, in an effort to enhance future results, we added sales staff focused on consumable sales toexisting customers, enabling existing sales representatives to increase focus on instrument sales. We expect that increasing the installed base of our nCounterAnalysis Systems will drive demand for our relatively high margin consumable products. If we are not able to successfully increase our installed base ofnCounter Analysis Systems, sales of our consumable products and our margins may not meet expectations. Moreover, we must convince physicians and third-party payors that our diagnostic products, such as Prosigna, are cost effective in obtaining information that can help inform treatment decisions and that ournCounter Analysis Systems could enable an equivalent or superior approach that lessens reliance on centralized laboratories. In the U.S., Medicare and mostprivate insurers provide coverage and payment for patients to be tested with Prosigna; however, other countries, such as Germany, provide more limitedcoverage and payment for Prosigna.We also plan to develop and introduce new products which would be sold primarily to new customer types, such as our GeoMx DSP instrument foruse in pathology labs and a sequencer based on our Hyb & Seq chemistry targeted for use by hospitals and oncology clinics. We anticipate that our GeoMxDSP instrument will become commercially available in 2019 and scaling and training our sales force to attract new customers will require substantial timeand expense. Any failure to expand our existing customer base through the launch of our GeoMx DSP instrument, or other new applications and productswould adversely affect our operating results.Our research business depends on levels of research and development spending by academic and governmental research institutions andbiopharmaceutical companies, a reduction in which could limit demand for our products and adversely affect our business and operating results.In the near term, we expect that a large portion of our revenue will be derived from sales of our nCounter Analysis Systems to academic andgovernment research laboratories and biopharmaceutical companies worldwide for research and development applications. The demand for our products willdepend in part upon the research and development budgets of these customers, which are impacted by factors beyond our control, such as:•changes in government programs (such as the National Institutes of Health) that provide funding to research institutions and companies;•macroeconomic conditions and the political climate;•changes in the regulatory environment;•differences in budgetary cycles;•competitor product offerings or pricing;•market-driven pressures to consolidate operations and reduce costs; and•market acceptance of relatively new technologies, such as ours.In addition, academic, governmental and other research institutions that fund research and development activities may be subject to stringentbudgetary constraints that could result in spending reductions, reduced allocations or budget cutbacks, which could jeopardize the ability of these customersto purchase our products. Our operating results may fluctuate substantially due to reductions and delays in research and development expenditures by thesecustomers. Any decrease in our customers’ budgets or expenditures, or in the size, scope or frequency of capital or operating expenditures, could materiallyand adversely affect our business, operating results and financial condition.Our sales cycle is lengthy and variable, which makes it difficult for us to forecast revenue and other operating results.Our sales process involves numerous interactions with multiple individuals within an organization, and often includes in-depth analysis bypotential customers of our products, performance of proof-of-principle studies, preparation of extensive documentation and a lengthy review process. As aresult of these factors, the large capital investment required in purchasing our instruments and the budget cycles of our customers, the time from initialcontact with a customer to our receipt of a purchase order can vary significantly and be up to 12 months or longer. With the introduction of our nCounterSPRINT system in July 2015, which is targeted at individual researchers that often have less certain funding than other potential customers, our visibilityregarding timing of sales has decreased. Given the length and uncertainty of our sales cycle, we have in the past experienced, and likely will in the futureexperience, fluctuations in our instrument sales on a period-to-period basis. These-23- factors also make it difficult to forecast revenue on a quarterly basis. Furthermore, from time-to-time, we may lease instruments or place instruments underreagent rental agreements, wherein a customer does not purchase an instrument upfront but instead pays a rental fee associated with each purchase ofreagents. An increase in instruments placed under these lease or reagent rental agreements may reduce the number of instruments we would otherwise sell inany period. In addition, any failure to meet customer expectations could result in customers choosing to continue to use their existing systems or to purchasesystems other than ours.Our reliance on distributors for sales of our products outside of the United States, and on clinical laboratories for delivery of Prosigna testing services,could limit or prevent us from selling our products and impact our revenue.We have established distribution agreements for our nCounter Analysis Systems and related consumable products in many countries where we donot sell directly. We intend to continue to grow our business internationally, and to do so we must attract additional distributors and retain existingdistributors to maximize the commercial opportunity for our products. There is no guarantee that we will be successful in attracting or retaining desirablesales and distribution partners or that we will be able to enter into such arrangements on favorable terms. Distributors may not commit the necessary resourcesto market and sell our products to the level of our expectations or may choose to favor marketing the products of our competitors. If current or futuredistributors do not perform adequately, or we are unable to enter into effective arrangements with distributors in particular geographic areas, we may notrealize long-term international revenue growth.Similarly, we or our distributors have entered into agreements with clinical laboratories globally to provide Prosigna testing services. We do notprovide testing services directly and, thus, we are reliant on these clinical laboratories to actively promote and sell Prosigna testing services. These clinicallaboratories may take longer than anticipated to begin offering Prosigna testing services and may not commit the necessary resources to market and sellProsigna testing services to the level of our expectations. Furthermore, we intend to contract with additional clinical laboratories to offer Prosigna testingservices, including physician-owned laboratories, and we may be unsuccessful in attracting and contracting with new clinical laboratory providers. If currentor future Prosigna testing service providers do not perform adequately, or we are unable to enter into contracts with additional clinical laboratories to provideProsigna testing services, we may not be successful selling Prosigna and our future revenue prospects may be adversely affected.Our future capital needs are uncertain and we may need to raise additional funds in the future.We believe that our existing cash and cash equivalents, together with funds available under our term loan agreement and revolving credit facility,will be sufficient to meet our anticipated cash requirements for at least the next 12 months. However, we may need to raise substantial additional capital to:•expand the commercialization of our products;•fund our operations; and•further our research and development.Our future funding requirements will depend on many factors, including:•market acceptance of our products;•the cost and timing of establishing additional sales, marketing and distribution capabilities;•revenue and cash flow derived from existing or future collaborations;•the cost of our research and development activities;•the cost and timing of regulatory clearances or approvals;•the effect of competing technological and market developments; and•the extent to which we acquire or invest in businesses, products and technologies, including new licensing arrangements for new products.We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all. If we raise additional funds by issuing equity orequity-linked securities, or convertible debt, our stockholders may experience dilution. For example, in January 2018, we entered into a sales agreement withCowen and Company, LLC, or Cowen, to sell up to $40.0 million worth of shares of our common stock, from time to time, through an “at the market” equityoffering program under which Cowen will act as sales agent. In July 2018 and August 2018, we sold an aggregate of 4,600,000 shares of common stock in anunderwritten public offering for net proceeds of $53.8 million. In October 2018, we entered into a new $100.0 million term loan facility with CR Group L.P.Additional debt financing, if available, may involve additional covenants restricting our operations or our ability to incur additional debt. Any debt oradditional equity financing that we raise may contain terms that are not favorable to us or our stockholders. If we raise additional funds through collaborationand licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on termsthat are not favorable to us. We have in the past pursued these types of transactions, and may in the future-24- pursue similar transactions or other strategic transactions, on our own or with other advisors, that may impact our business and prospects and the value of ourcommon stock. If we do not have, or are not able to obtain, sufficient funds, we may have to delay development or commercialization of our products orlicense to third parties the rights to commercialize products or technologies that we would otherwise seek to commercialize. We also may have to reducemarketing, customer support or other resources devoted to our products or cease operations. Any of these factors could harm our operating results.Our research and development efforts will be hindered if we are not able to contract with third parties for access to archival tissue samples.Under standard clinical practice, tumor biopsies removed from patients are preserved and stored in formalin-fixed paraffin embedded, or FFPE,format. We rely on our ability to secure access to these archived FFPE tumor biopsy samples, as well as information pertaining to the clinical outcomes of thepatients from which they were derived for our clinical development activities. Others compete with us for access to these samples. Additionally, the process ofnegotiating access to archived samples is lengthy because it typically involves numerous parties and approval levels to resolve complex issues such as usagerights, institutional review board approval, privacy rights, publication rights, intellectual property ownership and research parameters. In January 2017, theDepartment of Health and Human Services finalized new rules, which became effective as of January 19, 2018, expanding the language to be included ininformed consent forms related to the collection of identifiable private information or identifiable biospecimens. If this new requirement, or other factorsarising in the future, impact our ability to negotiate access to archived tumor tissue samples with hospitals, clinical partners, pharmaceutical companies, orcompanies developing therapeutics on a timely basis or on commercially reasonable terms, or at all, or if other laboratories or our competitors secure access tothese samples before us, our ability to research, develop and commercialize future products will be limited or delayed.We may not be able to develop new products, enhance the capabilities of our systems to keep pace with rapidly changing technology and customerrequirements or successfully manage the transition to new product offerings, any of which could have a material adverse effect on our business andoperating results.Our success depends on our ability to develop new products and applications for our technology in existing and new markets, while improving theperformance and cost-effectiveness of our systems. New technologies, techniques or products could emerge that might offer better combinations of price andperformance than our current or future products and systems. Existing markets for our products, including gene expression analysis, gene fusions and copynumber variation, as well as new markets, such as protein expression and gene mutations, and potential markets for our research and diagnostic productcandidates, are characterized by rapid technological change and innovation. Competitors may be able to respond more quickly and effectively than we can tonew or changing opportunities, technologies, standards or customer requirements. We anticipate that we will face increased competition in the future asexisting companies and competitors develop new or improved products and as new companies enter the market with new technologies. It is critical to oursuccess that we anticipate changes in technology and customer requirements and successfully introduce new, enhanced and competitive technologies to meetour customers’ and prospective customers’ needs on a timely and cost-effective basis. If we do not successfully innovate and introduce new technology intoour product lines, our business and operating results will be adversely impacted.The development of new products typically requires new scientific discoveries or advancements and complex technology and engineering. Suchdevelopments may involve external suppliers and service providers, making the management of development projects complex and subject to risks anduncertainties regarding timing, timely delivery of required components or services and satisfactory technical performance of such components or assembledproducts. For example, in 2017, we continued to work with our supplier of cartridges used in our nCounter SPRINT systems to improve the design whichresolved the previous leakage issues in the microfluidic device produced for us. If we do not achieve the required technical specifications or successfullymanage new product development processes, or if development work is not performed according to schedule, then such new technologies or products may beadversely impacted and our business and operating results may be harmed.Additionally, we must carefully manage the introduction of new products. If customers believe that such products will offer enhanced features or besold for a more attractive price, they may delay purchases until such products are available. If customers conclude that such new products offer better value ascompared to our existing products, we may suffer from reduced sales of our existing products and our overall revenue may decline. We may also have excessor obsolete inventory of older products as we transition to new products and our experience in managing product transitions is limited. If we do noteffectively manage the transitions to new product offerings, our revenue, results of operations and business will be adversely affected.-25- New market opportunities may not develop as quickly as we expect, limiting our ability to successfully market and sell our products.The market for our products is new and evolving. Accordingly, we expect the application of our technologies to emerging opportunities will takeseveral years to develop and mature and we cannot be certain that these market opportunities will develop as we expect. For example, in September 2015, welaunched our first 3D Biology application, a new product that allows users to simultaneously measure gene and protein expression from a single sample. In2016 and 2017, we launched additional 3D Biology panels, including our first for the measurement of DNA mutations and in 2017 we launched our 360panels for use in breast cancer, immuno-oncology and hematology. In 2018, we expanded beyond oncology and launched panels in neuroscience and CAR-Tcharacterization. We recently launched our GeoMx DSP product on an early access basis, which will target the pathology market, a market we have notpreviously targeted.The future growth of the market for these new products depends on many factors beyond our control, including recognition and acceptance of ourapplications by the scientific community and the growth, prevalence and costs of competing methods of genomic analysis. If the markets for our newproducts do not develop as we expect, our business may be adversely affected. If we are not able to successfully market and sell our products or to achieve therevenue or margins we expect, our operating results may be harmed.We are dependent on single source suppliers for some of the components and materials used in our products, and the loss of any of these suppliers couldharm our business.We rely on Precision System Science, Co., Ltd of Chiba, Japan, to build our nCounter Prep Station, Korvis LLC of Corvallis, Oregon, to build ournCounter Digital Analyzer and GeoMx DSP, Paramit Corporation of Morgan Hill, California, to build our new nCounter SPRINT Profiler and IDEXCorporation of Lake Forest, Illinois to build the fluidics cartridge, a key component of our nCounter SPRINT Profiler. Each of these contract manufacturersare sole suppliers. Since our contracts with these instrument suppliers do not commit them to carry inventory or make available any particular quantities, theymay give other customers’ needs higher priority than ours, and we may not be able to obtain adequate supplies in a timely manner or on commerciallyreasonable terms. We also rely on sole suppliers for various components we use to manufacture our consumable products. We periodically forecast our needsfor such components and enter into standard purchase orders with them. If we were to lose such suppliers, there can be no assurance that we will be able toidentify or enter into agreements with alternative suppliers on a timely basis on acceptable terms, if at all. If we should encounter delays or difficulties insecuring the quality and quantity of materials we require for our products, our supply chain would be interrupted which would adversely affect sales. If any ofthese events occur, our business and operating results could be harmed.We may experience manufacturing problems or delays that could limit our growth or adversely affect our operating results.Our consumable products are manufactured at our Seattle, Washington facility using complex processes, sophisticated equipment and strictadherence to specifications and quality systems procedures. Any unforeseen manufacturing problems, such as contamination of our facility, equipmentmalfunction, quality issues with components and materials sourced from third-party suppliers or failure to strictly follow procedures or meet specifications,could result in delays or shortfalls in production or require us to voluntarily recall our consumable products. Identifying and resolving the cause of any suchmanufacturing or supplier issues could require substantial time and resources. If we are unable to keep up with demand for our products by successfullymanufacturing and shipping our products in a timely manner, our revenue could be impaired, market acceptance for our products could be adversely affectedand our customers might instead purchase our competitors’ products.In addition, the introduction of new products may require the development of new manufacturing processes and procedures as well as new suppliers.For example, our GeoMx DSP systems may require that we establish supply relationships with antibody providers. While all of our CodeSets are producedusing the same basic processes, significant variations may be required to meet new product specifications. Developing new processes and negotiating supplyagreements can be very time consuming, and any unexpected difficulty in doing so could delay the introduction of a product.If our Seattle facilities become unavailable or inoperable, we will be unable to continue our research and development, manufacturing our consumables orprocessing sales orders, and our business will be harmed.We manufacture our consumable products in our headquarters facilities in Seattle, Washington. In addition, Seattle is the center for research anddevelopment, order processing, receipt of our instruments manufactured by third-party contract manufacturers and shipping products to customers. Ourfacilities and the equipment we use to manufacture our consumable products would be costly, and would require substantial lead time, to repair or replace.Seattle is situated near active earthquake fault lines. These facilities may be harmed or rendered inoperable by natural or man-made disasters, includingearthquakes and power outages, which may render it difficult or impossible for us to produce our products for some period of time. The inability tomanufacture consumables or to ship products to customers for even a short period of time may result in the loss of customers or harm our reputation, and wemay be unable to regain those customers in the future. Although we possess insurance for-26- damage to our property and the disruption of our business, this insurance, and in particular earthquake insurance, which is limited, may not be sufficient tocover all of our potential losses and may not continue to be available to us on acceptable terms, if at all.We expect to generate a substantial portion of our product and service revenue internationally and are subject to various risks relating to ourinternational activities, which could adversely affect our operating results.For 2018, 2017, and 2016 approximately 40%, 40%, and 38% respectively, of our product and service revenue was generated from sales tocustomers located outside of North America. We believe that a significant percentage of our future revenue will come from international sources as we expandour overseas operations and develop opportunities in additional areas. Engaging in international business involves a number of difficulties and risks,including:•required compliance with existing and changing foreign regulatory requirements and laws;•required compliance with anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act and U.K. Bribery Act, data privacy requirements,labor laws and anti-competition regulations;•export or import restrictions;•various reimbursement and insurance regimes;•laws and business practices favoring local companies;•longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;•political and economic instability, such as the anticipated exit of Great Britain from the European Economic Community;•potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers;•difficulties and costs of staffing and managing foreign operations; and•difficulties protecting or procuring intellectual property rights.As we expand internationally, our results of operations and cash flows will become increasingly subject to fluctuations due to changes in foreigncurrency exchange rates. Historically, most of our revenue has been denominated in U.S. dollars, although we have sold our products and services in localcurrency outside of the United States, principally the Euro. Our expenses are generally denominated in the currencies in which our operations are located,which is primarily in the United States. As our operations in countries outside of the United States grow, our results of operations and cash flows willincreasingly be subject to fluctuations due to changes in foreign currency exchange rates, which could harm our business in the future. For example, if thevalue of the U.S. dollar increases relative to foreign currencies, our product and service revenue could be adversely affected as we convert revenue from localcurrencies to U.S. dollars. Similarly, a strong U.S. dollar relative to the local currencies of our international customers can potentially reduce demand for ourproducts, which may compound the adverse effect of foreign exchange translation on our revenue. If we dedicate significant resources to our internationaloperations and are unable to manage these risks effectively, our business, operating results and prospects will suffer.Significant U.K. or European developments stemming from the U.K.’s decision to withdraw from the European Union could have a material adverse effecton us.In June 2016, the United Kingdom held a referendum and voted in favor of leaving the European Union, and in March 2017, the government of theUnited Kingdom formally initiated the withdrawal process. Negotiations for the United Kingdom's exit from the EU, or Brexit, has created political andeconomic uncertainty, particularly in the United Kingdom and the European Union, and this uncertainty may last for years. Our business in the UnitedKingdom, the European Union, and worldwide could be affected during this period of uncertainty, and perhaps longer, by the impact of the UnitedKingdom’s referendum. There are many ways in which our business could be affected, only some of which we can identify as of the date of this report.The decision of the United Kingdom to withdraw from the European Union has caused and, along with events that could occur in the future as aconsequence of the United Kingdom’s withdrawal may continue to cause significant volatility in global financial markets, including in global currency anddebt markets. This volatility could cause a slowdown in economic activity in the United Kingdom, Europe or globally, which could adversely affect ouroperating results and growth prospects. In addition, our business could be negatively affected by new trade agreements or data transfer agreements betweenthe United Kingdom and other countries, including the United States, and by the possible imposition of trade or other regulatory and immigration barriers inthe United Kingdom. In addition, the Europe-wide market authorization framework for our products (and for the drugs sold by our collaboration partners inthe pharmaceutical industry) and access to European Union research funding by research scientists based in the United Kingdom may also change.Furthermore, we currently operate in Europe-27- through a subsidiary based in the United Kingdom, which provides us with certain operational, tax and other benefits, as well as through other subsidiaries inEurope. The United Kingdom’s withdrawal from the European Union could adversely affect our ability to realize those benefits and we may incur costs andsuffer disruptions in our European operations as a result. These possible negative impacts, and others resulting from the United Kingdom’s actual orthreatened withdrawal from the European Union, may adversely affect our operating results and growth prospects.Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow,financial condition or results of operations.New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could affect the tax treatmentof our domestic and foreign earnings. Any new taxes could adversely affect our domestic and international business operations, and our business andfinancial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.For example, the legislation commonly known as the Tax Cut & Jobs Act, which was signed into law on December 22, 2017, significantly revised the InternalRevenue Code of 1986, as amended, or the Code. The newly enacted federal income tax law, among other things, contains significant changes to corporatetaxation, including a reduction of the federal statutory rates from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interestexpense to 30% of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxableincome, elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated,elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductionsfor depreciation expense over time, and modifying or repealing many business deductions and credits. Notwithstanding the reduction in the corporateincome tax rate, the overall impact of the new federal tax law is uncertain and our business and financial condition could be adversely affected. It is alsounknown if and to what extent various states will conform to the newly enacted federal tax law. The impact of this tax reform on holders of our common stockis likewise uncertain and could be adverse.Our ability to use net operating losses to offset future taxable income may be subject to certain limitations.As of December 31, 2018, we had federal net operating loss carryforwards, or NOLs, to offset future taxable income of approximately $288.7 million.The federal NOL carryforwards generated during and after fiscal 2018 totaling $55.0 million are carried forward indefinitely, while all others, if not utilized,will expire in various years beginning in 2025. A lack of future taxable income would adversely affect our ability to utilize these NOLs. In addition, underSection 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its NOLs to offset future taxableincome. We may have already experienced one or more ownership changes. Depending on the timing of any future utilization of our carryforwards, we maybe limited as to the amount that can be utilized each year as a result of such previous ownership changes. However, we do not believe such limitations willcause our NOL and credit carryforwards to expire unutilized. In addition, future changes in our stock ownership as well as other changes that may be outsideof our control, could result in additional ownership changes under Section 382 of the Code. Our NOLs may also be impaired under similar provisions of statelaw or limited pursuant to provisions of the recent Tax Cut and Jobs Act amendments to the Code. We have recorded a full valuation allowance related to ourNOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.Provisions of our debt instruments may restrict our ability to pursue our business strategies.Our new term loan agreement with CR Group L.P., and revolving credit facility with Silicon Valley Bank require us, and any debt instruments wemay enter into in the future may require us, to comply with various covenants that limit our ability to, among other things:•dispose of assets;•complete mergers or acquisitions;•incur indebtedness;•encumber assets;•pay dividends or make other distributions to holders of our capital stock;•make specified investments;•engage in any new line of business; and•engage in certain transactions with our affiliates.These restrictions could inhibit our ability to pursue our business strategies. In addition, we are subject to financial covenants based on total revenueand minimum cash balances. If we default under our term loan agreement or revolving credit facility, and such event of default is not cured or waived, thelenders could terminate commitments to lend and cause all-28- amounts outstanding with respect to the debt to be due and payable immediately, which in turn could result in cross defaults under other debt instruments.Our assets and cash flow may not be sufficient to fully repay borrowings under all of our outstanding debt instruments if some or all of these instruments areaccelerated upon a default. We may incur additional indebtedness in the future. The debt instruments governing such indebtedness could contain provisionsthat are as, or more, restrictive than our existing debt instruments. If we are unable to repay, refinance or restructure our indebtedness when payment is due,the lenders could proceed against the collateral granted to them to secure such indebtedness or force us into bankruptcy or liquidation.Acquisitions or joint ventures could disrupt our business, cause dilution to our stockholders and otherwise harm our business.We may acquire other businesses, products or technologies as well as pursue strategic alliances, joint ventures, technology licenses or investments incomplementary businesses. We have not made any acquisitions to date, and our ability to do so successfully is unproven. Any of these transactions could bematerial to our financial condition and operating results and expose us to many risks, including:•disruption in our relationships with customers, distributors or suppliers as a result of such a transaction;•unanticipated liabilities related to acquired companies;•difficulties integrating acquired personnel, technologies and operations into our existing business;•diversion of management time and focus from operating our business;•increases in our expenses and reductions in our cash available for operations and other uses; and•possible write-offs or impairment charges relating to acquired businesses.Foreign acquisitions involve unique risks in addition to those mentioned above, including those related to integration of operations across differentcultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries.Also, the anticipated benefit of any strategic transaction may not materialize. Future acquisitions or dispositions could result in potentially dilutiveissuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harmour financial condition. We cannot predict the number, timing or size of future joint ventures or acquisitions, or the effect that any such transactions mighthave on our operating results.If we are unable to recruit, train and retain key personnel, we may not achieve our goals.Our future success depends on our ability to recruit, train, retain and motivate key personnel, including our senior management, research anddevelopment, manufacturing and sales and marketing personnel. Competition for qualified personnel is intense, particularly in the Seattle, Washington area.Our growth depends, in particular, on attracting, retaining and motivating highly-trained sales personnel with the necessary scientific background and abilityto understand our systems at a technical level to effectively identify and sell to potential new customers. We do not maintain fixed term employmentcontracts or key man life insurance with any of our employees. Because of the complex and technical nature of our products and the dynamic market in whichwe compete, any failure to attract, train, retain and motivate qualified personnel could materially harm our operating results and growth prospects.Undetected errors or defects in our products could harm our reputation, decrease market acceptance of our products or expose us to product liabilityclaims.Our products may contain undetected errors or defects when first introduced or as new versions are released. Disruptions or other performanceproblems with our products may damage our customers’ businesses, harm our reputation and result in reduced revenues. If that occurs, we may also incursignificant costs, the attention of our key personnel could be diverted, or other significant customer relations problems may arise. We may also be subject towarranty and liability claims for damages related to errors or defects in our products. A material liability claim or other occurrence that harms our reputationor decreases market acceptance of our products could adversely impact our business and operating results.The sale and use of products or services based on our technologies, or activities related to our research and clinical studies, could lead to the filing ofproduct liability claims if someone were to allege that one of our products contained a design or manufacturing defect which resulted in the failure toadequately perform the analysis for which it was designed. A product liability claim could result in substantial damages and be costly and time consuming todefend, either of which could materially harm our business or financial condition. We cannot assure investors that our product liability insurance wouldadequately protect our assets from the financial impact of defending a product liability claim. Any product liability claim brought against us, with or withoutmerit, could increase our product liability insurance rates or prevent us from securing insurance coverage in the future.-29- We face risks related to handling of hazardous materials and other regulations governing environmental safety.Our operations are subject to complex and stringent environmental, health, safety and other governmental laws and regulations that both publicofficials and private individuals may seek to enforce. Our activities that are subject to these regulations include, among other things, our use of hazardousmaterials and the generation, transportation and storage of waste. We could discover that we, an acquired business or our suppliers are not in materialcompliance with these regulations. Existing laws and regulations may also be revised or reinterpreted, or new laws and regulations may become applicable tous, whether retroactively or prospectively, that may have a negative effect on our business and results of operations. It is also impossible to eliminatecompletely the risk of accidental environmental contamination or injury to individuals. In such an event, we could be liable for any damages that result,which could adversely affect our business.If we experience a significant disruption in our information technology systems or breaches of data security, our business could be adversely affected.We rely on information technology systems to keep financial records, manage our manufacturing operations, fulfill customer orders, capturelaboratory data, maintain corporate records, communicate with staff and external parties and operate other critical functions. Our information technologysystems are potentially vulnerable to disruption due to breakdown, malicious intrusion and computer viruses or other disruptive events including but notlimited to natural disaster. If we were to experience a prolonged system disruption in our information technology systems or those of certain of our vendors, itcould negatively impact our ability to serve our customers, which could adversely impact our business. Although we maintain offsite back-ups of our data, ifoperations at our facilities were disrupted, it may cause a material disruption in our business if we are not capable of restoring function on an acceptabletimeframe. In addition, our information technology systems are potentially vulnerable to data security breaches — whether by employees or others — whichmay expose sensitive data to unauthorized persons. Such data security breaches could lead to the loss of trade secrets or other intellectual property, or couldlead to the public exposure of personal information (including sensitive personal information) of our employees, customers and others, any of which couldhave a material adverse effect on our business, reputation, financial condition and results of operations. In addition, any such access, disclosure or other lossof information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, including state dataprotection regulations and the E.U. General Data Protection Regulation, or GDPR, and other regulations, the breach of which could result in significantpenalties. In addition, these breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harmof the type described above.We intend to seek strategic collaborations and partnerships and other transactions, which may result in the use of a significant amount of our managementresources or significant costs, and we may not be able to fully realize the potential benefit of such transactions.We intend to seek strategic collaborations and partnerships to support the continued growth of the company. Accordingly, we may be engaged inevaluating potential transactions including, without limitation, strategic partnerships, divestitures of existing businesses or assets, a merger or consolidationwith a third party that results in a change in control, a sale or transfer of all or a significant portion of our assets or a purchase by a third party of our securitiesthat may result in a minority or control investment by such third party. From time to time, we may engage in discussions that may result in one or moretransactions. Although there would be uncertainty that any of these discussions would result in definitive agreements or the completion of any transaction,we may devote a significant amount of our management resources to such a transaction, which could negatively impact our operations. In addition, we mayincur significant costs in connection with seeking strategic transactions regardless of whether the transaction is completed. In the event that we consummate astrategic collaboration or partnership or other transaction in the future, we cannot assure you that we would fully realize the potential benefit of such atransaction which could adversely affect our future financial results or that such transaction would positively impact the value of stockholders' investment inus.Our strategy to seek to enter into strategic collaborations and licensing arrangements with third parties to develop diagnostic tests and other products maynot be successful.We have relied, and expect to continue to rely, on strategic collaborations and licensing agreements with third parties for discoveries based onwhich we develop diagnostic tests and research products. For example, we licensed the rights to intellectual property that forms the basis of Prosigna fromBioclassifier, LLC, which was founded by several of our research customers engaged in translational research. Similarly, in connection with our collaborationwith Celgene Corporation, we licensed the rights to intellectual property relating to a gene signature for lymphoma subtyping, which was discovered by aconsortium of researchers including several of our research customers, from the National Institutes of Health. In connection with our collaboration with Merckto develop a companion diagnostic test and the subsequent termination of the collaboration agreement, Merck granted to us a non-exclusive license tocertain intellectual property that relates to Merck's tumor inflammation signature. We intend to enter into more such arrangements with our researchcustomers and other researchers,-30- including biopharmaceutical companies and research institutions, for development of future diagnostic products. However, there is no assurance that we willbe successful in doing so. Establishing collaborations and licensing arrangements is difficult and time-consuming. Discussions may not lead tocollaborations or licenses on favorable terms, if at all. To the extent we agree to work exclusively with a party in a given area, our opportunities to collaboratewith others could be limited. Certain parties may seek to partner with companies in addition to us in connection with a project. This, in turn, may limit thecommercial potential of any products that are the subject of such collaborations. Potential collaborators or licensors may elect not to work with us basedupon their assessment of our financial, regulatory, commercial or intellectual property position. In particular, our customers are not obligated to collaboratewith us or license technology to us, and they may choose to develop diagnostic products themselves or collaborate with our competitors.New diagnostic product development involves a lengthy and complex process, and we may be unable to commercialize on a timely basis, or at all, any ofthe tests or products we develop individually or with our collaborators.Few research and development projects result in successful commercial products, and success in early clinical studies often is not replicated in laterstudies. At any point, we may abandon development of a product candidate or we may be required to expend considerable resources repeating clinicalstudies, which would adversely impact potential revenue and our expenses. In addition, any delay in product development would provide others withadditional time to commercialize competing products before we do, which in turn may adversely affect our growth prospects and operating results.In addition, the success of the development programs for any product candidates or assays developed in collaboration with others will be dependenton the continued pursuit and success of the related drug trials by our collaborators. For example, in October 2017, Merck notified us of their decision not tocontinue to pursue regulatory approval of the companion diagnostic we were developing for their product, KEYTRUDA, and in August 2018, we and Merckagreed to mutually terminate our development collaboration agreement. There is no guarantee that our collaborators will continue to pursue clinical trials forproduct candidates or assays that are the subject of our collaborations or that such clinical trials will be successful and, as a result, we may expendconsiderable time and resources developing in vitro diagnostic assays that will not gain regulatory approval. For example, pursuant to our collaboration withCelgene Corporation, we are developing a companion diagnostic, LymphMark, that is expected to be a potential companion diagnostic to aid in identifyingpatients with diffuse large B-cell lymphoma for treatment. Depending on the outcome of the clinical trial being run by Celgene, we anticipate we may file forregulatory approval of LymphMark with the U.S. Food and Drug Administration. Furthermore, significant consolidation in the life sciences industry hasoccurred during the last several years and in connection with such consolidation, the combined company often reassesses its development priorities whichmay impact our existing collaborations or future opportunities. For example, in May 2017, Astellas Pharma announced a joint decision with Pfizer Inc., orPfizer, to discontinue the planned ENDEAR trial which was the subject of our collaboration. We were informed that the decision resulted from an oncologyportfolio review by Astellas Pharma and Pfizer. In January 2019, Bristol Myers Squibb announced that it was acquiring Celgene; this transaction is expectedto close in the third quarter of 2019. Even if we establish new relationships, we or our collaborators may terminate those relationships or they may neverresult in the successful development or commercialization of future tests or other products. From time to time we have agreed to modify the terms of ouragreements with collaborators, including financial terms, and in the future it is possible that we will agree to modify the terms of existing and futureagreements with collaborators.In August 2017, we entered into a collaboration agreement with Lam Research Corporation, or Lam, with respect to the development andcommercialization of our Hyb & Seq sequencing platform and related assays. Pursuant to the terms of the collaboration agreement, Lam will contribute up to$50.0 million, payable quarterly, for allowable development costs. In exchange, Lam is eligible to receive certain single-digit percentage royalty paymentson net sales by us of certain products and technologies developed under the collaboration agreement, if any. In addition, we issued Lam a warrant to purchaseup to 1.0 million shares of our common stock. Any product development activities pursuant to this collaboration are uncertain and development costs mayexceed $50.0 million, in which case we would need to obtain additional funding to complete development of our Hyb & Seq sequencing platform and relatedassays. Ultimately the development may not be successful, which could negatively impact our prospects for future revenue growth.Although we expect such collaborations to provide funding to cover our costs of development, the failure, discontinuation or modification of theseclinical trials could negatively impact our ability to attract new collaboration partners, and would reduce our prospects for introducing new diagnosticproducts, revenue growth, and future operating results.The life sciences research and diagnostic markets are highly competitive. If we fail to compete effectively, our business and operating results will suffer.We face significant competition in the life sciences research and diagnostic markets. We currently compete with both established and early stage lifesciences research companies that design, manufacture and market instruments and consumables for gene expression analysis, single-cell analysis, polymerasechain reaction, or PCR, digital PCR, other nucleic acid detection and additional applications. These companies use well-established laboratory techniquessuch as microarrays or quantitative-31- PCR as well as newer technologies such as next generation sequencing such as RNA-sequencing. We believe our principal competitors in the life sciencesresearch and diagnostic markets are Agilent Technologies, Becton-Dickinson, Bio-Rad, Bio-Techne, Fluidigm, HTG Molecular Diagnostics, Illumina,Luminex, Merck Millipore, O-Link, Perkin Elmer, Qiagen, Roche Applied Science, Thermo Fisher Scientific, and 10x Genomics. In addition, there are anumber of new market entrants in the process of developing novel technologies for the life sciences market, including those that may compete with GeoMxDSP.We also compete with commercial diagnostic laboratory companies. We believe our principal competitor in the breast cancer diagnostics market isGenomic Health, which provides gene expression analysis at its central laboratory in Redwood City, California and currently commands a substantialmajority of the market. We also face competition from companies such as Agendia, bioTheranostics, and Myriad Genetics.Many of our current competitors are large publicly-traded companies, or are divisions of large publicly-traded companies, and may enjoy a numberof competitive advantages over us, including:•greater name and brand recognition, financial and human resources;•broader product lines;•larger sales forces and more established distributor networks;•substantial intellectual property portfolios;•larger and more established customer bases and relationships; and•better established, larger scale, and lower cost manufacturing capabilities.We believe that the principal competitive factors in all of our target markets include:•cost of capital equipment;•cost of consumables and supplies;•reputation among customers;•innovation in product offerings;•flexibility and ease-of-use;•accuracy and reproducibility of results; and•compatibility with existing laboratory processes, tools and methods.We believe that additional competitive factors specific to the diagnostics market include:•availability of reimbursement for testing services;•breadth of clinical decisions that can be influenced by information generated by tests;•volume, quality, and strength of clinical and analytical validation data;•inclusion in treatment guidelines; and•economic benefit accrued to customers based on testing services enabled by products.We cannot assure investors that our products will compete favorably or that we will be successful in the face of increasing competition from newproducts and technologies introduced by our existing competitors or new companies entering our markets. In addition, we cannot assure investors that ourcompetitors do not have or will not develop products or technologies that currently or in the future will enable them to produce competitive products withgreater capabilities or at lower costs than ours. For example, we recently concluded that certain of our customers have shifted certain types of experimentsthat previously had been performed on our nCounter system to RNA-sequencing technology. Although we are pursuing several strategies to mitigate thistrend, there can be no assurance we will be successful in doing so. Any failure to compete effectively could materially and adversely affect our business,financial condition and operating results.If Prosigna fails to achieve and sustain sufficient market acceptance, we will not generate expected revenue, and our prospects may be harmed.Commercialization of Prosigna in Europe, the United States and the other jurisdictions in which we intend to pursue regulatory approval orclearance is a key element of our strategy. Currently, most oncologists seeking sophisticated gene expression analysis for diagnosing and profiling breastcancer in their patients ship tissue samples to a limited number of centralized laboratories typically located in the United States. We may experiencereluctance, or refusal, on the part of physicians to order, and third-party payors to pay for, Prosigna if the results of our research and clinical studies, and oursales and marketing activities relating to communication of these results, do not convey to physicians and patients that Prosigna provides equivalent orbetter prognostic information than those centralized laboratories. In addition, our diagnostic tests are performed by pathologists in local laboratories, ratherthan by a vendor in a remote centralized laboratory, which requires us to educate pathologists regarding the benefits of this business model and oncologistsregarding the reliability and consistency of results generated locally. Also, we offer Prosigna in other countries outside of the United States, where genomictesting for-32- breast cancer is not widely available and the market for such tests is new. The future growth of the market for genomic breast cancer testing will depend onphysicians’ acceptance of such testing and the availability of reimbursement for such tests.These hurdles may make it difficult to convince healthcare providers that tests using our technologies are appropriate options for cancer diagnostics,may be equivalent or superior to available tests, and may be at least as cost effective as alternative technologies. If we fail to successfully commercializeProsigna on a widespread basis, we may never receive a return on the significant investments in sales and marketing, medical, regulatory, manufacturing andquality assurance personnel we have made, and further investments we intend to make, which would adversely affect our growth prospects, operating resultsand financial condition.Risks Related to Government Regulation and Diagnostic Product ReimbursementOur “Research Use Only” products for the research, life sciences market could become subject to more stringent regulatory surveillance as medical devicesby the FDA or other regulatory agencies in the future which could increase our costs and delay our commercialization efforts, thereby materially andadversely affecting our business and results of operations.In the United States, most of our products are currently labeled and sold for Research Use Only, or RUO, and not for the diagnosis or treatment ofdisease, and are sold to pharmaceutical and biotechnology companies, academic and government institutions and research laboratories. Because suchproducts are not intended for diagnostic use, and the products do not include clinical or diagnostic claims or provide directions to use as diagnostic products,they are not subject to the same level of control by the Food and Drug Administration, or FDA, as medical devices. In particular, while the FDA regulationsrequire that RUO products be appropriately labeled, “For Research Use Only,” the regulations do not subject such products to the FDA’s pre- and post-marketcontrols for medical devices. Pursuant to FDA guidance on RUO products, a company may not make clinical or diagnostic claims about an RUO product orprovide clinical directions or clinical support services to customers for RUO products. If the FDA were to modify its approach to regulating products labeledfor research use only, it could reduce our revenue or increase our costs and adversely affect our business, prospects, results of operations or financialcondition. In the event that the FDA requires marketing authorization of our RUO products in the future, there can be no assurance that the FDA willultimately grant any clearance or approval requested by us in a timely manner, or at all.In addition, we sell dual-use instruments with software that has both FDA-cleared functions, and research functions for which FDA approval orclearance is not required. Dual-use instruments are subject to FDA regulation since they are intended, at least in part, for use by customers performing clinicaldiagnostic testing. In November 2014, FDA issued a guidance document that described FDA’s approach to regulating molecular diagnostic instruments thatcombine both approved/cleared device functions and device functions for which approval/clearance is not required. There is a risk that requirements for dualuse instruments could change causing additional costs and delays for development of these products. For example, there could be enforcement action if theFDA determines that approval or clearance was required for those functions for which FDA approval or clearance has not been obtained, or the instruments arebeing promoted for off-label use. There is also a risk that the FDA could broaden its current regulatory enforcement of dual-use instruments throughadditional FDA oversight of such products or impose additional requirements upon such products. In July 2017, FDA adopted a new regulation exemptingcertain clinical multiplex test systems, like the ones used with our Prosigna assay, from premarket notification requirements. However, these new regulationswill not impact the FDA clearance requirements for our nCounter Dx Analysis System which will still require 510(k) clearance for use with specific assays,such as Prosigna.If Medicare and other third-party payors in the United States and foreign countries do not approve reimbursement for diagnostic tests enabled by ourtechnology, or revise or rescind reimbursement rates, the commercial success of our diagnostic products would be compromised.Successful commercialization of our diagnostic products depends, in large part, on the availability of adequate reimbursement for testing servicesthat our diagnostic products enable from government insurance plans, managed care organizations and private insurance plans. There is significantuncertainty surrounding third-party reimbursement for the use of tests that incorporate new technology. For example, after the FDA clearance of Prosigna inSeptember 2013, it took over two years to achieve broad Medicare reimbursement of Prosigna testing.If we are unable to obtain positive policy decisions from third-party payors approving reimbursement for our tests at adequate levels, the commercialsuccess of our diagnostic products would be compromised and our revenue would be significantly limited. Even if we do obtain reimbursement for our tests,Medicare, Medicaid and other payors may withdraw their coverage policies, cancel their contracts at any time, review and adjust the rate of reimbursement,require co-payments from patients or stop paying for our tests, which would reduce revenue for testing services based on our technology, and indirectly,demand for our diagnostic products. In addition, insurers, including managed care organizations as well as government payors such as Medicare andMedicaid, have increased their efforts to control the cost, utilization and delivery of healthcare services, which may include decreased coverage or reducedreimbursement.-33- From time to time, Congress has considered and implemented changes to the Medicare fee schedules in conjunction with budgetary legislation, andpricing and payment terms, including the possible requirement of a patient co-payment for Medicare beneficiaries for tests covered by Medicare, and aresubject to change at any time. The Protecting Access to Medicare Act, or PAMA, of 2014 revised the Medicare Clinical Laboratory Fee Schedule, or CLFS, tobase prices on private payor rates that are reported to the Centers for Medicare and Medicaid Services, or CMS. In June 2016, CMS released the final ClinicalDiagnostic Tests Laboratory Payment System regulations, in response to PAMA. Under the definitions in the regulations, Prosigna is defined as a ClinicalDiagnostic Laboratory Test, or CDLT, and therefore will be repriced every three years based on a weighted median of private payor payments submitted byreporting labs. As a result, if private payor payment amounts decline, there is a risk that Medicare prices will fall as well, though PAMA limits thesereductions to no more than 10% less than the prior year during calendar years 2018-2020 and no more than 15% less during years 2021-2023. In 2017, as partof the market-based pricing determinations for 2018 required by PAMA, only one private payor payment from a single commercial laboratory was reported,and it was an anomalous payment amount, well below the current Medicare reimbursement price. CMS used that single payment amount as the weightedmedian, which triggered an automatic 10% reduction in Prosigna’s Medicare reimbursement rate of $3,443 to $3,099, effective January 1, 2018, followed bya subsequent 10% reduction to $2,789, effective January 1, 2019. There will be an additional 10% automatic reduction in the Medicare reimbursement ratefor Prosigna for calendar year 2020. Reductions in the prices at which testing services based on our technology are reimbursed could reduce our customers’interest in offering Prosigna and have a negative impact on our revenue.Under PAMA, CMS is required to reprice CLDTs, including Prosigna, every three years. The next repricing will be announced by CMS in late 2020,based on private payor reimbursement data collected by reporting laboratories during the period January 1, 2019 to June 30, 2019. These new prices will takeeffect on January 1, 2021. Depending on the pricing data reported by these laboratories to CMS, Prosigna’s Medicare reimbursement price may change.In many countries outside of the United States, various coverage, pricing and reimbursement approvals are required. For example, we have receivedpositive reimbursement decisions for Prosigna have occurred in France, certain regions of Spain, Canada, Israel, Switzerland and Denmark, but despite thesepositive developments, we continue to expect that it will take several years to establish broad coverage and reimbursement for testing services based on ourproducts with most payors in countries outside of the United States, and our efforts may not be successful.We continue to pursue positive reimbursement and coverage decisions from government insurance plans, managed care organizations and privateinsurance plans. From time to time, if positive coverage decisions are obtained, we may publicly announce such decisions. In most cases where coverage isdenied by a third-party payor, there will be subsequent opportunities to submit additional information or clinical evidence and have such decisionreconsidered. We intend to evaluate the benefit of continued pursuit of a positive reimbursement determination on a case by case basis and in most casesexpect to continue to pursue a positive coverage decision with those payors based on additional information or subsequent clinical developments; as a result,we do not intend to publicly announce any denials of coverage or the absence of a coverage determination on a regular basis.Our nCounter reagents may be used by clinical laboratories to create Laboratory-Developed Tests, (LDT), which could, in the future, be the subject ofadditional FDA regulation as medical devices, which could materially and adversely affect our business and results of operations.A clinical laboratory can use our custom-manufactured reagents to create what is called a Laboratory Developed Test, or LDT. LDTs, according tothe FDA, are diagnostic tests that are developed, validated and performed by a single laboratory and include genetic tests. Historically, LDTs generally havenot been subject to FDA regulations. In October 2014, the FDA issued draft guidance documents proposing the use of a risk-based approach to regulatingLDTs. Any restrictions on LDTs by the FDA could decrease demand for our reagents. Additionally, compliance with additional regulatory burdens could betime consuming and costly for our customers. While FDA announced in November 2016 that it did not intend to seek finalization of the draft LDT guidancein the near term, FDA could alter its position or Congress could enact legislation that could result in FDA regulation of some LDTs. To date, draft legislativeproposals have been discussed, but no legislation has been introduced. If FDA changed its policy or legislation were enacted, it could adversely affectdemand for these specialized reagents or our instruments.Our nCounter reagents allow users to design and validate their own customized assays using standard sets of barcodes provided by us with thelaboratories’ choice of oligonucleotide probes. These reagents, which are offered to customers in the United States through a custom manufacturing service,may be used by laboratories in conjunction with analyte-specific reagents and general purpose reagents to create diagnostic tests or test systems validatedwithin the accredited testing laboratory.-34- Approval and/or clearance by the FDA and foreign regulatory authorities for our diagnostic tests will take significant time and require significantresearch, development and clinical study expenditures and ultimately may not succeed.Before we begin to label and market our products for use as clinical diagnostics in the United States, unless an exemption applies we are required toobtain prior 510(k) clearance, or pre-market approval (PMA) from the FDA. In September 2013, we received FDA 510(k) clearance for Prosigna as aprognostic indicator for distant recurrence-free survival at 10 years in post-menopausal women with Stage I/II lymph node-negative or Stage II lymph node-positive (1-3 positive nodes) hormone receptor-positive breast cancer who have undergone surgery in conjunction with locoregional treatment and consistentwith the standard of care. In addition, we are currently collaborating with Celgene on a companion diagnostic test for their drug REVLIMID. In August 2014,the FDA issued a companion diagnostics final guidance stating that if the device is essential to the safety or efficacy of the drug, the FDA generally willrequire approval or clearance for the device at the time when the FDA approves the drug. The FDA stated in the companion diagnostics final guidance thatwhile in some instances a companion diagnostic could come to market through a 510(k), FDA expects that companion diagnostics usually will require aPMA. In July 2016, the FDA issued a draft co-development companion diagnostic and therapeutic guidance document which similarly reflected thisinformation. The draft guidance appears to also relate, at least in part, to what may be considered complementary diagnostics, i.e., diagnostics that arebeneficial for therapeutic product development or clinical decision making but that do not meet the definition of an IVD companion diagnostic. If wedeveloped a diagnostic device to be used in conjunction with a pharmaceutical product that was then cleared or approved but not as a companion diagnosticfor the therapeutic product, this may result in potentially reduced revenue for the test as the labeling of the drug may not reference the need for the diagnostictest.Any 510(k) clearance, de novo authorization or PMA approval we obtain for any future product would place substantial restrictions on how ourdevice is marketed or sold. The FDA will continue to place considerable restrictions on our products, including, but not limited to, the obligation to complywith the Quality System Regulation, or QSR, registering manufacturing facilities, listing the products with the FDA, and complying with labeling, marketing,complaint handling, medical device reporting requirements, and reporting certain corrections and removals. Obtaining FDA clearance or approval fordiagnostics can be expensive and uncertain, and generally takes from several months to several years from submission, and generally requires detailed andcomprehensive scientific and clinical data, as well as compliance with FDA regulations. In addition, we have limited experience in obtaining PMA approvalfrom the FDA and are therefore supplementing our operational capabilities to manage the more complex processes needed to obtain and maintain PMAs.Notwithstanding the expense, these efforts may never result in FDA approval, de novo authorizations, or 510(k) clearance. Even if we were to obtainregulatory approval, authorization or clearance, it may not be for the uses we believe are important or commercially attractive, in which case we would notmarket our product for those uses.Sales of our diagnostic products outside the United States are subject to foreign regulatory requirements governing clinical studies, vigilancereporting, marketing approval, manufacturing, regulatory inspections, product licensing, pricing and reimbursement. These regulatory requirements varygreatly from country to country. As a result, the time required to obtain approvals outside the United States may differ from that required to obtain FDAapproval or clearance, and we may not be able to obtain foreign regulatory approvals on a timely basis or at all. Approval or clearance by the FDA does notensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval or clearance byregulatory authorities in other countries or by the FDA, and foreign regulatory authorities could require additional testing beyond what the FDA requires. Inaddition, FDA regulates exports of medical devices. Failure to comply with these regulatory requirements or to obtain required approvals or clearances couldimpair our ability to commercialize our diagnostic products outside of the United States.If we are unable to obtain additional regulatory clearances, registrations, or approvals to market Prosigna in additional countries or if regulatorylimitations are placed on our diagnostic products, our business and growth will be harmed. In addition, if we do not obtain additional regulatoryclearances or approvals necessary to market products other than Prosigna for diagnostic purposes, we will be limited to marketing such products forresearch use only. We have received regulatory clearance in the United States under a 510(k) for a version of our first diagnostic product, Prosigna, providing anassessment of a patient’s risk of recurrence for breast cancer, we have obtained a CE mark for Prosigna which permits us to market that assay for diagnosticpurposes in the European Union, and we have received regulatory clearances in selected other jurisdictions. Other than with respect to Prosigna in suchjurisdictions in which we have received regulatory clearance, we are limited to marketing our products for research use only, which means that we cannotmake diagnostic or clinical claims. We intend to seek regulatory authorizations to market Prosigna in other jurisdictions and, potentially, for otherindications. In addition, pursuant to our collaborations with pharmaceutical companies for the development of companion diagnostic tests for use with theirdrugs, we are responsible for obtaining any regulatory authorizations needed to use the companion diagnostic tests in clinical trials as well as the regulatoryapprovals to sell the companion diagnostic tests following completion of such trials. For example, we are currently working on the development ofLymphMark, a companion diagnostic test for REVLIMID that we have developed in a collaboration with Celgene. Some of the-35- compensation we expect to receive pursuant to these collaborations is based on the receipt of such approvals. Any failure to obtain regulatory approvals forour diagnostic tests in a particular jurisdiction may also reduce sales of our nCounter systems for clinical use in that jurisdiction, as the lack of a robust menuof available diagnostic tests would make those systems less attractive to testing laboratories.We cannot assure investors that we will be successful in obtaining these regulatory clearances, registrations, or approvals. If we do not obtainadditional regulatory clearances or approvals to market future products or expand future indications for diagnostic purposes, if additional regulatorylimitations are placed on our products or if we fail to successfully commercialize such products, the market potential for our diagnostic products would beconstrained, and our business and growth prospects would be adversely affected.We expect to rely on third parties in conducting any future studies of our diagnostic products that may be required by the FDA or other regulatoryauthorities, and to fulfill product registration requirements in foreign countries, and those third parties may not perform satisfactorily.We do not have the ability to independently conduct the clinical studies or other studies that may be required to obtain FDA and other regulatoryclearance or approval for our diagnostic products, including additional indications. Accordingly, we expect to rely on third parties, such as medicalinstitutions, clinical investigators, consultants, and our pharmaceutical collaborators to conduct such studies. For example, we contract with clinicallaboratories to perform the companion diagnostic tests we have developed that are used in the clinical trials run by pharmaceutical companies pursuant to ourcompanion diagnostic collaborations. Our reliance on these third parties for clinical development activities will reduce our control over these activities.These third-party contractors may not complete activities on schedule or conduct studies in accordance with regulatory requirements or the study design. Ourreliance on third parties that we do not control will not relieve us of any applicable requirement to ensure compliance with various procedures required undergood clinical practices and regulatory requirements. If these third parties do not successfully carry out their contractual duties or regulatory obligations ormeet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of the data they obtain is compromised due to their failure toadhere to our clinical protocols or regulatory requirements or for other reasons, the studies may be extended, delayed, suspended or terminated, and we maynot be able to obtain regulatory approval for our diagnostic products. In addition, under our contracts with our pharmaceutical collaborators, we potentiallycould be held liable for the failure of our third party subcontractors to perform their contractual obligations.Our pharmaceutical collaborators may decide to end their clinical program, modify or terminate a clinical trial, or not pursue regulatory filings for acompanion diagnostic test. For example, in October 2017, Merck notified us of the decision to not continue to pursue regulatory approval of the companiondiagnostic for their product, KEYTRUDA, under our collaboration and, in August 2018, we and Merck agreed to mutually terminate our developmentcollaboration agreement. It is also possible that a clinical trial run by one of our collaborators may not meet its endpoint and consequently may not support aregulatory filing for the companion diagnostic we are developing.In many countries, we are not able to directly apply for product registrations, and therefore must rely on third-party contractors or productdistributors resident in those countries to fulfill the product registration requirements. Our reliance on these third parties reduces our control over theregistration activities, and those parties may not appropriately register the products. Our reliance on third parties does not relieve us of the obligation tocomply with applicable requirements, and therefore any failure on the part of the third parties could subject us to enforcement action in the country in whichthe registration was not properly fulfilled.We are subject to ongoing and extensive regulatory requirements, and our failure to comply with these requirements could substantially harm ourbusiness.Certain of our products are regulated as in vitro diagnostic medical devices, including Prosigna and the nCounter FLEX Analysis System.Accordingly, we and certain of our contract manufacturers are subject to ongoing International Organization for Standardization, or ISO, as well as regulationby the FDA and other national health authorities. These may include routine inspections by Notified Bodies, FDA, and other health authorities, of ourmanufacturing facilities and our records for compliance with requirements such as ISO 13485 and the QSR, which establish extensive requirements forquality assurance and control as well as manufacturing and change control procedures. We are also subject to other regulatory obligations, such asrequirements pertaining to the registration of our manufacturing facilities and the listing of our devices with the FDA; continued adverse event andmalfunction reporting; reporting certain corrections and removals; and labeling and promotional requirements. Other agencies may also issue guidelines andregulations that could impact the development of our products, including companion diagnostic tests. For example, the European Medicines Agency, aEuropean Union agency which is responsible for the scientific evaluation of medicines used in the EU, recently launched an initiative to determineguidelines for the use of genomic biomarkers in the development and life-cycle of drugs. On May 25, 2017 the European Union adopted the IVD DirectiveRegulation, which increases the regulatory requirements applicable to some in vitro diagnostics in-36- the EU and would require that we re-classify and obtain approval, registration, or clearance for our existing CE-marked IVD products within a five-year graceperiod (by May 25, 2022). We may also be subject to additional FDA or global regulatory authority post-marketing obligations or requirements by the FDA or globalregulatory authority to change our current product classifications which would impose additional regulatory obligations on us. The promotional claims wecan make for Prosigna are limited to the intended use as required by regulatory authority. If we are not able to maintain regulatory compliance, we may not bepermitted to market our medical device products and/or may be subject to enforcement by EU Competent Authorities and the FDA and other globalregulatory authority such as the issuance of warning or untitled letters, fines, injunctions, and civil penalties; recall or seizure of products; operatingrestrictions; and criminal prosecution. In addition, we may be subject to similar regulatory regimes of foreign jurisdictions as we continue to commercializeour products in new markets outside of the U.S. and Europe. Adverse Notified Body, EU Competent Authority or FDA or global regulatory authority action inany of these areas could significantly increase our expenses and limit our revenue and profitability.We may be subject, directly or indirectly, to healthcare fraud and abuse laws and other laws applicable to our marketing practices. If we are unable tocomply, or have not complied, with such laws, we could face substantial penalties.Our operations are directly, or indirectly through our customers, subject to various fraud and abuse laws, including, without limitation, the federaland state anti-kickback statutes and state, federal and foreign marketing compliance laws and gift bans. These laws may impact, among other things, ourproposed sales and marketing and education programs and require us to implement additional internal systems for tracking certain marketing expendituresand reporting them to government authorities. In addition, we may be subject to privacy regulations by both the federal government and the states in whichwe conduct our business as well as by foreign governments and entities. The laws that may affect our ability to operate include:•the federal Anti-kickback Law and state equivalents;•the federal physician self-referral prohibition, commonly known as the Stark Law, and the state equivalents;•the federal Health Insurance Portability and Accountability Act of 1996, as amended;•the Medicare civil money penalty and exclusion requirements;•the federal False Claims Act and state equivalents;•state physician gift bans and state, federal and foreign marketing expenditure disclosure laws;•the Foreign Corrupt Practices Act, which applies to our international activities; and•the European Union's General Data Protection Regulation.If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may besubject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations, any of which couldadversely affect our ability to operate our business and our results of operations.Healthcare policy changes, including legislation reforming the United States healthcare system, may have a material adverse effect on our financialcondition and results of operations.The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively, the ACA, enacted inMarch 2010, made changes that significantly impact the pharmaceutical and medical device industries and clinical laboratories. For example, beginning in2013, each medical device manufacturer must pay a sales tax in an amount equal to 2.3% of the price for which such manufacturer sells its medical devices. InDecember 2015, Congress passed a two-year suspension of the medical device tax from January 1, 2016 to December 31, 2017. In January 2018, Congresssuspended the tax again for a two-year period. The tax applies to our listed medical device products, which include the nCounter Dx Analysis System andProsigna. The Budget Control Act of 2011, contained automatic spending cuts to the federal budget known as sequestration. As a result of sequestration,Medicare payments are reduced by 2% per year. For Prosigna, pricing changes can occur through the annual adjustment to the CLFS; this resulted in a 10%reduction in the Medicare reimbursement price for Prosigna starting on January 1, 2018 and future 10% reductions in 2019 and 2020. These or any futureproposed or mandated reductions in payments may apply to some or all of the clinical laboratory tests that our customers use our technology to deliver toMedicare beneficiaries, and may indirectly reduce demand for our products.Other significant measures contained in the ACA include coordination and promotion of research on comparative clinical effectiveness of differenttechnologies and procedures, initiatives to revise Medicare payment methodologies, such as bundling of payments across the continuum of care by providersand physicians, and initiatives to promote quality indicators in payment methodologies. The ACA also included significant new fraud and abuse measures,including required disclosures of financial arrangements with physician customers, lower thresholds for violations and increasing potential penalties for suchviolations.-37- In addition to the ACA, the effect of which cannot presently be quantified, various healthcare reform proposals have also emerged from federal andstate governments. Changes in healthcare policy, such as the creation of broad test utilization limits for diagnostic products in general or requirements thatMedicare patients pay for portions of clinical laboratory tests or services received, could substantially impact the sales of our tests, increase costs and divertmanagement’s attention from our business. In addition, sales of our tests outside of the United States will subject us to foreign regulatory requirements, whichmay also change over time.We cannot predict whether future healthcare initiatives, including potential repeal of the ACA in whole or in part, will be implemented at the federalor state level or in countries outside of the United States in which we may do business, or the effect any future legislation or regulation will have on us.Changes in the United States healthcare industry may result in decreased profits to us, lower reimbursements by payors for our products or reduced medicalprocedure volumes, all of which may adversely affect our business, financial condition and results of operations.Risks Related to Intellectual PropertyIf we are unable to protect our intellectual property effectively, our business would be harmed.We rely on patent protection as well as trademark, copyright, trade secret and other intellectual property rights protection and contractualrestrictions to protect our proprietary technologies, all of which provide limited protection and may not adequately protect our rights or permit us to gain orkeep any competitive advantage. As of December 31, 2018, we owned or licensed 27 issued U.S. patents and approximately 36 pending U.S. patentapplications, including provisional and non-provisional filings. We also owned or licensed approximately 266 pending and granted counterpart applicationsworldwide, including 118 country-specific validations of 13 European patents. We continue to file new patent applications to protect the full range of ourtechnologies. If we fail to protect our intellectual property, third parties may be able to compete more effectively against us and we may incur substantiallitigation costs in our attempts to recover or restrict use of our intellectual property.Our success depends in part on obtaining patent protection for our products and processes, preserving trade secrets, patents, copyrights andtrademarks, operating without infringing the proprietary rights of third parties, and acquiring licenses for technology or products. We cannot assure investorsthat any of our currently pending or future patent applications will result in issued patents, and we cannot predict how long it will take for such patents to beissued. As the patent and prior art landscape for translational research and molecular diagnostic life science products grows more crowded and becomes morecomplex we may find it more difficult to obtain patent protection for our products including those related to digital spatial profiling and sequencing, forexample. Our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from practicing our technologies or fromdeveloping competing products and may therefore fail to provide us with any competitive advantage. Additionally, we cannot assure investors that ourcurrently pending or future patent applications have or will be filed in all of our potential markets. Further, we cannot assure investors that other parties willnot challenge any patents issued to us or that courts or regulatory agencies will hold our patents to be valid or enforceable. We cannot guarantee investorsthat we will be successful in defending challenges made against our patents and patent applications. Any successful third-party challenge to our patentscould result in the third party or the unenforceability or invalidity of such patents and could deprive us of the ability to prevent others from using thetechnologies claimed in such issued patents.The patent positions of life sciences companies can be highly uncertain and involve complex legal and factual questions for which important legalprinciples remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies’ patents has emerged to date in the UnitedStates. Furthermore, in the biotechnology field, courts frequently render opinions that may affect the patentability of certain inventions or discoveries,including opinions that may affect the patentability of methods for analyzing or comparing DNA.In particular, the patent positions of companies engaged in development and commercialization of genomic diagnostic tests, like Prosigna, areparticularly uncertain. Various courts, including the U.S. Supreme Court, have rendered decisions that impact the scope of patentability of certain inventionsor discoveries relating to genomic diagnostics. Specifically, these decisions stand for the proposition that patent claims that recite laws of nature (forexample, the relationships between gene expression levels and the likelihood of risk of recurrence of cancer) are not themselves patentable unless thosepatent claims have sufficient additional features that provide practical assurance that the processes are genuine inventive applications of those laws ratherthan patent drafting efforts designed to monopolize the law of nature itself. What constitutes a “sufficient” additional feature is uncertain. Furthermore, inview of these decisions, in December 2014 the U.S. Patent and Trademark Office, or USPTO, published revised guidelines for patent examiners to apply whenexamining process claims for patent eligibility. This guidance was updated by the USPTO in July 2015 and additional illustrative examples provided in May2016. The USPTO provided additional guidance on examination procedures pertaining to subject matter eligibility in April 2018 and June 2018. Theguidance indicates that claims directed to a law of nature, a natural phenomenon, or an abstract idea that do not meet the eligibility requirements should berejected as non‑statutory, patent ineligible subject matter; however, method of-38- treatment claims that practically apply natural relationships should be considered patent eligible. We cannot assure you that our patent portfolio will not benegatively impacted by the current uncertain state of the law, new court rulings or changes in guidance or procedures issued by the USPTO. From time totime, the U.S. Supreme Court, other federal courts, the U.S. Congress or the USPTO may change the standards of patentability and validity of patents withinthe genomic diagnostic space, and any such changes could have a negative impact on our business.The laws of some non-U.S. countries do not protect intellectual property rights to the same extent as the laws of the United States, and manycompanies have encountered significant problems in protecting and defending such rights in foreign jurisdictions. The legal systems of certain countries,particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating tobiotechnology, which could make it difficult for us to stop the infringement of our patents. Proceedings to enforce our patent rights in foreign jurisdictionscould result in substantial cost and divert our efforts and attention from other aspects of our business.Changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of ourintellectual property. We cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents. For example:•We might not have been the first to make the inventions covered by each of our pending patent applications.•We might not have been the first to file patent applications for these inventions.•Others may independently develop similar or alternative products and technologies or duplicate any of our products and technologies.•It is possible that our pending patent applications will not result in issued patents, and even if they issue as patents, they may not provide abasis for commercially viable products, may not provide us with any competitive advantages, or may be challenged and invalidated bythird parties.•We may not develop additional proprietary products and technologies that are patentable.•The patents of others may have an adverse effect on our business.•We apply for patents covering our products and technologies and uses thereof, as we deem appropriate. However, we may fail to apply forpatents on important products and technologies in a timely fashion or at all.In addition to pursuing patents on our technology, we take steps to protect our intellectual property and proprietary technology by entering intoconfidentiality agreements and intellectual property assignment agreements with our employees, consultants, corporate partners and, when needed, ouradvisors. Such agreements may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in theevent of unauthorized use or disclosure or other breaches of the agreements, and we may not be able to prevent such unauthorized disclosure. Monitoringunauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be, adequate. If we were toenforce a claim that a third party had illegally obtained and was using our trade secrets, it would be expensive and time consuming, and the outcome wouldbe unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets.In addition, competitors could purchase our products and attempt to replicate some or all of the competitive advantages we derive from ourdevelopment efforts, willfully infringe our intellectual property rights, design around our protected technology or develop their own competitivetechnologies that fall outside of our intellectual property rights. In addition, competitors may develop their own versions of our tests in countries where wedid not apply for patents, where our patents have not issued or where our intellectual property rights are not recognized and compete with us in thosecountries and markets. If our intellectual property is not adequately protected so as to protect our market against competitors’ products and methods, ourcompetitive position could be adversely affected, as could our business.We have not yet registered certain of our trademarks in all of our potential markets. If we apply to register these trademarks, our applications may notbe allowed for registration, and our registered trademarks may not be maintained or enforced. In addition, opposition or cancellation proceedings may befiled against our trademark applications and registrations, and our trademarks may not survive such proceedings. If we do not secure registrations for ourtrademarks, we may encounter more difficulty in enforcing them against third parties than we otherwise would.To the extent our intellectual property, including licensed intellectual property, offers inadequate protection, or is found to be invalid orunenforceable, we would be exposed to a greater risk of direct competition. If our intellectual property does not provide adequate protection against ourcompetitors’ products, our competitive position could be adversely affected, as could our business. Both the patent application process and the process ofmanaging patent disputes can be time consuming and expensive.-39- We depend on certain technologies that are licensed to us. We do not control these technologies and any loss of our rights to them could prevent us fromselling our products.We rely on licenses in order to be able to use various proprietary technologies that are material to our business, including our core digital molecularbarcoding technology licensed from the Institute for Systems Biology, technology relating to Prosigna licensed from Bioclassifier, LLC, intellectual propertyrelating to a gene signature for lymphoma subtyping from the National Institutes of Health for use in our collaboration with Celgene Corporation, andintellectual property relating to the tumor inflammation signature from Merck. We do not own the patents that underlie these licenses. Our rights to use thesetechnologies and employ the inventions claimed in the licensed patents are subject to the continuation of and compliance with the terms of those licenses.We may need to license other technologies to commercialize future products. We may also need to negotiate licenses to patents and patentapplications after launching any of our commercial products. Our business may suffer if the patents or patent applications are unavailable for license or if weare unable to enter into necessary licenses on acceptable terms.In some cases, we do not control the prosecution, maintenance, or filing of the patents to which we hold licenses, or the enforcement of these patentsagainst third parties. Some of our patents and patent applications were either acquired from another company who acquired those patents and patentapplications from yet another company, or are licensed from a third party. Thus, these patents and patent applications are not written by us or our attorneys,and we did not have control over the drafting and prosecution. The former patent owners and our licensors might not have given the same attention to thedrafting and prosecution of these patents and applications as we would have if we had been the owners of the patents and applications and had control overthe drafting and prosecution. We cannot be certain that drafting or prosecution of the licensed patents and patent applications by the licensors have been orwill be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights.Enforcement of our licensed patents or defense of any claims asserting the invalidity of these patents is often subject to the control or cooperation ofour licensors. Certain of our licenses contain provisions that allow the licensor to terminate the license upon specific conditions. Therefore, our business maysuffer if these licenses terminate, if the licensors fail to abide by the terms of the license or fail to prevent infringement by third parties or if the licensedpatents or other rights are found to be invalid. Our rights under the licenses are subject to our continued compliance with the terms of the license, includingthe payment of royalties due under the license. Because of the complexity of our products and the patents we have licensed, determining the scope of thelicense and related royalty obligation can be difficult and can lead to disputes between us and the licensor. An unfavorable resolution of such a dispute couldlead to an increase in the royalties payable pursuant to the license or termination of the license. If a licensor believed we were not paying the royalties dueunder the license or were otherwise not in compliance with the terms of the license, the licensor might attempt to revoke the license. If such an attempt weresuccessful, we might be barred from producing and selling some or all of our products.In addition, certain of the patents we have licensed relate to technology that was developed with U.S. government grants. Federal regulations imposecertain domestic manufacturing requirements with respect to some of our products embodying these patents.Involvement in lawsuits to protect or enforce our patents and proprietary rights, to determine the scope, coverage and validity of others’ proprietary rights,or to defend against third-party claims of intellectual property infringement, could be time-intensive and costly and may adversely impact our business orstock price.We have received notices of claims of infringement and misappropriation or misuse of other parties’ proprietary rights in the past and may from timeto time receive additional notices. Some of these claims have led and may lead to litigation. We cannot assure investors that we will prevail in such actions,or that other actions alleging misappropriation or misuse by us of third-party trade secrets, infringement by us of third-party patents and trademarks or otherrights, or the validity of our patents, trademarks or other rights, will not be asserted or prosecuted against us.Litigation may also be necessary for us to protect or enforce our patent and proprietary rights, defend against third-party claims or to determine thescope, coverage and validity of the proprietary rights of others. Litigation could result in substantial legal fees and could adversely affect the scope of ourpatent protection and reduce our ability to compete in the marketplace. The outcome of any litigation or other proceeding is inherently uncertain and mightnot be favorable to us. If we resort to legal proceedings to enforce our intellectual property rights or to determine the validity, scope and coverage of theintellectual property or other proprietary rights of others, the proceedings could be burdensome and expensive, even if we were to prevail. Any litigation thatmay be necessary in the future could result in substantial costs and diversion of resources and could have a material adverse effect on our business, operatingresults or financial condition.Numerous significant intellectual property issues have been litigated, and will likely continue to be litigated, between existing and new participantsin our existing and targeted markets. Our success depends in part on our non-infringement of the patents or proprietary rights of third parties. We developcomplex products that integrate a wide range of technologies which-40- may impact our ability to do so clear of third party rights and therefore may need to license other technologies or challenge the scope, coverage and validityof the proprietary rights of others to commercialize future products. As we develop new technologies such as those related to genomic diagnostic tests, digitalspatial profiling and sequencing, for example, and move into new markets and applications for our products, we expect incumbent participants in suchmarkets may assert their patents and other proprietary rights against us as part of a business strategy to slow our entry into such markets, impede oursuccessful competition and/or extract substantial license and royalty payments from us. In addition, we may be unaware of pending third-party patentapplications that relate to our technology and our competitors and others may have patents or may in the future obtain patents and claim that use of ourproducts infringes these patents. Our competitors and others may now, and in the future, have significantly larger and more mature patent portfolios than wecurrently have. In addition, future litigation may involve patent holding companies or other adverse patent owners who have no relevant product revenueand against whom our own patents may provide little or no deterrence or protection. Therefore, our commercial success may depend in part on our non-infringement of the patents or proprietary rights of third parties. We are aware of a third party, Genomic Health, Inc., that has issued patents and pendingpatent applications in the United States, Europe and other jurisdictions that claim methods of using certain genes that are included in Prosigna. We believethat Prosigna does not infringe any valid issued claim. We could incur substantial costs and divert the attention of our management and technical personnelin defending against any of these claims. Any adverse ruling or perception of an adverse ruling in defending ourselves against these claims could have anadverse impact on our stock price, which may be disproportionate to the actual impact of the ruling itself. Parties making claims against us may be able toobtain injunctive or other relief, which could block our ability to develop, commercialize and sell products, and could result in the award of substantialdamages against us. In the event of a successful claim of infringement against us, we may be required to pay damages and obtain one or more licenses fromthird parties, or be prohibited from selling certain products. We may not be able to obtain these licenses at a reasonable cost, if at all. We could therefore incursubstantial costs related to royalty payments for licenses obtained from third parties, which could negatively affect our gross margins. In addition, we couldencounter delays in product introductions while we attempt to develop alternative methods or products to avoid infringing third-party patents or proprietaryrights. Defense of any lawsuit or failure to obtain any of these licenses on favorable terms could prevent us from commercializing products, and theprohibition of sale of any of our products could materially affect our ability to grow and gain market acceptance for our products.Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some ofour confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of this kind of litigation, therecould be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceivethese results to be negative, it could have a substantial adverse effect on the price of our common stock.In addition, our agreements with some of our suppliers, distributors, customers, collaborators and other entities with whom we do business require usto defend or indemnify these parties to the extent they become involved in infringement claims against us, including the claims described above. We couldalso voluntarily agree to defend or indemnify third parties in instances where we are not obligated to do so if we determine it would be important to ourbusiness relationships. If we are required or agree to defend or indemnify any of these third parties in connection with any infringement claims, we couldincur significant costs and expenses that could adversely affect our business, operating results, or financial condition.We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees’former employers.Many of our employees were previously employed at universities or other life sciences companies, including our competitors or potentialcompetitors. Although no claims against us are currently pending, we or our employees may be subject to claims that these employees or we haveinadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defendagainst these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights. A loss ofkey research personnel work product could hamper or prevent our ability to commercialize certain potential products, which could severely harm ourbusiness. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.Our products contain third-party open source software components, and failure to comply with the terms of the underlying open source software licensescould restrict our ability to sell our products.Our products contain software tools licensed by third-party authors under “open source” licenses. Use and distribution of open source software mayentail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protectionsregarding infringement claims or the quality of the code. Some open source licenses contain requirements that we make available source code formodifications or derivative works we create based upon the type of open source software we use. If we combine our proprietary software with open sourcesoftware in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the-41- public. This would allow our competitors to create similar products with less development effort and time and ultimately could result in a loss of productsales.Although we monitor our use of open source software to avoid subjecting our products to conditions we do not intend, the terms of many opensource licenses have not been interpreted by U.S. courts, and there is a risk that these licenses could be construed in a way that could impose unanticipatedconditions or restrictions on our ability to commercialize our products. Moreover, we cannot assure investors that our processes for controlling our use ofopen source software in our products will be effective. If we are held to have breached the terms of an open source software license, we could be required toseek licenses from third parties to continue offering our products on terms that are not economically feasible, to re-engineer our products, to discontinue thesale of our products if re-engineering could not be accomplished on a timely basis, or to make generally available, in source code form, our proprietary code,any of which could adversely affect our business, operating results, and financial condition.We use third-party software that may be difficult to replace or cause errors or failures of our products that could lead to lost customers or harm to ourreputation.We use software licensed from third parties in our products. In the future, this software may not be available to us on commercially reasonable terms,or at all. Any loss of the right to use any of this software could result in delays in the production of our products until equivalent technology is eitherdeveloped by us, or, if available, is identified, obtained and integrated, which could harm our business. In addition, any errors or defects in third-partysoftware, or other third-party software failures could result in errors, defects or cause our products to fail, which could harm our business and be costly tocorrect. Many of these providers attempt to impose limitations on their liability for such errors, defects or failures, and if enforceable, we may have additionalliability to our customers or third-party providers that could harm our reputation and increase our operating costs.We will need to maintain our relationships with third-party software providers and to obtain software from such providers that does not contain anyerrors or defects. Any failure to do so could adversely impact our ability to deliver reliable products to our customers and could harm our results ofoperations.Risks Related to Our Common StockThe price of our common stock may be volatile, and you could lose all or part of your investment.The trading price of our common stock has fluctuated and may continue to fluctuate substantially. The trading price of our common stock dependson a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to ouroperating performance. These fluctuations could cause stockholders to lose all or part of their investment in our common stock. Factors that could causefluctuations in the trading price of our common stock include the following:•actual or anticipated quarterly variation in our results of operations or the results of our competitors;•announcements by us or our competitors of new products, significant contracts, commercial relationships or capital commitments;•failure to obtain or delays in obtaining product approvals or clearances from the FDA or foreign regulators;•adverse regulatory or reimbursement announcements;•issuance of new or changed securities analysts’ reports or recommendations for our stock;•developments or disputes concerning our intellectual property or other proprietary rights;•commencement of, or our involvement in, litigation;•market conditions in the research and diagnostics markets;•manufacturing disruptions;•any future sales of our common stock or other securities;•any change to the composition of the board of directors or key personnel;•announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;•general economic conditions and slow or negative growth of our markets; and•the other factors described in this “Risk Factors” section.The stock market in general, and market prices for the securities of life sciences and diagnostic companies like ours in particular, have from time totime experienced volatility that often has been unrelated to the operating performance of the-42- underlying companies. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our operatingperformance. In several recent situations where the market price of a stock has been volatile, holders of that stock have instituted securities class actionlitigation against the company that issued the stock. If any of our stockholders were to bring a lawsuit against us, the defense and disposition of the lawsuitcould be costly and divert the time and attention of our management and harm our operating results.If securities or industry analysts do not publish research reports about our business, or if they issue an adverse opinion about our business, our stock priceand trading volume could decline.The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or ourbusiness. If one or more of the analysts who cover us issues an adverse opinion about our company, our stock price would likely decline. If one or more ofthese analysts ceases coverage of us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause ourstock price or trading volume to decline.Future sales of our common stock in the public market could cause our stock price to fall.Our stock price could decline as a result of sales of a large number of shares of our common stock or the perception that these sales could occur,including by our officers, directors and their respective affiliates. These sales, or the possibility that these sales may occur, also might make it more difficultfor us to sell equity securities in the future at a time and at a price that we deem appropriate.We register the offer and sale of all shares of common stock that we may issue under our equity compensation plans. In addition, in the future, wemay issue additional shares of common stock or other equity or debt securities convertible into common stock in connection with a financing, acquisition,litigation settlement, employee arrangements or otherwise. For example, in July and August 2018, we sold an aggregate of 4,600,000 shares of common stockin an underwritten public offering for net proceeds of $53.8 million. Any such future issuance, including any issuances pursuant to our “at the market” equityoffering program under our sales agreement with Cowen, could result in substantial dilution to our existing stockholders and could cause our stock price todecline.We have broad discretion over the use of the proceeds to us from our July 2018 and August 2018 underwritten public offering and our October 2018 termloan agreement and will have broad discretion over the use of the proceeds to us from our “at the market” equity offering program and may apply theproceeds to uses that do not improve our operating results or the value of your securities.We have broad discretion over the use of proceeds to us from our July 2018 and August 2018 underwritten public offering and our October 2018term loan agreement and we will have broad discretion to use the net proceeds to us from our “at the market” equity offering program put into place inJanuary 2018, and investors will be relying solely on the judgment of our board of directors and management regarding the application of these proceeds.Although we expect to use the net proceeds from our “at the market” equity offering program for general corporate purposes, investors will not have theopportunity, as part of their investment decision, to assess whether the proceeds are being used appropriately. Our use of the proceeds may not improve ouroperating results or increase the value of the securities offered pursuant to the foregoing fundraising transactions.Anti-takeover provisions in our charter documents and under Delaware or Washington law could make an acquisition of us difficult, limit attempts by ourstockholders to replace or remove our current management and limit our stock price.Provisions of our certificate of incorporation and bylaws may delay or discourage transactions involving an actual or potential change in our controlor change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that ourstockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our stock. Among other things,the certificate of incorporation and bylaws:•permit the board of directors to issue up to 15,000,000 shares of preferred stock, with any rights, preferences and privileges as they maydesignate;•provide that the authorized number of directors may be changed only by resolution of the board of directors;•provide that all vacancies, including newly-created directorships, may, except as otherwise required by law, be filled by the affirmative voteof a majority of directors then in office, even if less than a quorum;•divide the board of directors into three classes;•provide that a director may only be removed from the board of directors by the stockholders for cause;•require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and maynot be taken by written consent;-43- •provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directorsat a meeting of stockholders must provide notice in writing in a timely manner, and meet specific requirements as to the form and content ofa stockholder’s notice;•prevent cumulative voting rights (therefore allowing the holders of a plurality of the shares of common stock entitled to vote in anyelection of directors to elect all of the directors standing for election, if they should so choose);•provide that special meetings of our stockholders may be called only by the chairman of the board, our chief executive officer or by theboard of directors; and•provide that stockholders are permitted to amend the bylaws only upon receiving at least two-thirds of the total votes entitled to be cast byholders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law,which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for aperiod of three years following the date on which the stockholder became an “interested” stockholder. Likewise, because our principal executive offices arelocated in Washington, the anti-takeover provisions of the Washington Business Corporation Act may apply to us under certain circumstances now or in thefuture. These provisions prohibit a “target corporation” from engaging in any of a broad range of business combinations with any stockholder constituting an“acquiring person” for a period of five years following the date on which the stockholder became an “acquiring person.”Complying with the laws and regulations affecting public companies increases our costs and the demands on management and could harm our operatingresults.As a public company, we incur and will continue to incur significant legal, accounting and other expenses that we did not incur as a privatecompany. We ceased to be an “emerging growth company” on December 31, 2018 and are no longer eligible for reduced disclosure requirements andexemptions applicable to “emerging growth companies.” As such, we will be required to hold a say-on-pay vote and a say-on-frequency vote at our 2019annual meeting of stockholders. We expect that our loss of “emerging growth company” status will require additional attention from management and willresult in increased costs to us, which could include higher legal fees, accounting fees and fees associated with investor relations activities, among others. Inaddition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and The Nasdaq Global Market impose numerous requirements on publiccompanies, including requiring changes in corporate governance practices. Also, the Exchange Act requires, among other things, that we file annual,quarterly and current reports with respect to our business and operating results. Our management and other personnel must devote a substantial amount oftime to compliance with these laws and regulations. These burdens may increase as new legislation is passed and implemented, including any newrequirements that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 may impose on public companies. These requirements haveincreased and will likely continue to increase our legal, accounting, and financial compliance costs and have made and will continue to make some activitiesmore time consuming and costly. For example, as a public company it is more difficult and more expensive for us to obtain director and officer liabilityinsurance, and in the future we may be required to accept reduced policy limits and coverage or to incur substantial costs to maintain the same or similarcoverage. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or ourboard committees or as executive officers.The Sarbanes-Oxley Act requires the SEC to implement new requirements on registrants, and these new requirements that were implemented require,among other things, that we assess the effectiveness of our internal control over financial reporting annually and SEC requirements also require us to assessthe effectiveness of our disclosure controls and procedures quarterly. In particular, Section 404 of the Sarbanes-Oxley Act, or Section 404, requires us toperform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independentregistered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. As an “emerging growth company,” we availedourselves of the exemption from the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control overfinancial reporting under Section 404. However, we may no longer avail ourselves of this exemption since we ceased to be an “emerging growth company”on December 31, 2018. As a result, our independent registered public accounting firm is required to undertake an assessment of our internal control overfinancial reporting and the cost of our compliance with Section 404 will correspondingly increase. Our compliance with applicable provisions of Section 404will require that we incur substantial accounting expense and expend significant management time on compliance-related issues as we implement additionalcorporate governance practices and comply with reporting requirements.As disclosed in Part II, Item 9A, during the fourth quarter of fiscal 2018, management identified material weaknesses in internal control related toineffective aspects of its overall control environment related to information technology general-44- controls. This material weakness contributed to additional material weaknesses, specifically in the areas of: (i) user access and program change managementover certain information technology systems and (ii) controls over monitoring of certain access rights related to processing journal entries, both of whichsupport our financial reporting processes. As a result, management concluded that our internal control over financial reporting was not effective as ofDecember 31, 2018. We have taken initial steps to implement remediation efforts; however, there can be no assurance that our efforts to remediate thematerial weaknesses will be successful or will be completed by the end of our 2019 fiscal year. Pursuing these remediation efforts will result in additionaltechnology and other expenses.If we are unable to remediate these material weaknesses, or are otherwise unable to maintain effective internal control over financial reporting ordisclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements withinrequired time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment oflegal and other expenses and negatively impact the price of our common stock. In addition, we could be subject to sanctions or investigations by the SEC orother regulatory authorities, which would require additional financial and management resources.Furthermore, investor perceptions of our company may suffer as a result of the material weaknesses in our internal controls, and this could cause adecline in the market price of our stock. Irrespective of compliance with Section 404, any failure of our internal control over financial reporting could have amaterial adverse effect on our stated operating results and harm our reputation. If we are unable to remediate the material weaknesses effectively or efficientlyor avoid future material weaknesses, it could harm our operations, financial reporting, or financial results and could result in an adverse opinion on ourinternal control over financial reporting from our independent registered public accounting firm.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesWe currently have three long-term operating lease agreements for 104,538 square feet of space used for general office, laboratory, manufacturing,operations, and research and development purposes in Seattle, Washington. The long-term operating leases expire in 2026 and include options to renew atthe then fair market rental for each of the facilities. The lease agreements contain rent abatement periods, scheduled rent increases and provide for tenantimprovement allowances. In addition, we have four office leases outside of Seattle, Washington, totaling approximately 3,363 square footage, with terms ofthree years or less.Our landlords hold security deposits of approximately $328,000. We believe that our existing facilities are adequate to meet our businessrequirements for the near-term and that additional space will be available on commercially reasonable terms, if required.Item 3. Legal ProceedingsWe are not engaged in any material legal proceedings. From time to time, we may become involved in litigation relating to claims arising from theordinary course of business. We believe that there are no claims or actions pending against us currently, the ultimate disposition of which would have amaterial adverse effect on our consolidated results of operation, financial condition or cash flows.Item 4. Mine Safety DisclosuresNot applicable.-45- PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket InformationOur common stock is traded on The Nasdaq Global Market under the symbol “NSTG.” Trading of our common stock commenced on June 26, 2013in connection with our initial public offering.HoldersAs of February 28, 2019, there were approximately 24 holders of record of our common stock. The actual number of stockholders is greater than thisnumber of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.Performance GraphThis performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), or incorporated by reference into any filing of NanoString Technologies, Inc. under the Securities Act of 1933, as amended, or the Exchange Act,except as shall be expressly set forth by specific reference in such filing.The following graph compares the performance of our common stock for the periods indicated with the performance of the Nasdaq Composite Indexand the Nasdaq Medical Equipment Index. This graph assumes an investment of $100 on December 31, 2013 in each of our common stock, the NasdaqComposite Index and the Nasdaq Medical Equipment Index, and assumes reinvestment of dividends, if any. The stock price performance shown on the graphbelow is not necessarily indicative of future stock price performance.-46- Recent Sales of Unregistered SecuritiesOn November 1, 2018 we issued an aggregate of 5,292 shares of our common stock to a warrant holder upon the exercise of outstanding warrants topurchase an aggregate of 11,837 shares of our common stock pursuant to a net exercise mechanism under the warrants. Each warrant had an exercise price of$8.448 per share. The issuances of these shares were exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 3(a)(9)thereof as an exchange with an existing security holder where no commission or other remuneration is paid or given for soliciting such exchange.Securities Authorized for Issuance under Equity Compensation PlansThe following table summarizes information about our equity compensation plans as of December 31, 2018. All outstanding awards relate to ourcommon stock.Plan Category(a) Number of Securitiesto be Issued UponExercise ofOutstandingOptions, Warrantsand Rights (b) WeightedAverage ExercisePrice ofOutstandingOptions,Warrants andRights (c) Number of SecuritiesRemaining Availablefor Future IssuanceUnder EquityCompensation Plans(Excluding SecuritiesReflected in Column (a)) (1)Equity compensation plans approved by security holders: 2004 Stock Option Plan695,640 $2.95 —2013 Equity Incentive Plan5,357,841 11.20 737,7322013 Employee Stock Purchase Plan— N.A. 266,884Equity compensation plans not approved by security holders(2):130,000 5.96 120,000Total6,183,481 N.A. 1,124,616(1) Our 2013 Equity Incentive Plan includes provisions providing for an annual increase in the number of securities available for future issuance on the first day of each fiscal year,equal to the least of: (a) 1,406,250 shares; (b) 5% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; and (c) such other amountas the board of directors may determine. Our 2013 Employee Stock Purchase Plan includes provisions providing for an annual increase in the number of securities available forfuture issuance on the first day of each fiscal year, equal to the least of: (a) 1% of the outstanding shares of common stock on the first day of such fiscal year; (b) 281,250 shares;and (c) such other amount as the board of directors, or a committee appointed by the board of directors, may determine.(2) On January 15, 2018, our board of directors adopted the NanoString Technologies, Inc. 2018 Inducement Equity Incentive Plan, or the Inducement Plan, and, subject to theadjustment provisions of the Inducement Plan, reserved 250,000 shares of our common stock for issuance pursuant to equity awards granted under the Inducement Plan. TheInducement Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules. The Inducement Plan provides for thegrant of equity-based awards, including nonstatutory stock options, restricted stock units, restricted stock, stock appreciation rights, performance shares and performance units, andits terms are substantially similar to our 2013 Equity Incentive Plan, including with respect to treatment of equity awards in the event of a “merger” or “change in control” as definedunder the Inducement Plan, but with such other terms and conditions intended to comply with the Nasdaq inducement award exception or to comply with the Nasdaq acquisitionand merger exception. However, our 2013 Equity Incentive Plan permits certain exchange programs (including repricings) without stockholder approval, while the Inducement Planrequires stockholder approval for such exchange programs.-47- Item 6. Selected Financial DataThe following selected financial data is derived from our audited financial statements and should be read in conjunction with, and is qualified in itsentirety by, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8, “Financial Statements andSupplementary Data” contained elsewhere in this Annual Report on Form 10-K. The selected Consolidated Statements of Operations data for the years endedDecember 31, 2018, 2017, and 2016 and Consolidated Balance Sheet data as of December 31, 2018 and 2017 have been derived from our auditedconsolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. The selected Consolidated Statements of Operations data for theyears ended December 31, 2015 and 2014 and Consolidated Balance Sheet data as of December 31, 2016, 2015, and 2014 have been derived from ouraudited consolidated financial statements that are not included in this Annual Report on Form 10-K. Historical results are not necessarily indicative of futureresults. Year Ended December 31, 2018 2017 2016 2015 2014 (In thousands, except per share amounts)Consolidated Statements of Operations: Revenue(1)$106,732 $114,905 $86,489 $62,667 $47,593Costs and expenses: Cost of product and service revenue36,331 31,880 30,245 26,126 21,149Research and development61,599 46,888 34,720 24,597 21,404Selling, general and administrative78,195 74,334 62,700 53,186 51,063Total costs and expenses176,125 153,102 127,665 103,909 93,616Loss from operations(69,393) (38,197) (41,176) (41,242) (46,023)Other income (expense): Interest income1,331 809 390 233 272Interest expense(7,431) (6,153) (5,672) (4,017) (4,140)Other income (expense)(1,658) 183 (515) (389) (147)Total other income (expense)(7,758) (5,161) (5,797) (4,173) (4,015)Net loss before provision for income taxes(77,151) (43,358) (46,973) (45,415) (50,038)Provision for income taxes(249) (204) (116) (166) —Net loss$(77,400) $(43,562) $(47,089) $(45,581) $(50,038)Net loss per share—basic and diluted$(2.78) $(1.84) $(2.34) $(2.40) $(2.80)Weighted-average shares used in computing basic and dilutednet loss per share27,883 23,731 20,116 19,027 17,839 As of December 31, 2018 2017 2016 2015 2014Consolidated Balance Sheet Data: Cash, cash equivalents and short-term investments$93,997 $77,555 $74,036 $49,044 $72,225Working capital88,592 86,002 77,402 61,882 76,411Total assets147,558 136,762 126,373 92,869 102,068Long-term debt and lease financing obligations, net ofdiscounts58,396 48,931 47,424 41,226 30,246Total stockholders’ equity$36,869 $40,109 $12,305 $20,215 $44,813 (1)Amounts have not been retrospectively modified to reflect the adoption of Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers, for the yearsended December 31, 2014, 2015, 2016 and 2017.-48- Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsYou should read the following discussion and analysis together with the financial statements and the related notes to those statements includedelsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as thoseset forth in the section of this report captioned “Risk Factors” and elsewhere in this report, our actual results may differ materially from those anticipatedin these forward-looking statements. Throughout this discussion, unless the context specifies or implies otherwise, the terms “NanoString”, “we”, “us” and“our” refer to NanoString Technologies, Inc. and its subsidiaries.OverviewWe develop, manufacture and sell products that unlock scientifically valuable and clinically actionable information from minute amounts ofbiological material. Our core technology is a unique, proprietary optical barcoding chemistry that enables the labeling and counting of single molecules.This proprietary chemistry may reduce the number of steps required to conduct certain types of scientific experiments and allow for multiple experiments tobe conducted at once. As a result, we are able to develop tools that are easier for researchers to use and that may generate faster and more consistent scientificresults.We use our technology to develop tools for scientific research, primarily in the fields of genomics and proteomics, and also to develop clinicaldiagnostic tests. We currently have one commercially available product platform, our nCounter Analysis System instruments and related consumables. Wemarket and sell our instruments and related consumables to researchers in academic, government, and biopharmaceutical laboratories for research use and toclinical laboratories and medical centers for diagnostic use, both through our direct sales force and through selected distributors in certain internationalmarkets. As of December 31, 2018, we had an installed base of approximately 730 nCounter systems, which our customers have used to publish more than2,300 peer-reviewed papers.We derive a substantial majority of our revenue from the sale of our products, which consist of our nCounter instruments and related proprietaryconsumables. Our instruments are designed to work only with our consumable products. Accordingly, as the installed base of our instruments grows, weexpect recurring revenue from consumable sales to become an increasingly important driver of our operating results. We also derive revenue from processingfees related to proof-of-principle studies we conduct for potential customers and extended service contracts for our nCounter Analysis Systems. Additionally,we generate revenue through product development collaborations.We use third-party contract manufacturers to produce the instruments comprising our nCounter Analysis System. We manufacture consumables atour Seattle, Washington facility. This operating model is designed to be capital efficient and to scale efficiently as our product volumes grow. We focus asubstantial portion of our resources on developing new technologies, products and solutions. We invested $61.6 million, $46.9 million and $34.7 million in2018, 2017, and 2016, respectively, in research and development and intend to continue to make significant investments in research and development.We have discovered other novel applications that utilize our proprietary barcoding chemistry, and we have two new product platforms underdevelopment. Following completion of product development, each of these new systems is expected to be commercialized as a new instrument along withassociated consumables.The first new platform, our GeoMx Digital Spatial Profiling, or GeoMx DSP system, is designed to enable the field of spatial genomics. WhilenCounter and other existing technologies analyze gene activity as a whole throughout the totality of a biological sample, GeoMx DSP is used to analyzespecifically selected regions of a biological sample in order to see how gene activity or protein levels might vary across those regions or in certain cell types.In advance of the launch of the commercial version of GeoMx DSP, we have provided early access to the system’s capabilities by offering selected customersthe opportunity to send biological samples to our Seattle facility to be tested by us on prototype instruments. To date, we have conducted over 70 projects forapproximately 50 customers pursuant to this Technology Access Program, or TAP. In addition, in the third quarter of 2018 we announced the GeoMx PrioritySite, or GPS, Program. The GPS Program is designed to provide customers the opportunity to be among the first to receive a GeoMx DSP instrument followingits commercial launch, as well as advanced service and support. Inclusion in the GPS Program has also provided researchers the opportunity to begingenerating data on samples through our TAP service. As of December 31, 2018, we have received over 30 orders for GeoMx DSP pursuant to our GPSProgram. The full commercial launch of GeoMx DSP instruments and consumables is expected to commence during the first half of 2019, with installationsof commercial instruments expected to commence in the second half of 2019.The second new platform, our Hyb & Seq molecular profiling system, is designed to use a modified version of our proprietary chemistry to determineand analyze gene sequences within a biological sample, or to potentially profile the activity of an even greater number of genes as compared to our nCounterAnalysis System. Hyb & Seq is designed to determine gene sequences using a work flow with fewer steps as compared to currently available gene sequencingtechnologies. Hyb & Seq is expected to become commercially available during 2021.-49- In August 2017, we entered into a collaboration agreement with Lam Research Corporation, or Lam, to support the development of our Hyb & Seqproduct candidate and related assays. For additional information regarding this development collaboration agreement, see the section of this report captioned“Business—Collaborations—Lam Research Corporation”. In March 2014, we entered into a collaboration agreement with Celgene Corporation, or Celgene, to develop, seek regulatory approval for, andcommercialize a companion diagnostic assay for use in screening patients with Diffuse Large B-Cell Lymphoma. For additional information regarding thecollaboration agreement, see the section of this report captioned “Business—Collaborations—Celgene Corporation”.In May 2015, we entered into a clinical research collaboration agreement with Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc., orMerck, to develop an assay intended to optimize immune-related gene expression signatures and evaluate the potential to predict benefit from Merck’s anti-PD-1 therapy, KEYTRUDA, in multiple tumor types. In October 2017, we were notified by Merck of the decision not to pursue regulatory approval of thecompanion diagnostic test for KEYTRUDA. As a result, in August 2018, we and Merck agreed to mutually terminate our development collaborationagreement, effective as of September 30, 2018, following the completion of certain close-out activities.In January 2016, we entered into a collaboration with Medivation, Inc. and Astellas Pharma Inc. to pursue the translation of a novel gene expressionsignature algorithm discovered by Medivation into a companion diagnostic assay using the nCounter Analysis System. In September 2016, Medivation wasacquired by Pfizer, Inc., or Pfizer, and became a wholly owned subsidiary of Pfizer. In May 2017, we received notification from Pfizer and Astellasterminating the collaboration agreement as a result of a decision to discontinue the related clinical trial.Our product and service revenue increased 16.0% to $83.5 million in 2018, compared to $72.0 million in 2017. The increase was driven primarilyby increased revenue from consumables and Prosigna, and increased revenue from service contracts associated with our growing installed base of nCounterAnalysis Systems and for our GeoMx DSP technology access service.Our total revenue in 2018 was $106.7 million compared to $114.9 million in 2017 and $86.5 million in 2016. Our total revenue has varied moresignificantly as compared to our product and service revenue, and may do so in future periods, as a result of the timing of revenue recognition associated withour collaboration agreements. Revenue recognition relating to these agreements, which is recorded as collaboration revenue, primarily consists ofrecognizing deferred revenue relating to cash payments received previously from our collaborators. Collaboration revenue recognized may vary significantlydepending on the timing and cost of certain research and development activities relating to a collaboration, the expected time frame for completing certaincollaboration activities, the outcome of research and development activities being conducted pursuant to a collaboration, the contractual terms of a particularcollaboration agreement and other factors.Historically, we have generated a substantial majority of our revenue from sales to customers in North America; however, we expect sales in otherregions may increase over time. We have never been profitable and had net losses of $77.4 million, $43.6 million, and $47.1 million in 2018, 2017, and2016, respectively. As of December 31, 2018, our accumulated deficit was $391.3 million.Key Financial MetricsWe are organized as, and operate in, one reportable segment: the development, manufacture and commercialization of instruments, consumables andservices for efficiently profiling the activity of hundreds of genes and proteins simultaneously from a single tissue sample. Our chief operating decisionmaker is the chief executive officer, who manages our operations and evaluates our financial performance on a total company basis. Our principal operationsand decision-making functions are located at our corporate headquarters in the United States.RevenueWe generate revenue from the sale of our products and related services. For a description of our revenue recognition policies, see the section of thisreport captioned “—Critical Accounting Policies and Significant Estimates—Revenue Recognition.”Product RevenueOur product revenue consists of sales of our nCounter Analysis Systems and related consumables, including Prosigna in vitro diagnostic kits. OurnCounter MAX Analysis System typically consists of one nCounter Digital Analyzer and one nCounter Prep Station, having a U.S. list price of $235,000.The U.S. list price of the similarly configured nCounter Dx Analysis System is $265,000, or $285,000 if fully enabled to run Prosigna. Our newly developednCounter SPRINT Profiler has a reduced footprint and combines the function of the prep station with the digital analyzer in a single instrument. It has a U.S.list price of $149,000. Outside the United States, depending on the country, list prices are generally higher. In certain cases,-50- customers may pay less than the list price for our various nCounter instruments. For example, some of our systems are sold to customers through independentdistributors, and these distributors may purchase systems from us at a discount to list price. Our customer base is primarily composed of academic institutions,government laboratories, biopharmaceutical companies and clinical laboratories that perform analyses or testing using our nCounter Analysis System andpurchase related consumables, potentially including Prosigna kits.For our research customers, related consumables include gene and protein expression analysis panels, which are standardized and pre-manufactured,custom CodeSets, which we manufacture to the specific requirements of an individual researcher, and Master Kits, cartridges and reagents, which are ancillaryreagents, cartridges, tips and reagent plates required to setup and process samples in our instruments. For our clinical laboratory customers, relatedconsumables include our Prosigna in vitro diagnostic kits. Our average consumables revenue per installed system was approximately $80,000 for the yearended December 31, 2018.The list price of a Prosigna test in the United States and Europe is $2,080 and €1,550 per patient, respectively. Although the price of Prosigna andour additional future diagnostic products will depend on many factors, including whether and how much third-party payors will reimburse laboratories forconducting such tests, we expect that the gross margin for our diagnostic kits may be higher than for our research consumables. We sell Prosigna kits to ourlab customers, who will be responsible for providing the testing service and contracting and billing payors. Prosigna kits are sold to clinical laboratories on afixed dollars-per-kit basis, which does not expose us to direct third-party payor reimbursement risk. However, we provide customary volume discounts, and insome cases, introductory pricing during the period in which third-party payor reimbursement is being established. As a result, the average selling price perProsigna test is lower than list price.Service RevenueService revenue consists of fees associated with service contracts and conducting proof-of-principle studies. We include a one-year warranty with thesale of our instruments and offer service contracts, which are purchased by a majority of our customers. We selectively provide proof-of-principle studies toprospective customers in order to help them better understand the benefits of the nCounter Analysis System, and in some cases allow customers early accessto technologies under development, such as our GeoMx DSP system, for which we generate data and perform analysis services on their behalf.Collaboration RevenueCollaboration revenue has been derived primarily from our collaborations with Lam, Celgene and Merck and historically, our terminatedcollaboration with Medivation and Astellas. As of December 31, 2018, we have received a total of $106.8 million from these collaboration agreements, ofwhich $22.8 million, $42.3 million, and $16.7 million has been recorded as collaboration revenue in 2018, 2017, and 2016, respectively, with the remainderrecorded as deferred revenue and customer deposits, which will be recognized as collaboration revenue over our remaining development performance periodfor each of the agreements. Collaboration revenue also includes revenue recognized under several smaller collaborations.Revenue by GeographyWe sell our products through our own sales forces in the United States, Canada, Singapore, Israel and certain European countries. We sell throughdistributors in other parts of the world. As we have expanded our European direct sales force and entered into agreements with distributors of our products inEurope, the Middle East, Asia Pacific and South America, the amount of revenue generated outside of North America has generally increased, although therehave been significant quarter-to-quarter fluctuations. In the future, we intend to continue to expand our sales force and establish additional distributorrelationships outside the United States to better access international markets.The following table reflects total revenue by geography based on the geographic location of our customers, distributors and collaborators. For salesto distributors, their geographic location may be different from the geographic locations of the ultimate end customer. Americas consists of the United States,Canada, Mexico and South America; and Asia Pacific includes Japan, China, South Korea, Singapore, Malaysia, India and Australia. Year Ended December 31, 2018 2017 2016 (Dollars in thousands)Americas$74,137 70% $86,099 75% $60,330 70%Europe & Middle East25,715 24% 21,791 19% 18,497 21%Asia Pacific6,880 6% 7,015 6% 7,662 9%Total revenue$106,732 100% $114,905 100% $86,489 100%-51- Most of our revenue is denominated in U.S. dollars. Our expenses are generally denominated in the currencies in which our operations are located,which is primarily in the United States. Changes in foreign currency exchange rates have not materially affected us to date; however, they may becomematerial to us in the future as our operations outside of the United States expand.Cost of Product and Service RevenueCost of product and service revenue consists primarily of costs incurred in the production process, including costs of purchasing instruments fromthird-party contract manufacturers, consumable component materials and assembly labor and overhead, installation, warranty, service and packaging anddelivery costs. In addition, cost of product and service revenue includes royalty costs for licensed technologies included in our products, provisions for slow-moving and obsolete inventory and stock-based compensation expense. We provide a one-year warranty on each nCounter Analysis System sold andestablish a reserve for warranty repairs based on historical warranty repair costs incurred.The average unit cost of our instruments has declined in the current year as compared to prior years primarily as a result of increased placements ofour lower-cost nCounter SPRINT Profiler. We expect the average unit costs of our nCounter instruments to continue to decline as we expand our marketopportunity among smaller research laboratories and sell a higher proportion of SPRINT systems. We expect the unit costs of consumable products to declineas a result of our ongoing efforts to improve our manufacturing processes and expected increases in production volume and yields. Although the unit costs ofour custom CodeSets vary, they are generally higher as a percentage of the related revenue than our standard panel products and in vitro Prosigna diagnostickits.Operating ExpensesResearch and DevelopmentResearch and development expenses consist primarily of salaries and benefits, occupancy costs, laboratory supplies, engineering services,consulting fees, costs associated with licensing molecular diagnostics rights and clinical study expenses to support the regulatory approval or clearance ofdiagnostic products. We have made substantial investments in research and development since our inception. Our research and development efforts havefocused primarily on the tasks required to enhance our technologies and to support development and commercialization of new and existing products andapplications. We believe that our continued investment in research and development is essential to our long-term competitive position and expect tocontinue to make investments in research and development activities at levels consistent with our current levels. In particular, following our entry into theLam collaboration in August 2017, which provides up to $50.0 million of funding for our Hyb & Seq program, we have experienced a substantial increase inrelated research and development expenses in 2018 and we may continue to invest at similar levels in future periods as we continue our developmentactivities related to the Hyb & Seq platform.To date, we have found that it has been effective for us to manage our research and development activities on a departmental basis. Accordingly,other than pursuant to terms of certain of our collaborations, we have neither required employees to report their time by project nor allocated our research anddevelopment costs to individual projects. Research and development expense by functional area was as follows: Year Ended December 31, 2018 2017 2016 (In thousands)Platform technology$28,634 $16,645 $10,312Manufacturing process development4,689 3,025 2,582Life sciences research products and applications10,107 7,933 6,298Diagnostic product development7,004 7,161 6,648Clinical, regulatory and medical affairs5,439 7,036 5,111Facility allocation5,726 5,088 3,769Total research and development expense$61,599 $46,888 $34,720-52- Selling, General and AdministrativeSelling, general and administrative expense consists primarily of costs for our sales and marketing, finance, human resources, informationtechnology, business development, legal and general management functions, as well as professional fees for legal, consulting and accounting services. Weexpect selling, general and administrative expenses to increase in future periods as the number of sales, technical support and marketing and administrativepersonnel grows to support the expected introduction of new products and product platforms, including our GeoMx DSP and Hyb and Seq productcandidates, as well as the general broadening of our customer base and growth of our existing nCounter business. Legal, accounting and compliance costshave increased as a result of our being a public company, and we expect them to continue to increase as our business grows.Factors Affecting Our PerformanceInstrument Installed BaseOur future financial performance will be driven in large part by the rate of sales of our nCounter Analysis Systems, as well as our ability to driveconsumable sales through our installed base of these systems. As of December 31, 2018, we had an installed base of approximately 730 nCounter AnalysisSystems, which we count based on the number of nCounter SPRINT, MAX or FLEX Profilers sold, given that a system may couple one system with multiplenCounter Prep Stations. In the year ended December 31, 2018 our annualized rate of consumable sales per installed system, including sales of nCounterconsumables and Prosigna, was approximately $80,000.In addition to growth related to our nCounter platform of instruments and consumables, we plan to grow our system and consumable sales in thecoming years through the introduction of new product platforms such as our GeoMx DSP and Hyb & Seq product candidates.In addition to seeking to increase sales of our existing nCounter platform and consumables and from our expected new product platformintroductions, we will continue to employ other growth strategies, including expanding our sales channel in both direct and distributor territories,developing new consumable content for our nCounter platform and enhancing certain features of our nCounter platform. As part of this strategy, in both 2017and 2018, we added incremental sales territories and augmented our field sales team, and have continued to grow our base of distributors. As our installedbase of instruments grows, we solicit feedback from our customers and focus our research and development efforts on improving our nCounter AnalysisSystem or enabling applications, which in turn helps to drive additional sales of our instruments and consumables.Our sales process involves numerous interactions with multiple individuals within an organization, and often includes in-depth analysis bypotential customers of our products, performance of proof-of-principle studies, preparation of extensive documentation and a lengthy review process. As aresult of these factors, the capital investment required in purchasing our instruments and the budget cycles of our customers, the time from initial contact witha customer to our receipt of a purchase order can vary significantly, and may be up to 12 months or longer. Given the length and uncertainty of our salescycle, we will likely experience fluctuations in our future instrument sales on a period-to-period basis. Recurring Consumables RevenueOur instruments are designed to be used only with our consumables. This closed system model generates recurring revenue from each instrument wesell. Management focuses on recurring consumable revenue per system as an indicator of the continuing value generated by each system. We calculaterecurring consumables revenue per system (also known as pull-through) quarterly by dividing consumables and in vitro diagnostic kits revenue recognizedin a particular quarter (other than consumables revenue related to proof-of-principle studies) by the total number of nCounter Analysis Systems installed as ofthe last day in the immediately preceding quarter. Historically, a large majority of our systems and related consumables have been sold to research customers.Our average annualized consumables revenue per installed system was approximately $80,000 for the year ended December 31, 2018.As the installed base of the nCounter Analysis Systems expands, consumables revenue is expected to increase and over time should continue to bean increasingly important contributor to our total revenue. Our consumables revenue per system installed may fluctuate in the future, reflecting the mix of ourinstalled instruments, and potential shifts in the mix, or type, of consumables sold to our installed customer base. Additionally, we expect Prosigna in vitrodiagnostic kit revenue to contribute an increasing amount of recurring revenue as we install more diagnostic systems, Prosigna is included in important breastcancer treatment guidelines and reimbursement by third-party payors becomes more broadly available. In 2017 we launched our “360” panels for use inbreast cancer, immuno-oncology and hematology. In 2018, we expanded the number of panels in oncology, specifically focused on breast cancer andimmuno-oncology, and also added panels in two new research areas, neuroscience and autoimmunity. In 2019, we intend to continue to expand our nCounterpanels, primarily focused on neuroscience and immune-related diseases. The introduction of new applications has the potential to further increase our-53- consumables revenue stream. Over time, we believe that consumables revenue may be subject to less period-to-period fluctuation than our instrument salesrevenue.Revenue Mix and Gross MarginOur product revenue is derived from sales of nCounter Analysis System instruments and related consumables, including Prosigna in vitro diagnostickits. Generally, our consumables have higher gross margins than our instruments. There may be fluctuations in sales mix between instruments andconsumables from period to period. For example, during 2018 our total product and service revenue increased by 16%, which included 18% growth inrevenues related to our consumables, including in vitro diagnostic kits, compared to 2017 and 3% growth in our instrument sales compared to 2017.However, during 2017 our total product and service revenues increased by 4%, which included an 11% decline in instrument sales compared to 2016. Thisdecline in instrument sales was offset by revenue growth from our consumables, including Prosigna in vitro diagnostic kits, and increased revenue fromservice contracts resulting from our growing installed base of nCounter Analysis Systems. Although future results may vary period to period, over time, as ourinstalled base of systems grows, consumables may continue to constitute a larger percentage of total product revenue, which would tend to increase our grossmargins. Such gross margin increases may be offset by the mix of consumable products sold, or in the event we introduce new instrument product platformsthat become increasing components of our product sales, such as GeoMx DSP or Hyb and Seq. In addition, both the average selling price and manufacturingcost of our instruments has decreased with the introduction of the nCounter SPRINT Profiler and this trend may continue with future generations of ournCounter Analysis System. For example, although we sold approximately 12% more systems in 2018 compared to 2017, our instrument revenue onlyincreased 3%. This was largely due to substantially increased sales of lower priced SPRINT systems in 2018. Future instrument selling prices and grossmargins may fluctuate as we grow our volume of distribution partners in geographies outside of the United States, as we introduce new products and reduceour product costs, and from variability in the timing of new product introductions.We derive service revenue from service contracts, which are purchased by a majority of our customers. Additionally, we selectively provide proof-of-principle studies in connection with prospective sales to customers to demonstrate the performance of our nCounter Analysis System. Collaboration revenueis primarily derived from our diagnostic and other collaborations with Celgene, Merck, Lam, and historically, our collaboration with Medivation andAstellas.The following table reflects the breakdown of revenue in absolute dollars and as percentage of total revenue. Year Ended December 31, 2018 2017 2016 (Dollars in thousands)Product revenue: Instruments$21,441 20% $20,839 18% $24,229 28%Consumables43,847 41% 38,311 33% 37,545 43%In vitro diagnostic kits9,445 9% 6,745 6% 4,168 5%Total product revenue74,733 70% 65,895 57% 65,942 76%Service revenue8,790 8% 6,115 5% 3,192 4%Total product and service revenue83,523 78% 72,010 62% 69,134 80%Collaboration revenue23,209 22% 42,895 38% 17,355 20%Total revenue$106,732 100% $114,905 100%$86,489 100%-54- Results of OperationsComparison of Years Ended December 31, 2018 and 2017Revenue Year Ended December 31, Change 2018 2017 Dollars Percentage (Dollars in thousands)Product revenue: Instruments$21,441 $20,839 $602 3%Consumables43,847 38,311 5,536 14%In vitro diagnostic kits9,445 6,745 2,700 40%Total product revenue74,733 65,895 8,838 13%Service revenue8,790 6,115 2,675 44%Total product and service revenue83,523 72,010 11,513 16%Collaboration revenue23,209 42,895 (19,686) (46)%Total revenue$106,732 $114,905 $(8,173) (7)%Instrument revenue for the year ended December 31, 2018 increased as compared to the prior year, due primarily to an increase in the number ofinstruments sold. The magnitude of the instrument revenue increase was partially offset by a shift in sales mix towards our SPRINT instruments, whichgenerally have lower average selling prices than our MAX and FLEX instruments. Consumables revenue increased for the year ended December 31, 2018,primarily as a result of our growing installed base of nCounter Analysis Systems, as well as growth in sales of our standardized panel consumable products. Invitro diagnostic kit revenue represents sales of Prosigna assays, which increased for the year ended December 31, 2018 as more testing providers commencedproviding services and testing volumes increased, most significantly in territories outside of the United States. The increase in service revenue was primarilyrelated to an increase in the number of installed instruments covered by service contracts, and also increases in revenue generated from technology accessfees, particularly fees related to services offered pursuant to our GeoMx DSP Technology Access Program. Our product and service revenue may continue toincrease in future periods as a result of our increased investments in sales and marketing activities, the growth in sales of our nCounter consumable productsas driven by our increasing installed base of nCounter instruments, the introduction of new nCounter consumable products, the continued sale of additionalnCounter instruments and the potential commercial launch of new product platforms such as our GeoMx DSP and Hyb & Seq product candidates. As an offsetto our anticipated expenses relating to the development of our Hyb & Seq platform, Lam has committed to provide up to $50.0 million in funding, of which$35.1 million has been funded as of December 31, 2018.Collaboration revenue decreased for the year ended December 31, 2018 as compared to the prior year, due primarily to the termination of ourcollaboration with Medivation and Astellas in 2017. The termination resulted in the recognition of deferred collaboration revenue of $11.5 million for theyear ended December 31, 2017, which represented all of the remaining deferred revenue relating to the terminated collaboration. In addition, the scope of ourcollaboration with Merck changed during the fourth quarter of 2017, resulting in a further reduction of collaboration revenue in 2018 as compared to thesame period in 2017. These decreases were partially offset by collaboration revenue generated from our agreements with Lam and Celgene. Our collaborationagreement with Lam was entered into during the third quarter of 2017 and represented $18.6 million of collaboration revenue for the year endedDecember 31, 2018. Collaboration revenue related to our agreement with Lam was $3.7 million for the year ended December 31, 2017.Cost of Product and Service Revenue; Gross Profit; and Gross Margin Year Ended December 31, Change 2018 2017 Dollars Percentage (Dollars in thousands)Cost of product and service revenue$36,331 $31,880 $4,451 14%Product and service gross profit$47,192 $40,130 $7,062 18%Product and service gross margin57% 56% For the year ended December 31, 2018, cost of product and service revenue increased as compared to the same periods in 2017, due to highervolumes of instruments and consumables sold, including our Prosigna in vitro diagnostic kits, as well as increased volume of service contracts associatedwith our growing installed base of nCounter instruments. Our gross margin on product and service revenue for the year ended December 31, 2018 increasedcompared to the prior year primarily as a result of increased consumable revenue as a percentage of our overall sales mix, including sales of our Prosigna invitro diagnostic kits,-55- which generally have higher gross margins than our instrument placements, as well as increasing sales of our nCounter panel products as a percentage of ourconsumables revenue. The favorable mix shift towards consumables comprising a higher percentage of our total product and service revenues was partiallyoffset by an increase in the number of lower margin SPRINT instrument sales, and modestly lower average selling prices realized across all instrument sales, ascompared to the prior year. In addition, our gross margin during the year ended December 31, 2018 was also impacted by increases in outside consulting andother costs relating to quality assurance and system requirements for diagnostic products related manufacturing.We expect our cost of product and service revenue to increase in future periods, primarily due to our expected growth in product and servicerevenue. We expect our gross margin on product and service revenue may fluctuate in future periods, depending upon our mix of instrument sales, fromwhich we typically record lower gross margins, as compared to our sales of consumable products or services, the impact of the launch, and any sales achieved,of our new product platforms such as our GeoMx or Hyb & Seq product platforms, which during any initial launch may impact our mix of instruments sold ascompared to consumables, and potential expenses we may incur for regulatory compliance, quality assurance or related to the expansion of ourmanufacturing capacity. Any costs related to collaboration revenue are included in research and development expense.Research and Development Expense Year Ended December 31, Change 2018 2017 Dollars Percentage (Dollars in thousands)Research and development expense$61,599 $46,888 $14,711 31%The increase in research and development expense for the year ended December 31, 2018 was primarily attributable to an increase in staffing andpersonnel-related costs of $6.2 million, as well as increased supply costs of $4.1 million and professional fees of $3.6 million. These increased costs wereincurred primarily to support the development of our GeoMx DSP and Hyb & Seq platforms.We expect that research and development costs may continue to increase in future periods to support remaining product development activitiesrelating to our GeoMx DSP and Hyb & Seq platforms.Selling, General and Administrative Expense Year Ended December 31, Change 2018 2017 Dollars Percentage (Dollars in thousands)Selling, general and administrative expense$78,195 $74,334 $3,861 5%The increase in selling, general and administrative expense for the year ended December 31, 2018 was primarily attributable to an increase instaffing and personnel-related costs of $2.6 million to support our sales, marketing and administrative functions, as well as an increase in professional fees of$1.1 million related to legal, consulting and other costs associated with activities and implementation of certain processes relating to our compliance withthe Sarbanes Oxley Act. These increases were partially offset by lower sales and marketing costs of $1.0 million related to fewer promotional events and otherexternal activities.We expect selling, general and administrative expense to increase in future periods as the number of sales, technical support and marketing andadministrative personnel grows to support the expected growth in our existing lines of business, as well as to support the introduction of new products andproduct platforms, including our new GeoMx DSP and Hyb & Seq product platforms.Other Income (Expense) Year Ended December 31, Change 2018 2017 Dollars Percentage (Dollars in thousands)Interest income$1,331 $809 $522 65%Interest expense(7,431) (6,153) (1,278) 21%Other income (expense), net(1,658) 183 (1,841) (1,006)%Total other income (expense), net$(7,758) $(5,161) $(2,597) 50%Interest expense increased for the year ended December 31, 2018 due primarily to having a higher average balance of long-term debt outstandingduring 2018 which was $52.5 million as compared to $48.6 million for 2017. In addition, as a result of the replacement of our long-term debt facility withCRG, we incurred a loss on extinguishment of the original long-term debt-56- which totaled $0.8 million. Interest income increased for the year ending December 31, 2018, due to higher interest rates as well as an increased averageinvestment balance during the year. Other income (expense), net is primarily related to estimated costs for certain state and local taxes and to realized andunrealized gains or losses associated with foreign currency transactions primarily denominated in the Euro and British Pounds, both of which generallyweakened relative to the U.S. Dollar for the year ending December 31, 2018, compared to the prior year.Comparison of Years Ended December 31, 2017 and 2016Revenue Year Ended December 31, Change 2017 2016 Dollars Percentage (Dollars in thousands)Product revenue: Instruments$20,839 $24,229 $(3,390) (14)%Consumables38,311 37,545 766 2%In vitro diagnostic kits6,745 4,168 2,577 62%Total product revenue65,895 65,942 (47) —%Service revenue6,115 3,192 2,923 92%Total product and service revenue72,010 69,134 2,876 4%Collaboration revenue42,895 17,355 25,540 147%Total revenue$114,905 $86,489 $28,416 33%Instruments revenue decreased for the year ended December 31, 2017, due primarily to fewer instruments sold during the year, and to a lesser extent,the realization of a lower average price per instrument sold. We sold approximately 125 instruments in 2017, down from approximately 140 instruments in2016. While our mix of instruments sold remained relatively consistent year over year, the average price per instrument sold in 2017 was impacted by agreater proportion of instruments being sold through distributors during 2017, for which we typically record lower selling prices, as well as lower pricesrecorded related to sales of our nCounter SPRINT Profilers as compared to 2016. Consumables revenue increased during 2017, primarily as a result of ourgrowing installed base of nCounter Analysis Systems, as well as growth in various European markets. In vitro diagnostic kit revenue represents sales ofProsigna assays, which increased as more testing providers came online, and testing volumes increased. The increase in service revenue was primarily relatedto an increase in the number of instruments covered by service contracts, and also increases in revenue generated from technology access fees, data analysis,and other services related to new potential customers and technologies which are under development. Our product and service revenue may continue toincrease in future periods, as a result of our increased investments in sales and marketing activities, the introduction of new nCounter consumable products,and the potential commercial launch of our GeoMx DSP and Hyb & Seq product candidates.Collaboration revenue increased by $25.5 million in 2017, due largely to changes in estimates related to future costs associated with ourcollaborations with Merck and Medivation and Astellas. Our collaboration with Medivation and Astellas was terminated during the second quarter of 2017,and during the fourth quarter of 2017, we were notified by Merck of a change in scope associated with planned future regulatory activities. Both of theseevents resulted in a decrease of the total expected costs associated with the collaborations, and as a result, the completion percentage used in the proportionalperformance model used for revenue recognition increased substantially. These changes in estimates resulted in an acceleration of revenue recognized during2017, relative to the original planned project time lines and estimated costs. The addition of our new collaboration agreement with Lam, which was enteredinto during the third quarter of 2017, also contributed to our increased collaboration revenue in 2017 as compared to the prior year.Cost of Product and Service Revenue; Gross Profit; and Gross Margin Year Ended December 31, Change 2017 2016 Dollars Percentage (Dollars in thousands)Cost of product and service revenue$31,880 $30,245 $1,635 5%Product and service gross profit$40,130 $38,889 $1,241 3%Product and service gross margin56% 56% For the year ended December 31, 2017, cost of product and service revenue increased due to higher volumes of consumables sold, including ourProsigna in vitro diagnostic kits, as well as increased revenue from service contracts and data analysis services as compared to 2016. These increases werepartially offset by the lower volume of instruments sold during the-57- year. Our gross margin on product and service revenue in 2017 benefited from a shift in revenue mix from instruments to consumables, driven in large part bycontinued growth in Prosigna in vitro diagnostic kit revenue, the addition of new higher margin service revenue from our GeoMx DSP technology accessprogram, and a lower royalty rate on our license of the foundational nCounter patents due to the achievement of a cumulative revenue milestone that tookeffect in the third quarter of 2016. These increases were offset by lower average selling prices realized on certain sales of our nCounter Analysis Systems, as aresult of selected promotion and sales related activities during the period, the reduction in certain higher gross margin custom consumable orders, andincreased reserves for slow-moving inventory. We expect our cost of product and service revenue to increase in future periods, primarily due to our expectedcontinued growth in product and service revenue. We expect our gross margin on product and service revenue to remain stable or potentially increase infuture periods, as we increase our sales of consumables through a larger instrument installed base, as we introduce new nCounter consumable products thatmay have lower gross margins during their initial launch period, and as a greater proportion of nCounter SPRINT Profilers are sold in future periods as apercentage of our total instrument sales. Costs related to collaboration revenue are included in research and development expense.Research and Development Expense Year Ended December 31, Change 2017 2016 Dollars Percentage (Dollars in thousands)Research and development expense$46,888 $34,720 $12,168 35%The increase in research and development expense in 2017 was primarily attributable to an increase in staffing and personnel-related costs of $6.2million, as well as increased supply costs of $2.2 million and professional fees of $1.8 million. These increased costs were incurred primarily to support theadvancement of our collaborations and technology and product development activities, including GeoMx DSP and Hyb & Seq, product candidates. Inaddition, facility costs increased by $1.4 million in 2017, due to expansion of our leased space for research and development activities. We expect thatresearch and development costs will continue to increase in future periods in support of remaining development activities relating to our GeoMx DSPproduct candidate, and as a result of our new collaboration agreement with Lam and the resulting expansion of our development of the Hyb & Seq productcandidate. As an offset to this expected increase in expense relating to Hyb & Seq, Lam has committed to provide up to $50.0 million in funding. We expectthe majority of the Hyb and Seq program development efforts and related costs to be incurred during 2018 and the first half of 2019.Selling, General and Administrative Expense Year Ended December 31, Change 2017 2016 Dollars Percentage (Dollars in thousands)Selling, general and administrative expense$74,334 $62,700 $11,634 19%The increase in selling, general and administrative expense in 2017 was primarily attributable to an increase in staffing and personnel-related costsof $8.8 million to support our sales, marketing and administrative functions, increased sales and marketing costs of $1.6 million related to promotionalevents and other external activities, and increased professional fees of $0.6 million. These increases were partially offset by $0.6 million of lower state andlocal gross receipt-based taxes primarily as a result of lower amounts received under our collaboration agreements. We expect selling, general andadministrative expenses may increase in future periods, in the event we make additional investments to support the sales of our existing products, or launchactivities relating to new product candidates, such as our GeoMx DSP product candidate, for which material commercial launch activities are expected tocommence in 2019.Other Income (Expense) Year Ended December 31, Change 2017 2016 Dollars Percentage (Dollars in thousands)Interest income$809 $390 $419 107%Interest expense(6,153) (5,672) (481) 8%Other income (expense), net183 (515) 698 (136)%Total other income (expense), net$(5,161) $(5,797) $636 (11)%Interest expense increased in 2017, due primarily to increases in our long-term debt borrowings during these periods. The average balance of long-term debt outstanding during 2017 and 2016 was $48.6 million and $44.9 million, respectively. Interest income increased in 2017, due to higher interestrates as well as an increased average investment balance in 2017.-58- Other income (expense), net is primarily related to realized and unrealized gains or losses associated with foreign currency transactions during 2017, in whichwe benefited from the weakening of the U.S. dollar versus foreign currencies, primarily the Euro and the British pound.Liquidity and Capital ResourcesAs of December 31, 2018, we had cash, cash equivalents and short-term investments of $94.0 million, compared to $77.6 million as of December 31,2017. We believe our existing cash, cash equivalents and short-term investments will be sufficient to meet our working capital and capital expenditure needsfor at least the next 12 months. However, we may need to raise additional capital to expand the commercialization of our products, fund our operations andfurther our research and development activities. Our future funding requirements will depend on many factors, including: the nature and timing of anyadditional companion diagnostic development collaborations we may establish; market acceptance and the level of sales of our existing products and newproduct candidates; the nature and timing of any additional research, product development or other partnerships or collaborations we may establish; the costand timing of establishing additional sales, marketing and distribution capabilities; the cost of our research and development activities; the cost and timingof regulatory clearances or approvals; the effect of competing technological and market developments; and the extent to which we acquire or invest inbusinesses, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.We will require additional funds in the future and we may not be able to obtain such funds on acceptable terms, or at all. If we raise additional fundsby issuing equity or equity-linked securities, our stockholders may experience dilution. Debt financing, if available, may involve covenants restricting ouroperations or our ability to incur additional debt. Any debt or additional equity financing that we raise may contain terms that are not favorable to us or ourstockholders. If we raise additional funds through partnership, collaboration or licensing arrangements with third parties, it may be necessary to relinquishsome rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we are unable to raise adequate funds, we may haveto liquidate some or all of our assets, delay or reduce the scope of or eliminate some or all of our research and development programs, delay development,launch activities or commercialization of our products or license to third parties the rights to commercialize products or technologies that we wouldotherwise seek to commercialize, or reduce marketing, customer support or other resources devoted to our products or cease operations.Sources of FundsSince inception, we have financed our operations primarily through the sale of equity securities and, to a lesser extent, from borrowings. Our cashused in operations for the year ended December 31, 2018 was $54.1 million, including $23.6 million in cash receipts from our collaboration agreements. Thetiming and amount of such receipts in the future are uncertain, and therefore we may be required to secure larger amounts of cash to fund our plannedoperations.Equity FinancingsIn July 2018, we completed an underwritten public offering of 4,600,000 shares of common stock, including the exercise in full by the underwritersof their option to purchase 600,000 additional shares of common stock in August 2018, for total gross proceeds of $57.5 million. After underwriter’scommissions and other expenses of the offering, our aggregate net proceeds were approximately $53.8 million.In January 2018, we entered into a sales agreement with a sales agent to sell shares of our common stock through an “at the market” equity offeringprogram for up to $40.0 million in gross cash proceeds. The sales agreement allows us to set the parameters for the sale of shares, including the number ofshares to be issued, the time period during which sales are requested to be made, limits on the number of shares that may be sold in any one trading day and aminimum price below which sales may not be made. Under the terms of the Sales Agreement, commission expenses to the sales agent will be 3% of the grosssales price per share sold through the sales agent. The Sales Agreement shall automatically terminate upon the issuance and sale of placement shares equalingsales proceeds of $40.0 million and may be terminated earlier by either us, or the sales agent upon five days’ notice. As of the date of this report, there hadbeen no shares of common stock sold under this agreement.In June 2017, we completed an underwritten public offering of 3,450,000 shares of common stock, including the exercise by the underwriter of anover-allotment option for 450,000 shares of common stock, for total gross proceeds of $57.8 million. After underwriters’ fees and commissions and otherexpenses of the offering, our aggregate net proceeds were approximately $56.5 million.-59- Debt InstrumentsTerm Loan AgreementsIn April 2014, we entered into a term loan agreement, or the 2014 Term Loan, under which we could borrow up to $45.0 million. In October 2015,we amended the 2014 Term Loan primarily to increase the maximum borrowing capacity to $60.0 million, excluding deferred interest, reduce the applicableinterest rate from 12.5% to 12.0%, extend the interest-only period through March 2021, and extend the final maturity to March 2022. Under the 2014 TermLoan, borrowings accrued interest at 12.0% annually, payable quarterly, of which 3.0% could be deferred during the first six years of the amended term at ouroption and paid together with the principal at maturity. We borrowed a total of $45.0 million under the 2014 Term Loan through June 2016, excludingdeferred interest. On December 31, 2016, our option to borrow the remaining $15.0 million under the 2014 Term Loan expired. Total borrowings and deferredinterest under the 2014 Term Loan were $49.3 million as of December 31, 2017.In October 2018, we entered into an amended and restated term loan agreement, or the 2018 Term Loan, under which we may borrow up to $100.0million, which is due and payable in September 2024. At closing, we received net proceeds of approximately $7.8 million, pursuant to borrowings of $60.0million under the new facility, net of repayment of our 2014 Term Loan of $50.4 million, including deferred interest and transaction-related fees andexpenses. Of the $40.0 million in additional borrowing capacity under the 2018 Term Loan, we have the option to borrow up to $20.0 million untilJune 2019 subject to no further terms and conditions, and up to an additional $20.0 million until March 2020, subject to the achievement of annual revenuethresholds as at or prior to December 31, 2019.The 2018 Term Loan accrues interest at a rate of 10.5%, payable quarterly, of which 3.0% may be deferred during the six year term at our option andrepaid at maturity together with the principal. We paid an upfront fee of 0.5% of the aggregate principal amount of the initial borrowing under the 2018 TermLoan, and will pay a facility fee equal to 2.0% of the total amount borrowed including any deferred interest at the time the principal is repaid. A long-termliability of $1.4 million is being accreted using the effective interest method for the facility fee over the term of the 2018 Term Loan. Additional borrowingsunder the 2018 Term Loan will bear the same upfront and facility fees.In connection with 2018 Term Loan, warrants to purchase an aggregate of 341,578 shares of common stock with an exercise price per share of$21.12 were issued to the lenders, and, in the event additional amounts are drawn under the 2018 Term Loan, additional warrants will be issued on eachsubsequent draw date for 0.3% of the fully-diluted shares then outstanding. The exercise price for additional warrants will be set at a 25.0% premium to theaverage closing trading price for the 30-day trading period as of the date immediately before the applicable draw date. The warrants issued in conjunctionwith the initial borrowing under the 2018 Term Loan were determined to be closely linked to our common stock, and as such, were recorded as an equitysecurity in additional paid in capital at their relative fair value of $1.6 million with a corresponding debt discount recorded against 2018 Term Loan balanceoutstanding.Total borrowings and deferred interest under the 2018 Term Loan were $60.4 million as of December 31, 2018. The balance of the 2018 Term Loanas of December 31, 2018 is net of discounts related to the warrants, debt issuance costs and other upfront fees of $2.0 million.We have the option to prepay the 2018 Term Loan, in whole or part, at any time subject to payment of a redemption fee of up to 4.0%, whichdeclines 1.0% after the first year of the term, with no redemption fee payable if prepayment occurs after the second year of the loan.Obligations under the 2018 Term Loan are collateralized by substantially all of our assets. The 2018 Term Loan contains customary conditions toborrowings, events of default and negative covenants, including covenants that could limit our ability to, among other things, incur additional indebtedness,liens or other encumbrances, make dividends or other distributions; buy, sell or transfer assets; engage in any new line of business; and enter into certaintransactions with affiliates. The 2018 Term Loan also includes a $2.0 million minimum liquidity covenant and annual minimum revenue-based financialcovenants. If our actual revenues are below the minimum annual revenue requirement for any given year, we may avoid a related default by generatingproceeds from an equity or subordinated debt issuance equal to the shortfall between our actual revenues and the minimum revenue requirement.2018 Revolving Loan FacilityIn January 2018, we entered into a $15.0 million secured revolving loan facility, with availability subject to a borrowing base consisting of eligibleaccounts receivable. In November 2018, we entered into an amended and restated loan and security agreement to increase the borrowing capacity under thefacility to $20.0 million, amend the borrowing base to include finished goods inventory, and extend the final maturity under the facility to November 2021.As of December 31, 2018, no amounts had been drawn on the facility.-60- Interest on borrowings is payable monthly and accrues at a yearly rate equal to the greater of the prime rate as reported in the Wall Street Journalplus 0.50%, or 4.75%. During an event of default, amounts drawn accrue interest at a yearly rate equal to 8.75%. Obligations under the agreement are securedby our cash and cash equivalents, accounts receivable and proceeds thereof, and inventory and proceeds from the sale thereof. The lender’s interest in thecollateral under the loan facility is senior to the lender’s interest in such collateral under the term loan agreement. The loan facility contains variouscustomary representations and warranties, conditions to borrowing, events of default, including cross default provisions with respect to the loan facility, andcovenants, including financial covenants requiring the maintenance of minimum annual revenue and liquidity.We were in compliance with our financial covenants under the 2018 Term Loan agreement and the secured revolving loan facility asof December 31, 2018. Use of FundsOur principal uses of cash are funding our operations, capital expenditures, working capital requirements and satisfaction of any outstandingobligations under our revolving or term loan facilities, respectively. Over the past several years, our revenue has increased significantly from year to year and,as a result, our cash flows from customer collections have increased. However, our operating expenses have also increased as we have invested in our salesand marketing activities and growing our existing product sales, in research and development of new product platforms and technologies that we believehave the potential to drive the long-term growth of our business, and in support of our various collaborations.Our operating cash requirements may increase in the future as we invest in the research and development of new product platforms including GeoMxDSP and Hyb & Seq, increase sales and marketing activities to expand the installed base of our nCounter Analysis Systems and continue to promoteconsumable usage, including Prosigna, and develop new applications, chemistry and instruments for our nCounter platform. We cannot be certain ourrevenues will grow sufficiently to offset our operating expense increases, nor can we be certain that we will be successful in continuing to generate cash fromnew partnerships or collaborations to help fund our operations. As a result, we may need to raise additional funds to support our operations, and such fundingmay not be available to us on acceptable terms, or at all. If we are unable to raise additional funds when needed, our operations and ability to execute ourbusiness strategy could be adversely affected.Historical Cash Flow TrendsThe following table shows a summary of our cash flows for the periods indicated: Year Ended December 31, 2018 2017 2016 (In thousands)Cash used in operating activities$(54,065) $(51,657) $(6,079)Cash used in investing activities(22,925) (2,490) (30,261)Cash provided by financing activities75,081 59,668 35,093Operating Cash FlowsWe derive operating cash flows from cash collected from the sale of our products and services and from collaborations. These cash flows received arecurrently outweighed by our use of cash for operating expenses to support the growth of our business. As a result, we have historically experienced negativecash flows from operating activities and this will likely continue for the foreseeable future.Net cash used in operating activities for 2018 consisted of our net loss of $77.4 million partially offset by $8.9 million of changes in our operatingassets and liabilities and $14.4 million of net non-cash income and expense items, such as stock-based compensation, depreciation and amortization, deferredinterest converted to principal pursuant to our term loan agreement, and provisions for bad debt and inventory obsolescence.Net cash used in operating activities for 2017 consisted of our net loss of $43.6 million, plus the negative impact of decreases in our deferredrevenue related to collaboration agreements of $29.2 million. The decrease in deferred revenue related to collaborations was due primarily to the terminationof our Medivation and Astellas collaboration agreement and the change in scope of the Merck collaboration agreement, both of which resulted in thecompletion percentage used in the proportional performance model used for revenue recognition to increase substantially. As a result, we accelerated therecognition of revenue recognized during 2017, relative to the original planned project time lines and estimated costs. These unfavorable “uses” of fundswere partially offset by $3.3 million of changes in our operating assets and liabilities and $17.8 million of net non-cash income and expense items, such asstock-based compensation, depreciation and amortization, deferred interest converted to principal pursuant to our term loan agreement, and provisions forbad debt and inventory obsolescence.-61- Net cash used in operating activities for 2016 consisted of our net loss of $47.1 million partially offset by $27.5 million of changes in our operatingassets and liabilities, including $29.9 million related to our collaboration agreements, and by $13.5 million of net non-cash income and expense items, suchas stock-based compensation, depreciation and amortization, deferred interest converted to principal for the term loan, and accretion of discount on short-term investments.Investing Cash FlowsOur most significant investing activities for the years ended December 31, 2018, 2017, and 2016 were related to the purchase and sale of short-terminvestments. Because we manage our cash usage with respect to our total cash, cash equivalents and short-term investments, we do not consider these cashflows to be important to an understanding of our liquidity and capital resources.In the years ended December 31, 2018, 2017, and 2016, we purchased $4.5 million, $4.3 million, and $4.0 million respectively, of property andequipment required to support the growth and expansion of our operations.Financing Cash FlowsHistorically, we have funded our operations through the issuance of equity securities and debt borrowings.Net cash provided by financing activities for 2018 consisted of net proceeds of $53.8 million from an underwritten public offering, $13.5 million ofnet proceeds from our 2018 Term Loan, $3.5 million of proceeds from the exercise of stock options, and $1.5 million from proceeds associated with ourEmployee Stock Purchase Plan.Net cash provided by financing activities for 2017 consisted of net proceeds of $56.5 million from an underwritten public offering, $1.8 millionfrom proceeds associated with our Employee Stock Purchase Plan, and $1.1 million of proceeds from the exercise of stock options.Net cash provided by financing activities for 2016 consisted of net proceeds of $26.2 million from the sale of shares through an “at the market”equity offering program, proceeds of $5.0 million from our amended term loan agreement, $1.5 million from proceeds associated with our Employee StockPurchase Plan, and $2.6 million of proceeds from the exercise of stock options.Contractual ObligationsThe following table reflects a summary of our contractual obligations as of December 31, 2018. Payments due by periodContractual Obligations(1)Total Less than 1Year 1-3 Years 3-5 Years More than 5Years (In thousands)Lease obligations(2)$41,714 $5,526 $11,153 $11,577 $13,458Long-term debt obligations(3)60,400 — — — 60,400Purchase obligations(4)17,698 17,698 — — —Total$119,812 $23,224 $11,153 $11,577 $73,858(1)Excludes royalty obligations based on net sales of products, including royalties payable to the Institute for Systems Biology, as any such amounts are notcurrently determinable.(2)Lease costs are primarily for office, laboratory and manufacturing space.(3)Includes principal and deferred interest on long-term debt obligations.(4)Purchase obligations consist of contractual and legally binding commitments under outstanding purchase orders to purchase long lead time inventory andother research and development items.Critical Accounting Policies and Significant EstimatesOur discussion and analysis of our financial condition and results of operations are based upon our financial statements which have been prepared inaccordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates andjudgments that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the dateof the financial statements. Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that webelieve to be reasonable under the circumstances. Actual results may differ from these estimates.-62- Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results ofoperations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of mattersthat are inherently uncertain. Our critical accounting policies and estimates include those related to: •revenue recognition;•stock-based compensation;•inventory valuation;•fair value measurements; and•income taxes.Revenue RecognitionWe generate the majority of our revenue from sales of products and services. Our products consist of our proprietary nCounter Analysis Systems andrelated consumables. Services consist of instrument service contracts and service fees for assay processing.Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the considerationexpected to be received in exchange for those products and services. This process involves identifying the contract with a customer, determining theperformance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract,and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in acontract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and isseparately identified in the contract. Performance obligations are considered satisfied once control of a product or service has transferred to the customer,meaning the customer has the ability to use and obtain the benefit of the product or service. Revenue is recognized for satisfied performance obligations onlywhen there are no uncertainties regarding payment terms or transfer of control.Revenue from instruments, consumables and in vitro diagnostic kits is recognized generally upon shipment to the end customer, which is when titleof the product has been transferred to the customer. Instrument revenue related to installation and calibration services is recognized when the customer haspossession of the instrument and the services have been performed. Such services can also be provided by our distribution partners and other third parties. Forinstruments sold solely to run Prosigna assays, an initial training course must be provided by us prior to instrument revenue recognition.Instrument service contracts are sold with contract terms ranging from 12-36 months and cover periods after the end of the initial 12-month warranty.These contracts include services to maintain performance within our designed specifications and a minimum of one preventative maintenance serviceprocedure during the contract term. Revenue from services to maintain designed specifications is considered a stand-ready obligation and recognized evenlyover the contract term and service revenue related to preventative maintenance of instruments is recognized when the procedure is completed. Revenue fromservice fees for assay processing is recognized upon the rendering of the related performance obligation.For arrangements with multiple performance obligations, we allocate the contract price in proportion to its stand-alone selling price. We use our bestestimate of stand-alone selling price for its products and services based on average selling prices over a 12-month period and reviews its stand-alone pricesannually.Product and service revenues from sales to customers through distributors are recognized consistent with the policies and practices for direct sales tocustomers, as described above.We enter into collaboration agreements that may generate upfront fees, and in some cases subsequent milestone payments that may be earned uponcompletion of certain product development milestones or other designated activities. We are able to estimate the total expected cost of product developmentand other services under these arrangements and recognize collaboration revenue using a contingency-adjusted proportional performance model. Costsincurred to date compared to total expected costs are used to determine proportional performance, as this is considered to be representative of the delivery ofoutputs under the arrangements. Revenue recognized at any point in time is limited to cash received, amounts contractually due, or the amounts of anyproduct development or other contractual milestone payments when achievement of a milestone is deemed to be probable. Changes in estimates of totalexpected collaboration product development or other costs are accounted for prospectively as a change in estimate. From period to period, collaborationrevenue can fluctuate substantially based on the achievement or probable achievement of product development or other milestones, or as estimates of totalexpected collaboration product development or other costs are changed or updated. We may recognize revenue from collaboration agreements that do notinclude upfront or milestone-based payments. Amounts due to collaboration partners are recognized when the related activities have occurred and areclassified in the statement of operations, generally as research and development expense, based on the nature of the related activities.-63- Stock-based CompensationWe account for stock-based compensation at fair value. Stock-based compensation costs are recognized based on their grant date fair valueestimated using the Black-Scholes option pricing model. Stock-based compensation expense recognized in the consolidated statements of operations isbased on options ultimately expected to vest and has been reduced by an estimated forfeiture rate based on our historical and expected forfeiture patterns. Weuse the straight-line method of allocating compensation cost over the requisite service period of the related award.Determining the fair value of stock-based awards at the grant date under the Black-Scholes option pricing model requires judgment, includingestimating the value per share of our common stock, risk-free interest rate, expected term and dividend yield and volatility. The assumptions used incalculating the fair value of stock-based awards represent our best estimates based on management judgment and subjective future expectations. Theseestimates involve inherent uncertainties. If any of the assumptions used in the Black-Scholes option pricing model significantly change, stock-basedcompensation for future awards may differ materially from the awards granted previously.The expected term of options granted is based on historical experience of similar awards and expectations of future employee behavior. The risk-freeinterest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. We have not paid and do not anticipatepaying cash dividends on our common stock; therefore, the expected dividend yield is assumed to be zero. Volatility through 2016 was based on theestimated volatility of similar companies whose share prices are publicly available. In 2017, we calculated volatility based on our share price activitythroughout the year.Inventory ValuationInventory consists of raw materials, certain component parts to be used in manufacturing our products and finished goods. Inventory is stated at thelower of cost or market. Cost is determined using a standard cost system, whereby the standard costs are updated periodically to reflect current costs andmarket represents the lower of replacement cost or estimated net realizable value. We record adjustments to inventory for potentially excess, obsolete, slow-moving or impaired items. The business environment in which we operate is subject to rapid changes in technology and customer demand. We regularlyreview inventory for excess and obsolete products and components, taking into account product life cycle and development plans, product expiration andquality issues, historical experience and our current inventory levels. If actual market conditions are less favorable than anticipated, additional inventoryadjustments could be required.Recent Accounting PronouncementsFor information regarding recent accounting pronouncements, see Note 2 of the Notes to the Consolidated Financial Statements under Item 8 of thisreport.Off-Balance Sheet ArrangementsWe do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance orspecial purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for any other contractuallynarrow or limited purpose.Item 7A. Quantitative and Qualitative Disclosures About Market RiskWe are exposed to various market risks, including changes in commodity prices and interest rates. Market risk is the potential loss arising fromadverse changes in market rates and prices. Prices for our products are largely denominated in U.S. dollars and, as a result, we do not face significant risk withrespect to foreign currency exchange rates.Interest Rate RiskGenerally, our exposure to market risk has been primarily limited to interest income sensitivity, which is affected by changes in the general level ofU.S. interest rates, particularly because the majority of our investments are in short-term debt securities. The primary objective of our investment activities isto preserve principal while at the same time maximizing the income we receive without significantly increasing risk. To minimize risk, we maintain ourportfolio of cash, cash equivalents and short-term investments in a variety of interest-bearing instruments, which have included U.S. government and agencysecurities, high-grade U.S. corporate bonds, asset-backed securities, and money market funds. Declines in interest rates, however, would reduce futureinvestment income. A 10% decline in interest rates, occurring on January 1, 2019 and sustained throughout the period ending December 31, 2019, would notbe material.-64- As of December 31, 2018, the principal and deferred interest outstanding under our term borrowings was $60.4 million. The interest rates on our termborrowings under our credit facility are fixed. If overall interest rates had increased by 10% during the periods presented, our interest expense would not havebeen affected.Foreign Currency Exchange RiskAs we continue to expand internationally our results of operations and cash flows will become increasingly subject to fluctuations due to changes inforeign currency exchange rates. Historically, a majority of our revenue has been denominated in U.S. dollars, although we sell our products and servicesdirectly in certain markets outside of the United States denominated in local currency, principally the Euro. Our expenses are generally denominated in thecurrencies in which our operations are located, which is primarily in the United States. The effect of a 10% adverse change in exchange rates on foreigndenominated cash, receivables and payables would not have been material for the periods presented. As our operations in countries outside of the UnitedStates grow, our results of operations and cash flows will be subject to potentially greater fluctuations due to changes in foreign currency exchange rates,which could harm our business in the future. To date, we have not entered into any material foreign currency hedging contracts although we may do so in thefuture.Inflation RiskWe do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to becomesubject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do socould adversely affect our business, financial condition and results of operations.-65- Item 8. Financial Statements and Supplementary DataINDEX TO CONSOLIDATED FINANCIAL STATEMENTSNANOSTRING TECHNOLOGIES, INC. Page(s)Financial Statements: Report of Independent Registered Public Accounting Firm67Consolidated Balance Sheets69Consolidated Statements of Operations70Consolidated Statements of Comprehensive Loss71Consolidated Statements of Changes in Stockholders’ Equity72Consolidated Statements of Cash Flows73Notes to Consolidated Financial Statements75-66- Report of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of NanoString Technologies, Inc.Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of NanoString Technologies, Inc. and its subsidiaries (the “Company”) as ofDecember 31, 2018 and 2017, and the related consolidated statements of operations, of comprehensive loss, of changes in stockholders’ equity and of cashflows for each of the three years in the period ended December 31, 2018, including the related notes (“collectively referred to as the consolidated financialstatements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in InternalControl – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Companyas of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all materialrespects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – IntegratedFramework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to: (i) anineffective control environment as the Company had an insufficient complement of resources with an appropriate level of information technology (“IT”)controls knowledge, expertise and training commensurate with the Company’s financial reporting requirements which contributed to additional materialweaknesses in that the Company (ii) did not design and maintain effective controls over certain IT general controls for the significant applications used in thepreparation of the financial statements, and (iii) did not design and maintain controls to timely detect and independently review instances where individualswith access to post a journal entry may also have edited or created the journal entry.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonablepossibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The materialweaknesses referred to above are described in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Weconsidered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2018 consolidated financialstatements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on thoseconsolidated financial statements.Basis for OpinionsThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financialreporting, and for its assessment of the effectiveness of internal control over financial reporting included in management's report referred to above. Ourresponsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reportingbased on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and arerequired to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whethereffective internal control over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a testbasis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principlesused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit ofinternal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also includedperforming such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and-67- procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assetsof the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPSeattle, WashingtonMarch 11, 2019We have served as the Company's auditor since 2008.-68- NanoString Technologies, Inc.Consolidated Balance Sheets December 31, 2018 2017 (In thousands, except par valueamounts)Assets Current assets: Cash and cash equivalents$24,356 $26,136Short-term investments69,641 51,419Accounts receivable, net17,279 19,564Inventory, net13,173 20,057Prepaid expenses and other current assets7,258 4,745Total current assets131,707 121,921Restricted cash— 143Property and equipment, net15,171 14,057Other assets680 641Total assets$147,558 $136,762Liabilities and Stockholders’ Equity Current liabilities: Accounts payable$8,636 $4,092Accrued liabilities3,705 4,507Accrued compensation and other employee benefits12,060 8,634Customer deposits8,167 8,945Deferred revenue, current portion9,890 9,229Deferred rent, current portion657 512Total current liabilities43,115 35,919Deferred revenue, net of current portion1,620 3,304Deferred rent and other liabilities, net of current portion7,558 8,499Long-term debt, net of discounts58,396 48,931Total liabilities110,689 96,653Commitments and contingencies (Note 14) Stockholders’ equity Preferred stock, $0.0001 par value, 15,000 shares authorized; none issued— —Common stock, $0.0001 par value, 150,000 shares authorized; 30,913 and 25,421 shares issued andoutstanding at December 31, 2018 and 2017, respectively3 2Additional paid-in-capital428,162 353,308Other comprehensive loss(40) (99)Accumulated deficit(391,256) (313,102)Total stockholders’ equity36,869 40,109Total liabilities and stockholders’ equity$147,558 $136,762The accompanying notes are an integral part of these consolidated financial statements.-69- NanoString Technologies, Inc.Consolidated Statements of Operations Years Ended December 31, 2018 2017 2016 (In thousands, except per share amounts)Revenue: Product and service$83,523 $72,010 $69,134Collaboration23,209 42,895 17,355Total revenue106,732 114,905 86,489Costs and expenses: Cost of product and service revenue36,331 31,880 30,245Research and development61,599 46,888 34,720Selling, general and administrative78,195 74,334 62,700Total costs and expenses176,125 153,102 127,665Loss from operations(69,393) (38,197) (41,176)Other income (expense): Interest income1,331 809 390Interest expense(7,431) (6,153) (5,672)Other income (expense)(1,658) 183 (515)Total other income (expense)(7,758) (5,161) (5,797)Net loss before provision for income taxes(77,151) (43,358) (46,973)Provision for income taxes(249) (204) (116)Net loss$(77,400) $(43,562) $(47,089)Net loss per share—basic and diluted$(2.78) $(1.84) $(2.34)Weighted average shares used in computing basic and diluted net loss per share27,883 23,731 20,116The accompanying notes are an integral part of these consolidated financial statements.-70- NanoString Technologies, Inc.Consolidated Statements of Comprehensive Loss Years Ended December 31, 2018 2017 2016 (In thousands)Net loss$(77,400) $(43,562) $(47,089)Other comprehensive income (loss): Change in unrealized gain (loss) on short-term investments59 (42) (28)Comprehensive loss$(77,341) $(43,604) $(47,117)The accompanying notes are an integral part of these consolidated financial statements.-71- NanoString Technologies, Inc.Consolidated Statements of Changes in Stockholders’ Equity Common Stock AdditionalPaid-inCapital OtherComprehensiveLoss AccumulatedDeficit TotalStockholders’Equity Shares Amount (In thousands)Balances at January 1, 201619,570 $2 $242,693 $(29) (222,451) $20,215Issuance of common stock net of issuance costs of $1.0million1,333 — 26,073 — — 26,073Issuance of common stock for employee stock purchase plan139 — 1,489 — — 1,489Exercise of stock options349 — 2,607 — — 2,607Exercise of common stock warrants, net133 — — — — —Vesting of restricted stock units5 — — — — —Stock-based compensation— — 9,038 — — 9,038Net loss— — — — (47,089) (47,089)Other comprehensive (income) loss— — — (28) — (28)Balances at December 31, 201621,529 2 281,900 (57) (269,540) 12,305Issuance of common stock net of issuance costs of $1.3million3,450 — 56,486 — — 56,486Issuance of common stock for employee stock purchase plan139 — 1,793 — — 1,793Issuance of common stock warrants— — 674 — — 674Exercise of stock options228 — 1,086 — — 1,086Exercise of common stock warrants, net29 — — — — —Vesting of restricted stock units, net46 — — — — —Stock-based compensation— — 11,369 — — 11,369Net loss— — — — (43,562) (43,562)Other comprehensive (income) loss— — — (42) — (42)Balances at December 31, 201725,421 2 353,308 (99) (313,102) 40,109Cumulative effect of a change in accounting policy(1)— — — — (754) (754)Issuance of common stock net of issuance costs of $3.7million4,600 1 53,828 — — 53,829Issuance of common stock warrants— — 4,593 — — 4,593Exercise of stock options431 — 3,507 — — 3,507Issuance of common stock for employee stock purchase plan257 — 1,451 — — 1,451Exercise of common stock warrants, net118 — — — — —Vesting of restricted stock units, net86 — — — — —Stock-based compensation— — 11,475 — — 11,475Net loss— — — — (77,400) (77,400)Other comprehensive (income) loss— — — 59 — 59Balances at December 31, 201830,913 $3 $428,162 $(40) $(391,256) $36,869 (1) Effective January 1, 2018, we adopted Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers. See Note 2. Significant Accounting Policies andNote 3. Revenue from Contracts with Customers for more information. The accompanying notes are an integral part of these consolidated financial statements.-72- NanoString Technologies, Inc.Consolidated Statements of Cash Flows Years Ended December 31, 2018 2017 2016 (In thousands)Operating activities Net loss$(77,400) $(43,562) $(47,089)Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization4,070 3,354 2,977Stock-based compensation expense11,475 11,369 9,038Repayment of accrued interest of long-term debt(5,446) — —Loss on extinguishment of long-term debt842 — —Amortization (accretion) of discount or premium on short-term investments278 198 (20)Amortization of debt issuance costs and discounts438 171 158Conversion of accrued interest to long-term debt1,530 1,472 1,357(Gain) loss on disposal of property and equipment97 15 (2)Provision for bad debt467 361 —Provision for inventory obsolescence691 866 822Changes in operating assets and liabilities Accounts receivable1,807 2,277 (2,476)Inventory5,251 (8,742) (5,857)Prepaid expenses and other assets(2,714) (1,278) 109Accounts payable4,640 (110) 869Accrued liabilities(494) 1,312 (40)Accrued compensation and other employee benefits3,463 295 281Customer deposits(778) 8,335 610Deferred revenue(1,779) (29,161) 29,948Deferred rent and other liabilities(503) 1,171 3,236Net cash used in operating activities(54,065) (51,657) (6,079)Investing activities Purchases of property and equipment(4,485) (4,284) (3,991)Proceeds from sale of property and equipment— — 4Proceeds from sale of short-term investments7,910 3,600 4,700Proceeds from maturity of short-term investments51,300 79,599 34,800Purchases of short-term investments(77,650) (81,405) (65,774)Net cash used in investing activities(22,925) (2,490) (30,261)Financing activities Proceeds from long-term debt60,000 — 5,000Deferred costs related to long-term debt(500) — —Repayment of long-term debt and lease financing obligations(45,000) (58) (226)Fees paid upon extinguishment of debt(1,009) — —Proceeds from sale of common stock, net53,829 56,486 26,223Proceeds from issuance of common stock warrants3,010 674 —Proceeds from issuance of common stock for employee stock purchase plan1,451 1,793 1,489Tax withholdings related to net share settlements of restricted stock units(207) (313) —Proceeds from exercise of stock options3,507 1,086 2,607Net cash provided by financing activities75,081 59,668 35,093Net increase (decrease) in cash and cash equivalents(1,909) 5,521 (1,247)Effect of exchange rate changes on cash and cash equivalents(14) 32 (26)Cash and cash equivalents and restricted cash Beginning of year26,279 20,726 21,999End of year$24,356 $26,279 $20,726-73- NanoString Technologies, Inc.Consolidated Statements of Cash Flows (continued) Years Ended December 31, 2018 2017 2016 (In thousands)Reconciliation of cash and cash equivalents and restricted cash at end of period: Cash and cash equivalents$24,356 $26,136 $20,583Restricted cash— 143 143Cash and cash equivalents and restricted cash at end of period$24,356 $26,279 $20,726 Supplemental disclosures Cash paid for interest$6,213 $4,416 $4,071Fair value of warrants issued with long-term debt1,583 — —Cash paid for taxes231 154 217Purchases of property and equipment, accrued but not paid— — 275Rental instruments reclassified from inventory585 1,023 801Non-cash inventory exchanged for services106 — 28The accompanying notes are an integral part of these consolidated financial statements.-74- NanoString Technologies, Inc.Notes to Consolidated Financial Statements1. Description of the BusinessNanoString Technologies, Inc. (the “Company”) was incorporated in the state of Delaware on June 20, 2003. The Company’s headquarters is locatedin Seattle, Washington. The Company’s proprietary optical barcoding chemistry enables direct detection, identification and quantification of individualtarget molecules in a biological sample by attaching a unique color coded fluorescent reporter to each target molecule of interest. The Company markets itsproprietary nCounter Analysis System, consisting of instruments and consumables, including its Prosigna Breast Cancer Assay, to academic, government,biopharmaceutical and clinical laboratory customers.The Company has incurred losses to date and expects to incur additional losses for the foreseeable future. The Company continues to invest themajority of its resources in the development and growth of its business, including significant investments in new product development and sales andmarketing efforts. The Company’s activities have been financed primarily through the sale of equity securities and incurrence of indebtedness, cash receivedby the Company pursuant to certain product development collaborations, and, to a lesser extent, through the incurrence of capital leases and otherborrowings.2. Significant Accounting PoliciesAccounting Principles and Principles of ConsolidationThe consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in theUnited States of America (“U.S. GAAP”). The accompanying consolidated financial statements reflect the accounts of the Company and its wholly-ownedsubsidiaries. Each of the subsidiaries operates as a sales and support office. The functional currency of each subsidiary is the U.S. dollar. All significantintercompany balances and transactions have been eliminated.Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements andthat affect the reported amounts of revenue and expenditures during the reporting period. Actual results could differ from those estimates. Significantestimates inherent in the preparation of the accompanying consolidated financial statements include the estimation of the valuation of inventory, the fairvalue of the Company’s equity securities, the calculation of stock-based compensation and the estimated future cost of ongoing collaboration agreements, forwhich revenues are recognized on a proportional performance basis.Cash and Cash EquivalentsThe Company considers all highly-liquid investments with purchased maturities of three months or less to be cash equivalents. The Company’s cashequivalents consist principally of funds maintained in depository accounts. The Company invests its cash and cash equivalents with major financialinstitutions; at times these investments exceed federally insured limits.InvestmentsThe Company classifies its securities as available-for-sale, which are reported at estimated fair value with unrealized gains and losses included inaccumulated other comprehensive loss in stockholders’ equity. Realized gains, realized losses and declines in the value of securities judged to be other-than-temporary, are included in other income (expense). The cost of investments for purposes of computing realized and unrealized gains and losses is based onthe specific identification method. Amortization of premiums and accretion of discounts are included in other income (expense). Interest and dividendsearned on all securities are included in other income (expense). Investments in securities with maturities of less than one year, or where management’s intentis to use the investments to fund current operations, or to make them available for current operations, are classified as short-term investments.If the estimated fair value of a security is below its carrying value, the Company evaluates whether it is more likely than not that it will sell thesecurity before its anticipated recovery in market value and whether evidence indicating that the cost of the investment is recoverable within a reasonableperiod of time outweighs evidence to the contrary. The Company also evaluates whether or not it intends to sell the investment. If the impairment isconsidered to be other-than-temporary, the security is written down to its estimated fair value. In addition, the Company considers whether credit losses existfor any securities. A credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis of-75- the security. Other-than-temporary declines in estimated fair value and credit losses are charged against other income (expense).Accounts Receivable and Allowance for Doubtful AccountsAccounts receivable are stated at the amount management expects to collect from customers based on their outstanding invoices. Managementreviews accounts receivable regularly to determine if any receivable will potentially be uncollectible and to estimate the amount of allowance for doubtfulaccounts necessary to reduce accounts receivable to its estimated net realizable value by analyzing the status of significant past due receivables. Theallowance for doubtful accounts was $0.7 million as of December 31, 2018, $0.5 million as of December 31, 2017, and $0.1 million as of December 31, 2016and 2015. Additions to the allowance were $0.5 million, $0.4 million, and $0 for the years ended December 31, 2018, 2017, and 2016, respectively. Therewere write-offs of uncollectible accounts of approximately $0.2 million, $1,200, and $5,000 during the years ended December 31, 2018, 2017, and 2016respectively.Concentration of Credit RisksFinancial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term investments and accounts receivable. Cash is invested in accordance with the Company’s investment policy, which includes guidelines intended tominimize and diversify credit risk. Most of the Company’s investments are not federally insured. The Company has credit risk related to the collectability ofits accounts receivable. The Company performs initial and ongoing evaluations of its customers’ credit history or financial position and generally extendscredit on account without collateral. The Company has not experienced any significant credit losses to date.The Company had one customer/collaborator, Lam Research Corporation (“Lam”), that represented 17% of total revenue for the year endedDecember 31, 2018 and two customers/collaborators, (1) Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc. (“Merck”), and (2) Medivation, Inc.and Astellas Pharma Inc., that represented 25% and 10%, respectively, of total revenue for the year ended December 31, 2017. The Company had onecustomer/collaborator, Merck, that represented 13% of total revenue for the year 2016. The Company had no customers or collaborators that represented morethan 10% of total accounts receivable as of December 31, 2018 and 2017.The Company is also subject to supply chain risks related to the outsourcing of the manufacturing and production of its instruments to solesuppliers. Although there are a limited number of manufacturers for instruments of this type, the Company believes that other suppliers could provide similarproducts on comparable terms. Similarly, the Company sources certain raw materials used in the manufacture of consumables from certain sole suppliers. Achange in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which would adversely affect operating results.Fair value of financial instrumentsThe recorded amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other assets,accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. Investments that are classified as available-for-sale arerecorded at fair value. The fair value for securities held is determined using quoted market prices, broker or dealer quotations, or alternative pricing sourceswith reasonable levels of price transparency. The recorded amount of the Company’s long-term debt approximates fair value because the related interest ratesapproximate rates currently available to the Company.InventoryInventory consists of finished goods, work in process, raw materials and certain component parts to be used in manufacturing or servicing theCompany’s products. Inventory is stated at the lower of cost or net realizable value. Cost is determined using a standard cost system, whereby the standardcosts are updated periodically to reflect current costs and market represents the lower of cost or market (replacement cost or estimated net realizable value).The Company’s policy is to establish inventory reserves when conditions exist that suggest that inventory may be in excess of anticipated demand, obsolete,slow moving or impaired. In the event that the Company identifies these conditions exist in its inventory, its carrying value is reduced to its net realizablevalue. Inventory reserves were $3.2 million as of December 31, 2018, $2.7 million as of December 31, 2017, and $2.2 million as of December 31, 2016.Additions to the reserves were $0.7 million, $0.9 million, and $0.8 million for the years ended December 31, 2018, 2017, and 2016, respectively. Write-offsof inventory reserves for the years ended December 31, 2018, 2017, and 2016 were $0.3 million, $0.4 million, and $0.7 million, respectively.The Company outsources the manufacturing of its instruments to third-party contract manufacturers who manufacture them to certain specificationsand source certain raw materials from sole source providers. Major delays in shipments, inferior quality, insufficient quantity or any combination of these orother factors may harm the Company’s business and results of operations. In addition, the inability of one or more of these suppliers to provide the Companywith an adequate supply of its-76- products or raw materials or the loss of one or more of these suppliers may cause a delay in the Company’s ability to fulfill orders while it obtains areplacement supplier and may harm the Company’s business and results of operations.Property and EquipmentProperty and equipment are recorded at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed usingthe straight-line method over the estimated useful lives of the assets. Manufacturing equipment is depreciated over five years, lease and loaner instrumentsare depreciated over one to five years, prototype systems are depreciated over two years, computer equipment is generally depreciated over three years,furniture and fixtures are depreciated over five years and leasehold improvements are amortized over the life of the related assets or the term of the lease,whichever is shorter. Expenditures for additions are capitalized and expenditures for maintenance and repairs are expensed as incurred. Gains and losses fromthe disposal of property and equipment are reflected in the consolidated statements of operations in the period of disposition.Leases and Leasehold ImprovementsRent expense for leases that provide for scheduled rent increases during the lease term is recognized on a straight-line basis over the term of therelated lease. Leasehold improvements that are funded by landlord incentives or allowances are recorded in property and equipment and as a component ofdeferred rent and are amortized as a reduction of rent expense over the term of the related lease.Impairment of Long-Lived AssetsThe Company recognizes impairment losses on long-lived assets when indicators of impairment are present and the anticipated undiscounted cashflows to be generated by those assets are less than the asset’s carrying values. The Company has not experienced any impairment losses on its long-livedassets during the periods presented.SegmentsOperating segments are defined as components of an entity for which separate financial information is available and evaluated regularly by the chiefoperating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chiefexecutive officer, who manages the operations and evaluates the financial performance on a total Company basis. The Company’s principal operations anddecision-making functions are located at its corporate headquarters in the United States and the Company operates as a single operating and reportingsegment.Revenue RecognitionThe Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects theconsideration expected to be received in exchange for those products and services. This process involves identifying the contract with a customer,determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligationsin the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from otherobligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customerand is separately identified in the contract. Performance obligations are considered satisfied once the Company has transferred control of a product or serviceto the customer, meaning the customer has the ability to use and obtain the benefit of the product or service. The Company recognizes revenue for satisfiedperformance obligations only when there are no uncertainties regarding payment terms or transfer of control.The Company generates the majority of its revenue from the sale of products and services. The Company’s products consist of its proprietarynCounter Analysis Systems and related consumables. Services consist of instrument service contracts and service fees for assay processing. Revenues arepresented net of the taxes that are collected from customers and remitted to governmental authorities.Revenue from instruments, consumables and in vitro diagnostic kits is recognized generally upon shipment to the end customer, which is when titleof the product has been transferred to the customer. Instrument revenue related to installation and calibration services is recognized when the customer haspossession of the instrument and the services have been performed. Such services can also be provided by the Company’s distribution partners and other thirdparties. For instruments sold solely to run Prosigna assays, an initial training course must be provided by the Company prior to instrument revenuerecognition.Instrument service contracts are sold with contract terms ranging from 12-36 months and cover periods after the end of the initial 12-month warranty.These contracts include services to maintain performance within the Company’s designed specifications and a minimum of one preventative maintenanceservice procedure during the contract term. Revenue from-77- services to maintain designed specifications is considered a stand-ready obligation and recognized evenly over the contract term. Revenue from service feesfor assay processing is recognized upon the rendering of the related performance obligation.For arrangements with multiple performance obligations, the Company allocates the contract price in proportion to its stand-alone selling price. TheCompany uses its best estimate of stand-alone selling price for its products and services based on average selling prices over a 12-month period and reviewsits stand-alone prices annually.Product and service revenues from sales to customers through distributors are recognized consistent with the policies and practices for direct sales tocustomers, as described above.The Company enters into collaboration agreements that may generate upfront fees, and in some cases subsequent milestone payments that may beearned upon completion of certain product development milestones or other designated activities. The Company estimates the expected total cost of productdevelopment and other services under these arrangements and recognizes collaboration revenue using a contingency-adjusted proportional performancemodel. Costs incurred to date compared to total expected costs are used to determine proportional performance, as this is considered to be representative ofthe delivery of outputs under the arrangements. Revenue recognized at any point in time is limited to cash received, amounts contractually due, or theamounts of any product development or other contractual milestone payments when achievement of a milestone is deemed to be probable. Changes inestimates of total expected collaboration product development or other costs are accounted for prospectively as a change in estimate. From period to period,collaboration revenue can fluctuate substantially based on the achievement or probable achievement of product development or other milestones, or asestimates of total expected collaboration product development or other costs are changed or updated. The Company may recognize revenue fromcollaboration agreements that do not include upfront or milestone-based payments. Amounts due to collaboration partners are recognized when the relatedactivities have occurred and are classified in the statement of operations, generally as research and development expense, based on the nature of the relatedactivities.For the years ending December 31, 2017 and 2016, the Company recognized revenue related to its products and services based on the applicableaccounting standards for revenue recognition which were in effect for those periods. The accounting standards in effect for years prior to 2018 allowedrevenue to be recognized when (1) persuasive evidence of an arrangement existed, (2) delivery occurred or services had been rendered, (3) the price to thecustomer was fixed or determinable and (4) collectability was reasonably assured. A delivered product or service was considered to be a separate unit ofaccounting when it had value to the customer on a stand-alone basis. Products or services had value on a stand-alone basis if they were sold separately by anyvendor or the customer could resell the delivered product.Instruments, consumables and in vitro diagnostic kits were considered to be separate units of accounting as they were sold separately and revenuewas recognized upon transfer of ownership, which was generally upon shipment. Instrument revenue related to installation and calibration services wasrecognized when services were rendered by the Company.Service revenue is recognized when earned, which is generally upon the rendering of the related services. Service agreements and service fees forassay processing are each considered separate units of accounting as they are sold separately. Service agreements are generally separately priced. Revenuefrom service agreements is deferred and recognized on a straight-line basis over the service period.For arrangements with multiple deliverables, the Company allocated the agreement consideration at the inception of the agreement to thedeliverables based upon their relative selling prices. Selling prices were established by reference to vendor specific objective evidence based on stand-alonesales transactions for each deliverable. Vendor specific objective evidence was considered to have been established when a substantial majority of individualsales transactions within the previous 12-month period fall within a reasonably narrow range, which the Company defined to be plus or minus 15% of themedian sales price of actual stand-alone sales transactions. The Company used its best estimate of selling price for individual deliverables when vendorspecific objective evidence or third-party evidence was unavailable. Allocated revenue was only recognized for each deliverable when the revenuerecognition criteria was met.Cost of RevenueCost of revenue consists primarily of costs incurred in the production process, including costs of purchasing instruments from third-party contractmanufacturers, consumable component materials and assembly labor and overhead, installation, warranty, service and packaging and delivery costs. Inaddition, cost of revenue includes royalty costs for licensed technologies included in the Company’s products, provisions for slow-moving and obsoleteinventory and stock-based compensation expense. Cost of revenue for instruments and consumables is recognized in the period the related revenue isrecognized. Shipping and handling costs incurred for product shipments are included in cost of revenue in the consolidated statements of operations.-78- Reserve for Product WarrantiesThe Company generally provides a one-year warranty on its nCounter Analysis Systems and establishes a reserve for future warranty costs based onhistorical product failure rates and actual warranty costs incurred. Warranty expense is recorded as a component of cost of revenue in the consolidatedstatements of operations.Research and DevelopmentResearch and development expenses, consisting primarily of salaries and benefits, occupancy costs, laboratory supplies, clinical study costs,contracted services, consulting fees and related costs, are expensed as incurred.Selling, General and AdministrativeSelling expenses consist primarily of personnel related costs for sales and marketing, contracted services and service fees and are expensed as therelated costs are incurred. Advertising costs are expensed as incurred and are included in sales and marketing expenses. Advertising costs totaledapproximately $4.8 million, $5.9 million, and $5.3 million during the years ended December 31, 2018, 2017, and 2016, respectively.General and administrative expenses consist primarily of personnel related costs for the Company’s finance, human resources, businessdevelopment, legal, information technology and general management, as well as professional fees for legal, accounting, and other consulting services.General and administrative expenses are expensed as they are incurred.Income TaxesThe Company accounts for income taxes under the liability method. Under the liability method, deferred tax assets and liabilities are determinedbased on the differences between the financial reporting and income tax bases of assets and liabilities and are measured using the tax rates that will be ineffect when the differences are expected to reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets willnot be realized.The Company determines whether a tax position is more likely than not to be sustained upon examination based on the technical merits of theposition. For tax positions meeting the more-likely-than-not threshold, the tax amount recognized in the financial statements is reduced by the largest benefitthat has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.Stock-Based CompensationThe Company accounts for stock-based compensation under the fair value method. Stock-based compensation costs are based on option awardsgranted and vested based on their grant-date fair value, estimated using the Black-Scholes option pricing model. The Company uses the straight-lineattribution method for recognizing compensation expense.Guarantees and IndemnificationsIn the normal course of business, the Company guarantees and/or indemnifies other parties, including vendors, lessors and parties to transactionswith the Company, with respect to certain matters. The Company has agreed to hold the other parties harmless against losses arising from breach ofrepresentations or covenants, or out of intellectual property infringement or other claims made against certain parties. It is not possible to determine themaximum potential amount the Company could be required to pay under these indemnification agreements, since the Company has not had any priorindemnification claims, and each claim would be based upon the unique facts and circumstances of the claim and the particular provisions of each agreement.In the opinion of management, any such claims would not be expected to have a material adverse effect on the Company’s consolidated results of operations,financial condition or cash flows. The Company did not have any related liabilities recorded at December 31, 2018 and 2017.Comprehensive LossComprehensive loss includes certain changes in equity that are excluded from net loss. Specifically, unrealized gains and losses on short-terminvestments are included in comprehensive (income) loss.Recently Adopted Accounting PronouncementIn May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) entitled “ASU 2014-09, Revenuefrom Contracts with Customers.” The standard requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer ofpromised goods or services to a customer. In March 2016, the FASB issued “ASU 2016-08, Principal vs Agent Considerations (Reporting Revenue Grossversus Net)” which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued “ASU 2016-10,Identifying Performance Obligations and Licensing” which clarifies the implementation guidance on identifying performance obligations and the licensingimplementation guidance. In May 2016, the FASB issued “ASU 2016-12, Narrow-Scope Improvements and-79- Practical Expedients” which provides practical expedients for contract modifications and clarification on assessing the collectability criterion, presentationof sales taxes, measurement date for non-cash consideration and completed contracts at transition. The standards require an entity to recognize the amount ofrevenue which it expects to be entitled for the transfer of promised goods or services to a customer. This guidance replaces most existing revenue recognitionguidance and requires more extensive disclosures related to revenue recognition, particularly in quarterly financial statements. A cumulative effect ofapplying the new revenue standard has been recognized as an adjustment to the opening balance of retained earnings as of January 1, 2018, using themodified retrospective transition method. The comparative information has not been restated and continues to be reported under the accounting standards ineffect for the period presented.See Note 3. Revenue from Contracts with Customers, for additional accounting policy and transition disclosures.In January 2016, FASB issued “ASU 2016-01, Financial Instruments: Overall.” The standard addresses certain aspects of recognition, measurement,presentation and disclosure of financial instruments. The Company adopted the standard in the first quarter of 2018 and adoption did not have a materialimpact on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures.In August 2016, FASB issued “ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments.” Thestandard provides guidance on the presentation of certain cash receipts and cash payments in the statement of cash flows in order to reduce diversity inexisting practice. The Company adopted the standard in the first quarter of 2018 and there was no material impact on its consolidated results of operations,financial condition, cash flows, and financial statement disclosures.In November 2016, FASB issued “ASU 2016-18, Statement of Cash Flows: Restricted Cash.” The standard requires companies to include amountsgenerally described as restricted cash and restricted cash equivalents, along with cash and cash equivalents, when reconciling the beginning-of-period andend-of-period amounts shown on the statement of cash flows. The Company adopted the standard in the first quarter of 2018 using the retrospective transitionmethod and reflected the impact of this standard in its consolidated cash flows.In May 2017, FASB issued “ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting.” The standard clarifies whichchanges to the terms or conditions of a share-based payment award are required to be accounted for as modifications. The Company adopted the standard inthe first quarter of 2018 prospectively and adoption did not have an impact on its consolidated results of operations, financial condition, cash flows, andfinancial statement disclosures.Recent Accounting PronouncementsIn February 2016, FASB issued “ASU 2016-02, Leases – Recognition and Measurement of Financial Assets and Financial Liabilities.” The standardrequires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. Leases will be classified as either financeor operating, with classification affecting the pattern of expense recognition. In August 2018, FASB issued “ASU 2018-11, Leases (Topic 842): TargetedImprovements,” which allows the cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In December 2018,FASB issued “ASU-2018-20, Leases (Topic 842): Narrow Scope Improvements for Lessors,” which provides an election for lessors to exclude sales andrelated taxes collected from lessees from consideration in the contract, requires lessors to exclude from revenue and expense lessor costs paid directly to thirdparties by lessees, and clarifies lessors accounting for variable payments related to both lease and nonlease components.The Company will adopt the standard as of January 1, 2019, using the modified retrospective transition approach to be applied to leases existing asof, or entered into after, January 1, 2019. The Company is in the process of evaluating the impact of this standard and expects it to primarily relate to itsoperating leases for office and laboratory space noted in “Part 1. Item 2. Properties” of this Annual Report on Form 10-K, for which the Company will record alease liability and corresponding right-of-use asset upon adoption. Future undiscounted obligations related to the Company’s facility leases in effect as ofDecember 31, 2018, are included in the table of future minimum lease payments disclosed in Note 14. The Company does not expect the impact of adoptionto have a significant impact on its consolidated results of operations or cash flows, but does anticipate significant new disclosure requirements.In June 2016, FASB issued “ASU 2016-13, Financial Instruments — Credit Losses (Topic 326)” and subsequently in November 2018, “ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses.” The standard requires disclosure regarding expected credit losses onfinancial instruments at each reporting date, and changes how other than temporary impairments on investments securities are recorded. The standard willbecome effective for the Company beginning January 1, 2020 with early adoption permitted. The Company is currently assessing the impact adoption of thisstandard will have on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures.-80- In February 2018, FASB issued “ASU 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain TaxEffects from Accumulated Other Comprehensive Income.” The new guidance permits companies to reclassify the stranded tax effects of the Tax Cuts and JobsAct (the “Act”) on items within accumulated other comprehensive income to retained earnings. The Company will adopt the standard as of January 1, 2019and is currently assessing the impact adoption of this standard will have on its consolidated results of operations, financial condition, cash flows, andfinancial statement disclosures.In August 2018, FASB issued “ASU 2018-15, Intangibles — Goodwill and other — Internal-use software (Subtopic 350-40): Customer’s Accountingfor Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The standard aligns the requirements for capitalizingimplementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred todevelop or obtain internal-use software. The standard will become effective for the Company beginning on January 1, 2020, with early adoption permitted.The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations, financial condition, cash flows,and financial statement disclosures.In November 2018, the FASB issued “ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 andTopic 606.” The new guidance clarifies when certain transactions between collaborative arrangement participants which should be accounted for as revenueunder Topic 606. The standard will become effective for the Company beginning on January 1, 2020, with early adoption permitted. The Company iscurrently assessing the impact adoption of this standard will have on its consolidated results of operations, financial condition, cash flows, and financialstatement disclosures.3. Revenue from Contracts with CustomersOn January 1, 2018, the Company adopted the new standard for revenue recognition provided in “ASU 2014-09, Revenue from Contracts withCustomers” and has applied the modified retrospective transition method to all contracts that were not completed as of January 1, 2018. Results for reportingperiods beginning after January 1, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported underthe accounting standards in effect for the prior period. The Company recorded a transition adjustment which reduced opening retained earnings by $0.8million as of January 1, 2018 due to the cumulative impact of adopting the new revenue standard. The Company's revenues for the twelve months endedDecember 31, 2018 included the recognition of $0.8 million, as a result of adopting the new revenue standard and satisfying certain performance obligationsduring the period.The Company has determined that its collaborative agreements fall within the scope of ASC 808, Collaborative Arrangements, and applies theprinciples of ASC 606, Revenue from Contracts with Customers, in the measurement and recognition of revenue. In addition, the Company has concludedthat when service contracts are sold as part of a bundled arrangement with other products and services, these contracts will no longer be accounted for underseparate accounting guidance, but rather included as a separate performance obligation within a contract subject to the new standard, which includes theirinclusion in the determination and allocation of the aggregate transaction price, and recognition of revenue upon the delivery of the performance obligation.Performance obligationsPerformance obligations related to instrument sales are reviewed on a contract-by-contract basis, as individual contract terms may vary, and mayinclude installation and calibration services. For instruments sold solely to run Prosigna assays, training to the customer is a required performance obligationprior to any revenue recognition related to the instrument sale. Performance obligations for the Company's consumable products are generally completedupon shipment to the customer.-81- Disaggregated RevenuesThe following table provides information about disaggregated revenue by major product line and primary geographic market (in thousands): Year Ended December 31, 2018 Americas Europe andMiddle East AsiaPacific TotalProduct revenue: Instruments$12,033 $6,677 $2,731 $21,441Consumables29,653 10,847 3,347 43,847In vitro diagnostic kits3,014 6,094 337 9,445Total product revenue44,700 23,618 6,415 74,733Service revenue6,228 2,097 465 8,790Total product and service revenue50,928 25,715 6,880 83,523Collaboration revenue23,209 — — 23,209Total revenues$74,137 $25,715 $6,880 $106,732 Year Ended December 31, 2017(1) Americas Europe andMiddle East AsiaPacific TotalProduct revenue: Instruments$10,556 $6,561 $3,722 $20,839Consumables25,583 9,934 2,794 38,311In vitro diagnostic kits2,473 3,982 290 6,745Total product revenue38,612 20,477 6,806 65,895Service revenue4,592 1,314 209 6,115Total product and service revenue43,204 21,791 7,015 72,010Collaboration revenue42,895 — — 42,895Total revenues$86,099 $21,791 $7,015 $114,905 Year Ended December 31, 2016(1) Americas Europe andMiddle East AsiaPacific TotalProduct revenue: Instruments$12,086 $7,900 $4,243 $24,229Consumables27,015 7,481 3,049 37,545In vitro diagnostic kits1,517 2,476 175 4,168Total product revenue40,618 17,857 7,467 65,942Service revenue2,357 640 195 3,192Total product and service revenue42,975 18,497 7,662 69,134Collaboration revenue17,355 — — 17,355Total revenues$60,330 $18,497 $7,662 $86,489(1) Amounts have not been retrospectively modified to reflect the adoption of Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers, for the yearsended December 31, 2017 and 2016, respectively.Contract balances and remaining performance obligationsContract liabilities are included in the current and long-term portions of deferred revenue of $11.5 million and $12.5 million as of December 31,2018 and December 31, 2017, respectively, and within customer deposits of $8.2 million and $8.9 million as of December 31, 2018 and December 31, 2017,respectively, on the consolidated balance sheets. Total contract-82- liabilities decreased by $1.8 million for the twelve months ended December 31, 2018 as a result of cash payments received of $29.0 million related to ourcollaborations and service contracts, partially offset by the recognition of previously deferred revenue of $30.8 million for the completion of certainperformance obligations during the period. The Company did not record any contract assets as of December 31, 2018.Unsatisfied or partially unsatisfied performance obligations related to collaboration agreements as of December 31, 2018 were $13.4 million and areexpected to be completed over the period of each collaboration agreement, through June 2020. Performance obligations related to product and servicecontracts as of December 31, 2018 were $6.3 million and are expected to be completed over the term of the related contract, through August 2023.Practical expedientsThe Company generally recognizes expense related to the acquisition of contracts, such as sales commissions, at the time of revenue recognition,which is generally in the same period products are sold, and in the case of services, revenue is recognized as services are rendered or over the period of timecovered by the service contract, which is typically 12-months from the sale. The Company has not established any contract assets or liabilities related tocontract acquisition costs as of December 31, 2018. The Company records commission expenses within selling, general and administrative expenses.Impact of new revenue standardIn accordance with the new revenue guidance, which the Company adopted effective January 1, 2018, the disclosure of the impact of adoption ofthis new standard to our consolidated statements of operations was as follows: Year Ended December 31, 2018(in thousands, except per share amounts) As Reported Amounts underprevious revenuestandard Effect of ChangeRevenue: Product and service $83,523 $82,769 $754Collaboration 23,209 23,209 —Total revenue 106,732 105,978 754Net loss $(77,400) $(78,154) $754Net loss per share - basic and diluted $(2.78) $(2.80) $0.02The adoption of the new revenue standard did not have an aggregate impact on the Company’s net cash provided by operating activities, butresulted in offsetting changes in certain liabilities presented within net cash provided by operating activities in the Company’s consolidated statement ofcash flows, as reflected in the above tables.4. Short-term InvestmentsShort-term investments consisted of available-for-sale securities as follows (in thousands):Type of securities as of December 31, 2018Amortized cost Grossunrealizedgains Grossunrealizedlosses Fair valueCorporate debt securities$47,299 $1 $(21) $47,279U.S. government-related debt securities14,972 — (11) 14,961Asset-backed securities$7,410 $— $(9) $7,401Total available-for-sale securities$69,681$1$(41) $69,641Type of securities as of December 31, 2017Amortized cost Grossunrealizedgains Grossunrealizedlosses Fair valueCorporate debt securities$35,567 $— $(53) $35,514U.S. government-related debt securities15,951 — (46) 15,905Total available-for-sale securities$51,518$—$(99)$51,419-83- Table of ContentsThe fair values of available-for-sale securities by contractual maturity at December 31 were as follows (in thousands): 2018 2017Maturing in one year or less$69,641 $39,985Maturing in one to three years— 11,434Total available-for-sale securities$69,641$51,419The Company has the ability to sell its available-for-sale investments maturing greater than one year within 12 months from the balance sheet dateand, accordingly, has classified these securities as current in the consolidated balance sheet.The following table summarizes investments that have been in a continuous unrealized loss position as of December 31, 2018 (in thousands). Less Than 12 Months 12 Months orGreater Total Fairvalue Grossunrealizedlosses Fairvalue Grossunrealizedlosses Fairvalue GrossunrealizedlossesCorporate debt securities$14,957 $(15) $2,516 $(6) $17,473 $(21)U.S. government-related debt securities14,961 (11) — — 14,961 (11)Asset-backed securities7,401 (9) — — 7,401 (9)Total$37,319 $(35) $2,516 $(6) $39,835 $(41)The Company invests in securities that are rated investment grade or better. The unrealized losses on investments as of December 31, 2018 andDecember 31, 2017 were primarily caused by interest rate increases.The Company reviews the individual securities in its portfolio to determine whether a decline in a security’s fair value below the amortized costbasis is other-than-temporary. The Company determined that as of December 31, 2018, there were no investments in its portfolio that were other-than-temporarily impaired.5. Fair Value MeasurementsThe Company establishes the fair value of its assets and liabilities using the price that would be received to sell an asset or paid to transfer afinancial liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is used to measure fair value. Thethree levels of the fair value hierarchy are as follows:•Level 1 — Quoted prices in active markets for identical assets and liabilities.•Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are notactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.•Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers areunobservable.The Company’s available-for-sale securities by level within the fair value hierarchy were as follows (in thousands):Type of securities as of December 31, 2018Fair value measurement using:Level 1 Level 2 Level 3 TotalCash equivalents: Money market fund$16,293 $— $— $16,293Short-term investments: Corporate debt securities— 47,279 — 47,279U.S. government-related debt securities— 14,961 — 14,961Asset-backed securities— 7,401 — 7,401Total$16,293 $69,641 $— $85,934-84- Type of securities as of December 31, 2017Fair value measurement using:Level 1 Level 2 Level 3 TotalCash equivalents: Money market fund$22,398 $— $— $22,398Short-term investments: Corporate debt securities— 35,514 — 35,514U.S. government-related debt securities— 15,905 — 15,905Total$22,398 $51,419 $— $73,8176. Inventory, NetInventory consisted of the following at December 31 (in thousands): 2018 2017Raw materials$3,408 $5,743Work in process4,054 4,845Finished goods5,711 9,469Total inventory$13,173$20,057In 2018 and 2017, the Company transferred into property, plant and equipment net amounts totaling $0.6 million and $1.0 million, respectively, ofinventory that was leased or loaned to customers, or assigned for internal use in the Company’s facilities.7. Property and Equipment Property and equipment consisted of the following at December 31 (in thousands): Useful Life(Years) 2018 2017Manufacturing equipment5 $10,625 $8,395Lease and loaner instruments1 - 5 4,305 4,106Prototype instruments2 975 2,938Computer equipment3 2,095 2,067Furniture and fixtures5 1,456 1,670Leasehold improvementsVarious 11,960 11,971Construction in progress 685 158Total property and equipment, gross 32,10131,305Less: Accumulated depreciation and amortization (16,930) (17,248)Total property and equipment, net $15,171$14,057Prototype instruments consist of nCounter instruments used in internal testing and other development activities. Accumulated depreciation on leaseand loaner instruments was $2.4 million and $1.9 million at December 31, 2018 and 2017, respectively.Depreciation and amortization expense related to property and equipment for the years ended December 31, 2018, 2017, and 2016 totaledapproximately $4.0 million, $3.3 million, and $2.9 million, respectively.8. Long-Term DebtTerm Loan AgreementsIn April 2014, the Company entered into a term loan agreement (“2014 Term Loan”), under which it could borrow up to $45.0 million. In October2015, the Company amended the 2014 Term Loan primarily to increase the maximum borrowing capacity to $60.0 million, excluding deferred interest,reduce the applicable interest rate from 12.5% to 12.0%, extend the interest-only period through March 2021, and extend the final maturity to March 2022.Under the 2014 Term Loan, borrowings accrued interest at 12.0% annually, payable quarterly, of which 3.0% could be deferred during the first six years ofthe amended term at the Company’s option and paid together with the principal at maturity. The Company borrowed a total of $45.0 million-85- under the 2014 Term Loan through June 2016, excluding deferred interest. On December 31, 2016, the Company’s option to borrow the remaining $15.0million under the 2014 Term Loan expired. Total borrowings and deferred interest under the 2014 Term Loan were $49.3 million as of December 31, 2017.In October 2018, the Company entered into an amended and restated term loan agreement (“2018 Term Loan”), under which it may borrow up to$100.0 million, which is due and payable in September 2024. At closing, the Company received net proceeds of approximately $7.8 million, pursuant toborrowings of $60.0 million under the new facility, net of repayment of the Company's 2014 Term Loan of $50.4 million, including deferred interest andtransaction-related fees and expenses. Of the $40.0 million in additional borrowing capacity under the 2018 Term Loan, the Company has the option toborrow up to $20.0 million until June 2019 subject to no further terms and conditions, and up to an additional $20.0 million until March 2020, subject to theachievement of annual revenue thresholds as at or prior to December 31, 2019.The term loan agreements involved multiple lenders who were considered members of a loan syndicate. In determining whether the most recentamendment was to be accounted for as a debt extinguishment or a debt modification, the Company considered whether lenders remained the same orchanged. As all the lenders who were members of the loan syndicate changed as part of the amended and restated loan agreement, the 2014 Term Loan wasextinguished, and the 2018 Term Loan was treated as a new borrowing. The extinguishment resulted in a loss of approximately $0.8 million for the yearended December 31, 2018, which was included in interest expense in the accompanying consolidated statements of operations.The 2018 Term Loan accrues interest at a rate of 10.5%, payable quarterly, of which 3.0% may be deferred during the six-year term at the Company’soption and repaid at maturity together with the principal. The Company paid an upfront fee of 0.5% of the aggregate principal amount of the initialborrowing under the 2018 Term Loan, and will pay a facility fee equal to 2.0% of the total amount borrowed including any deferred interest at the time theprincipal is repaid. A long-term liability of $1.4 million is being accreted using the effective interest method for the facility fee over the term of the 2018Term Loan. Additional borrowings under the 2018 Term Loan will bear the same upfront and facility fees as the initial borrowing.In connection with 2018 Term Loan, warrants to purchase an aggregate of 341,578 shares of common stock with an exercise price per share of$21.12 were issued to the lenders, and, in the event additional amounts are drawn under the 2018 Term Loan, additional warrants will be issued on eachsubsequent draw date for 0.3% of the fully-diluted shares then outstanding. The exercise price for additional warrants will be set at a 25.0% premium to theaverage closing trading price for the 30-day trading period as of the date immediately before the applicable draw date. The warrants issued in conjunctionwith the initial borrowing under the 2018 Term Loan were determined to be closely linked to the Company’s stock, and as such, were recorded as an equitysecurity in additional paid in capital at their relative fair value of $1.6 million with a corresponding debt discount recorded against the 2018 Term Loanbalance outstanding.Total borrowings and deferred interest under the 2018 Term Loan were $60.4 million as of December 31, 2018. The balance of the 2018 Term Loanas of December 31, 2018 is net of discounts related to the warrants, debt issuance costs and other upfront fees of $2.0 million.The Company has the option to prepay the 2018 Term Loan, in whole or part, at any time subject to payment of a redemption fee of up to 4.0%,which declines 1.0% after the first year of the term, with no redemption fee payable if prepayment occurs after the second year of the loan.Obligations under the 2018 Term Loan are collateralized by substantially all of the Company’s assets. The 2018 Term Loan contains customaryconditions to borrowings, events of default and negative covenants, including covenants that could limit the Company’s ability to, among other things, incuradditional indebtedness, liens or other encumbrances, make dividends or other distributions; buy, sell or transfer assets; engage in any new line of business;and enter into certain transactions with affiliates. The 2018 Term Loan also includes a $2.0 million minimum liquidity covenant and minimum annualrevenue-based financial covenants. If the Company’s actual revenues are below the minimum annual revenue requirement for any given year, it may avoid arelated default by generating proceeds from an equity or subordinated debt issuance equal to the shortfall between its actual revenues and the minimumrevenue requirement.The Company incurred $7.4 million, $6.2 million, and $5.7 million of interest expense under the term loan agreements for the years endedDecember 31, 2018, 2017, and 2016, respectively.2018 Revolving Loan FacilityIn January 2018, the Company entered into a $15.0 million secured revolving loan facility, with availability subject to a borrowing base consistingof eligible accounts receivable. In November 2018, the Company entered into an amended and restated loan and security agreement to increase theborrowing capacity under the facility to $20.0 million, amend the borrowing base to include finished goods inventory, and extend the final maturity underthe facility to November 2021. As of December 31, 2018, no amounts had been drawn on the facility.-86- Interest on borrowings is payable monthly and accrues at a yearly rate equal to the greater of the prime rate as reported in the Wall Street Journalplus 0.50%, or 4.75%. During an event of default, amounts drawn accrue interest at a yearly rate equal to 8.75%. Obligations under the agreement are securedby the Company’s cash and cash equivalents, accounts receivable and proceeds thereof, and inventory and proceeds from the sale thereof. The lender’sinterest in the collateral under the loan facility is senior to the lender’s interest in such collateral under the term loan agreement. The loan facility containsvarious customary representations and warranties, conditions to borrowing, events of default, including cross default provisions with respect to the loanfacility, and covenants, including financial covenants requiring the maintenance of minimum annual revenue and liquidity. The Company incurred $0.1million of interest expense under the revolving loan facility for the year ended December 31, 2018.The Company was in compliance with its financial covenants under the 2018 Term Loan and the secured revolving loan facility as of December 31,2018.Long-term debt consisted of the following at December 31 (in thousands): 2018 2017Borrowings under term loan agreements$60,000 $45,000Paid in-kind interest on term loan agreements400 4,315Unamortized debt discounts(2,004) (384)Long-term debt, net of discounts$58,396$48,931Scheduled future payments of principal for outstanding debt were as follows at December 31:2019$—2020—2021—2022—2023—Thereafter60,400 $60,4009. Collaboration AgreementsThe Company evaluates the statement of operations classification of payments between the participants in each of its collaboration agreements atinception based on the nature of the arrangement, the nature of its business operations and the contractual terms of the arrangement. The Company hasdetermined that amounts to be received from collaborators in connection with the collaboration agreements entered into through December 31, 2018 arerelated to revenue generating activities.The Company uses a contingency-adjusted proportional performance model to recognize revenue over the Company’s performance period for eachcollaboration agreement that includes up front, or milestone-based or other contractual payments. Costs incurred to date compared to total expected costs areused to determine proportional performance, as this is considered to be representative of the delivery of outputs under the arrangement. Revenue recognizedat any point in time is a factor of and limited to cash received and amounts contractually due. Changes in estimates of total expected costs are accounted forprospectively in the period of change.The Company recognizes revenue from collaboration agreements that do not include up front, milestone-based, or other contractual payments whenearned, which is generally in the same period that related costs are incurred. Amounts due to collaboration partners are recognized when the related activitieshave occurred and are classified in the statement of operations, generally as research and development expense, based on the nature of the related activities.Lam Research CorporationIn August 2017, the Company entered into a collaboration agreement with Lam Research Corporation (“Lam”) with respect to the development ofthe Company’s Hyb & Seq platform product candidate. Pursuant to the terms of the collaboration agreement, Lam will contribute up to an aggregate of $50.0million, with amounts thereunder payable quarterly, to be applied to the research and development of the Company’s Hyb & Seq platform, based onallowable development costs. Lam is eligible to receive certain single-digit percentage royalty payments from the Company on net sales of certain productsand technologies developed under the collaboration agreement, if any such net sales are ever achieved. The maximum amount of royalties payable to Lamwill be capped at an amount up to three times the amount of development funding actually provided by Lam. The Company retains exclusive rights to obtainregulatory approval, manufacture and commercialize the Hyb & Seq products.-87- Lam participates in research and product development through a joint steering committee. The Company will reimburse Lam for the cost of up to 10 full-timeLam employees each year in accordance with the product development plan.In connection with the execution of the collaboration agreement, the Company issued Lam a warrant to purchase up to 1.0 million shares of theCompany’s common stock with the number of underlying shares exercisable at any time proportionate to the amount of the $50.0 million commitment thathas been provided by Lam. The exercise price of the warrant is $16.75 per share, and the warrant will expire on the seventh anniversary of the issuancedate. The warrant was determined to have a fair value of $6.7 million upon issuance, and such amount will be recorded as additional paid in capitalproportionately from the quarterly collaboration payments made by Lam.The Company recognized revenue related to the Lam agreement of $18.6 million and $3.7 million for the years ended December 31, 2018 and 2017,respectively. The Company received development funding of $21.7 million and $13.4 million related to the Lam collaboration for the years endedDecember 31, 2018 and 2017, respectively. At December 31, 2018, the Company had recorded $1.9 million of deferred revenue related to the Lamcollaboration, of which $1.2 million is estimated to be recognizable as revenue within one year. In addition, $7.3 million and $8.3 million are included incustomer deposits in the consolidated balance sheets as of December 31, 2018 and 2017, respectively, which represents amounts received in advance. TheCompany incurred costs of $0.3 million for the year ended December 31, 2018 related to services provided by Lam employees under the terms of theagreement. As of December 31, 2018, Lam had not exercised any warrants.Celgene CorporationIn March 2014, the Company entered into a collaboration agreement with Celgene Corporation (“Celgene”) to develop, seek regulatory approvalfor, and commercialize a companion diagnostic using the nCounter Analysis System to identify a subset of patients with Diffuse Large B-Cell Lymphoma. InFebruary 2018, the Company and Celgene entered into an amendment to their collaboration agreement in which Celgene agreed to provide the Companyadditional funding for work intended to enable a subtype and prognostic indication for the test being developed under the agreement for Celgene’s drugREVLIMID. In connection with this amendment, the Company agreed to remove the right to receive payments from Celgene in the event commercial sales ofthe companion diagnostic test do not exceed certain pre-specified minimum annual revenues during the first three years following regulatory approval. Inaddition, the amendment allows Celgene, at its election, to use trial samples with additional technologies for companion diagnostics.Pursuant to the Company’s agreement as amended in February 2018, the Company is eligible to receive payments from Celgene totaling up to $24.8million, of which $5.8 million was received as an upfront payment upon delivery of certain information to Celgene and $19.0 million is for developmentfunding and potential success-based development and regulatory milestones. There have been several amendments to the collaboration agreement and inreturn the Company has received additional payments totaling $2.1 million. The Company will retain all commercial rights to the diagnostic test developedunder this collaboration, subject to certain backup rights granted to Celgene to commercialize the diagnostic test in a particular country if the Companyelects to cease distribution or elects not to distribute the diagnostic in such country. Assuming success in the clinical trial process, and subject to regulatoryapproval, the Company will market and sell the diagnostic assay.The process of successfully developing a product candidate, obtaining regulatory approval and ultimately commercializing a product candidate ishighly uncertain and the attainment of any additional milestones is therefore uncertain and difficult to predict. In addition, certain milestones are outside theCompany’s control and are dependent on the performance of Celgene and the outcome of a clinical trial and related regulatory processes. Accordingly, theCompany is not able to reasonably estimate when, if at all, any additional milestone payments may be payable to the Company by Celgene.The Company recognized revenue related to the Celgene agreement of $2.6 million, $0.2 million, and $3.2 million for the years ended December 31,2018, 2017, and 2016, respectively. At December 31, 2018, the Company had recorded $4.0 million of deferred revenue related to the Celgene collaboration,all of which is estimated to be recognizable as revenue within one year.Merck & Co., Inc.In May 2015, the Company entered into a clinical research collaboration agreement with Merck Sharp & Dohme Corp., a subsidiary of Merck & Co.,Inc. (“Merck”), to develop an assay intended to optimize immune-related gene expression signatures and evaluate the potential to predict benefit fromMerck’s anti-PD-1 therapy, KEYTRUDA. Under the terms of the collaboration agreement, the Company received $3.9 million in payments during 2015. Inconnection with the execution of the development collaboration agreement, the Company and Merck terminated the May 2015 clinical researchcollaboration and moved all remaining activities under the related work plan to the new development collaboration agreement. In February 2016, theCompany expanded its collaboration with Merck by entering into a new development collaboration agreement to clinically develop, seek regulatoryapproval for, and commercialize a companion diagnostic test to predict response to KEYTRUDA in multiple tumor types. During 2016, the Companyreceived $12.0 million upfront as a technology access fee and $8.5 million of preclinical milestone payments. In October 2017, Merck notified the Companyof its decision not to pursue regulatory approval-88- of the companion diagnostic test for KEYTRUDA and, in August 2018, the Company and Merck agreed to mutually terminate their developmentcollaboration agreement, effective as of September 30, 2018, following the completion of certain close-out activities. As part of the mutual terminationagreement, Merck granted to the Company a non-exclusive license to certain intellectual property that relates to Merck’s tumor inflammation signature.The Company recognized revenue related to the Merck agreement of $1.6 million, $27.0 million, and $8.6 million for the years ended December 31,2018, 2017, and 2016, respectively. The Company received development funding of $1.1 million, $6.8 million, and $8.7 million for the years endedDecember 31, 2018, 2017, and 2016, respectively. As of December 31, 2018, there is no remaining deferred revenue related to the Merck collaboration.Medivation, Inc. and Astellas Pharma, Inc.In January 2016, the Company entered into a collaboration agreement with Medivation, Inc. (“Medivation”) and Astellas Pharma Inc. (“Astellas”) topursue the translation of a novel gene expression signature algorithm discovered by Medivation into a companion diagnostic assay using the nCounterAnalysis System. In September 2016, Medivation was acquired by Pfizer, Inc. (“Pfizer”) and became a wholly owned subsidiary of Pfizer. In May 2017, theCompany received notification from Pfizer and Astellas terminating the collaboration agreement as a result of a decision to discontinue the related clinicaltrial.The Company recognized revenue related to the Medivation/Astellas agreement of $11.5 million and $4.8 million for the years ended December 31,2017 and 2016, respectively, including the favorable impact of a $1.0 million termination penalty during 2017. The Company achieved and was paid formilestones totaling $6.0 million during 2016. The Company received development funding of $0.9 million, and $2.4 million for the years endedDecember 31, 2017 and 2016, respectively.10. Common Stock and Preferred StockPublic OfferingsIn May 2015, the Company entered into a sales agreement with a sales agent to sell shares of the Company’s common stock through an “at themarket” equity offering program for up to $40.0 million in total sales proceeds. Pursuant to the sales agreement, the Company sold 1,331,539 and 960,400shares during 2016 and 2015, respectively, for net proceeds of $26.1 million and $12.5 million, respectively. The Sales Agreement automatically terminatedwhen the Company sold the maximum number of shares allowed under the agreement.In June 2017, the Company completed an underwritten public offering of 3,450,000 shares of common stock, including the exercise by theunderwriter of an over-allotment option for 450,000 shares of common stock, for total gross proceeds of $57.8 million. After underwriter’s fees andcommissions and other expenses of the offering, the Company’s aggregate net proceeds were approximately $56.5 million.In January 2018, the Company entered into a Sales Agreement with a sales agent to sell shares of the Company's common stock through an “at themarket” equity offering program for up to $40.0 million in gross cash proceeds. The Sales Agreement allows the Company to set the parameters for the sale ofshares, including the number of shares to be issued, the time period during which sales are requested to be made, limits on the number of shares that may besold in any one trading day and a minimum price below which sales may not be made. Under the terms of the Sales Agreement, commission expenses to thesales agent will be 3% of the gross sales price per share sold through the sales agent. The Sales Agreement shall automatically terminate upon the issuanceand sale of shares that provide gross proceeds of $40.0 million and may be terminated earlier by either the Company or the sales agent upon five days’ notice.In July 2018, the Company completed an underwritten public offering of 4,600,000 shares of common stock, including the exercise in full by theunderwriters of their option to purchase 600,000 additional shares of common stock in August 2018, for total gross proceeds of $57.5 million. Afterunderwriter’s commissions and other expenses of the offering, the Company’s aggregate net proceeds were approximately $53.8 million.Common StockEach share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legallyavailable and when declared by the board of directors, subject to the prior rights of holders of other classes of stock outstanding.Preferred StockPursuant to the amended and restated certificate of incorporation filed by the Company immediately prior to the completion of its initial publicoffering, the Company’s board of directors is authorized to issue up to 15,000,000 shares of preferred stock in one or more series and to fix the rights,preferences, privileges and restrictions thereof. These rights,-89- Table of Contentspreferences and privileges could include dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking fund terms andthe number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock. Theissuance of preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividendpayments and payments upon liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing change in theCompany’s control or other corporate action. As of December 31, 2018, no shares of preferred stock were issued or outstanding, and the board of directors hasnot authorized or designated any rights, preferences, privileges and restrictions for any class of preferred stock.WarrantsPrior to the Company’s initial public offering, warrants to purchase preferred stock were issued related to certain financing transactions. All preferredstock warrants were converted into warrants to purchase common stock upon the effectiveness of the initial public offering. In addition, the Company hasissued common stock warrants to third parties in accordance with the provisions of certain debt and collaboration agreements. As of December 31, 2018, therewere 905,798 common stock warrants outstanding with a weighted average exercise price of $18.38 per share and expiration dates ranging from 2022 to2025.11. Stock-based Compensation2004 Stock Option Plan and 2013 Equity Incentive PlanThe Company’s 2004 Stock Option Plan, 2013 Equity Incentive Plan, and the 2018 Inducement Equity Incentive Plan (the “Plans”) authorize thegrant of options, restricted stock units (“RSUs”) and other equity awards to employees, directors and consultants. As of December 31, 2018, there were9,022,827 shares authorized under the Plans. All options granted have a ten-year term and generally vest and become exercisable over four years of continuedemployment or service as defined in each option agreement. The Board of Directors determines the option exercise price and may designate stock optionsgranted as either incentive or nonstatutory stock options. The Company generally grants stock options to employees with exercise prices equal to theestimated fair value of the Company’s common stock on the date of grant.Stock Option ActivityA summary of the Company’s stock option activity under the Plans is as follows: Shares Weighted-average exerciseprice per share Weighted-average remainingcontractualterm (in years) Aggregateintrinsic value(in thousands)Outstanding at January 1,20185,196,253 $13.32 6.98 $3,861Granted1,186,944 8.69 Canceled and forfeited(910,243) 14.48 Exercised(430,602) 8.14 Outstanding at December 31, 20185,042,352 $12.46 6.49 $18,255 December 31, 2018: Options vested and expected to vest5,042,352 $12.46 6.49 $18,255Options exercisable3,381,664 $12.48 5.49 $12,099The weighted-average grant-date fair value per share of options granted with exercise prices equal to the market price on the date of the grant were$4.78, $9.08, and $6.79 for the years ended December 31, 2018, 2017, and 2016, respectively. The aggregate intrinsic value in the table above is calculatedas the difference between the exercise price of the underlying options and the quoted price of the Company’s common stock for all options that were in-the-money at December 31, 2018. The aggregate intrinsic value of options exercised was $2.2 million during 2018, $2.4 million during 2017, and $5.0 millionduring 2016, determined as of the option exercise date. The fair value of options vested was $6.8 million, $8.9 million, and $6.8 million for the years endedDecember 31, 2018, 2017, and 2016, respectively.-90- The following table summarizes information about the Company’s stock options outstanding at December 31, 2018: Outstanding ExercisableExercise PriceNumber ofShares Weighted-AverageRemainingContractualLife in Years Number ofShares Weighted-AverageRemainingContractualLife in Years$1.92357,609 3.22 357,609 3.22$2.24 – $6.72344,531 2.62 336,231 2.46$6.80 – $12.561,225,090 7.94 462,948 6.15$12.77484,976 5.83 463,659 5.82$12.89 – $12.94436,867 6.90 298,921 6.73$13.01 – $14.95322,713 7.22 223,186 6.61$14.99 – $17.48464,533 7.35 293,914 6.78$17.83 – $18.901,150,432 6.49 777,347 5.62$19.09 – $22.71255,601 7.26 167,849 7.12 5,042,3523,381,664 Restricted Stock Unit (RSU) ActivityA summary of RSU activity under the Plans is as follows:Non-vested RSUs Share Equivalent Weighted-AverageGrant Date FairValueNon-vested at January 1, 2018 661,707 $11.07Changes during the year: Granted 711,001 7.41Vested (109,469) 14.82Forfeited (122,110) 8.73Non-vested at December 31, 2018 1,141,129 $8.68The fair value of the RSUs is determined based on the closing price of the Company’s common stock on the date of grant. The fair value of vestedRSUs was $1.0 million, $1.1 million, and $64,000 for the years ended December 31, 2018, 2017, and 2016, respectively.Stock-based compensationThe following table sets forth stock-based compensation expense related to stock-based arrangements under the Plans for the years endedDecember 31 as follows (in thousands): 2018 2017 2016Cost of revenue$616 $719 $548Research and development3,156 2,853 2,046Selling, general and administrative6,982 7,047 5,602Total stock-based compensation expense$10,754$10,619$8,196As of December 31, 2018, total unrecognized stock-based compensation cost related to non-vested options and RSUs was $15.7 million. This costwill be recognized on a straight-line basis over the weighted-average remaining service period of 2.16 years. The Company utilizes newly issued shares tosatisfy option exercises. No tax benefit was recognized related to stock-based compensation cost since the Company has not reported taxable income to dateand has established a full valuation allowance to offset all of the potential tax benefits associated with its deferred tax assets.-91- Valuation assumptionsThe fair value of each employee option grant as of December 31 was estimated on the date of grant using the Black-Scholes option pricing modelwith the following assumptions: 2018 2017 2016Risk-free interest rates2.22% - 3.01% 1.40% - 2.26% 1.18% - 2.12%Expected term (years)5.50 - 6.09 5.50 - 6.25 5.50 - 6.50Expected dividend yield— — —Expected volatility56.0% - 57.7% 53.9% - 58.0% 47.0%The risk-free interest rates are based on the implied yield currently available in U.S. Treasury securities at maturity with an equivalent term. Forpurposes of determining the expected term of the awards in the absence of sufficient historical data relating to stock-option exercises, the Company applies asimplified approach in which the expected term of an award is presumed to be the mid-point between the vesting date and the expiration date of the award.The Company has not declared or paid any dividends and does not currently expect to do so in the foreseeable future. Expected volatility is based on thehistorical cumulative volatility of the Company’s stock price.Employee Stock Purchase PlanThe Company’s 2013 Employee Stock Purchase Plan (“ESPP”) provides eligible employees with an opportunity to purchase common stock from theCompany and to pay for their purchases through payroll deductions. The ESPP has overlapping offering periods of approximately 12 months in length. Theoffering periods generally start with the first trading day on or after March 1 and September 1 of each year and end on the first trading day on or after March 1and September 1 of the following year, approximately 12 months later. Within each offering period, shares are purchased each six months on an exercise date.An employee electing to participate in the ESPP (a “participant”) will be granted an option at the start of the offering period to purchase shares withcontributions in any whole percentage ranging from 0% to 10% (or greater or lesser percentages or dollar amounts that the administrator determines) of theparticipant’s eligible compensation. The participant’s contributions will be accumulated and then used to purchase the Company’s shares on each exercisedate. The purchase price on the exercise date will be 85% of the fair market value of the lesser of the Company’s share price on either the first trading day ofthe offering period or on the exercise date.During 2018, 2017, and 2016, shares issued under the ESPP were 257,132, 138,972, and 139,195, respectively. The Company recorded share-basedcompensation expense for shares issued from the ESPP of $0.7 million, $0.8 million, and $0.8 million for the years ended December 31, 2018, 2017, and2016, respectively. A total of 1,079,647 shares of common stock have been reserved for issuance under the ESPP, of which 266,884 shares were available forissuance as of December 31, 2018.12. Defined Contribution Retirement PlanThe Company maintains a 401(k) defined contribution retirement plan covering substantially all of its employees. The plan provides for matchingand discretionary contributions by the Company. Contributions were $1.3 million, $1.2 million, and $0.9 million for the years ended December 31, 2018,2017, and 2016, respectively.13. Income TaxesLoss before income taxes for the years ended December 31 consisted of the following (in thousands): 2018 2017 2016Domestic$(78,124) $(44,324) $(47,562)Foreign973 966 589Loss before income taxes$(77,151) $(43,358) $(46,973)-92- Significant components of our provision for income taxes for the years ended December 31 are as follows (in thousands): 2018 2017 2016Current: Domestic$— $— $—Foreign249 204 116Total provision for income taxes$249 $204 $116The Tax Cuts and Jobs Act, or the Act, was enacted on December 22, 2017, which reduced the U.S. federal corporate tax rate from 35% to 21%,among other changes. The Company’s accounting for the elements of the Act is complete and resulted in a $37.7 million reduction in its net deferred taxassets as of December 31, 2017 to reflect the new statutory rate. The rate adjustment to the deferred tax assets was fully offset by a decrease in the valuationallowance, resulting in no rate impact to the Company.A reconciliation of the federal statutory income tax rate to the effective income tax rate for the years ended December 31 are as follows (inthousands): 2018 2017 2016Income tax provision at statutory rate$(16,202) $(15,076) $(16,010)Tax on repatriated foreign earnings and other nondeductible items195 179 135Change in tax credits(2,148) (2,361) (1,449)Change in valuation allowance19,935 (19,792) 17,824Change in tax rate— 37,690 —Foreign tax and other(1,531) (436) (384)Total provision for income taxes$249 $204 $116At December 31, 2018, for income tax return purposes the Company has gross federal and state NOL carryforwards totaling $339.3 million and taxcredit carryforwards of $9.1 million. The gross federal NOL carryforwards generated during and after fiscal 2018 totaling $55.0 million are carried forwardindefinitely, while all others, if not utilized, will expire beginning in 2025 through 2038. The carryforwards may be subject to limitations under the InternalRevenue Code and applicable state tax law.The Company does not expect to utilize any of its net operating loss and tax credit carryforwards in the near term. The Company may have alreadyexperienced one or more ownership changes. Depending on the timing of any future utilization of its carryforwards, the Company may be limited as to theamount that can be utilized each year as a result of such previous ownership changes. However, the Company does not believe such limitations will cause itscarryforwards to expire unutilized.Future changes in the Company’s stock ownership as well as other changes that may be outside the Company’s control could potentially result infurther limitations on the Company’s ability to utilize its net operating loss and tax credit carryforwards.The effect of temporary differences and carryforwards that give rise to deferred tax assets for the years ended December 31 were as follows (inthousands): 2018 2017Net operating loss carryforwards$63,442 $49,662Research and development tax credit carryforwards8,491 6,505Foreign tax credit carryforwards613 448Stock-based compensation7,703 5,664Other8,347 6,382Total deferred tax assets88,59668,661Less: Valuation allowance(88,596) (68,661)Net deferred tax assets$—$—The Company has recorded a full valuation allowance related to its deferred tax assets due to the uncertainty of the ultimate realization of the futurebenefits from those assets.-93- The table below summarizes changes in the deferred tax asset valuation allowance for the years ended December 31 (in thousands): 2018 2017 2016Balance at beginning of year$68,661 $88,453 $70,629Charged to costs and expenses19,935 17,898 17,824Impact of change in tax rate— (37,690) —Balance at end of year$88,596 $68,661 $88,453The total balance of unrecognized gross tax benefits for the years ended December 31, resulting from research and development tax credits claimedon the Company’s annual tax return was as follows (in thousands): 2018 2017 2016Unrecognized tax benefits at beginning of year$2,168 $1,524 $1,041Additions based on current year tax positions662 644 483Unrecognized tax benefits at end of year$2,830$2,168$1,524The Company classifies applicable interest and penalties on amounts due to tax authorities as a component of the provision for income taxes. Theamount of accrued interest and penalties recorded in 2018, 2017, or 2016 was not significant. The Company does not anticipate that the amount of itsexisting unrecognized tax benefits will significantly increase or decrease within the next 12 months. Due to the presence of net operating loss carryforwardsin most jurisdictions, the Company’s tax years remain open for examination by U.S. taxing authorities back to 2004.14. Commitments and ContingenciesOperating LeasesThe Company is obligated to make future minimum payments under three operating leases for 107,901 square feet of space used for general office,laboratory, manufacturing, operations, and research and development purposes primarily in Seattle, Washington. The leases expire beginning in 2019 to2026 and include options to renew at the then current fair market rental for each of the facilities. The lease agreements contain rent abatement periods,scheduled rent increases and provide for tenant improvement allowances. Accordingly, the Company has recorded a deferred rent liability of $8.2 million and$8.7 million as of December 31, 2018 and 2017, respectively. This deferred rent liability is amortized over the term of the related lease.Rent expense totaled approximately $4.9 million, $4.8 million, and $3.8 million for the years ended December 31, 2018, 2017, and 2016,respectively.Future minimum lease payments under noncancelable operating leases as of December 31, 2018 were as follows (in thousands):2019$5,52620205,56020215,59320225,70820235,869Thereafter13,458 $41,714Purchase CommitmentsThe Company has non-cancellable purchase obligations totaling $17.7 million at December 31, 2018 related to binding commitments to purchaseinventory and other research and development items.ContingenciesFrom time to time, the Company may become involved in litigation relating to claims arising from the ordinary course of business. Additionally, theCompany operates in various states and local jurisdictions for which sales, occupation, or franchise taxes may be payable to certain taxing authorities.Management believes that there are no claims or actions pending-94- against the Company currently, the ultimate disposition of which would have a material adverse effect on the Company’s consolidated results of operation,financial condition or cash flows.15. Net Loss Per ShareNet loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding. Outstanding stockoptions, warrants and preferred stock have not been included in the calculation of diluted net loss per share because to do so would be anti-dilutive.Accordingly, the numerator and the denominator used in computing both basic and diluted net loss per share for each period are the same.The following outstanding options, restricted stock units and warrants as of December 31 were excluded from the computation of diluted net loss pershare for the periods presented because their effect would have been anti-dilutive (in thousands): 2018 2017 2016Options to purchase common stock5,395 5,335 4,711Restricted stock units1,147 313 115Common stock warrants535 317 49116. Information about Geographic AreasThe following table is based on the geographic location of distributors or end users who purchased products and services and collaborators. For salesto distributors, their geographic location may be different from the geographic locations of the ultimate end user. Revenue by geography as of December 31was as follows (in thousands): 2018 2017 2016Americas$74,137 $86,099 $60,330Europe & Middle East25,715 21,791 18,497Asia Pacific6,880 7,015 7,662Total revenue$106,732$114,905$86,489Total revenue in the United States was $71.2 million, $84.0 million, and $58.0 million for the years ended December 31, 2018, 2017, and 2016,respectively. The Company’s assets are primarily located in the United States and not allocated to any specific geographic region. Substantially all of theCompany’s long-lived assets are located in the United States.17. Condensed Quarterly Financial Data (unaudited)The following table contains selected unaudited financial data for each quarter of 2018 and 2017. The unaudited information should be read inconjunction with the Company’s financial statements and related notes included elsewhere in this report. The Company believes that the followingunaudited information reflects all normal recurring adjustments necessary for a fair statement of the information for the periods presented. The operatingresults for any quarter are not necessarily indicative of results for any future period. Three months ended March 31, June 30, September 30, December 31, (in thousands, except per share data)2018 Total revenue$23,085 $24,999 $28,616 $30,032Product and service gross profit$10,350 $11,832 $12,162 $12,848Net loss$(19,202) $(20,601) $(16,486) $(21,111)Net loss per share – basic and diluted$(0.75) $(0.80) $(0.56) $(0.68)2017 Total revenue$18,063 $34,592 $27,016 $35,234Product and service gross profit$8,602 $10,086 $9,610 $11,832Net loss$(18,852) $(4,555) $(11,404) $(8,751)Net loss per share – basic and diluted$(0.87) $(0.20) $(0.45) $(0.34)-95- Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosurecontrols and procedures as of December 31, 2018. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under theExchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in thereports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the U.S.Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and proceduresdesigned to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated andcommunicated to the company’s management, including its Chief Executive and Chief Financial Officers, as appropriate to allow timely decisions regardingrequired disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonableassurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls andprocedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2018, our Chief Executive Officer and Chief FinancialOfficer have concluded that, as of such date, our disclosure controls and procedures were not effective due to the material weaknesses in internal control overfinancial reporting, described below.Following identification of the material weaknesses and prior to filing this Annual Report on Form 10-K, we completed substantive procedures forthe year ended December 31, 2018. Based on these procedures, management concluded that our consolidated financial statements included in this Form 10-Khave been prepared in accordance with U.S. GAAP. Our Chief Executive Officer and Chief Financial Officer have certified that, based on their knowledge, thefinancial statements, and other financial information included in this Form 10-K, fairly present in all material respects the financial condition, results ofoperations and cash flows of the Company as of, and for, the periods presented in this Form 10-K. PricewaterhouseCoopers, LLP, an independent registeredpublic accounting firm, has issued an unqualified opinion on our consolidated financial statements, which is included in Item 8 of this Form 10-K.Management’s Annual Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal controlover financial reporting includes those policies and procedures that:(i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;(ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations ofour management and directors; and(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets thatcould have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting asof December 31, 2018. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO) Internal Control—Integrated Framework (2013). A material weakness is a deficiency, or a combination of deficiencies, in internalcontrol over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will notbe prevented or detected on a timely basis.We identified a material weakness related to (i) an ineffective control environment as we had an insufficient complement of resources with anappropriate level of information technology (“IT”) controls knowledge, expertise and training commensurate with our financial reporting requirements. Thismaterial weakness contributed to additional material weaknesses:(ii) We did not design and maintain effective controls over certain IT general controls for the significant applications used in the preparation of thefinancial statements. Specifically, we did not maintain user access controls to adequately restrict user and privileged access to the financialapplication, programs, and data to appropriate personnel.-96- Table of ContentsAdditionally, we also did not maintain adequate program change management controls for certain financial systems to ensure that IT program anddata changes affecting financial applications and underlying accounting records are identified, tested, authorized and implemented appropriately.(iii) We did not design and maintain controls to timely detect and independently review instances where individuals with access to post a journalentry may also have edited or created the journal entry.These material weaknesses did not result in any identified misstatements to our annual or interim financial statements, and there were no changes topreviously released financial results. These material weaknesses could result in a misstatement to the account balances or disclosures within the financialstatements that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.Based on these material weaknesses, management concluded that as of December 31, 2018, our internal control over financial reporting was not effective.The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in their report which appears herein.Remediation EffortsManagement has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the materialweaknesses are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) implementingan improved IT process and system for approving, monitoring and implementing IT changes to key systems which impact our financial reporting; (ii)implementing improved processes for requesting, authorizing, and reviewing user access to key systems which impact our financial reporting, includingidentifying access to roles where manual business process controls may be required; (iii) enhancing our training programs and documentation practices whichaddress ITGCs and related policies; and (iv) enhanced quarterly reporting on the remediation measures to the Audit Committee of the Board of Directors. Webelieve that these actions will remediate the material weaknesses. The material weaknesses will not be considered remediated, however, until the applicablecontrols operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.Changes in Internal Control over Financial ReportingThere have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely tomaterially affect, our internal control over financial reporting.Item 9B. Other InformationNone.-97- PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceInformation Concerning our DirectorsThe following table sets forth the name, age and certain background information regarding each member of the board of directors as of March 11, 2019.There are no family relationships among any of the directors or executive officers.NomineesClass Age Position DirectorSince R. Bradley GrayI 42 Director, President and Chief Executive Officer 2010 William D. Young(1)(3)III 74 Chairman of the Board 2010 Elisha W. Finney(1)II 57 Director 2017 Nicholas Galakatos, Ph.D.(2*)(3)III 61 Director 2009 Robert M. Hershberg, M.D., Ph.D.(3)I 56 Director 2015 Kirk D. Malloy, Ph.D.(2)I 52 Director 2016 Gregory Norden(1*)(2)II 61 Director 2012 Charles P. Waite(1)(3*)II 63 Director 2004 (1) Member of the audit committee(2) Member of the compensation committee(3) Member of the nominating and corporate governance committee*Denotes chair of such committeeR. Bradley Gray has served as a member of the board of directors and as President and Chief Executive Officer since June 2010. Prior to joining ourcompany, Mr. Gray held various positions at Genzyme, a biotechnology company acquired by Sanofi in 2011. He served as Vice President of Product &Business Development for Genzyme Genetics, the diagnostic services division of Genzyme, from June 2008 to May 2010, leading the development ofmolecular diagnostics and partnering activities. From September 2006 to June 2008, he served as Vice President of Business & Strategic Development forGenzyme Genetics, leading growth efforts through partnerships and licensing. Mr. Gray joined Genzyme in October 2004 as Director of CorporateDevelopment, supporting business development and leading Genzyme Ventures, the corporate venture capital fund of Genzyme. Prior to joining Genzyme,Mr. Gray was a management consultant in the healthcare practice of McKinsey & Company, a global management consulting firm, from September 2000 toOctober 2004, where he worked with senior healthcare executives in the United States and Europe on a broad range of issues including pharmaceutical anddiagnostic product strategy, post-merger integration, organization design, and operational turnarounds. Mr. Gray received a B.A. in Economics andManagement from Oxford University, where he studied as a British Marshall Scholar, and an S.B. in Chemical Engineering from the Massachusetts Instituteof Technology. We believe that Mr. Gray possesses specific attributes that qualify him to serve as a director, including the perspective and experience hebrings as Chief Executive Officer and his knowledge of molecular diagnostic development and commercialization.William D. Young has served as the chairman of the board of directors since January 2010 and as a member of the audit committee since November2011 and nominating and corporate governance committee since September 2013. Mr. Young is a Senior Advisor at Blackstone Life Sciences sinceNovember 2018, following Blackstone's acquisition of Clarus Ventures. Prior to Blackstone he was a Venture Partner at Clarus Ventures, a health care and lifesciences venture capital firm, which he joined in March 2010. Prior to joining Clarus Ventures, Mr. Young served from 1999 until June 2009 as chairman ofthe board of directors and Chief Executive Officer of Monogram Biosciences, a biotechnology company acquired by Laboratory Corporation of America inJune 2009. From 1980 to 1999 Mr. Young was employed at Genentech, a biotechnology company acquired by Roche in March 2009, most recently as ChiefOperating Officer from 1997 to 1999, where he was responsible for all Product Development, Manufacturing and Commercial functions. Mr. Young joinedGenentech in 1980 as Director of Manufacturing and Process Sciences and became Vice President in 1983. Prior to joining Genentech, Mr. Young worked atEli Lilly & Co. for 14 years and held various positions in production and process engineering, antibiotic process development and production management.Mr. Young is a member of the boards of directors of Vertex Pharmaceuticals and Theravance Biopharma where he is the lead independent director. Mr. Youngretired from BioMarin Pharmaceutical's board of directors in November 2015 and from Biogen Inc.'s board of directors as chairman in June 2014. Mr. Youngreceived his M.B.A. from Indiana University and his B.S. in chemical engineering from Purdue University, and an honorary doctorate of engineering fromPurdue University. Mr. Young was elected to The National Academy of Engineering in 1993 for his contributions to-98- Table of Contentsbiotechnology. We believe that Mr. Young’s demonstrated leadership in his field, his understanding of the industry and his senior management experience inseveral companies in our industry qualify him to serve as the chairman of the board of directors.Elisha W. Finney has served as a member of the board of directors and as a member of the audit committee since May 2017. Ms. Finney retired inMay 2017 from her position as the Executive Vice President and CFO of Varian Medical Systems, a publicly-traded developer of cancer care solutions. AtVarian, her management responsibilities included corporate accounting, corporate communications and investor relations, internal audit, risk management,tax and treasury, and corporate information systems. Ms. Finney was named vice president, finance and CFO of Varian Medical Systems in April 1999, SeniorVice President and CFO in 2005 and Executive Vice President and CFO in 2012. She joined Varian as risk manager in 1988. Prior to joining Varian, Ms.Finney was with the Fox Group, a property management company in Foster City, California and Beatrice Foods in Chicago, Illinois. She holds a BA degree inrisk management and insurance from the University of Georgia as well as an MBA degree from Golden Gate University in San Francisco. Ms. Finney currentlyserves on the board of directors at ICU Medical, Inc., a publicly traded infusion-therapy company, iRobot Corporation, a publicly-traded maker of consumerrobots, CUTERA, Inc., a publicly-traded maker of cosmetic and aesthetic laser equipment, and METTLER-TOLEDO International Inc., a publicly-tradedmaker and marketer of precision instruments for use in laboratory, industrial and food retailing applications, and she previously served as a board member atAltera Corporation, Thoratec and Laserscope. We believe that Ms. Finney is qualified to serve as a director of NanoString because of her more than 25 yearsof financial and life science expertise.Nicholas Galakatos, Ph.D. has served as a member of the board of directors, as the chairman of the compensation committee and as a member of thenominating and corporate governance committee since June 2009. Dr. Galakatos is a Senior Managing Director of Blackstone, and Head of the BlackstoneLife Sciences business since November 2018, following Blackstone's acquisition of Clarus Ventures. Prior to Blackstone, he was Managing Director of ClarusVentures, a health care and life sciences venture capital firm, which he co-founded in 2005. Dr. Galakatos has been a venture capital investor since 1992,initially at Venrock Associates from 1992 to 1997 and then at MPM Capital since 2000 where he was General Partner of the Bioventures II and BioventuresIII funds. From 1997 to 2000, he was Vice President, New Business, and a member of the Management Team at Millennium Pharmaceuticals, abiopharmaceutical company acquired by Takeda Pharmaceutical in May 2008. He was a founder of Millennium Predictive Medicine and TransFormPharmaceuticals, where he also was the Chairman and founding Chief Executive Officer. Dr. Galakatos is Chairman of the Board of Directors of EntasisTherapeutics, a clinical stage biopharmaceutical company, and has been the Lead Director at Affymax Inc., and a Director of Portola Pharmaceuticals, Inc.,and Aveo Pharmaceuticals, Inc. Dr. Galakatos received a B.A. degree in Chemistry from Reed College, a Ph.D. degree in Organic Chemistry from theMassachusetts Institute of Technology, and performed postdoctoral studies in molecular biology at Harvard Medical School. We believe that Dr. Galakatos isqualified to serve as a director of NanoString because of his operating experience in the biopharmaceutical industry and his extensive experience as a venturecapital investor and a director of several public companies. Dr. Galakatos’s investment focus on life sciences companies also provides substantial expertise inour industry.Robert M. Hershberg, M.D., Ph.D. has served as a member of the board of directors and as a member of the nominating and corporate governancecommittee since March 2015. Since March 2017, Dr. Hershberg has served as Executive Vice President of Business Development and Global Alliances ofCelgene Corporation, a publicly-traded biopharmaceutical company, where he is a member of the Executive Committee and is responsible for all businessdevelopment related activities across the company and management of business alliances. From January 2016 to March 2017, Dr. Hershberg served as theChief Scientific Officer, where he was responsible for overseeing Celgene’s scientific platforms, discovery capabilities and early clinical development, andfrom July 2014 to January 2016, he served as Senior Vice-President of Immuno-Oncology at Celgene, where he led Celgene’s research and early developmentefforts across its immuno-oncology portfolio. From 2011 to 2017, Dr. Hershberg was President and Chief Executive Officer of VentiRx Pharmaceuticals, aclinical stage biopharmaceutical company, which he co-founded in 2006; from 2006 to 2011 he also served as its Executive Vice President and ChiefMedical Officer. Prior to co-founding VentiRx, Dr. Hershberg served as Senior Vice President and Chief Medical Officer at Dendreon Corporation, abiotechnology company, where he led the clinical, regulatory and biometrics groups, focusing on the development of Provenge® in metastatic prostatecancer. From 2001 to 2003, Dr. Hershberg was the Vice President of Medical Genetics at Corixa, a pharmaceutical company (acquired by GlaxoSmithKline in2005). Earlier in his career, Dr. Hershberg served as an Assistant Professor at Harvard Medical School and an Associate Physician at the Brigham andWomen’s Hospital in Boston, Massachusetts. Dr. Hershberg holds clinical and research faculty positions at the University of Washington School of Medicineand is a member of the board of directors of Adaptive Biotechnologies Corp., a clinical stage biotechnology company. He completed his undergraduatedegree in molecular biology and M.D. at UCLA, and his Ph.D. in biology at the Salk Institute. We believe Dr. Hershberg is qualified to serve as a director ofNanoString because of his extensive experience as a senior executive officer at multiple biotechnology companies.-99- Table of ContentsKirk D. Malloy, Ph.D. has served as a member of the board of directors since September 2016 and as a member of the compensation committee sinceMay 2017. Dr. Malloy served as Chief Executive Officer of Verogen, Inc., from August 2017 to August 2018 after founding the company and securing initialfunding. Dr. Malloy is currently founder and principal at BioAdvisors, LLC, where he provides strategic consulting services to life science, diagnostics, andgenomics companies. Prior to founding BioAdvisors in April 2016, he was at Illumina, Inc. from 2002 to 2016, most recently as Senior Vice President andGeneral Manager of Life Sciences and Applied Markets from January 2014 to April 2016. From May 2005 to December 2013 he served as Vice President ofGlobal Customer Solutions; he was also Vice President of Global Quality from December 2005 to May 2007. Dr. Malloy joined Illumina in 2002 as SeniorDirector of Global Customer Solutions. Before Illumina, he held various commercial leadership positions at Biosite Diagnostics and QIAGEN Inc. Dr. Malloycurrently serves as Lead Independent Director for Organovo, a publicly-traded company that designs and creates functional, three-dimensional human tissuesfor use in medical research and therapeutic applications. He also serves as a director for several private genomics tools companies. Dr. Malloy earned his B.S.in Biology from the University of Miami, and his M.S. and Ph.D. from the University of Delaware and held post-doctoral and instructor positions at BostonUniversity and Northeastern University. We believe Dr. Malloy is qualified to serve as a director of NanoString because of his extensive experience with morethan 20 years of commercial leadership in life science tools, applied markets, and molecular diagnostics.Gregory Norden has served as a member of the board of directors and as chairman of the audit committee since July 2012 and as a member of thecompensation committee since April 2015. From 1989 to 2010, Mr. Norden held various senior positions with Wyeth/American Home Products, mostrecently as Wyeth’s Senior Vice President and Chief Financial Officer. Prior to this role, Mr. Norden was Executive Vice President and Chief Financial Officerof Wyeth Pharmaceuticals. Prior to his affiliation with Wyeth, Mr. Norden served as Audit Manager at Arthur Andersen & Company. Mr. Norden also serveson the boards of directors of Royalty Pharma, the industry leader in the acquisition of revenue-producing intellectual property, Univision, the leading mediacompany serving Hispanic America, Zoetis, the leading animal health company and Entasis Therapeutics, a clinical stage biopharmaceutical company. Mr.Norden is a former director of Welch Allyn (acquired by Hill-Rom in 2015), Lumara Health (acquired by AMAG Pharmaceuticals in 2014), and HumanGenome Sciences (acquired by GlaxoSmithKline in 2012). Mr. Norden received a M.S. in Accounting from Long Island University - C.W. Post and a B.S. inManagement/Economics from the State University of New York - Plattsburgh. We believe that Mr. Norden’s qualifications to serve on the board of directorsinclude his extensive financial and accounting expertise and experience at Wyeth and at Arthur Andersen & Company and his significant experience in thebiopharmaceutical industry.Charles P. Waite has served as a member of the board of directors since July 2004, as a member of the audit committee and nominating andcorporate governance committee since June 2009, and as a member of the compensation committee from June 2009 to April 2017; he currently serves aschairman of the nominating and corporate governance committee. He has been a General Partner of OVP Venture Partners II and a Vice President of NorthwestVenture Services Corp. since 1987, a General Partner of OVP Venture Partners III since 1994, a General Partner of OVP Venture Partners IV since 1997, aGeneral Partner of OVP Venture Partners V since 2000, a General Partner of OVP Venture Partners VI since 2001, and a General Partner of OVP VenturePartners VII since 2007, all of which are venture capital firms. Prior to joining OVP, Mr. Waite was a General Partner at Hambrecht & Quist Venture Partnersfrom 1984 to 1988, where he focused on investments in information technology and life sciences. He is a former director of Complete Genomics, a publicly-traded DNA sequencing platform developer (acquired by BGI-Shenzen in March 2013), and currently serves on the board of directors of eight privatecompanies. Mr. Waite received an A.B. in history from Kenyon College and an M.B.A. from Harvard University. We believe that Mr. Waite’s significantoperational and leadership experience as a venture capital investor who sits on a number of boards qualify him to serve as a director. Mr. Waite’s investmentfocus on life sciences companies also provides substantial expertise in our industry.Leadership StructureMr. Young serves as the Chairman of the Board, and Mr. Gray serves as President and Chief Executive Officer of the Company. The roles of ChiefExecutive Officer and Chairman of the Board are currently separated in recognition of the differences between the two roles. We believe that it is in the bestinterests of our stockholders for the Board to make a determination regarding the separation or combination of these roles each time it elects a new Chairmanor appoints a Chief Executive Officer, based on the relevant facts and circumstances applicable at such time. In June 2010, when Mr. Gray was first appointedPresident and Chief Executive Officer, the Board determined it was in the best interests of the Company to continue to maintain an independent Chairman toallow Mr. Gray to focus on his primary responsibility for the operational leadership and strategic direction of the Company.Audit Committee of the BoardThe current members of our audit committee are Messrs. Norden, Waite and Young, and Ms. Finney. Mr. Norden is chairman of the audit committee.The composition of our audit committee meets the requirements for independence under current NASDAQ Stock Market listing standards and SEC rules andregulations. Each member of our audit committee meets-100- Table of Contentsthe financial literacy requirements of the NASDAQ Stock Market listing standards. Our board of directors has determined that each of Mr. Norden and Ms.Finney are audit committee financial experts, as that term is defined under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002, andpossesses financial sophistication, as defined under the rules of The NASDAQ Stock Market. The audit committee operates under a written charter that wasadopted by our board of directors and satisfies the applicable rules of the SEC and the listing standards of the Nasdaq Stock Market. A copy of the charter isavailable on our website at http://investors.nanostring.com/corporate-governance.Our audit committee oversees our corporate accounting and financial reporting process and assists the board of directors in monitoring our financialsystems. Our audit committee will also: •approve the hiring, discharging and compensation of our independent auditors;•oversee the work of our independent auditors;•approve engagements of the independent auditors to render any audit or permissible non-audit services;•review the qualifications, independence and performance of the independent auditors;•review financial statements, critical accounting policies and estimates;•review the adequacy and effectiveness of our internal controls; and review and discuss with management and the independent auditors the results ofour annual audit, our quarterly financial statements and our publicly filed reports.Information Concerning Our Executive OfficersThe following table sets forth the name, age and certain background information about each of our current executive officers as of March 11, 2019who do not also serve on our Board of Directors. Officers are elected by the board of directors to hold office until their successors are elected and qualified.Name Age PositionK. Thomas Bailey 50 Chief Financial OfficerMary Tedd Allen, Ph.D. 56 Senior Vice President, OperationsJoseph M. Beechem, Ph.D. 61 Senior Vice President, Research and DevelopmentJ. Chad Brown 61 Senior Vice President, Sales and MarketingDavid W. Ghesquiere 52 Senior Vice President, Corporate & Business DevelopmentK. Thomas Bailey has served as Chief Financial Officer since January 2018. Prior to joining our company, Mr. Bailey was Chief Financial Officer atAgaMatrix Holdings LLC, a developer, manufacturer and marketer of medical technologies for diabetes care, from March 2014 to January 2018. Prior tojoining AgaMatrix, Mr. Bailey served as Chief Executive Officer of Angiotech Pharmaceuticals, a developer, manufacturer and marketer of local drug, drugdelivery and medical device technologies, from October 2011 to October 2013, and served as Angiotech’s Chief Financial Officer from December 2005 toOctober 2011. During his time as CFO of Angiotech, Mr. Bailey directed a restructuring of Angiotech’s debt obligations pursuant to the Canadian CreditorsArrangement Act in 2011, with recognition of the restructuring pursuant to Chapter 15 under U.S. law. Mr. Bailey also serves as a Director of AgaMatrixHoldings, SCP Interventional Radiology LLC and The Homestretch Foundation, and previously served as a Director of Angiotech Pharmaceuticals, LifeCareManagement Services and OncoGenex Inc. Previously, Mr. Bailey served as a Director in the health care investment banking group at Credit Suisse FirstBoston and Donaldson, Lufkin & Jenrette. Mr. Bailey received an A.B. in economics from Harvard University in 1990 and an M.B.A. from Harvard BusinessSchool in 1995.Mary Tedd Allen, Ph.D. has served as Senior Vice President, Operations since May 2017, and previously served as our Vice President of Operationsfrom February 2016 to May 2017, and as our Vice President of Manufacturing from March 2007 to February 2016. Prior to joining our company, Dr. Allenserved as the Director of Research and Programs at the Washington Technology Center, Washington state’s non-profit technology-based economicdevelopment enterprise, from February 2006 to February 2007. Before joining the Washington Technology Center, Dr. Allen was Vice President of theAdvanced Manufacturing and Development group at Applied Biosystems, a publicly-traded biotechnology company acquired by Invitrogen in November2008 to form Life Technologies, from February 2002 to August 2005. Dr. Allen has more than 20 years of experience managing product development andmanufacturing groups for both semiconductor and biotech applications. She received a B.A. in Chemistry from Mount Holyoke College and a Ph.D. inChemistry from the University of Rochester.Joseph M. Beechem, Ph.D. has served as Senior Vice President of Research and Development since April 2012. Prior to joining our company,Dr. Beechem held various positions at Life Technologies, a publicly-traded biotechnology tools company, most recently as Vice President, Head ofAdvanced Sequencing and Head of Global Sequencing Chemistry,-101- Table of ContentsBiochemistry and Biophysics from January 2010 to April 2012. From December 2007 to December 2012, he served as Chief Technology Officer of LifeTechnologies. During his career at Life Technologies, he led the design and development of multiple genetic analysis technologies, the latest advancedSOLiD sequencing technology and the single molecule nano-DNA sequencing technology. Prior to joining Life Technologies, Dr. Beechem was ChiefScientific Officer at Invitrogen, a publicly-traded biotechnology company that acquired Applied Biosystems in November 2008 to form Life Technologies,from August 2003 to December 2007 and Director of Biosciences at Molecular Probes, a biotechnology company acquired by Invitrogen in 2003, fromAugust 2000 to August 2003. Prior to his industry experience, Dr. Beechem led an NIH-funded research laboratory for 11 years as a tenured associateprofessor at Vanderbilt University. He has authored or co-authored more than 100 peer-reviewed papers in diverse fields such as biomathematics, physics,chemistry, physiology, spectroscopy, diagnostics and biology. Dr. Beechem is also named on nearly 40 U.S. patents or patent applications and has served ona number of editorial and scientific advisory boards. He received a B.S. in Chemistry and Biology from Northern Kentucky University and a Ph.D. inBiophysics from The Johns Hopkins University.J. Chad Brown has served as Senior Vice President, Sales and Marketing since July 2017. Prior to joining our company, Mr. Brown served as thePresident and Head of Commercial Operations for North America for Qiagen N.V. from August 2015 to March 2016. From July 2007 until August 2015, Mr.Brown held a series of commercial leadership positions at Roche Diagnostics Corporation in the Applied Sciences and Centralized Diagnostics divisions,including as VP of Marketing and VP of Sales for Centralized Diagnostics and as the National Director of Sales for Genomic Systems. Previously, he held aseries of sales leadership positions in medical device and healthcare companies, including Rotech Healthcare from March 2003 to December 2005, ApriaHealthcare Group from January 1998 to March 2003, Chiron Diagnostics from January 1990 to January 1998, and Humana from January 1981 to January1990. Mr. Brown earned his BS degree in Health Services Administration from the University of Kentucky.David W. Ghesquiere has served as Senior Vice President, Corporate & Business Development since November 2013. Prior to joining our company,Mr. Ghesquiere was the founder and managing director of Adrenaline Venture & Advisory LLC, an international advisory firm, from August 2012 toNovember 2013. Prior to founding Adrenaline Venture & Advisory, Mr. Ghesquiere served as Senior Vice President, Corporate & Business Development atDendreon Corporation, a biotechnology company, from 2011 to 2012. From 2005 to 2010, Mr. Ghesquiere held a variety of executive positions at OSIPharmaceuticals, acquired by Astellas Pharma in 2010, including Senior Vice-President of Corporate & Business Development and Managing Director of OSIInvestment Holdings GmbH and OSI Investment Management GmbH, OSI’s wholly owned, Switzerland-based subsidiaries, where he played a key role inestablishing OSI’s venture capital arm. Earlier in his career, Mr. Ghesquiere served as Director of Global Business Development for Aventis Pharmaceuticals,which merged with Sanofi in 2004, and worked in product marketing at Johnson & Johnson. Mr. Ghesquiere received an M.B.A. from The University ofWestern Ontario’s Ivey School of Business and a B.A. in economics from The University of Western Ontario.Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class ofour equity securities, to file reports of ownership of, and transactions in, our securities with the SEC and NASDAQ. Such directors, executive officers, and tenpercent stockholders are also required to furnish us with copies of all Section 16(a) forms that they file.Based solely on a review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during2018, our directors, executive officers, and 10% stockholders complied with all Section 16(a) filing requirements applicable to them.Corporate Governance Principles and Code of Business Conduct and Code of EthicsOur board of directors has adopted Corporate Governance Principles. These principles address, among other items, the responsibilities of ourdirectors, the structure and composition of our board of directors and corporate governance policies and standards applicable to us in general. In addition, ourboard of directors has adopted a Code of Business Conduct that applies to all of our employees, officers and directors, including our Chief Executive Officer,Chief Financial Officer, and other executive and senior financial officers. The board of directors also has adopted a Code of Ethics that applies to our ChiefExecutive Officer, Chief Financial Officer and other senior financial officers. The full text of our Corporate Governance Principles, Code of Business Conductand Code of Ethics is posted on the Corporate Governance portion of our website at http://investors.nanostring.com/corporate-governance. We will postamendments to our Corporate Governance Principles, Code of Business Conduct and Code of Ethics or waivers of the same for directors and executiveofficers on the same website.-102- Table of ContentsCompensation of Non-Employee DirectorsCompensation PolicyThe compensation committee retained Arnosti Consulting, Inc., or Arnosti Consulting, an independent compensation advisory firm, to providerecommendations to the nominating and corporate governance committee, or the NCG committee, on non-employee director compensation. ArnostiConsulting provided us with competitive data, analysis and recommendations regarding any appropriate updates to the non-employee director compensationpolicy previously in place. For purposes of the policy, each director is classified into one of the two following categories: (1) an “employee director,” is adirector who is employed by us; and (2) a “non-employee director,” is a director who is not an employee director. Only non-employee directors receivecompensation under the director compensation policy, which is provided in the form of equity and cash, as described below.For 2018, both the cash component and the equity component remained in effect at 2017 levels. We believe our non-employee directorcompensation program provides reasonable compensation to our non-employee directors that is appropriately aligned with our peers and is commensuratewith the services and contributions of our non-employee directors. All directors will be reimbursed for expenses in their capacities as directors in accordancewith our standard expense reimbursement policy. Dr. Galakatos is a senior managing director of Blackstone, which is a stockholder of our company throughcertain of its affiliated entities, and as a result of the internal policies of Blackstone, Dr. Galakatos is required to hold or remit any compensation received forhis service on our board of directors for the benefit of Clarus Ventures or its affiliates.Equity CompensationUnder the policy, upon joining our board of directors, each non-employee director receives an option to purchase 0.08% of our outstanding shareson the date of grant. This remains unchanged from the equity grant levels applicable to new non-employee directors under the policy as in effect in 2016 and2017. The exercise price of the initial grant is the fair market value, as determined in accordance with our 2013 Equity Incentive Plan, on the date of thegrant. The shares underlying the initial grant vest as to 50% of the total shares subject to such award on the one year anniversary of the date the directorcommenced services, and the remaining 50% of the total shares vest in 12 equal monthly installments thereafter, in each case, subject to continued service asa director through each vesting date.Pursuant to the policy, at the beginning of each fiscal year, each non-employee director is granted an option to purchase 0.04% of our outstandingshares on the date of grant. The exercise price of this annual grant is the fair market value, as determined in accordance with our 2013 Equity Incentive Plan,on the date of the grant. All of the shares underlying the annual grant vest on the one year anniversary of the date of grant, subject to continued service as adirector through the vesting date.The vesting of each grant described above accelerates in full in connection with a “change in control” as defined in our 2013 Equity Incentive Plan,if the service of an outside director is terminated on or following a change in control, other than pursuant to a voluntary resignation of the director that is notat the request of the acquirer. Awards granted under the outside director compensation policy are granted pursuant to, and subject to the other terms andconditions of, our 2013 Equity Incentive Plan. Our 2013 Equity Incentive Plan provides that no non-employee director may be granted, in any fiscal year,stock-settled equity awards with a grant date fair value (determined in accordance with GAAP) of more than $500,000, with this limit increased to $1,000,000in connection with his or her initial service, or cash-settled awards with a grant date fair value of more than $175,000, increased to $350,000 in connectionwith his or her initial service.Cash CompensationFor 2018, each non-employee director receives an annual cash retainer of $40,000 for serving on the board of directors, which we believe alignedwith market practices and provided our non-employee directors with reasonable compensation commensurate with their service. In addition to the annualretainer, the chairperson of the board of directors received an additional cash retainer of $40,000 for 2018, and the chairpersons of the board’s auditcommittee, compensation committee and nominating and corporate governance committee were entitled to an additional cash retainer of $18,000, $12,000and $10,000 per year, respectively. Non-chairperson members of the audit committee, compensation committee and nominating and corporate governancecommittee were entitled to an additional cash retainer of $7,500, $6,000 and $5,000 per year, respectively. As noted, the amount of the retainers remained thesame as in 2017. All cash payments are payable in four equal installments at the end of each calendar quarter during which such individual served as adirector (such payments to be prorated for service during a portion of such quarter).2019 Changes to Director Compensation PolicyIn December 2018, the NCG committee retained Radford, an independent compensation consultant, to replace Arnosti Consulting based onRadford's status as the leading provider of compensation intelligence and consulting services to companies in the life sciences and technology sectors. Thatsame month, the board suspended the annual non-employee director grants that-103- Table of Contentswere scheduled to be issued on January 1, 2019, in order to allow for the completion of Radford's review of the director compensation policy and theimplementation of any resulting equity compensation changes.Radford conducted an extensive review of our director compensation policies and practices and conducted an extensive market analysis. Radfordconfirmed that director cash compensation generally is competitive to the market, although compensation to the chairs of our audit and compensationcommittees slightly lagged that provided by our peers. Based on its benchmarking of director equity, Radford reported that a number of our peer companieshad begun using a blend of stock options and restricted stock units, rather than just stock options. Radford also found that the prevalent peer group practicewas to use a target dollar value for setting equity awards rather than a percentage of outstanding company stock methodology. Based on these findings, andthe Company’s philosophy of generally delivering equity value that falls between the 50th and 75th percentiles of peer company equity levels in order toreasonably compensate our non-employee directors for their service, the NCG committee recommended to our board of directors in January 2019 thefollowing changes to director compensation, which were subsequently approved by the board:•Initial equity grant of stock options for newly elected or appointed directors will be granted automatically on their start date as a non-employeedirector valued at $200,000 (described further below) and 1/3 of the total will vest on each anniversary of the grant date over three years, subject tocontinued service through each vesting date, and subject to the change in control provisions of our 2013 Equity Incentive Plan, which are describedabove; and•Annual equity grants to directors will be valued at $100,000 (described below), will be split equally (by value) between stock options and restrictedstock units, and will be granted on the date of the annual stockholders' meeting each year. These equity grants will vest in full on the date that is theearlier of the one-year anniversary of the grant date, or the date immediately prior to the next annual stockholders meeting, subject to continuedservice through the vesting date, and subject to the change in control provisions of our 2013 Equity Incentive Plan, which are described above; and•Modest increases in the audit and compensation committee chair retainers to align with the market 50th percentile.The number of options will be determined by dividing the dollar value of the grant by the Black Scholes value of a share and the number ofrestricted stock units will be determined by dividing the dollar value of the grant by the fair market value of a share, meaning the closing price of a share, ofthe company's common stock on the date of the grant. The exercise price of the initial and annual option grants is the fair market value, as determined inaccordance with our 2013 Equity Incentive Plan, on the date of the grant.In light of the suspension of the scheduled January 1, 2019 annual equity grants to our non-employee directors pending Radford’s review of ourdirector compensation policy, the board intends to make an interim option grant valued at $50,000 to each director prior to the date of the annualstockholders' meeting on June 18, 2019. This grant will vest in full on the day prior to the date of the annual stockholders' meeting, June 18, 2019, subject tocontinued service as a director through the vesting date, and subject to the change in control provisions of our 2013 Equity Incentive Plan, which aredescribed above. The regularly scheduled annual equity grants as described above will occur on the next day, the date of the annual stockholders' meeting,June 18, 2019.2018 Director Compensation TableNameFees Earned orpaid in Cash Option Awards(1) TotalWilliam D. Young(2)$92,500 $40,355 $132,855Elisha Finney(3)47,500 40,355 87,855Nicholas Galakatos, Ph.D.(4)57,000 40,355 97,355Robert M. Hershberg, M.D., Ph.D.(5)45,000 40,355 85,355Kirk D. Malloy, Ph.D.(6)46,000 40,355 86,355Gregory Norden(7)64,000 40,355 104,355Charles P. Waite(8)57,500 40,355 97,855 (1) Represents the aggregate grant date fair value of stock option awards granted in 2018. These amounts have been computed in accordance with FinancialAccounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718, without regard to estimated forfeitures. For a discussionof valuation assumptions, see the notes to our financial statements included in Item 8 of this report.(2) As of December 31, 2018, Mr. Young held options for the purchase of 125,178 shares of common stock, of which 115,010 shares were vested as of suchdate.-104- Table of Contents(3) As of December 31, 2018, Ms. Finney held options for the purchase of 27,521 shares of common stock,13,738 of which were vested as of such date.(4) As of December 31, 2018, Dr. Galakatos held options for the purchase of 48,779 shares of common stock, of which 38,611 shares were vested as of suchdate.(5) As of December 31, 2018, Dr. Hershberg held options for the purchase of 41,545 shares of common stock, of which 31,377 shares were vested as of suchdate.(6) As of December 31, 2018, Dr. Malloy held options for the purchase of 34,964 shares of common stock, of which 24,796 shares were vested as of suchdate.(7) As of December 31, 2018, Mr. Norden held options for the purchase of 59,185 shares of common stock, of which 49,017 shares were vested as of suchdate.(8) As of December 31, 2018, Mr. Waite held options for the purchase of 48,779 shares of common stock, of which 38,611 shares were vested as of such date.Item 11. Executive CompensationCompensation Discussion and AnalysisWe became a public company in June 2013 and have filed our proxies since then under the scaled reporting rules applicable to emerging growthcompanies. Beginning in 2019 we are no longer an emerging growth company and this year’s Part III of Form 10-K and proxy statement relating to the 2019meeting of stockholders now include additional details as follows:•This Compensation Discussion and Analysis, or CD&A;•An additional year of reporting history, and reporting on compensation for two additional Named Executive Officers, or NEOs, in our SummaryCompensation Table; and•Additional compensation disclosure tables for “Grants of Plan-Based Awards,” “Option Exercises,” and “Potential Change-in-Control and SeveranceBenefits” which are included in the “Executive Compensation” section of this annual report on Form 10-K and proxy statement relating to the 2019meeting of stockholders.In addition, this year’s proxy statement will include:•An advisory vote on executive compensation; and•An advisory vote on the frequency on which we will hold our “say on pay” vote.Our Named Executive Officers, or NEOs, for 2018 were as follows:•R. Bradley Gray, our President and Chief Executive Officer;•K. Thomas Bailey, our Chief Financial Officer;•Mary Tedd Allen, our Senior Vice President of Operations;•Joseph M. Beechem, our Senior Vice President of Research and Development; and•David W. Ghesquiere, our Senior Vice President of Corporate and Business Development.Executive Summary2018 Business Highlights During 2018, we achieved several important milestones in our business and financial plans, including the following:•Achieved product and service revenue for fiscal year 2018 of $83.5 million (on a GAAP basis), a 16% increase over 2017 product and servicerevenue.•Increased installed base to approximately 730 nCounter Analysis Systems, an increase of approximately 21% since year-end 2017.•Shipped our first beta GeoMx DSP, our newest product offering, during the fourth quarter.•Announced that the GeoMx Priority Site program for customers was over-subscribed, yielding pre-orders for more than 30 instruments.•Executed an underwritten public offering of our stock in July 2018 for $53.8 million in net proceeds.•Entered into a new term loan agreement for $100 million with Cap Royalty Group.-105- Table of Contents•Ended 2018 with cash, cash equivalents and short-term investments of $94.0 million.The operational achievements highlighted above resulted in a total shareholder return of approximately 100% (2x stock price increase) from thebeginning to the end of 2018.2018 Executive Compensation HighlightsDuring 2018, we continued to follow the executive compensation policies and procedures that we put in place in connection with becoming apublic company, including:•Emphasis on pay for performance: Our compensation committee is focused on ensuring that a significant portion of total compensation for ourNEOs is performance-based. For 2018, the variable compensation awarded to our NEOs ranged from 37% to 60% of each NEO’s total targeted annualcompensation. For the fiscal year 2019, the compensation committee has approved the addition of performance-based stock units as a newcomponent of the equity stock program, in addition to the time-based stock options and restricted stock units which have historically been granted.•No guaranteed compensation: Although we have signed employment agreements with each of our NEOs, all of these agreements provide for “atwill” employment, and none of these agreements provides any guarantees relating to salary increases or the amounts of incentive pay or equityawards.•Reasonable severance and targeted change in control benefits: The employment agreements we have with our NEOs do not provide for “singletrigger” benefits upon a change in control that do not require termination of employment. These employment agreements require that the NEO’semployment be terminated by us without “cause” or the NEO resign for “good reason” in order for the NEO to receive severance benefits, whether inconnection with a change in control or otherwise. Likewise, equity awards to these NEOs contain “double trigger” provisions in order for the vestingof these awards to accelerate in connection with a change in control.•Independent compensation consultant: Our compensation committee engages its own independent compensation consultant, which provides thecompensation committee with valuable data regarding market compensation trends and guidance to the compensation committee about executivecompensation programs in general.•No tax gross ups. We do not provide tax gross ups to any of our NEOs.•Perquisites: We do not provide any special perquisites to any of our NEOs.•Policy against speculative trading: Our insider trading policy prohibits our executives from engaging in “hedging” or “pledging” transactions withrespect to our common stock.•Risk analysis. We believe the structure of our executive compensation program motivates our executives to make thoughtful, appropriate decisionswith measured risks balanced by appropriate rewards for the company.Compensation Objectives and PhilosophyThe objectives of our executive compensation program are as follows:•Recruit, motivate and retain highly qualified executive officers who possess the skills and leadership necessary to sustain a high-growth business;•Reward our executives for achieving or exceeding short-term individual and company goals that drive our growth;•Provide long-term retention and incentives to our executives that align their interests with the long-term interests of our company and ourstockholders, thereby incentivizing management to increase stockholder value; and•Provide compensation packages that are competitive, reasonable and fair relative to peers and the overall market.Processes and Procedures for Compensation DecisionsThe Compensation Committee’s Process and the Role of the CEOOur compensation committee is responsible for the executive compensation programs for our executive officers and reports to our board of directorson its discussions, decisions and other actions. In carrying out these responsibilities, our compensation committee reviews and approves the compensation forour NEOs, including developing the appropriate corporate goals and objectives for these executives and assessing performance against these goals andobjectives. The compensation committee also provides oversight of the Company’s overall compensation policies, plans and benefit programs, and overallcompensation philosophy.At the beginning of each year, the compensation committee meets and approves strategic, operational and financial objectives for the company, orthe Corporate Goals, for the upcoming year. The Corporate Goals are developed by Mr. Gray, the NEOs and the other members of the executive team and Mr.Gray presents them to the committee for approval. Each NEO-106- Table of Contentsalso proposes his or her own individual goals for the applicable year, in consultation with Mr. Gray, which are primarily comprised of subsets of theCorporate Goals for which each NEO is primarily responsible. These individual goals are also factored into the final assessment of each NEO’s performancefor that year. Shortly after the end of the year, the compensation committee evaluates the performance of our NEOs against the previous year’s CorporateGoals and individual goals. The level of achievement of the Corporate Goals and individual goals are considered, along with input from Mr. Gray, and ourVP of Human Resources, in determining payments to be made under the company’s incentive compensation program for the completed year.As part of the annual executive compensation setting process, Mr. Gray (with the support of our VP of Human Resources) makes recommendations toour compensation committee regarding short- and long-term compensation for all NEOs (other than himself) based on corporate and individual performance,and market trends. Our compensation committee then reviews the recommendations, as well as the input and data from the compensation committee’sindependent compensation consultant, and makes decisions as to total compensation, as well as each individual compensation component, for each of theseNEOs. No NEO participates in portions of any meetings during which decision are made regarding his or her own compensation.With respect to the compensation for Mr. Gray, the compensation committee consults with our VP of Human Resources, as well as the independentcompensation consultant, and reviews the data provided by the consultant, to make decisions regarding Mr. Gray’s performance, individual components ofhis compensation and total compensation. Mr. Gray does not participate in the portions of any meeting during which decisions are made regarding hiscompensation.Role of the Compensation Consultant and Use of a Peer GroupThe compensation committee is authorized to retain the services of one or more executive compensation consultants, in connection with theestablishment of our compensation programs and related policies. From 2012 to October 2018, Arnosti Consulting, Inc. served as the compensationcommittee’s compensation consultant, to provide it with information, recommendations and other advice relating to executive compensation on an ongoingbasis. In late 2018, the compensation committee selected Radford as its compensation consultant to replace Arnosti Consulting.At the beginning of 2018, Arnosti Consulting assisted us in developing a group of peer companies to help us determine the appropriate level ofoverall compensation for our NEOs and other executive officers, as well as assess each separate element of compensation, with a goal of ensuring that thecompensation we offer to our NEOs and other executive officers is competitive and fair. For fiscal year 2018, our peer group for compensation decisionsconsisted of the following companies in the biotechnology or life sciences tools and services industries, each of which had less than $510 million incommercial product revenue and market capitalizations (30-day average as of January 11, 2019) ranging from $150 million to $2.4 billion:Accelerate Diagnostics, Inc.OraSure Technologies, Inc.Fluidigm Corp.Oxford Immunotec Global PlcGenMark Diagnostics, Inc.Pacific Biosciences of California, Inc.Genomic Health, Inc.Quidel Corp.Luminex Corp.T2 Biosystems, Inc.Meridian Bioscience, Inc.Veracyte, Inc.Natera, Inc. In addition to the peer group data, Arnosti Consulting also provided the compensation committee with data from Radford compensation studies forcompanies in the life sciences and biotechnology industries for positions that are comparable to those of our NEOs and other members of our executive team.Our compensation committee finds comparative data from our peer group and the Radford data to be useful in setting and adjusting executive compensation,and uses it primarily to ensure that our executive compensation program and its constituent elements are and remain competitive in relation to our peers. Thecompensation committee has not adopted any formal benchmarking guidelines and retains the discretion to set levels of executive compensation above orbelow peer levels. The compensation committee looks to factors such as individual performance and contribution to the company, the need to retainparticular talent, the retention risk for an executive, an executive’s level of experience and responsibilities and comparability of roles within other peercompanies.-107- Table of ContentsElements and Analysis of Named Executive Officer CompensationThe compensation program for our NEOs consists of:•base salary;•annual cash incentive compensation;•long-term equity incentive awards; and•severance and change in control-related benefits.Our NEOs are also eligible to participate in the employee benefit programs that we make available to all full time employees, including medical anddental coverage, life and disability insurance, flexible spending accounts, a 401(k) plan and an employee stock purchase plan. The NEOs’ participation inthese programs is on the same terms and conditions as those offered to our other full time employees.Base SalariesWe provide base salaries to our NEOs to compensate them for services rendered on a day-to-day basis. Each NEO’s base salary is typically set basedon competitive market considerations and his or her level, responsibilities, experience, and skill set. Historically, we have not applied specific formulas todetermine changes in base salary. Rather, the base salaries of our NEOs (other than our CEO) have been reviewed on an annual basis by our CEO and ourcompensation committee based on their experience with respect to setting salary levels, supplemented by market data provided by the compensationcommittee’s independent compensation consultant and assessments of the performance of the NEOs. The base salary of our CEO is reviewed by thecompensation committee annually based on the same factors and inputs.In setting NEO base salaries for 2018, our compensation committee reviewed the peer group data provided by Arnosti Consulting as well asperformance achievement against the 2017 corporate and individual goals. The compensation committee did not review Mr. Bailey’s salary as he had joinedthe company in January 2018. Based on the peer company data and Radford data, the compensation committee found that the base salaries for our NEOs werewithin the competitive range of the 50th to 60th percentile. Based on that information and the company performance of 50% of achievement of the 2017Corporate Goals, the compensation committee chose not to make any changes to NEO base salaries for 2018 from 2017 levels.Name 2018 Base SalaryR. Bradley Gray $565,000K. Thomas Bailey 400,000Mary Tedd Allen 320,000Joseph M. Beechem 385,000David W. Ghesquiere 375,000Annual Cash Incentive CompensationOur incentive compensation plan provides our NEOs with annual cash incentive awards based on our achievement of our Corporate Goals andindividual goal achievement. For each NEO, the target bonus opportunity is determined as a percentage of his or her base salary (as indicated in the tablebelow), which was established for 2018 by the compensation committee in consultation with Arnosti Consulting, based on peer group data, historicalperformance and internal equity considerations.We established our annual incentive compensation program in order to motivate our executives to achieve short-term financial and businessobjectives, reflecting our “pay for performance” culture and resulting in a significant portion of NEO compensation tying directly to their individual andCompany achievements. The program also helps us to remain competitive with our peer companies, which generally offer an annual incentive opportunity asa standard element of compensation. 2018 annual cash incentives will be paid in the first quarter of 2019 based on 2018 performance.At the beginning of 2018, the compensation committee met and approved the Corporate Goals for 2018. These Corporate Goals were developed andproposed to the compensation committee by Mr. Gray, the NEOs and the other members of the executive team. Each Corporate Goal was assigned apercentage weighting toward the overall Corporate Goal component of the NEO’s annual incentive, as shown in the table below. Each member of theexecutive team also developed and proposed his or her own individual goals for 2018, in consultation with Mr. Gray. The Corporate Goals and individualgoals were set at levels intended to be challenging but attainable with one or two “stretch” goals that would be harder to achieve. For example, the productand service revenue Corporate Goal was considered a “stretch” goal as it would require double digit product and service revenue growth over 2017performance. The compensation committee considered the appropriateness and level of challenge attached to the proposed goals, and approved them aspresented. Each NEO’s annual incentive award for-108- Table of Contents2018 was based on his or her achievement against the Corporate Goals and his or her individual goal, with these components weighted for each NEO asfollows: Mr. Gray, 100% Corporate Goals; Mr. Bailey, 75% Corporate Goals/25% individual goals; Dr. Allen, 75% Corporate Goals/25% individual goals,Dr. Beechem, 75% Corporate Goal/25% individual goals, and Mr. Ghesquiere, 75% Corporate Goals/25% individual goals. The Corporate Goals wereweighted very heavily for each NEO (and, in Mr. Gray’s case, comprised the entirety of his annual incentive award opportunity), because our NEOs are in theposition to influence and drive overall Company performance and stockholder value, and therefore the compensation committee believed it appropriate thatmost of their annual incentive be awarded on this basis.At the beginning of 2019, the compensation committee reviewed the performance of our NEOs against the 2018 Corporate Goals and based on thesignificant advances we made against those goals, along with the overachievement on some goals, determined the overall Corporate Goal achievement at129.5%, which the compensation committee rounded to achievement of 130%. In particular, the committee recognized the company’s success in achievingdouble digit growth for product and service revenue in each quarter of 2018.Corporate Goal Attainment (Revenue and gross margin in this chart are on a GAAP basis)GoalExplanation Weighting (%) Attainment Percentage/Evaluation of Performance ResultingIncentive Weight(%)Return Core Businessto Compelling GrowthGrow product and service revenue to $85.8 millionfor 2018 and increase product and service revenueeach quarter by at least 10% year over year 35% 110%: Achieved $83.5 million in product and servicerevenue; exceeded 10% growth in product and servicerevenue in all quarters, with substantialoverachievement in two of the four quarters 39%Extend Leadership inOncology Research &DiagnosticsDeliver specified revenue amounts for oncologypanels and Prosigna; launch new panels; advancedevelopment of LymphMark assay; enter into acompanion diagnostic partnership with abiopharma company; and publish immuno-oncology papers from academic collaborations 15% 100%: Oncology product and service revenue goalsexceeded; new Breast Cancer 360 and Car-T panelslaunched; LymphMark studies progressed; fourimmuno-oncology publications; biopharma partnershipsigned but not for a companion diagnostic 15%Drive nCounter intoNew Therapeutic Areasand ApplicationsLaunch new neuro-inflammation and autoimmuneprofiling panels and achieve revenue goals forthose panels and systems 10% 90%: significant growth in non-oncology instrumentand consumables sales; new neuro-inflammation andautoimmune panels launched 9%Launch Digital SpatialProfiling (DSP) Systemunder Early AccessPlace DSP beta systems and achieve a certainamount of revenue in DSP early access sales priorto commercial launch in 2019 15% 200%: beta system placement and presalessubstantially exceeded expectations 30%Advance Hyb & SeqToward 2020Commercial LaunchDevelop prototype systems and completesequencing chemistry 10% 70%: Technical achievements reached but fullcommercial launch delayed until 2021 7%Rebuild Trust withInvestorsMeet or exceed investor growth expectations ineach quarter; deliver gross margin of 57%; securefinancing to end the year with access to adequatecash to fund growth 15% 200%: exceeded investor growth expectations in eachquarter; achieved 57% gross margin; follow on equityoffering completed and new term loan facility in place;ended the year with $94.0 million in cash and cashequivalents 30% 100% 130%-109- Table of ContentsIn addition, the compensation committee reviewed the performance of each NEO against the individual goals of each NEO set at the beginning of2018 and determined each NEO’s achievement as follows:Individual Goal Attainment (Revenue and gross margin in this chart are on a GAAP basis)Named Executive OfficerIndividual Goals Attainment Percentage Weighting as a % of TotalBonusR. Bradley GrayNone n/a —%K. Thomas BaileyFinancing; investor relations; year-end cash; Finance processimprovements; gross margin of 57% 150% 25%Mary Tedd AllenActivities to support revenue growth; gross margin of 57%; suppliermanagement; quality system to support regulatory submissions forcompanion diagnostics; ISO recertification; improvements in shipment andservice response times 90% 25%Joseph M. BeechemSpecified progress in product development for GeoMx Digital SpatialProfiler, Hyb & Seq and panels 90% 25%David GhesquiereExecute collaborations and partnerships relating to companion diagnostics,GeoMx and Hyb and Seq 80% 25%Based on the level of achievement of the Corporate Goals and individual goals and the weighting of such goals for each NEO, the compensationcommittee then approved payment of the bonuses as follows: Corporate Bonus Individual Bonus Total BonusNamedExecutiveOfficer2018 BaseSalary Target as a% of salary Weight Attain. Value Weight Attain. Value ActualTargetPercentR. BradleyGray$565,000 85% 100% 130% $624,325 —% n/a n/a $624,325$480,250130%K. ThomasBailey400,000 50% 75% 130% 195,000 25% 150% $75,000 270,000200,000135%Mary TeddAllen320,000 45% 75% 130% 140,400 25% 90% 32,400 172,800144,000120%Joseph M.Beechem385,000 50% 75% 130% 187,688 25% 90% 43,312 231,000192,500120%DavidGhesquiere375,000 50% 75% 130% 182,813 25% 80% 37,500 220,313187,500118%Long Term Equity Incentive AwardsWe have established a long-term equity incentive program to motivate our NEOs to increase stockholder value, and to achieve long-term corporateobjectives. We feel strongly that granting stock-based awards to our executives promotes alignment of their interests with those of stockholders by allowingthem to participate in, and rewarding them for, long-term appreciation of our stock. The compensation committee also considers the vesting conditions onthese awards to serve an important retention function for our NEOs. In addition, our compensation committee believes that this program is necessary to beand remain competitive with our peer companies and in the industries in which we compete for talent. Equity grants are made in connection with the hiring ofan NEO, and also typically are awarded on an annual basis in the first quarter of each fiscal year.From the founding of the company until 2015, we granted only stock options to employees with the exercise price set as the fair market value on thedate of grant and vesting 25% on the first anniversary of the grant date, following by monthly vesting in equal increments over the following three years,generally with “double trigger” acceleration of vesting provisions for our NEOs and certain other executives described below. In 2016, we introducedrestricted stock units, or RSUs, into our executive compensation program and since then, our annual NEO and other executive equity grants have included acombination of stock options and RSUs. The compensation committee decided to make this change based on its assessment of the market practice surveydata provided by Arnosti Consulting, which showed that companies in our peer group typically moved toward inclusion of RSUs in order to provide a morepredictable return in a volatile stock market than stock options. From a company dilution perspective, the committee recognized that RSUs reduce dilution asfewer shares are required to deliver an equivalent value as under a stock option. In 2019, the compensation committee expanded the granting of RSUs to all-110- Table of Contentsemployees annually, though stock options still comprise all or a portion of the initial equity grants provided upon hire for employees. The strong retentionthat RSUs provide, combined with the incentives to drive long-term stockholder value that options provide, together create a balanced approach intended tomeet the Company’s pay-for-performance objectives and retention needs, while helping to manage dilution.The vesting schedule for these RSUs are typically 1/3 of the total on the anniversary of the vesting commencement date over three years, subject tocontinued service, generally with the “double trigger” acceleration of vesting provisions for our NEOs and certain other executives described below. As partof the negotiated terms of his employment with the Company, Mr. Bailey’s new hire RSU award is scheduled to vest in full on the second anniversary of hisstart date, rather than under our typical three-year schedule.Generally, the stock options and RSUs granted to our NEOs and certain other executives include “double trigger” acceleration protection, underwhich the award vests in full upon a termination without cause or resignation for good reason that occurs following a change in control. The compensationcommittee provides this “double trigger” involuntary termination protection because it recognizes that the possibility of a change in control could bedistracting for NEOs, and result in uncertainty about their future employment with the Company after a transaction. The acceleration features the Companyprovides allow our executives to focus on making decisions regarding a change in control that are in the best interests of our stockholders, despite anypersonal employment uncertainties. With respect to Mr. Bailey’s new hire stock options and RSUs, in order to receive this acceleration of vesting, histermination without cause or for good reason must occur within 12 months following a change in control. This 12-month time limit is consistent with thetime limits we have historically provided for the typically larger new hire equity awards.The value of stock options and RSUs awarded to each NEO is determined based on the compensation committee’s assessment of a number of factors,including the role and responsibility of each NEO, external market data, the performance of the NEO and the expected contribution of the NEO to futureresults. The compensation committee also reviews the value of the NEO’s equity holdings and previously granted equity awards in determining these awards,and may increase or decrease future awards based on these other holdings.In 2018, the compensation committee approved equity grants for NEOs at the same level and in the same mix of options and RSUs as had beengranted in 2017, taking account of the need to maintain competitive compensation levels with our peer group and retain the talent critical to our success.In January 2018, our CEO also proposed that the compensation committee consider issuing additional RSUs in light of heightened retentionconcerns. After reviewing executives’ current vested and unvested options and RSUs, and receiving advice from Arnosti Consulting, the compensationcommittee’s independent compensation consultant, the compensation committee recognized that a substantial portion of our NEOs’ equity, composedprimarily of stock options, were underwater and that their “in the money” option holdings were at minimal levels and did not serve the purpose ofincentivizing retention of these NEOs. In addition, the overall value of their equity holdings at that time were also quite modest as compared to the holdingsof similarly situated executives in our peer group. Finally, the compensation committee also recognized that the company’s stock had dropped significantlyas a result of the company’s performance in 2017, which could result in the departure of executives at a time when it was particularly critical for us to retainour leadership. For all of these reasons, the compensation committee determined that there were unusual and heightened retention risks, and that it wascrucial to retain and motivate key talent during what was an uncertain period. As a result, in March 2018, the compensation committee approved RSUsawards to our NEOs, or the Retention RSUs. These Retention RSUs were equal in value to each NEO’s 2018 salary (other than Mr. Gray's Retention RSUgrant which was equal in value to approximately two times his 2018 salary) and have the same vesting schedule and acceleration provisions as the annualRSUs described above.The equity awards granted to our NEOs for 2018 are as set forth in the table below. Mr. Bailey’s stock option and RSU awards were granted by thecompensation committee following the commencement of his employment in January 2018. As is typical for new hire awards, Mr. Bailey’s stock option grantand RSU grant were higher than most other NEOs given that they were granted in connection with his hire:Named Executive Officer2018 Stock Option Grant 2018 RSU Grant 2018 Retention RSUGrantR. Bradley Gray60,000 30,000 132,941K. Thomas Bailey95,000 35,000 n/aMary Tedd Allen20,000 10,000 37,647Joseph M. Beechem20,000 10,000 45,294David Ghesquiere20,000 10,000 44,118-111- Table of ContentsCompensation Decisions for 2019: Addition of Performance Stock UnitsIn October 2018, working with Arnosti Consulting, our compensation committee conducted an evaluation of the peer group of publicly tradedcompanies that we had been using to help assess executive compensation. Additional companies were added to the peer group for 2019 as follows, to providea fuller reflection of the group of companies with which we compete for talent: Care Dx, Cerus, Codexis, Harvard BioSciences, HTG Molecular Dx, Invitae,NeoGenomics and Quanterix. In December 2018, our compensation committee retained Radford to review our executive compensation policies and practicesand to conduct an extensive market analysis. Based on its benchmarking of executive equity, Radford recommended that the Company focus on meeting themarket 50th percentile for annual equity value with a potential for providing equity at up to 75th percentile, depending on performance and business impact,with final equity grant determinations also taking into account Company and executive past and expected future performance, long- and short-termCompany objectives, current equity values held by the executives, executive experience and skill sets, retention needs and other factors the compensationcommittee deems relevant.Radford reported that over half of our peer companies include performance-based restricted stock units, or PSUs, as part of the equity mix. We hadpreviously only issued PSUs on an ad hoc basis to one NEO. They suggested that the Company should consider adding PSUs to the time-based stock optionsand restricted stock units which have historically been granted to the executive team, in order to contribute strongly to the pay-for-performance culture thatthe Company focuses on and be consistent with market trends. Even after the 2018 grant of one-time Retention RSUs to our executives, the value of equityholdings for a majority of our executive team remained below market as benchmarked again the peer group by Radford. As a result, Radford suggested a grantof PSUs in 2019 to address these considerations. In determining the appropriate structure of the PSUs, performance goals tied to specified product and servicerevenue goals were established as the compensation committee determined that these metrics closely align with long-term shareholder value creation. Thecommittee elected to allocate approximately 50% of the total 2019 equity value for the NEOs to PSU awards to emphasize the performance component. Inevaluating both the incentive as well as the retentive value of the PSUs, the committee elected to include additional time-based vesting requirements at theconclusion of the performance period to further strengthen the retentive component of the PSU awards. If a change in control of the Company occurs prior tothe end of the performance period, the revenue goals would no longer apply, and the award would vest as a time-based award, subject to the “double trigger”severance protections generally included in the Company’s executive equity awards that provide vesting acceleration upon termination without cause orresignation for good reason that occurs following a change in control. It is expected that these PSUs will be granted by the compensation committee in thefirst quarter of 2019 (which timing is consistent with its regular practice of making annual executive equity grants in the first quarter of each fiscal year)along with annual grants of stock options and RSUs.Employment AgreementsWe have entered into employment agreements with each of our NEOs with the oversight and approval of our compensation committee, or in the caseof our CEO, with the oversight and approval of our compensation committee. Each of these employment agreements was negotiated by our CEO, with theexception of his own employment agreement, and contains terms intended to attract, retain and motivate our NEOs. These employment agreements have nospecified term and also acknowledge that each of these NEOs is an “at will” employee, whose employment can be terminated at any time. The agreements setforth the terms and conditions of employment of each NEO, including base salary, target annual incentive compensation payment, standard employee benefitplan participation, and initial stock grant and the terms of vesting of the initial stock grant. These employment agreements were each subject to execution ofour standard confidential information and invention assignment agreement.In addition, each NEO has entered into an indemnification agreement with us, pursuant to which we have agreed to indemnify our NEOs against anycosts, expenses and judgements assessed against them as a result of the performance of their duties as our employees, with certain exceptions.Severance and Change in Control BenefitsWe have entered into employment agreements with our NEOs that contain severance and change in control provisions which require us to providespecific payments and benefits in connection with the termination of our NEOs’ employment in certain circumstances, generally subject to their execution ofa release of claims. In addition, as described above, NEO equity awards generally contain “double trigger” vesting acceleration provisions triggered inconnection with the termination of our NEO’s employment in certain circumstances following a change in control, as described above. We believe that theseseverance and change in control arrangements and provisions provide retention value by encouraging our NEOs to continue their employment with us andincrease stockholder value by reducing any potential distractions caused by the possibility of an involuntary termination of employment or a potentialchange in control, allowing our NEOs to focus on their duties and responsibilities. For a summary of the material terms and conditions of these severance andchange in control arrangements, see the section titled “Potential Payments upon Termination or Change in Control” below.-112- Table of ContentsHealth, Welfare and 401(k) Plan BenefitsOur NEOs are eligible to participate in all of our employee benefit plans, including our medical, dental, vision, life and disability plans, in each caseon the same basis as other employees.We maintain a tax-qualified retirement plan that provides eligible employees, including our NEOs, with an opportunity to save for retirement on atax advantaged basis. All participants’ interests in their deferrals are 100% vested when contributed. We currently match employee 401(k) contributions at arate of $1.00 for each dollar contribution, up to 2% of an eligible employee’s gross salary and at the rate of $0.50 for each dollar contribution up to anadditional 4% of each employee’s gross salary, capped at a maximum matching contribution amount of $4,000 per employee. Pre-tax contributions areallocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Post taxcontributions to a Roth account are also offered under the plan. The 401(k) plan is intended to qualify under Sections 401(a) and 501(a) of the InternalRevenue Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees untildistributed from the 401(k) plan, and all contributions are deductible by us when made.Other Executive Compensation PoliciesPolicy Against Speculative Transactions. Our insider trading policy expressly prohibits all of our employees, including our NEOs and our directorsfrom engaging in speculative transactions relating to our stock including short sales, puts/calls, hedging of stock ownership positions, margin accounts orpledges, and transactions involving derivative securities relating to our common stock.No Executive Perquisites. We do not provide perquisites or personal benefits to our NEOs.No Tax Gross Ups. We do not provide for any tax gross up payments to our NEOs.Stock Ownership Guidelines. In 2018 and 2019, we considered, but did not adopt, stock ownership guidelines for our NEOs and directors. Themajority of our peer companies similarly have not adopted stock ownership guidelines for their executives or directors. We do expect to consider adoptingsuch guidelines for our NEOs and directors in the future.Tax and Accounting Treatment of Compensation. Section 162(m) of the Internal Revenue Code places a limit of $1 million per year on the amountof compensation paid to certain of our executive officers that the Company may deduct for federal income tax purposes. An exception to the $1 millionlimitation for performance-based compensation meeting certain requirements was repealed beginning in 2018 (other than with respect to certaingrandfathered arrangements) under the Tax Cuts and Jobs Act (the “Act”). In addition, the regulations under Section 162(m) contain a transition rule thatapplies to companies during a limited period following the initial public offering of their stock. Pursuant to this rule, certain compensation granted before theend of a transition period (and, with respect to restricted stock units, that also are paid out before the end of the transition period) currently is not countedtoward the deduction limitations of Code Section 162(m) if certain requirements are met. It is possible that certain of the equity awards granted prior to theend of our transition period in 2017 may be eligible to be excluded from the Section 162(m) deduction limits pursuant to this transition rule. As a result ofthese changes and the end of our transition period, except as otherwise provided in the transition relief provisions of the Act or pursuant to the transitionperiod rules, compensation paid to any of our covered executives generally will not be deductible in 2018 or future years, to the extent that it exceeds $1million.Our compensation committee has not adopted a policy that any or all equity or other compensation must be deductible. Given that we have not beenprofitable since our inception, our compensation committee has not emphasized or sought to maximize the deductibility of executive compensation andinstead has focused our compensation policies on the goals discussed throughout this CD&A. However, as we move toward profitability, the compensationcommittee intends to balance the objective of ensuring an effective compensation package with the need to maximize the deductibility of executivecompensation. However, we cannot guarantee that any compensation in excess of $1 million paid to our covered executives will be or will remain deductibleunder Section 162(m).We account for stock-based compensation in accordance with the requirements of Accounting Standards Codification Topic 718, Compensation -Stock Compensation. Under the fair value provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value ofthe award.Compensation Recovery Policy. As a public company subject to Section 304 of the Sarbanes-Oxley Act of 2002, if we are required to restate ourfinancial results as the result of misconduct or due to our material noncompliance with any financial reporting requirements under the federal securities laws,our chief executive officer and chief financial officer may be legally required to reimburse us for any bonus or incentive-based or equity-based compensationthey receive. In addition, we will comply with the requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act and anticipate that wewill adopt a compensation recovery policy once final regulations on the subject have been adopted.-113- Table of ContentsCompensation Committee ReportOur compensation committee has reviewed the Compensation Discussion and Analysis provided above with management. Based on such review anddiscussion, our compensation committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in thisannual report on Form 10-K and proxy statement relating to the 2019 meeting of stockholders.Respectfully submitted by the members of the compensation committee of the board of directors:Dr. Nicholas Galakatos (Chairman)Dr. Kirk D. MalloyGregory NordenSummary Compensation Table for Fiscal Years 2018, 2017 and 2016The table below sets forth compensation information for the individuals who served as our chief executive officer and chief financial officer during2018, and our three most highly compensated executive officers, other than our chief executive officer or chief financial officer, who served as executiveofficers as of December 31, 2018. We refer to these five individuals throughout this report as our “NEOs” for 2018.Name and Principal Position Year Salary Stock Awards(1) OptionAwards(1) Non-Equity IncentivePlan Compensation(2) All OtherCompensation(3) TotalR. Bradley Gray 2018 $565,000 $1,107,999 $226,661 $624,325 $4,000 $2,527,985President and ChiefExecutive Officer 2017 561,667 564,000 570,022 240,125 4,000 1,939,814 2016 533,333 404,375 378,814 375,233 4,000 1,695,755 K. Thomas Bailey 2018 400,000 291,550 430,988 270,000 3,333 1,395,871Chief Financial Officer Mary Tedd Allen 2018 320,000 324,000 75,554 172,800 4,000 896,354Senior Vice President,Operations Joseph M. Beechem 2018 385,000 375,999 75,554 231,000 4,000 1,071,553Senior Vice President,Research & Development 2017 380,653 188,000 190,007 107,800 4,000 870,460 David W. Ghesquiere 2018 375,000 368,002 75,554 220,313 4,000 1,042,869Senior Vice President,Corporate & Business Development 2017 372,458 188,000 190,007 93,750 4,000 848,215 2016 355,000 559,175 532,548 149,850 4,000 1,600,573 (1) The dollar amounts in this column represent the aggregate grant date fair value of restricted stock unit awards and stock option awards granted in 2018,2017 and 2016, respectively. These amounts have been computed in accordance with FASB ASC Topic 718. Pursuant to SEC rules, the amounts shownexclude the impact of estimated forfeitures related to service-based vesting conditions. For a discussion of valuation assumptions, see Note 2 and Note11 of the Notes to Consolidated Financial Statements under Item 8 of this report.(2) The amounts in this column represent the amounts earned and payable each year under the bonus plan for such year, all of which were paid in thesubsequent year.(3) The amounts in this column consist of matching contributions made by us pursuant to our 401(k) plan.-114- Table of ContentsGrants of Plan-Based AwardsThe following table sets forth each equity and non-equity based award granted to our NEOs during 2018. Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) All OtherStockAwards:Number ofShares ofStock orUnits (#) (2)All Other OptionAwards: Number ofSecuritiesUnderlying Options(#) (2)(4)Exercise orBase Price ofOptionAwardsGrant DateFair Value ofStock andOptionAwards (3)NameGrant DateName of PlanThresholdTargetMaximum R. Bradley Gray 2018 Non-Equity Plan $480,250 2/6/20182013 Equity IncentivePlan 162,941 $1,107,999 2/6/20182013 Equity IncentivePlan 60,000$6.80226,661 K. Thomas Bailey 2018 Non-Equity Plan 200,000 1/18/20182018 InducementEquity Incentive Plan 35,000 291,550 1/18/20182018 InducementEquity Incentive Plan 95,0008.16430,988 Mary Tedd Allen 2018 Non-Equity Plan 144,000 2/6/20182013 Equity IncentivePlan 47,647 324,000 2/6/20182013 Equity IncentivePlan 20,0006.8075,554 Joseph M. Beechem 2018 Non-Equity Plan 192,500 2/6/20182013 Equity IncentivePlan 55,294 375,999 2/6/20182013 Equity IncentivePlan 20,0006.8075,554 David Ghesquiere 2018 Non-Equity Plan 187,500 2/6/20182013 Equity IncentivePlan 54,118 368,002 2/6/20182013 Equity IncentivePlan 20,0006.8075,554 (1) The amounts reported in this column represent the target amount of annual performance-based incentive bonus compensation that might have been paidto each named executive officer for 2018 performance. There are no threshold or maximum levels for the award. The actual payouts approved for 2018performance are shown in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” These awards are described infurther detail in the Compensation Discussion and Analysis in the section entitled “Non-Equity Incentive Plan Compensation & Bonus — 2018 Non-Equity Incentive Plan Payments.” The bonus payouts approved pursuant to the 2018 Non-Equity Plan will be paid during the first quarter of 2019.(2) The amounts in these columns represent restricted stock units and stock options granted and are described in further detail above in the “CompensationDiscussion and Analysis” and below in the “Outstanding Equity Awards at December 31, 2018” table. The per share exercise price of the stock options isequal to the closing price of a share of NanoString Technologies, Inc.'s stock on the date of grant.(3) The dollar amounts in this column reflect the aggregate grant date fair value of the awards granted in 2018. These amounts have been computed inaccordance with FASB ASC Topic 718. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-basedvesting conditions. For a discussion of valuation assumptions, see Note 2 and Note 11 of the Notes to Consolidated Financial Statements under Item 8 ofthis report. The option exercise price has not been deducted from the amounts indicated above. Regardless of the value placed on a stock option on thegrant date, the actual value of the option will depend on the market value of NanoString Technologies, Inc.'s common-115- Table of Contentsstock at such date in the future when the option is exercised. The proceeds to be paid to the individual following the exercise of the option do notinclude the option exercise price.(4) The amounts in this column represent the stock option awards granted in 2018.Outstanding Equity Awards at Fiscal Year-EndThe following table presents information concerning equity awards held by our NEOs at the end of 2018. Option Awards Stock Awards VestingCommencementDateNumber of Securities UnderlyingOption (#)OptionExercisePriceOptionExpirationDate Number ofShares orUnits ofStock ThatHave NotVested (#) MarketValue ofShares orUnits ofStock ThatHave NotVested NameExercisable Unexercisable R. Bradley GrayJune 25, 2010145,424(1) — $2.24June 29, 2020 — — March 1, 2012126,582(1) — 1.92February 28, 2022 — — January 10, 201361,309(1) — 6.72January 9, 2023 — — January 31, 201490,000(1) — 18.18January 30, 2024 — — February 9, 201595,836(2) 4,164(2) 12.77February 8, 2025 — — February 3, 2016— — — 10,418(3) $154,499(4) February 3, 201644,272(2) 18,228(2) 12.94February 2, 2026 — — February 6, 201727,500(2) 32,500(2) 18.80February 5, 2027 — — March 6, 2017—(2) — — 20,001(3) 296,615(4) February 6, 201812,500(2) 47,500(2) 6.80February 5, 2028 — — February 6, 2018— — — 30,000(3) 444,900(4) February 6, 2018— — — 132,941(3) 1,971,515(4) K. Thomas BaileyJanuary 16, 2018— 95,000(5) 8.16January 15, 2028 — — January 18, 2018— — — 35,000(6) 519,050(4) Mary Tedd AllenMarch 1, 201231,250(1) — 1.92February 28, 2022 — — January 10, 201310,000(1) — 6.72January 9, 2023 — — January 31, 201425,000(1) — 18.18January 30, 2024 — — February 9, 201519,167(2) 833(2) 12.77February 8, 2025 — — February 3, 2016— — — 2,000(3) 29,660(4) February 3, 20168,500(2) 3,500(2) 12.94February 2, 2026 — — February 6, 20177,333(2) 8,667(2) 18.80February 5, 2027 — — February 6, 2017— — — 5,334(3) 79,103(4) February 6, 20184,166(2) 15,834(2) 6.80February 5, 2028 — — February 6, 2018— — — 10,000(3) 148,300(4) February 6, 2018— — — 37,647(3) 595,952(4) Joseph M.BeechemApril 19, 201282,968(1) — 1.92April 18, 2022 — — January 10, 201324,999(1) — 6.72January 9, 2023 — — January 31, 201435,000(1) — 18.18January 30, 2024 — — February 9, 201543,126(2) 1,874(2) 12.77February 8, 2025 — — February 3, 2016— — — 4,168(3) 61,811(4) February 3, 201617,708(2) 7,292(2) 12.94February 2, 2026 — — February 6, 20179,166(2) 10,834(2) 18.80February 5, 2027 — — March 6, 2017— — — 6,667(3) 98,872(4) February 6, 20184,166(2) 15,834(2) 6.80February 5, 2028 — — February 6, 2018— — — 10,000(3) 148,300(4) February 6, 2018— — — 45,294(3) 671,710(4) David GhesquiereDecember 5, 201393,000(1) — 12.50December 4, 2023 — — January 31, 20144,000(1) — 18.18January 30, 2024 — — February 9, 201543,126(2) 1,874(2) 12.77February 8, 2025 — — February 3, 2016— — — 4,168(3) 61,811(4) -116- Table of Contents February 5, 201617,708(2) 7,292(2) 12.94February 4, 2026 — — November 10, 2016— — — 2,500(3) 37,075(4) November 10, 2016— — — 10,000(3) 148,300(4) November 11, 20167,812(2) 7,188(2) 22.71November 10, 2026 — — November 11, 2016— 20,000(2) 22.71November 10, 2026 — — February 6, 20179,166(2) 10,834(2) 18.80February 5, 2027 — — February 6, 2017— — — 6,667(3) 98,872(4) February 6, 20184,166(2) 15,834(2) 6.80February 5, 2028 — — February 6, 2018— — — 10,000(3) 148,300(4) February 6, 2018— — — 44,118(3) 654,270(4) (1) The options have fully vested.(2) Options vest in equal monthly installments from the vesting commencement date over four years. Notwithstanding the foregoing, if the named executiveofficer is terminated without cause or resigns for good reason (each as defined in the executive’s applicable stock option agreement), in each case,following a change in control (as defined under our 2013 Equity Incentive Plan), then 100% of the then-unvested shares will vest.(3) One third of the restricted stock units vest on the first market trading day following the first anniversary of vesting commencement date and one third ofthe restricted stock units vest annually on the first market trading day after each of the second and third anniversaries of the vesting commencement date.Notwithstanding the foregoing, if the named executive officer is terminated without cause or resigns for good reason (each as defined in the executive’sapplicable restricted stock unit agreement), in each case, following a change in control (as defined under our 2013 Equity Incentive Plan), then 100% ofthe then-unvested shares will vest.(4) The market value of unvested shares is calculated by multiplying the number of unvested shares by the closing market price of our common stock on TheNASDAQ Stock Market on December 31, 2018, the last trading day of the year, which was $14.83 per share.(5) Twenty-five percent of the options vest on the one year anniversary of the start date, and the remaining options will vest monthly over the next thirty-sixmonths in approximately equal monthly amounts. Notwithstanding the foregoing, if Mr. Bailey is terminated without cause or resigns for good reason(each as defined in the executive’s applicable stock option agreement), in each case, following a change in control (as defined under our 2018Inducement Equity Incentive Plan), then 100% of the then-unvested shares will vest.(6) The restricted stock units vest on the second anniversary of Mr. Bailey's start date. Notwithstanding the foregoing, if Mr. Bailey is terminated withoutcause or resigns for good reason (each as defined in the executive’s applicable restricted stock unit agreement), in each case, following a change incontrol (as defined under our 2018 Inducement Equity Incentive Plan), then 100% of the then-unvested shares will vest.-117- Table of ContentsOption Exercises and Stock VestedThe following table sets forth information regarding exercises of equity awards by our NEOs for the year ended December 31, 2018. Option Awards Stock AwardsNameNumber of SharesAcquired on Exercise(#) Value Realized onExercise Number of SharesAcquired onVesting (#) Value Realized onVestingR. Bradley Gray— $— 20,415 $135,181K. Thomas Bailey— — — —Mary Tedd Allen41,250 659,175 4,666 30,836Joseph M. Beechem— — 7,499 49,710David Ghesquiere— — 14,999 120,235Executive Employment ArrangementsEach NEO is an “at-will” employee. Employment agreements with our NEOs provide for one or more of the following: annual base salary, an annualcash incentive payment targeted at a percentage of the NEO’s base salary, initial grants of stock options and/or restricted stock units and participation in ourCompany-wide employee benefit plans. In addition, the employment agreements we have entered into with our NEOs provide for severance payments andbenefits as described below.The current base salary and target annual cash incentive as a percentage of each NEO’s base salary for 2019 is as follows:Name2019 BaseSalary Value Realized onExerciseR. Bradley Gray$600,000 85%K. Thomas Bailey415,000 50Mary Tedd Allen330,000 50Joseph M. Beechem395,000 50David Ghesquiere382,500 502018 Potential Payments upon Termination or Change in ControlWe have entered into employment agreements with our NEOs that contain severance and change in control provisions which require us to providespecific payments and benefits in connection with the termination of our NEOs’ employment in certain circumstances. If the event of our termination of theNEO’s employment other than for “cause” (as defined in each employment agreement and summarized below) (and that is not by reason of the NEO’s death ordisability), or due to the NEO’s resignation from employment with us for “good reason” (as defined in each employment agreement and summarized below),the NEO will receive continuing base salary payments for a period of six months (or in Mr. Gray’s case, 12 months). However, if such termination other thanfor “cause,” death or disability, or such resignation for “good reason,” in either case, occurs within 12 months following a “change in control” (as defined inour 2013 Equity Incentive Plan or, for Mr. Bailey, under our 2018 Inducement Equity Incentive Plan), the NEO instead will be entitled to the following:•a lump sum payment equal to 12 months (or in Mr. Gray’s case, 24 months) of his or her then-effective base salary;•100% (or in Mr. Gray’s case, 200%) of his or her target annual cash incentive payment. This will be calculated based on the completion of a fullcalendar year and at the then-effective target percentage times the then-effective base salary; and•reimbursement of premiums paid for continuation coverage under COBRA for the NEO and his or her eligible dependents for up to 12 months (or inMr. Gray’s case, 24 months).In order to receive the severance benefits detailed above, each NEO is obligated to execute a release of claims against us, provided that the releasebecomes enforceable and irrevocable not later than 60 days following such NEO’s termination date, and to continue to comply with the terms of certain non-solicitation and non-competition requirements under the NEO’s proprietary information and inventions agreement (and for Messrs. Gray and Ghesquiere andDrs. Beechem and Allen, certain other restricted covenants, such as non-disparagement requirements, contained in the employment agreement, and for Mr.-118- Table of ContentsBailey, any other obligations under his proprietary information and inventions agreement). Mr. Bailey’s release of claims agreement will contain certainrestrictive covenants, such as non-solicit provisions and mutual non-disparagement requirements.For each of Messrs. Gray and Ghesquiere and Drs. Beechem and Allen, the employment agreements provided “double trigger” acceleration ofvesting of their new hire equity awards in the event of a termination without cause or resignation for good reason, in either event that occurs after a change incontrol of the Company. However, each of these new hire awards have fully vested based on continued service to the Company over time. NEO equity awardsgenerally contain similar “double trigger” vesting acceleration provisions, as described below.We do not provide for any gross ups for any excise taxes that may be imposed by Section 4999 of the Internal Revenue Code. Mr. Bailey’semployment agreement provides that, in the event that any payment to Mr. Bailey is subject to the excise tax imposed by Section 4999 of the InternalRevenue Code (as a result of a payment being classified as a “parachute payment” under Section 280G of the Internal Revenue Code), Mr. Bailey will beentitled to receive such payment as would entitle him to receive the greatest after-tax benefit of either the full payment or a lesser payment which wouldresult in no portion of such severance benefits being subject to excise tax.For purposes of the 2013 Equity Incentive Plan, 2018 Inducement Equity Incentive Plan, and change in control benefits contained in the NEOs’employment agreements, “change in control” means generally means:•the date that any one person, or more than one person acting as a group, acquires ownership of our capital stock that, together with the stock held bysuch person or such group, constitutes more than 50% of the total voting power of our capital stock;•the date that a majority of members of the board is replaced during any 12 month period by directors whose appointment or election is not endorsedby a majority of the members of the board prior to such date; or•the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12 month period ending on the date ofthe most recent acquisition by such person or group) assets from us that have a total gross fair market value equal to or more than 50% of the totalgross fair market value of all of our assets immediately prior to such acquisition or acquisitions.For purposes of each of the employment agreements with our NEOs (other than Mr. Bailey), “cause” means generally:•a violation of one of our material written policies that continues uncured for 30 days after notification by us;•an act of dishonesty in connection with such NEO’s responsibilities as our employee;•such NEO’s conviction of, or plea of nolo contendere to, a felony;•such NEO’s gross misconduct;•such NEO’s failure or refusal to follow the lawful and proper directives of the board of directors which are within his or her duties that are notcorrected within 30 days after written notice; or•such NEO’s material breach of his or her proprietary information agreement or the non-disparagement provision of his or her employment agreement.For purposes of the employment agreement with Mr. Bailey, “cause” means generally:•his failure to substantially perform his duties and responsibilities (other than a failure from his disability) after receiving written notice of the allegedfailure and 10 days’ opportunity to cure;•his commission of any act of fraud, embezzlement, dishonesty or misrepresentation;•his violation of any federal or state law or regulation applicable to our business or the business of our affiliates;•his breach of any confidentiality agreement or invention assignment agreement with us (or any affiliate of our affiliates);•his being convicted of, or entering a plea of nolo contendere to, a felony or committing any act of moral turpitude, dishonesty or fraud against, orthe misappropriation of material property belonging to, us or our affiliates; or•his failure to provide us with proof of his authorization to work in the U.S. (which has been provided)For purposes of each of the employment agreements with our NEOs (other than Mr. Bailey), “good reason” means generally any of the following,without such NEO’s written consent:•for Mr. Gray, a material and permanent diminution in his duties, authority or responsibilities causing such position to be of materially reducedstature or responsibility including a requirement that he is required to report to a corporate-119- Table of Contentsofficer or employee instead of reporting directly to our board of directors or, if we become a subsidiary of another corporation, the board of directorsof our parent company;•for Drs. Beechem and Allen and Mr. Ghesquiere, a material, adverse and permanent diminution in such NEO’s position, causing such position to beof materially reduced stature or responsibility, provided that the continuance of his or her duties and responsibilities at the subsidiary or divisionallevel following a change in control, rather than at the parent, combined or surviving company level following the change in control, will not bedeemed good reason within the meaning of this clause;•for Mr. Gray, our material breach of any provision of his employment agreement;•for Drs. Beechem and Allen and Mr. Ghesquiere, our material breach of such NEO’s employment agreement that continues uncured for 30 daysfollowing notice by him or her;•a refusal by such NEO to relocate to a facility or location more than 40 miles (or, for Mr. Gray, more than 50 miles) from our then-current location; or•for Drs. Beechem and Allen, and Mr. Ghesquiere, a material reduction in the kind and level of employee benefits (other than base salary) whichresults in a substantial reduction of the NEO’s overall benefits package (other than a reduction applicable to officers of the Company generally).To qualify as a resignation for good reason, the NEO must provide notice to us within 30 days (90 days for Mr. Gray) after the initial existence of thecondition or event described above and allow us to cure the condition or event within 30 days following our receipt of the notice, and if not cured, the NEOthereafter elects to terminate his or her employment voluntarily within 30 days after the expiration of the period for correcting such condition or event. Inaddition, any change in the NEO’s job function or responsibilities in order to accommodate a disability under the Americans with Disabilities Act, the FamilyMedical Leave Act or any analogous statute or law will not constitute a basis for the NEO to resign for good reason.For purposes of the employment agreement with Mr. Bailey, “good reason” means generally his resignation within 30 days after the expiration ofthe cure period described below following the occurrence of any of the following, without his express written consent:•the assignment to him of any duties or the reduction of his duties, either of which results in a material diminution in his position or responsibilitieswith us, provided that the continuance of his duties and responsibilities at the subsidiary or divisional level following a change in control, ratherthan at the parent, combined, or surviving company level following such change in control will not be deemed good reason;•a material reduction in his base salary;•a material change in the geographic location at which he must perform services (for purposes of the foregoing, his relocation to a facility or alocation less than 25 miles from his then-present location will not be considered a material change in geographic location); or•our material breach of any material provision of his employment agreement.Mr. Bailey’s resignation will not be deemed to be for good reason unless he has first provided us with written notice of the acts or omissionsconstituting the grounds for good reason within 90 days of the initial existence of the grounds for good reason and a reasonable cure period of not less than30 days following the date we receive such notice, and such condition has not been cured during such period.NEO Equity AwardsThe equity awards granted to our NEOs generally include “double trigger” acceleration provisions. Under these provisions, if the NEO is terminatedwithout “cause” or resigns for “good reason,” in each case, following a “change in control” (as defined under the applicable equity plan under which theaward was granted), the equity award will vest in full immediately prior to such termination, provided that with respect to Mr. Bailey’s new hire stock optionsand RSUs, in order to receive this acceleration of vesting, his termination without cause or for good reason must occur within 12 months following a changein control. With respect to the above-described equity acceleration provisions, the definitions of “cause” and “good reason” are substantially the same as thoseset forth in Mr. Bailey’s employment agreement and described above, except that the “cause” definition does not include failure to provide proof ofauthorization to work in the U.S., and the good reason definition is triggered by a material breach of the applicable equity award agreement, rather than of theemployment agreement.2013 Equity Incentive Plan and 2018 Inducement Equity Incentive PlanOur 2013 Equity Incentive Plan, or the 2013 Plan, and our 2018 Inducement Equity Incentive Plan, each provide that in the event of a merger or“change in control,” as defined under the applicable plan, each outstanding award will be treated as the administrator determines, except that if a successorcorporation or its parent or subsidiary does not assume or substitute an-120- Table of Contentsequivalent award for any outstanding award, then such award will fully vest, all restrictions on such award will lapse, all performance goals or other vestingcriteria applicable to such award will be deemed achieved at 100% of target levels, and such award will become fully exercisable, if applicable, for a specifiedperiod prior to the transaction. The award will then terminate upon the expiration of the specified period of time. Under our 2013 Plan, if the service of an outside director is terminated on or following a change in control, other than pursuant to a voluntaryresignation not at the request of the acquirer, his or her outstanding stock options and stock appreciation rights, if any, will vest fully and becomeimmediately exercisable, all restrictions on his or her restricted stock and restricted stock units will lapse, and all performance goals or other vestingrequirements for his or her awards with performance-based vesting will be deemed achieved at 100% of target levels, and all other terms and conditions met.The following table describes the payments and benefits that each of our NEOs would be entitled to receive in thecircumstances described above under the plans and arrangements with our NEOs described above. Payments and benefits areestimated assuming that the triggering event took place on December 31, 2018, and the price per share of our common stockis the closing price on The Nasdaq Global Market as of that date. EmploymentTermination WithoutCause or For GoodReason and NoChange in Control Employment Termination Without Cause or For Good Reason Within 12months Following a Change in Control Employment Termination WithoutCause or For Good Reason More than12 months after a Change in ControlNameSeverance Payments (1) SeverancePayments (2) Annual CashIncentivePayment (3) Equity Acceleration(4) Health CareBenefits (5) SeverancePayments (1) Equity Acceleration(4)R. Bradley Gray$565,000 $1,130,000 $960,500 $3,291,983 $48,595 $565,000 $3,291,983K. Thomas Bailey200,000 400,000 200,000 1,152,700 21,600 200,000 —Mary Tedd Allen160,000 320,000 144,000 988,493 7,063 160,000 988,493Joseph M. Beechem192,500 385,000 192,500 1,125,482 21,600 192,500 1,125,482David Ghesquiere187,500 375,000 187,500 1,293,417 15,003 187,500 1,293,417(1) The amount shown in this column for each NEO consists of continuing payments of the NEO's base salary as of December 31, 2018, for a period of sixmonths (or in Mr. Gray's case, twelve months).(2) The amount shown in this column for each NEO consists of a lump sum payment equal to twelve months (or in Mr. Gray's case, twenty-four months) ofthe NEO’s base salary as of December 31, 2018.(3) The amount shown in this column for each NEO consists of a lump sum payment equal to 100% (or in Mr. Gray's case, 200%) of the NEO’s target annualcash incentive payment, which is calculated based on the completion of a full calendar year and the then-effective target percentage times the then-effective base salary.(4) The amount shown in this column for each NEO consists of the value of the portions of the unvested in-the-money options and restricted stock unitawards held by the NEO for which vesting is accelerated upon the triggering event. The value of each such portion of such equity awards is calculated bymultiplying (x) the closing stock price of our common stock of $14.83 per share on December 31, 2018, as reported on the Nasdaq Global Market (and inthe case of options, less the exercise price per share of the option) by (y) the number of shares covered by such portion of the equity award.(5) The amount shown in this column for each NEO consists of the estimated cost of reimbursement of premiums paid for continuation coverage underCOBRA for the NEO and his or her eligible dependents for up to 12 months (or in Mr. Gray’s case, 24 months).Risk Analysis of our Compensation PlansOur compensation committee reviews and discusses with management the risks arising from our executive compensation philosophy and practicesapplicable to all employees to determine whether they encourage excessive risk-taking and to evaluate compensation policies and practices that couldmitigate such risks. In addition, our compensation committee engaged Arnosti Consulting in 2017 and 2018 and then Radford in at the end of 2018 toindependently review our executive compensation program. Based on those reviews, the compensation committee structures our executive compensationprogram to encourage our NEOs to focus on both long-term and short-term success. We do not believe that our executive compensation program creates risksthat are reasonably likely to have a material adverse effect on us.-121- Table of ContentsItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe following table sets forth certain information with respect to the beneficial ownership of our common stock at January 31, 2019 for: •each person who we know beneficially owns more than 5% of our common stock;•each of our directors;•each of our named executive officers; and•all of our directors and executive officers as a group.The percentage of beneficial ownership shown in the table is based upon 31,060,827 shares outstanding as of January 31, 2019.Information with respect to beneficial ownership has been furnished by each director, executive officer or beneficial owner of more than 5% of ourcommon stock. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership ofsecurities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules take into accountshares of common stock issuable pursuant to the exercise of stock options or warrants that are either immediately exercisable or exercisable on or before the60th day after January 31, 2019, as well as restricted stock units that vest on or before such date. Certain of the options granted to our named executiveofficers may be exercised prior to the vesting of the underlying shares. We refer to such options as being “early exercisable.” Shares of common stock issuedupon early exercise are subject to our right to repurchase such shares until such shares have vested. These shares are deemed to be outstanding andbeneficially owned by the person holding those options or a warrant for the purpose of computing the percentage ownership of that person, but they are nottreated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entitiesidentified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicablecommunity property laws.Except as otherwise noted below, the address for each person or entity listed in the table is c/o NanoString Technologies, Inc., 530 Fairview Avenue,N., Seattle, Washington 98109.Name of Beneficial OwnerShares Percentage5% Stockholders: Entities affiliated with Clarus Funds (1)4,036,025 13.0%Cadian Capital Management, LP (2)2,301,269 7.4%Entities affiliated with Levin Capital Strategies (3)2,228,595 7.2%Blackrock, Inc. (4)1,586,937 5.1%Directors and Named Executive Officers: R. Bradley Gray (5)781,654 2.5%K. Thomas Bailey (6)27,708 *Mary Tedd Allen, Ph.D. (7)158,586 *Joseph M. Beechem, Ph.D. (8)266,701 *David W. Ghesquiere (9)242,441 *William D. Young (10)155,178 *Elisha Finney (11)26,075 *Nicholas Galakatos, Ph.D. (12)48,779 *Robert Hershberg, M.D., Ph.D. (13)41,545 *Kirk Malloy, Ph.D. (14)34,964 *Gregory Norden (15)69,185 *Charles P. Waite (16)50,486 *All directors and executive officers as a group (13 persons) (17)1,941,909 5.9%(*) Less than one percent.(1) The number of shares owned set forth above is based solely on the most recently available Schedule D/A filed with the SEC on January 11, 2019.Consists of 4,036,025 shares held directly by Clarus Lifesciences II, L.P. (“Clarus”). Clarus Ventures II GP, L.P (“Clarus GP”) is the general partner ofClarus. Blackstone Clarus II L.L.C. is the general partner of Clarus GP. The sole member of Blackstone Clarus II L.L.C. is Blackstone Holdings II L.P. Thegeneral partner of Blackstone Holdings II L.P. is Blackstone Holdings I/II GP Inc. The controlling stockholder of Blackstone Holdings I/II-122- Table of ContentsGP Inc. is The Blackstone Group L.P. The general partner of The Blackstone Group L.P. is Blackstone Group Management L.L.C. Blackstone GroupManagement L.L.C. is wholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of suchentities and Mr. Schwarzman may be deemed to beneficially own the shares beneficially owned by Clarus, but each (other than Clarus) disclaimsbeneficial ownership of such shares. The address for each of Clarus and Clarus GP is c/o Clarus Ventures LLC, 101 Main Street, Suite 1210, Cambridge,Massachusetts 02142. The address for each of the other Blackstone entities and Mr. Schwarzman is c/o The Blackstone Group L.P., 345 Park Avenue,New York, New York 10154.(2) The number of shares owned set forth above is based solely on the most recently available Schedule 13G/A filed with the SEC on February 13, 2018. Allsecurities reported in the Schedule 13G are directly owned by advisory clients of Cadian Capital Management, LP (“Cadian”). None of the advisoryclients individually owns more than 5% of the common stock of NanoString Technologies, Inc. Eric Bannasch may be deemed to beneficially own theshares held of record by Cadian. The address of each of the foregoing persons and entities is 535 Madison Avenue, 36th Floor, New York, NY 10022.(3) The number of shares owned set forth above is based solely on the most recently available Schedule 13G filed with the SEC on January 24, 2018.Consists of 1,050,851 shares held directly by Levin Capital Strategies, L.P., and 1,177,744 shares held directly by Levin Capital Strategies G.P., LLC.The address of Levin Capital Strategies is 595 Madison Avenue, 17th Floor, New York, New York 10022.(4) Based solely on the most recently available Schedule 13G filed with the SEC on January 25, 2018. The address of the foregoing persons and entities is55 East 52nd Street, New York, New York 10055.(5) Includes 87,931 shares held, 74,730 shares attributable to restricted stock units that will vest within 60 days of January 31, 2019 and options to purchase618,993 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as of such date.(6) Consists of options to purchase 27,708 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as of such date.(7) Includes 28,789 shares held, 20,548 shares attributable to restricted stock units that will vest within 60 days of January 31, 2019 and options to purchase109,249 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as of such date.(8) Includes 17,699 shares held, 25,932 shares attributable to restricted stock units that will vest within 60 days of January 31, 2019 and options to purchase223,070 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as of such date.(9) Includes 31,048 shares held, 25,540 shares attributable to restricted stock units that will vest within 60 days of January 31, 2019 and options to purchase185,853 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as of such date.(10) Includes 30,000 shares held, and options to purchase 125,178 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as ofsuch date.(11) Consists of options to purchase 26,075 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as of such date.(12) Consists of options to purchase 48,779 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as of such date. Inconnection with The Blackstone Group's acquisition of Clarus Ventures in October 2018, voting and dispositive control of the shares held by ClarusVentures is as described in footnote 1 above.(13) Consists of options to purchase 41,545 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as of such date.(14) Consists of options to purchase 34,964 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as of such date.(15) Includes 10,000 shares held and options to purchase 59,185 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as ofsuch date.(16) Includes 1,707 shares held and options to purchase 48,779 shares that are exercisable within 60 days of January 31, 2019, all of which are vested as ofsuch date.(17) Includes 207,820 shares held, 157,004 shares attributable to restricted stock units that will vest within 60 days of January 31, 2019 and options topurchase 1,577,085 shares that are exercisable within 60 days of January 31, 2019.-123- Table of ContentsItem 13. Certain Relationships and Related Transactions, and Director IndependenceRelated Person Transaction PolicyWe have adopted a formal, written policy that our executive officers, directors (including director nominees), holders of more than 5% of any class ofour voting securities, and any member of the immediate family of or any entities affiliated with any of the foregoing persons, are not permitted to enter into arelated person transaction with us without the prior approval or, in the case of pending or ongoing related person transactions, ratification of our auditcommittee. For purposes of our policy, a related person transaction is a transaction, arrangement or relationship where we were, are or will be involved and inwhich a related person had, has or will have a direct or indirect material interest, other than transactions available to all of our United States employees.Certain transactions with related parties, however, are excluded from the definition of a related person transaction including, but not limited to:(1) transaction with another company at which a related person’s only relationship is as an employee (excluding as an executive officer or a director) orbeneficial owner of less than 5% of that company’s shares; (2) transaction where the related person’s interest arises solely from the ownership of our equitysecurities and all holders of our common stock received the same benefit on a pro rata basis (e.g. dividends); (3) transactions available to all employeesgenerally; (4) transactions involving the purchase or sale of products or services in the ordinary course of business, not exceeding $50,000; and(5) transactions in which the related person’s interest derives solely from his or her service as a director, trustee or officer (or similar position) of a not-for-profit organization or charity that receives donations from the Company.No member of the audit committee may participate in any review, consideration or approval of any related person transaction where such member orany of his or her immediate family members, or any entities with which the audit committee member is affiliated, is the related person. In approving orrejecting the proposed agreement, our audit committee shall consider the relevant facts and circumstances available and deemed relevant to the auditcommittee, including, but not limited to: (1) the benefits and perceived benefits, or lack thereof, to our company; (2) the impact on a director’s independencein the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executiveofficer; (3) the materiality and character of the related person’s direct and indirect interest; (4) the actual or apparent conflict of interest of the related person;(5) the availability of other sources for comparable products or services; (6) the opportunity costs of alternative transactions; (7) the terms of the transaction;(8) the commercial reasonableness of the terms of the proposed transaction; and (9) terms available to unrelated third parties or to employees under the sameor similar circumstances. In reviewing proposed related person transactions, the audit committee will only approve or ratify related person transactions thatare in, or not inconsistent with, the best interests of our company and stockholders, as the audit committee determines in good faith.In addition to the arrangements described below, we have also entered into the arrangements which are described where required in the sectioncaptioned “Executive Compensation — Executive Employment Arrangements”.Indebtedness of Directors and OfficersNone of our current or former directors or executive officers is indebted to us, nor are any of these individuals indebted to another entity whichindebtedness is the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by us.Other TransactionsWe have entered into separate indemnification agreements with each of our directors and certain of our officers, including our named executiveofficers.We have granted stock options and restricted stock units to our named executive officers, other executive officers and our non-employee directors.Certain of our executive officers are participants in our 2013 Employee Stock Purchase Plan.Director IndependenceOur board of directors has undertaken a review of its composition, the composition of its committees and the independence of directors andconsidered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying outhis or her responsibilities. Based upon information requested from and provided by each director concerning his or her background, employment andaffiliations, including family relationships, the board of directors has determined that none of Messrs. Young, Waite and Norden, Ms. Finney, and Drs.Galakatos, Hershberg, and Malloy, representing seven of our eight directors, has a relationship which would interfere with the exercise of independentjudgment in carrying out the responsibilities of a director and that each of these directors is an “independent director” as defined under the rules of TheNasdaq Stock Market. The board of directors also determined that Messrs. Norden-124- Table of Contents(chairman), Waite and Young, and Ms. Finney, who comprise our audit committee, Drs. Galakatos (chairman) and Malloy and Mr. Norden, who currentlycomprise our compensation committee, and Messrs. Waite (chairman) and Young and Drs. Galakatos and Hershberg, who comprise our nominating andcorporate governance committee, satisfy the independence standards for those committees established by applicable SEC rules and the rules of The NasdaqStock Market.Item 14. Principal Accountant Fees and ServicesThe following table summarizes the fees of PricewaterhouseCoopers LLP, our independent registered public accounting firm, for 2018 and 2017. Year Ended December 31,Fee Category2018 2017Audit fees (1)$2,510,481 $1,113,568Audit-related fees— —Tax fees— —All other fees (2)62,771 161,819Total fees$2,573,252 $1,275,387 (1) Audit fees relate to professional services provided in connection with the audit of our annual consolidated financial statements, review of our quarterlyconsolidated financial statements and our public offerings. In 2018, audit fees also relate to the audit of internal control over financial reporting.(2) All other fees include any fees billed that are not audit, audit related, or tax fees. In 2018 and 2017, these fees related primarily to professional servicesprovided in connection with the review of internal controls, processes and related systems over financial reporting designed by management, in additionto fees related to accounting research software.-125- Table of ContentsPART IV Item 15. Exhibits, Financial Statement Schedules(a) The following documents are filed as part of this report:(1) Financial Statements — The financial statements filed as part of this Annual Report on Form 10-K are listed on the Index to ConsolidatedFinancial Statements in Item 8.(2) Financial Statement Schedules — The financial statement schedules have been omitted because the information required to be set forth therein isnot applicable or is shown in the financial statements or the notes thereto.(3) Exhibits — The exhibits required by Item 601 of Regulation S-K are listed in paragraph (b) below.(b) ExhibitsThe exhibits listed on the Exhibit Index (following the Signatures section of this report) are filed herewith or are incorporated by reference toexhibits previously filed with the SEC.Exhibit Incorporated by ReferenceNumber Description Form Filing Date Number Filed Herewith3.1 Amended and Restated Certificate of Incorporation of theRegistrant. 10-Q August 8, 2013 3.1 3.2 Amended and Restated Bylaws of the Registrant. 10-Q August 8, 2013 3.2 4.1 Specimen Common Stock Certificate of the Registrant. S-1/A June 13, 2013 4.1 4.2 Warrant to Purchase Common Stock issued to Lam ResearchCorporation. 8-K August 8, 2017 4.1 4.3 Form of Warrant to Purchase Common Stock dated as of October12, 2018 is issued in connection with Amended and RestatedTerm Loan Agreement dated as of October 12, 2018 among theRegistrant and certain of the Registrant's subsidiaries and CRGPartners III L.P., CRG Partners III-Parallel Fund “A” L.P., CRGPartners III Parallel Fund “B” (Cayman) L.P., CRG Partners III(Cayman) LEV AIV L.P. and CRG Partners III (Cayman) UNLEVAIV I L.P., and CRG Servicing LLC. X10.1 Form of Director and Executive Officer IndemnificationAgreement. S-1/A June 13, 2013 10.1 10.2+ 2004 Stock Option Plan, as amended. S-1 May 20, 2013 10.2 10.3+ Form of Notice of Stock Option Grant and Stock OptionAgreement under the 2004 Stock Option Plan, as amended. S-1 May 20, 2013 10.3 10.4+ Form of Notice of Stock Option Grant and Stock OptionAgreement permitting early exercise under the 2004 StockOption Plan, as amended. S-1 May 20, 2013 10.4 10.5+ 2013 Equity Incentive Plan. S-1/A June 13, 2013 10.5 10.6+ Form of Notice of Stock Option Grant and Stock OptionAgreement under the 2013 Equity Incentive Plan. S-1/A June 13, 2013 10.6 10.7+ Form of Notice of Restricted Stock Grant and Restricted StockAgreement under the 2013 Equity Incentive Plan. S-1/A June 13, 2013 10.7 10.8+ Form of Notice of Restricted Stock Unit Grant and RestrictedStock Unit Agreement under the 2013 Equity Incentive Plan. S-1/A June 13, 2013 10.8 10.9+ 2013 Employee Stock Purchase Plan. S-1/A June 13, 2013 10.9 10.10+ 2018 Inducement Equity Incentive Plan and related formagreements. 8-K January 16, 2018 10.1 -126- Exhibit Incorporated by ReferenceNumber Description Form Filing Date Exhibit Filed Herewith10.11+ Employment Agreement, dated May 24, 2010, between theRegistrant and R. Bradley Gray. S-1 May 20, 2013 10.8 10.12+ Amendment to Employment Agreement, dated August 4, 2017,between the Registrant and R. Bradley Gray. 10-Q August 9, 2017 10.1 10.13+ Employment Agreement, dated November 20, 2013, between theRegistrant and David W. Ghesquiere. 10-K March 11, 2016 10.12 10.14+ Amendment to Employment Agreement, dated August 4, 2017,between the Registrant and David W. Ghesquiere. 10-Q August 9, 2017 10.3 10.15+ Employment Agreement, dated March 31, 2012, between theRegistrant and Joseph Beechem. S-1 January 13, 2014 10.12 10.16+ Amendment to Employment Agreement, dated December 27,2012, between the Registrant and Joseph Beechem. 10-K March 7, 2018 10.17 10.17+ Amendment to Employment Agreement, dated November 7,2017, between the Registrant and Joseph Beechem. 10-K March 7, 2018 10.18 10.18+ Employment Agreement, dated October 17, 2017, between theRegistrant and J. Chad Brown. 10-K March 7, 2018 10.19 10.19+ Employment Agreement, dated January 16, 2018, between theRegistrant and K. Thomas Bailey. 10-K March 7, 2018 10.20 10.20+ Employment Agreement, dated June 8, 2009, between theRegistrant and Mary Tedd Allen X10.21+ Amendment to Employment Agreement, dated December 28,2012, between the Registrant and Mary Tedd Allen. X10.22+ Amendment to Employment Agreement, dated October 23, 2017,between the Registrant and Mary Tedd Allen. X10.23 Lease between the Registrant and BMR-530 Fairview AvenueLLC, dated October 19, 2007, as amended through December 22,2014 (including Amendment No. 1 through Amendment No. 7). 10-K March 13, 2015 10.14 10.24 Amendment No. 8 to Lease between the Registrant and BMR-530Fairview Avenue LLC, dated February 27, 2015. 10-K March 11, 2016 10.13 10.25 Lease between the Registrant and BMR-500 Fairview AvenueLLC, dated December 22, 2014. 10-K March 13, 2015 10.15 10.26 Amendment No. 1 to Lease between the Registrant and BMR-500Fairview Avenue LLC, dated June 27, 2016. 10-Q August 4, 2016 10.1 10.27 Office Lease Agreement between the Registrant and Blume RoyBuilding LLC, dated December 26, 2013, as amended throughNovember 18, 2014. 10-K March 13, 2015 10.16 10.28 Amendment No. 2 to Office Lease Agreement between theRegistrant and Blume Roy Building LLC, dated February 1,2016. 10-Q May 6, 2016 10.1 10.29† Amended and Restated Term Loan Agreement dated as ofOctober 12, 2018 among the Registrant and certain of theRegistrant's subsidiaries and CRG Partners III L.P., CRG PartnersIII-Parallel Fund “A” L.P., CRG Partners III Parallel Fund “B”(Cayman) L.P., CRG Partners III (Cayman) LEV AIV L.P. andCRG Partners III (Cayman) UNLEV AIV I L.P., and CRGServicing LLC. X-127- Exhibit Incorporated by ReferenceNumber Description Form Filing Date Exhibit Filed Herewith10.30† Exclusive License Agreement, dated February 4, 2004, betweenthe Registrant and The Institute for Systems Biology. S-1 May 20, 2013 10.19 10.31† Amendment No. 1 to Exclusive License Agreement, datedFebruary 5, 2007, between the Registrant and The Institute forSystems Biology. S-1 May 20, 2013 10.20 10.32 Amendment No. 2 to Exclusive License Agreement, dated May17, 2007, between the Registrant and The Institute for SystemsBiology. S-1 May 20, 2013 10.21 10.33† Amended and Restated Exclusive License Agreement, effectiveJuly 7, 2010, between the Registrant and Bioclassifier, LLC. S-1 May 20, 2013 10.22 10.34 First Amendment to Amended and Restated Exclusive LicenseAgreement between the Company and Bioclassifier, LLC, datedMarch 31, 2015. 10-Q May 11, 2015 10.1 10.35 Amendment No. 2 to Amended and Restated Exclusive LicenseAgreement between the Company and Bioclassifier, LLC, datedJune 24, 2016. 10-Q August 4, 2016 10.2 10.36† Third Amendment to Amended and Restated Exclusive LicenseAgreement between the Company and Bioclassifier, LLC, datedJuly 18, 2018. 10-Q November 8, 2018 10.1 10.37† Collaboration Agreement, dated August 4, 2017, between theRegistrant and Lam Research Corporation. 10-Q November 8, 2017 10.1 10.38 Sales Agreement, dated as of January 5, 2018 betweenNanoString Technologies, Inc. and Cowen and Company, LLC. 10-K March 7, 2018 1.1 10.39† Amended and Restated Loan and Security Agreement, dated as ofNovember 16, 2018, by and between NanoString Technologies,Inc. and Silicon Valley Bank. X21.1 List of subsidiaries of the Registrant. 10-K March 7, 2018 21.1 23.1 Consent of PricewaterhouseCoopers LLP, IndependentRegistered Public Accounting Firm. X24.1 Powers of Attorney (contained on signature page). X31.1 Certification of Principal Executive Officer Required UnderRules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of1934, as amended. X31.2 Certification of Principal Financial Officer Required UnderRules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of1934, as amended. X32.1 Certification of Principal Executive Officer Required UnderRule 13a-14(b) of the Securities Exchange Act of 1934, asamended, and 18 U.S.C. §1350. X32.2 Certification of Principal Financial Officer Required UnderRule 13a-14(b) of the Securities Exchange Act of 1934, asamended, and 18 U.S.C. §1350. X101.INS XBRL Instance Document. X101.SCH XBRL Taxonomy Extension Schema Document. X101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. X-128- Exhibit Incorporated by ReferenceNumber Description Form Filing Date Number Filed Herewith101.DEF XBRL Taxonomy Extension Definition Linkbase Document. X101.LAB XBRL Taxonomy Extension Label Linkbase Document X101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. X+Indicates a management contract or compensatory plan.†Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securitiesand Exchange Commission.Item 16. Form 10-K SummaryNot applicable.-129- SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized.Dated: March 11, 2019NANOSTRING TECHNOLOGIES, INC. By:/s/ R. Bradley Gray R. Bradley Gray President and Chief Executive OfficerPOWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints R. Bradley Gray and K.Thomas Bailey, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawfulattorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in eachcapacity stated below, and to file, any and all documents in connection therewith, with the Securities and Exchange Commission, granting unto saidattorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that saidattorneys-in-fact and agents or any of them or their and his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.Pursuant to the requirements of the Securities Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf ofthe registrant and in the capacities and on the dates indicated.Signature Title Date /s/ R. Bradley Gray President, Chief Executive Officer and Director (PrincipalExecutive Officer) March 11, 2019R. Bradley Gray /s/ K. Thomas Bailey Chief Financial Officer (Principal Accounting and FinancialOfficer) March 11, 2019K. Thomas Bailey /s/ William D. Young Chairman of the Board of Directors March 11, 2019William D. Young /s/ Elisha W. Finney Director March 11, 2019Elisha W. Finney /s/ Nicholas Galakatos Director March 11, 2019Nicholas Galakatos /s/ Robert M. Hershberg Director March 11, 2019Robert M. Hershberg /s/ Kirk D. Malloy Director March 11, 2019Kirk D. Malloy /s/ Gregory Norden Director March 11, 2019Gregory Norden /s/ Charles P. Waite Director March 11, 2019Charles P. Waite -130- Exhibit 4.3THE OFFER AND SALE OF THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OFANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD,PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR,IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCHOFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.WARRANT TO PURCHASE STOCKCompany:NANOSTRING TECHNOLOGIES, INC., a Delaware corporationNumber of Shares:[ ]Type/Series of Stock:Common StockWarrant Price:$21.12 per shareIssue Date:October 12, 2018Expiration Date:Seventh Anniversary of the date of original issuanceCredit Facility:This Warrant to Purchase Stock (“Warrant”) is issued in connection with that certain Amended andRestated Term Loan Agreement of even date herewith (as modified, amended and/or restated from timeto time, the “Loan Agreement”), among Company, as borrower, the subsidiary guarantors party thereto,[ ] (“CRG”) and the other lenders party thereto and CRG Servicing LLC, a Delaware limited liabilitycompany, as administrative agent and collateral agent (“Agent”).THIS WARRANT CERTIFIES THAT, for good and valuable consideration, CRG (together with any successor or permittedassignee or transferee of this Warrant or of any shares issued upon exercise hereof, “Holder”) is entitled to purchase the number offully paid and non-assessable shares (the “Shares”) of the above-stated Type/Series of Stock (the “Class”) of the above-namedcompany (the “Company”) at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of thisWarrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.SECTION 1.EXERCISE. 1.1 Method of Exercise. Holder may at any time and from time to time exercise this Warrant, in whole or in part, bydelivering to the Company in accordance with the provisions of Section 5.5 the original of this Warrant together with a duly executedNotice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to acashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or otherform of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.1.2 Cashless Exercise. On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in themanner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect toreceive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised. Thereupon, theCompany shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:X = Y(A-B)/Awhere:X = the number of Shares to be issued to the Holder;Y = the number of Shares with respect to which this Warrant is being exercised (inclusive of theShares surrendered to the Company in payment of the aggregate Warrant Price);A = the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; andB = the Warrant Price.1.3 Fair Market Value. If the Company’s common stock is then traded or quoted on a nationally recognized securitiesexchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”), the fair market value of a Share shall be thearithmetic average of the closing price of a share of common stock reported for the 30 consecutive Trading Days ending on the dateimmediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company. If theCompany’s common stock is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair marketvalue of a Share in its reasonable good faith judgment.1.4 Delivery of Certificate and New Warrant. Within a reasonable time after Holder exercises this Warrant in themanner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate or establish a book entry positionrepresenting the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, anew warrant of like tenor representing the Shares not so acquired.-2- 1.5 Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft,destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonablysatisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Companyfor cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant oflike tenor and amount.1.6 Treatment of Warrant Upon Acquisition of Company.(a) Acquisition. For the purpose of this Warrant, “Acquisition” means any transaction or series of relatedtransactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company;(ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effectedexclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company intheir capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (orthe surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, ifsuch Company stockholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as ofimmediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any saleor other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstandingcombined voting power.(b) Treatment of Warrant at Acquisition. In the event of an Acquisition in which the consideration to bereceived by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash andMarketable Securities (a “Cash/Public Acquisition”), either (i) Holder shall exercise this Warrant pursuant to Section 1.1 and/or 1.2 andsuch exercise will be deemed effective immediately prior to and contingent upon the consummation of such Acquisition or (ii) ifHolder elects not to exercise the Warrant, this Warrant will expire immediately prior to the consummation of such Acquisition.(c) The Company shall provide Holder with written notice relating to the Cash/Public Acquisition (togetherwith such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with suchcontemplated Cash/Public Acquisition giving rise to such notice), which is to be delivered to Holder not less than five (5) BusinessDays prior to the closing of the proposed Cash/Public Acquisition. In the event the Company does not provide such notice, then if,immediately prior to the Cash/Public Acquisition, the fair market value of one Share (or other security issuable upon the exercisehereof) as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date, then thisWarrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or suchother securities) for which it shall not previously have been exercised, and the Company shall promptly notify the Holder of thenumber of Shares (or such other securities) issued upon such exercise to the Holder and Holder shall be deemed to have restated eachof the representations and warranties in Section 4 of the Warrant as the date thereof.-3- (d) Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the acquiring,surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the samesecurities and/or other property as would have been delivered for the Shares issuable upon exercise of the unexercised portion of thisWarrant as if such Warrant was exercised immediately prior to the closing of the Acquisition such that the Shares were outstanding onand as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of thisWarrant.(e) As used in this Warrant, “Marketable Securities” means securities meeting all of the followingrequirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other informationunder the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holderin connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in a TradingMarket, and (iii) Holder would be able to publicly re-sell, within six (6) months following the closing of such Acquisition, all of theissuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in fullon or prior to the closing of such Acquisition.SECTION 2.ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend or distribution on the outstanding sharesof the Class payable in common stock or other securities or property (other than cash), then upon exercise of this Warrant, for eachShare acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property whichHolder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If theCompany subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number ofShares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If theoutstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, theWarrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.2.2 Reclassification, Exchange, Combinations or Substitution. Upon any event whereby all of the outstanding sharesof the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different classand/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series ofCompany securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event,and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of thisSection 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similarevents.-4- 2.3 No Fractional Share. No fractional Share shall be issuable upon exercise of this Warrant and the number of Sharesto be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant,the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractionalinterest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effectiveWarrant Price.2.4 Notice/Certificate as to Adjustments. Upon each adjustment of the Warrant Price, Class and/or number of Shares,the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to theWarrant Price, Class and/or number of Shares and facts upon which such adjustment is based. The Company shall, upon writtenrequest from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and theWarrant Price, Class and number of Shares in effect upon the date of such adjustment.SECTION 3.REPRESENTATIONS AND COVENANTS OF THE COMPANY.3.1 Representations and Warranties. The Company represents and warrants to, and agrees with, the Holder that allShares which may be issued upon the exercise of this Warrant, and all securities, if any, issuable upon conversion of the Shares, shall,upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except forrestrictions on transfer provided for herein or under applicable federal and state securities laws. The Company covenants that it shall atall times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class,common stock and other securities as will be sufficient to permit the exercise in full of this Warrant and the conversion of the Sharesinto common stock or such other securities, as applicable.3.2 Notice of Certain Events. If the Company proposes at any time to:(a) declare any dividend or distribution upon the outstanding shares of the Class, whether in cash, property,stock, or other securities and whether or not a regular cash dividend;(b) offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additionalshares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);(c) effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of theoutstanding shares of the Class; or(d) effect an Acquisition or to liquidate, dissolve or wind up.then, in connection with each such event, the Company shall give Holder:-5- (1) at least five (5) Business Days prior written notice of the date on which a record will be taken forsuch dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class willbe entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above; and(2) in the case of the matters referred to in (c) and (d) above at least five (5) Business Days prior writtennotice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class willbe entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event).Reference is made to Section 1.6(c) whereby this Warrant will be deemed to be exercised pursuant to Section 1.2 hereof if theCompany does not give written notice to Holder of a Cash/Public Acquisition as required by the terms hereof. Company will alsoprovide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting orreporting requirements.SECTION 4.REPRESENTATIONS, WARRANTIES OF THE HOLDER.The Holder represents and warrants to the Company as follows:4.1 Purchase for Own Account. This Warrant and the securities to be acquired upon exercise of this Warrant byHolder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale ordistribution within the meaning of the Act. Holder also represents that it has not been formed for the specific purpose of acquiring thisWarrant or the Shares.4.2 Disclosure of Information. Holder is aware of the Company’s business affairs and financial condition and hasreceived or has had full access to all the information it considers necessary or appropriate to make an informed investment decisionwith respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions andreceive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities andto obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effortor expense) necessary to verify any information furnished to Holder or to which Holder has access.4.3 Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities involvessubstantial risk. Holder has experience as an investor in securities of companies in a similar stage as the Company and acknowledgesthat Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has suchknowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment inthis Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of itsofficers, directors or controlling persons of a nature and duration that enables-6- Holder to be aware of the character, business acumen and financial circumstances of such persons.4.4 Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D promulgatedunder the Act.4.5 The Act. Holder understands that this Warrant and the Shares issuable upon exercise hereof have not beenregistered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, thebona fide nature of the Holder’s investment intent as expressed herein. Holder understands that this Warrant and the Shares issuedupon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable statesecurities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisionsof Rule 144 promulgated under the Act.4.6 No Voting Rights. Holder, as a Holder of this Warrant, will not have any voting rights until the exercise of thisWarrant.SECTION 5.MISCELLANEOUS.5.1 Term; Automatic Cashless Exercise Upon Expiration.(a) Term. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at anytime and from time to time on or before 5:00 PM, Eastern time, on the Expiration Date and shall be void thereafter.(b) Automatic Cashless Exercise upon Expiration. If, upon the Expiration Date, the fair market value of oneShare (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than theWarrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant toSection 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Companyshall, within a reasonable time, deliver a certificate or establish a book entry position representing the Shares (or such other securities)issued upon such exercise to Holder.5.2 Legends. Each certificate or book entry position evidencing Shares (and each certificate or book entry positionevidencing the securities issued upon conversion of any Shares, if any) shall be imprinted with a legend in substantially the followingform:THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATEAND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THEISSUER TO [ ] DATED OCTOBER 12, 2018, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISETRANSFERRED-7- UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGALCOUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE,PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.5.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares issued upon exercise of this Warrant(and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole orin part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, withoutlimitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonablyrequested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate ofHolder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act.Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144promulgated under the Act.5.4 Transfer Procedure. After receipt by Holder of the executed Warrant, Holder may transfer all or part of thisWarrant to one or more of Holder’s affiliates (each, a “Holder Affiliate”), by execution of an Assignment substantially in the form ofAppendix 2. Subject to the provisions of Article 5.3 and upon providing the Company with written notice, Holder, any such HolderAffiliate and any subsequent Holder, may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or theShares issuable directly or indirectly, upon conversion of the Shares, if any) to any transferee so long as either such transferee is aHolder Affiliate, provided, however, in connection with any such transfer, the Holder Affiliate(s) or any subsequent Holder will givethe Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of thetransferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable).5.5 Notices. All notices and other communications hereunder from the Company to the Holder, or vice versa, shall bedeemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-classregistered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt isconfirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courierfee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by theCompany or such Holder from time to time in accordance with the provisions of this Section 5.5. All notices to Holder shall beaddressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:[ ]1000 Main Street, Suite 2500Houston, TX 77002-8- Attn: Portfolio ReportingTel.: 713.209.7350Fax: 713.209.7351 Email: notices@crglp.comNotice to the Company shall be addressed as follows until Holder receives notice of a change in address:NANOSTRING TECHNOLOGIES, INC.530 Fairview Avenue N., Suite 2000Seattle, WA 98109Attn: Tom Bailey, Chief Financial OfficerTelephone: (888) 358-6266Facsimile: (206) 378-6288Email address: tbailey@nanostring.comWith copies (which shall not constitute notice) to:WILSON SONSINI GOODRICH & ROSATI701 Fifth Avenue, Suite 5100Seattle, WA 98104Attn: Michael NordtvedtTelephone: (206) 883-2524Facsimile: (206) 883-2699Email: mnordtvedt@wsgr.com5.6 Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally orin a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against whichenforcement of such change, waiver, discharge or termination is sought.5.7 Attorneys’ Fees. In the event of any dispute between the parties concerning the terms and provisions of thisWarrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, includingreasonable attorneys’ fees.5.8 Counterparts; Facsimile/Electronic Signatures. This Warrant may be executed in counterparts, all of whichtogether shall constitute one and the same agreement. Any signature page delivered electronically or by facsimile shall be binding tothe same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.5.9 Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State ofDelaware, without giving effect to its principles regarding conflicts of law.-9- 5.10 Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affectthe meaning of any provision of this Warrant.5.11 Business Days. “Business Day” is any day that is not a Saturday, Sunday or a day on which Holder is closed.5.12 Trading Days. “Trading Day” means any day on which the Company’s common stock is traded on principalsecurities exchange or securities market on which the Company’s common stock is then traded; provided that "Trading Day" shall notinclude any day on which the Company’s common stock is scheduled to trade on such exchange or market for less than 4.5 hours orany day that the Company’s common stock is suspended from trading during the final hour of trading on such exchange or market (orif such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hourending at 4:00:00 p.m., New York time). If the Company’s common stock is not traded in a Trading Market, then “Trading Day” shallhave the same meaning as Business Day.[Balance of Page Intentionally Left Blank]-10- IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorizedrepresentatives effective as of the Issue Date written above.“COMPANY”NANOSTRING TECHNOLOGIES, INC.By: ________________________________Name: _____________________________(Print)Title: ______________________________“HOLDER”[ ]By ________________________________Name:Title:Warrant to Purchase Stock APPENDIX 1NOTICE OF EXERCISE1.The undersigned [ ] hereby exercises its right to purchase __________ shares of the Common Stock of NANOSTRINGTECHNOLOGIES, INC. (the “Company”) in accordance with the attached Warrant To Purchase Stock, and tenders payment of theaggregate Warrant Price for such shares as follows:[ ] check in the amount of $__________ payable to order of the Company enclosed herewith[ ] Wire transfer of immediately available funds to the Company’s account[ ] Cashless Exercise pursuant to Section 1.2 of the Warrant[ ] Other [Describe]2.Please issue a certificate or certificates or establish a book entry position or positions representing the Shares in the namespecified below:[ ]1000 Main Street, Suite 2500Houston, TX 77002Attn: Portfolio ReportingTel.: 713.209.7350Fax: 713.209.7351Email: notices@crglp.com 3.By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties inSection 4 of the Warrant to Purchase Stock as of the date hereof.[ ]By ________________________________Name:Title:Appendix 1 APPENDIX 2ASSIGNMENTFor value received, [ ] hereby sells, assigns and transfers untoName: [TRANSFEREE]Address: Tax ID: that certain Warrant to Purchase Stock issued by NANOSTRING TECHNOLOGIES, INC. (the “Company”), on October 12,2018 (the “Warrant”) together with all rights, title and interest therein.[ ]By ________________________________Name:Title:Date: ________________________________By its execution below, and for the benefit of the Company, [TRANSFEREE] makes each of the representations and warranties setforth in Article 4 of the Warrant and agrees to all other provisions of the Warrant as of the date hereof.[TRANSFEREE]By: ________________________________Name: _____________________________Title: ______________________________ Exhibit 10.20NANOSTRING TECHNOLOGIES, INC.MARY TEDD ALLEN EMPLOYMENT AGREEMENTThis Agreement is entered into as of June 8, 2009 (this "Agreement") by and between NanoString Technologies, Inc., aDelaware corporation (the "Company"), and Mary Tedd Allen ("Executive").1.Position.(a)Title. Executive will serve as the Vice President, Manufacturing Development of the Company. Executive willrender such business and professional services in the performance of her duties, consistent with Executive's position within theCompany, as shall reasonably be assigned to her by the Company's Chief Executive Officer and/or Board of Directors (the "Board").The period of Executive's employment under this Agreement is referred to herein as the “Employment Term."(b)Obligations. Executive agrees to the best of her ability and experience that she will at all times loyally andconscientiously perform all of the duties and obligations required of and from her pursuant to the express and implicit terms hereof, andto the reasonable satisfaction of the Company. During the Employment Term, Executive further agrees that she will devote all of herbusiness time and attention to the business of the Company; the Company will be entitled to all of the benefits and profits arising fromor incident to all such work services and advice; she will not render commercial or professional services of any nature to any person ororganization, whether or not for compensation, including but not limited to sitting on the Board of Directors of any for-profitcorporation without the prior written consent of the Board; and she will not directly or indirectly engage or participate in any businessthat is competitive in any manner with the business of the Company. Nothing in this Agreement will prevent Executive from acceptingspeaking or presentation engagements in exchange for honoraria or from serving on boards of charitable organizations, or from owningno more than one percent (1%) of the outstanding equity securities of a corporation whose stock is listed on a national stock exchange.2.At-Will Employment. The parties agree that Executive's employment with the Company is "at-will" employment andmay be terminated at any time with or without cause or notice. Executive understands and agrees that neither her job performance norpromotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification,amendment, or extension, by implication or otherwise, of her employment with the Company.3.Compensation.(a)Base Salary. During the Employment Term, the Company will pay Executive as compensation for her servicesa base salary at the annualized rate of one hundred eighty thousand dollars ($180,000) (the "Base Salary"). The Base Salary will be paidperiodically in accordance with the Company's normal payroll practices and be subject to the usual, required withholding, and shall besubject to annual review by the Board for any appropriate adjustment.(b)Bonus. Executive shall be entitled to receive an annual, performance-based, cash bonus of up to 20% ofExecutive's Base Salary for each calendar year, which bonus shall be awarded in the Board's sole discretion, shall be based onExecutive's performance in the prior calendar year against metrics established for such year by the Company, and shall be paid by nolater than March 15 following the calendar year to which the bonus corresponds. If Executive is terminated by or leaves the Companyprior to the end of a given calendar year, then the Company shall have no obligation to pay a bonus to Executive for such year.(c)Equity grant. At the first Board meeting following the execution of this Agreement and the Company havingreceived an independent valuation of the Company's Common Stock in accordance with the provisions of Section 409A of the InternalRevenue Code, the Company shall award Executive an incentive stock option exercisable for a total of five hundred thousand(500,000) shares of common stock of the Company (the "Stock Option"), with an exercise price that is at least equal to the fair marketvalue of the Company's Common Stock on the date of grant, a vesting commencement date that is the same as the date on which thisagreement is entered into and on such terms and conditions as may be established by the Board in its reasonable discretion pursuant tothe Company's 2004 Stock Option Plan (the "Plan"). In the event that there is a Change in Control (as such term is defined in the Plan),and the Executive is terminated from employment without Cause (as defined below) or resigns for a Good Reason (as defined below) on or within twelve months after the effective date of such Change in Control,then one hundred percent (100%) of the unvested portion of the Stock Option shall vest and become exercisable at the time of hertermination from employment. Executive shall be required to execute the Company's standard form of stock option agreement.4.Employee Benefits. During the Employment Term, Executive will be entitled to participate in the employee benefit planscurrently and hereafter maintained by the Company of general applicability to other senior executives of the Company, including,without limitation, the Company's medical plans. The Company reserves the right to cancel or change the benefit plans and programs itoffers to its employees at any time. Executive shall also be entitled to take paid vacation consistent with the Company's vacation policyapproved by the Board.5.Severance Benefits.(a)Involuntary Termination. If Executive's employment with the Company terminates as a result of anInvoluntary Termination (as defined below), and Executive signs and does not revoke a standard release of claims with the Companyby no later than sixty (60) days after the date of termination, then, subject to Executive's compliance with Section 8, Executive shallreceive severance pay (less applicable withholding taxes) at a rate equal to her Base Salary rate, as then in effect, for a period of six (6)months from the date such release of claims becomes effective (such payments shall be paid periodically in accordance with theCompany's normal payroll policies).(b)Voluntary Termination; Termination for Cause. If Executive's employment with the Company is terminatedvoluntarily by Executive or for Cause by the Company, then (i) all vesting of any unvested stock options or shares of restricted stockheld by Executive as of the date of Executive's termination of employment will terminate immediately, (ii) all payments ofcompensation by the Company to Executive hereunder will terminate immediately (except as to amounts already earned) and (iii)Executive will only be eligible for severance benefits in accordance with the Company's established policies as then in effect.(c)Termination by Reason of Death or Disability. If Executive's employment with the Company terminates as aresult of Executive's death or Disability (as defined in Section 6 below), Executive or Executive's estate or representative will receive allsalary accrued (plus any other amounts payable as determined by the Board in its sole discretion) as of the date of Executive's death orDisability and any other benefits payable under the Company's then existing benefit plans and policies in accordance with such plansand policies in effect on the date of death or Disability and in accordance with applicable law. Such payments shall be made by theCompany periodically in accordance with the Company's normal payroll policies with respect to each element of such payments.6.Definitions.(a)Cause. For purposes of this Agreement, "Cause" is defined as (i) a violation of a material written Companypolicy that is communicated by the Board to Executive and that continues uncured for thirty (30) days, (ii) an act of dishonesty madeby Executive in connection with Executive's responsibilities as an employee, (iii) Executive's conviction of, or plea of nolo contendereto, a felony, (iv) Executive's gross misconduct, (v) the failure or refusal of Executive to follow the lawful and proper directives of theBoard that are within the scope of the Executive's duties set forth in Section 1 above and that is not corrected within thirty (30) daysafter written notice from the Board to Executive identifying such failure or refusal or (vi) Executive's material breach of the PlIA (asdefined below) or Section 8(b) hereof.(b)Disability. For purposes of this Agreement, "Disability" shall mean that Executive has been unable to performher duties hereunder as the result of her incapacity due to physical or mental illness, and such inability, which continues for at least 120 consecutive calendar days or 150 calendar days during any consecutive twelve month period,is determined to be total and permanent by a physician selected by the Company and its insurers and acceptable to Executive or toExecutive's legal representative (with such agreement on acceptability not to be unreasonably withheld).(c)Good Reason. For purposes of this Agreement, "Good Reason" shall mean if (A) there is (1) a material,adverse and permanent change in Executive's position as set forth in Section 1(a) of this Agreement causing such position to be ofmaterially reduced stature or responsibility, (2) a reduction of more than five percent (5%) in Executive's Base Salary then in effect(other than any such reduction applicable to officers of the Company generally), (3) a material reduction by the Company in the kind orlevel of employee benefits (other than Base Salary) to which Executive is entitled immediately prior to such reduction with the resultthat Executive's overall benefits package (other than Base Salary) is substantially reduced (other than any such reduction applicable toofficers of the Company generally), (4) any material breach by the Company of any material provision of this Agreement whichcontinues uncured for thirty (30) days following notice by Executive thereof, or (5) a refusal by Executive, following a request by theCompany, to relocate to a facility or location more than forty (40) miles from the Company's current location, and (B) Executiveprovides notice to the Company within thirty (30) days after the initial occurrence of the condition or event described above, theCompany fails to cure or remedy any such condition or event within the thirty (30) day period following its receipt of the notice, andExecutive thereafter elects to terminate her employment voluntarily within thirty (30) days after the expiration of the period forcorrecting such condition or event; provided, however, that none of the foregoing shall constitute Good Reason to the extent thatExecutive has agreed in writing to such material change, reduction, breach or refusal, and provided further that any change inExecutive's job function or responsibilities in order to accommodate a disability under the Americans with Disabilities Act, the FamilyMedical Leave Act or any analogous statute or law shall not constitute a basis for Executive to involuntarily terminate her employmenthereunder.(d)Involuntary Termination. For purposes of this Agreement, an "Involuntary Termination" shall be deemed tooccur if: (i) Executive's employment with the Company is terminated by the Company for any reason other than Cause (and for areason other than Executive's death or Disability); or (ii) Executive terminates her employment with the Company for Good Reason.7.Proprietary Information and Inventions Agreement. Executive acknowledges that he is and will continue to be bound bythe terms and conditions of the Proprietary Information and Inventions Agreement (the "PIIA"), a copy of which is attached hereto asExhibit A.8.Conditional Nature of Severance Payments.(a)Non-Solicitation; Non-Competition. Executive agrees and acknowledges that Executive's right to receive theseverance benefits set forth in Section 5 (to the extent Executive is otherwise entitled to such benefits) shall be conditioned uponExecutive's continued compliance with Section 8 (Non-Solicitation) and Section 9 (Non-Competition) of the PIIA and Section 8(b) ofthis Agreement. Upon any breach of this section, all severance benefits pursuant to this Agreement shall immediately cease including,without limitation, Executive's right to exercise any stock options on a date that is more than ninety (90) days after the date thatExecutive's employment was terminated.(b)Non-Disparagement. During and after the Employment Term, Executive agrees to refrain from anydefamation, libel or slander of the Company and its officers, directors, employees, agents, investors, stockholders, administrators,affiliates, divisions, subsidiaries, predecessor and successor corporations, and assigns, and any tortious interference with the contracts,relationships and prospective economic advantage of any of the foregoing persons and entities. (c)Understanding of Covenants. Executive represents that he (i) is familiar with the covenants set forth in Section8 and Section 9 of the PIIA, and (ii) is fully aware of her obligations hereunder, including, without limitation, the reasonableness of thelength of time, scope and geographic coverage of such covenants.9.Confidentiality of Terms. Executive agrees to follow the Company's strict policy that employees must not disclose, eitherdirectly or indirectly, any information, including any of the terms of this Agreement to any person, including other employees of theCompany; provided, however, that Executive may discuss such terms with members of Executive's immediate family and any legal, taxor accounting specialists who provide Executive with individual legal, tax or accounting advice.10.Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legalrepresentatives of Executive upon Executive's death and (b) any successor of the Company. Any such successor of the Company willbe deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, "successor" means anyperson, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectlyacquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form ofcompensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution.Any other attempted assignment, transfer, conveyance or other disposition of Executive's right to compensation or other benefits will benull and void.11.Notices. All notices, requests, demands and other communications called for hereunder shall be in writing and shall bedeemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well established commercialovernight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressedto the parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing:If to the Company:NanoString Technologies, Inc.530 Fairview Ave. N., Suite 2000Seattle, WA 98109Attn: CEOIf to Executive:to the last residential address known by the Company.12.Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to beillegal, unenforceable or void, this Agreement will continue in full force and effect without said provision.13.Application of 409A. Notwithstanding anything to the contrary set forth herein, any payments and benefits providedunder this Agreement that constitute "deferred compensation" within the meaning of Section 409A of the Internal Revenue Code of1986, as amended (the "Code") and the regulations and other guidance thereunder and any state law of similar effect (collectively, the"Section 409A") shall not commence in connection with Executive's termination of employment unless and until Executive has alsoincurred a "separation from service" (as such term is defined in Treasury Regulation Section 1.409A-l(h) (the "Separation FromService"), unless the Company reasonably determines that such amounts may be provided to Executive without causing Executive toincur the additional 20% tax under Section 409A.It is intended that each installment of severance pay provided for in this Agreement is a separate "payment" for purposes ofTreasury Regulation Section 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that severance payments set forth in thisAgreement satisfy, to the greatest extent possible, the exceptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-l(b)(4), 1.409A-l(b)(5), and 1.409A-l(b)(9).If the Company (or, if applicable, the successor entity thereto) determines that any payments or benefits constitute "deferredcompensation" under Section 409A and Executive is, on the termination of service, a "specified employee" of the Company or anysuccessor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoidthe incurrence of the adverse personal tax consequences under Section 409A, the timing of the payments and benefits shall be delayeduntil the earlier to occur of: (a) the date that is six months and one day after Executive's Separation From Service, or (b) the date ofExecutive's death (such applicable date, the "Specified Employee Initial Payment Date"). On the Specified Employee Initial PaymentDate, the Company (or the successor entity thereto, as applicable) shall (i) pay to Executive a lump sum amount equal to the sum of thepayments and benefits that Executive would otherwise have received through the Specified Employee Initial Payment Date if thecommencement of the payment of such amounts had not been so delayed pursuant to this Section and (ii) commence paying thebalance of the payments and benefits in accordance with the applicable payment schedules set forth in this Agreement.14.Arbitration.(a)General. In consideration of Executive's service to the Company, her promise to arbitrate all employmentrelated disputes and Executive's receipt of the compensation, pay raises and other benefits paid to Executive by the Company, atpresent and in the future, Executive agrees that any and all controversies, claims, or disputes with anyone (including the Company andany employee, officer, director, stockholder or benefit plan of the Company in their capacity as such or otherwise) arising out of,relating to, or resulting from Executive's service to the Company under this Agreement or otherwise or the termination of Executive'sservice with the Company, including any breach of this Agreement, shall be subject to binding arbitration under the Arbitration Rulesset forth in the Revised Code of Washington Chapter 7.04 (the "Rules") and pursuant to Washington law. Disputes which Executiveagrees to arbitrate, and thereby agrees to waive any right to a trial by jury, include any statutory claims under state or federal law,including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, theAge Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, claims of harassment, discrimination orwrongful termination. Executive further understands that this Agreement to arbitrate also applies to any disputes that the Company mayhave with Executive.(b)Procedure. Executive agrees that any arbitration will be administered by the American Arbitration Association("AAA") and that a neutral arbitrator will be selected in a manner consistent with its National Rules for the Resolution of EmploymentDisputes. The arbitration proceedings will allow for discovery according to the rules set forth in the National Rules/or the Resolution ofEmployment Disputes or the Washington Code of Civil Procedure. Executive agrees that the arbitrator shall have the power to decideany motions brought by any party to the arbitration, including motions for summary judgment and/or adjudication and motions todismiss and demurrers, prior to any arbitration hearing. Executive agrees that the arbitrator shall issue a written decision on the meritswith findings of fact and conclusions of law. Executive also agrees that the arbitrator shall have the power to award any remedies,including attorneys' fees and costs, available under applicable law. Executive understands the Company will pay for any administrativeor hearing fees charged by the arbitrator or AAA except that Executive shall pay the first $200.00 of any filing fees associated with anyarbitration Executive initiates. Executive agrees that the arbitrator shall administer and conduct any arbitration in a manner consistentwith the Rules and that to the extent that the AAA's National Rules for the Resolution of Employment Disputes conflict with the Rules,the Rules shall take precedence.(c)Remedy. Except as provided by the Rules, arbitration shall be the sole, exclusive and final remedy for anydispute between Executive and the Company. Accordingly, except as provided for by the Rules, neither Executive nor the Companywill be permitted to pursue court action regarding claims that are subject to arbitration. Notwithstanding, the arbitrator will not have theauthority to disregard or refuse to enforce any lawful Company policy, and the arbitrator shall not order or require the Company to adopt a policy not otherwise required by law which theCompany has not adopted.(d)Availability of Injunctive Relief. In addition to the right under the Rules to petition the court for provisionalrelief, Executive agrees that any party may also petition the court for injunctive relief where either party alleges or claims a violation ofthis Agreement or the PIIA or any other agreement regarding trade secrets, confidential information, non-competition, non solicitationor non-disparagement. In the event either party seeks injunctive relief, the prevailing party shall be entitled to recover reasonable costsand attorneys' fees.(e)Administrative Relief. Executive understands that this Agreement does not prohibit Executive from pursuingan administrative claim with a local, state or federal administrative body such as the Washington State Human Rights Commission,Equal Employment Opportunity Commission or the workers' compensation board. This Agreement does, however, preclude Executivefrom pursuing court action regarding any such claim.(f)Voluntary Nature of Agreement. Executive acknowledges and agrees that Executive is executing thisAgreement voluntarily and without any duress or undue influence by the Company or any other person. Executive furtheracknowledges and agrees that Executive has carefully read this Agreement and that Executive has asked any questions needed forExecutive to understand the terms, consequences and binding effect of this Agreement and fully understand it, including that Executiveis waiving Executive's right to a jury trial. Finally, Executive agrees that Executive has been provided an opportunity to seek the adviceof an attorney of Executive's choice before signing this Agreement.15.Integration. This Agreement, any stock option and restricted stock agreements between the Company and Executive andthe PIIA represent the entire agreement and understanding between the parties as to the subject matter herein and supersede all prior orcontemporaneous agreements whether written or oral. No waiver, alteration, or modification of any of the provisions of this Agreementwill be binding unless in writing and signed by duly authorized representatives of the parties hereto.16.Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.Governing Law. This Agreement will be governed by the laws of the State of Washington, without giving effect to principles ofconflict of laws.IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. COMPANY:NANOSTRING TECHNOLOGIES, INC. By:/s/ Wayne D. Burns Print Name:Wayne D. Burns Title:Chief Financial Officer EXECUTIVE: /s/ Mary Tedd AllenMary Tedd Allen EXHIBIT APROPRIETARY INFORMATION AND INVENTIONS AGREEMENT NANOSTRING TECHNOLOGIES, INC.PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT(WASHINGTON EMPLOYEES)In consideration for my becoming employed (or my employment being continued), or retained as a consultant (or myconsulting relationship being continued), by NanoString Technologies, Inc. or any of its current or future subsidiaries, affiliates,successors or assigns (collectively, the "Company"), the Company and I hereby agree as follows:1.Duties. I will perform for the Company such duties as may be designated by the Company from time to time. Duringmy period of employment or consulting relationship with the Company, I will devote my best efforts to the interests of the Companyand will not engage in other employment or in any activities detrimental to the best interests of the Company without the prior writtenconsent of the Company.2.Confidentiality Obligation. I understand and agree that all Proprietary Information (as defined below) shall be the soleproperty of the Company and its assigns, including all trade secrets, patents, copyrights and other rights in connection therewith. Ihereby assign to the Company any rights I may acquire in such Proprietary Information. I will hold in confidence and not directly orindirectly to use or disclose, both during my employment by or consulting relationship with the Company and after its termination(irrespective of the reason for such termination), any Proprietary Information I obtain or create during the period of my employment orconsulting relationship, whether or not during working hours, except to the extent authorized by the Company, until such ProprietaryInformation becomes generally known. I agree not to make copies of such Proprietary Information except as authorized by theCompany. Upon termination of my employment or consulting relationship or upon an earlier request of the Company, I will return ordeliver to the Company all tangible forms of such Proprietary Information in my possession or control, including but not limited todrawings, specifications, documents, records, devices, models or any other material and copies or reproductions thereof.3.Ownership of Physical Property. All document, apparatus, equipment and other physical property in any form,whether or not pertaining to Proprietary Information, furnished to me by the Company or produced by me or others in connection withmy employment or consulting relationship shall be and remain the sole property of the Company. I shall return to the Company all suchdocuments, materials and property as and when requested by the Company, except only (i) my personal copies of records relating tomy compensation; (ii) if applicable, my personal copies of any materials evidencing shares of the Company's capital stock purchasedby me and/or options to purchase shares of the Company's capital stock granted to me; (iii) my copy of this Agreement and (iv) mypersonal property and personal documents I bring with me to the Company and any personal correspondence and personal materialsthat I accumulate and keep at my office during my employment (my "Personal Documents"). Even if tl1e Company does not so request,I shall return all such documents, materials and property upon termination of my employment or consulting relationship, and, except formy Personal Documents, I will not take with me any such documents, material or property or any reproduction thereof upon suchtermination.4.Assignment of Inventions. (a)Without further compensation, I hereby agree promptly to disclose to the Company, all Inventions (as defined below)which I may solely or jointly develop or reduce to practice during the period of my employment or consulting relationship with theCompany which (i) pertain to any line of business activity of the Company, (ii) are aided by the use of time, material or facilities of theCompany, whether or not during working hours or (iii) relate to any of my work during the period of my employment or consultingrelationship wid1 the Company, whether or not during normal working hours ("Company Inventions"). During the term of myemployment or consultancy, all Company Inventions that I conceive, reduce to practice, develop or have developed (in whole or inpart, either alone or jointly with others) shall be the sole property of the Company and its assigns to the maximum extent permitted bylaw (and to the fullest extent permitted by law shall be deemed "works made for hire"), and the Company and its assigns shall be thesole owner of all patents, copyrights, trademarks, trade secrets and other rights in connection therewith. I hereby assign to the Companyany rights that I may have or acquire in such Company Inventions.(b)I attach hereto as Exhibit A a complete list of all Inventions, if any, made by me prior to my employment orconsulting relationship with the Company that are relevant to the Company's business, and I represent and warrant that such list iscomplete. If no such list is attached to this Agreement, I represent that I have no such Inventions at the time of signing this Agreement.If in the course of my employment or consultancy (as the case may be) with the Company, I use or incorporate into a product orprocess an Invention not covered by Section 4(a) of this Agreement in which I have an interest, the Company is hereby granted anonexclusive, fully paid-up, royalty-free, perpetual, worldwide license of my interest to use and sublicense such Invention withoutrestriction of any kind.NOTICE REQUIRED BY REVISED CODE OF WASHINGTON 49.44.140:Any assignment of Inventions required by this Agreement does not apply to an Invention for which no equipment, supplies,facility or trade secret information of the Company was used and which was developed entirely on the employee's owntime, unless (a) the Invention relatesdirectly to the business of the Company or (ii) to the Company's actual or demonstrably anticipated research ordevelopment or (b) the Invention results from any work performed by the employee for the Company.5.Further Assistance; Power of Attorney. I agree to perform, during and after my employment or consultingrelationship, all acts deemed necessary or desirable by the Company to permit and assist it, at its expense, in obtaining and enforcingthe full benefits, enjoyment, rights and title throughout the world in the Inventions assigned to the Company as set forth in Section 4above. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings. Ihereby irrevocably designate the Company and its duly authorized officers and agents as my agent and attorney-in fact, to execute andfile on my behalf any such applications and to do all other lawful acts to further the prosecution and issuance of patents, copyright andmask work registrations related to such Inventions. This power of attorney shall not be affected by my subsequent incapacity. 6.Inventions. As used in this Agreement, the term "Inventions" means discoveries, developments, concepts, designs,ideas, know-how, improvements, inventions, trade secrets and/or original works of authorship, whether or not patentable, copyrightableor otherwise legally protectable. This includes, but is not limited to, any new product, machine, article of manufacture, biologicalmaterial, method, procedure, process, technique, use, equipment, device, apparatus, system, compound, formulation, composition ofmatter, design or configuration of any kind, or any improvement thereon.7.Proprietary Information. As used in this Agreement, the term "Proprietary Information" means information orphysical material not generally known or available outside the Company or information or physical material entrusted to the Companyby third parties. This includes, but is not limited to, Inventions, confidential knowledge, copyrights, product ideas, techniques,processes, formulas, object codes, biological materials, mask works and/or any other information of any type relating to documentation,laboratory notebooks, data, schematics, algorithms, flow charts, mechanisms, research, manufacture, improvements, assembly,installation, marketing, forecasts, sales, pricing, customers, the salaries, duties, qualifications, performance levels and terms ofcompensation of other employees, and/or cost or other financial data concerning any of the foregoing or the Company and itsoperations. Proprietary Information may be contained in material such as drawings, samples, procedures, specifications, reports, studies,customer or supplier lists, budgets, cost or price lists, compilations or computer programs, or may be in the nature of unwrittenknowledge or know-how.8.Solicitation of Employees, Consultants and Other Parties. During the term of my employment or consultingrelationship with the Company, and for a period of one year following the termination of my relationship with the Company for anyreason, I will not directly or indirectly solicit, induce, recruit or encourage any of the Company's employees or consultants to terminatetheir relationship with the Company, or attempt any of the foregoing, either for myself or any other person or entity. Further, at any timefollowing termination of my relationship with the Company for any reason, I shall not use any Proprietary Information of the Companyto attempt to negatively influence any of the Company's clients or customers from purchasing any of the Company's products orservices, or solicit any licensor to or customer of the Company or licensee of the Company's products, that are known to me, withrespect to any business, products or services that are competitive to the products or services offered by the Company or underdevelopment as of the date of termination of my relationship with the Company.9.Noncompetition. During the term of my employment or consulting relationship with the Company and for one yearfollowing the termination of my relationship with the Company for any reason, I will not, without the Company's prior written consent,directly or indirectly work on any products or services that are competitive with products or services (a) being commercially developedor exploited by the Company during my employment or consultancy and (b) on which I worked or about which I learned ProprietaryInformation during my employment or consultancy with the Company.10.No Conflicts. I represent that my performance of all the terms of this Agreement as an employee of or consultant tothe Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquiredby me in confidence or in trust prior to my becoming an employee or consultant of the Company, and I will not disclose to theCompany, or induce the Company to use, any confidential or proprietary information or material belonging to any previous employeror others. I agree not to enter into any written or oral agreement that conflicts with the provisions of this Agreement. 11.No Interference. I certify that, to the best of my information and belief, I am not a party to any other agreementwhich will interfere with my full compliance with this Agreement.12.Effects of Agreement. This Agreement (a) shall survive for a period of five years beyond the termination of myemployment by or consulting relationship with the Company, (b) inures to the benefit of successors and assigns of the Company and (c)is binding upon my heirs and legal representatives.13.At-Will Relationship. I understand and acknowledge that my employment or consulting relationship with theCompany is and shall continue to be at-will, as defined under applicable law, meaning that either I or the Company may terminate therelationship at any time for any reason or no reason, without further obligation or liability.14.Injunctive Relief. I acknowledge that violation of this Agreement by me may cause irreparable injury to theCompany, and I agree that the Company will be entitled to seek extraordinary relief in court, including, but not limited to, temporaryrestraining orders, preliminary injunctions and permanent injunctions without the necessity of posting a bond or other security andwithout prejudice to any other rights and remedies that the Company may have for a breach of this Agreement.15.Miscellaneous. This Agreement supersedes any oral, written or other communications or agreements concerning thesubject matter of this Agreement, and may be amended or waived only by a written instrument signed by me and the Chief ExecutiveOfficer of the Company. This Agreement shall be governed by the laws of the State of Washington applicable to contracts entered intoand performed entirely within the State of Washington, without giving effect to principles of conflict of laws. If any provision of thisAgreement is held to be unenforceable under applicable law, then such provision shall be excluded from this Agreement only to theextent unenforceable, and the remainder of such provision and of this Agreement shall be enforceable in accordance with its terms.16.Acknowledgment. I certify and acknowledge that I have carefully read all of the provisions of this Agreement andthat I understand and will fully and faithfully comply with such provisions.[Signature Page Follows] The undersigned have executed this Proprietary Information and Inventions Agreement as of the date set forth below. NANOSTRING TECHNOLOGIES, INC. /s/ H. Perry FellSignatureH. Perry Fell, President & CEO Dated:February 15, 2007 MARY TEDD ALLEN, an Individual /s/ Mary Tedd AllenSignature Dated:February 15, 2007 Exhibit ANanoString Technologies, Inc.201 Elliott Ave West, Suite 300Seattle, WA 98119Ladies and Gentlemen:1.The following is a complete list of all Inventions relevant to the subject matter of my employment by the Company that have been madeor conceived or first reduced to practice by me, alone or jointly with others or which has become known to me prior to my employment by the Company. Irepresent that such list is complete.2.I propose to bring to my employment or consultancy the following materials and documents of a former employer:XNo materials or documents. See below:By:/s/ Mary Tedd Allen Mary Tedd Allen [Please Print Name] February 15, 2007 Exhibit 10.21NANOSTRING TECHNOLOGIES, INC.AMENDMENT TO EMPLOYMENT AGREEMENTThis amendment (the "Amendment") is made by and between Mary Tedd Allen ("Executive") and NanoString Technologies, Inc.(the "Company," and together with Executive, the "Parties") on the dates set forth below.WHEREAS, the Parties entered into an employment agreement effective June 8, 2009 (the "Employment Agreement");WHEREAS, the Company and Executive desire to amend certain provisions of the Employment Agreement in order to clarifythe timing of the severance payment, as set forth below, in accordance with Section V.I.B.3 of Internal Revenue Service Notice 2010-6,as amended by Internal Revenue Service Notice 2010-80.NOW, THEREFORE, for good and valuable consideration, Executive and the Company agree that the Employment Agreementis hereby amended as follows.1.Section 409A. Section 13 of the Employment Agreement is hereby amended to insert the following paragraphimmediately following the first paragraph thereof:"Any severance payments or benefits under this Agreement that would be considered "deferred compensation" underSection 409A will be paid on, or, in the case of installments, will not commence until, the sixtieth (60th) day followingExecutive's Separation From Service, of, if later, such time is required by the final paragraph of this Section 13. Except asrequired by the final paragraph of this Section 13, any installment payments that would have been made to Executive during the60 day period immediately following Executive's Separation From Service but for the preceding sentence will be paid toExecutive on the sixtieth (60th) day following Executive's Separation from Service and the remaining payments shall be made asprovided in this Agreement."2.Full Force and Effect. To the extent not expressly amended hereby, the Agreement shall remain in full force andeffect.3.Entire Agreement. This Amendment and the Agreement constitute the full and entire understanding and agreementbetween the Parties with regard to the subjects hereof and thereof. This Amendment may be amended at any time only by mutualwritten agreement of the Parties.4.Counterparts. This Amendment may be executed in counterparts, all of which together shall constitute one instrument,and each of which may be executed by less than all of the parties to this Amendment.5.Governing Law. This Amendment will be governed by the laws of the State of Washington (with the exception of itsconflict of laws provisions). IN WITNESS WHEREOF, each of the Parties has executed this Amendment, in the case of the Company by its duly authorizedofficer, on the dates set forth below.NANOSTRING TECHNOLOGIES, INC. /s/ Wayne D. Burns By:Wayne D. Burns Sr. VP, Operations & Administration Date:December 26, 2012 Mary Tedd Allen /s/ Mary Tedd Allen By:Mary Tedd Allen Date:December 28, 2012 Exhibit 10.22NANOSTRING TECHNOLOGIES, INC.AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENTThis Amendment to Executive Employment Agreement (this "Amendment") is made by and between Mary Tedd Allen("Executive") and NanoString Technologies, Inc., a Delaware corporation (the "Company" and together with Executive, the "Parties")on the dates set forth below.WHEREAS, the Parties previously entered into an employment agreement effective June 8, 2009, as amended December 28,2012 (the "Employment Agreement");WHEREAS, the Company and Executive desire to amend certain provisions of the Employment Agreement related to severancebenefits, as set forth below.NOW, THEREFORE, for good and valuable consideration, the Parties agree that the Agreement is hereby amended as follows:1.The Employment Agreement is hereby amended as follows:A.The period at the end of the first sentence of Section 5(a) is replaced by the following:"; provided, however, that if such Involuntary Termination occurs within twelve (12) months following a Change inControl (as defined in the Company's 2013 Equity Incentive Plan), (i) Executive shall be entitled to a lump sum paymentequal to Executive's then-effective Base Salary and target bonus (less applicable withholding taxes) and (ii) if Executiveelects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended("COBRA") within the time period prescribed pursuant to COBRA for Executive and Executive's eligible dependents,the Company will reimburse Executive for the premiums necessary to continue group health insurance benefits forExecutive and Executive's eligible dependents for a period of twelve (12) months following the date of InvoluntaryTermination, except that the right to future COBRA payments shall terminate the date upon which Executive ceases tobe eligible for coverage under COBRA."B.Clause (A)(1) of Section 6(c) is hereby qualified in its entirety as follows: the continuance of Executive'sduties and responsibilities at the subsidiary or divisional level following a Change in Control, rather than at the parent, combined orsurviving company level following such Change in Control shall not be deemed Good Reason within the meaning of clause (A)(1).2.Full Force and Effect. To the extent not expressly amended hereby, the Agreement shall remain in full force andeffect.3.Entire Agreement. This Amendment and the Agreement (and any other documents referenced therein) constitute thefull and entire understanding and agreement between the Parties with regard to the subjects hereof and thereof.4.Governing Law. This Amendment will be governed by the laws of the State of Washington (with the exception of itsconflict of laws provisions).(signature page follows)IN WITNESS WHEREOF, each of the Parties has executed this Amendment as of the date set forth below. EXECUTIVE By:/s/ Mary Tedd Allen Name:Mary Tedd Allen Date:September 20, 2017 NANOSTRING TECHNOLOGIES, INC. By:/s/ R. Bradley Gray Name:R. Bradley GrayTitle:President and CEODate:October 23, 2017 10.29[EXECUTION VERSION]AMENDED AND RESTATED TERM LOAN AGREEMENTdated as ofOctober 12, 2018amongNANOSTRING TECHNOLOGIES, INC., as Borrower,The Subsidiary Guarantors from Time to Time Party Hereto,The Lenders from Time to Time Party Hereto,andCRG SERVICING LLC,as Administrative Agent and Collateral AgentU.S. $100,000,000[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION TABLE OF CONTENTS PageSECTION 1 DEFINITIONS11.01Certain Defined Terms11.02Accounting Terms and Principles241.03Interpretation241.04Changes to GAAP25SECTION 2 THE COMMITMENT252.01Commitments252.02Borrowing Procedures252.03Fees262.04Use of Proceeds262.05Defaulting Lenders262.06Substitution of Lenders272.07Permitted Commercialization Arrangements28SECTION 3 PAYMENTS TO PRINCIPAL AND INTEREST283.01Repayment283.02Interest283.03Prepayments29SECTION 4 PAYMENTS, ETC.334.01Payments334.02Computations334.03Notices334.04Set-Off344.05Pro Rata Treatment34SECTION 5 YIELD PROTECTION, ETC.355.01Additional Costs365.02Illegality375.03Taxes37SECTION 6 CONDITIONS PRECEDENT416.01Conditions to the First Borrowing416.02Conditions to Subsequent Borrowings436.03Conditions to Each Borrowing43SECTION 7 REPRESENTATIONS AND WARRANTIES447.01Power and Authority447.02Authorization; Enforceability457.03Governmental and Other Approvals; No Conflicts457.04Financial Statements; Material Adverse Change457.05Properties457.06No Actions or Proceedings497.07Compliance with Laws and Agreements497.08Taxes497.09Full Disclosure49[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONi 7.10Regulation507.11Solvency507.12Subsidiaries517.13Indebtedness and Liens517.14Material Agreements517.15Restrictive Agreements517.16Real Property517.17Pension Matters527.18Collateral; Security Interest527.19Regulatory Approvals537.20Update of Schedules53SECTION 8 AFFIRMATIVE COVENANTS538.01Financial Statements and Other Information538.02Notices of Material Events558.03Existence; Conduct of Business578.04Payment of Obligations578.05Insurance578.06Books and Records; Inspection Rights578.07Compliance with Laws and Other Obligations588.08Maintenance of Properties, Etc588.09Licenses588.10Action under Environmental Laws588.11Use of Proceeds598.12Certain Obligations Respecting Subsidiaries; Further Assurances598.13Termination of Non-Permitted Liens628.14Intellectual Property628.15Post-Closing Items62SECTION 9 NEGATIVE COVENANTS639.01Indebtedness639.02Liens659.03Fundamental Changes and Acquisitions689.04Lines of Business689.05Investments689.06Restricted Payments709.07Payments of Indebtedness719.08Change in Fiscal Year719.09Sales of Assets, Etc719.10Transactions with Affiliates729.11Restrictive Agreements739.12Amendments to Material Agreements739.13Operating Leases739.14Sales and Leasebacks749.15Hazardous Material74[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONii 9.16Accounting Changes749.17Compliance with ERISA74SECTION 10 FINANCIAL COVENANTS7410.01Minimum Liquidity7410.02Minimum Revenue74SECTION 11 EVENTS OF DEFAULT7511.01Minimum Revenue7511.02Remedies78SECTION 12 ADMINISTRATIVE AGENT7912.01Appointment and Duties7912.02Binding Effect8112.03Use of Discretion8112.04Delegation of Rights and Duties8112.05Reliance and Liability8112.06Administrative Agent Individually8212.07Lender Credit Decision8312.08Expenses; Indemnities8312.09Resignation of Administrative Agent8312.10Release of Collateral or Guarantors8412.11Additional Secured Parties85SECTION 13 MISCELLANEOUS8513.01No Waiver8513.02No Waiver8513.03Expenses, Indemnification, Etc8613.04Amendments, Etc8713.05Successors and Assigns8713.06Survival9013.07Captions9013.08Counterparts9013.09Governing Law9013.10Jurisdiction, Service of Process and Venue9013.11Waiver of Jury Trial9113.12Waiver of Immunity9113.13Entire Agreement9113.14Severability9213.15No Fiduciary Relationship9213.16Confidentiality9213.17USA PATRIOT Act9213.18Maximum Rate of Interest9213.19Certain Waivers.9213.20Tax Treatment9413.21Original Issue Discount9413.22Amendment and Restatement of Original Loan Agreement94[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONiii SECTION 14 GUARANTEE9414.01The Guarantee9514.02Obligations Unconditional; Subsidiary Guarantor Waivers9514.03Reinstatement9614.04Subrogation9614.05Remedies9614.06Instrument for the Payment of Money9714.07Continuing Guarantee9714.08Rights of Contribution9714.09General Limitation on Guarantee Obligations98 SCHEDULES AND EXHIBITS Schedule 1-Commitments and Warrant SharesExhibit A-Form of Guarantee Assumption AgreementExhibit B-Form of Notice of BorrowingExhibit C-1-Form of U.S. Tax Compliance CertificateExhibit C-2-Form of U.S. Tax Compliance CertificateExhibit C-3-Form of U.S. Tax Compliance CertificateExhibit C-4-Form of U.S. Tax Compliance CertificateExhibit D-Form of Compliance CertificateExhibit E-Opinion RequestExhibit F-Form of Landlord ConsentExhibit G-Form of Subordination AgreementExhibit H-Form of Intercreditor Agreement (Permitted Priority Debt)Exhibit I-1-Form of Discounted Prepayment Option NoticeExhibit I-2-Form of Lender Participation NoticeExhibit I-3-Form of Discounted Voluntary Prepayment NoticeExhibit J-Form of Non-Disturbance Agreement[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONiv AMENDED AND RESTATED TERM LOAN AGREEMENT, dated as of October 12, 2018 (this “Agreement”), amongNanoString Technologies, Inc., a Delaware corporation (“Borrower”), the Subsidiary Guarantors from time to time party hereto, theLenders from time to time party hereto and CRG Servicing LLC, a Delaware limited liability company (“CRG Servicing”), asadministrative agent and collateral agent for the Lenders (in such capacities, together with its successors and assigns, “AdministrativeAgent”).WITNESSETH:WHEREAS, Borrower, Administrative Agent, the Subsidiary Guarantors and certain of the Lenders are party to the TermLoan Agreement, dated as of April 1, 2014 (as amended by Amendment Agreement No. 1, dated as of April 16, 2015; AmendmentAgreement No. 2, dated as of October 30, 2015; and Amendment Agreement No. 3, dated as of February 17, 2017, the “OriginalLoan Agreement”), pursuant to which the lenders party thereto made loans and other extensions of credit to Borrower.WHEREAS, Borrower has requested certain modifications to the terms of the Original Loan Agreement, and theAdministrative Agent and Lenders have agreed to the requested modifications and to continue to make loans and other extensions ofcredit to the Borrower, all on the terms and conditions set forth herein.WHEREAS, the parties hereto hereby agree that the Original Loan Agreement shall be amended and restated in its entirety,and shall remain in full force and effect only, as set forth herein. Accordingly, the parties agree as follows:SECTION 1DEFINITIONS1.01 Certain Defined Terms. As used herein, the following terms have the following respective meanings:“Acceptable Discount” has the meaning set forth in Section 3.03(c)(iii).“Acceptance Date” has the meaning set forth in Section 3.03(c)(ii).“Accounting Change Notice” has the meaning set forth in Section 1.04(a).“Act” has the meaning set forth in Section 13.17.“Acquisition” means any transaction, or any series of related transactions, by which any Person directly or indirectly, by meansof a take-over bid, tender offer, amalgamation, merger or purchase of assets, or similar transaction having the same effect as any of theforegoing, (a) acquires any business or product, or any division, product or line of business or all or substantially all of the assets of anyPerson engaged in any business or any division, product or line of business, (b) acquires control of securities of a Person engaged in abusiness representing more than 50% of the ordinary voting power for the election of directors or other governing body if the businessaffairs of such Person are managed by a board of directors or other governing[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION1 body, or (c) acquires control of more than 50% of the ownership interest in any Person engaged in any business that is not managed bya board of directors or other governing body.“Administrative Agent” has the meaning set forth in the introduction hereto.“Affected Lender” has the meaning set forth in Section 2.06(a).“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or moreintermediaries, Controls or is Controlled by or is under common Control with the Person specified.“Agreement” has the meaning set forth in the introduction hereto.“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Obligor, its Subsidiaries orAffiliates from time to time concerning or relating to bribery or corruption, including the United States Foreign Corrupt Practices Act of1977, as amended, and the rules and regulations thereunder.“Anti-Money Laundering Laws” means any and all laws, statutes, regulations or obligatory government orders, decrees,ordinances or rules applicable to an Obligor, its Subsidiaries or Affiliates related to terrorism financing or money laundering, includingany applicable provision of the Act and The Currency and Foreign Transaction Reporting Act (also known as the “Bank SecrecyAct,” 31 U.S.C. §§5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959).“Applicable Discount” has the meaning set forth in Section 3.03(c)(iii).“Asset Sale” has the meaning set forth in Section 9.09.“Asset Sale Net Proceeds” means the aggregate amount of the cash proceeds received from any Asset Sale, net of any bonafide costs incurred in connection with such Asset Sale, plus, with respect to any non-cash proceeds of an Asset Sale, the fair marketvalue of such non-cash proceeds as determined by Borrower’s Board of Directors, acting reasonably.“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee of suchLender.“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy.”“Benefit Plan” means any employee benefit plan as defined in Section 3(3) of ERISA (whether governed by the laws of theUnited States or otherwise) to which any Obligor or Subsidiary thereof incurs or otherwise has any obligation or liability, contingent orotherwise.“Borrower” has the meaning set forth in the introduction hereto.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION2 “Borrower Facilities” means the premises located at (i) 530 Fairview Avenue N, Seattle, WA 98109, (ii) 500 FairviewAvenue N, Seattle, WA 98109, and (iii) 617 Eastlake Avenue E, Seattle WA 98109, which are leased by Borrower pursuant to theBorrower Leases.“Borrower Leases” means (i) the Lease dated as of October 19, 2007 by and between Borrower and BMR-530 FairviewAvenue LLC, (ii) the Lease dated as of December 22, 2014 by and between Borrower and BMR-500 Fairview Avenue LLC, and (ii)the Lease dated as of October 19, 2007 by and between Borrower and Blume Company, LLC, in each case, as amended or extendedfrom time to time.“Borrower Party” has the meaning set forth in Section 13.03(b).“Borrowing” means a borrowing consisting of Loans made on the same day by the Lenders according to their respectiveCommitments (including a borrowing of a PIK Loan).“Borrowing Date” means the date of a Borrowing.“Borrowing Notice Date” means, (a) in the case of the first Borrowing, a date that is at least twelve Business Days prior to theBorrowing Date of such Borrowing and, (b) in the case of a subsequent Borrowing, a date that is at least twenty (20) Business Daysprior to the Borrowing Date of such Borrowing.“Business Day” means a day (other than a Saturday or Sunday) on which commercial banks are not authorized or required toclose in New York City.“Capital Lease Obligations” means, as to any Person, the obligations of such Person to pay rent or other amounts under a leaseof (or other agreement conveying the right to use) real and/or personal Property which obligations are required to be classified andaccounted for as a capital lease on a balance sheet of such Person under GAAP and, for purposes of this Agreement, the amount ofsuch obligations shall be the capitalized amount thereof, determined in accordance with GAAP.“Change of Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person orgroup of Persons acting jointly or otherwise in concert of capital stock representing more than 50% of the aggregate ordinary votingpower represented by the issued and outstanding capital stock of Borrower, (b) during any period of twelve (12) consecutive calendarmonths, the occupation of a majority of the seats (other than vacant seats) on the board of directors of Borrower by Persons who wereneither (i) nominated by the board of directors of Borrower, nor (ii) appointed by directors so nominated, or (c) the acquisition of director indirect Control of Borrower by any Person or group of Persons acting jointly or otherwise in concert; in each case whether as aresult of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise; provided, however, that theoccurrence of a Qualified FPO shall not be deemed a Change of Control.“Claims” means any claims, demands, complaints, grievances, actions, applications, suits, causes of action, orders, charges,indictments, prosecutions, informations (brought by a[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION3 public prosecutor without grand jury indictment) or other similar processes, assessments or reassessments.“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgatedthereunder from time to time.“Collateral” means the collateral provided for in the Security Documents.“Commitment” means, with respect to each Lender, the obligation of such Lender to make Loans to Borrower in accordancewith the terms and conditions of this Agreement, which commitment is in the amount set forth opposite such Lender’s name onSchedule 1 under the caption “Commitment”, as such Schedule may be amended from time to time. The aggregate Commitments onthe date hereof equal $100,000,000. For purposes of clarification, the amount of any PIK Loans shall not reduce the amount of theavailable Commitment.“Commitment Period” means the period from and including the first date on which all of the conditions precedent set forth inSection 6.01 have been satisfied (or waived by the Lenders) and through and including March 30, 2020.“Commodity Account” has the meaning set forth in the Security Agreement.“Compliance Certificate” has the meaning given to such term in Section 8.01(c).“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (howeverdenominated) or that are franchise Taxes or branch profits Taxes.“Contracts” means contracts, licenses, leases, agreements, obligations, promises, undertakings, understandings, arrangements,documents, commitments, entitlements or engagements under which a Person has, or will have, any liability or contingent liability (ineach case, whether written or oral, express or implied).“Control” means, in respect of a particular Person, the possession, directly or indirectly, of the power to direct or cause thedirection of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.“Controlling” and “Controlled” have meanings correlative thereto.“Controlled Foreign Corporation” means a “controlled foreign corporation” as defined in Section 957(a) of the Code.“Copyright” has the meaning set forth in the Security Agreement.“CRG Servicing” has the meaning set forth in the introduction hereto.“Default” means any Event of Default and any event that, upon the giving of notice, the lapse of time or both, would constitutean Event of Default.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION4 “Default Rate” has the meaning set forth in Section 3.02(b).“Defaulting Lender” means, subject to Section 2.05, any Lender that (a) has failed to perform any of its funding obligationshereunder, including in respect of its Loans, within three (3) Business Days of the date required to be funded by it hereunder, (b) hasnotified Borrower or any Lender that it does not intend to comply with its funding obligations or has made a public statement to thateffect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, or (c) has, orhas a direct or indirect parent company that has, (i) become the subject of an Insolvency Proceeding, (ii) had a receiver, conservator,trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business ora custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in anysuch proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership oracquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.“Deposit Account” is defined in the Security Agreement.“Disclosure Letter” means that certain Disclosure Letter, dated the date hereof, by the Obligors to Administrative Agent, towhich are attached certain Schedules referenced herein.“Discount Range” has the meaning set forth in Section 3.03(c)(ii).“Discounted Prepayment Option Notice” has the meaning set forth in Section 3.03(c)(ii).“Discounted Voluntary Prepayment” has the meaning set forth in Section 3.03(c)(i).“Discounted Voluntary Prepayment Notice” has the meaning set forth in Section 3.03(c)(v).“Dollars” and “$” means lawful money of the United States of America.“Eligible Transferee” means and includes a commercial bank, an insurance company, a finance company, a financialinstitution, any investment fund that invests in loans or any other “accredited investor” (as defined in Regulation D of the SecuritiesAct) that is principally in the business of managing investments or holding assets for investment purposes, provided that the followingconditions are met: (1) for any entity (other than an Affiliate of the Lenders party hereto on the date hereof) becoming a Lender on orprior to the second Borrowing Date, such entity shall have either (A) a rating of BBB or higher from Standard & Poor’s Rating Groupand a rating of Baa2 or higher from Moody’s Investors Service, Inc. at the date that it becomes a Lender or (B) has total assets inexcess of $1,000,000,000, and (2) for any entity (other than an Affiliate of the Lenders party hereto on the date hereof) becoming aLender after the second Borrowing Date, such entity shall have sufficient funds to acquire or purchase the assigned Loans from anassigning Lender; and in each case which, through its applicable lending office, is capable of lending to Borrower without theimposition of any withholding or similar taxes;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION5 provided that notwithstanding the foregoing, “Eligible Transferee” shall not include (i) Borrower or any of Borrower’s Affiliates orSubsidiaries or (ii) unless a Default or Event of Default has occurred and is continuing, a direct competitor of Borrower or a vulturehedge fund, each as determined by the Administrative Agent. Notwithstanding the foregoing, (x) in connection with assignments by aLender due to a forced divestiture at the request of any regulatory agency, the restrictions set forth herein shall not apply and EligibleTransferee shall mean any Person or party and (y) in connection with a Lender’s own financing or securitization transactions, therestrictions set forth herein shall not apply and Eligible Transferee shall mean any Person or party providing such financing or formedto undertake such securitization transaction and any transferee of such Person or party; provided that no such sale, transfer, pledge orassignment under this clause (y) shall release such Lender from any of its obligations hereunder or substitute any such Person or partyfor such Lender as a party hereto until Administrative Agent shall have received and accepted an effective assignment agreement fromsuch Person or party in form satisfactory to Administrative Agent executed, delivered and fully completed by the applicable partiesthereto, and shall have received such other information regarding such Eligible Transferee as Administrative Agent reasonably shallrequire.“Environmental Law” means any federal, state, provincial or local governmental law, rule, regulation, order, writ, judgment,injunction or decree relating to pollution or protection of the environment or the treatment, storage, disposal, release, threatened releaseor handling of hazardous materials, and all local laws and regulations related to environmental matters and any specific agreementsentered into with any competent authorities which include commitments related to environmental matters.“Equity Interest” means, with respect to any Person, any and all shares, interests, participations or other equivalents, includingmembership interests (however designated, whether voting or nonvoting), of equity of such Person, including, if such Person is apartnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right toreceive a share of the profits and losses of, or distributions of property of, such partnership, but excluding debt securities convertible orexchangeable into such equity.“Equivalent Amount” means, with respect to an amount denominated in one currency, the amount in another currency thatwould be purchased by the amount in the first currency determined by reference to the Exchange Rate at the time of determination.“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended.“ERISA Affiliate” means, collectively, any Obligor, Subsidiary thereof, and any Person under common control, or treated as asingle employer, with any Obligor or Subsidiary thereof, within the meaning of Section 414(b), (c), (m) or (o) of the Code.“ERISA Event” means (a) a reportable event as defined in Section 4043 of ERISA with respect to a Title IV Plan, excluding,however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notifiedwithin 30 days of the[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION6 occurrence of such event; (b) the applicability of the requirements of Section 4043(b) of ERISA with respect to a contributing sponsor,as defined in Section 4001(a)(13) of ERISA, to any Title IV Plan where an event described in paragraph (9), (10), (11), (12) or (13) ofSection 4043(c) of ERISA is reasonably expected to occur with respect to such plan within the following 30 days; (c) a withdrawal byany Obligor or any ERISA Affiliate thereof from a Title IV Plan or the termination of any Title IV Plan resulting in liability underSections 4063 or 4064 of ERISA; (d) the withdrawal of any Obligor or any ERISA Affiliate thereof in a complete or partialwithdrawal (within the meaning of Section 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liabilitytherefore, or the receipt by any Obligor or any ERISA Affiliate thereof of notice from any Multiemployer Plan that it is inreorganization or insolvency pursuant to Section 4241 or 4245 of ERISA; (e) the filing of a notice of intent to terminate, the treatmentof a plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC toterminate a Title IV Plan or Multiemployer Plan; (f) the imposition of liability on any Obligor or any ERISA Affiliate thereof pursuantto Sections 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the failure by any Obligor orany ERISA Affiliate thereof to make any required contribution to a Plan, or the failure to meet the minimum funding standard ofSection 412 of the Code with respect to any Title IV Plan (whether or not waived in accordance with Section 412(c) of the Code) orthe failure to make by its due date a required installment under Section 430 of the Code with respect to any Title IV Plan or the failureto make any required contribution to a Multiemployer Plan; (h) the determination that any Title IV Plan is considered an at-risk plan ora plan in endangered to critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 ofERISA; (i) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for thetermination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan; (j) the imposition of any liabilityunder Title I or Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon anyObligor or any ERISA Affiliate thereof; (k) an application for a funding waiver under Section 303 of ERISA or an extension of anyamortization period pursuant to Section 412 of the Code with respect to any Title IV Plan; (l) the occurrence of a non-exemptprohibited transaction under Sections 406 or 407 of ERISA for which any Obligor or any Subsidiary thereof may be directly orindirectly liable; (m) a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule underSection 401(a) of the Code by any fiduciary or disqualified person for which any Obligor or any ERISA Affiliate thereof may bedirectly or indirectly liable; (n) the occurrence of an act or omission which would give rise to the imposition on any Obligor or anyERISA Affiliate thereof of fines, penalties, taxes or related charges under Chapter 43 of the Code or under Sections 409, 502(c), (i) or(1) or 4071 of ERISA; (o) the assertion of a material claim (other than routine claims for benefits) against any Plan or the assets thereof,or against any Obligor or any Subsidiary thereof in connection with any such plan; (p) receipt from the IRS of notice of the failure ofany Qualified Plan to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Qualified Plan to fail toqualify for exemption from taxation under Section 501(a) of the Code; (q) the imposition of any lien (or the fulfillment of theconditions for the imposition of any lien) on any of the rights, properties or assets of any Obligor or any ERISA Affiliate thereof, ineither case pursuant to Title I or IV, including Section 302(f) or 303(k) of ERISA or to Section 401(a)(29) or 430(k) of the Code; or (r)the establishment or amendment by any Obligor or any[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION7 Subsidiary thereof of any “welfare plan”, as such term is defined in Section 3(1) of ERISA, that provides post-employment welfarebenefits in a manner that would increase the liability of any Obligor.“ERISA Funding Rules” means the rules regarding minimum required contributions (including any installment paymentthereof) to Title IV Plans, as set forth in Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 ofERISA.“Event of Default” has the meaning set forth in Section 11.01.“Exchange Rate” means the rate at which any currency (the “Pre-Exchange Currency”) may be exchanged into anothercurrency (the “Post-Exchange Currency”), as quoted in the Wall Street Journal print edition on such day (or, if such day is not a dayon which the Wall Street Journal is published, the immediately preceding day on which the Wall Street Journal was published). In theevent that such rate does not appear in the Wall Street Journal print edition, the “Exchange Rate” with respect to exchanging such Pre-Exchange Currency into such Post-Exchange Currency shall be determined by reference to such other publicly available service fordisplaying exchange rates as may be agreed upon by Borrower and Administrative Agent or, in the absence of such agreement, suchExchange Rate shall instead be determined by Administrative Agent by any reasonable method as they deem applicable to determinesuch rate, and such determination shall be conclusive absent manifest error.“Excluded Foreign Subsidiary” means any (i) FSHCO, (ii) Foreign Subsidiary that is a Controlled Foreign Corporation or (iii)a Foreign Subsidiary owned by (1) a FSHCO or (2) a Subsidiary described in clause (ii).“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld ordeducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxesand branch profits Taxes, in each case (i) imposed by the United States or as a result of such Recipient being organized under the lawsof, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing suchTax (or any political subdivision thereof), or (ii) that are Other Connection Taxes, (b) U.S. Federal withholding Taxes that are imposedon amounts payable to or for the account of a Lender to the extent that the obligation to withhold amounts existed on the date that (x)such Lender became a “Lender” under this Agreement (other than pursuant to an assignment request by Borrower under Section5.03(g)) or (y) such Lender changes its lending office, except in each case to the extent such Lender is a direct or indirect assignee ofany other Lender that was entitled, at the time the assignment of such other Lender became effective, to receive additional amountsunder Section 5.03 or such Lender was entitled to receive additional amounts under Section 5.03 immediately before it changed itslending office, (c) any withholding Taxes imposed under FATCA, and (d) Taxes attributable to such Recipient’s failure to complywith Section 5.03(e).“Expense Cap” has the meaning set forth in the Fee Letter.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION8 “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successorversion that is substantively comparable and not materially more onerous to comply with), any current or future regulationspromulgated thereunder or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code andany fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention amongGovernmental Authorities and implementing such Sections of the Code.“Federal Funds Effective Rate” means, for any day, the weighted average of the rates on overnight federal funds transactionswith members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day bythe Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of thequotations for the day of such transactions received by Administrative Agent from three federal funds brokers of recognized standingselected by it.“Fee Letter” means that fee letter agreement dated as of the date hereof between Borrower and Administrative Agent.“First-Tier Foreign Subsidiary” means an Excluded Foreign Subsidiary that is a direct Subsidiary of an Obligor.“Foreign Lender” means a Lender that is not a U.S. Person.“Foreign Subsidiary” means a Subsidiary of Borrower that is not a U.S. Person.“FSHCO” means an entity that owns (directly or indirectly) no material assets other than Equity Interests (or Equity Interestsand debt interests) of one or more Controlled Foreign Corporations. “GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time, setforth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified PublicAccountants, in the statements and pronouncements of the Financial Accounting Standards Board and in such other statements by suchother entity as may be in general use by significant segments of the accounting profession that are applicable to the circumstances as ofthe date of determination. Subject to Section 1.02, all references to “GAAP” shall be to GAAP applied consistently with the principlesused in the preparation of the financial statements described in Section 7.04(a).“Governmental Approval” means any consent, authorization, approval, order, license, franchise, permit, certificate,accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.“Governmental Authority” means any nation, government, branch of power (whether executive, legislative or judicial), state,province or municipality or other political subdivision thereof and any entity exercising executive, legislative, judicial, monetary,regulatory or administrative functions of or pertaining to government, including regulatory authorities,[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION9 governmental departments, agencies, commissions, bureaus, officials, ministers, courts, bodies, boards, tribunals and dispute settlementpanels, and other law-, rule- or regulation-making organizations or entities of any State, territory, county, city or other politicalsubdivision of the United States.“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantorguaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primaryobligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchaseor pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advanceor supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for thepurpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equitycapital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay suchIndebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support suchIndebtedness or obligation; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinarycourse of business.“Guarantee Assumption Agreement” means a Guarantee Assumption Agreement substantially in the form of Exhibit A by anentity that, pursuant to Section 8.12(a), is required to become a “Subsidiary Guarantor” hereunder.“Guaranteed Obligations” has the meaning set forth in Section 14.01.“Hazardous Material” means any substance, element, chemical, compound, product, solid, gas, liquid, waste, by-product,pollutant, contaminant or material which is hazardous or toxic, and includes (a) asbestos, polychlorinated biphenyls and petroleum(including crude oil or any fraction thereof) and (b) any material classified or regulated as “hazardous” or “toxic” or words of likeimport pursuant to an Environmental Law.“Hedging Agreement” means any interest rate exchange agreement, foreign currency exchange agreement, commodity priceprotection agreement or other interest or currency exchange rate or commodity price hedging arrangement.“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or obligationsof such Person with respect to deposits or advances of any kind by third parties, (b) all obligations of such Person evidenced by bonds,debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) allobligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) allobligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payableincurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness hasan existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or notthe Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION10 Indebtedness or other obligations of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise,of such Person as an account party in respect of letters of credit and letters of guaranty, (j) obligations under any Hedging Agreementcurrency swaps, forwards, futures or derivatives transactions, (k) all obligations, contingent or otherwise, of such Person in respect ofbankers’ acceptances, (l) all obligations of such Person under license or other agreements containing a guaranteed minimum paymentor purchase by such Person, and (m) all Equity Interests of such Person subject to repurchase or redemption rights or obligations(excluding repurchases or redemptions at the sole option of such Person). The Indebtedness of any Person shall include theIndebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liabletherefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of suchIndebtedness provide that such Person is not liable therefor. For purposes of clarification, operating lease obligations shall not bedeemed to be “Indebtedness” hereunder.“Indemnified Party” has the meaning set forth in Section 13.03(b).“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or onaccount of any Obligation and (b) to the extent not otherwise described in clause (a), Other Taxes.“Insolvency Proceeding” means (a) any case, action or proceeding before any court or other Governmental Authority relatingto bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any generalassignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of anyPerson’s creditors generally or any substantial portion of such Person’s creditors, in each case undertaken under U.S. Federal, state orforeign law, including the Bankruptcy Code.“Intellectual Property” means all Patents, Trademarks, Copyrights, and Technical Information, whether registered or not,domestic and foreign. Intellectual Property shall include all:(a) applications or registrations relating to such Intellectual Property;(b) rights and privileges arising under applicable Laws with respect to such Intellectual Property;(c) rights to sue for past, present or future infringements of such Intellectual Property; and(d) rights of the same or similar effect or nature in any jurisdiction corresponding to such Intellectual Property throughout theworld.“Interest-Only Period” means the period from and including the first Borrowing Date and through and including the twentythird (23rd) Payment Date following the first Borrowing Date, which Payment Date shall be June 30, 2024.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION11 “Interest Period” means, with respect to each Borrowing, (a) initially, the period commencing on and including the BorrowingDate thereof and ending on and including the next Payment Date, and, (b) thereafter, each period beginning on and including the lastday of the immediately preceding Interest Period and ending on and including the next succeeding Payment Date.“Invention” means any novel, inventive and useful art, apparatus, method, process, machine (including article or device),manufacture or composition of matter, or any novel, inventive and useful improvement in any art, method, process, machine (includingarticle or device), manufacture or composition of matter.“Investment” means, for any Person: (a) the acquisition (whether for cash, property, services or securities or otherwise) ofcapital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or anyagreement to make any such acquisition (including any “short sale” or any sale of any securities at a time when such securities are notowned by the Person entering into such sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, anyother Person (including the purchase of property from another Person subject to an understanding or agreement, contingent orotherwise, to resell such property to such Person), but excluding any such advance, loan or extension of credit having a term notexceeding 90 days arising in connection with the sale of inventory or supplies by such Person in the ordinary course of business; (c)the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Personand (without duplication) any amount committed to be advanced, lent or extended to such Person; or (d) the entering into of anyHedging Agreement.“IRS” means the U.S. Internal Revenue Service or any successor agency, and to the extent relevant, the U.S. Department ofthe Treasury.“Knowledge” means, with respect to any Person, the actual knowledge of any Responsible Officer of such Person including, inthe case of Borrower, the actual knowledge of the CEO, CFO or VP of Finance.“Landlord Consent” means a Landlord Consent substantially in the form of Exhibit F.“Laws” means, collectively, all international, foreign, federal, state, provincial, territorial, municipal and local statutes, treaties,rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation oradministration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and allapplicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, anyGovernmental Authority, in each case whether or not having the force of law.“Lender” means each Person listed as a “Lender” on a signature page hereto, together with its successors, and each assignee ofa Lender pursuant to Section 13.05(b).“Lender Participation Notice” has the meaning set forth in Section 3.03(c)(iii).[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION12 “Lien” means any mortgage, lien, pledge, charge or other security interest, or any lease, title retention agreement, mortgage,restriction, easement, right-of-way, option or adverse claim (of ownership or possession) or other encumbrance of any kind or characterwhatsoever or any preferential arrangement that has the practical effect of creating a security interest.“Liquidity” means the balance of unencumbered (other than by Liens described in Sections 9.02(a), 9.02(c) (provided thatthere is no default under the documentation governing the Permitted Priority Debt) and 9.02(j)) cash and Permitted Cash EquivalentInvestments (which for greater certainty shall not include any undrawn credit lines), in each case to the extent held in an account overwhich the Secured Parties have a perfected security interest.“Loan” means (a) each loan advanced by a Lender pursuant to Section 2.01 and (b) each PIK Loan deemed to have beenadvanced by a Lender pursuant to Section 3.02(d). For purposes of clarification, any calculation of the aggregate outstanding principalamount of Loans on any date of determination shall include both the aggregate principal amount of loans advanced pursuant to Section2.01 and not yet repaid, and all PIK Loans deemed to have been advanced and not yet repaid, on or prior to such date ofdetermination.“Loan Documents” means, collectively, this Agreement, the Disclosure Letter, the Fee Letter, the Security Documents, eachWarrant, any subordination agreement or any intercreditor agreement entered into by Administrative Agent (on behalf of the Lenders)with any other creditors of Obligors or any agent acting on behalf of such creditors, and any other present or future document,instrument, agreement or certificate executed by Obligors and delivered to Administrative Agent or any Secured Party in connectionwith or pursuant to this Agreement or any of the other Loan Documents, all as amended, restated, supplemented or otherwise modified.“Loss” means judgments, debts, liabilities, expenses, costs, damages or losses, contingent or otherwise, whether liquidated orunliquidated, matured or unmatured, disputed or undisputed, contractual, legal or equitable, including loss of value, professional fees,including fees and disbursements of legal counsel on a full indemnity basis, and all costs incurred in investigating or pursuing anyClaim or any proceeding relating to any Claim.“Majority Lenders” means, at any time, Lenders having at such time in excess of 50% of the aggregate Commitments (or, ifsuch Commitments are terminated, the outstanding principal amount of the Loans) then in effect, ignoring, in such calculation, theCommitments of and outstanding Loans owing to any Defaulting Lender.“Margin Stock” means “margin stock” within the meaning of Regulations U and X.“Material Adverse Change” and “Material Adverse Effect” mean a material adverse change in or effect on (a) the business,financial condition, operations, performance or Property of Borrower and its Subsidiaries taken as a whole, (b) the ability of anyObligor to perform its obligations under the Loan Documents, or (c) the legality, validity, binding effect or enforceability of the LoanDocuments or the rights and remedies of Administrative Agent or any Lender under any of the Loan Documents. For the avoidance ofdoubt, the following events, in and of themselves, shall not constitute a Material Adverse Change or a Material Adverse Effect[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION13 (it being understood, however, that the consequences of any such event might, when considered with other events, give rise to aMaterial Adverse Change or Material Adverse Effect): (1) a claimed, or notice of, breach or termination of a PermittedCommercialization Arrangement, (2) negative or equivocal clinical study results in respect of the Product or any other product, (3)delay in the introduction of any new products, (4) a going concern qualification in an auditor’s opinion, (5) any delay in obtainingregulatory clearances or approvals to market or sell any product that does not result in the loss of the ability to sell the Product in theUnited States, (6) the initiation or continuance of litigation involving claims of infringement of a patent or trademark, ormisappropriation of intellectual property, of a third party, (7) the failure of a patent application listed on Schedule 7.05(b)(i) to issue inany jurisdiction in which it is filed, or (8) any voluntary or involuntary recall.“Material Agreements” means (a) the agreements which are listed in Schedule 7.14 to the Disclosure Letter (as updated byBorrower from time to time in accordance with Section 7.20 to list all such agreements that meet the description set forth in clauses (b)and (c) of this definition), (b) material inbound and outbound license agreements and (c) all other agreements held by the Obligors fromtime to time, the absence or termination of any of which would reasonably be expected to result in a Material Adverse Effect; provided,however, that “Material Agreements” exclude all: (i) licenses implied by the sale of a product; and (ii) paid-up licenses for commonlyavailable software programs under which an Obligor is the licensee. “Material Agreement” means any one such agreement.“Material Indebtedness” means, at any time, any Indebtedness of any Obligor, the outstanding principal amount of which,individually or in the aggregate, exceeds $1,000,000 (or the Equivalent Amount in other currencies).“Material Intellectual Property” means, the Obligor Intellectual Property described in Schedule 7.05(c) to the DisclosureLetter and any other Obligor Intellectual Property after the date hereof the loss of which would reasonably be expected to have aMaterial Adverse Effect.“Maturity Date” means the earlier to occur of (a) the Stated Maturity Date, and (b) the date on which the Loans are acceleratedpursuant to Section 11.02.“Maximum Rate” has the meaning set forth in Section 13.18.“Minimum Required Revenue” has the meaning set forth in Section 10.02.“Multiemployer Plan” means any multiemployer plan, as defined in Section 400l(a)(3) of ERISA, to which any ERISAAffiliate incurs or otherwise has any obligation or liability, contingent or otherwise.“nCounter Elements” means general purpose reagents containing generic reporter probes and capture probes that customerscan combine with independently sourced oligonucleotides to create their own customized reagents.“Non-Consenting Lender” has the meaning set forth in Section 2.06(a).[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION14 “Non-Disclosure Agreement” has the meaning set forth in Section 13.16.“Non-Disturbance Agreement” means a non-disturbance agreement in substantially the form attached hereto as Exhibit J.“Non-Obligor Subsidiary” means a Non-Obligor Subsidiary.“Notice of Default Interest” has the meaning set forth in Section 3.02(b).“Notice of Borrowing” has the meaning set forth in Section 2.02.“Obligations” means, with respect to any Obligor, all amounts, obligations, liabilities, covenants and duties of every type anddescription owing by such Obligor to Administrative Agent, any Lender, any other indemnitee hereunder or any participant, arising outof, under, or in connection with, any Loan Document, whether direct or indirect (regardless of whether acquired by assignment),absolute or contingent, due or to become due, whether liquidated or not, now existing or hereafter arising and however acquired, andwhether or not evidenced by any instrument or for the payment of money, including, without duplication, (a) if such Obligor isBorrower, all Loans, (b) all interest, whether or not accruing after the filing of any petition in bankruptcy or after the commencement ofany insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed inany such proceeding, and (c) all other fees, expenses (including fees, charges and disbursements of counsel), interest, commissions,charges, costs, disbursements, indemnities and reimbursement of amounts paid and other sums chargeable to such Obligor under anyLoan Document.“Obligor Intellectual Property” means Intellectual Property owned by or licensed to any of the Obligors.“Obligors” means, collectively, Borrower and the Subsidiary Guarantors and their respective successors and permitted assigns.“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.“Offered Loans” has the meaning set forth in Section 3.03(c)(iii).“Original Loan Agreement” has the meaning set forth in the introduction hereto.“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connectionbetween such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed,delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under,engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or LoanDocument).“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arisefrom any payment made under, from the execution,[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION15 delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise withrespect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (otherthan an assignment made pursuant to Section 5.03(g)).“Participant” has the meaning set forth in Section 13.05(e).“Participant Register” has the meaning set forth in Section 13.05(f).“Patents” has the meaning set forth in the Security Agreement.“Payment Date” means each March 31, June 30, September 30, December 31 and the Maturity Date, commencing on the firstsuch date to occur following the first Borrowing Date; provided that, if any such date shall occur on a day that is not a Business Day,the applicable Payment Date shall be the next preceding Business Day.“Payment In Full” means that (i) the Commitments shall have expired or been terminated and (ii) all Obligations (other thanWarrant Obligations and inchoate indemnification obligations for which no claim has been made) shall have been paid in fullindefeasibly in cash.“PBGC” means the United States Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successorentity performing similar functions.“Permitted Acquisition” means any acquisition by Borrower or any of its wholly-owned Subsidiaries, whether by purchase,merger or otherwise, of all or substantially all of the assets of, all of the Equity Interests of, or a business line or unit or a division of,any Person; provided that:(a) immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and becontinuing or would result therefrom;(b) all transactions in connection therewith shall be consummated, in all material respects, in accordance with allapplicable Laws and in conformity with all applicable Governmental Approvals;(c) in the case of the acquisition of all of the Equity Interests of such Person, all of the Equity Interests (except for anysuch securities in the nature of directors’ qualifying shares required pursuant to applicable Law) acquired, or otherwise issuedby such Person or any newly formed Subsidiary of Borrower in connection with such acquisition, shall be owned 100% by anObligor or any other Subsidiary, and Borrower shall have taken, or caused to be taken, as of the date such Person becomes aSubsidiary of Borrower, each of the actions set forth in Section 8.12, if applicable;(d) Borrower and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 10.01 andSection 10.02 on a pro forma basis after giving effect to such acquisition; and[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION16 (e) such Person (in the case of an acquisition of Equity Interests) or assets (in the case of an acquisition of assets or adivision) (i) shall be engaged or used, as the case may be, in the same or similar business or lines of business, or businessesancillary thereto, in which Borrower and/or its Subsidiaries are engaged or (ii) shall have a similar customer base as Borrowerand/or its Subsidiaries.“Permitted Acquisition Basket” means the difference of an amount equal to the Cap (as defined below) minus (i) totalconsideration for all such Permitted Acquisitions permitted in reliance on Section 9.03(e), minus (ii) the aggregate amount ofIndebtedness permitted in reliance on Section 9.01(m) or (n), minus (iii) the aggregate amount of unfunded Investments permitted inreliance on Section 9.05(q), minus (iv) the aggregate amount of payments permitted in reliance on Section 9.06(k). For purposes ofthis definition, “Cap” means, with respect to any transaction, an amount that satisfies any of the following characteristics: an amount (i)not exceeding 40% of Borrower’s market capitalization at the time the transaction is first disclosed to Administrative Agent or (ii) inexcess of 40% of Borrower’s market capitalization at the time the transaction is first disclosed to Lenders, but only with AdministrativeAgent’s prior consent, not to be unreasonably withheld.“Permitted Cash Equivalent Investments” means (a) marketable direct obligations issued or unconditionally guaranteed by theUnited States or any agency or any State thereof having maturities of not more than two (2) years from the date of acquisition, (b)commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’sRatings Group or Moody’s Investors Service, Inc., and (c) money market funds registered according to SEC Rule 2a-7 of theInvestment Company Act of 1940, as amended, with assets under management of at least $1,000,000,000.“Permitted Commercialization Arrangement” means such commercialization, research and development, co-marketing andother collaborative arrangements, including joint ventures, whether or not such arrangements provide for licenses to Patents,Trademarks, Copyrights or other Intellectual Property rights and assets of Borrower, with Persons (including a PermittedCommercialization Arrangement Vehicle) with a primary line of business in the development, commercialization or manufacture ofmedical, diagnostic or pharmaceutical products or devices; provided that any such licenses must be bona fide arms’-length transfers ofthe right to use such Intellectual Property that do not have the economic substance of a sale and Borrower retains legal ownership ofsuch Intellectual Property.“Permitted Commercialization Arrangement Vehicle” means an entity, which may be a joint venture enterprise, engaged inthe business of a Permitted Commercialization Arrangement and in which the Borrower or its Subsidiaries have substantialrepresentation in the governing body of such entity.“Permitted Indebtedness” means any Indebtedness permitted under Section 9.01.“Permitted Liens” means any Liens permitted under Section 9.02.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION17 “Permitted Priority Debt” means Indebtedness of Borrower under one working capital revolving credit facility, in an amountnot to exceed at any time the sum of 80% of the face amount at such time of Borrower’s non-delinquent accounts receivable and 50%of the fair market value of Borrower’s eligible inventory at the time of any advance; provided that (a) such Indebtedness (i) if secured,is secured solely by (subject to the following clause (ii)) Borrower’s (A) inventory, (B) accounts or proceeds arising from the sale orlease of inventory or the provision of services, (C) books and records relating to the foregoing collateral, and/or (D) segregatedproceeds of the foregoing (including any deposit accounts, securities accounts or commodities accounts holding solely such proceeds),and (ii) is not secured by (A) any Intellectual Property or licenses thereof, (B) equipment, (C) any accounts or proceeds arising fromthe sale, transfer, license or other disposition of any Intellectual Property or licenses or equipment, or (D) proceeds of Loans or ofCollateral that does not secure such Permitted Priority Debt, and (b) the holders or lenders thereof have executed and delivered toAdministrative Agent an intercreditor agreement in substantially the form of Exhibit H and with such changes (if any) as are mutuallysatisfactory to Administrative Agent and the provider of such Indebtedness. Notwithstanding the foregoing, Permitted Priority Debtincludes the Indebtedness under the SVB Credit Agreement (as defined in the Intercreditor Agreement, dated as of January 5, 2018,between CRG Servicing and Silicon Valley Bank, a California corporation, which references the Original Loan Agreement).“Permitted Priority Liens” means (a) Liens permitted under Section 9.02(c), (d), (e), (f), (g), (j) and (n), and (b) Lienspermitted under Section 9.02(b); provided that such Liens are also of the type described in Section 9.02(c), (d), (e), (f), (g), (j) and(n).“Permitted Refinancing” means, with respect to any Indebtedness, any extensions, renewals and replacements of suchIndebtedness; provided that such extension, renewal or replacement (a) shall not increase the outstanding principal amount of suchIndebtedness, (b) contains terms relating to outstanding principal amount, amortization, maturity, collateral (if any) and subordination(if any), and other material terms taken as a whole no less favorable in any material respect to Borrower and its Subsidiaries or theSecured Parties than the terms of any agreement or instrument governing such existing Indebtedness, (c) shall have an applicableinterest rate which does not exceed the rate of interest of the Indebtedness being replaced, and (d) shall not contain any newrequirement to grant any lien or security or to give any guarantee that was not an existing requirement of such Indebtedness.“Permitted Subordinated Debt” means Indebtedness incurred, so long as Borrower is a Publicly Reporting Company, pursuantto registration under Rule 144A (a) that is governed by documentation containing representations, warranties, covenants and events ofdefault no more burdensome or restrictive than those contained in the Loan Documents unless such terms are also offered to theLenders, (b) that has a maturity date later than the Stated Maturity Date, (c) in respect of which no cash principal payments are requiredprior to the Stated Maturity Date, (d) that has a maximum annual cash interest rate of 6% prior to the Stated Maturity Date, (e) that isunsecured except by an interest escrow account (a “Subordinated Debt Interest Escrow Account”) funded by the proceeds of suchIndebtedness which holds no more than the cash interest due in respect of the next three years on the outstanding principal amount ofsuch[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION18 Indebtedness, and (f) that is governed by subordination terms that are no less favorable to Secured Parties than as set forth in ExhibitG.“Person” means any individual, corporation, company, voluntary association, partnership, limited liability company, jointventure, trust, unincorporated organization or Governmental Authority or other entity of whatever nature.“PIK Loan” has the meaning set forth in Section 3.02(d).“PIK Period” means the period beginning on the first Borrowing Date through and including the earlier to occur of (a) thetwenty third (23rd) Payment Date after the first Borrowing Date, which Payment Date shall be June 30, 2024, and (b) the date onwhich any Default shall have occurred (provided that if such Default shall have been cured or waived, the PIK Period shall resumeuntil the earlier to occur of the next Default and the twenty third (23rd) Payment Date after the first Borrowing Date).“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV ofERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate is (or, if suchplan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.“Prepayment Premium” means if the prepayment occurs:(A) on or prior to the fourth (4th) Payment Date, the Prepayment Premium shall be an amount equal to 4.00% of theaggregate outstanding principal amount of the Loans being prepaid on such Redemption Date;(B) after the fourth (4th) Payment Date, and on or prior to the eighth (8th) Payment Date, the Prepayment Premium shall be anamount equal to 3.00% of the aggregate outstanding principal amount of the Loans being prepaid on such Redemption Date; and(C) after the eighth (8th) Payment Date, the Prepayment Premium shall be an amount equal to 0.00% of the aggregateoutstanding principal amount of the Loans being prepaid on such Redemption Date.The Prepayment Premium payable upon any prepayment shall be in addition to any payments required pursuant to the FeeLetter.“Product” means (a) the principal version in the market of (i) the nCounter® Analysis System and its essential components, or(ii) the nCounter-based Prosigna™ Breast Cancer Prognostic Gene Signature Assay, (b) DSP (Digital Spatial Profiling), (c) Hyb &Seq and (d) each of their respective commercially available successors.“Property” of any Person means any property or assets, or interest therein, of such Person.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION19 “Proportionate Share” means, with respect to any Lender, the percentage obtained by dividing (a) the Commitment (or, if theCommitments are terminated, the outstanding principal amount of the Loans) of such Lender then in effect by (b) the sum of theCommitments (or, if the Commitments are terminated, the outstanding principal amount of the Loans) of all Lenders then in effect.“Proposed Discounted Prepayment Amount” has the meaning set forth in Section 3.03(c)(ii).“Publicly Reporting Company” means an issuer generally subject to the public reporting requirements of the Securities andExchange Act of 1934.“Qualified FPO” means an underwritten follow on public offering of the securities exchange-listed Equity Interests ofBorrower, excluding such offerings to which only Strategic Investors subscribe.“Qualified Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (a)that is or was at any time maintained or sponsored by any Obligor or any ERISA Affiliate thereof or to which any Obligor or anyERISA Affiliate thereof has ever made, or was ever obligated to make, contributions, and (b) that is intended to be tax qualified underSection 401(a) of the Code.“Qualifying Lenders” has the meaning set forth in Section 3.03(c)(iv).“Qualifying Loans” has the meaning set forth in Section 3.03(c)(iv).“Real Property Security Documents” means the Landlord Consent and any mortgage or deed of trust or any other realproperty security document executed or required hereunder to be executed by any Obligor and granting a security interest in realProperty owned or leased (as tenant) by any Obligor in favor of the Secured Parties.“Recipient” means Administrative Agent, any Lender or any other recipient of any payment to be made by or on account ofany Obligation.“Redemption Date” means, as the context may require, (i) the Payment Date on which an optional prepayment is madepursuant to Section 3.03(a), (ii) the date of an Asset Sale or Change of Control in connection with which a prepayment pursuant toSection 3.03(b), (iii) the date mandated by a Requirement of Law as described in Section 5.02(b), (iv) the date on which Loansbecome due and payable pursuant to Section 11.02(a) or (b), and (v) in the event that Loans become due and payable prior to theStated Maturity Date for any reason not related to the foregoing clauses (i) through (iv), the date on which a prepayment is due.“Redemption Price” means amount equal to the aggregate principal amount of the Loans being prepaid plus the PrepaymentPremium plus any accrued but unpaid interest and any fees then due and owing (including any fees payable pursuant to the Fee Letter).“Register” has the meaning set forth in Section 13.05(d).[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION20 “Regulation T” means Regulation T of the Board of Governors of the Federal Reserve System, as amended.“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as amended.“Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System, as amended.“Regulatory Approvals” means any registrations, licenses, authorizations, permits or approvals issued by any GovernmentalAuthority and applications or submissions related to any of the foregoing.“Related Person” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees,agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.“Requirement of Law” means, as to any Person, any statute, law, treaty, rule or regulation or determination, order, injunctionor judgment of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or anyof its Properties or revenues.“Responsible Officer” of any Person means each of the president, chief executive officer, chief financial officer and senior vicepresident (operations/administration) of such Person.“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect toany Equity Interest of Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including anysinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any suchshares of capital stock of Borrower or any of its Subsidiaries or any option, warrant or other right to acquire any such shares of capitalstock of Borrower or any of its Subsidiaries.“Restrictive Agreement” has the meaning set forth in Section 7.15.“Revenue” of a Person means all revenue properly recognized under GAAP, consistently applied, less all rebates, discountsand other price allowances.“Sanctions” means any international economic sanction administered or enforced by the United States Government (includingOFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.“Sanctioned Jurisdiction” means any country or territory to the extent that such country or territory is the subject of anySanction.“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintainedby OFAC, the U.S. Department of State, the United[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION21 Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority, (b) any Personoperating, organized or resident in a Sanctioned Jurisdiction or (c) any Person owned or Controlled by any such person or Personsdescribed in clauses (a) and (b).“Secured Parties” means the Lenders, Administrative Agent, each other Indemnified Party and any other holder of anyObligation.“Security Agreement” means the Amended and Restated Security Agreement, dated as of the date hereof, among the Obligorsand Administrative Agent, granting a security interest in the Obligors’ personal Property in favor of the Secured Parties.“Security Documents” means, collectively, the Security Agreement, each Short-Form IP Security Agreement, each RealProperty Security Document, and each other security document, control agreement or financing statement required or recommended toperfect Liens in favor of the Secured Parties.“Securities Account” has the meaning set forth in the Security Agreement.“Short-Form IP Security Agreements” means short-form copyright, patent or trademark (as the case may be) securityagreements, entered into by one or more Obligors in favor of Administrative Agent, for the benefit of the Secured Parties, each in formand substance satisfactory to Administrative Agent (and as amended, modified or replaced from time to time).“Solvent” means, with respect to any Person at any time, that (a) the present fair saleable value of the Property of such Personis greater than the total amount of liabilities (including contingent liabilities) of such Person, (b) the present fair saleable value of theProperty of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as theybecome absolute and matured and (c) such Person has not incurred and does not intend to, and does not believe that it will, incur debtsor liabilities beyond such Person’s ability to pay as such debts and liabilities mature.“Specified Financial Covenants” has the meaning set forth in Section 10.03(a).“Stated Maturity Date” means the twenty fourth (24th) Payment Date following the first Borrowing Date, which Payment Dateshall be September 30, 2024.“Strategic Investor” means a non-financial investor with operations in a field analogous or relating to the Borrower’s business,as determined by the Borrower’s Board of Directors in its business judgment.“Subordinated Debt Cure Right” has the meaning set forth in Section 10.03(a).“Subordinated Debt Interest Escrow Account” has the meaning set forth in the definition of Permitted Subordinated Debt.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION22 “Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company,partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’sconsolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as anyother corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interestsrepresenting more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than50% of the general partnership interests are, as of such date, owned, controlled or held by the parent or one or more subsidiaries of theparent or by the parent and one or more subsidiaries of the parent or (b) that is, as of such date, otherwise Controlled by the parent orone or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless the context requiresotherwise, “Subsidiary” refers to a Subsidiary of Borrower.“Subsidiary Guarantors” means each of the Subsidiaries of Borrower identified under the caption “SUBSIDIARYGUARANTORS” on the signature pages hereto and each Subsidiary of Borrower that becomes, or is required to become, a“Subsidiary Guarantor” after the date hereof pursuant to Section 8.12(a) or (b).“Substitute Lender” has the meaning set forth in Section 2.06(a).“Tax Returns” has the meaning set forth in Section 7.08.“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding),assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penaltiesapplicable thereto.“Technical Information” means all trade secrets and other proprietary or confidential information, which may includeinformation of a scientific, technical, or business nature in any form or medium, standards and specifications, conceptions, ideas,innovations, discoveries, Invention disclosures, all documented research, developmental, demonstration or engineering work, data,plans, reports, summaries, experimental data, manuals, models, samples, know-how, technical information, systems, methodologies,computer programs or information technology.“Title IV Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (i) thatis or was at any time maintained or sponsored by any Obligor or any ERISA Affiliate thereof or to which any Obligor or any ERISAAffiliate thereof has ever made, or was obligated to make, contributions, and (ii) that is or was subject to Section 412 of the Code,Section 302 of ERISA or Title IV of ERISA.“Trademarks” is defined in the Security Agreement.“Transactions” means the execution, delivery and performance by each Obligor of this Agreement and the other LoanDocuments to which such Obligor is intended to be a party and the Borrowings (and the use of the proceeds of the Loans).[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION23 “U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.“U.S. Tax Compliance Certificate” has the meaning set forth in Section 5.03(e)(ii)(B)(3).“Warrant” means each warrant to purchase Equity Interests of Borrower, issued by Borrower to the Lenders in connectionwith the Transactions, per the Warrant Shares table on Schedule 1.“Warrant Obligations” means, with respect to any Obligor, all Obligations arising out of, under or in connection with, anyWarrant.“Withdrawal Liability” means, at any time, any liability incurred (whether or not assessed) by any ERISA Affiliate and not yetsatisfied or paid in full at such time with respect to any Multiemployer Plan pursuant to Section 4201 of ERISA.“Withholding Agent” means any Obligor and Administrative Agent.1.02 Accounting Terms and Principles. All accounting determinations required to be made pursuant hereto shall, unless expresslyotherwise provided herein, be made in accordance with GAAP. All components of financial calculations made to determinecompliance with this Agreement, including Section 10, shall be adjusted to include or exclude, as the case may be, withoutduplication, such components of such calculations attributable to any Acquisition consummated after the first day of the applicableperiod of determination and prior to the end of such period, as determined in good faith by Borrower based on assumptions expressedtherein and that were reasonable based on the information available to Borrower at the time of preparation of the ComplianceCertificate setting forth such calculations.1.03 Interpretation. For all purposes of this Agreement, except as otherwise expressly provided herein or unless the contextotherwise requires, (a) the terms defined in this Agreement include the plural as well as the singular and vice versa; (b) wordsimporting gender include all genders; (c) any reference to a Section, Annex, Schedule or Exhibit refers to a Section of, or Annex,Schedule or Exhibit to, this Agreement; (d) any reference to “this Agreement” refers to this Agreement, including all Annexes,Schedules and Exhibits hereto, and the words herein, hereof, hereto and hereunder and words of similar import refer to this Agreementand its Annexes, Schedules and Exhibits as a whole and not to any particular Section, Annex, Schedule, Exhibit or any othersubdivision; (e) references to days, months and years refer to calendar days, months and years, respectively; (f) all references herein to“include” or “including” shall be deemed to be followed by the words “without limitation”; (g) the word “from” when used inconnection with a period of time means “from and including” and the word “until” means “to but not including”; and (h) accountingterms not specifically defined herein shall be construed in accordance with GAAP (except for the term “property” , which shall beinterpreted as broadly as possible, including, in any case, cash, securities, other assets, rights under contractual obligations and permitsand any right or interest in any property, except where otherwise noted). Unless otherwise expressly provided herein, references toorganizational documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to includeall[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION24 permitted subsequent amendments, restatements, extensions, supplements and other modifications thereto.1.04 Changes to GAAP. If, after the date hereof, any change occurs in GAAP or in the application thereof and such change wouldcause any amount required to be determined for the purposes of the covenants to be maintained or calculated pursuant to Section 8, 9or 10 to be materially different than the amount that would be determined prior to such change, then:(a) Borrower will provide a detailed notice of such change (an “Accounting Change Notice”) to Administrative Agentconcurrently with the delivery of the next Compliance Certificate;(b) either Borrower or the Majority Lenders may indicate within 90 days following the date of the Accounting Change Noticethat they wish to revise the method of calculating such financial covenants or amend any such amount, in which case the parties will ingood faith attempt to agree upon a revised method for calculating the financial covenants;(c) until Borrower and the Majority Lenders have reached agreement on such revisions, (i) such financial covenants oramounts will be determined without giving effect to such change and (ii) all financial statements, Compliance Certificates and similardocuments provided hereunder shall be provided together with a reconciliation between the calculations and amounts set forth thereinbefore and after giving effect to such change in GAAP;(d) if no party elects to revise the method of calculating the financial covenants or amounts, then the financial covenants oramounts will not be revised and will be determined in accordance with GAAP without giving effect to such change; and(e) any Event of Default arising as a result of such change which is cured by operation of this Section 1.04 shall be deemed tobe of no effect ab initio.SECTION 2THE COMMITMENT2.01 Commitments. Each Lender agrees severally, on and subject to the terms and conditions of this Agreement (including Section6), to make up to three term loans (provided that PIK Loans shall be deemed not to constitute “term loans” for purposes of this Section2.01) to Borrower, each on a Business Day during the Commitment Period in Dollars in an aggregate principal amount for suchLender not to exceed such Lender’s unfunded Commitment; provided, however, that no Lender shall be obligated to make a Loan inexcess of such Lender’s Proportionate Share of the applicable amount of any Borrowing set forth in Section 6 (if any) other than PIKLoans. Amounts of Loans repaid may not be reborrowed.2.02 Borrowing Procedures. Subject to the terms and conditions of this Agreement (including Section 6), each Borrowing (otherthan a Borrowing of PIK Loans) shall be made on written notice in the form of Exhibit B given by Borrower to Administrative Agentnot later than 11:00 a.m. (Central time) on the Borrowing Notice Date (a “Notice of Borrowing”).[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION25 2.03 Fees. Borrower shall pay to Administrative Agent and/or the Lenders, as applicable, such fees as described in the Fee Letter.2.04 Use of Proceeds. Borrower shall use the proceeds of the Loans for repayment of all outstanding Indebtedness and obligationsunder the Original Loan Agreement, general working capital purposes and corporate purposes and to pay fees, costs and expensesincurred in connection with the Transactions; provided that the Lenders shall have no responsibility as to the use of any proceeds ofLoan.2.05 Defaulting Lenders.(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a DefaultingLender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver orconsent with respect to this Agreement shall be restricted as set forth in Section 13.04.(ii) Reallocation of Payments. Any payment of principal, interest, fees or other amounts received by the Lenders forthe account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 11 or otherwise), shall beapplied at such time or times as follows: first, as Borrower may request (so long as no Default exists), to the funding of any Loan inrespect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement; second, if so determinedby the Majority Lenders and Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligationsof such Defaulting Lender to fund Loans under this Agreement; third, to the payment of any amounts owing to the Lenders as a resultof any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of suchDefaulting Lender’s breach of its obligations under this Agreement; fourth, so long as no Default exists, to the payment of any amountsowing to Borrower as a result of any judgment of a court of competent jurisdiction obtained by Borrower against such DefaultingLender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to such Defaulting Lender oras otherwise directed by a court of competent jurisdiction; provided that if (A) such payment is a payment of the principal amount ofany Loans in respect of which such Defaulting Lender has not fully funded its appropriate share and (B) such Loans were made at atime when the conditions set forth in Section 6 were satisfied or waived, such payment shall be applied solely to pay the Loans of allnon-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender. Anypayments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by aDefaulting Lender pursuant to this Section 2.05(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and eachLender irrevocably consents hereto.(b) Defaulting Lender Cure. If Borrower and the Majority Lenders agree in writing in their sole discretion that a DefaultingLender should no longer be deemed to be a Defaulting Lender, that Lender will, to the extent applicable, purchase that portion ofoutstanding Loans of[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION26 the other Lenders or take such other actions as necessary to cause the Loans to be held on a pro rata basis by the Lenders inaccordance with their Proportionate Share, whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustmentswill be made retroactively with respect to fees accrued or payments made by or on behalf of Borrower while that Lender was aDefaulting Lender; and provided further that, except to the extent otherwise expressly agreed by the affected parties, no changehereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from thatLender’s having been a Defaulting Lender.2.06 Substitution of Lenders.(a) Substitution Right. If any Lender (an “Affected Lender”), (i) becomes a Defaulting Lender or (ii) does not consent to anyamendment, waiver or consent to any Loan Document for which the consent of the Majority Lenders is obtained but that requires theconsent of other Lenders (a “Non-Consenting Lender”), then (x) Borrower may elect to pay in full such Affected Lender with respectto all Obligations due to such Affected Lender (which for the avoidance of doubt, shall not include any Prepayment Premium due) or(y) either Borrower or Administrative Agent shall identify any willing Lender or Affiliate of any Lender or Eligible Transferee (in eachcase, a “Substitute Lender”) to substitute for such Affected Lender; provided that any substitution of a Non-Consenting Lender shalloccur only with the consent of Administrative Agent.(b) Procedure. To substitute such Affected Lender or pay in full all Obligations owed to such Affected Lender, Borrowershall deliver a notice to such Affected Lender. The effectiveness of such payment or substitution shall be subject to the delivery byBorrower (or, as may be applicable in the case of a substitution, by the Substitute Lender) of (i) payment for the account of suchAffected Lender, of, to the extent accrued through, and outstanding on, the effective date for such payment or substitution, allObligations owing to such Affected Lender (which for the avoidance of doubt, shall not include any Prepayment Premium) and (ii) inthe case of a substitution, an Assignment and Assumption executed by the Substitute Lender, which shall thereunder, among otherthings, agree to be bound by the terms of the Loan Documents; provided, however, that if the Affected Lender does not execute suchAssignment and Acceptance within ten (10) Business Days of delivery of the notice required hereunder, such Affected Lender shall bedeemed to have executed such Assignment and Acceptance.(c) Effectiveness. Upon satisfaction of the conditions set forth in Sections 2.06(a) and (b), Administrative Agent shall recordsuch substitution or payment in the Register, whereupon (i) in the case of any payment in full of an Affected Lender, such AffectedLender’s Commitments shall be terminated and (ii) in the case of any substitution of an Affected Lender, (A) such Affected Lendershall sell and be relieved of, and the Substitute Lender shall purchase and assume, all rights and claims of such Affected Lender underthe Loan Documents, except that the Affected Lender shall retain such rights under the Loan Documents that expressly provide thatthey survive the repayment of the Obligations and the termination of the Commitments, (B) such Affected Lender shall no longerconstitute a “Lender” hereunder and such Substitute Lender shall become a “Lender” hereunder and (C) such Affected Lender shall[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION27 execute and deliver an Assignment and Assumption to evidence such substitution; provided, however, that the failure of any AffectedLender to execute any such Assignment and Assumption shall not render such sale and purchase (or the corresponding assignment)invalid.2.07 Permitted Commercialization Arrangements. Lenders each understand and agree that Borrower and its Subsidiaries willenter into Permitted Commercialization Arrangements that will, in the reasonable opinion of Borrower’s Board of Directors, supportthe business and operations of Borrower and permit Borrower to repay the Obligations hereunder. Lenders further agree to cooperatereasonably with Borrower in implementing such Permitted Commercialization Arrangements, which cooperation will include enteringinto Non-Disturbance Agreements or other similar agreements with such modifications thereto as shall be reasonably requested byBorrower and the counterparties thereto unless such modifications are materially adverse to the interest of Lenders.SECTION 3PAYMENTS OF PRINCIPAL AND INTEREST3.01 Repayment.(a) Repayment. During the Interest-Only Period, no scheduled payments of principal of the Loans shall be due. Borroweragrees to repay to the Lenders the outstanding principal amount of the Loans on the Maturity Date.(b) Application. Any optional or mandatory prepayment of the Loans shall be applied to the installments thereof underSection 3.01(a) in the inverse order of maturity. To the extent not previously paid, the principal amount of the Loans, together with allother outstanding Obligations (other than Warrant Obligations), shall be due and payable on the Maturity Date.3.02 Interest.(a) Interest Generally. Subject to Section 3.02(d), Borrower agrees to pay to the Lenders interest on the unpaid principalamount of the Loans and the amount of all other outstanding Obligations, in the case of the Loans, for the period from the applicableBorrowing Date and, in the case of any other Obligation (but for the avoidance of doubt, excluding any Warrant Obligations), from thedate such other Obligation is due and payable, in each case, until paid in full, at a rate per annum equal to 10.50%.(b) Default Interest. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing, as of the earlier of(i) the date on which the Lenders deliver to Borrower a written notice pursuant to this Section 3.02(b) (such notice, a “Notice ofDefault Interest”) that the Loans shall bear interest at the Default Rate because an Event of Default has occurred and is continuing,and (ii) if Borrower shall have failed to deliver notice pursuant to Section 8.02(a)(i) of such Event of Default, the date on which suchEvent of Default occurred, and during the continuance of any such Event of Default, the interest payable pursuant to Section 3.02(a)shall increase by 2.00% per annum (such aggregate increased rate, the “Default Rate”). Notwithstanding any other provision herein(including Section 3.02(d)), if interest is required to[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION28 be paid at the Default Rate, it shall be paid entirely in cash. If any other Obligation is not paid when due under the applicable LoanDocument, the amount thereof shall accrue interest at a rate equal to 2.00% per annum (without duplication of interest payable at theDefault Rate).(c) Interest Payment Dates. Subject to Section 3.02(d), accrued interest on the Loans shall be payable in arrears on eachPayment Date with respect to the most recently completed Interest Period in cash, and upon the payment or prepayment of the Loans(on the principal amount being so paid or prepaid); provided that interest payable at the Default Rate shall be payable from time to timeon demand.(d) Redemption Price. For the avoidance of doubt, in the event any Loans shall become due and payable for any reason,interest pursuant to Sections 3.02(a) and (b) shall accrue on the Redemption Price for such Loans from and after the date suchRedemption Price is due and payable until paid in full.(e) Paid In-Kind Interest. Notwithstanding Section 3.02(a), at any time during the PIK Period, Borrower may elect to paythe interest on the outstanding principal amount of the Loans payable pursuant to Section 3.01 as follows: (i) only 7.50% of the10.50% per annum interest in cash and (ii) 3.00% of the 10.50% per annum interest as compounded interest, added to the aggregateprincipal amount of the Loans (the amount of any such compounded interest being a “PIK Loan”). The principal amount of each PIKLoan shall accrue interest in accordance with the provisions of this Agreement applicable to the Loans.3.03 Prepayments.(a) Optional Prepayments. Upon prior written notice to Administrative Agent delivered pursuant to Section 4.03, Borrowershall have the right to optionally prepay in whole or in part the outstanding principal amount of the Loans on any Payment Date for theRedemption Price. No partial prepayment shall be made under this Section 3.03(a) in connection with any event described in Section3.03(b).(b) Mandatory Prepayments.(i) Asset Sales. In the event of any Asset Sale or series of Asset Sales (other than any Asset Sale permitted underSection 9.09(a)—(o)), Borrower shall provide thirty (30) days’ prior written notice of such Asset Sale to Administrative Agent and, ifwithin such notice period Majority Lenders or Administrative Agent advise Borrower that the Majority Lenders require a prepaymentpursuant to this Section 3.03(b)(i), Borrower shall: (x) if the assets sold represent substantially all of the assets or Revenues ofBorrower, or represent any specific line of business which either on its own or together with other lines of business sold over the termof this Agreement account for Revenue generated by such lines of business exceeding 15% of the Revenue of Borrower in theimmediately preceding year, prepay the aggregate outstanding principal amount of the Loans in an amount equal to the RedemptionPrice applicable on the date of such Asset Sale, and (y) in the case of all other Asset Sales not described in the foregoing clause (x),prepay the Loans in an amount equal to the entire amount of the Asset Sale Net[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION29 Proceeds of such Asset Sale, plus any accrued but unpaid interest and any fees (including any fees payable pursuant to the Fee Letter)then due and owing, credited in the following order:(A) first, in reduction of Borrower’s obligation to pay any unpaid interest and any fees then due and owing;(B) second, in reduction of Borrower’s obligation to pay any Claims or Losses referred to in Section 13.03then due and owing;(C) third, in reduction of Borrower’s obligation to pay any amounts due and owing on account of the unpaidprincipal amount of the Loans;(D) fourth, in reduction of any other Obligation then due and owing; and(E) fifth, to Borrower or such other Persons as may lawfully be entitled to or directed by Borrower to receivethe remainder.(ii) Change of Control. In the event of a Change of Control, Borrower shall immediately provide notice of suchChange of Control to Administrative Agent and, if within 10 days of receipt of such notice Majority Lenders or Administrative Agentadvise Borrower that the Majority Lenders require a prepayment pursuant to this Section 3.03(b)(ii), Borrower shall prepay theaggregate outstanding principal amount of the Loans in an amount equal to the Redemption Price applicable on the date of suchChange of Control and pay any fees payable pursuant to the Fee Letter.(c) Optional Prepayments Below Par.(i) Notwithstanding anything to the contrary set forth in this Agreement or any other Loan Document, Borrower shallhave the right to prepay Loans to the Lenders up to four (4) times a calendar year at a discount to the par value of such Loans and on anon pro rata basis (each, a “Discounted Voluntary Prepayment”) pursuant to the procedures described in this Section 3.03(c);provided that (A) any Discounted Voluntary Prepayment shall be offered to all Lenders on a pro rata basis, (B) Borrower shall deliverto the Lenders, together with each Discounted Prepayment Option Notice, a certificate of a Responsible Officer of Borrower (1)certifying that no Default has occurred and is continuing or would result from the Discounted Voluntary Prepayment, (2) certifying thatneither Borrower nor any of its Affiliates has any material non-public information with respect to Borrower, its Subsidiaries or theLoans that either (a) has not been disclosed to the Lenders prior to such time, or (b) if not disclosed to the Lenders, could reasonably beexpected to have a material effect upon, or other be material to (i) a Lender’s decision to participate in a Discounted VoluntaryPrepayment, or (ii) to the market price of the Loans, (3) certifying that no Default has occurred within the six (6) months prior to thedate of such notice, (4) certifying that Borrower was not in breach of Section 10.02 hereof during the most recently completed twelve(12) month period prior to the date of such notice, (5) certifying that each of the conditions to such Discounted Voluntary Prepaymentcontained in this Section 3.03(c) has been satisfied and (6) specifying the aggregate principal amount of Loans[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION30 Borrower is offering to prepay pursuant to such Discounted Voluntary Prepayment, (C) the aggregate amount of Loans prepaidpursuant to this Section 3.03(c) (valued at the par amount thereof) shall not be less than 20% of the Loans still outstanding, and (D) aperiod of at least thirty (30) days has passed since the previous Discounted Voluntary Prepayment.(ii) To the extent Borrower seeks to make a Discounted Voluntary Prepayment, Borrower will provide written noticeto the Lenders substantially in the form of Exhibit I-1 (each, a “Discounted Prepayment Option Notice”) that Borrower desires toprepay Loans in an aggregate principal amount specified therein by Borrower (each, a “Proposed Discounted Prepayment Amount”),in each case at a discount to the par value of such Loans as specified below. The Proposed Discounted Prepayment Amount of anyLoans shall not be less than 20% of the par value of the Loans still outstanding (unless otherwise agreed by the Lenders). TheDiscounted Prepayment Option Notice shall further specify with respect to the proposed Discounted Voluntary Prepayment (A) theProposed Discounted Prepayment Amount for Loans to be prepaid, (B) a discount range (which may be a single percentage) selectedby Borrower with respect to such proposed Discounted Voluntary Prepayment equal to a percentage of par of the principal amount ofthe Loans to be prepaid (the “Discount Range”), and (C) the date by which Lenders are required to indicate their election to participatein such proposed Discounted Voluntary Prepayment, which shall be at least ten Business Days following the date of the DiscountedPrepayment Option Notice (the “Acceptance Date”).(iii) On or prior to the Acceptance Date, each such Lender may specify by written notice substantially in the form ofExhibit I-2 (each, a “Lender Participation Notice”) to the Lenders (A) a maximum discount to par (the “Acceptable Discount”)within the Discount Range (for example, a Lender specifying a discount to par of 20% would accept a purchase price of 80% of thepar value of the Loans to be prepaid) and (B) a maximum principal amount (subject to rounding requirements specified by the Lenders)of the Loans to be prepaid held by such Lender with respect to which such Lender is willing to permit a Discounted VoluntaryPrepayment at the Acceptable Discount (“Offered Loans”). Based on the Acceptable Discounts and principal amounts of the Loans tobe prepaid specified by the Lenders in the applicable Lender Participation Notice, the Lenders, in consultation with Borrower, shalldetermine the applicable discount for such Loans to be prepaid (the “Applicable Discount”), which Applicable Discount shall be (A)the percentage specified by Borrower if Borrower has selected a single percentage pursuant to Section 3.03(c)(ii) for the DiscountedVoluntary Prepayment or (B) otherwise, the highest Acceptable Discount at which Borrower can pay the Proposed DiscountedPrepayment Amount in full (determined by adding the principal amounts of Offered Loans commencing with the Offered Loans withthe highest Acceptable Discount); provided that in the event that such Proposed Discounted Prepayment Amount cannot be repaid infull at any Acceptable Discount, the Applicable Discount shall be the lowest Acceptable Discount specified by the Lenders that iswithin the Discount Range. The Applicable Discount shall be applicable for all Lenders who have offered to participate in theDiscounted Voluntary Prepayment and have Qualifying Loans (as defined below). Any Lender with outstanding Loans to be prepaidwhose Lender Participation Notice is not received by Borrower by the Acceptance Date shall be deemed to have declined to accept aDiscounted Voluntary Prepayment of any of its Loans at any discount to their par value within the Applicable Discount.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION31 (iv) Borrower shall make a Discounted Voluntary Prepayment by prepaying those Loans to be prepaid (or therespective portions thereof) offered by the Lenders (“Qualifying Lenders”) that specify an Acceptable Discount that is equal to orgreater than the Applicable Discount (“Qualifying Loans”) at the Applicable Discount; provided that if the aggregate proceedsrequired to prepay all Qualifying Loans (disregarding any interest payable at such time) would exceed the amount of aggregateproceeds required to prepay the Proposed Discounted Prepayment Amount, such amounts in each case calculated by applying theApplicable Discount, Borrower shall prepay such Qualifying Loans ratably among the Qualifying Lenders based on their respectiveprincipal amounts of such Qualifying Loans (subject to rounding requirements specified by the Lenders). If the aggregate proceedsrequired to prepay all Qualifying Loans (disregarding any interest payable at such time) would be less than the amount of aggregateproceeds required to prepay the Proposed Discounted Prepayment Amount, such amounts in each case calculated by applying theApplicable Discount, Borrower shall prepay all Qualifying Loans.(v) Each Discounted Voluntary Prepayment shall be made within five Business Days of the Acceptance Date (or suchlater date as the Lenders shall reasonably agree, given the time required to calculate the Applicable Discount and determine the amountand holders of Qualifying Loans), without premium or penalty, upon irrevocable notice substantially in the form of Exhibit I-3 (each a“Discounted Voluntary Prepayment Notice”), delivered to the Lenders no later than 1:00 p.m. New York City Time, three BusinessDays prior to the date of such Discounted Voluntary Prepayment, which notice shall (A) specify the date and amount of theDiscounted Voluntary Prepayment and the Applicable Discount determined by the Lenders, (B) certifying that neither Borrower norany of its Affiliates has any material non-public information with respect to Borrower, its Subsidiaries or the Loans that either (a) hasnot been disclosed to the Lenders prior to such time, or (b) if not disclosed to the Lenders, could reasonably be expected to be have amaterial effect upon, or other be material to (i) a Lender’s decision to participate in a Discounted Voluntary Prepayment, or (ii) to themarket price of the Loans, and (C) state that no Default or Event of Default has occurred and is continuing or would result from theDiscounted Voluntary Prepayment. If any Discounted Voluntary Prepayment Notice is given, the amount specified in such notice shallbe due and payable to the applicable Lenders, subject to the Applicable Discount on the applicable Loans, on the date specified thereintogether with accrued interest (on the par principal amount) to and including such date on the amount prepaid. The par principalamount of each Discounted Voluntary Prepayment of a Loan shall be applied to reduce the remaining installments of such Loans in theinverse order of maturity.(vi) To the extent not expressly provided for herein, each Discounted Voluntary Prepayment shall be consummatedpursuant to reasonable procedures (including as to timing, rounding, minimum amounts, Interest Periods and calculation of ApplicableDiscount in accordance with Section 3.03(c)(iii)) established by the Lenders and Borrower.(vii) Prior to the delivery of a Discounted Voluntary Prepayment Notice, (A) upon written notice to the Lenders,Borrower may withdraw or modify its offer to make a Discounted Voluntary Prepayment pursuant to any Discounted PrepaymentOption Notice and[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION32 (B) any Lender may withdraw its offer to participate in a Discounted Voluntary Prepayment pursuant to any Lender ParticipationNotice.(viii) Nothing in this Section 3.03(c) shall require Borrower to undertake any Discounted Voluntary Prepayment. NoDiscounted Voluntary Prepayment shall be subject to the requirements of Section 3.03(a), but for purposes of clarification, Borrowermay make a prepayment in accordance with, and subject to Section 3.03(a) following any Discounted Prepayment Option Notice thatfails to result in a Discounted Voluntary Prepayment being consummated.(ix) For the avoidance of doubt, any Loans that are prepaid pursuant to this Section 3.03(c) shall be deemed cancelledimmediately upon giving effect to such prepayment.SECTION 4PAYMENTS, ETC.4.01 Payments.(a) Payments Generally. Each payment of principal, interest and other amounts to be made by the Obligors under thisAgreement or any other Loan Document shall be made in Dollars, in immediately available funds, without deduction, set off orcounterclaim, to an account to be designated by Administrative Agent by notice to Borrower, not later than 4:00 p.m. (Central time) onthe date on which such payment shall become due (each such payment made after such time on such due date to be deemed to havebeen made on the next succeeding Business Day).(b) Application of Payments. Each Obligor shall, at the time of making each payment under this Agreement or any otherLoan Document, specify to Administrative Agent the amounts payable by such Obligor hereunder to which such payment is to beapplied (and in the event that Obligors fail to so specify, or if an Event of Default has occurred and is continuing, the Lenders mayapply such payment in the manner they determine to be appropriate).(c) Non-Business Days. If the due date of any payment under this Agreement (other than of principal of or interest on theLoans) would otherwise fall on a day that is not a Business Day, such date shall be extended to the next succeeding Business Day,and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.4.02 Computations. All computations of interest and fees hereunder shall be computed on the basis of a year of 360 days and actualdays elapsed (including the first day but excluding the last day) during the period for which payable.4.03 Notices. Each notice of optional prepayment shall be effective only if received by Administrative Agent not later than 4:00 p.m.(Central time) on the date five (5) Business Days (or such shorter period as may be agreed to in Administrative Agent’s sole discretion)prior to the date of prepayment. Each notice of optional prepayment shall specify the amount to be prepaid and the date of prepayment.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION33 4.04 Set-Off.(a) Set-Off Generally. Upon the occurrence and during the continuance of any Event of Default, each of AdministrativeAgent, each Lender and each of their Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted bylaw, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and otherindebtedness at any time owing by Administrative Agent, any Lender and any of their Affiliates to or for the credit or the account ofany Obligor against any and all of the Obligations, whether or not such Person shall have made any demand and although suchobligations may be unmatured. Administrative Agent and each Lender agree promptly to notify Borrower after any such set-off andapplication; provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights ofAdministrative Agent, each Lender and each of their Affiliates under this Section 4.04 are in addition to other rights and remedies(including other rights of set-off) that such Persons may have.(b) Exercise of Rights Not Required. Nothing contained herein shall require Administrative Agent, any Lender or any oftheir respective Affiliates to exercise any such right or shall affect the right of such Person to exercise, and retain the benefits ofexercising, any such right with respect to any other indebtedness or obligation of any Obligor.4.05 Pro Rata Treatment.(a) Unless Administrative Agent shall have been notified in writing by any Lender prior to the proposed date of anyBorrowing that such Lender will not make the amount that would constitute its share of such Borrowing available to AdministrativeAgent, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such date inaccordance with Section 2, and Administrative Agent may, in reliance upon such assumption, make available to Borrower acorresponding amount. If such amount is not in fact made available to Administrative Agent by the required time on the applicableBorrowing Date therefor, such Lender and Borrower severally agree to pay to Administrative Agent forthwith, on demand, suchcorresponding amount with interest thereon, for each day from and including the date on which such amount is made available toBorrower but excluding the date of payment to Administrative Agent, at a rate equal to the greater of (A) the Federal Funds EffectiveRate and (B) a rate reasonably determined by Administrative Agent in accordance with banking industry rules on interbankcompensation. If Borrower and such Lender shall pay such interest to Administrative Agent for the same or an overlapping period,Administrative Agent shall promptly remit to Borrower the amount of such interest paid by Borrower for such period. If such Lenderpays its share of the applicable borrowing to Administrative Agent, then the amount so paid shall constitute such Lender’s Loanincluded in such borrowing. Any payment by Borrower shall be without prejudice to any claim Borrower may have against a Lenderthat shall have failed to make such payment to Administrative Agent.(b) Unless Administrative Agent shall have received notice from Borrower prior to the date on which any payment is due toAdministrative Agent for the account of the Lenders hereunder that Borrower will not make such payment, Administrative Agent mayassume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION34 such assumption, distribute to the Lenders the amount due. In such event, if Borrower has not in fact made such payment, then each ofthe Lenders severally agrees to repay to Administrative Agent forthwith on demand the amount so distributed to such Lender, withinterest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment toAdministrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by Administrative Agent in accordancewith banking industry rules on interbank compensation. Nothing herein shall be deemed to limit the rights of Administrative Agent orany Lender against any Obligor.(c) If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, orotherwise) on account of the principal of or interest on any Loan made by it or other obligations hereunder, as applicable (other thanpursuant to a provision hereof providing for non-pro rata treatment), in excess of its Proportionate Share, of such payment on accountof the Loans, such Lender shall (i) notify Administrative Agent of the receipt of such payment, and (ii) within five (5) Business Daysof such receipt purchase (for cash at face value) from the other Lenders, as applicable (directly or through Administrative Agent),without recourse, such participations in the Loans made by them or make such other adjustments as shall be equitable, as shall benecessary to cause such purchasing Lender to share the excess payment ratably with each of the other Lenders in accordance with theirrespective Proportionate Shares, as applicable; provided, however, that (A) if any such participations are purchased and all or anyportion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to theextent of such recovery, without interest and (B) the provisions of this paragraph shall not be construed to apply to (x) any paymentmade by Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arisingfrom the existence of a Defaulting Lender) or (y) any payment obtained by a Lender as consideration for the assignment or sale of aparticipation in any of its Loans to any assignee or participant, other than to Borrower or any of its Affiliates (as to which theprovisions of this paragraph shall apply). Borrower agrees that any Lender so purchasing a participation from another Lender pursuantto this Section 4.05(c) may exercise all its rights of payment (including the right of set-off) with respect to such participation as fully asif such Lender were the direct creditor of Borrower in the amount of such participation. No documentation other than notices and thelike referred to in this Section 4.05(c) shall be required to implement the terms of this Section 4.05(c). Administrative Agent shall keeprecords (which shall be conclusive and binding in the absence of manifest error) of participations purchased pursuant to this Section4.05(c) and shall in each case notify the Lenders following any such purchase. Borrower consents on behalf of itself and each otherObligor to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring aparticipation pursuant to the foregoing arrangements may exercise against each Obligor rights of setoff and counterclaim with respectto such participation as fully as if such Lender were a direct creditor of each Obligor in the amount of such participation.SECTION 5YIELD PROTECTION, ETC.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION35 5.01 Additional Costs.(a) Change in Requirements of Law Generally. If, on or after the date hereof, the adoption of any Requirement of Law, orany change in any Requirement of Law, or any change in the interpretation or administration thereof by any court or otherGovernmental Authority charged with the interpretation or administration thereof, or compliance by any of the Lenders (or its lendingoffice) with any request or directive (whether or not having the force of law) of any such Governmental Authority, shall impose,modify or deem applicable any reserve (including any such requirement imposed by the Board of Governors of the Federal ReserveSystem), special deposit, contribution, insurance assessment or similar requirement, in each case that becomes effective after the datehereof, against assets of, deposits with or for the account of, or credit extended by, a Lender (or its lending office) or shall impose on aLender (or its lending office) any other condition affecting the Loans or the Commitment, and the result of any of the foregoing is toincrease the cost to such Lender of making or maintaining the Loans, or to reduce the amount of any sum received or receivable bysuch Lender under this Agreement or any other Loan Document, by an amount deemed by such Lender to be material (other than (i)Indemnified Taxes, (ii) Taxes described in clauses (b) through (d) of the definition of “Excluded Taxes” and (iii) Connection IncomeTaxes), then Borrower shall pay to such Lender on demand such additional amount or amounts as will compensate such Lender forsuch increased cost or reduction.(b) Change in Capital Requirements. If a Lender shall have determined that, on or after the date hereof, the adoption of anyRequirement of Law regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof byany Governmental Authority charged with the interpretation or administration thereof, or any request or directive regarding capitaladequacy (whether or not having the force of law) of any such Governmental Authority, in each case that becomes effective after thedate hereof, has or would have the effect of reducing the rate of return on capital of a Lender (or its parent) as a consequence of aLender’s obligations hereunder or the Loans to a level below that which a Lender (or its parent) would have achieved but for suchadoption, change, request or directive by an amount reasonably deemed by it to be material, then Borrower shall pay to such Lender ondemand such additional amount or amounts as will compensate such Lender (or its parent) for such reduction.(c) Notification by Lender. Each Lender (directly or through Administrative Agent) will promptly notify Borrower of anyevent of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to thisSection 5.01. Before giving any such notice pursuant to this Section 5.01(c) such Lender shall designate a different lending office ifsuch designation (x) will, in the reasonable judgment of such Lender, avoid the need for, or reduce the amount of, such compensationand (y) will not, in the reasonable judgment of such Lender, be materially disadvantageous to such Lender. A certificate of the Lenderclaiming compensation under this Section 5.01, setting forth the additional amount or amounts to be paid to it hereunder, shall beconclusive and binding on Borrower in the absence of manifest error.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION36 (d) Notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Actand all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines ordirectives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor orsimilar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemedto constitute a change in Requirements of Law for all purposes of this Section 5.01, regardless of the date enacted, adopted or issued.5.02 Illegality. Notwithstanding any other provision of this Agreement, in the event that on or after the date hereof the adoption of orany change in any Requirement of Law or in the interpretation or application thereof by any competent Governmental Authority shallmake it unlawful for a Lender or its lending office to make or maintain the Loans (and, in the opinion of such Lender, the designationof a different lending office would either not avoid such unlawfulness or would be disadvantageous to such Lender), then such Lendershall promptly notify Borrower thereof following which (a) the Lender’s Commitment shall be suspended until such time as suchLender may again make and maintain the Loans hereunder and (b) if such Requirement of Law shall so mandate, the Loans shall beprepaid by Borrower on or before such date as shall be mandated by such Requirement of Law in an amount equal to the RedemptionPrice applicable on the date of such prepayment.5.03 Taxes.(a) Payments Free of Taxes. Any and all payments by or on account of any Obligation shall be made without deduction orwithholding for any Taxes, except as required by applicable law. If any applicable law requires the deduction or withholding of anyTax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deductionor withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance withapplicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Obligor shall be increased as necessaryso that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sumspayable under this Section 5) the applicable Recipient receives an amount equal to the sum it would have received had no suchdeduction or withholding been made.(b) Payment of Other Taxes by Borrower. The Obligors shall timely pay to the relevant Governmental Authority inaccordance with applicable law, or at the option of each Lender, timely reimburse it for, Other Taxes.(c) Evidence of Payments. As soon as practicable after any payment of Taxes by any Obligor to a Governmental Authorityof a withholding Tax pursuant to this Section 5.03, such Obligor shall deliver to Administrative Agent the original or a certified copyof a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or otherevidence of such payment reasonably satisfactory to Administrative Agent.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION37 (d) Indemnification. The Obligors shall jointly and severally reimburse and indemnify each Recipient, within 10 days afterdemand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable toamounts payable under Section 5.01) payable or paid by such Recipient or required to be withheld or deducted from a payment tosuch Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes werecorrectly or legally imposed or asserted by the relevant Governmental Authority; provided that the Obligors shall not be required toindemnify a Recipient pursuant to this Section 5.03(d) to the extent that such Recipient fails to notify Borrower of its intent to make aclaim for indemnification under this Section within 180 days after a claim is asserted by the relevant Governmental Authority. Acertificate as to the amount of such payment or liability delivered to Borrower by a Lender shall be conclusive absent manifest error.(e) Status of Lenders.(i) Any Lender that is entitled to an exemption from, or reduction of withholding Tax with respect to payments madeunder any Loan Document shall deliver to Borrower (directly or through Administrative Agent), at the time or times reasonablyrequested by Borrower or Administrative Agent, such properly completed and executed documentation reasonably requested byBorrower or Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.In addition, any Lender shall deliver (directly or through Administrative Agent) such other documentation prescribed by applicable lawor as reasonably requested by Borrower or Administrative Agent as will enable Borrower or Administrative Agent to determinewhether or not such Lender is subject to backup withholding or information reporting requirements.(ii) Without limiting the generality of the foregoing, in the event that Borrower is a U.S. Person:(A) any Lender that is a U.S. Person shall deliver to Borrower (directly or through Administrative Agent) onor prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon thereasonable request of Borrower or Administrative Agent), executed originals of IRS Form W-9 (or successor form) certifying that suchLender is exempt from U.S. Federal backup withholding tax;(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower (directly orthrough Administrative Agent and in such number of copies as shall be requested by the recipient) on or prior to the date on whichsuch Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request ofBorrower or Administrative Agent), whichever of the following is applicable:(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the UnitedStates is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or IRSForm W-8BEN-E, as applicable (or successor form) establishing an exemption from, or reduction of, U.S. Federal withholding Taxpursuant to the “interest” article of such tax treaty and (y) with respect to any[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION38 other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successorform) establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “otherincome” article of such tax treaty;(2) executed originals of IRS Form W-8ECI (or successor form);(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest underSection 881(c) of the Code, (x) a certificate substantially in the form of Exhibit C-1 to the effect that such Foreign Lender is not a“bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning ofSection 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. TaxCompliance Certificate”) and (y) executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successorform); or(4) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY (or successor form), accompanied by IRS Form W-8ECI (or successor form), IRS Form W-8BEN or IRS Form W-8BEN-E, asapplicable (or successor form), a U.S. Tax Compliance Certificate substantially in the form of Exhibit C-2 or Exhibit C-3, IRS FormW-9 (or successor form), and/or other certification documents from each beneficial owner, as applicable; provided that if the ForeignLender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption,such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit C-4 on behalf of each suchdirect and indirect partner.(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower (directly orthrough Administrative Agent and in such number of copies as shall be requested by the recipient) on or prior to the date on whichsuch Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request ofBorrower), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction inU.S. Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicablelaw to permit Borrower to determine the withholding or deduction required to be made; and(D) if a payment made to a Recipient under any Loan Document would be subject to U.S. Federal withholdingTax imposed by FATCA if such Recipient were to fail to comply with the applicable reporting requirements of FATCA (includingthose contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Recipient shall deliver to Borrower (directly or throughAdministrative Agent) at the time or times prescribed by law as reasonably requested by Borrower or Administrative Agent anynecessary forms and information reasonably requested by Borrower or Administrative Agent to comply with their obligations underFATCA and to determine that such Recipient has complied with such Recipient’s obligations under FATCA or to determine theamount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include anyamendments made to FATCA after the date of this Agreement.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION39 (iii) To the extent legally permissible, at the time or times reasonably requested by Borrower, Administrative Agent shall(A) if Administrative Agent is a U.S. Person, deliver an IRS Form W-9 to Borrower, or (B) if Administrative Agent is not a U.S.Person, deliver the applicable IRS Form W-8 certifying Administrative Agent’s exemption from, or reduction of, U.S. withholdingTaxes with respect to amounts payable hereunder.(iv) Each Recipient agrees that if any form or certification it previously delivered becomes obsolete or inaccurate in anyrespect, or if Borrower or Administrative Agent notifies such Recipient that any form or certification such Recipient previouslydelivered has expired or becomes obsolete in any respect, such Recipient shall promptly update such form or certification or promptlynotify Borrower and Administrative Agent in writing of its legal inability to do so.(f) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received arefund (for this purpose, including credits in lieu of a refund) of any Taxes as to which it has been indemnified pursuant to this Section5.03 (including by the payment of additional amounts pursuant to Section 5.03), it shall pay to the indemnifying party an amount equalto such refund (but only to the extent of indemnity payments made under this Section 5.03 with respect to the Taxes giving rise to suchrefund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paidby the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the written request of suchindemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (plus any penalties, interest orother charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay suchrefund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 5.03(f), in no event will theindemnified party be required to pay any amount to an indemnifying party pursuant to this Section 5.03(f) the payment of whichwould place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if theindemnification payments or additional amounts giving rise to such refund had never been paid. This Section 5.03(f) shall not beconstrued to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deemsconfidential) to the indemnifying party or any other Person.(g) Mitigation Obligations. If any Obligor is required to pay any Indemnified Taxes or additional amounts to any Lender orto any Governmental Authority for the account of any Lender pursuant to Section 5.01 or this Section 5.03, then such Lender shall (atthe request of Borrower or applicable Obligor) use commercially reasonable efforts to designate a different lending office for fundingor booking its Loans hereunder or to assign and delegate its rights and obligations hereunder to another of its offices, branches orAffiliates if, in the sole reasonable judgment of such Lender, such designation or assignment and delegation would (i) eliminate orreduce amounts payable pursuant to Section 5.01 or this Section 5.03, as the case may be, in the future, (ii) not subject such Lender toany unreimbursed cost or expense and (iii) not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay allreasonable costs and[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION40 expenses incurred by any Lender in connection with any such designation or assignment and delegation.SECTION 6CONDITIONS PRECEDENT6.01 Conditions to the First Borrowing. The obligation of each Lender to make a Loan as part of the first Borrowing shall notbecome effective until the following conditions precedent shall have been satisfied or waived in writing by the Lenders:(a) Borrowing Date. Such Borrowing shall be made on the date hereof.(b) Amount of First Borrowing. The amount of such Borrowing shall equal $60,000,000.(c) Terms of Material Agreements, Etc. Lenders shall be reasonably satisfied with the terms and conditions of all of theObligors’ Material Agreements.(d) No Law Restraining Transactions. No applicable law or regulation shall restrain, prevent or, in the reasonable judgmentof the Lenders, impose materially adverse conditions upon the Transactions.(e) Payment of Fees. Lenders shall be satisfied with the arrangements to deduct the fees set forth in the Fee Letter (includingthe financing fee required pursuant to the Fee Letter) from the proceeds advanced.(f) Lien Searches. Lenders shall be satisfied with Lien searches regarding Borrower and its Subsidiaries made prior to suchBorrowing.(g) Documentary Deliveries. The Lenders shall have received the following documents, each of which shall be in form andsubstance satisfactory to the Lenders:(i) Agreement. This Agreement duly executed and delivered by Borrower and each of the other parties hereto.(ii) Security Documents.(A) The Security Agreement, duly executed and delivered by each of the Obligors.(B) Each of the Short-Form IP Security Agreements, duly executed and delivered by the applicable Obligor. (C) Original share certificates or other documents or evidence of title with regard to all Equity Interests ownedby the Obligors (to the extent that such Equity Interests are certificated), together with share transfer documents, undated and executedin blank.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION41 (D) Duly executed control agreements in favor of Administrative Agent for the benefit of the Secured Partiesfor all Deposit Accounts, Securities Accounts and Commodity Accounts owned by the Obligors in the United States (other thanExcluded Accounts, as defined in the Security Agreement).(E) Evidence of filing of each of the Short-Form IP Security Agreements in the United States Patent andTrademark Office or the United States Copyright office, as applicable.(F) Without limitation, all other documents and instruments reasonably required to perfect the Secured Parties’Lien on, and security interest in, the Collateral required to be delivered on or prior to such Borrowing Date shall have been dulyexecuted and delivered and be in proper form for filing, and shall create in favor of the Secured Parties, a perfected Lien on, andsecurity interest in, the Collateral, subject to no Liens other than Permitted Liens.(iii) Fee Letter. The Fee Letter duly executed and delivered by Borrower and Administrative Agent.(iv) Approvals. Certified copies of all material licenses, consents, authorizations and approvals of, and notices to andfilings and registrations with, any Governmental Authority (including all foreign exchange approvals), and of all third-party consentsand approvals, necessary in connection with the making and performance by the Obligors of the Loan Documents and theTransactions.(v) Corporate Documents. Certified copies of the constitutive documents of each Obligor (if publicly available insuch Obligor’s jurisdiction of formation) and of resolutions of the Board of Directors (or shareholders, if applicable) of each Obligorauthorizing the making and performance by it of the Loan Documents to which it is a party.(vi) Incumbency Certificate. A certificate of each Obligor as to the authority, incumbency and specimen signaturesof the persons who have executed the Loan Documents and any other documents in connection herewith on behalf of the Obligors.(vii) Officer’s Certificate. A certificate, dated such Borrowing Date and signed by the President, a Vice President or afinancial officer of Borrower, confirming compliance with the conditions set forth in Section 6.03.(viii) Opinions of Counsel. Favorable opinions, each dated such Borrowing Date, of counsel to each Obligor in formacceptable to the Lenders and their counsel, responsive to the requests set forth in Exhibit E.(ix) Insurance. Certificates of insurance evidencing the existence of all insurance required to be maintained by theObligors and their respective Subsidiaries pursuant to Section 8.05 and the designation of Administrative Agent as the lender’s losspayees or additional named insured, as the case may be, thereunder.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION42 (x) Intercreditor Agreement. Each holder of any of Borrower’s Permitted Priority Debt shall have executed anddelivered to Administrative Agent an intercreditor agreement, in substantially the form attached hereto as Exhibit H, with suchchanges (if any) as are satisfactory to the Lenders. 6.02 Conditions to Subsequent Borrowings. The obligation of each Lender to make a Loan as part of a subsequent Borrowing issubject to the following conditions precedent, which shall have been satisfied or waived in writing by the Lenders:(a) Second Borrowing. In the case of the second Borrowing:(i) Prior Borrowing. The first Borrowing shall have occurred.(ii) Borrowing Date. Such Borrowing shall occur on or prior to June 30, 2019.(iii) Amount of Borrowing. The amount of such Borrowing shall be less than or equal to $20,000,000 (as selected byBorrower).(b) Third Borrowing. In the case of the third Borrowing:(i) Prior Borrowings. The first and second Borrowings shall have occurred.(ii) Borrowing Date. Such Borrowing shall occur on or prior to March 30, 2020.(iii) Amount of Borrowing. The amount of such Borrowing shall be less than or equal to $20,000,000 (as selected byBorrower).(iv) Borrowing Milestone. During any consecutive twelve month period ending on or prior to December 31, 2019,Borrower shall have received Revenue in an amount equal to or exceeding $[†].(v) Notice of Milestone Achievement. Borrower shall have delivered to Administrative Agent a notice certifyingsatisfaction of the condition set forth in Section 6.02(b)(iv) no later than thirty (30) days thereafter.(vi) Notice of Borrowing. A Notice of Borrowing shall have been received no later than sixty (60) calendar days aftersatisfaction of the condition set forth in Section 6.02(b)(v).(c) Financing Fee. Except in the case of any PIK Loan, Administrative Agent shall have received, for the account of eachLender, the fees payable pursuant to the Fee Letter.6.03 Conditions to Each Borrowing. The obligation of each Lender to make a Loan as part of any Borrowing (including the firstBorrowing) is also subject to satisfaction of the following[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION43 further conditions precedent on the applicable Borrowing Date, which shall have been satisfied or waived in writing by the Lenders:(a) Commitment Period. Except in the case of any PIK Loan, such Borrowing Date shall occur during the CommitmentPeriod.(b) No Default; Representations and Warranties. Both immediately prior to the making of such Loan and after givingeffect thereto and to the intended use thereof:(i) no Default shall have occurred and be continuing or would result from such proposed Loan or the application of theproceeds thereof;(ii) the representations and warranties made in Section 7 shall be true and correct on and as of the Borrowing Date,and immediately after giving effect to the application of the proceeds of the Borrowing, with the same force and effect as if made onand as of such date (except that the representation regarding representations and warranties that refer to a specific earlier date shall bethat they were true and correct on such earlier date);and(iii) no Material Adverse Effect has occurred or is reasonably likely to occur after giving effect to such proposedBorrowing.(c) Notice of Borrowing. Except in the case of any PIK Loan, Administrative Agent shall have received a Notice ofBorrowing as and when required pursuant to Section 2.02.(d) Warrants. Borrower shall have delivered to Administrative Agent the Warrants as described in the Warrant Shares tableon Schedule 1).Each Borrowing shall constitute a certification by Borrower to the effect that the conditions set forth in this Section 6.03 havebeen fulfilled as of the applicable Borrowing Date.SECTION 7REPRESENTATIONS AND WARRANTIESEach Obligor represents and warrants to Administrative Agent and the Lenders that:7.01 Power and Authority. Each of Borrower and its Subsidiaries (a) is duly organized and validly existing under the laws of itsjurisdiction of organization, (b) has all requisite corporate or other equivalent power, and has all material governmental licenses,authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to beconducted except to the extent that failure to have the same would not reasonably be expected to have a Material Adverse Effect, (c) isqualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes suchqualification necessary and where failure so to qualify would (either individually or in the aggregate) have a Material Adverse Effect,and (d) has full power, authority and legal right to make and perform each of the Loan Documents to which it is a party and, in thecase of Borrower, to borrow the Loans hereunder.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION44 7.02 Authorization; Enforceability. The Transactions are within each Obligor’s corporate or equivalent powers and have been dulyauthorized by all necessary corporate or equivalent action and, if required, by all necessary shareholder action. This Agreement hasbeen duly executed and delivered by each Obligor and constitutes, and each of the other Loan Documents to which it is a party whenexecuted and delivered by such Obligor will constitute, a legal, valid and binding obligation of such Obligor, enforceable against eachObligor in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization,moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of generalprinciples of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).7.03 Governmental and Other Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of,registration or filing with, or any other action by, any Governmental Authority or any third party, except for (i) such as have beenobtained or made and are in full force and effect and (ii) material filings and recordings in respect of the Liens created pursuant to theSecurity Documents, (b) will not violate any applicable law or regulation or the charter, bylaws or other organizational documents ofBorrower and its Subsidiaries, (c) will not violate any order of any Governmental Authority, other than any such violations that,individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, (d) will not violate or result in adefault under any indenture, agreement or other instrument binding upon Borrower and its Subsidiaries or assets, or give rise to a rightthereunder to require any payment to be made by any such Person, and (e) will not result in the creation or imposition of any Lien(other than Permitted Liens) on any asset of Borrower and its Subsidiaries.7.04 Financial Statements; Material Adverse Change.(a) Financial Statements. Borrower has heretofore furnished to the Lenders certain financial statements as provided for inSection 8.01. Such financial statements present fairly, in all material respects, the financial position and results of operations and cashflows of Borrower and its Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end auditadjustments and the absence of footnotes in the case of the previously-delivered statements of the type described in Section 8.01(a).Neither Borrower nor any of its Subsidiaries has any material contingent liabilities or unusual forward or long-term commitments notdisclosed in the aforementioned financial statements.(b) No Material Adverse Change. Since December 31, 2017, there has been no Material Adverse Change.7.05 Properties.(a) Property Generally. Each Obligor has good and marketable fee simple title to, or valid leasehold interests in, all its realand personal Property material to its business, subject only to Permitted Liens and except as would not reasonably be expected tointerfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION45 (b) Intellectual Property. The Obligors represent and warrant to the Lenders as follows, as of the date hereof, eachBorrowing Notice Date and each Borrowing Date:(i) Schedule 7.05(b)(i) to the Disclosure Letter (as amended from time to time by Borrower in accordance withSection 7.20) contains:(A) a complete and accurate list of all applied for or issued Patents, owned by or licensed to any Obligor,including the jurisdiction and patent number;(B) a complete and accurate list of all applied for or registered Trademarks, owned by or licensed to anyObligor, including the jurisdiction, trademark application or registration number and the application or registration date; and(C) a complete and accurate list of all applied for or registered Copyrights, owned by or licensed to anyObligor;(ii) Each Obligor is the sole or joint owner of all right, title and interest in and to and has the right to use its ObligorIntellectual Property with no breaks in chain of title with good and marketable title, free and clear of any Liens or Claims of any kindwhatsoever other than Permitted Liens. Without limiting the foregoing, and except as set forth in Schedule 7.05(b)(ii):(A) other than with respect to the Material Agreements, or as permitted by Section 9.09, the Obligors have nottransferred ownership of Material Intellectual Property, in whole or in part, to any other Person who is not an Obligor;(B) other than (i) the Material Agreements, (ii) customary restrictions in in-bound licenses of IntellectualProperty and non-disclosure agreements, or (iii) as would have been or is permitted by Section 9.09, there are no judgments, covenantsnot to sue, permits, grants, licenses, Liens (other than Permitted Liens), Claims, or other agreements or arrangements relating to theMaterial Intellectual Property, including any development, submission, services, research, license or support agreements, which bind,obligate or otherwise restrict the Obligors;(C) the use of any of the Obligor Intellectual Property, in the manner used by each Obligor in the conduct of itsbusiness as of the date hereof, to the best of such Obligor’s Knowledge, does not breach, violate, infringe or interfere with or constitutea misappropriation of any valid rights arising under any Intellectual Property of any other Person;(D) there are no pending or, to any Obligor’s Knowledge, threatened Claims against the Obligors asserted byany other Person involving the Obligor Intellectual Property, including any Claims of adverse ownership, invalidity, infringement,misappropriation, violation or other opposition to such Intellectual Property; no Obligor has received any written notice from anyPerson that any Obligor business, the use of the Obligor Intellectual Property, or the manufacture, use or sale of any product or theperformance of any service by any Obligor infringes upon, violates or constitutes a misappropriation of, or may infringe upon, violateor[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION46 constitute a misappropriation of, or otherwise interferes with, any other Intellectual Property of such Person;(E) no Obligor has any Knowledge that the Obligor Intellectual Property is being infringed, violated,misappropriated or otherwise used by any other Person without the express authorization of such Obligor. Without limiting theforegoing, no Obligor has put any other Person on notice of actual or potential infringement, violation or misappropriation of any of theObligor Intellectual Property; no Obligor has initiated the enforcement of any Claim with respect to any of the Obligor IntellectualProperty;(F) all relevant current and former employees and consultants of each Obligor have executed writtenconfidentiality and invention assignment Contracts with such Obligor that irrevocably assign to such Obligor or its designee all of theirrights to any Inventions relating to any Obligor’s business;(G) to the Knowledge of the Obligors, the Obligor Intellectual Property is all the Intellectual Propertynecessary for the operation of Obligors’ business as it is currently conducted;(H) each Obligor has taken reasonable precautions to protect the secrecy, confidentiality and value of tradesecrets and confidential information in its Obligor Intellectual Property;(I) each Obligor has delivered to Administrative Agent accurate and complete copies of all MaterialAgreements relating to the Obligor Intellectual Property;(J) there are no pending or, to the Knowledge of any of the Obligors, threatened in writing Claims against theObligors asserted by any other Person relating to the Material Agreements, including any Claims of breach or default under suchMaterial Agreements;(iii) With respect to the Obligor Intellectual Property consisting of Patents owned by an Obligor, except as set forth inSchedule 7.05(b)(iii) to the Disclosure Letter (as amended from time to time by Borrower in accordance with Section 7.20), andwithout limiting the representations and warranties in Section 7.05(b)(iii):(A) each of the issued claims in such Patents, to Obligors’ Knowledge, is valid and enforceable;(B) the inventors identified in such Patents have executed written Contracts with an Obligor or its predecessor-in-interest that properly and irrevocably assign to an Obligor or predecessor-in-interest all of their rights to any of the Inventionsclaimed in such Patents to the extent permitted by applicable law;(C) none of such Patents, or the Inventions claimed in them, have been dedicated to the public except as aresult of intentional decisions made by the applicable Obligor;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION47 (D) to any Obligor’s Knowledge, all prior art material to such Patents was adequately disclosed to orconsidered by the respective patent offices during prosecution of such Patents to the extent required by applicable law or regulation;(E) subsequent to the issuance of such Patents, neither any Obligor nor its predecessors in interest have filedany disclaimer or filed any other voluntary reduction in the scope of the Inventions claimed in such Patents;(F) Borrower has not received written notice that any such Patent is subject to any competing conceptionclaims of allowable or allowed subject matter of any patent applications or patents of any third party and have not been the subject ofany interference, re-examination, inter partes review, post grant review or opposition proceedings, nor are the Obligors aware of anybasis for any such interference, re-examination, inter partes review, post grant review or opposition proceedings;(G) no such Patents, to any Obligor’s Knowledge, have ever been finally adjudicated to be invalid,unpatentable or unenforceable for any reason in any administrative, arbitration, judicial or other proceeding, and, with the exception ofpublicly available documents in the applicable Patent Office recorded with respect to any Patents, no Obligor has received any noticeasserting that such Patents are invalid, unpatentable or unenforceable; if any of such Patents is terminally disclaimed to another patentor patent application, all patents and patent applications subject to such terminal disclaimer are included in the Collateral;(H) there is no fact or circumstance known to the Obligors that would cause them to reasonably conclude thatany of the issued patents in such Patents is invalid or unenforceable;(I) no Obligor has any Knowledge that any Obligor or any prior owner of such Patents or their respectiveagents or representatives have engaged in any conduct, or omitted to perform any necessary act, the result of which would invalidate orrender unpatentable or unenforceable any such Patents; and(J) all maintenance fees, annuities, and the like due or payable on the Patents have been timely paid or thefailure to so pay was the result of an intentional decision by the applicable Obligor or would not reasonably be expected to result in aMaterial Adverse Change.(iv) none of the foregoing representations and statements of fact contains any untrue statement of material fact or omitsto state any material fact necessary to make any such statement or representation not misleading to a prospective Lender seeking fullinformation as to the Obligor Intellectual Property and the Obligors’ business.(c) Material Intellectual Property. Schedule 7.05(c) to the Disclosure Letter (as amended from time to time by Borrower inaccordance with Section 7.20) contains an accurate list of the Obligor Intellectual Property the loss of which would reasonably beexpected to have a[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION48 Material Adverse Effect, with an indication as to whether the applicable Obligor owns or has an exclusive or non-exclusive license tosuch Obligor Intellectual Property.7.06 No Actions or Proceedings.(a) Litigation. There is no litigation, investigation or proceeding pending or, to any Obligor’s Knowledge, threatened withrespect to Borrower and its Subsidiaries by or before any Governmental Authority or arbitrator (i) that either individually or in theaggregate would reasonably be expected to have a Material Adverse Effect, except as specified in Schedule 7.06 to the DisclosureLetter (as amended from time to time by Borrower in accordance with Section 7.20) or (ii) that involves this Agreement or theTransactions.(b) Environmental Matters. The operations and Property of Borrower and its Subsidiaries comply with all applicableEnvironmental Laws, except to the extent the failure to so comply (either individually or in the aggregate) would not reasonably beexpected to have a Material Adverse Effect.(c) Labor Matters. Borrower and its Subsidiaries have not engaged in unfair labor practices and there are no material laboractions or disputes involving the employees of Borrower or its Subsidiaries that would reasonably be expected to have a MaterialAdverse Effect.7.07 Compliance with Laws and Agreements. Each of the Obligors is in compliance with all laws, regulations and orders of anyGovernmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or itsproperty, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a MaterialAdverse Effect. No Default has occurred and is continuing.7.08 Taxes. All material federal, state, local and foreign income and franchise and other material Tax returns, reports and statements(collectively, the “Tax Returns”) required to be filed by any Obligor have been timely filed with the appropriate GovernmentalAuthorities, all such Tax Returns are true, correct and complete in all material respects, and all material Taxes reflected therein orotherwise due and payable have been paid (except for those contested in good faith by appropriate proceedings diligently conductedand for which adequate reserves are maintained on the books of the Obligor in accordance with GAAP). No Tax Return of anyObligor is under audit or examination by any Governmental Authority and no Obligor has received written notice of any material auditor examination or any assertion of any claim for Taxes from any Governmental Authority. Proper and accurate Tax amounts have beenwithheld by each Obligor from their respective employees for all periods in material compliance with the Tax, social security andunemployment withholding provisions of applicable Laws and such withholdings have been paid to the respective GovernmentalAuthorities or, only to the extent such withholdings are not yet due and payable, such withholdings are adequately reserved for on thebooks of the Obligor in accordance with GAAP. No Obligor has participated in a “listed transaction” within the meaning of TreasuryRegulation Section 1.6011-4(b)(2).7.09 Full Disclosure. Obligors have disclosed to Administrative Agent and the Lenders all Material Agreements to which anyObligor is subject, and all other matters to any Obligor’s[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION49 Knowledge, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect. None of thereports, financial statements, certificates or other information furnished by or on behalf of any Obligor to Administrative Agent or anyLender in connection with the negotiation of this Agreement and the other Loan Documents or delivered hereunder or thereunder (asmodified or supplemented by other information so furnished) contains any material misstatement of material fact or omits to state anymaterial fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;provided that, with respect to projected financial information, Borrower represents only that such information was prepared in goodfaith based upon assumptions believed to be reasonable at the time.7.10 Regulation.(a) Investment Company Act. Neither Borrower nor any of its Subsidiaries is an “investment company” as defined in, orsubject to regulation under, the Investment Company Act of 1940.(b) Margin Stock. Neither Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, inthe business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and nopart of the proceeds of the Loans will be used to buy or carry any Margin Stock in violation of Regulation T, U or X.(c) OFAC; Sanctions, Etc. Neither Borrower nor any of its Subsidiaries or, to the knowledge of any Obligor, any RelatedPerson (i) is currently the subject of any Sanctions or is a Sanctioned Person, (ii) is located (or has its assets located), organized orresiding in any Sanctioned Jurisdiction, (iii) is or has been (within the previous five (5) years) engaged in any impermissible transactionwith any Person who is now or was then the subject of Sanctions or who is located, organized or residing in any SanctionedJurisdiction, (iv) directly or indirectly derives revenues from investments in, or transactions with, Sanctioned Persons, (v) has taken anyaction, directly or indirectly, that would result in a violation by such Persons of any Anti-Corruption Laws, or (vi) has violated anyAnti-Money Laundering Laws. No Loan, nor the proceeds from any Loan, has been or will be used, directly or indirectly, to lend,contribute or provide to, or has been or will be otherwise made available to fund, any impermissible activity or business of any Personlocated, organized or residing in any Sanctioned Jurisdiction or who is the subject of any Sanctions, or in any other manner that willresult in any violation by any Person (including the Lender and its Affiliates) of Sanctions or otherwise in violation of any Anti-Corruption Laws or Anti-Money Laundering Laws. Each of Borrower and its Subsidiaries has implemented and maintains in effectpolicies and procedures designed to promote compliance by Borrower and its Subsidiaries and their respective directors, officers,employees, agents and Related Persons with the Anti-Corruption Laws.7.11 Solvency. Each Obligor is and, immediately after giving effect to the Borrowing and the use of proceeds thereof will be,Solvent.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION50 7.12 Subsidiaries. Set forth on Schedule 7.12 to the Disclosure Letter is a complete and correct list of all Subsidiaries as of the datehereof. Each such Subsidiary is duly organized and validly existing under the jurisdiction of its organization shown in said Schedule7.12 to the Disclosure Letter, and the percentage ownership by Borrower of each such Subsidiary is as shown in said Schedule 7.12 tothe Disclosure Letter.7.13 Indebtedness and Liens. Set forth on Schedule 7.13(a) to the Disclosure Letter is a complete and correct list of all materialIndebtedness of each Obligor outstanding as of the date hereof. Schedule 7.13(b) to the Disclosure Letter is a complete and correct listof all Liens affirmatively granted by Borrower and other Obligors with respect to their respective Property and outstanding as of thedate hereof.7.14 Material Agreements. Set forth on Schedule 7.14 to the Disclosure Letter (as amended from time to time by Borrower inaccordance with Section 7.20) is a complete and correct list of (i) each Material Agreement and (ii) each agreement creating orevidencing any Material Indebtedness. No Obligor is in default under any such Material Agreement or agreement creating orevidencing any Material Indebtedness. Except as otherwise disclosed on Schedule 7.14 to the Disclosure Letter, all material vendorpurchase agreements and provider contracts of the Obligors are in full force and effect without material modification from the form inwhich the same were disclosed to Administrative Agent and the Lenders, except for such modifications as would not reasonably beexpected to be adverse to the interests of Administrative Agent or Lenders.7.15 Restrictive Agreements. None of the Obligors is subject to any indenture, agreement, instrument or other arrangement thatprohibits, restricts or imposes any condition upon (a) the ability of Borrower or any Subsidiary to create, incur or permit to exist anyLien upon any of its property or assets (other than (x) customary provisions in contracts (including leases and in‑bound licenses ofIntellectual Property) restricting the assignment thereof, (y) restrictions or conditions imposed by any agreement governing securedPermitted Indebtedness permitted under Section 9.01(h), to the extent that such restrictions or conditions apply only to the property orassets securing such Indebtedness, or (z) as such may apply to the interest of any such Obligor in a Permitted CommercializationArrangement Vehicle), or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of itscapital stock or to make or repay loans or advances to Borrower or any other Subsidiary or to Guarantee Indebtedness of Borrower orany other Subsidiary (each, a “Restrictive Agreement”), except (i) those listed on Schedule 7.15 or otherwise permitted under Section9.11, (ii) restrictions and conditions imposed by law or by this Agreement, (iii) customary restrictions and conditions contained inagreements relating to the sale of a Subsidiary or assets pending such sale, provided such restrictions and conditions apply only to theSubsidiary or assets that are to be sold and such sale is permitted hereunder; (iv) any stockholder agreement, charter, by laws or otherorganizational documents of Borrower or any Subsidiary as in effect on the date hereof; and (v) limitations associated with PermittedLiens.7.16 Real Property.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION51 (a) Generally. Neither Borrower nor any of its Subsidiaries owns or leases (as tenant thereof) any real property, except asdescribed on Schedule 7.16 to the Disclosure Letter (as amended from time to time by Borrower in accordance with Section 7.20).(b) Borrower Leases. (i) Borrower has delivered a true, accurate and complete copy of the Borrower Leases toAdministrative Agent.(ii) The Borrower Leases are in full force and effect and no default has occurred under the Borrower Leases and, tothe Knowledge of Borrower, there is no existing condition which, but for the passage of time or the giving of notice, would reasonablybe expected to result in a default under the terms of the Borrower Leases.(iii) Borrower is the tenant under the Borrower Leases and has not transferred, sold, assigned, conveyed, disposed of,mortgaged, pledged, hypothecated, or encumbered any of its interest in, the Borrower Leases.7.17 Pension Matters. Schedule 7.17 to the Disclosure Letter sets forth, as of the date hereof, a complete and correct list of, and thatseparately identifies, (a) all Title IV Plans, (b) all Multiemployer Plans and (c) all material Benefit Plans. Each Benefit Plan, and eachtrust thereunder, intended to qualify for tax exempt status under Section 401 or 501 of the Code or other Requirements of Law soqualifies. Except for those that would not, in the aggregate, have a Material Adverse Effect, (x) each Benefit Plan is in compliance withapplicable provisions of ERISA, the Code and other Requirements of Law, (y) there are no existing or pending (or to the Knowledgeof any Obligor or Subsidiary thereof, threatened) claims (other than routine claims for benefits in the normal course), sanctions, actions,lawsuits or other proceedings or investigation involving any Benefit Plan to which any Obligor or Subsidiary thereof incurs orotherwise has or would have an obligation or any liability or Claim and (z) no ERISA Event is reasonably expected to occur.Borrower and each of its ERISA Affiliates has met all applicable requirements under the ERISA Funding Rules with respect to eachTitle IV Plan, and no waiver of the minimum funding standards under the ERISA Funding Rules has been applied for or obtained. Asof the most recent valuation date for any Title IV Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of theCode) is at least 60%, and neither Borrower nor any of its ERISA Affiliates knows of any facts or circumstances that wouldreasonably be expected to cause the funding target attainment percentage to fall below 60% as of the most recent valuation date. As ofthe date hereof, no ERISA Event has occurred in connection with which obligations and liabilities (contingent or otherwise) remainoutstanding. No ERISA Affiliate would have any Withdrawal Liability as a result of a complete withdrawal from any MultiemployerPlan on the date this representation is made.7.18 Collateral; Security Interest. Each Security Document is effective to create in favor of the Secured Parties a legal, valid andenforceable security interest in the Collateral subject thereto and each such security interest is perfected to the extent required by (andhas the priority required by) the applicable Security Document. The Security Documents collectively are effective to create in favor ofthe Secured Parties a legal, valid and enforceable security interest in the Collateral, which security interests are first-priority (subjectonly to Permitted Priority Liens).[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION52 7.19 Regulatory Approvals. Borrower and its Subsidiaries hold, and will continue to hold, either directly or through licensees andagents, all Regulatory Approvals, licenses, permits and similar governmental authorizations of a Governmental Authority necessary orrequired for Borrower and its Subsidiaries to conduct their operations and business in the manner currently conducted. 7.20 Update of Schedules. Each of Schedules 7.05(b)(i), 7.05(b)(iii), 7.05(c), 7.06, 7.14 and 7.16 to the Disclosure Letter may beupdated by Borrower from time to time (including concurrently with the delivery of each Compliance Certificate) in order to ensure thecontinued accuracy of such Schedule as of any upcoming date on which representations and warranties are made incorporating theinformation contained on such Schedule. Such update may be accomplished by Borrower providing to Administrative Agent, inwriting (including by electronic means), a revised version of such Schedule or the Disclosure Letter in accordance with the provisionsof Section 13.02. Each such updated Schedule shall be effective immediately upon the receipt thereof by Administrative Agent.SECTION 8AFFIRMATIVE COVENANTSEach Obligor covenants and agrees with Administrative Agent and the Lenders that, until Payment In Full:8.01 Financial Statements and Other Information. Borrower will furnish to Administrative Agent:(a) as soon as available and in any event within 5 days following the date Borrower files Form 10-Q with the Securities andExchange Commission, the consolidated balance sheets of the Obligors as of the end of such quarter, and the related consolidatedstatements of income, shareholders’ equity and cash flows of Borrower and its Subsidiaries for such quarter and the portion of thefiscal year through the end of such quarter, prepared in accordance with GAAP consistently applied, all in reasonable detail and settingforth in comparative form the figures for the corresponding period in the preceding fiscal year, together with a certificate of aResponsible Officer of Borrower stating that such financial statements fairly present the financial condition of Borrower and itsSubsidiaries as at such date and the results of operations of Borrower and its Subsidiaries for the period ended on such date and havebeen prepared in accordance with GAAP consistently applied, subject to changes resulting from normal, year-end audit adjustmentsand except for the absence of footnotes;(b) as soon as available and in any event within 5 days following the date Borrower files Form 10-K with the Securities andExchange Commission, the consolidated balance sheets of Borrower and its Subsidiaries as of the end of such fiscal year, and therelated consolidated statements of income, shareholders’ equity and cash flows of Borrower and its Subsidiaries for such fiscal year,prepared in accordance with GAAP consistently applied, all in reasonable detail and setting forth in comparative form the figures forthe previous fiscal year, accompanied by a report and opinion thereon of PriceWaterhouseCoopers LLP or another firm of independentcertified public accountants of recognized national standing acceptable to the Lenders, which[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION53 report and opinion shall be prepared in accordance with generally accepted auditing standards (provided that Lenders acknowledgethat a going concern qualification, in and of itself, will not render such opinion unacceptable to Lenders);(c) together with the financial statements required pursuant to Sections 8.01(a) and (b), a compliance certificate of aResponsible Officer as of the end of the applicable accounting period (which delivery may, unless a Lender requests executedoriginals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof forall purposes) in the form of Exhibit D (a “Compliance Certificate”) including details of any material issues that are raised by auditors;(d) as soon as available after delivering the information required pursuant to Section 8.01(b), a consolidated financial forecastfor Borrower and its Subsidiaries for the following five fiscal years, including forecasted consolidated balance sheets, consolidatedstatements of income, shareholders’ equity and cash flows of Borrower and its Subsidiaries;(e) within 5 days of filing, provide access (via posting and/or links on Borrower’s web site) to all reports on Form 10-K andForm 10-Q filed with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any nationalsecurities exchange; and within 5 days of filing, provide notice and access (via posting and/or links of Borrower’s web site) to allreports on Form 8-K filed with the Securities and Exchange Commission, and copies of (or access to, via posting and/or links onBorrower’s web site) all other reports, proxy statements and other materials filed by Borrower with the SEC, any GovernmentalAuthority succeeding to any of the functions of the SEC or with any national securities exchange;(f) promptly, and in any event within five Business Days after receipt thereof by an Obligor thereof, copies of each notice orother correspondence received from any securities regulator or exchange to the authority of which an Obligor may become subjectfrom time to time concerning any investigation or possible investigation or other inquiry by such agency regarding financial or otheroperational results of such Obligor;(g) the information regarding insurance maintained by the Obligors and their respective Subsidiaries as required under Section8.05;(h) promptly following Administrative Agent’s request at any time, proof of Borrower’s compliance with Section 10.01;(i) within five (5) business days of each quarterly board meeting, copies of statements, reports and forecasts presented at suchmeetings of Borrower’s board of directors which are, in the sole reasonable judgment of Borrower’s CEO and/or CFO, necessary tounderstand the state of or outlook for the Borrower’s business operations; provided that any such material may be redacted byBorrower to exclude information relating to the Lenders (including Borrower’s strategy regarding the Loans). For avoidance of doubtfor purposes of compliance with this Section 8.01(j) only, Borrower shall not be required to provide competitively sensitive[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION54 information, confidential employee information, materials which fall under the attorney-client privilege, or materials provided tocommittees of the board of directors;(j) within five (5) days of delivery, copies of all statements, reports and notices made available to or holders of PermittedSubordinated Debt;(k) prompt notice of Borrower’s achievement of the milestone described in Section 6.02(b)(iv); and(l) promptly following Administrative Agent’s request from time to time, such other information respecting the operations,properties, business or condition (financial or otherwise) of the Obligors pursuant to or in response to any environmental, social andgovernance policies and questionnaires of Administrative Agent or any Lender.8.02 Notices of Material Events.(a) Borrower will furnish to Administrative Agent written notice of the following promptly after a Responsible Officer firstlearns of the existence of:(i) the occurrence of any Default;(ii) notice of the occurrence of any event with respect to an Obligor’s property or assets resulting in a Loss, to theextent not covered by insurance, aggregating $1,000,000 (or the Equivalent Amount in other currencies) or more;(iii) (A) any proposed acquisition of stock, assets or property by any Obligor that would reasonably be expected toresult in environmental liability under Environmental Laws, and (B)(1) spillage, leakage, discharge, disposal, leaching, migration orrelease of any Hazardous Material required to be reported to any Governmental Authority under applicable Environmental Laws, and(2) all actions, suits, claims, notices of violation, hearings, investigations or proceedings pending, or to any Obligor’s Knowledge,threatened against or affecting Borrower or any of its Subsidiaries or with respect to the ownership, use, maintenance and operation oftheir respective businesses, operations or properties, relating to Environmental Laws or Hazardous Material;(iv) the assertion of any environmental matter by any Person against, or with respect to the activities of, Borrower orany of its Subsidiaries and any alleged violation of or non-compliance with any Environmental Laws or any permits, licenses orauthorizations which would reasonably be expected to involve damages in excess of $1,000,000 other than any environmental matteror alleged violation that, if adversely determined, would not (either individually or in the aggregate) have a Material Adverse Effect;(v) the filing or commencement of any action, suit or proceeding by or before any arbitrator or GovernmentalAuthority against or directly affecting Borrower or any of its Affiliates that, if adversely determined, would reasonably be expected toresult in a Material Adverse Effect;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION55 (vi) (i) on or prior to any filing by any ERISA Affiliate of any notice of intent to terminate any Title IV Plan, a copy ofsuch notice and (ii) promptly, and in any event within ten days, after any Responsible Officer of any ERISA Affiliate knows or hasreason to know that a request for a minimum funding waiver under Section 412 of the Code has been filed with respect to any Title IVPlan or Multiemployer Plan, a notice (which may be made by telephone if promptly confirmed in writing) describing such waiverrequest and any action that any ERISA Affiliate proposes to take with respect thereto, together with a copy of any notice filed with thePBGC or the IRS pertaining thereto;(vii) (i) the termination of any Material Agreement; (ii) the receipt by Borrower or any of its Subsidiaries of any defaultor termination notice under any Material Agreement; or (iii) any material amendment to a Material Agreement;(viii) the reports and notices as required by the Security Documents;(ix) concurrently with the delivery of each Compliance Certificate, notice of any material change in accountingpolicies or financial reporting practices by the Obligors;(x) promptly after the occurrence thereof, notice of any labor controversy resulting in or threatening to result in anystrike, work stoppage, boycott, shutdown or other material labor disruption against or involving an Obligor;(xi) a licensing agreement or arrangement entered into by Borrower or any Subsidiary in connection with anyinfringement or alleged infringement of the Intellectual Property of another Person; and(xii) any other development that results in, or would reasonably be expected to result in, a Material Adverse Effect.Each notice delivered under this Section 8.02(a) shall be accompanied by a statement of a financial officer or other executiveofficer of Borrower setting forth in reasonable detail the event or development requiring such notice and any action taken or proposedto be taken with respect thereto.(b) Borrower will furnish to Administrative Agent, concurrently with the delivery of each Compliance Certificate, writtennotice of the creation or other acquisition of any Intellectual Property by Borrower or any Subsidiary after the date hereof and duringsuch prior fiscal year which is registered or becomes registered or the subject of an application for registration with the U.S. CopyrightOffice or the U.S. Patent and Trademark Office, as applicable, or with any other equivalent foreign Governmental Authority;(c) Borrower will furnish to Administrative Agent written notice of any change to any Obligor’s ownership of DepositAccounts, Securities Accounts and Commodity Accounts, by delivering to Administrative Agent an updated Schedule 7 to theSecurity Agreement setting forth a complete and correct list of all such accounts within ten (10) days of such change; and[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION56 (d) Borrower will furnish to Administrative Agent such other information respecting the operations, properties, business orcondition (financial or otherwise) of the Obligors (including with respect to the Collateral) as Administrative Agent may from time totime reasonably request.8.03 Existence; Conduct of Business. Such Obligor will, and will cause each of its Subsidiaries to, do or cause to be done all thingsnecessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges andfranchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, amalgamation,consolidation, division, liquidation or dissolution permitted under Section 9.03.8.04 Payment of Obligations. Such Obligor will, and will cause each of its Subsidiaries to, pay and discharge its obligations,including (i) all material Taxes, fees, assessments and governmental charges or levies imposed upon it or upon its properties or assetsprior to the date on which penalties attach thereto, and all lawful claims for labor, materials and supplies which, if unpaid, mightbecome a Lien upon any properties or assets of Borrower or any Subsidiary, except to the extent such Taxes, fees, assessments orgovernmental charges or levies, or such claims are being contested in good faith by appropriate proceedings and are adequatelyreserved against in accordance with GAAP; and (ii) all lawful claims which, if unpaid, would by law become a Lien upon its propertynot constituting a Permitted Lien.8.05 Insurance. Such Obligor will, and will cause each of its Subsidiaries to, maintain insurance with financially sound and reputableinsurance companies in such amounts and against such risks as are customarily maintained by companies engaged in the same orsimilar businesses operating in the same or similar locations. Upon the written request of Administrative Agent or the MajorityLenders, such Obligor shall furnish Administrative Agent from time to time with full information as to the insurance carried by it and,if so requested, copies of all such insurance policies. Such Obligor also shall furnish to Administrative Agent from time to time uponthe request of Administrative Agent or the Majority Lenders a letter from such Obligor’s insurance broker or other insurance specialiststating that all premiums then due on the policies relating to insurance on the Collateral have been paid, that such policies are in fullforce and effect. Such Obligor shall use commercially reasonable efforts to ensure, or cause others to ensure, that all insurance policiesrequired under this Section 8.05 shall provide that they shall not be terminated or cancelled nor shall any such policy be materiallychanged in a manner adverse to such Obligor without at least 30 days’ (10 days’ for nonpayment of premium) prior written notice tosuch Obligor and Administrative Agent. Receipt of notice of termination or cancellation of any such insurance policies or reduction ofcoverages or amounts thereunder shall entitle the Secured Parties to renew any such policies, cause the coverages and amounts thereofto be maintained at levels required pursuant to the first sentence of this Section 8.05 or otherwise to obtain similar insurance in place ofsuch policies, in each case at the expense of such Obligor (payable on demand). The amount of any such expenses shall accrue interestat the Default Rate if not paid on demand, and shall constitute “Obligations.”8.06 Books and Records; Inspection Rights.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION57 (a) Such Obligor will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, trueand correct entries are made of all dealings and transactions in relation to its business and activities.(b) Such Obligor will, and will cause each of its Subsidiaries to, permit any representatives designated by AdministrativeAgent and not having a conflict of interest with Borrower (unless an Event of Default has occurred and is continuing), upon reasonableprior notice, to visit and inspect its properties, to examine and make extracts from its books and records, to inspect its facilities and todiscuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and intervals (butnot more often than once per year unless an Event of Default has occurred and is continuing) as Administrative Agent may reasonablyrequest.(c) The Obligors shall pay all documented out-of-pocket costs of all such inspections and meetings; provided that, so long asno Event of Default has occurred and is continuing, (i) in the case of inspections, the Obligors shall not be required to pay suchexpenses for more than one (1) inspection for each fiscal year and (ii) in the case of meetings, the Obligors shall not be obligated to paysuch expenses for more than one (1) meeting per year.8.07 Compliance with Laws and Other Obligations. Such Obligor will, and will cause each of its Subsidiaries to, (i) comply in allmaterial respects with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property (includingEnvironmental Laws) and (ii) comply in all material respects with all terms of Indebtedness and all other Material Agreements, exceptwhere the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.8.08 Maintenance of Properties, Etc. Such Obligor shall, and shall cause each of its Subsidiaries to, maintain and preserve all of itsproperties necessary or useful in the proper conduct of its business in good working order and condition in accordance with the generalpractice of other Persons of similar character and size, ordinary wear and tear and damage from casualty or condemnation excepted.8.09 Licenses. Such Obligor shall, and shall cause each of its Subsidiaries to, obtain and maintain all licenses, authorizations,consents, filings, exemptions, registrations and other Governmental Approvals necessary in connection with the execution, deliveryand performance of the Loan Documents, the consummation of the Transactions or the operation and conduct of its business andownership of its properties, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect.8.10 Action under Environmental Laws. Such Obligor shall, and shall cause each of its Subsidiaries to, upon becoming aware ofthe presence of any Hazardous Materials or the existence of any environmental liability under applicable Environmental Laws withrespect to their respective businesses, operations or properties, take all actions, at their cost and expense, as shall be necessary oradvisable to investigate and clean up the condition of their respective businesses, operations or properties, including all requiredremoval, containment and remedial[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION58 actions, and restore their respective businesses, operations or properties to a condition in compliance with applicable EnvironmentalLaws.8.11 Use of Proceeds. The proceeds of the Loans will be used only as provided in Section 2.04. No part of the proceeds of theLoans will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board ofGovernors of the Federal Reserve System, including Regulations T, U and X.8.12 Certain Obligations Respecting Subsidiaries; Further Assurances.(a) Subsidiary Guarantors. Such Obligor will take such action, and will cause each of its Subsidiaries to take such action,from time to time as shall be necessary to ensure that all Subsidiaries (other than any Excluded Foreign Subsidiary not required to be aSubsidiary Guarantor under Section 8.12(b)(i)), are “Subsidiary Guarantors” hereunder. Without limiting the generality of theforegoing, in the event that Borrower or any of its Subsidiaries shall form or acquire any new Subsidiary (other than any new ExcludedForeign Subsidiary not required to be a Subsidiary Guarantor under Section 8.12(b)(i)), such Obligor and its Subsidiaries willpromptly and in any event within thirty (30) days (or such longer time as consented to by Administrative Agent in writing) of theformation or acquisition of such Subsidiary:(i) cause such new Subsidiary to become a “Subsidiary Guarantor” hereunder, and a “Grantor” under the SecurityAgreement, pursuant to a Guarantee Assumption Agreement;(ii) take such action or cause such Subsidiary to take such action (including delivering such shares of stock togetherwith undated transfer powers executed in blank) as shall be necessary to create and perfect valid and enforceable first priority (subjectto Permitted Priority Liens) Liens on substantially all of the personal property of such new Subsidiary as collateral security for theobligations of such new Subsidiary hereunder;(iii) to the extent that the parent of such Subsidiary is not a party to the Security Agreement or has not otherwisepledged Equity Interests in its Subsidiaries in accordance with the terms of the Security Agreement and this Agreement, cause theparent of such Subsidiary to execute and deliver a pledge agreement in favor of the Secured Parties in respect of all outstanding issuedshares of such Subsidiary; and(iv) deliver such proof of corporate action, incumbency of officers, opinions of counsel and other documents as isconsistent with those delivered by each Obligor pursuant to Section 6.01 or as Administrative Agent or the Majority Lenders shallhave requested.(b) Excluded Foreign Subsidiaries.(i) In the event that, at any time, Excluded Foreign Subsidiaries have, in the aggregate, (A) total revenues constituting15% or more of the total revenues of Borrower and its Subsidiaries on a consolidated basis, or (B) total assets constituting 15% or moreof the total assets of Borrower and its Subsidiaries on a consolidated basis, promptly (and, in any event,[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION59 within thirty (30) days (or such longer time as consented to by Administrative Agent in writing)) Obligors shall cause one or more ofsuch Excluded Foreign Subsidiaries to become Subsidiary Guarantors in the manner set forth in Section 8.12(a), such that, after suchSubsidiaries become Subsidiary Guarantors, the non-guarantor Excluded Foreign Subsidiaries in the aggregate shall cease to haverevenues or assets, as applicable, that meet the thresholds set forth in clauses (A) and (B) above; provided however thatnotwithstanding the foregoing, any Foreign Subsidiary that individually generates revenue constituting 10% or more of the totalrevenues of Borrower and its Subsidiaries on a consolidated basis, or individually owns total assets constituting 10% or more of thetotal assets of Borrower and its Subsidiaries on a consolidated basis shall be required to become a Subsidiary Guarantor in the mannerset forth in Section 8.12(a); provided further that no Foreign Subsidiary shall be required to become a Subsidiary Guarantor if doingso would result in material adverse tax consequences for Borrower and its Subsidiaries, taken as a whole. For the avoidance of doubt,revenues and assets of Foreign Subsidiaries considered in the calculation of the preceding thresholds shall not include intercompanyrevenues and assets that are eliminated in consolidation. For the purposes of this Section 8.12(b)(i), the determination of whether a“material adverse tax consequence” shall be deemed to result from such Foreign Subsidiary becoming a Subsidiary Guarantor shall bemade by Administrative Agent, in Administrative Agent’s sole reasonable discretion, following consultation with Borrower, takinginto consideration and weighing, among others, the following relevant factors: (i) the magnitude of an increase in Borrower’s taxliability or a reduction in Borrower’s net operating loss carryforward, taken as a whole; (ii) the amount of revenues generated by orassets accumulated at such Foreign Subsidiary compared with those generated by or accumulated at the Obligors; (iii) whether theLoans are over- or under-collateralized; (iv) the financial performance of the Borrower and its Subsidiaries, taken as a whole, and theObligors’ ability to perform the Obligations at such time; and (v) the cost to the Borrower and its Subsidiaries balanced against thepractical benefit to the Secured Parties.(ii) With respect to each First-Tier Foreign Subsidiary, such Obligor shall grant a security interest and Lien in 65% ofthe voting Equity Interests and 100% of all other Equity Interests in such First-Tier Foreign Subsidiaries in favor of the Secured Partiesas Collateral for the Obligations. Without limiting the generality of the foregoing, in the event that any Obligor shall form or acquireany new Subsidiary that is a First-Tier Foreign Subsidiary, such Obligor will promptly and in any event within thirty (30) days of theformation or acquisition of such Subsidiary (or such longer time as consented to by Administrative Agent in writing) grant a securityinterest and Lien in 65% of the voting Equity Interests and 100% of all other Equity Interests of such Subsidiary in favor of theSecured Parties as Collateral for the Obligations (provided that in the case of a First-Tier Foreign Subsidiary that is a SubsidiaryGuarantor, such Obligor shall grant a security interest and Lien in 100% of the Equity Interests of such Subsidiary in favor of theSecured Parties as Collateral for the Obligations), including entering into any necessary local law security documents and delivery ofcertificated securities issued by such First-Tier Foreign Subsidiary as required by this Agreement or the Security Agreement.Notwithstanding anything else contained in this Section 8.12(b)(ii), the Lenders shall not require any foreign law documents to perfect,register or otherwise document a security interest in the voting stock of any Foreign Subsidiary in a jurisdiction outside the UnitedStates unless either (1) such Foreign Subsidiary has assets or revenues representing more than the[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION60 greater of (A) $3,000,000 or (B) 5% of Borrower’s total consolidated assets or revenues (subject to the reimbursement limitationsdescribed in Section 8.12(c)), or (2) the Lenders bear all legal and filing costs, fees, expenses and other amounts relating to suchperfection, registration or documentation of such security interest in the voting stock of such Foreign Subsidiary in such foreignjurisdiction.(c) Further Assurances. Such Obligor will, and will cause each of its Subsidiaries to, take such action from time to time asshall reasonably be requested by Administrative Agent or the Majority Lenders to effectuate the purposes and objectives of thisAgreement. Without limiting the generality of the foregoing, each Obligor will, and will cause each Person that is required to be aSubsidiary Guarantor or whose voting Equity Interests are required to be pledged, to take such action from time to time (includingexecuting and delivering such assignments, security agreements, control agreements and other instruments) as shall be reasonablyrequested by Administrative Agent or the Majority Lenders to create, in favor of the Secured Parties, perfected security interests andLiens in substantially all of the personal property of such Subsidiary Guarantor or entity whose voting Equity Interests are required tobe pledged, as collateral security for the Obligations (other than Warrant Obligations); provided that:(i) (A) any such security interest or Lien shall be subject to the relevant requirements of the Security Documents, (B)no actions in any jurisdiction outside the United States shall be required in order to create any security interests in immaterial assets,including immaterial Intellectual Property; (C) no filings in respect of any security interest or Lien shall be required in any jurisdictionthat imposes recording fees based on the aggregate principal amount of Indebtedness secured (except where the Lenders are willing tobear all such filing costs); (D) no landlord waiver, bailee waiver or any local law equivalent shall be required with respect to locationsoutside the United States; and (E) no actions in any jurisdiction outside the United States shall be required where the cost of obtainingor perfecting a security interest in such assets exceeds the practical benefit to the Lenders afforded thereby, as reasonably determinedby Administrative Agent (in consultation with the Obligors);(ii) any such foreign guarantees and foreign security will be limited or not required if (or to the extent) (A) it is limitedby applicable corporate benefit, maintenance of capital, “thin capitalization” rules and financial assistance restrictions or (B) if the samewould violate the fiduciary duties of a Subsidiary’s directors or contravene any legal prohibition or regulatory condition or it isgenerally accepted (taking into account market practice in respect of the giving of guarantees and security for financial obligations inthe relevant jurisdiction) that it would result in a material risk of personal or criminal liability on the part of any officer or director of aSubsidiary; and(iii) notwithstanding any provision under this Agreement or other Loan Document to the contrary (other than Section9.09(f)), Borrower and its Subsidiaries shall not be responsible for legal and filing costs, fees, expenses and other amounts in excess of$15,000 in respect of actions required under this Section 8.12 or Section 8.16(b) for each foreign jurisdiction, or $50,000 in theaggregate for all foreign jurisdictions.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION61 8.13 Termination of Non-Permitted Liens. In the event that Borrower or any of its Subsidiaries shall become aware or be notifiedby Administrative Agent or any Lender of the existence of any outstanding Lien against any Property of Borrower or any of itsSubsidiaries, which Lien is not a Permitted Lien, the applicable Obligor shall use its best efforts to promptly terminate or cause thetermination of such Lien.8.14 Intellectual Property.(a) Notwithstanding any provision in this Agreement or any other Loan Documents to the contrary, Secured Parties are notassuming any liability or obligation of Obligors or their Affiliates of whatever nature, whether presently in existence or arising orasserted hereafter. All such liabilities and obligations shall be retained by and remain obligations and liabilities of the Obligors and/ortheir Affiliates, as the case may be. Without limiting the foregoing, Secured Parties are not assuming and shall not be responsible forany liabilities or Claims of Obligors or their Affiliates, whether present or future, absolute or contingent and whether or not relating tothe Obligors, the Obligor Intellectual Property, and/or the Material Agreements, and Borrower shall indemnify and save harmlessSecured Parties from and against all such liabilities, Claims and Liens.(b) In the event that the Obligors acquire Obligor Intellectual Property during the term of this Agreement, then the provisionsof this Agreement shall automatically apply thereto and any such Obligor Intellectual Property shall automatically constitute part of theCollateral under the Security Documents, without further action by any party, in each case from and after the date of such acquisition(except that any representations or warranties of any Obligor shall apply to any such Obligor Intellectual Property only from and afterthe date, if any, subsequent to such acquisition that such representations and warranties are brought down or made anew as providedherein). Borrower shall provide notice thereof as set forth in Section 8.02(b) and shall execute and deliver to Administrative AgentShort-Form Intellectual Property Security Agreements regarding all incremental applied for or registered Obligor Intellectual Propertywithin 30 days of such notice.8.15 Post-Closing Items.(a) Borrower shall use commercially reasonable efforts to cause the bailees for the 20413 87th Avenue South, Kent, WA98031 and 5235 International Dr Ste C, Cudahy, WI 53110 locations to execute and deliver to Administrative Agent, no later thanthirty (30) days after the date hereof, bailee waivers in respect of such properties.(b) Borrower shall use commercially reasonable efforts to execute and deliver to Administrative Agent, not later than thirty(30) days after the date hereof, a Landlord Consent with respect to each of the Borrower Facilities described in clauses (i) and (ii) ofthe definition thereof, duly executed and delivered by each applicable landlord.(c) Borrower shall deliver to Administrative Agent, not later than five (5) Business Days after the date on whichAdministrative Agent shall have delivered terminations of pre-existing control agreements, duly executed control agreements for thebenefit of the Secured[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION62 Parties for all Deposit Accounts, Securities Accounts and Commodity Accounts owned by the Obligors in the United States (otherthan Excluded Accounts (as defined in the Security Agreement)).(d) Borrower shall deliver to Administrative Agent, not later than thirty (30) days after the date hereof, endorsements ofinsurance evidencing the existence of all insurance required to be maintained by the Obligors and their respective Subsidiaries pursuantto Section 8.05 and the designation of Administrative Agent as the lender’s loss payees or additional named insured, as the case maybe, thereunder.SECTION 9NEGATIVE COVENANTSEach Obligor covenants and agrees with Administrative Agent and the Lenders that, until Payment In Full:9.01 Indebtedness. Such Obligor will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist anyIndebtedness, whether directly or indirectly, except:(a) the Obligations;(b) Indebtedness existing on the date hereof and set forth in Part II of Schedule 7.13(a) to the Disclosure Letter andPermitted Refinancings thereof;(c) Permitted Priority Debt;(d) accounts payable and purchasing card balances owing to trade creditors for goods and services and current operatingliabilities (not the result of the borrowing of money) incurred in the ordinary course of Borrower’s or such Subsidiary’s business inaccordance with customary terms and not more than sixty (60) days past due, unless contested in good faith by appropriate proceedingsand reserved for in accordance with GAAP;(e) Indebtedness consisting of guarantees resulting from endorsement of negotiable instruments for collection by any Obligorin the ordinary course of business;(f) Indebtedness (i) of any Obligor to any other Obligor, (ii) of any Non-Obligor Subsidiary to any other Non-ObligorSubsidiary, and (iii) of an Obligor to a Non-Obligor Subsidiary incurred in the ordinary course of business in an amount not to exceedas of the date incurred the greater of (A) $5,000,000 (or the Equivalent Amount in other currencies) or (B) 5% of the total consolidatedassets of Borrower and its Subsidiaries, in the aggregate at any time outstanding for all such Indebtedness, so long as the terms of suchIndebtedness (including interest rates and fees) are no less favorable to such Obligor than in a comparable arm’s length transaction witha Person not an Affiliate of Borrower (it being understood that intercompany payment arrangements to the extent consisting ofreimbursement of bona fide third party fees and costs does not constitute Indebtedness restricted by this Section 9.01);[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION63 (g) Guarantees (i) by an Obligor of Indebtedness of another Obligor and (ii) by any Non-Obligor Subsidiary of Indebtednessof any other Non-Obligor Subsidiary;(h) normal course of business equipment financing, provided that (i) at the time of incurrence thereof, the outstanding principalamount of such Indebtedness or the capitalized amount of the remaining lease or similar payments under the relevant lease or otherapplicable agreement or instrument that would appear on a balance sheet of such Person as of such date in accordance with GAAP,shall not exceed $5,000,000 (or the Equivalent Amount in other currencies), and (ii) if secured, the collateral therefor consists solely ofthe assets being financed, the products and proceeds thereof and books and records related thereto;(i) Unsecured Indebtedness in connection with corporate credit cards in an aggregate principal amount not exceeding$2,000,000 at any time outstanding;(j) Indebtedness in respect of any agreement providing for treasury, depositary, cash management services, including inconnection with any automated clearing house transfers of funds or any similar transactions, securities settlements, foreign exchangecontracts, assumed settlement, netting services, overdraft protections and other cash management, intercompany cash pooling andsimilar arrangements, in each case in the ordinary course of business;(k) Permitted Subordinated Debt in an aggregate principal amount at any time outstanding not to exceed the greater of (i)$125,000,000 and (ii) 25% of Borrower’s market capitalization at the time of issuance;(l) Indebtedness with respect to letters of credit outstanding, provided that at any time in any given calendar year, theoutstanding principal amount of such Indebtedness shall not exceed (i) $1,000,000 at any time outstanding, or (ii) if inclusive of lettersof credit issued to support a facility expansion, $2,500,000 at any time outstanding;(m) (i) Indebtedness in an outstanding principal amount of up to $5,000,000 incurred, assumed or otherwise acquired inconnection with a Permitted Acquisition (which may be Indebtedness existing prior to the Permitted Acquisition secured by the assetsacquired as described in Section 9.02(k)(ii)), and (ii) and Permitted Refinancings thereof;(n) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that (i) such Indebtedness exists atthe time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming aSubsidiary, and (ii) the aggregate principal amount of Indebtedness permitted in reliance on this Section 9.01(n) for all such newSubsidiaries does not cause the Permitted Acquisition Basket to be exceeded;(o) contingent return obligations consistent with market practice in respect of unspent advances to the company by a third-party entity (each such entity a “Research Partner”) whereby such funds and any interest thereon are used to pay costs and expensesfor the research performed and expenses incurred in compliance with agreements between Borrower or its Subsidiaries and suchResearch Partner;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION64 (p) obligations under bona fide time-based licenses of Borrower or any Subsidiary in the ordinary course of business;(q) advance or deposits from customers or vendors received in the ordinary course of business and held with a deposit bankinsured by the Federal Deposit Insurance Corporation;(r) Indebtedness (other than for borrowed money) that may be deemed to exist pursuant to any guarantees, warranty orcontractual service obligations, performance, surety, statutory, appeal, bid, prepayment guarantee, payment (other than payment ofIndebtedness) or completion of performance guarantees or similar obligations incurred in the ordinary course of business;(s) Indebtedness consisting of (i) the bona fide financing of insurance premiums or self-insurance obligations (which must becommercially reasonable and consistent with insurance practices generally) or (ii) take-or-pay obligations contained in supply or similaragreements, in each case, in the ordinary course of business;(t) any indemnification, purchase price adjustment, earn-out or similar obligations incurred in connection with Investmentspermitted by Section 9.03(e) (but subject to the same monetary limits as described in Section 9.03(e));(u) workers' compensation claims, payment obligations in connection with health disability or other types of social securitybenefits, unemployment or other insurance obligations, reclamation and statutory obligations, in each case incurred in the ordinarycourse of Borrower’s or its Subsidiary’s business;(v) Hedging Agreements entered into in the ordinary course of Borrower's financial planning solely to hedge currency,interest rate or commodity price risks (and not for speculative purposes);(w) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft of similar instrumentdrawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within two (2)Business Days of notice to Borrower or the relevant Subsidiary of its incurrence;(x) other unsecured Indebtedness in an aggregate principal amount not to exceed $5,000,000 at any time outstanding; and(y) Indebtedness approved in advance in writing by the Administrative Agent.9.02 Liens. Such Obligor will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien onany property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable)or rights in respect of any thereof, except:(a) Liens securing the Obligations;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION65 (b) any Lien on any property or asset of Borrower or any of its Subsidiaries existing on the date hereof and set forth in Part IIof Schedule 7.13(b) to the Disclosure Letter; provided that (i) no such Lien shall extend to any other property or asset of Borrower orany of its Subsidiaries and (ii) any such Lien shall secure only those obligations which it secures on the date hereof and extensions,renewals and replacements thereof that do not increase the outstanding principal amount thereof;(c) Liens described in the definition of “Permitted Priority Debt”;(d) Liens securing Indebtedness permitted under Section 9.01(h); provided that such Liens are restricted solely to thecollateral described in Section 9.01(h);(e) Liens imposed by law which were incurred in the ordinary course of business, including (but not limited to) carriers’,warehousemen’s and mechanics’ liens, liens relating to leasehold improvements and other similar liens arising in the ordinary course ofbusiness and which (x) do not in the aggregate materially detract from the value of the Property subject thereto or materially impair theuse thereof in the operations of the business of such Person or (y) are being contested in good faith by appropriate proceedings, whichproceedings have the effect of preventing the forfeiture or sale of the Property subject to such liens and for which adequate reserveshave been made if required in accordance with GAAP;(f) Liens, pledges or deposits made in connection with and to secure payment of workers’ compensation, unemploymentinsurance or other similar social security legislation in the ordinary course of business (other than Liens imposed by ERISA);(g) Liens securing Taxes, assessments and other governmental charges, the payment of which is not yet due or is beingcontested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserve or otherappropriate provisions, if any, as shall be required by GAAP shall have been made;(h) servitudes, easements, rights of way, restrictions and other similar encumbrances on real Property imposed by applicableLaws and encumbrances consisting of zoning or building restrictions, easements, licenses, restrictions on the use of property or minorimperfections in title thereto which, in the aggregate, are not material, and which do not in any case materially detract from the value ofthe property subject thereto or interfere with the ordinary conduct of the business of any of the Obligors;(i) with respect to any real Property, (A) (i) such defects or encroachments as might be revealed by an up-to-date survey ofsuch real Property; (ii) the reservations, limitations, provisos and conditions expressed in the original grant, deed or patent of suchproperty by the original owner of such real Property pursuant to applicable Laws; and (iii) rights of expropriation, access or user or anysimilar right conferred or reserved by or in applicable Laws, which, in the aggregate for (i), (ii) and (iii), are not material, and which donot in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business ofany of the Obligors, and (B) leases or subleases granted in the ordinary course of business;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION66 (j) Bankers liens, rights of setoff and similar Liens incurred on deposits made in the ordinary course of business;(k) (i) Liens securing Indebtedness permitted in reliance on Section 9.01(m), provided that such Liens extend solely to theassets acquired in such Permitted Acquisition; and (ii) Liens securing Indebtedness permitted in reliance on Section 9.01(n), providedthat such Liens do not attach to any other property of any other Obligor or Subsidiary and such Liens are of the type otherwisepermitted under this Section 9.02;(l) Non-exclusive licenses or sublicenses, leases or subleases of property (other than real Property or Intellectual Property)granted in the ordinary course of Borrower’s business, if the leases, subleases, licenses and sublicenses do not prohibit an Obligor fromgranting Control Agent or any Lender a security interest in such property;(m) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section11.01(l);(n) cash collateral arrangements made (i) with respect to letters of credit permitted by Section 9.01(l) but not exceeding theamount of the Indebtedness permitted by Section 9.01(l) and (ii) with respect to the Subordinated Debt Interest Escrow Account;(o) Liens in connection with transfers permitted under Section 9.09;(p) Liens the creation of which did not involve Borrower’s or its Subsidiaries’ consensual participation or involvementencumbering assets not to exceed $500,000 in the aggregate in any fiscal year;(q) deposits to secure the performance of bids, trade contracts, operating leases, statutory obligations, surety and appeal bonds(other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature (including by means of aletter of credit supporting the same), in each case in the ordinary course of business;(r) Liens (i) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties inconnection with the importation of goods in the ordinary course of business or (ii) on specific items of inventory or other goods andproceeds of any Person securing such Person's obligations in respect of bankers' acceptances or letters of credit issued or created for theaccount of such Person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course ofbusiness;(s) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into byBorrower or any of its Subsidiaries in the ordinary course of business permitted by this Agreement;(t) Liens encumbering reasonable and customary initial deposits and margin deposits and similar Liens attaching to commoditytrading accounts or other brokerage accounts incurred[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION67 in the ordinary course of business and not for speculative purposes; provided that the amount of the obligations secured thereby doesnot exceed $500,000;(u) Liens solely on any cash earnest money deposits made by Borrower or any of its Subsidiaries in connection with any letterof intent or purchase agreement permitted hereunder; and(v) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;provided that no Liens otherwise permitted under any of the foregoing (other than Section 9.02(a), (m) or (o)) shall apply to anyMaterial Intellectual Property.9.03 Fundamental Changes and Acquisitions. Such Obligor will not, and will not permit any of its Subsidiaries to, (i) enter intoany transaction of merger, amalgamation or consolidation (ii) divide, liquidate, wind up or dissolve itself (or suffer any division,liquidation or dissolution), or (iii) make any Acquisition or otherwise acquire any business or substantially all the property from, orcapital stock of, or be a party to any acquisition of, any Person, except:(a) Investments permitted under Section 9.05;(b) any Subsidiary may be merged, amalgamated or consolidated with or into any Obligor;(c) any Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its property (upon voluntary liquidation orotherwise) to any Obligor;(d) the sale, transfer or other disposition of the capital stock of any Subsidiary to any Obligor;(e) Borrower and its Subsidiaries may make Permitted Acquisitions in an aggregate amount that does not cause the PermittedAcquisition Basket to be exceeded; and(f) Borrower and its Subsidiaries may enter into Permitted Commercialization Arrangements.9.04 Lines of Business. Such Obligor will not, and will not permit any of its Subsidiaries to, engage to any material extent in anybusiness other than the business engaged in on the date hereof by Borrower or any Subsidiary or a business reasonably related thereto.9.05 Investments. Such Obligor will not, and will not permit any of its Subsidiaries to, make, directly or indirectly, or permit toremain outstanding any Investments except:(a) Investments outstanding on the date hereof and identified in Schedule 9.05 to the Disclosure Letter;(b) operating deposit accounts with banks;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION68 (c) extensions of credit in the nature of accounts receivable or notes receivable arising from the sales or leases of goods orservices in the ordinary course of business;(d) Permitted Cash Equivalent Investments;(e) Investments by Obligors in Subsidiary Guarantors;(f) Investments by Obligors in Foreign Subsidiaries in an aggregate amount at any time outstanding (net of payments forinventory and equipment, any intercompany loan repayments and returns of cash, inventory and equipment, whether made by cashpayment or by offset of amounts owed by such Obligor to such Foreign Subsidiary) not to exceed the greater of (A) $15,000,000 (orthe Equivalent Amount in other currencies) or (B) 10% of the total consolidated assets of Borrower and its Subsidiaries, it beingunderstood that transfers of inventory and equipment in the ordinary course of business will be counted against the foregoing limits atan amount no less than the GAAP value of such asset (which shall not be less than cost or depreciated value); provided that any suchoffset in respect of payment for services shall not exceed an amount that is consistent with the application of arm's length principlesunder Section 482 of the Code and regulations thereunder. For the avoidance of doubt, no transfer of Intellectual Property to a ForeignSubsidiary (other than non-exclusive licenses) shall be permitted under this Section 9.05(f);(g) Hedging Agreements entered into in the ordinary course of Borrower’s financial planning solely to hedge currency risks(and not for speculative purposes);(h) Investments consisting of security deposits with utilities, landlords and other like Persons made in the ordinary course ofbusiness;(i) (i) employee loans, advances and guarantees in accordance with Borrower’s usual and customary practices with respectthereto (if permitted by applicable law) which in the aggregate shall not exceed $1,000,000 outstanding at any time (or the EquivalentAmount in other currencies), and (ii) non-cash loans to employees, officers or directors relating to the purchase of Equity Interests ofBorrower pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of Directors;(j) Investments received in connection with any Insolvency Proceedings in respect of any customers, suppliers or clients andin settlement of delinquent obligations of, and other disputes with, customers, suppliers or clients;(k) Investments (excluding non-exclusive licenses of Intellectual Property and exclusive (with respect to jurisdiction only)licenses of Intellectual Property outside of the U.S.) as part of a Permitted Commercialization Arrangement, provided that the value ofthe cash and tangible property components of such Investment (valued at cost) shall not in any fiscal year exceed $10,000,000 (or suchgreater amount approved by the Administrative Agent, such approval not to be unreasonably withheld), provided the portion of suchlimit not used in any fiscal year shall not be available in any succeeding fiscal year;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION69 (l) Investments permitted under Section 9.03;(m) Investments permitted by Borrower’s investment policy as in effect as of the date of this Agreement, with such changesthereto as shall be approved by Borrower’s Board of Directors with the consent of Administrative Agent, which consent shall not beunreasonably withheld;(n) non-cash Investments in joint ventures or strategic alliances in the ordinary course of Borrower's business consisting ofnon-exclusive licensing of technology, the development of technology or the providing of technical support;(o) Investments in an aggregate amount not to exceed $5,000,000 in any fiscal year of Borrower;(p) Guarantees of commercial obligations of Subsidiaries (not constituting Indebtedness) in the ordinary course of business notprohibited hereby; and(q) Investments of a Person existing at the time such Person becomes a Subsidiary of, Borrower or merges with, Borrower orany Subsidiary; provided that (i) such Investments were not made in contemplation of such Person becoming a Subsidiary or suchmerger, in an aggregate amount not to exceed $5,000,000 at any time, and (ii) the amount of such Investments shall not cause thePermitted Acquisition Basket to be exceeded.9.06 Restricted Payments. Such Obligor will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay ormake, directly or indirectly, any Restricted Payment, except:(a) Borrower may declare and pay dividends with respect to its capital stock payable solely in additional shares of its commonstock;(b) Borrower may purchase, redeem, retire, or otherwise acquire shares of its capital stock or other Equity Interests with theproceeds received from a substantially concurrent issue of new shares of its capital stock or other Equity Interests;(c) payments pursuant to employee stock plans, which payments must be approved by Borrower’s Board of Directorscomprised of disinterested members;(d) a Restricted Payment by any Subsidiary Guarantor to any Obligor;(e) a Restricted Payment by any Non-Obligor Subsidiary to Borrower or any other Subsidiary;(f) any Subsidiary that is a wholly-owned direct or indirect Subsidiary of Borrower may declare and pay dividends ratablywith respect to its Equity Interests;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION70 (g) Borrower may make cash payments in lieu of fractional shares in connection with the exercise of warrants, options, orother securities, convertible or exchangeable for Equity Interests of Borrower;(h) Borrower may issue its Equity Interests upon the exercise of warrants or options to purchase Equity Interests of Borrower;(i) Borrower may distribute rights pursuant to a stockholder rights plan or redeem such rights for no or nominal consideration;provided that such redemption is in accordance with the terms of such plan;(j) Borrower may make Restricted Payments in connection with the retention of Equity Interests in payment of withholdingtaxes in connection with equity-based compensation plans; and(k) Borrower or any Subsidiary may make payments or distributions to dissenting stockholders pursuant to applicable law inconnection with any Permitted Acquisition; provided that the payment of such amounts does not cause the Permitted AcquisitionBasket to be exceeded.9.07 Payments of Indebtedness. Such Obligor will not, and will not permit (without the consent of the Administrative Agent in itssole discretion) any of its Subsidiaries to, make any payments in respect of any Indebtedness other than (i) the Obligations and (ii)subject to any applicable terms of subordination, other Permitted Indebtedness.9.08 Change in Fiscal Year. Such Obligor will not, and will not permit any of its Subsidiaries to, change the last day of its fiscalyear from that in effect on the date hereof, except to change the fiscal year of a Subsidiary acquired in connection with an Acquisitionto conform its fiscal year to that of Borrower.9.09 Sales of Assets, Etc. Such Obligor will not, and will not permit any of its Subsidiaries to, sell, lease, exclusively license (interms of geography or field of use), transfer, or otherwise dispose of any of its Property (including accounts receivable and capitalstock of Subsidiaries) to any Person in one transaction or series of transactions (any thereof, an “Asset Sale”), except:(a) transfers of cash for equivalent value and inventory in the ordinary course of its business, including the transfer ofnCounter systems to collaborators as compensation for services rendered in the ordinary course of business;(b) sales, loans or leases of inventory in the ordinary course of its business on ordinary business terms (including reagent rentalagreements);(c) tangible property transfers to a Permitted Commercialization Arrangement Vehicle but subject to the monetary limit onInvestments as described under Section 9.05(k);(d) transfers of Property by any Obligor to any other Obligor;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION71 (e) dispositions of any Property that is obsolete or worn out or no longer used or useful in the Business;(f) placements of specialized equipment for manufacturing, with a fair market value not to exceed the sum of $3,000,000 inthe aggregate, with foreign or domestic contract manufacturers where Borrower retains title to such equipment and maintains theLenders’ Lien on such equipment (such Lien being acknowledged by such manufacturer) with a right to recover the equipment;provided that notwithstanding Sections 8.12(c) and 8.16(b), Borrower shall be solely responsible for paying (or reimbursing Lenders)for all legal and filing costs relating to the creation and maintenance of Lenders’ Lien on such Property in foreign jurisdictions.(g) dispositions consisting of the sale, transfer, assignment or other disposition of unpaid and overdue accounts receivable inconnection with the collection, compromise or settlement thereof in the ordinary course of business and not as part of a financingtransaction;(h) dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similarreplacement property or (ii) the proceeds of such disposition are applied to the purchase price of such replacement property within 180days;(i) dispositions resulting from casualty events;(j) non-exclusive licenses of Borrower’s and its Subsidiaries’ Intellectual Property;(k) licenses for the use of the Intellectual Property of Borrower or its Subsidiaries (but not to any of Borrower’s otherAffiliates, except for a Permitted Commercialization Arrangement Vehicle) that are approved by Borrower’s Board of Directors andwhich would not result in a legal transfer of title of the licensed property but that may be exclusive (i) in respects other than territory(such as field of use or scope) and (ii) as to territory, only as to discrete areas outside of the United States; provided that any suchlicense of such Intellectual Property covering the Product may be exclusive only as to territory and only as to discrete areas outside ofthe United States;(l) exclusive and non-exclusive licenses covering nCounter Elements or diagnostic gene content other than for nCounter-based Prosigna™ Breast Cancer Prognostic Gene Signature Assay;(m) any transaction permitted under Section 9.02, 9.03, 9.05 or 9.06;(n) the disposition of other property in an aggregate amount not to exceed $5,000,000; and(o) any other Asset Sale the Asset Sale Net Proceeds of which are applied as required under Section 3.03(b)(i).9.10 Transactions with Affiliates. Such Obligor will not, and will not permit any of its Subsidiaries to, sell, lease, license orotherwise transfer any assets to, or purchase, lease, license or otherwise acquire any assets from, or otherwise engage in any othertransactions with, any of[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION72 its Affiliates, unless such transaction (other than a transaction of the type described in Section 9.10(b), for which consent is required asdescribed therein) is no less favorable to Borrower than those that would be obtained in a comparable arm’s-length transaction with aPerson not an Affiliate of Borrower; provided that the foregoing restriction shall not apply to the following:(a) transactions between or among Obligors;(b) transactions consented to by Administrative Agent, which consent shall not be unreasonably withheld, which increase thetax efficiency of Borrower and its Subsidiaries as a whole that are undertaken between Borrower and its Subsidiaries in good faithbased on advice of external legal counsel and that comply with arm’s length principles pursuant to Section 482 of the Code andregulations thereunder;(c) the transactions set forth on Schedule 9.10 to the Disclosure Letter;(d) transactions permitted under Sections 9.01(f), (g), (m) (with respect to Section 9.01(m), only to the extent suchIndebtedness is assumed or acquired from the acquired target), 9.03(b) to (d), 9.05(a), (f) and (i), 9.06 (a) and (c) to (f); and(e) transactions under Permitted Commercialization Arrangements permitted under Sections 9.03(f), 9.05(k), and 9.09(c) and(k), but only if such transactions have first been approved by a majority of the board members of Borrower’s board of directors,exclusive of any interested board members, exercising their reasonable business judgment and fiduciary duties to Borrower, and, onlyso long as Borrower is a Publicly Reporting Company.9.11 Restrictive Agreements. Such Obligor will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into,incur or permit to exist any Restrictive Agreement that contains terms and provisions that are inconsistent with those found in the LoanDocuments such that a conflict would exist that would cause, or would reasonably be expected to cause, a material breach of any LoanDocument or such Restrictive Agreement.9.12 Amendments to Material Agreements. Such Obligor will not, and will not permit any of its Subsidiaries to, (i) terminate anyMaterial Agreement that is listed on Schedule 9.12 to the Disclosure Letter at the time of the first Borrowing or at the time of eachsubsequent Borrowing (other than for a PIK Loan) (unless replaced with another agreement that, viewed as a whole, is on better termsfor Borrower or such Subsidiary) or (ii) make any amendment, restatement or alteration which is tantamount to a termination of anysuch Material Agreement described in the foregoing clause (i), without in each case the prior written consent of the Lender (whichconsent shall not be unreasonably withheld or delayed).9.13 Operating Leases.Borrower will not, and will not permit any of its Subsidiaries to, make any expenditures in respect of operating leases, exceptfor:(i) real estate operating leases;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION73 (ii) operating leases between Borrower and any of its wholly-owned Subsidiaries or between any of Borrower’swholly-owned Subsidiaries; and(iii) operating leases that would not cause Borrower and its Subsidiaries, on a consolidated basis, to make paymentsexceeding Five Million Dollars ($5,000,000) (or the Equivalent Amount in other currencies) in any fiscal year.9.14 Sales and Leasebacks. Except as disclosed on Schedule 9.14 to the Disclosure Letter, such Obligor will not, and will notpermit any of its Subsidiaries to, become liable, directly or indirectly, with respect to any lease, whether an operating lease or a CapitalLease Obligation, of any property (whether real, personal, or mixed), whether now owned or hereafter acquired, (i) which Borrower orsuch Subsidiary has sold or transferred or is to sell or transfer to any other Person and (ii) which Borrower or such Subsidiary intendsto use for substantially the same purposes as property which has been or is to be sold or transferred.9.15 Hazardous Material. Such Obligor will not, and will not permit any of its Subsidiaries to, use, generate, manufacture, install,treat, release, store or dispose of any Hazardous Material, except in compliance with all applicable Environmental Laws or where thefailure to comply would not reasonably be expected to result in a Material Adverse Change.9.16 Accounting Changes. Such Obligor will not, and will not permit any of its Subsidiaries to, make any significant change inaccounting treatment or reporting practices, except as required or permitted by GAAP.9.17 Compliance with ERISA. No ERISA Affiliate shall cause or suffer to exist (a) any event that would result in the imposition ofa Lien with respect to any Title IV Plan or Multiemployer Plan or (b) any other ERISA Event that would, in the aggregate, have aMaterial Adverse Effect. No Obligor or Subsidiary thereof shall cause or suffer to exist any event that would result in the imposition ofa Lien with respect to any Benefit Plan that would have a Material Adverse Effect.SECTION 10FINANCIAL COVENANTS10.01 Minimum Liquidity. Borrower shall maintain at all times Liquidity in an amount which shall exceed the greater of(i) $2,000,000 and (ii) to the extent Borrower has incurred Permitted Priority Debt, the minimum cash balance, if any, required ofBorrower by Borrower’s Permitted Priority Debt creditors.10.02 Minimum Revenue. Borrower and its Subsidiaries shall have annual Revenue (for each respective calendar year, the“Minimum Required Revenue”):(a) during the twelve-month period beginning on January 1, 2019, of at least $[†];(b) during the twelve-month period beginning on January 1, 2020, of at least $[†];(c) during the twelve-month period beginning on January 1, 2021, of at least $[†];[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION74 (d) during the twelve-month period beginning on January 1, 2022, of at least $[†]; and(e) during the twelve-month period beginning on January 1, 2023, of at least $[†].SECTION 11EVENTS OF DEFAULT11.01 Events of Default. Each of the following events shall constitute an “Event of Default”:(a) Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at thedue date thereof or at a date fixed for prepayment thereof or otherwise;(b) any Obligor shall fail to pay any Obligation (other than an amount referred to in Section 11.01(a)) when and as the sameshall become due and payable, and such failure shall continue unremedied for a period of three (3) Business Days;(c) any representation or warranty made or deemed made by or on behalf of Borrower or any of its Subsidiaries in or inconnection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or in any report,certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other LoanDocument or any amendment or modification hereof or thereof, shall: (i) prove to have been incorrect when made or deemed made tothe extent that such representation or warranty contains any materiality or Material Adverse Effect qualifier; or (ii) prove to have beenincorrect in any material respect when made or deemed made to the extent that such representation or warranty does not otherwisecontain any materiality or Material Adverse Effect qualifier;(d) any Obligor shall fail to observe or perform any covenant, condition or agreement contained in Section 8.02, 8.03(a) (withrespect to Borrower’s existence), 8.11, 8.12, 8.14, 8.15, 9 or 10;(e) any Obligor shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other thanthose specified in Section 11.01(a), (b) or (d)) or any other Loan Document, and such failure shall continue unremedied for a period ofthirty (30) or more days after written notice thereof from the Lenders is received by a Responsible Officer of Borrower;(f) Borrower or any of its Subsidiaries shall fail to make any payment (whether of principal or interest and regardless ofamount) in respect of any Material Indebtedness, when and as the same shall become due and payable after giving effect to anyapplicable grace or cure period as originally provided by the terms of such Indebtedness;(g) any material breach of, or “event of default” or similar event by any Obligor under, any Material Agreement shall occur,which would give the counterparty to such Material[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION75 Agreement the right to terminate such Material Agreement pursuant to the terms thereof (after giving effect to any applicable grace orcure period and provided that such material breach, “event of default” or similar event is not being contested in good faith withreasonable basis by such Obligor), to the extent that (i) the Obligor has received written notice of (A) termination of such MaterialAgreement or (B) written notice of such material breach, “event of default”, or similar event and written notice of the counterparty’sintent to terminate such Material Agreement on the basis thereof, and (ii) the counterparty to such Material Agreement has not waivedsuch material breach, “event of default” or similar event;(h) (i) any material breach of, or “event of default” or similar event under, the documentation governing any MaterialIndebtedness shall occur and such breach or “event of default” or similar event shall continue unremedied, uncured or unwaived after aperiod of five (5) Business Days after the expiration of any cure period thereunder, or (ii) any event or condition occurs (A) that resultsin any Material Indebtedness becoming due prior to its scheduled maturity or (B) that enables or permits (with or without the giving ofnotice, the lapse of time or both) the holder or holders of such Material Indebtedness or any trustee or agent on its or their behalf tocause such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior toits scheduled maturity; provided that this Section 11.01(h) shall not apply to secured Indebtedness that becomes due as a result of thevoluntary sale or transfer of the property or assets securing such Material Indebtedness;(i) any Obligor:(i) becomes insolvent, or generally does not or becomes unable to pay its debts or meet its liabilities as the samebecome due, or admits in writing its inability to pay its debts generally, or declares any general moratorium on its indebtedness, orproposes a compromise or arrangement or deed of company arrangement between it and any class of its creditors;(ii) commits an act of bankruptcy or makes an assignment of its property for the general benefit of its creditors ormakes a proposal (or files a notice of its intention to do so);(iii) institutes any proceeding seeking to adjudicate it an insolvent, or seeking liquidation, dissolution, winding-up,reorganization, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or anyclass of creditors), or composition of it or its debts or any other relief, under any federal, provincial or foreign Law now or hereafter ineffect relating to bankruptcy, winding-up, insolvency, reorganization, receivership, plans of arrangement or relief or protection ofdebtors or at common law or in equity, or files an answer admitting the material allegations of a petition filed against it in any suchproceeding;(iv) applies for the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager,sequestrator, conservator, custodian, administrator, trustee, liquidator, voluntary administrator, receiver and manager or other similarofficial for it or any substantial part of its property; or[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION76 (v) takes any action, corporate or otherwise, to approve, effect, consent to or authorize any of the actions described inthis Section 11.01(i) or Section 11.01(j), or otherwise acts in furtherance thereof or fails to act in a timely and appropriate manner indefense thereof;(j) any petition is filed, application made or other proceeding instituted against or in respect of Borrower or any Subsidiary:(i) seeking to adjudicate it as insolvent;(ii) seeking a receiving order against it;(iii) seeking liquidation, dissolution, winding-up, reorganization, compromise, arrangement, adjustment, protection,moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), deed of company arrangement or compositionof it or its debts or any other relief under any federal, provincial or foreign law now or hereafter in effect relating to bankruptcy,winding-up, insolvency, reorganization, receivership, plans of arrangement or relief or protection of debtors or at common law or inequity; or(iv) seeking the entry of an order for relief or the appointment of, or the taking of possession by, a receiver, interimreceiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator, voluntary administrator, receiver andmanager or other similar official for it or any substantial part of its property;and such petition, application or proceeding continues undismissed, or unstayed and in effect, for a period of sixty (60) days after theinstitution thereof; provided that if an order, decree or judgment is granted or entered (whether or not entered or subject to appeal)against Borrower or such Subsidiary thereunder in the interim, such grace period will cease to apply; provided further that if Borroweror such Subsidiary files an answer admitting the material allegations of a petition filed against it in any such proceeding, such graceperiod will cease to apply;(k) any other event occurs which, under the laws of any applicable jurisdiction, has an effect equivalent to any of the eventsreferred to in either of Section 11.01(i) or (j);(l) one or more judgments or settlements for the payment of money in an aggregate amount in excess of $5,000,000 (or theEquivalent Amount in other currencies) shall be rendered against or entered into by any Obligor or any combination thereof and thesame shall remain undischarged for a period of sixty (60) consecutive days during which execution shall not be effectively stayed, orany action shall be legally taken by a judgment or settlement creditor to attach or levy upon any assets of any Obligor to enforce anysuch judgment or settlement;(m) (i) an ERISA Event shall have occurred that, in the opinion of the Lenders, when taken together with all other ERISAEvents that have occurred, would reasonably be expected to result in liability of Borrower and its Subsidiaries in an aggregate amountexceeding $5,000,000 for all periods until repayment of all Obligations;(n) a Change of Control shall have occurred;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION77 (o) a Material Adverse Change shall have occurred;(p) (i) any Lien created by any of the Security Documents shall at any time not constitute a valid and perfected Lien on theapplicable Collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession isrequired herein or therein) in favor of Secured Parties, free and clear of all other Liens (other than Permitted Liens), (ii) except forexpiration in accordance with its terms, any of the Security Documents or any Guarantee of any of the Obligations (including thatcontained in Section 14) shall for whatever reason cease to be in full force and effect, or (iii) any of the Security Documents or anyGuarantee of any of the Obligations (including that contained in Section 14), or the enforceability thereof, shall be repudiated orcontested by any Obligor; and(q) any injunction, whether temporary or permanent, shall be rendered against any Obligor that prevents the Obligors fromselling or manufacturing the Product or its commercially available successors (excluding related products of the nCounter® AnalysisSystem) in the United States for more than sixty (60) consecutive calendar days.11.02 Remedies. (a) Upon the occurrence of any Event of Default, then, and in every such event (other than an Event of Defaultdescribed in Section 11.01(i), (j) or (k)), and at any time thereafter during the continuance of such event, Majority Lenders may, bynotice to Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, andthereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole(or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), andthereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and otherObligations (including fees specified in the Fee Letter), shall become due and payable immediately (in the case of the Loans, at theRedemption Price therefor), without presentment, demand, protest or other notice of any kind, all of which are hereby waived by eachObligor.(b) Upon the occurrence of any Event of Default described in Section 11.01(i), (j) or (k), the Commitments shallautomatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and otherObligations, shall automatically become due and payable immediately (in the case of the Loans, at the Redemption Price therefor),without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Obligor.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION78 (c) Prepayment Premium and Redemption Price. (i) For the avoidance of doubt, the Prepayment Premium (as acomponent of the Redemption Price) shall be due and payable whenever so stated in this Agreement, or by any applicable operation oflaw, regardless of the circumstances causing any related acceleration or payment prior to the Stated Maturity Date, including any Eventof Default or other failure to comply with the terms of this Agreement, whether or not notice thereof has been given, or anyacceleration by, through, or on account of any bankruptcy filing.(ii) For the avoidance of doubt, the Prepayment Premium (as a component of the Redemption Price) and the feesspecified in the Fee Letter that are payable upon the repayment of the Loans shall be due and payable at any time the Loans becomedue and payable prior to the Stated Maturity Date for any reason, whether due to acceleration pursuant to the terms of this Agreement(in which case it shall be due immediately, upon the giving of notice to Borrower in accordance with Section 11.02(a), orautomatically, in accordance with Section 11.02(b)), by operation of law or otherwise (including where bankruptcy filings or theexercise of any bankruptcy right or power, whether in any plan of reorganization or otherwise, results or would result in a payment,discharge, modification or other treatment of the Loans or Loan Documents that would otherwise evade, avoid, or otherwise disappointthe expectations of Lenders in receiving the full benefit of their bargained-for Prepayment Premium or Redemption Price as providedherein). The Obligors and Lenders acknowledge and agree that any Prepayment Premium and the fees specified in the Fee Letter dueand payable in accordance with the Loan Documents shall not constitute unmatured interest, whether under section 502(b)(3) of theBankruptcy Code or otherwise, but instead is reasonably calculated to ensure that the Lenders receive the benefit of their bargain underthe terms of this Agreement.(iii) Each Obligor acknowledges and agrees that the Lenders shall be entitled to recover the full amount of theRedemption Price and the fees specified in the Fee Letter in each and every circumstance such amount is due pursuant to or inconnection with this Agreement and the Fee Letter, including in the case of any Obligor’s bankruptcy filing, so that the Lenders shallreceive the benefit of their bargain hereunder and otherwise receive full recovery as agreed under every possible circumstance, andBorrower hereby waives any defense to payment, whether such defense may be based in public policy, ambiguity, or otherwise. EachObligor further acknowledges and agrees, and waives any argument to the contrary, that payment of such amounts does not constitutea penalty or an otherwise unenforceable or invalid obligation. Any damages that the Lenders may suffer or incur resulting from orarising in connection with any breach hereof or thereof by Borrower shall constitute secured obligations owing to the Lenders.SECTION 12ADMINISTRATIVE AGENT12.01 Appointment and Duties. (a) Appointment of Administrative Agent. Each Lender hereby irrevocably appoints CRGServicing (together with any successor Administrative Agent pursuant to Section 12.09) as Administrative Agent hereunder andauthorizes Administrative Agent to (i) execute and deliver the Loan Documents and accept delivery thereof on its behalf[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION79 from any Obligor or any of its Subsidiaries, (ii) take such action on its behalf and to exercise all rights, powers and remedies andperform the duties as are expressly delegated to Administrative Agent under such Loan Documents, (iii) act as agent of such Lenderfor purposes of acquiring, holding, enforcing and perfecting all Liens granted by the Obligors on the Collateral to secure any of theObligations and (iv) exercise such powers as are reasonably incidental thereto.(b) Duties as Collateral and Disbursing Agent. Without limiting the generality of Section 12.01(a), Administrative Agentshall have the sole and exclusive right and authority (to the exclusion of the Lenders), and is hereby authorized, to (i) act as thedisbursing and collecting agent for the Lenders with respect to all payments and collections arising in connection with the LoanDocuments (including in any proceeding described in Section 11.01(h), (i) or (j) or any other bankruptcy, insolvency or similarproceeding), and each Person making any payment in connection with any Loan Document to any Secured Party is hereby authorizedto make such payment to Administrative Agent, (ii) file and prove claims and file other documents necessary or desirable to allow theclaims of the Secured Parties with respect to any Obligation in any proceeding described in Section 11.01(h), (i) or (j) or any otherbankruptcy, insolvency or similar proceeding (but not to vote, consent or otherwise act on behalf of such Secured Party), (iii) act ascollateral agent for each Secured Party for purposes of acquiring, holding, enforcing and perfecting all Liens created by the LoanDocuments and all other purposes stated therein, (iv) manage, supervise and otherwise deal with the Collateral, (v) take such otheraction as is necessary or desirable to maintain the perfection and priority of the Liens created or purported to be created by the LoanDocuments, (vi) except as may be otherwise specified in any Loan Document, exercise all remedies given to Administrative Agent andthe other Secured Parties with respect to the Collateral, whether under the Loan Documents, applicable Requirements of Law orotherwise, (vii) enter into intercreditor agreements with respect to Permitted Priority Debt or any other subordination agreement orintercreditor agreement with respect to Indebtedness of an Obligor, (viii) enter into non-disturbance agreements and similar agreementsand (ix) execute any amendment, consent or waiver under the Loan Documents on behalf of any Lender that has consented in writingto such amendment, consent or waiver; provided, however, that Administrative Agent hereby appoints, authorizes and directs eachLender to act as collateral sub-agent for Administrative Agent and the Secured Parties for purposes of the perfection of all Liens withrespect to the Collateral, including any deposit account maintained by an Obligor with, and cash and Permitted Cash EquivalentInvestments held by, such Lender, and may further authorize and direct any Lender to take further actions as collateral sub-agents forpurposes of enforcing such Liens or otherwise to transfer the Collateral subject thereto to Administrative Agent, and each Lenderhereby agrees to take such further actions to the extent, and only to the extent, so authorized and directed.(c) Limited Duties. Under the Loan Documents, Administrative Agent (i) is acting solely on behalf of the Lenders (except tothe limited extent provided in Section 12.11), with duties that are entirely administrative in nature, notwithstanding the use of thedefined term “Administrative Agent”, the terms “agent”, “administrative agent” and “collateral agent” and similar terms in any LoanDocument to refer to Administrative Agent, which terms are used for title purposes only, (ii) is not assuming any obligation under anyLoan Document other than as expressly set forth therein or any role as agent, fiduciary or trustee of or for any Lender or any[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION80 other Secured Party and (iii) shall have no implied functions, responsibilities, duties, obligations or other liabilities under any LoanDocument, and each Lender hereby waives and agrees not to assert any claim against Administrative Agent based on the roles, dutiesand legal relationships expressly disclaimed in the foregoing clauses (i) through (iii).12.02 Binding Effect. Each Lender agrees that (i) any action taken by Administrative Agent or the Majority Lenders (or, ifexpressly required hereby, a greater proportion of the Lenders) in accordance with the provisions of the Loan Documents, (ii) anyaction taken by Administrative Agent in reliance upon the instructions of the Majority Lenders (or, where so required, such greaterproportion) and (iii) the exercise by Administrative Agent or the Majority Lenders (or, where so required, such greater proportion) ofthe powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized andbinding upon all of the Secured Parties.12.03 Use of Discretion. (a) No Action without Instructions. Administrative Agent shall not be required to exercise any discretionor take, or to omit to take, any action, including with respect to enforcement or collection, except any action it is required to take oromit to take (i) under any Loan Document or (ii) pursuant to instructions from the Majority Lenders (or, where expressly required bythe terms of this Agreement, a greater proportion of the Lenders).(b) Right Not to Follow Certain Instructions. Notwithstanding Section 12.03(a), Administrative Agent shall not berequired to take, or to omit to take, any action (i) unless, upon demand, Administrative Agent receives an indemnification satisfactoryto it from the Lenders (or, to the extent applicable and acceptable to Administrative Agent, any other Secured Party) against allliabilities that, by reason of such action or omission, may be imposed on, incurred by or asserted against Administrative Agent or anyRelated Person thereof or (ii) that is, in the opinion of Administrative Agent or its counsel, contrary to any Loan Document orapplicable Requirement of Law.12.04 Delegation of Rights and Duties. Administrative Agent may, upon any term or condition it specifies, delegate or exercise anyof its rights, powers and remedies under, and delegate or perform any of its duties or any other action with respect to, any LoanDocument by or through or to any trustee, co-agent, sub-agent, employee, attorney-in-fact and any other Person (including any otherSecured Party). Any such Person shall benefit from this Section 12 to the extent provided by Administrative Agent. AdministrativeAgent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competentjurisdiction determines in a final and nonappealable judgment that Administrative Agent acted with gross negligence or willfulmisconduct in the selection of such sub-agent.12.05 Reliance and Liability. (a) Administrative Agent may, without incurring any liability hereunder, (i) consult with any of itsRelated Persons and, whether or not selected by it, any other advisors, accountants and other experts (including advisors to, andaccountants and experts engaged by, any Obligor) and (ii) rely and act upon any document and information and any telephonemessage or conversation, in each case believed by it to be genuine and transmitted, signed or otherwise authenticated by theappropriate parties.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION81 (b) None of Administrative Agent and its Related Persons shall be liable for any action taken or omitted to be taken by any ofthem under or in connection with any Loan Document, and each Lender and each Obligor hereby waives and shall not assert anyright, claim or cause of action based thereon, except to the extent of liabilities resulting primarily from the gross negligence or willfulmisconduct of Administrative Agent or, as the case may be, such Related Person (each as determined in a final, non-appealablejudgment by a court of competent jurisdiction) in connection with the duties expressly set forth herein. Without limiting the foregoing,Administrative Agent:(i) shall not be responsible or otherwise incur liability for any action or omission taken in reliance upon the instructionsof the Majority Lenders or for the actions or omissions of any of its Related Persons selected with reasonable care (other thanemployees, officers and directors of Administrative Agent, when acting on behalf of Administrative Agent);(ii) shall not be responsible to any Secured Party for the due execution, legality, validity, enforceability, effectiveness,genuineness, sufficiency or value of, or the attachment, perfection or priority of any Lien created or purported to be created under or inconnection with, any Loan Document;(iii) makes no warranty or representation, and shall not be responsible, to any Secured Party for any statement,document, information, representation or warranty made or furnished by or on behalf of any Related Person, in or in connection withany Loan Document or any transaction contemplated therein, whether or not transmitted by Administrative Agent, including as tocompleteness, accuracy, scope or adequacy thereof, or for the scope, nature or results of any due diligence performed byAdministrative Agent in connection with the Loan Documents; and(iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any provision of anyLoan Document, whether any condition set forth in any Loan Document is satisfied or waived, as to the financial condition of anyObligor or as to the existence or continuation or possible occurrence or continuation of any Default or Event of Default and shall notbe deemed to have notice or knowledge of such occurrence or continuation unless it has received a notice from Borrower or anyLender describing such Default or Event of Default clearly labeled “notice of default” (in which case Administrative Agent shallpromptly give notice of such receipt to all Lenders);and, for each of the items set forth in clauses (i) through (iv) above, each Lender and each Obligor herebywaives and agrees not to assert any right, claim or cause of action it might have against Administrative Agent based thereon.12.06 Administrative Agent Individually. Administrative Agent and its Affiliates may make loans and other extensions of creditto, acquire Equity Interests of, engage in any kind of business with, any Obligor or Affiliate thereof as though it were not actingAdministrative Agent and may receive separate fees and other payments therefor. To the extent Administrative Agent or any of itsAffiliates makes any Loan or otherwise becomes a Lender hereunder, it shall have and may exercise the same rights and powershereunder and shall be subject to the same[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION82 obligations and liabilities as any other Lender and the terms “Lender”, “Majority Lender”, and any similar terms shall, except whereotherwise expressly provided in any Loan Document, include Administrative Agent or such Affiliate, as the case may be, in itsindividual capacity as Lender or as one of the Majority Lenders, respectively.12.07 Lender Credit Decision. Each Lender acknowledges that it shall, independently and without reliance upon AdministrativeAgent, any Lender or any of their Related Persons or upon any document solely or in part because such document was transmitted byAdministrative Agent or any of its Related Persons, conduct its own independent investigation of the financial condition and affairs ofeach Obligor and make and continue to make its own credit decisions in connection with entering into, and taking or not taking anyaction under, any Loan Document or with respect to any transaction contemplated in any Loan Document, in each case based on suchdocuments and information as it shall deem appropriate.12.08 Expenses; Indemnities. (a) Each Lender agrees to reimburse Administrative Agent and each of its Related Persons (to theextent not reimbursed by any Obligor) promptly upon demand for such Lender’s Proportionate Share of any costs and expenses(including fees, charges and disbursements of financial, legal and other advisors and Other Taxes paid in the name of, or on behalf of,any Obligor) that may be incurred by Administrative Agent or any of its Related Persons in connection with the preparation,syndication, execution, delivery, administration, modification, consent, waiver or enforcement (whether through negotiations, throughany work-out, bankruptcy, restructuring or other legal or other proceeding or otherwise) of, or legal advice in respect of its rights orresponsibilities under, any Loan Document.(b) Each Lender further agrees to indemnify Administrative Agent and each of its Related Persons (to the extent notreimbursed by any Obligor), from and against such Lender’s aggregate Proportionate Share of the liabilities (including Taxes, interestsand penalties imposed for not properly withholding or backup withholding on payments made to on or for the account of any Lender)that may be imposed on, incurred by or asserted against Administrative Agent or any of its Related Persons in any matter relating to orarising out of, in connection with or as a result of any Loan Document, any Related Document or any other act, event or transactionrelated, contemplated in or attendant to any such document, or, in each case, any action taken or omitted to be taken by AdministrativeAgent or any of its Related Persons under or with respect to any of the foregoing; provided, however, that no Lender shall be liable toAdministrative Agent or any of its Related Persons to the extent such liability is found in a final, non-appealable judgment by a court ofcompetent jurisdiction to have resulted from such Administrative Agent’s or such Related Person’s gross negligence or willfulmisconduct.12.09 Resignation of Administrative Agent. (a) Administrative Agent may resign at any time by delivering notice of suchresignation to the Lenders and Borrower, effective on the date set forth in such notice or, if not such date is set forth therein, upon thedate such notice shall be effective. If Administrative Agent delivers any such notice, the Majority Lenders shall have the right toappoint a successor Administrative Agent. If, within 30 days after the retiring Administrative Agent having given notice ofresignation, no successor Administrative Agent has been appointed by the Majority Lenders that has accepted such appointment, thenthe retiring[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION83 Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent from among the Lenders. Eachappointment under this Section 12.09(a) shall be subject to the prior consent of Borrower, which may not be unreasonably withheldbut shall not be required during the continuance of an Event of Default.(b) Effective immediately upon its resignation, (i) the retiring Administrative Agent shall be discharged from its duties andobligations under the Loan Documents, (ii) the Lenders shall assume and perform all of the duties of Administrative Agent until asuccessor Administrative Agent shall have accepted a valid appointment hereunder, (iii) the retiring Administrative Agent and itsRelated Persons shall no longer have the benefit of any provision of any Loan Document other than with respect to any actions takenor omitted to be taken while such retiring Administrative Agent was, or because such Administrative Agent had been, validly acting asAdministrative Agent under the Loan Documents and (iv) subject to its rights under Section 12.03, the retiring Administrative Agentshall take such action as may be reasonably necessary to assign to the successor Administrative Agent its rights as AdministrativeAgent under the Loan Documents. Effective immediately upon its acceptance of a valid appointment as Administrative Agent, asuccessor Administrative Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiringAdministrative Agent under the Loan Documents.12.10 Release of Collateral or Guarantors. Each Lender hereby consents to the release and hereby directs Administrative Agent torelease (or, in the case of Section 12.10(b)(ii), release or subordinate) the following:(a) any Subsidiary of Borrower from its guaranty of any Obligation of any Obligor if all of the Equity Interests in suchSubsidiary owned by any Obligor or any of its Subsidiaries are disposed of in an Asset Sale permitted under the Loan Documents(including pursuant to a waiver or consent), to the extent that, after giving effect to such Asset Sale, such Subsidiary would not berequired to guaranty any Obligations pursuant to Section 8.12; and(b) any Lien held by Administrative Agent for the benefit of the Secured Parties against (i) any Collateral that is disposed ofby an Obligor in an Asset Sale permitted by the Loan Documents (including pursuant to a valid waiver or consent), to the extent allLiens required to be granted in such Collateral pursuant to Section 8.12 after giving effect to such Asset Sale have been granted, (ii)any property subject to a Lien described in Section 9.02(d) and (iii) all of the Collateral and all Obligors, upon (A) termination of theCommitments, (B) payment and satisfaction in full of all Loans and all other Obligations (other than Warrant Obligations) thatAdministrative Agent has been notified in writing are then due and payable, (C) deposit of cash collateral with respect to all contingentObligations (other than Warrant Obligations), in amounts and on terms and conditions and with parties satisfactory to theAdministrative Agent and each Indemnitee that is owed such Obligations (other than Warrant Obligations) and (D) to the extentrequested by Administrative Agent, receipt by the Secured Parties of liability releases from the Obligors each in form and substanceacceptable to Administrative Agent.Each Lender hereby directs Administrative Agent, and Administrative Agent hereby agrees, upon receipt ofreasonable advance notice from Borrower, to execute and[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION84 deliver or file such documents and to perform other actions reasonably necessary to release the guaranties and Liens when and asdirected in this Section 12.10.12.11 Additional Secured Parties. The benefit of the provisions of the Loan Documents directly relating to the Collateral or anyLien granted thereunder shall extend to and be available to any Secured Party that is not a Lender as long as, by accepting suchbenefits, such Secured Party agrees, as among Administrative Agent and all other Secured Parties, that such Secured Party is boundby (and, if requested by Administrative Agent, shall confirm such agreement in a writing in form and substance acceptable toAdministrative Agent) this Section 12 and the decisions and actions of Administrative Agent and the Majority Lenders (or, whereexpressly required by the terms of this Agreement, a greater proportion of the Lenders) to the same extent a Lender is bound;provided, however, that, notwithstanding the foregoing, (a) such Secured Party shall be bound by Section 12.08 only to the extent ofliabilities, costs and expenses with respect to or otherwise relating to the Collateral held for the benefit of such Secured Party, in whichcase the obligations of such Secured Party thereunder shall not be limited by any concept of Proportionate Share or similar concept,(b) each of Administrative Agent and each Lender shall be entitled to act at its sole discretion, without regard to the interest of suchSecured Party, regardless of whether any Obligation to such Secured Party thereafter remains outstanding, is deprived of the benefit ofthe Collateral, becomes unsecured or is otherwise affected or put in jeopardy thereby, and without any duty or liability to suchSecured Party or any such Obligation and (c) such Secured Party shall not have any right to be notified of, consent to, direct, requireor be heard with respect to, any action taken or omitted in respect of the Collateral or under any Loan Document.SECTION 13MISCELLANEOUS13.01 No Waiver. No failure on the part of Administrative Agent or any Lender to exercise and no delay in exercising, and nocourse of dealing with respect to, any right, power or privilege under any Loan Document shall operate as a waiver thereof, nor shallany single or partial exercise of any right, power or privilege under any Loan Document preclude any other or further exercise thereofor the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remediesprovided by law.13.02 Notices. All notices, requests, instructions, directions and other communications provided for herein (including anymodifications of, or waivers, requests or consents under, this Agreement) shall be given or made in writing (including by telecopy orelectronic means) delivered, if to Borrower, another Obligor, Administrative Agent or any Lender, to its address specified on thesignature pages hereto or its Guarantee Assumption Agreement, as the case may be, or at such other address as shall be designated bysuch party in a notice to the other parties. Except as otherwise provided in this Agreement, all such communications shall be deemed tohave been duly given upon receipt of a legible copy thereof, in each case given or addressed as aforesaid. All such communicationsprovided for herein by telecopy shall be confirmed in writing promptly after the delivery of such communication (it being understoodthat non-receipt of written confirmation of such communication shall not invalidate such communication).[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION85 Notices and other communications sent to an e-mail shall be deemed received upon the receipt by the intended recipient at its e-mailaddress provided that, if such notice, email or other communication is not sent during the normal business hours of the recipient, suchnotice, email or communication shall be deemed to have been sent at the opening of business on the next Business Day for therecipient.13.03 Expenses, Indemnification, Etc.(a) Expenses. Borrower agrees to pay or reimburse (i) Administrative Agent and the Lenders for all of their reasonable out-of-pocket costs and expenses (including the reasonable fees and expenses of Reed Smith LLP, special counsel to Administrative Agentand the Lenders, and any sales, goods and services or other similar Taxes applicable thereto, and printing, reproduction, documentdelivery, communication and travel costs) in connection with (x) the negotiation, preparation, execution and delivery of this Agreementand the other Loan Documents and the making of the Loans (exclusive of post-closing costs), (y) post-closing costs and (z) thenegotiation or preparation of any modification, supplement or waiver of any of the terms of this Agreement or any of the other LoanDocuments (whether or not consummated) and (ii) Administrative Agent and the Lenders for all of their out-of-pocket costs andexpenses (including the fees and expenses of legal counsel) in connection with any enforcement or collection proceedings resultingfrom the occurrence of an Event of Default; provided, however, that Borrower shall not be required to pay or reimburse any amountspursuant to Section 13.03(a)(i)(x) in excess of the Expense Cap.(b) Indemnification. Borrower hereby indemnifies Administrative Agent, each Lender, their respective Affiliates, and theirrespective directors, officers, employees, attorneys, agents, advisors and controlling parties (each, an “Indemnified Party”) from andagainst, and agrees to hold them harmless against, any and all Claims and Losses of any kind (including reasonable fees anddisbursements of counsel), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party, in each casearising out of or in connection with or relating to this Agreement or any of the other Loan Documents or the transactions contemplatedhereby or thereby or any use made or proposed to be made with the proceeds of the Loans, and any claim, investigation, litigation orproceeding or the preparation of any defense with respect thereto arising out of or in connection with or relating to any of theforegoing, whether or not any Indemnified Party is a party to an actual or prospective claim, litigation, investigation or proceedingrelating to any of the foregoing, whether based in contract, tort or any other theory, and whether or not such investigation, litigation orproceeding is brought by Borrower, any of its shareholders or creditors, and whether or not the conditions precedent set forth inSection 6 are satisfied or the other transactions contemplated by this Agreement are consummated, except to the extent such Claim orLoss is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’sgross negligence or willful misconduct. No Obligor shall assert any claim against any Indemnified Party, on any theory of liability, forconsequential, indirect, special or punitive damages arising out of or otherwise relating to this Agreement or any of the other LoanDocuments or any of the transactions contemplated hereby or thereby or the actual or proposed use of the proceeds of the Loans.Borrower, its Subsidiaries and Affiliates and their respective[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION86 directors, officers, employees, attorneys, agents, advisors and controlling parties are each sometimes referred to in this Agreement as a“Borrower Party.” No Lender shall assert any claim against any Borrower Party, on any theory of liability, for consequential, indirect,special or punitive damages arising out of or otherwise relating to this Agreement or any of the other Loan Documents or any of thetransactions contemplated hereby or thereby or the actual or proposed use of the proceeds of the Loans. This Section 13.03(b) shall notapply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.13.04 Amendments, Etc. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may bemodified or supplemented only by an instrument in writing signed by Borrower and the Majority Lenders (or Administrative Agent onbehalf of such Majority Lenders); provided however, that:(a) the consent of all of the Lenders shall be required to:(i) amend, modify, discharge, terminate or waive any of the terms of this Agreement if such amendment, modification,discharge, termination or waiver would increase the amount of the Loans, reduce the fees payable hereunder, reduce interest rates orother amounts payable with respect to the Loans, extend any date fixed for payment of principal, interest or other amounts payablerelating to the Loans or extend the repayment dates of the Loans;(ii) amend the provisions of Section 6;(iii) amend, modify, discharge, terminate or waive any Security Document if the effect is to release a material part ofthe Collateral subject thereto other than pursuant to the terms hereof or thereof; or(iv) amend this Section 13.04; and(b) no amendment, waiver or consent shall affect the rights or duties under any Loan Document of, or any payment to,Administrative Agent (or otherwise modify any provision of Section 12 or the application thereof) unless in writing and signed byAdministrative Agent in addition to any signature otherwise required.Notwithstanding anything to the contrary herein, a Defaulting Lender shall not have any right to approve or disapprove anyamendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of allLenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), exceptthat (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) anywaiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any DefaultingLender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.13.05 Successors and Assigns.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION87 (a) General. The provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefitof the parties hereto and their respective successors and assigns permitted hereby, except that Borrower may not assign or otherwisetransfer any of its rights or obligations hereunder or under any of the other Loan Documents without the prior written consent of theLenders. Any of the Lenders may assign or otherwise transfer any of their rights or obligations hereunder or under any of the otherLoan Documents to an assignee (i) in accordance with the provisions of Section 13.05(b), (ii) by way of participation in accordancewith the provisions of Section 13.05(e) or (iii) by way of pledge or assignment of a security interest subject to the restrictions ofSection 13.05(g). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than theparties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 13.05(e) and, tothe extent expressly contemplated hereby, the Indemnified Parties) any legal or equitable right, remedy or claim under or by reason ofthis Agreement.(b) Assignments by Lenders. Any of the Lenders may at any time assign to one or more (i) Eligible Transferees (or, if anEvent of Default has occurred and is continuing, to any Person) or (ii) entities consented to in writing by Borrower all or a portion oftheir rights and obligations under this Agreement (including all or a portion of the Commitment and the Loans at the time owing to it);provided, however, that no such assignment shall be made to Borrower, an Affiliate of Borrower, or any employees or directors ofBorrower at any time. Subject to the recording thereof by Administrative Agent pursuant to Section 13.05(d), from and after theeffective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to theextent of the interest assigned by such Assignment and Assumption, have the rights and obligations of the Lenders under thisAgreement and the other Loan Documents, and correspondingly the assigning Lender shall, to the extent of the interest assigned bysuch Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment andAssumption covering all of a Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) andthe other Loan Documents but shall continue to be entitled to the benefits of Section 5 and Section 13.03. Any assignment or transferby a Lender of rights or obligations under this Agreement that does not comply with this Section 13.05(b) shall be treated for purposesof this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 13.05(e).(c) Amendments to Loan Documents. Each of Administrative Agent, the Lenders and the Obligors agrees to enter into suchamendments to the Loan Documents, and such additional Security Documents and other instruments and agreements, in each case inform and substance reasonably acceptable to Administrative Agent, the Lenders and the Obligors, as shall reasonably be necessary toimplement and give effect to any assignment made under this Section 13.05.(d) Register. Administrative Agent, acting solely for this purpose as an agent of Borrower, shall maintain at one of its officesin the United States a register for the recordation of the name and address of any assignee of the Lenders and the Commitment andoutstanding principal amount (and stated interest) of the Loans owing thereto (the “Register”). The entries in[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION88 the Register shall be conclusive, absent manifest error, and Borrower shall treat each Person whose name is recorded in the Registerpursuant to the terms hereof as the “Lender” hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. TheRegister shall be available for inspection by Borrower, at any reasonable time and from time to time upon reasonable prior notice.(e) Participations. Any of the Lenders may at any time, without the consent of, or notice to, Borrower, sell participations toany Person (other than a natural person or Borrower or any of Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or aportion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of the Commitment and/or theLoans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shallremain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrower shall continue to dealsolely and directly with the Lenders in connection therewith.Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the soleright to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; providedthat such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to anyamendment, modification or waiver that would (i) increase or extend the term of such Lender’s Commitment, (ii) extend the date fixedfor the payment of principal of or interest on the Loans or any portion of any fee hereunder payable to the Participant, (iii) reduce theamount of any such payment of principal, or (iv) reduce the rate at which interest is payable thereon to a level below the rate at whichthe Participant is entitled to receive such interest. Subject to Section 13.05(f), Borrower agrees that each Participant shall be entitled tothe benefits of Section 5 (subject to the requirements and limitations therein, including the requirements under Section 5.03(e) (it beingunderstood that the documentation required under Section 5.03(e) shall be delivered to the participating Lender)) to the same extent asif it were a Lender and had acquired its interest by assignment pursuant to Section 13.05(b). To the extent permitted by law, eachParticipant also shall be entitled to the benefits of Section 4.04(a) as though it were the Lender.(f) Limitations on Rights of Participants. A Participant shall not be entitled to receive any greater payment under Section5.01 or 5.03 than a Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the saleof the participation to such Participant is made with Borrower’s prior written consent. Each Lender that sells a participation shall,acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of eachParticipant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the LoanDocuments (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of theParticipant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitment,loan, letter of credit or other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessaryto establish that such commitment, loan, letters of credit or other obligation is in registered form under Section 5f.103-1(c) of the United[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION89 States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shalltreat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of thisAgreement notwithstanding any notice to the contrary. For the avoidance of doubt, Administrative Agent (in its capacity asAdministrative Agent) shall have no responsibility for maintaining a Participant Register.(g) Certain Pledges. The Lenders may at any time pledge or assign a security interest in all or any portion of its rights underthis Agreement and any other Loan Document to secure obligations of the Lenders, including any pledge or assignment to secureobligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release the Lenders from any of theirobligations hereunder or substitute any such pledgee or assignee for the Lenders as a party hereto.13.06 Survival. The obligations of the Obligors under Sections 5.01, 5.02, 5.03, 13.03, 13.05, 13.09, 13.10, 13.11, 13.12, 13.13,13.14, 13.20 and Section 14 (solely to the extent guaranteeing any of the obligations under the foregoing Sections) shall survivePayment In Full and, in the case of the Lenders’ assignment of any interest in the Commitment or the Loans hereunder, shall survive,in the case of any event or circumstance that occurred prior to the effective date of such assignment, the making of such assignment,notwithstanding that the Lenders may cease to be “Lenders” hereunder. In addition, each representation and warranty made, or deemedto be made by a Notice of Borrowing, herein or pursuant hereto shall survive the making of such representation and warranty.13.07 Captions. The table of contents and captions and section headings appearing herein are included solely for convenience ofreference and are not intended to affect the interpretation of any provision of this Agreement.13.08 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constituteone and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart.13.09 Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construedin accordance with, the law of the State of New York, without regard to principles of conflicts of laws that would result in theapplication of the laws of any other jurisdiction; provided that Section 5-1401 of the New York General Obligations Law shall apply.13.10 Jurisdiction, Service of Process and Venue.(a) Submission to Jurisdiction. Each Obligor agrees that any suit, action or proceeding with respect to this Agreement or anyother Loan Document to which it is a party or any judgment entered by any court in respect thereof may be brought initially in thefederal or state courts in Houston, Texas or in the courts of its own corporate domicile and irrevocably submits to the non-exclusivejurisdiction of each such court for the purpose of any such suit, action, proceeding or judgment. This Section 13.10(a) is for the benefitof Administrative Agent and the Lenders only and, as a result, neither Administrative Agent nor any Lender shall be[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION90 prevented from taking proceedings in any other courts with jurisdiction. To the extent allowed by applicable Laws, AdministrativeAgent and the Lenders may take concurrent proceedings in any number of jurisdictions.(b) Alternative Process. Nothing herein shall in any way be deemed to limit the ability of Administrative Agent or theLenders to serve any such process or summonses in any other manner permitted by applicable law.(c) Waiver of Venue, Etc. Each Obligor irrevocably waives to the fullest extent permitted by law any objection that it maynow or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement or anyother Loan Document and hereby further irrevocably waives to the fullest extent permitted by law any claim that any such suit, actionor proceeding brought in any such court has been brought in an inconvenient forum. A final judgment (in respect of which time for allappeals has elapsed) in any such suit, action or proceeding shall be conclusive and may be enforced in any court to the jurisdiction ofwhich such Obligor is or may be subject, by suit upon judgment.13.11 Waiver of Jury Trial. EACH OBLIGOR AND EACH LENDER HEREBY IRREVOCABLY WAIVES, TO THEFULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT,ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOANDOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.13.12 Waiver of Immunity. To the extent that any Obligor may be or become entitled to claim for itself or its Property or revenuesany immunity on the ground of sovereignty or the like from suit, court jurisdiction, attachment prior to judgment, attachment in aid ofexecution of a judgment or execution of a judgment, and to the extent that in any such jurisdiction there may be attributed such animmunity (whether or not claimed), such Obligor hereby irrevocably agrees not to claim and hereby irrevocably waives such immunitywith respect to its obligations under this Agreement and the other Loan Documents.13.13 Entire Agreement. This Agreement and the other Loan Documents constitute the entire agreement among the parties withrespect to the subject matter hereof and thereof and supersede any and all previous agreements and understandings, oral or written,relating to the subject matter hereof. EACH OBLIGOR ACKNOWLEDGES, REPRESENTS AND WARRANTS THAT INDECIDING TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR IN TAKING OR NOTTAKING ANY ACTION HEREUNDER OR THEREUNDER, IT HAS NOT RELIED, AND WILL NOT RELY, ON ANYSTATEMENT, REPRESENTATION, WARRANTY, COVENANT, AGREEMENT OR UNDERSTANDING, WHETHERWRITTEN OR ORAL, OF OR WITH ADMINISTRATIVE AGENT OR THE LENDERS OTHER THAN THOSEEXPRESSLY SET FORTH IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION91 13.14 Severability. If any provision hereof is found by a court to be invalid or unenforceable, to the fullest extent permitted byapplicable law the parties agree that such invalidity or unenforceability shall not impair the validity or enforceability of any otherprovision hereof.13.15 No Fiduciary Relationship. Each Obligor acknowledges that Administrative Agent and the Lenders have no fiduciaryrelationship with, or fiduciary duty to, Borrower arising out of or in connection with this Agreement or the other Loan Documents, andthe relationship between the Lenders and Borrower is solely that of creditor and debtor. This Agreement and the other LoanDocuments do not create a joint venture among the parties.13.16 Confidentiality. Administrative Agent and the Lenders agree to maintain the confidentiality of the Confidential Information (asdefined in the Non-Disclosure Agreement) in accordance with the terms of that certain confidentiality agreement dated as of September20, 2012 between Borrower and Capital Royalty L.P. (the “Non-Disclosure Agreement”). Any new Lender that becomes party to thisAgreement hereby agrees to be bound by the terms of the Non-Disclosure Agreement. The parties to this Agreement shall prepare amutually agreeable press release announcing the completion of this transaction on the first Borrowing Date.13.17 USA PATRIOT Act. Administrative Agent and the Lenders hereby notify the Obligors that pursuant to the requirements ofthe USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) or any Anti-Money LaunderingLaws, they are required to obtain, verify and record information that identifies such Obligor, which information includes the name andaddress of such Obligor and other information that will allow such Lender to identify such Obligor in accordance with the Act or otherAnti-Money Laundering Laws.13.18 Maximum Rate of Interest. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid oragreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law(in each case, the “Maximum Rate”). If the Lenders shall receive interest in an amount that exceeds the Maximum Rate, the excessinterest shall be applied to the principal of the Loans, and not to the payment of interest, or, if the excessive interest exceeds suchunpaid principal, the amount exceeding the unpaid balance shall be refunded to the applicable Obligor. In determining whether theinterest contracted for, charged, or received by the Lenders exceeds the Maximum Rate, the Lenders may, to the extent permitted byapplicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) excludevoluntary prepayments and the effects thereof, (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount ofinterest throughout the contemplated term of the Indebtedness and other obligations of any Obligor hereunder, or (d) allocate interestbetween portions of such Indebtedness and other obligations under the Loan Documents to the end that no such portion shall bearinterest at a rate greater than that permitted by applicable Law.13.19 Certain Waivers.(a) Real Property Security Waivers.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION92 (i) Each Obligor acknowledges that all or any portion of the Obligations (other than the Warrant Obligations) maynow or hereafter be secured by a Lien or Liens upon real property evidenced by certain documents including deeds of trust andassignments of rents. The Secured Parties may, pursuant to the terms of said real property security documents and applicable law,foreclose under all or any portion of one or more of said Liens by means of judicial or nonjudicial sale or sales. Each Obligor agreesthat the Secured Parties may exercise whatever rights and remedies they may have with respect to said real property security, allwithout affecting the liability of any Obligor under the Loan Documents, except to the extent the Secured Parties realize payment bysuch action or proceeding. No election to proceed in one form of action or against any party, or on any obligation shall constitute awaiver of any Secured Party’s rights to proceed in any other form of action or against any Obligor or any other Person, or diminish theliability of any Obligor, or affect the right of the Secured Parties to proceed against any Obligor for any deficiency, except to the extentthe Secured Parties realize payment by such action, notwithstanding the effect of such action upon any Obligor’s rights of subrogation,reimbursement or indemnity, if any, against Obligor or any other Person.(ii) To the extent permitted under applicable law, each Obligor hereby waives any rights and defenses that are or maybecome available to such Obligor by reason of Sections 2787 to 2855, inclusive, of the California Civil Code.(iii) To the extent permitted under applicable law, each Obligor hereby waives all rights and defenses that suchObligor may have because the Obligations are or may be secured by real property. This means, among other things:(A) the Secured Parties may collect from any Obligor without first foreclosing on any real or personal propertycollateral pledged by any other Obligor;(B) If the Secured Parties foreclose on any real property collateral pledged by any Obligor:(1) The amount of the Loans may be reduced only by the price for which that collateral is sold at theforeclosure sale, even if the collateral is worth more than the sale price; and(2) the Secured Parties may collect from each Obligor even if the Secured Parties, by foreclosing on thereal property collateral, have destroyed any right that such Obligor may have to collect from any other Obligor.(3) To the extent permitted under applicable law, this is an unconditional and irrevocable waiver of anyrights and defenses each Obligor may have because the Obligations are or may be secured by real property. These rights and defensesinclude, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of CivilProcedure.(iv) To the extent permitted under applicable law, each Obligor waives all rights and defenses arising out of anelection of remedies by the Secured Parties, even though[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION93 that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed suchObligor’s rights of subrogation and reimbursement against the principal by the operation of Section 580d of the California Code ofCivil Procedure or otherwise.(b) Waiver of Marshaling. WITHOUT LIMITING THE FOREGOING IN ANY WAY, EACH OBLIGOR HEREBYIRREVOCABLY WAIVES AND RELEASES, TO THE EXTENT PERMITTED BY LAW, ANY AND ALL RIGHTS IT MAYHAVE AT ANY TIME (WHETHER ARISING DIRECTLY OR INDIRECTLY, BY OPERATION OF LAW, CONTRACT OROTHERWISE) TO REQUIRE THE MARSHALING OF ANY ASSETS OF ANY OBLIGOR, WHICH RIGHT OFMARSHALING MIGHT OTHERWISE ARISE FROM ANY PAYMENTS MADE OR OBLIGATIONS PERFORMED.13.20 Tax Treatment. The parties hereto agree (a) that any contingency associated with the Loans is described in TreasuryRegulations Section 1.1272-1(c) and/or Treasury Regulations Section 1.1275-2(h), and therefore no Loan is governed by the rules setout in Treasury Regulations Section 1.1275-4, (b) except for a Lender described in Sections 871(h)(3) or 881(c)(3) of the Code, absenta change in a Requirement of Law, all interest on the Loans is “portfolio interest” within the meaning of Sections 871(h) or 881(c) ofthe Code, and therefore is exempt from withholding tax under Sections 1441(c)(9) or 1442(a) of the Code, and (c) to adhere to thisSection 13.20 for U.S. Federal income and any other applicable Tax purposes and not to take any action or file any Tax Return, reportor declaration inconsistent herewith unless required by applicable Law.13.21 Original Issue Discount. For purposes of Sections 1272, 1273 and 1275 of the Code, each Loan is being issued with originalissue discount; please contact Thomas Bailey, Chief Financial Officer, 530 Fairview Avenue, N. Suite 2000, Seattle, WA 98109,telephone: (888) 358-6266 to obtain information regarding the issue price, the amount of original issue discount and the yield tomaturity.13.22 Amendment and Restatement of Original Loan Agreement. This Agreement amends, restates and supersedes the OriginalLoan Agreement in its entirety, except as provided in this Section. On and as of the date hereof, the rights and obligations of the partiesevidenced by the Original Loan Agreement shall be evidenced by this Agreement and the other Loan Documents and the grant ofsecurity interest in the Collateral by the relevant Loan Parties under the Original Loan Agreement and the other “Loan Documents” (asdefined in the Original Loan Agreement) shall continue under but as amended by this Agreement and the other Loan Documents, andshall not in any event be terminated, extinguished or annulled but shall hereafter be governed by this Agreement and the other LoanDocuments. All references to the Original Loan Agreement in any Loan Document or other document or instrument delivered inconnection therewith shall be deemed to refer to this Agreement and the provisions hereof. Nothing contained herein shall be construedas a novation of the “Obligations” outstanding under and as defined in the Original Loan Agreement, which shall remain in full forceand effect, except as modified hereby.SECTION 14GUARANTEE[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION94 14.01 The Guarantee. The Subsidiary Guarantors hereby jointly and severally guarantee to the Secured Parties and their respectivesuccessors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the principalof and interest on the Loans and all fees and other amounts from time to time owing to the Secured Parties by Borrower under thisAgreement or under any other Loan Document and by any other Obligor under any of the Loan Documents, in each case strictly inaccordance with the terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”). The SubsidiaryGuarantors hereby further jointly and severally agree that if Borrower shall fail to pay in full when due (whether at stated maturity, byacceleration or otherwise) any of the Guaranteed Obligations, the Subsidiary Guarantors will promptly pay the same, without anydemand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the GuaranteedObligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) inaccordance with the terms of such extension or renewal. For the avoidance of doubt and notwithstanding anything herein to thecontrary, the Guaranteed Obligations shall not include any Warrant Obligations.14.02 Obligations Unconditional; Subsidiary Guarantor Waivers. The obligations of the Subsidiary Guarantors under Section14.01 are absolute and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability ofthe obligations of Borrower under this Agreement or any other agreement or instrument referred to herein, or any substitution, releaseor exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted byapplicable law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge ordefense of a surety or guarantor, it being the intent of this Section 14.02 that the obligations of the Subsidiary Guarantors hereundershall be absolute and unconditional, joint and several, under any and all circumstances. Without limiting the generality of the foregoing,it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Subsidiary Guarantorshereunder, which shall remain absolute and unconditional as described above, and each Subsidiary Guarantor hereby irrevocablywaives any defenses to enforcement it may have (now or in the future) by reason of:(a) any change in the time, including the time for any performance or compliance with, place or manner of payment of, or inany other term of, the Guaranteed Obligations or any other obligation of any Obligor under any Loan Document, or any rescission,waiver, amendment or other modification of any Loan Document or any other agreement, including any increase in the GuaranteedObligations resulting from any extension of additional credit or otherwise;(b) any of the acts mentioned in any of the provisions of this Agreement or any other agreement or instrument referred toherein shall be done or omitted;(c) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall bemodified, supplemented or amended in any respect, or any right under this Agreement or any other agreement or instrument referred toherein shall be[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION95 waived or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in wholeor in part or otherwise dealt with;(d) any taking, exchange, substitution, release, impairment or non-perfection of any Collateral, any taking, release,impairment, amendment, waiver or other modification of any guaranty, for the Guaranteed Obligations or any lien or security interestgranted to, or in favor of, the Secured Parties as security for any of the Guaranteed Obligations shall fail to be perfected; and(e) the failure of any other Person to execute or deliver this Agreement, any Loan Document or any other guaranty oragreement or the release or reduction of liability of any Obligor or other guarantor or surety with respect to the Guaranteed Obligations.The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all noticeswhatsoever, and any requirement that any Secured Party exhaust any right, power or remedy or proceed against Borrower under thisAgreement or any other agreement or instrument referred to herein, or against any other Person under any other guarantee of, orsecurity for, any of the Guaranteed Obligations.14.03 Reinstatement. The obligations of the Subsidiary Guarantors under this Section 14 shall be automatically reinstated if and tothe extent that for any reason any payment by or on behalf of Borrower in respect of the Guaranteed Obligations is rescinded or mustbe otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy orreorganization or otherwise, and the Subsidiary Guarantors jointly and severally agree that they will indemnify the Secured Parties ondemand for all reasonable costs and expenses (including fees of counsel) incurred by the Lenders in connection with such rescission orrestoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted apreference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.14.04 Subrogation. The Subsidiary Guarantors hereby jointly and severally agree that until Payment In Full, they shall not exerciseany right or remedy arising by reason of any performance by them of their guarantee in Section 14.01, whether by subrogation orotherwise, against Borrower or any other guarantor of any of the Guaranteed Obligations or any security for any of the GuaranteedObligations.14.05 Remedies. The Subsidiary Guarantors jointly and severally agree that, as between the Subsidiary Guarantors and the SecuredParties, the obligations of Borrower under this Agreement and under the other Loan Documents may be declared to be forthwith dueand payable as provided in Section 11 (and shall be deemed to have become automatically due and payable in the circumstancesprovided in Section 11) for purposes of Section 14.01 notwithstanding any stay, injunction or other prohibition preventing suchdeclaration (or such obligations from becoming automatically due and payable) as against Borrower and that, in the event of suchdeclaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not dueand payable by Borrower) shall forthwith become due and payable by the Subsidiary Guarantors for purposes of Section 14.01.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION96 14.06 Instrument for the Payment of Money. Each Subsidiary Guarantor hereby acknowledges that the guarantee in this Section14 constitutes an instrument for the payment of money, and consents and agrees that the Secured Parties, at their sole option, in theevent of a dispute by such Subsidiary Guarantor in the payment of any moneys due hereunder, shall have the right to proceed bymotion for summary judgment in lieu of complaint pursuant to N.Y. Civ. Prac. L&R § 3213.14.07 Continuing Guarantee. The guarantee in this Section 14 is a continuing guarantee, and shall apply to all GuaranteedObligations whenever arising.14.08 Rights of Contribution. The Subsidiary Guarantors hereby agree, as between themselves, that if any Subsidiary Guarantorshall become an Excess Funding Guarantor (as defined below) by reason of the payment by such Subsidiary Guarantor of anyGuaranteed Obligations, each other Subsidiary Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the nextsentence), pay to such Excess Funding Guarantor an amount equal to such Subsidiary Guarantor’s Pro Rata Share (as defined belowand determined, for this purpose, without reference to the properties, debts and liabilities of such Excess Funding Guarantor) of theExcess Payment (as defined below) in respect of such Guaranteed Obligations. The payment obligation of a Subsidiary Guarantor toany Excess Funding Guarantor under this Section 14.08 shall be subordinate and subject in right of payment to the prior payment infull of the obligations of such Subsidiary Guarantor under the other provisions of this Section 14 and such Excess Funding Guarantorshall not exercise any right or remedy with respect to such excess until payment and satisfaction in full of all of such obligations.For purposes of this Section 14.08, (i) “Excess Funding Guarantor” means, in respect of any Guaranteed Obligations, aSubsidiary Guarantor that has paid an amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii) “Excess Payment”means, in respect of any Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share ofsuch Guaranteed Obligations and (iii) “Pro Rata Share” means, for any Subsidiary Guarantor, the ratio (expressed as a percentage) of(x) the amount by which the aggregate present fair saleable value of all properties of such Subsidiary Guarantor (excluding any sharesof stock of any other Subsidiary Guarantor) exceeds the amount of all the debts and liabilities of such Subsidiary Guarantor (includingcontingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of such Subsidiary Guarantor hereunderand any obligations of any other Subsidiary Guarantor that have been Guaranteed by such Subsidiary Guarantor) to (y) the amount bywhich the aggregate fair saleable value of all properties of all of the Subsidiary Guarantors exceeds the amount of all the debts andliabilities (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of Borrower and theSubsidiary Guarantors hereunder and under the other Loan Documents) of all of the Subsidiary Guarantors, determined (A) withrespect to any Subsidiary Guarantor that is a party hereto on the first Borrowing Date, as of such Borrowing Date, and (B) with respectto any other Subsidiary Guarantor, as of the date such Subsidiary Guarantor becomes a Subsidiary Guarantor hereunder.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION97 14.09 General Limitation on Guarantee Obligations. In any action or proceeding involving any provincial, territorial or statecorporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, ifthe obligations of any Subsidiary Guarantor under Section 14.01 would otherwise, taking into account the provisions of Section14.08, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account ofthe amount of its liability under Section 14.01, then, notwithstanding any other provision hereof to the contrary, the amount of suchliability shall, without any further action by such Subsidiary Guarantor, any Secured Party or any other Person, be automaticallylimited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors asdetermined in such action or proceeding.[Signature Pages Follow][†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION98 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day andyear first above written.BORROWER:NANOSTRING TECHNOLOGIES, INC.By:/s/ K. Thomas Bailey Name:K. Thomas Bailey Title:Chief Financial Officer Address for Notices: 530 Fairview Avenue, N. Suite 2000 Seattle, WA 98109 Attn:Thomas Bailey Tel.:[†] Email:[†] SUBSIDIARY GUARANTORS:NANOSTRING TECHNOLOGIES INTERNATIONAL INC.By:/s/ K. Thomas Bailey Name:K. Thomas Bailey Title:Chief Financial Officer Address for Notices: 530 Fairview Avenue, N. Suite 2000 Seattle, WA 98109 Attn:Thomas Bailey Tel.:[†] Email:[†] [†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION ADMINISTRATIVE AGENT:CRG SERVICING LLCBy:/s/ Nathan Hukill Name:Nathan Hukill Title:Authorized Signatory Address for Notices: 1000 Main Street, Suite 2500 Houston, TX 77002 Attn:Portfolio Reporting Tel.:[†] Fax:[†] Email:[†] LENDERS:CRG PARTNERS III L.P.BY CRG PARTNERS III GP L.P., its General PartnerBy CRG PARTNERS III GP LLC, its General PartnerBy:/s/ Nathan Hukill Name:Nathan Hukill Title:Authorized Signatory Address for Notices: 1000 Main Street, Suite 2500 Houston, TX 77002 Attn:Portfolio Reporting Tel.:[†] Fax:[†] Email:[†] CRG PARTNERS III - PARALLEL FUND "A" L.P.BY CRG PARTNERS III - PARALLEL FUND "A" GPL.P., its General Partner By CRG PARTNERS III - PARALLEL FUND "A" GPLLC, its General Partner By:/s/ Nathan Hukill Name:Nathan Hukill [†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION Title:Authorized Signatory Address for Notices: 1000 Main Street, Suite 2500 Houston, TX 77002 Attn:Portfolio Reporting Tel.:[†] Fax:[†] Email:[†] CRG PARTNERS III - PARALLEL FUND "B"(CAYMAN) L.P.BY CRG PARTNERS III (CAYMAN) GP L.P., itsGeneral Partner By CRG PARTNERS III (CAYMAN) GP LLC, itsGeneral Partner By:/s/ Nathan Hukill Name:Nathan Hukill Title:Authorized Signatory Witness:/s/ Nicole Nesson NameNicole Nesson Address for Notices: 1000 Main Street, Suite 2500 Houston, TX 77002 Attn:Portfolio Reporting Tel.:[†] Fax:[†] Email:[†] CRG PARTNERS III (CAYMAN) LEV AIV L.P.BY CRG PARTNERS III (CAYMAN) GP L.P., itsGeneral Partner By CRG PARTNERS III (CAYMAN) GP LLC, itsGeneral Partner By:/s/ Nathan Hukill Name:Nathan Hukill Title:Authorized Signatory Witness:/s/ Nicole Nesson NameNicole Nesson Address for Notices: [†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION 1000 Main Street, Suite 2500 Houston, TX 77002 Attn:Portfolio Reporting Tel.:[†] Fax:[†] Email:[†] CRG PARTNERS III (CAYMAN) UNLEV AIV I L.P.BY CRG PARTNERS III (CAYMAN) GP L.P., itsGeneral Partner By CRG PARTNERS III (CAYMAN) GP LLC, itsGeneral Partner By:/s/ Nathan Hukill Name:Nathan Hukill Title:Authorized Signatory Witness:/s/ Nicole Nesson NameNicole Nesson Address for Notices: 1000 Main Street, Suite 2500 Houston, TX 77002 Attn:Portfolio Reporting Tel.:[†] Fax:[†] Email:[†] [†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION Schedule 1 to Term Loan AgreementCOMMITMENTSLenderCommitmentProportionate ShareCRG Partners III L.P.$15,640,798.0615.64%CRG Partners III – Parallel Fund “A” L.P.$9,220,859.309.22%CRG Partners III Parallel Fund “B” (Cayman) L.P.$37,311,175.4237.31%CRG Partners III (Cayman) LEV AIV L.P.$33,457,827.2833.46%CRG Partners III (Cayman) UNLEV AIV I L.P.$4,369,339.954.37%TOTAL$100,000,000100%WARRANT SHARESLenderNumber of Warrant Sharesof Common Stock Outstanding FirstBorrowingSecondBorrowingThirdBorrowingCRG Partners III L.P.53,425TBD1TBD1CRG Partners III – Parallel Fund “A” L.P.31,496TBD1TBD1CRG Partners III Parallel Fund “B” (Cayman) L.P.127,447TBD1TBD1CRG Partners III (Cayman) LEV AIV L.P.114,285TBD1TBD1CRG Partners III (Cayman) UNLEV AIV I L.P.14,925TBD1TBD1Total percentage, of common stock of Borrower on a fully diluted basis(inclusive of Warrants granted on such date), to Lenders on stated date0.9%0.3%0.3%________________________¹ To equal such Lender’s Proportionate Share of the aggregate percentage set forth in the bottom row of such column for such Borrowing Date.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION Exhibit A to Term Loan AgreementFORM OF GUARANTEE ASSUMPTION AGREEMENTGUARANTEE ASSUMPTION AGREEMENT dated as of [DATE] (this “Agreement”) by [NAME OF ADDITIONALSUBSIDIARY GUARANTOR], a [___] [___] (the “Additional Subsidiary Guarantor”), in favor of CRG SERVICING LLC, asadministrative agent and collateral agent (the “Administrative Agent”) for the benefit of the Secured Parties under that certainAmended and Restated Term Loan Agreement, dated as of October 12, 2018 (as amended, restated, supplemented or otherwisemodified, renewed, refinanced or replaced, the “Loan Agreement”), among NanoString Technologies, Inc., a Delaware corporation(“Borrower”), Administrative Agent, the lenders from time to time party thereto and the Subsidiary Guarantors from time to time partythereto. The terms defined in the Loan Agreement are herein used as therein defined.Pursuant to Section 8.12(a) of the Loan Agreement, the Additional Subsidiary Guarantor hereby agrees to become a“Subsidiary Guarantor” for all purposes of the Loan Agreement, and a “Grantor” for all purposes of the Security Agreement. Withoutlimiting the foregoing, the Additional Subsidiary Guarantor hereby, jointly and severally with the other Subsidiary Guarantors,guarantees to the Lenders and their successors and assigns the prompt payment in full when due (whether at stated maturity, byacceleration or otherwise) of all Guaranteed Obligations (as defined in Section 14.01 of the Loan Agreement) in the same manner andto the same extent as is provided in Section 14 of the Loan Agreement. In addition, as of the date hereof, the Additional SubsidiaryGuarantor hereby makes the representations and warranties set forth in Sections 7.01, 7.02, 7.03, 7.05(a), 7.06, 7.07, 7.08 and 7.18 ofthe Loan Agreement, and in Section 2 of the Security Agreement, with respect to itself and its obligations under this Agreement andthe other Loan Documents, as if each reference in such Sections to the Loan Documents included reference to this Agreement, suchrepresentations and warranties to be made as of the date hereof.The Additional Subsidiary Guarantor hereby instructs its counsel to deliver the opinions referred to in Section 8.12(a) of theLoan Agreement to Administrative Agent.IN WITNESS WHEREOF, the Additional Subsidiary Guarantor has caused this Agreement to be duly executed and deliveredas of the day and year first above written. [ADDITIONAL SUBSIDIARY GUARANTOR] By: Name Title [†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit A-1 Exhibit B to Term Loan AgreementFORM OF NOTICE OF BORROWINGDate : [__________]To: CRG Servicing LLC and the Lenders referred to below1000 Main Street, Suite 2500 Houston, TX 77002 Attn: Portfolio ReportingRe: Borrowing under Amended and Restated Term Loan AgreementLadies and Gentlemen:The undersigned, NanoString Technologies, Inc., a Delaware corporation (“Borrower”), refers to the Amended and RestatedTerm Loan Agreement, dated as of October 12, 2018 (as the same may be amended, restated, supplemented or otherwise modifiedfrom time to time, the “Loan Agreement”), among Borrower, CRG Servicing LLC, as administrative agent and collateral agent (insuch capacities, the “Administrative Agent”), and the lenders from time to time party thereto and the subsidiary guarantors from time totime party thereto. The terms defined in the Loan Agreement are herein used as therein defined.Borrower hereby gives you notice irrevocably, pursuant to Section 2.02 of the Loan Agreement, of the borrowing of the Loanspecified herein:1. The proposed Borrowing Date is [__________].2. The amount of the proposed Borrowing is $[__________].3. The payment instructions with respect to the funds to be made available to Borrower are as follows:Bank name: [__________]Bank Address: [__________]Routing Number: [__________]Account Number: [__________]Swift Code: [__________]Borrower hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposedborrowing of the Loan, before and after giving effect thereto and to the application of the proceeds therefrom:a) the representations and warranties made by Borrower in Section 7 of the Loan Agreement shall be true on and as of theBorrowing Date and immediately after giving effect to[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit B-1 the application of the proceeds of the Borrowing with the same force and effect as if made on and as of such date except that therepresentation regarding representations and warranties that refer to a specific earlier date shall be that they were true on such earlierdate;b) on and as of the Borrowing Date, there shall have occurred no Material Adverse Change since December 31, 2017; andc) no Default exists or would result from such proposed Borrowing or the application of the proceeds thereof.IN WITNESS WHEREOF, Borrower has caused this Notice of Borrowing to be duly executed and delivered as of the dayand year first above written.BORROWER:NANOSTRING TECHNOLOGIES, INC.By _______________________________________Name:Title:[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit B-2 Exhibit C-1 to Term Loan AgreementFORM OF U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)Reference is made to the Amended and Restated Term Loan Agreement, dated as of October 12, 2018 (as the same may beamended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among NanoString Technologies,Inc., a Delaware corporation (“Borrower”), CRG Servicing LLC, as administrative agent and collateral agent (in such capacities, the“Administrative Agent”), and the lenders and the subsidiary guarantors from time to time party thereto. [______________________](the “Foreign Lender”) is providing this certificate pursuant to Section 5.03(e)(ii)(B) of the Loan Agreement. The Foreign Lenderhereby represents and warrants that:1. The Foreign Lender is the sole record owner of the Loans (as well as any note(s) evidencing such Loans) in respect ofwhich it is providing this certificate;2. The Foreign Lender is not a “bank” for purposes of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, asamended (the “Code”). In this regard, the Foreign Lender further represents and warrants that:(a) The Foreign Lender is not subject to regulatory or other legal requirements as a bank in any jurisdiction; and(b) The Foreign Lender has not been treated as a bank for purposes of any tax, securities law or other filing or submissionmade to any Governmental Authority, any application made to a rating agency or qualification for any exemption from tax, securitieslaw or other legal requirements;3. The Foreign Lender is not a 10-percent shareholder of Borrower within the meaning of Section 871(h)(3)(B) or Section881(c)(3)(B) of the Code; and4. The Foreign Lender is not a controlled foreign corporation receiving interest from a related person within the meaning ofSection 881(c)(3)(C) of the Code.The undersigned has delivered to Borrower (directly or through Administrative Agent) a correct and complete certificate of itsnon-U.S. Person status on IRS Form W-8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that(1) if the information provided in this certificate changes, the undersigned shall promptly so inform the Borrower and AdministrativeAgent, and (2) the undersigned shall have at all times furnished the Borrower and Administrative Agent with a properly completed andcurrently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the twocalendar years preceding such payments.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit C-1-1 Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to themin the Loan Agreement.IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly executed and delivered as of the dateindicated below.[NAME OF NON-U.S. LENDER]By _______________________________Name:Title:Date: ____________________[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit C-1-2 Exhibit C-2 to Term Loan AgreementFORM OF U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)Reference is made to the Amended and Restated Term Loan Agreement, dated as of October 12, 2018 (as the same may beamended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among NanoString Technologies,Inc., a Delaware corporation (“Borrower”), CRG Servicing LLC, as administrative agent and collateral agent (in such capacities, the“Administrative Agent”), and the lenders and the subsidiary guarantors from time to time party thereto. [______________________](the “Foreign Participant”) is providing this certificate pursuant to Section 5.03(e)(ii)(B) of the Loan Agreement. The ForeignParticipant hereby represents and warrants that:1. The Foreign Participant is the sole record and beneficial owner of the participation in respect of which it is providing thiscertificate;2. The Foreign Participant is not a “bank” for purposes of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, asamended (the “Code”). In this regard, the Foreign Participant further represents and warrants that:(a) The Foreign Participant is not subject to regulatory or other legal requirements as a bank in any jurisdiction; and(b) The Foreign Participant has not been treated as a bank for purposes of any tax, securities law or other filing or submissionmade to any Governmental Authority, any application made to a rating agency or qualification for any exemption from tax, securitieslaw or other legal requirements;3. The Foreign Participant is not a 10-percent shareholder of Borrower within the meaning of Section 871(h)(3)(B) or Section881(c)(3)(B) of the Code; and4. The Foreign Participant is not a controlled foreign corporation receiving interest from a related person within the meaningof Section 881(c)(3)(C) of the Code.The undersigned has furnished its participating Lender with a correct and complete certificate of its non-U.S. Person status onIRS Form W-8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the informationprovided in this certificate changes, the undersigned shall promptly so inform the Borrower and Administrative Agent, and (2) theundersigned shall have at all times furnished the Borrower and Administrative Agent with a properly completed and currently effectivecertificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar yearspreceding such payments.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit C-2-1 Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to themin the Loan Agreement.IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly executed and delivered as of the dateindicated below.[NAME OF NON-U.S. PARTICIPANT]By _______________________________Name:Title:Date: ____________________[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit C-2-2 Exhibit C-3 to Term Loan AgreementFORM OF U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)Reference is made to the Amended and Restated Term Loan Agreement, dated as of October 12, 2018 (as the same may beamended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among NanoString Technologies,Inc., a Delaware corporation (“Borrower”), CRG Servicing LLC, as administrative agent and collateral agent (in such capacities, the“Administrative Agent”), and the lenders and the subsidiary guarantors from time to time party thereto. [______________________](the “Foreign Participant”) is providing this certificate pursuant to Section 5.03(e)(ii)(B) of the Loan Agreement. The ForeignParticipant hereby represents and warrants that:1. The Foreign Participant is the sole record owner of the participation in respect of which it is providing this certificate;2. The Foreign Participant’s direct or indirect partners/members are the sole beneficial owners of the participation in respectof which it is providing this certificate;3. Neither the Foreign Participant nor its direct or indirect partners/members is a “bank” for purposes of Section 881(c)(3)(A)of the Internal Revenue Code of 1986, as amended (the “Code”). In this regard, the Foreign Participant further represents and warrantsthat:(a) neither the Foreign Participant nor its direct or indirect partners/members is subject to regulatory or other legalrequirements as a bank in any jurisdiction; and(b) neither the Foreign Participant nor its direct or indirect partners/members has been treated as a bank for purposes of anytax, securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency orqualification for any exemption from tax, securities law or other legal requirements;4. Neither the Foreign Participant nor its direct or indirect partners/members is a 10-percent shareholder of Borrower withinthe meaning of Section 871(h)(3)(B) or Section 881(c)(3)(B) of the Code; and5. Neither the Foreign Participant nor its direct or indirect partners/members is a controlled foreign corporation receivinginterest from a related person within the meaning of Section 881(c)(3)(C) of the Code.The undersigned has furnished its participating Lender with a correct and complete IRS Form W-8IMY accompanied by one ofthe following forms for each of its partners/members that is claiming the portfolio interest exemption : (i) an IRS Form W-8BEN or W-8BEN-E, as applicable, or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E, as applicable, fromeach such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, theundersigned agrees that (1) if the[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit C-3-1 information provided in this certificate changes, the undersigned shall promptly so inform the Borrower and Administrative Agent, and(2) the undersigned shall have at all times furnished the Borrower and Administrative Agent with a properly completed and currentlyeffective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendaryears preceding such payments.Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to themin the Loan Agreement.IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly executed and delivered as of the dateindicated below.[NAME OF NON-U.S. PARTICIPANT]By _______________________________Name:Title:Date: ____________________[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit C-3-2 Exhibit C-4 to Term Loan AgreementFORM OF U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)Reference is made to the Amended and Restated Term Loan Agreement, dated as of October 12, 2018 (as the same may beamended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among NanoString Technologies,Inc., a Delaware corporation (“Borrower”), CRG Servicing LLC, as administrative agent and collateral agent (in such capacities, the“Administrative Agent”), and the lenders and the subsidiary guarantors from time to time party thereto. [______________________](the “Foreign Lender”) is providing this certificate pursuant to Section 5.03(e)(ii)(B) of the Loan Agreement. The Foreign Lenderhereby represents and warrants that:1. The Foreign Lender is the sole record owner of the Loans (as well as any note(s) evidencing such Loans) in respect ofwhich it is providing this certificate;2. The Foreign Lender’s direct or indirect partners/members are the sole beneficial owners of the Loans (as well as anynote(s) evidencing such Loans) in respect of which it is providing this certificate;3. Neither the Foreign Lender nor its direct or indirect partners/members is a “bank” for purposes of Section 881(c)(3)(A) ofthe Internal Revenue Code of 1986, as amended (the “Code”). In this regard, the Foreign Lender further represents and warrants that:(a) neither the Foreign Lender nor its direct or indirect partners/members is subject to regulatory or other legal requirements asa bank in any jurisdiction; and(b) neither the Foreign Lender nor its direct or indirect partners/members has been treated as a bank for purposes of any tax,securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency orqualification for any exemption from tax, securities law or other legal requirements;4. Neither the Foreign Lender nor its direct or indirect partners/members is a 10-percent shareholder of Borrower within themeaning of Section 871(h)(3)(B) or Section 881(c)(3)(B) of the Code; and5. Neither the Foreign Lender nor its direct or indirect partners/members is a controlled foreign corporation receiving interestfrom a related person within the meaning of Section 881(c)(3)(C) of the Code.The undersigned has made available to Borrower (directly or through Administrative Agent) a correct and complete IRS FormW-8IMY accompanied by one of the following forms for each of its partners/members that is claiming the portfolio interest exemption:(i) an IRS Form W-8BEN or W-8BEN-E, as applicable, or (ii) an IRS Form W-8IMY accompanied by an[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit C-4-1 IRS Form W-8BEN or W-8BEN-E, as applicable, from each such partner’s/member’s beneficial owners that is claiming the portfoliointerest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes,the undersigned shall promptly so inform the Borrower and Administrative Agent, and (2) the undersigned shall have at all timesfurnished the Borrower and Administrative Agent with a properly completed and currently effective certificate in either the calendaryear in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to themin the Loan Agreement.IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly executed and delivered as of the dateindicated below.[NAME OF NON-U.S. LENDER]By _______________________________Name:Title:Date: __________________[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit C-4-2 Exhibit D to Term Loan AgreementFORM OF COMPLIANCE CERTIFICATE[DATE]This certificate is delivered pursuant to Section 8.01(c) of, and in connection with the consummation of the transactionscontemplated in, the Amended and Restated Term Loan Agreement, dated as of October 12, 2018 (as the same may be amended,restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among NanoString Technologies, Inc., aDelaware corporation (“Borrower”), CRG Servicing LLC, as administrative agent and collateral agent (in such capacities, the“Administrative Agent”), and the lenders and the subsidiary guarantors from time to time party thereto. Capitalized terms used hereinand not otherwise defined herein are used herein as defined in the Loan Agreement.The undersigned, a duly authorized Responsible Officer of Borrower having the name and title set forth below under hissignature, hereby certifies, on behalf of Borrower for the benefit of the Secured Parties and pursuant to Section 8.01(c) of the LoanAgreement that such Responsible Officer of Borrower is familiar with the Loan Agreement and that, in accordance with each of thefollowing sections of the Loan Agreement, each of the following is true on the date hereof, both before and after giving effect to anyLoan to be made on or before the date hereof:In accordance with Section 8.01[(a)/(b)] of the Loan Agreement, attached hereto as Annex A are the financial statements forthe [fiscal quarter/fiscal year] ended [__________] required to be delivered pursuant to Section 8.01[(a)/(b)] of the Loan Agreement.Such financial statements fairly present in all material respects the consolidated financial position, results of operations and cash flow ofBorrower and its Subsidiaries as at the dates indicated therein and for the periods indicated therein in accordance with GAAP [(subjectto the absence of footnote disclosure and normal year-end audit adjustments)]²Attached hereto as Annex B are the calculations used to determine compliance with each financial covenant contained inSection 10 of the Loan Agreement.No Default or Event of Default is continuing as of the date hereof[, except as provided for on Annex C attached hereto, withrespect to each of which Borrower proposes to take the actions set forth on Annex C].The representations and warranties made by Borrower in Section 7 of the Loan Agreement are true on and as of the datehereof, with the same force and effect as if made on and as of the date hereof (except that the representation regarding representationsand warranties that refer to a specific earlier date shall be that they were true on such earlier date)[, except as provided for on Annex Dattached hereto, with respect to each of which Borrower proposes to take the actions set forth on Annex D].________________________[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit D-1 ² Insert language in brackets only for quarterly certifications.[Attached hereto as Annex E are updates to Schedules 7.05(b)(i), 7.05(b)(iii), 7.05(c), 7.14 and 7.16 to the Disclosure Letter.]IN WITNESS WHEREOF, the undersigned has executed this certificate on the date first written above.NANOSTRING TECHNOLOGIES, INC.By _______________________________________Name:Title:[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit D-2 Annex A to Compliance CertificateFINANCIAL STATEMENTS[see attached][†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit D-3 • Annex B to Compliance CertificateCALCULATIONS OF FINANCIAL COVENANT COMPLIANCESection 10.01: Minimum Liquidity A. Amount of unencumbered (other than by Liens described in Sections 9.02(a),9.02(c) (provided that there is no default under the documentation governing thePermitted Priority Debt) and 9.02(j)) cash and Permitted Cash EquivalentInvestments (which for greater certainty shall not include any undrawn creditlines), in each case, to the extent held in an account over which the Lenders have aperfected security interest as of the date of this certificate:$__________B. The greater of:$__________ (1) $2,000,000 and (2) to the extent Borrower has incurred Permitted Priority Debt, the minimumcash balance required of Borrower by Borrower’s Permitted Priority Debtcreditors Was Liquidity at all times during the period greater than Line IB?:Yes: In compliance; No: Not incomplianceII. Section 10.02(a)-(e): Minimum Revenue—Subsequent Periods A. Revenues during the twelve-month period beginning on January 1, 2019$__________ Is line II.A equal to or greater than $[†]?Yes: In compliance; No: Not incompliance³B. Revenues during the twelve-month period beginning on January 1, 2020$__________ Is line II.B equal to or greater than $[†]?Yes: In compliance; No: Not incompliance4C. Revenues during the twelve-month period beginning on January 1, 2021$__________ Is line II.C equal to or greater than $[†]?Yes: In compliance; No: Not incomplianceD. Revenues during the twelve-month period beginning on January 1, 2022$__________________________________³ Include bracketed entry only on the Compliance Certificate to be delivered within 90 days of the end of 2019 pursuant to Section 8.01(c) of the LoanAgreement.4 Include bracketed entry only on the Compliance Certificate to be delivered within 90 days of the end of 2020pursuant to Section 8.01(c) of the Loan Agreement.5 Include bracketed entry only on the Compliance Certificate to be delivered within 90 days of the end of 2021pursuant to Section 8.01(c) of the Loan Agreement.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit D-4 Is line II.D equal to or greater than $[†]?Yes: In compliance; No: Not incompliance6E. Revenues during the twelve-month period beginning on January 1, 2023$__________ Is line II.E equal to or greater than $[†]?Yes: In compliance; No: Not incompliance7________________________6 Include bracketed entry only on the Compliance Certificate to be delivered within 90 days of the end of 2022pursuant to Section 8.01(c) of the Loan Agreement.[7 Include bracketed entry only on the Compliance Certificate to be delivered within 90 days of the end of 2023pursuant to Section 8.01(c) of the Loan Agreement.][†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit D-5 Annex C to Compliance CertificateEVENTS OF DEFAULT[Not applicable.][If applicable, state events and describe proposed remedial actions].[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit D-6 Annex D to Compliance CertificateREPRESENTATIONS AND WARRANTIES[Not applicable.][If applicable, state representations and describe proposed remedial actions].[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit D-7 Annex E to Compliance CertificateUPDATES TO DISCLOSURE LETTER[Schedule 7.05(b)(i) - Certain Intellectual Property Schedule 7.05(b)(ii) - Intellectual Property ExceptionsSchedule 7.05(c) - Material Intellectual PropertySchedule 7.14- Material AgreementsSchedule 7.16 - Real Property][†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit D-8 Exhibit E to Term Loan AgreementOPINION REQUESTThe opinions of legal counsel to Borrower and each other Obligor should address the following matters (capitalized terms usedbut not defined herein have the meanings given to them in the Agreement):1.Power and authority (Section 7.01)2.Valid existence/good standing (Section 7.01)3.Due authorization (Section 7.02)4.Due execution & delivery (Section 7.02)5.Enforceability (Section 7.02)6.No consents/conflicts (Section 7.03)7.Investment company (Section 7.10(a))8.Board regulations T, U & X (Section 7.10(b))9.Legal, valid and enforceable security interest (Section 7.18)10.Perfection of security interest (UCC) (Section 7.18)[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit E-1 Exhibit F to Term Loan AgreementFORM OF LANDLORD CONSENTTHIS LANDLORD CONSENT (the “Agreement”) is made and entered into as of October 12, 2018 by and among CRGServicing LLC, as administrative agent and collateral agent for the “Secured Parties” as defined in the Loan Agreement referred tobelow (in such capacities, “Administrative Agent”), [INSERT NAME OF BORROWER or GUARANTOR], a Delawarecorporation (“Debtor”), and [INSERT NAME OF LANDLORD], a [Delaware] [limited liability company] (“Landlord”).WHEREAS, Debtor has entered into an Amended and Restated Term Loan Agreement, dated as of October 12, 2018 (as thesame may be amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among NanoStringTechnologies, Inc., a Delaware corporation, as borrower, Administrative Agent, the lenders from time to time party thereto and thesubsidiary guarantors from time to time party thereto, and an Amended and Restated Security Agreement (together with the LoanAgreement, the “Agreements”), pursuant to which the Secured Parties have been granted a security interest in all of Debtor’s personalproperty, including, but not limited to, inventory, equipment and trade fixtures (hereinafter “Personal Property;” for purposes ofclarity, in no event shall Personal Property include any rents or other amounts payable to Landlord now or in the future); andWHEREAS, Landlord is the owner of the real property located at [__________] (the “Premises”); andWHEREAS, Landlord and Debtor have entered into that certain Lease dated [__________][, as amended by [___________]dated [__________]] ([collectively,] the “Lease”); andWHEREAS, certain of the Personal Property has or may become affixed to or be located on, wholly or in part, the Premises.NOW, THEREFORE, in consideration of any loans or other financial accommodation extended by the Secured Parties toDebtor at any time, and other good and valuable consideration, the parties agree as follows:1.Landlord subordinates to Administrative Agent (for the benefit of the Secured Parties) all security interests or other interestsor rights Landlord may now or hereafter have in, or to any of the Personal Property, whether for rent or otherwise, while Debtor isindebted to the Secured Parties.2. The Personal Property may be installed in or located on the Premises and is not and shall not be deemed a fixture or part of the realestate and shall at all times be considered personal property.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit F-1 3. Administrative Agent or its representatives may enter upon the Premises during normal business hours, and upon not less than twobusiness days’ advance notice to Landlord, to inspect the Personal Property.4. Upon the occurrence and during the continuance of an Event of Default under the Agreements, Administrative Agent or itsrepresentatives, at Administrative Agent’s option, upon written notice delivered to Landlord not less than ten (10) business days inadvance, may enter the Premises during normal business hours for the purpose of repossessing, removing or otherwise dealing withsaid Personal Property; provided that neither Administrative Agent nor Secured Parties shall be permitted to operate the business ofDebtor on the Premises or sell, auction or otherwise dispose of any Personal Property at the Premises (or the building in which thePremises is located) or advertise any of the foregoing; and such license shall continue, from the date Administrative Agent enters thePremises for as long as Administrative Agent reasonably deems necessary but not to exceed a period of ten (10) days. During theperiod Administrative Agent occupies the Premises, it shall pay to Landlord the rent provided under the Lease relating to the Premises,prorated on a per diem basis to be determined on a thirty (30) day month, without incurring any other obligations of Debtor.5. Administrative Agent shall pay to Landlord any costs for damage to the Premises or the building in which the Premises is locatedin removing or otherwise dealing with said Personal Property pursuant to paragraph 4 above, and shall indemnify and hold harmlessLandlord from and against (i) all claims, disputes and expenses, including reasonable attorneys’ fees, suffered or incurred by Landlordarising from Administrative Agent’s exercise of any of its rights hereunder, and (ii) any injury to third persons, caused by actions ofAdministrative Agent pursuant to this consent.6. Landlord agrees to give notice to Administrative Agent in writing by certified mail, facsimile or email of Landlord’s intent toexercise its remedies in response to any default by Debtor of any of the provisions of the Lease, to:CRG Servicing LLC1000 Main Street, Suite 2500Houston, TX 77002Attention: Portfolio ReportingFax: 713.209.7351Email: notices@crglp.com 7. Landlord shall have no obligation to preserve or protect the Personal Property or take any action in connection therewith, andAdministrative Agent waives all claims they may now or hereafter have against Landlord in connection with the Personal Property.8. This consent shall terminate and be of no further force or effect (except for those provisions that expressly survive the expiration ortermination hereof) upon the earlier of (i) the date on which all indebtedness secured by the Personal Property indefeasibly is paid infull (other than inchoate indemnification obligations for which no claim has been made) and (ii) the date on which the Lease isterminated or expires.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit F-2 9. All notices required to be given hereunder shall be effectively given only if given in writing and shall be deemed to have beenvalidly served, given, or delivered: (i) upon the earlier of actual receipt and three (3) business days after deposit in the U.S. mail, firstclass, registered or certified mail return receipt requested, with proper postage prepaid; (ii) one (1) business day after deposit with areputable overnight courier with all charges prepaid; or (iii) when delivered, if hand delivered by messenger, in each case addressed tothe party entitled to receive the same at the applicable address set forth on the applicable signature page of this agreement or at suchother address as may be specified for such purpose by notice given as herein provided.10. Nothing contained herein shall be construed to amend the Lease, and the Lease remains unchanged and in full force and effect.11. This consent shall be construed and interpreted in accordance with and governed by the laws of the State of [__________].12. This consent may not be changed or terminated orally and is binding upon and shall inure to the benefit of Landlord,Administrative Agent, Secured Parties and Debtor and the heirs, personal representatives, successors and assigns of Landlord,Administrative Agent, Secured Parties and Debtor.IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.LANDLORD:[__________]By _______________________________________Name:Title:ADMINISTRATIVE AGENT:CRG SERVICING LLCBy _________________________________Name:Title:[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit F-3 Address for Notices:1000 Main Street, Suite 2500Houston, TX 77002Attn: Portfolio ReportingTel.: 713.209.7350Fax: 713.209.7351Email: notices@crglp.comAcknowledged and Agreed:[INSERT NAME OF BORROWER OR GUARANTOR]By _______________________________________Name:Title:[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit F-4 Exhibit G to Term Loan AgreementTERMS OF SUBORDINATIONAll obligations with respect to Permitted Subordinated Debt, including the payment of principal of and interest on, the redemption priceor the fundamental change purchase price of, and all other fees, reimbursements, and expenses of Permitted Subordinated Debt will besubordinated to the prior payment in full of the Obligations, in cash or other payment satisfactory to the holders of the Obligations,including Obligations created, incurred, assumed or guaranteed after the date of the Permitted Subordinated Debt, other than and solelywith respect to obligations of the Permitted Subordinated Debt that are secured by a pledge of an interest escrow account and the assetstherein, which shall hold no more than the cash interest due in respect of the next three years on the outstanding principal amount ofsuch Permitted Subordinated Debt, solely to the extent of the assets therein and proceeds thereof.The holders of the Obligations will be entitled to receive payment in full, in cash or other payment satisfactory to the holders of theObligations, of all obligations due in respect of such Obligations (including interest after the commencement of any bankruptcyproceeding at the rate specified in the Agreement) before the holders of Permitted Subordinated Debt will be entitled to receive anypayments in respect of the obligations under Permitted Subordinated Debt, including any payment of principal of and interest on, theredemption price or the fundamental change purchase price of, or all other fees, reimbursements, and expenses of PermittedSubordinated Debt, in the event of any distribution to Borrower’s creditors:•in a liquidation or dissolution of Borrower;•in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to Borrower or Borrower’s property;•in an assignment for the benefit of creditors;•in any marshaling of Borrower’s assets and liabilities; or•in each case other than with respect to obligations of the Permitted Subordinated Debt that are secured by a pledge of theinterest escrow account described above and the assets therein, solely to the extent of the assets therein and proceeds thereof.Borrower also may not make any payment or distribution in respect of the Permitted Subordinated Debt, and may not acquire anyPermitted Subordinated Debt for cash or property, if:•a payment default on any of the Obligations occurs and is continuing; or•any other default occurs and is continuing on the Obligations that permits holders of the Obligations to accelerate its maturityand an appropriate notice of such default (a[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit G-1 “Payment Blockage Notice”) from Borrower or a representative of such holders is recieved;•provided, however, that the foregoing shall not prevent the holders of Permitted Subordinated Debt from receiving paymentsfrom the interest escrow account.•Borrower may resume payments on and distributions in respect of the Permitted Subordinated Debt, and may acquire thePermitted Subordinated Debt, upon the earlier of:•in the case of a payment default, upon the date on which such default is cured or waived; and•in the case of a nonpayment default, upon the earliest of (i) the date on which such default is cured or waived, (ii) 91 days afterthe date the Obligations are paid in full, (iii) 179 days after the date on which the applicable payment blockage notice isreceived, or (iv) the date the Payment Blockage Notice is rescinded.If any holder of the Permitted Subordinated Debt or a representative thereof receives any payment of any obligations in respect of thePermitted Subordinated Debt when the payment is prohibited by these subordination provisions, the holder or a representative thereof,as the case may be, will hold the payment in trust for the benefit of the holders of the Obligations. Upon the proper written request ofthe holders of the Obligations, the trustee or the holder, as the case may be, will deliver the amounts in trust to the holders of theObligations or their proper representative.Borrower must promptly notify holders of the Obligations if payment on the Permitted Subordinated Debt is accelerated because of anevent of default under the Permitted Subordinated Debt.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit G-2 Exhibit H to Term Loan AgreementFORM OF INTERCREDITOR AGREEMENTThis Intercreditor Agreement, dated as of [__________] (this “Agreement”), is made between CRG Servicing LLC, aDelaware limited liability company, as Administrative Agent, and [INSERT NAME OF A/R LENDER], a [__________] (“[A/RLender]”).RECITALSA.NanoString Technologies, Inc., a Delaware corporation (“Borrower”), has entered into the A/R Facility Agreement (as definedbelow) with [A/R Lender], which, along with any other obligations owing to [A/R Lender] by Borrower, is secured by certainproperty of Borrower [and the other Obligors (as defined below)].B.Borrower [has][and the other Obligors have] entered into that certain Amended and Restated Term Loan Agreement, dated asof October 12, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “CRG CreditAgreement”), with certain lenders and CRG Servicing LLC, a Delaware limited liability company, as administrative agent andcollateral agent for such lenders (in such capacities and together with its successors and assigns, “CRG Agent”), which issecured by certain property of Borrower [and the other Obligors].C.To induce each of [A/R Lender] and the lenders under the CRG Credit Agreement to make and maintain the credit extensionsunder the A/R Facility Agreement and the CRG Credit Agreement, respectively, each of [A/R Lender] and CRG Agent, onbehalf of the “Secured Parties” (as defined in the CRG Credit Agreement, the “CRG Creditors”; CRG Creditors, collectivelywith [A/R Lender], “Creditors” and each individually, a “Creditor”), is willing to enter into this Agreement to, among otherthings, subordinate certain of its liens on the terms and conditions herein set forth.NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:13. Definitions. As used herein, the following terms have the following meanings:“A/R Facility Agreement” means that certain [Credit Agreement], dated as of [_____________], between [A/R Lender] andBorrower, as the same may be amended, restated, supplemented or otherwise modified from time to time.“A/R Facility Documents” means the A/R Facility Agreement and all [Loan Documents], each as defined in the A/R FacilityAgreement.“A/R Facility Senior Collateral” means (i) Borrower’s accounts arising from the sale or lease of inventory or the provision ofservices, excluding IP/Equipment Accounts (collectively, “Inventory/Service Accounts”), (ii) Borrower’s inventory, (iii) to the extentevidencing,[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-1 governing, or securing Borrower’s Inventory/Service Accounts or inventory, Borrower’s payment intangibles, chattel paper,instruments and documents, (iv) to the extent held in a segregated deposit account that does not contain other cash, cash proceeds ofBorrower’s Inventory/Service Accounts and inventory, and (v) proceeds of insurance policies covering Borrower’s Inventory/ServiceAccounts and inventory received with respect to such accounts and inventory; provided that, for purposes of clarification,notwithstanding the foregoing, in no event shall “A/R Facility Senior Collateral” include any right, title or interest of any Obligor in(A) any Intellectual Property or any licenses thereof, (B) any accounts or proceeds arising from the sale, transfer, licensing or otherdisposition of any Intellectual Property or licenses, or from the sale, transfer, lease or other disposition of equipment (collectively,“IP/Equipment Accounts”), (C) equipment, (D) to the extent evidencing, governing, securing or otherwise related to equipment, anygeneral intangibles, chattel paper, instruments or documents or (E) proceeds of equipment or proceeds of insurance policies withrespect to equipment.“Bankruptcy Code” means the federal bankruptcy law of the United States as from time to time in effect, currently as Title 11of the United States Code. Section references to current sections of the Bankruptcy Code shall refer to comparable sections of anyrevised version thereof if section numbering is changed.“Claim” means, (i) in the case of [A/R Lender], any and all present and future “claims” (used in its broadest sense, ascontemplated by and defined in Section 101(5) of the Bankruptcy Code, but without regard to whether such claim would bedisallowed under the Bankruptcy Code) of [A/R Lender] now or hereafter arising or existing under or relating to the A/R FacilityDocuments (with the portion of [A/R Lender]’s Claim at any time consisting of the aggregate principal amount of indebtedness underthe A/R Facility Documents, not to exceed the sum of (x) 80% of the face amount at such time of Borrower’s non-delinquent accountsreceivable Inventory/Service Accounts and (y) 50% of the fair market value of Borrower’s eligible inventory at the time of anyadvance, whether joint, several, or joint and several, whether fixed or indeterminate, due or not yet due, contingent or non-contingent,matured or unmatured, liquidated or unliquidated, or disputed or undisputed, whether under a guaranty or a letter of credit, and whetherarising under contract, in tort, by law, or otherwise, any interest or fees thereon (including interest or fees that accrue after the filing of apetition by or against any Obligor under the Bankruptcy Code, irrespective of whether allowable under the Bankruptcy Code), anycosts of Enforcement Actions, including reasonable attorneys’ fees and costs, and any prepayment or termination fees, and (ii) in thecase of CRG Creditors, any and all present and future “claims” (used in its broadest sense, as contemplated by and defined in Section101(5) of the Bankruptcy Code, but without regard to whether such claim would be disallowed under the Bankruptcy Code) of CRGCreditors now or hereafter arising or existing under or relating to the CRG Documents, whether joint, several, or joint and several,whether fixed or indeterminate, due or not yet due, contingent or non-contingent, matured or unmatured, liquidated or unliquidated, ordisputed or undisputed, whether under a guaranty or a letter of credit, and whether arising under contract, in tort, by law, or otherwise,any interest or fees thereon (including interest or fees that accrue after the filing of a petition by or against any Obligor under theBankruptcy Code, irrespective of whether allowable under the Bankruptcy Code), any costs of Enforcement Actions, includingreasonable attorneys’ fees and costs, and any prepayment or termination fees.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-2 “Collateral” means all real or personal property of any Obligor in which any Creditor now or hereafter has a security interest.“Common Collateral” means all Collateral in which both [A/R Lender] and CRG Agent have a security interest.“CRG Documents” means all documentation related to the CRG Credit Agreement and all Loan Documents (as defined in theCRG Credit Agreement), including security or pledge agreements and all other related agreements.“CRG Senior Collateral” means all Collateral in which CRG Agent has a security interest, other than the A/R Facility SeniorCollateral, including, for the avoidance of doubt and without limitation, any additional Collateral in which CRG Agent may have asecurity interest following the commencement of or in connection with any Insolvency Proceeding, including without limitationCollateral subject to any CRG Agent security interests, superpriority claims, or other rights arising under Sections 507(b) and 552 ofthe Bankruptcy Code.“Credit Documents” means, collectively, the CRG Documents and the A/R Facility Documents.“Enforcement Action” means, with respect to any Creditor and with respect to any Claim of such Creditor or any item ofCollateral in which such Creditor has or claims a security interest, lien, or right of offset, (i) any action, whether judicial or nonjudicial,to repossess, collect, offset, recoup, give notification to third parties with respect to, sell, dispose of, foreclose upon, give notice of sale,disposition, or foreclosure with respect to, or obtain equitable or injunctive relief with respect to, such Claim or Collateral, (ii) anyaction in connection with any Insolvency Proceeding to protect, defend, enforce or assert rights with respect to such Claim orCollateral, including without limitation filing and defending any proof of claim, opposing or joining in the opposition of any sale ofassets or confirmation of a plan of reorganization, or opposing or joining in the opposition of any proposed debtor-in-possession loanor use of cash collateral, and (iii) the filing of, or the joining in the filing of, an involuntary bankruptcy or insolvency proceedingagainst any Obligor.“Intellectual Property” means, collectively, all copyrights, copyright registrations and applications for copyright registrations,including all renewals and extensions thereof, all rights to recover for past, present or future infringements thereof and all other rightswhatsoever accruing thereunder or pertaining thereto (collectively, “Copyrights”), all patents and patent applications, including theinventions and improvements described and claimed therein together with the reissues, divisions, continuations, renewals, extensionsand continuations in part thereof, all damages and payments for past or future infringements thereof and rights to sue therefor, and allrights corresponding thereto throughout the world and all income, royalties, damages and payments now or hereafter due and/orpayable under or with respect thereto (collectively, “Patents”), and all trade names, trademarks and service marks, logos, trademarkand service mark registrations, and applications for trademark and service mark registrations, including all renewals of trademark andservice mark registrations, all rights to recover for all past, present and future infringements thereof and all rights to sue therefor, and allrights corresponding[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-3 thereto throughout the world (collectively, “Trademarks”), together, in each case, with the product lines and goodwill of the businessconnected with the use of, and symbolized by, each such trade name, trademark and service mark, together with (a) all inventions,processes, production methods, proprietary information, know-how and trade secrets; (b) all licenses or user or other agreementsgranted to any Obligor with respect to any of the foregoing, in each case whether now or hereafter owned or used; (c) all information,customer lists, identification of suppliers, data, plans, blueprints, specifications, designs, drawings, recorded knowledge, surveys,engineering reports, test reports, manuals, materials standards, processing standards, performance standards, catalogs, computer andautomatic machinery software and programs; (d) all field repair data, sales data and other information relating to sales or service ofproducts now or hereafter manufactured; (e) all accounting information and all media in which or on which any information orknowledge or data or records may be recorded or stored and all computer programs used for the compilation or printout of suchinformation, knowledge, records or data; (f) all licenses, consents, permits, variances, certifications and approvals of governmentalagencies now or hereafter held by any Obligor; and (g) all causes of action, claims and warranties now or hereafter owned or acquiredby any Obligor in respect of any of the items listed above.“Junior Collateral” means, (i) in the case of [A/R Lender], all Common Collateral consisting of CRG Senior Collateral and (ii)in the case of CRG Creditors, all Common Collateral consisting of A/R Facility Senior Collateral.“Obligor” means Borrower, each subsidiary thereof and each other person or entity that provides a guaranty of, or collateralfor, any Claim of any Creditor.“Proceeds Sweep Period” means the period beginning on the later to occur of (i) the occurrence of an event of default underany Creditor’s Credit Documents and (ii) receipt by the other Creditor of written notice from such Creditor of such event of default,and ending on the date on which such event of default shall have been waived in writing by the Creditor issuing such notice.“Senior Collateral” means, (i) in the case of [A/R Lender], all A/R Facility Senior Collateral and (ii) in the case of CRGCreditors, all CRG Senior Collateral.“UCC” means the Uniform Commercial Code of any applicable jurisdiction and, if the applicable jurisdiction shall not haveany Uniform Commercial Code, the Uniform Commercial Code as in effect in the State of New York. The following terms have themeanings given to them in the applicable UCC: “account”, “chattel paper”, “commodity account”, “deposit account”, “document”,“equipment”, “general intangible”, “instrument”, “inventory”, “proceeds” and “securities account”.14. Lien Subordination. Notwithstanding the respective dates of attachment or perfection of the security interests of CRG Creditorsand the security interests of [A/R Lender], or any contrary provision of the UCC, or any applicable law or decision, or the provisionsof the Credit Documents, and irrespective of whether [A/R Lender] or any CRG Creditor holds possession of all or any part of theCollateral, (i) all now existing and hereafter arising security interests of [A/[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-4 R Lender] in any A/R Facility Senior Collateral shall at all times be senior to the security interests of CRG Creditors in such A/RFacility Senior Collateral, and (ii) all now existing and hereafter arising security interests of CRG Creditors in any CRG SeniorCollateral shall at all times be senior to any interests, including the security interests of [A/R Lender] in such CRG Senior Collateral.Notwithstanding the foregoing, [A/R Lender] agrees and acknowledges that it shall not receive, and [neither Borrower nor any Obligorshall grant][Borrower shall not grant], any security interest to [A/R Lender] in the CRG Senior Collateral.(a) Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors:(i) acknowledges and consents to (A) [Borrower][each Obligor] granting to the other Creditor a security interest in theCommon Collateral of such other Creditor, (B) the other Creditor filing any and all financing statements and other documents asreasonably deemed necessary by the other Creditor in order to perfect its security interest in its Common Collateral, and (C)[Borrower’s][each Obligor’s] entry into the Credit Documents to which the other Creditor is a party.(ii) acknowledges, agrees and covenants, notwithstanding Section 2(c) but subject to Section 5, that it shall notcontest, challenge or dispute the validity, attachment, perfection, priority or enforceability of the other Creditor’s security interest in theCommon Collateral, or the validity, priority or enforceability of the other Creditor’s Claim. For the avoidance of doubt andnotwithstanding anything in this Agreement to the contrary, [A/R Lender] shall not file or join in any motion or pleading in connectionwith any Insolvency Proceeding or take any other action seeking to recharacterize any Intellectual Property, the proceeds thereof, orany other CRG Senior Collateral or proceeds thereof as A/R Facility Senior Collateral.(b) Subject to Section 2(b)(ii), the priorities provided for herein with respect to security interests and liens are applicable onlyto the extent that such security interests and liens are enforceable, perfected and have not been avoided; if a security interest or lien isjudicially determined to be unenforceable or unperfected or is judicially avoided with respect to one or more Claims or any part thereof,the priorities provided for herein shall not be available to such security interest or lien to the extent that it is avoided or determined to beunenforceable. Nothing in this Section 2(c) affects the operation of any turnover of payment provisions hereof, or of any otheragreements among any of the parties hereto.15. Distribution of Proceeds of Common Collateral. During each Proceeds Sweep Period, all proceeds including proceeds of anysale, exchange, collection, or other disposition of:(i) A/R Facility Senior Collateral shall be distributed first, to [A/R Lender], in an amount up to the amount of [A/RLender]’s Claim; then, to CRG Agent, in an amount up to the amount of CRG Creditors’ Claim;(ii) CRG Senior Collateral shall be distributed first, to CRG Agent, in an amount up to the amount of CRG Creditors’Claim; then, to [A/R Lender], in an amount up to the amount of [A/R Lender]’s Claim.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-5 (b) In the event that, notwithstanding Section 3(a), any Creditor shall during any Proceeds Sweep Period receive anypayment, distribution, security or proceeds constituting its Junior Collateral prior to the indefeasible payment in full of the other set ofCreditors’ Claims and termination of all commitments of the other set of Creditors under their Credit Documents, such Creditor shallhold in trust, for such other Creditor, such payment, distribution, security or proceeds, and shall deliver to such other Creditor, in theform received (with any necessary endorsements or as a court of competent jurisdiction may otherwise direct) such payment,distribution, security or proceeds for application to the other set of Creditors’ Claims in accordance with Section 3(a).(c) At all times other than during a Proceeds Sweep Period, all proceeds including proceeds of any sale, exchange, collection,or other disposition of Collateral shall be distributed or applied, as applicable, in accordance with the CRG Documents and the A/RFacility Documents.(d) Except as expressly set forth herein, nothing in this Section 3 shall obligate any Creditor (i) to sell, exchange, collect orotherwise dispose of Collateral at any time, or (ii) to take any action in violation of any stay imposed in connection with anyInsolvency Proceeding, including without limitation the automatic stay in Section 362(a) of the Bankruptcy Code, nor shall anyCreditor have any liability to the other arising from or in connection with such Creditor’s failure to take such action.16. Subordination of Remedies. Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors (such Person for purposes ofthis Section 4, the “Junior Creditor”), agrees, subject to Section 5, that, (i) unless and until all Claims of the other set of Creditors (forpurposes of this Section 4, the “Senior Creditor”) have been indefeasibly paid in full and all commitments of the Senior Creditor underits Credit Documents have been terminated, or (ii) until the expiration of a period of 180 days from the date of notice of default underthe Senior Creditor’s Credit Documents given by the Senior Creditor to the Junior Creditor, whichever is earlier, and whether or notany Insolvency Proceeding has been commenced by or against any Obligor, the Junior Creditor shall not, without the prior writtenconsent of the Senior Creditor, enforce, or attempt to enforce, any rights or remedies under or with respect to any of such JuniorCreditor’s Junior Collateral, including causing or compelling the pledge or delivery of such Junior Collateral, any attachment of, levyupon, execution against, foreclosure upon or the taking of other action against or institution of other proceedings with respect to anysuch Junior Collateral, notifying any account debtors of any Obligor, asserting any claim or interest in any insurance with respect tosuch Junior Collateral, or exercising any rights under any lockbox agreement, account control agreement, landlord waiver or bailee’sletter or similar agreement or arrangement with respect to such Junior Collateral, or institute or commence, or join with any person orentity in commencing, any action or proceeding with respect to such rights or remedies (including any action of foreclosure,enforcement, collection or execution and any Insolvency Proceeding involving any Obligor), except that notwithstanding theforegoing, at all times, including during a Proceeds Sweep Period, the Junior Creditor shall be able to exercise its rights under alockbox agreement or an account control agreement with respect to any deposit account, securities account or commodity accountconstituting Collateral, including its rights to freeze such account[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-6 or exercise any rights of offset; provided that any distribution or withdrawal from such account shall be applied in accordance withSection 3(a).17. Insolvency Proceedings. Rights Continue. In the event of any Obligor’s insolvency, reorganization or any case, action orproceeding, commenced by or against such Obligor, under any bankruptcy or insolvency law or laws relating to the relief of debtors,including, without limitation, any voluntary or involuntary bankruptcy (including any case commenced under the Bankruptcy Code),insolvency, receivership, liquidation, dissolution, winding-up or other similar statutory or common law proceeding or arrangementinvolving any Obligor, the readjustment of its liabilities, any assignment for the benefit of its creditors, or any marshalling of its assetsor liabilities (each, an “Insolvency Proceeding”), (i) this Agreement shall remain in full force and effect in accordance with Section510(a) of the United States Bankruptcy Code, and (ii) the Collateral shall include, without limitation, all Collateral arising during orafter any such Insolvency Proceeding (which Collateral shall be subject to the priorities set forth in this Agreement).(a) Proof of Claim, Sales and Plans. At any meeting of creditors or in the event of any Insolvency Proceeding, each Creditorshall retain the right to vote, file a proof of claim and otherwise act with respect to its Claims (including the right to vote to accept orreject any plan of partial or complete liquidation, reorganization, arrangement, composition, or extension (a “Plan”)); provided that (i)no Creditor shall initiate, prosecute or participate in any claim or action in such Insolvency Proceeding directly or indirectly challengingthe enforceability, validity, perfection or priority of the other set of Creditors’ Claims, this Agreement, the Credit Documents, or anyliens securing the other set of Creditors’ Claims; and (ii) no Creditor shall propose any Plan or file or join in any motion or pleading insupport of any motion or Plan or exercise any other voting rights unless such Plan provides for the treatment of the Creditors’ claims inaccordance with the terms of Section 5(g) and otherwise consistent with the terms of this Agreement, or that would otherwise impairthe timely repayment of the other set of Creditors’ Claims in accordance with its terms or impair or impede any rights of the other set ofCreditors.(b) Finance and Sale Issues. If any Obligor shall be subject to any Insolvency Proceeding and a Creditor shall desire topermit the use by such Obligor of cash collateral (as defined in Section 363(a) of the Bankruptcy Code, “Cash Collateral”)constituting such Creditor’s Senior Collateral or to permit any Obligor to obtain financing (including on a priming basis with respect tosuch Creditor’s Senior Collateral), whether from such Creditor or any other third party under Section 362, 363 or 364 of theBankruptcy Code or any other applicable law (each, a “Post-Petition Financing”), then the other set of Creditors shall not oppose orraise any objection to or contest (or join with or support any third party opposing, objecting to or contesting), such use of CashCollateral or Post-Petition Financing and shall not request adequate protection or any other relief in connection therewith (except asspecifically permitted under Section 5(e)); provided, however, that, notwithstanding the foregoing, each Creditor shall be entitled tooppose, raise objection to, or contest (or join with or support any third party opposing, objecting to, or contesting) any such use ofCash Collateral or Post-Petition Financing if such proposed use of Cash Collateral or Post-Petition Financing would result in any lienson such[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-7 Creditor’s Senior Collateral to be subordinated to or pari passu with such Cash Collateral or Post-Petition Financing.(i) Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors, agrees that it shall raise no objection to, andshall not oppose or contest (or join with or support any third party opposing, objecting to or contesting), a sale, revesting or otherdisposition of any Collateral constituting its Junior Collateral free and clear of its liens or other Claims, whether under Sections 363 or1141 of the Bankruptcy Code or other applicable law, if the other set of Creditors has consented to such sale or disposition of suchassets; provided, however, that, notwithstanding the foregoing and for the avoidance of doubt, any Creditor shall be entitled to oppose,raise objection to, or contest (or join with or support any third party opposing, objecting to, or contesting) any sale, revesting or otherdisposition of any Collateral constituting its Senior Collateral free and clear of its liens or other Claims.(c) Relief from the Automatic Stay. Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors, agrees that, untilthe other set of Creditors’ Claims have been indefeasibly paid in full, such Creditor shall not seek relief, pursuant to Section 362(d) ofthe Bankruptcy Code or otherwise, from the automatic stay of Section 362(a) of the Bankruptcy Code or from any other stay in anyInsolvency Proceeding in respect of its Junior Collateral without the prior written consent of such other Creditor.(d) Adequate Protection. [A/R Lender] agrees that it shall not:(i) oppose, object to or contest (or join with or support any third party opposing, objecting to or contesting) (A) anyrequest by CRG Agent for adequate protection in any Insolvency Proceeding (or any granting of such request), or (B) any objection byCRG Agent to any motion, relief, action or proceeding based on such Senior Creditor claiming a lack of adequate protection; or(ii) seek or accept any form of adequate protection under any of Sections 362, 363 and/or 364 of the Bankruptcy Codewith respect to the Collateral, except to the extent that, in the sole discretion of CRG Agent, the receipt by [A/R Lender] of any suchadequate protection would not reduce (or would not have the effect of reducing) or adversely affect the adequate protection that CRGCreditors otherwise would be entitled to receive, it being understood that, in any event, (y) no adequate protection shall be requested oraccepted by [A/R Lender] unless CRG Agent is satisfied in its sole discretion with the adequate protection afforded to CRG Creditors,and (z) any such adequate protection is in the form of a replacement lien on the Obligors’ assets, which lien shall be subordinated to theliens securing CRG Creditors’ Claims (including any replacement liens granted in respect of CRG Creditors’ Claims) and any Post-Petition Financing (and all obligations relating thereto) on the same basis as the other liens securing [A/R Lender]’s Claims are sosubordinated to the liens securing CRG Creditors’ Claims as set forth in this Agreement.(e) Post-Petition Interest. Each Creditor shall not oppose or seek to challenge any claim by the other set of Creditors forallowance in any Insolvency Proceeding of Claims[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-8 consisting of post-petition interest, fees or expenses; provided that the treatment of such Claims are consistent with the Creditors’relative priorities set forth in this Agreement.(f) Separate Class. Without limiting anything to the contrary contained herein or in the Credit Documents, each of [A/RLender] and CRG Agent, on behalf of CRG Creditors, acknowledges and agrees that (i) the grants of liens pursuant to the CRGDocuments and the A/R Facility Documents constitute two separate and distinct grants of liens, and (ii) because of, among otherthings, their differing rights in the Collateral, each set of Creditors’ Claims are fundamentally different from the other’s Claims andmust be separately classified in any Plan proposed or adopted in an Insolvency Proceeding. To further effectuate the intent of theparties as provided in the immediately preceding sentence, if it is held that the respective Claims of the Creditors in respect of theCollateral constitute only one secured claim (rather than separate classes of senior and junior secured claims), then each of [A/RLender] and CRG Agent, on behalf of CRG Creditors, acknowledges and agrees (x) that all distributions shall be made as if there wereseparate classes of senior and junior secured claims against the Obligors in respect of the Collateral, and (y) to turn over to the otherCreditor amounts otherwise received or receivable by it in the manner described in Section 3(b) to the extent necessary to effectuatethe intent of this sentence.(g) Waiver. Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors, waives any claim it may hereafter haveagainst the other set of Creditors arising out of the election by such other set of Creditors of the application to the claims of such otherset of Creditors of Section 1111(b)(2) of the Bankruptcy Code, and/or out of any Cash Collateral or Post-Petition Financingarrangement or out of any grant of a lien in connection with the Collateral in any Insolvency Proceeding.18. Notice of Default. Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors, shall give to the other prompt writtennotice of the occurrence of any default or event of default (which has not been promptly waived or cured) under any of its CreditDocuments of which it has knowledge (and any subsequent cure or waiver thereof) and shall, simultaneously with giving any notice ofdefault or acceleration to Borrower, provide to such other Creditor a copy of such notice of default. [A/R Lender] acknowledges andagrees that any event of default under the A/R Facility Documents shall be deemed to be an event of default under the CRGDocuments. For the avoidance of doubt, nothing in this Section 6 shall obligate any Creditor to provide any notice in violation of anystay imposed in connection with any Insolvency Proceeding, including without limitation the automatic stay in Section 362(a) of theBankruptcy Code, nor shall any Creditor have any liability to the other arising from or in connection with such Creditor’s failure totake such action.19. Release of Liens. In the event of any private or public sale or other disposition, by or with the consent of [A/R Lender] and CRGAgent, on behalf of CRG Creditors (such Person, for purposes of this Section 7, the “Senior Creditor”), of all or any portion of suchset of Creditors’ Senior Collateral, CRG Agent, on behalf of CRG Creditors, and [A/R Lender], respectively (for purposes of thisSection 7, the “Junior Creditor”), agrees that such sale or disposition shall be free and clear of such Junior Creditor’s liens; providedthat such sale or disposition is made in[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-9 accordance with the UCC or applicable provisions of the Bankruptcy Code, including without limitation Sections 363(f) or 1141(c) ofthe Bankruptcy Code. The Junior Creditor agrees that, in connection with any such sale or other disposition, (i) the Senior Creditor isauthorized to file any and all UCC and other applicable lien releases and/or terminations in respect of the liens held by the JuniorCreditor in connection with such a sale or other disposition, and (ii) it shall execute any and all lien releases or other documentsreasonably requested by the Senior Creditor in connection therewith.20. Attorney-In-Fact. Until the CRG Creditors’ Claims have been fully paid in cash and the CRG Creditors’ arrangements to lendany funds to the Obligors have been terminated, [A/R Lender] irrevocably appoints CRG Agent as [A/R Lender]’s attorney-in-fact,and grants to CRG Agent a power of attorney with full power of substitution (which power of attorney is coupled with an interest), inthe name of [A/R Lender] or in the name of CRG Agent, for the use and benefit of CRG Agent, without notice to [A/R Lender], toperform at CRG Agent’s option the following acts in any bankruptcy, insolvency or similar proceeding involving Borrower:(a) To file the appropriate claim or claims in respect of the [A/R Lender] Claims on behalf of [A/R Lender] if [A/R Lender]does not do so prior to 30 days before the expiration of the time to file claims in such proceeding and if CRG Agent elects, in its solediscretion, to file such claim or claims; and(b) To accept or reject any plan of reorganization or arrangement on behalf of [A/R Lender] and to otherwise vote [A/RLender]’s claims in respect of any [A/R Lender] Claim in any manner that CRG Agent deems appropriate for the enforcement of itsrights hereunder.21. Agent for Perfection. [A/R Lender] acknowledges that applicable provisions of the UCC may require, in order to properlyperfect CRG Creditors’ security interest in the Common Collateral securing the CRG Creditors’ Claims, that CRG Agent possesscertain of such Common Collateral, and may require the execution of control agreements in favor of CRG Agent concerning suchCommon Collateral. In order to help ensure that CRG Creditors’ security interest in such Common Collateral is properly perfected (butsubject to and without waiving the other provisions of this Agreement), [A/R Lender] agrees to hold both for itself and, solely for thepurposes of perfection and without incurring any duties or obligations to CRG Creditors as a result thereof or with respect thereto, forthe benefit of CRG Creditors, any such Common Collateral, and agrees that CRG Creditors’ lien in such Common Collateral shall bedeemed perfected in accordance with applicable law.22. Credit Documents. Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors, represents and warrants that it hasprovided to the other true, correct and complete copies of all Credit Documents which relate to its credit agreement.(a) At any time and from time to time, without notice to the other set of Creditors, each Creditor may take such actions withrespect to its Claims as such Creditor, in its sole discretion, may deem appropriate, including, without limitation, terminating advancesunder its Credit Documents, increasing the principal amount, extending the time of payment, increasing applicable interest to thedefault rate, renewing, compromising or otherwise amending the terms[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-10 of any documents affecting its Claims and any Collateral therefor, and enforcing or failing to enforce any rights against Borrower orany other person, and no such action or inaction described in this sentence shall impair or otherwise affect such Creditor’s rightshereunder; provided, however, that (i) no Creditor shall take any action that is inconsistent with the provisions of this Agreement, and(ii) [A/R Lender] shall not increase the portion of [A/R Lender]’s Claim consisting of principal to an amount in excess of$[__________] without the prior written consent of CRG Agent. Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors,waives the benefits, if any, of any statutory or common law rule that may permit a subordinating creditor to assert any defenses of asurety or guarantor, or that may give the subordinating creditor the right to require a senior creditor to marshal assets, and each of [A/RLender] and CRG Agent, on behalf of CRG Creditors, agrees that it shall not assert any such defenses or rights.(b) Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors, agrees that any other Creditor may release or refrainfrom enforcing its security interest in the Collateral, or permit the use or consumption of such Collateral by any Obligor free of theother Creditor’s security interest, without incurring any liability to any other Creditor.23. Waiver of Right to Require Marshaling. Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors, expresslywaives any right that it otherwise might have to require any other Creditor to marshal assets or to resort to Collateral in any particularorder or manner, whether provided for by common law or statute. No Creditor shall be required to enforce any guaranty or anysecurity interest or lien given by any person or entity as a condition precedent or concurrent to the taking of any Enforcement Actionwith respect to the Collateral.24. Representations and Warranties. Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors, represents and warrantsto the other that:(a) all action on the part of such Creditor, its officers, directors, partners, members and shareholders, as applicable, necessaryfor the authorization of this Agreement and the performance of all obligations of such Creditor hereunder has been taken;(b) this Agreement constitutes the legal, valid and binding obligation of such Creditor, enforceable against such Creditor inaccordance with its terms;(c) the execution, delivery and performance of and compliance with this Agreement by such Creditor will not (i) result in anymaterial violation or default of any term of any of such Creditor’s charter, formation or other organizational documents (such asArticles or Certificate of Incorporation, bylaws, partnership agreement, operating agreement, etc.) or (ii) violate any material applicablelaw, rule or regulation.25. Disgorgement. If, at any time after payment in full of the [A/R Lender] Claims any payments of the [A/R Lender] Claims mustbe disgorged by [A/R Lender] for any reason (including, without limitation, any Insolvency Proceeding), this Agreement and therelative rights and priorities set forth herein shall be reinstated as to all such disgorged payments as though such payments had not beenmade and CRG Creditors shall immediately pay over to [A/R Lender] all[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-11 money or funds received or retained by CRG Creditors with respect to the CRG Creditors’ Claims to the extent that such receipt orretention would have been prohibited hereunder.(a) If, at any time after payment in full of the CRG Creditors’ Claims any payments of the CRG Creditors’ Claims must bedisgorged by any CRG Creditor for any reason (including, without limitation, any Insolvency Proceeding), this Agreement and therelative rights and priorities set forth herein shall be reinstated as to all such disgorged payments as though such payments had not beenmade and [A/R Lender] shall immediately pay over to CRG Agent all money or funds received or retained by [A/R Lender] withrespect to the [A/R Lender] Claims to the extent that such receipt or retention would have been prohibited hereunder.26. Successors and Assigns. This Agreement shall bind any successors or assignees of each Creditor. This Agreement shall remaineffective until all Claims are indefeasibly paid or otherwise satisfied in full and [A/R Lender] and the CRG Creditors have nocommitment to extend credit under the Credit Documents. This Agreement is solely for the benefit of the Creditors and not for thebenefit of Borrower or any other party. Each Creditor shall not sell, assign, pledge, dispose of or otherwise transfer all or any portion ofits Claims or any of its Credit Documents or any interest in any Common Collateral unless, prior to the consummation of any suchaction, the transferee thereof shall execute and deliver to the other set of Creditors an agreement of such transferee to be bound hereby,or an agreement substantially identical to this Agreement providing for the continued subjection of such Claims, the interests of thetransferee in the Collateral and the remedies of the transferee with respect thereto as provided herein with respect to the transferringCreditor and for the continued effectiveness of all of the other rights of the other Creditor arising under this Agreement, in each case inform satisfactory to the other set of Creditors.27. Further Assurances. Each of [A/R Lender] and CRG Agent, on behalf of CRG Creditors, agrees to execute such documentsand/or take such further action as the other Creditor may at any time or times reasonably request in order to carry out the provisions andintent of this Agreement, including, without limitation, ratifications and confirmations of this Agreement from time to time hereafter, asand when requested by the other Creditor.28. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and allof which together shall constitute one instrument.29. Governing Law; Waiver of Jury Trial. This Agreement and the rights and obligations of the parties hereunder shall begoverned by, and construed in accordance with, the law of the State of New York without regard to principles of conflicts of laws thatwould result in the application of the laws of any other jurisdiction.(a) EACH CREDITOR WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTIONBASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATEDHEREIN.30. Entire Agreement. This Agreement represents the entire agreement with respect to the subject matter hereof, and supersedes allprior negotiations, agreements and commitments. Each[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-12 Creditor is not relying on any representations by the other Creditor, Borrower or any other Obligor in entering into this Agreement, andeach Creditor has kept and will continue to keep itself fully apprised of the financial and other condition of each Obligor. ThisAgreement may be amended only by written instrument signed by the Creditors.31. Relationship among Creditors. The relationship among the Creditors is, and at all times shall remain solely that of creditors ofObligors. Creditors shall not under any circumstances be construed to be partners or joint venturers of one another; nor shall theCreditors under any circumstances be deemed to be in a relationship of confidence or trust or a fiduciary relationship with one another,or to owe any fiduciary duty to one another. Creditors do not undertake or assume any responsibility or duty to one another to select,review, inspect, supervise, pass judgment upon or otherwise inform each other of any matter in connection with any Obligor’sproperty, any Collateral held by any Creditor or the operations of any Obligor. Each Creditor shall rely entirely on its own judgmentwith respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken orassumed by any Creditor in connection with such matters is solely for the protection of such Creditor.32. No Modification. Notwithstanding anything contained herein, no provision of this Agreement shall be deemed to waive, amend,limit or otherwise modify any term or condition of the CRG Credit Agreement and the A/R Facility Documents.33. Severability. Any provision of this Agreement which is illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as tosuch jurisdiction, be ineffective to the extent such illegality, invalidity, prohibition or unenforceability without invalidating or impairingthe remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.34. Notices. All notices, demands, instructions and other communications required or permitted to be given to or made upon anyparty hereto shall be in writing and shall be delivered or sent by first-class mail, postage prepaid, or by overnight courier or messengerservice or by facsimile, message confirmed, and shall be deemed to be effective for purposes of this Agreement on the day that deliveryis made or refused. Unless otherwise specified in a notice mailed or delivered in accordance with the foregoing sentence, notices,demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at theirrespective addresses and facsimile numbers indicated on the signature pages hereto.IN WITNESS WHEREOF, the undersigned have executed this Intercreditor Agreement as of the date first above written.[A/R Lender]:[INSERT NAME OF A/R LENDER]By _______________________________________Name: [__________]Title: [__________][†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-13 Address for Notices:[__________][__________][__________]Tel: [__________]Email: [__________]CRG AGENT:CRG SERVICING LLCBy _________________________________Name:Title:Address for Notices:1000 Main Street, Suite 2500Houston, TX 77002Attn: Portfolio ReportingTel.: 713.209.7350Fax: 713.209.7351Email: notices@crglp.comAcknowledged and Agreed to:BORROWER:NANOSTRING TECHNOLOGIES, INC.By:___________________________Name: [__________]Title: [__________]Address for Notices:[__________][__________]Attn: [__________]Tel.: [__________][†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-14 Fax: [__________]Email: [__________]][†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit H-15 Exhibit I-1 to Term Loan AgreementFORM OF DISCOUNTED PREPAYMENT OPTION NOTICEDate : [__________]Capital Royalty Partners II L.P. and the other Lenders1000 Main Street, Suite 2500Houston, TX 77002Attn: General CounselRe: Discounted Prepayment Option NoticeLadies and Gentlemen:This Discounted Prepayment Option Notice is delivered to you pursuant to Section 3.03(c)(ii) of that certain Amended and RestatedTerm Loan Agreement, dated as of October 12, 2018 (as amended, restated, supplemented or otherwise modified from time to time,the “Loan Agreement”), among NanoString Technologies, Inc., a Delaware corporation (“Borrower”), the certain lenders and CRGServicing LLC, a Delaware limited liability company, as administrative agent and collateral agent for such lenders (in such capacitiesand together with its successors and assigns, “CRG Agent”). Capitalized terms used herein and not otherwise defined herein are usedherein as defined in the Loan Agreement.The Borrower hereby notifies each Lender that it is seeking:1. to prepay the Loans at a discount in an aggregate principal amount of $[ ] (the “Proposed Discounted Prepayment Amount”);2. a percentage discount to the par value of the principal amount of Loans [greater than or equal to [ ]% of par value but less than orequal to [ ]% of par value][equal to [ ]% of par value] (the “Discount Range”); and3. a Lender Participation Notice on or before [ ] , as determined pursuant to Section 3.03(c)(iii) of the Loan Agreement (the“Acceptance Date”).The Borrower expressly agrees that this Discounted Prepayment Option Notice is subject to the provisions of Section 3.03(c) of theLoan Agreement.The Borrower hereby represents and warrants to the Lenders as follows:1. No Default has occurred and is continuing or would result from the Borrower making the Discounted Voluntary Prepayment.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit I-1-1 2. No Default has occurred with the six (6) months prior to the date of this Discounted Prepayment Option Notice.3. Neither Borrower nor any of its Affiliates has any material non-public information (“MNPI”) with respect to Borrower, itsSubsidiaries or the Loans that either (a) has not been disclosed to the Lenders, or (b) if not disclosed to the Lenders, could reasonablybe expected to have a material effect upon, or otherwise be material to (i) a Lender’s decision to participate in a Discounted VoluntaryPrepayment, or (ii) to the market price of the Loans.4. Borrower was not in breach of Section 10.02 of the Loan Agreement during the most recently completed twelve (12) month periodprior to the date of this Discounted Prepayment Option Notice.5. Each of the other conditions to the Discounted Voluntary Prepayment contained in Section 3.03(c) of the Loan Agreement hasbeen satisfied.IN WITNESS WHEREOF, the undersigned has executed this Discounted Prepayment Option Notice as of the date first abovewritten.NANOSTRING TECHNOLOGIES, INC.By: _______________________________Name:Title: [†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit I-1-2 Exhibit I-2 to Term Loan AgreementFORM OF LENDER PARTICIPATION NOTICEDate : [__________]NanoString Technologies, Inc.530 Fairview Avenue NorthSeattle, WA 98109Attention: Chief Financial OfficerCapital Royalty Partners II L.P. and the other Lenders1000 Main Street, Suite 2500Houston, TX 77002Attn: General CounselRe: Lender Participation NoticeLadies and GentlemenReference is made to (a) that certain Amended and Restated Term Loan Agreement, dated as of October 12, 2018 (as amended,restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among NanoString Technologies, Inc., aDelaware corporation (“Borrower”), the certain lenders and CRG Servicing LLC, a Delaware limited liability company, asadministrative agent and collateral agent for such lenders (in such capacities and together with its successors and assigns, “CRGAgent”), and (b) that certain Discounted Prepayment Option Notice, dated [ ], 20[ ], from the Borrower (the “Discounted PrepaymentOption Notice”). Capitalized terms used herein and not defined herein shall have the meaning ascribed to such terms in the LoanAgreement or the Discounted Prepayment Option Notice, as applicable.The undersigned Lender hereby gives you notice, pursuant to Section 3.03(c)(iii) of the Loan Agreement, that it is willing to accept aDiscounted Voluntary Prepayment on Loans held by such Lender:1. ______________________________ in a maximum aggregate principal amount of $[ ]and2. ______________________________ at a percentage discount to par value of the principal amount of Loans equal to [ ]% of parvalue (the “Acceptable Discount”).[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit I-2-1 The undersigned Lender expressly agrees that this offer is subject to the provisions of Section 3.03(c) of the Loan Agreement.Furthermore, conditioned upon the Applicable Discount determined pursuant to Section 3.03(c)(iii) of the Loan Agreement being apercentage of par value less than or equal to the Acceptable Discount, the undersigned Lender hereby expressly consents and agrees toa prepayment of its Loans pursuant to Section 3.03(c) of the Loan Agreement in an aggregate principal amount equal to the OfferedLoans, as such principal amount may be reduced if the aggregate proceeds required to prepay Qualifying Loans (disregarding anyinterest payable in connection with such Qualifying Loans) would exceed the aggregate proceeds required to prepay the ProposedDiscounted Prepayment Amount for the relevant Discounted Voluntary Prepayment, and acknowledges and agrees that suchprepayment of its Loans will be allocated at par value.IN WITNESS WHEREOF, the undersigned has executed this Lender Participation Notice as of the date first above written.[LENDER]By: _______________________________Name:Title: [†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit I-2-2 Exhibit I-3 to Term Loan AgreementFORM OF DISCOUNTED VOLUNTARY PREPAYMENT NOTICEDate : [__________]Capital Royalty Partners II L.P. and the other Lenders1000 Main Street, Suite 2500Houston, TX 77002Attn: General CounselRe: Discounted Voluntary Prepayment NoticeLadies and Gentlemen:This Discounted Voluntary Prepayment Notice is delivered to you pursuant to Section 3.03(c)(v) of that certain Amended and RestatedTerm Loan Agreement, dated as of October 12, 2018 (as amended, restated, supplemented or otherwise modified from time to time,the “Loan Agreement”), among NanoString Technologies, Inc., a Delaware corporation (“Borrower”), the certain lenders and CRGServicing LLC, a Delaware limited liability company, as administrative agent and collateral agent for such lenders (in such capacitiesand together with its successors and assigns, “CRG Agent”), and the subsidiary guarantors from time to time party thereto. Capitalizedterms used herein and not defined herein shall have the meaning ascribed to such terms in the Loan Agreement.The Borrower hereby irrevocably notifies you that, pursuant to Section 3.03(c)(v) of the Loan Agreement, the Borrower will make aDiscounted Voluntary Prepayment to each Qualifying Lender with Qualifying Loans, which shall be made:1. on or before [ ], 20[ ] , as determined pursuant to Section 3.03(c)(v) of the Loan Agreement,2. in the aggregate principal amount of $[ ] of Loans3. at a percentage discount to the par value of the principal amount of the Loans equal to [ ]% of par value (the “ApplicableDiscount”).The Borrower expressly agrees that this Discounted Voluntary Prepayment Notice is irrevocable and is subject to the provisions ofSection 3.03(c) of the Loan Agreement.The Borrower hereby represents and warrants to the Lenders as follows:1. No Default or Event of Default has occurred and is continuing or would result from the Borrower making the DiscountedVoluntary Prepayment.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit I-3-1 2. Neither Borrower nor any of its Affiliates has any material non-public information (“MNPI”) with respect to Borrower, itsSubsidiaries or the Loans that either (a) has not been disclosed to the Lenders, or (b) if not disclosed to the Lenders, could reasonablybe expected to be have a material effect upon, or otherwise be material to (i) a Lender’s decision to participate in a DiscountedVoluntary Prepayment, or (ii) to the market price of the Loans.3. Each of the other conditions to the Discounted Voluntary Prepayment contained in Section 3.03(c) of the Loan Agreement hasbeen satisfied.The Borrower agrees that if prior to the date of the Discounted Voluntary Prepayment, any representation or warranty made herein byit will not be true and correct as of the date of the Discounted Voluntary Prepayment as if then made, it will promptly notify theLenders.IN WITNESS WHEREOF, the undersigned has executed this Discounted Voluntary Prepayment Notice as of the date firstabove written.NANOSTRING TECHNOLOGIES, INC.By: _______________________________Name:Title:[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit I-3-2 Exhibit J to Term Loan AgreementFORM OF NON-DISTURBANCE AGREEMENTTHIS AGREEMENT, dated as of [INSERT DATE], by and among [INSERT NAME OF BORROWER OR OTHERGRANTOR] (“Licensor”) and [INSERT NAME OF LICENSEE] (“Licensee”), as parties to the License Agreement (as definedbelow), and the Administrative Agent (as defined below) as the holder of the Security Interest (as defined below).W I T N E S S E T H:WHEREAS, Licensor and Licensee [are parties to/will enter into] that certain [License Agreement] [dated [as of/on or about][INSERT DATE] (the “License Agreement”), providing for a collaboration, license, joint venture, partnership, royalty agreement orsimilar agreement or other research, development, manufacturing or other commercial exploitation arrangement with respect to certainintellectual property and other property owned or controlled by Licensor (the “Licensed Property”) for the term and upon theconditions set forth therein; andWHEREAS, Licensor has entered into that certain Amended and Restated Term Loan Agreement, dated as of October 12,2018 (as amended, restated, supplemented or otherwise modified from time to time, the “CRG Credit Agreement”), with certainlenders and CRG Servicing LLC, a Delaware limited liability company, as administrative agent and collateral agent for such lenders(in such capacities and together with its successors and assigns, “CRG Agent”), pursuant to which Licensor has granted to the SecuredParties (as defined therein) a security interest in some or all of the Licensed Property (the “Security Interest”); andWHEREAS, Licensee has requested that the Administrative Agent agree not to disturb any of Licensee’s rights with respect tothe Licensed Property granted under the License Agreement (the “Licensee Rights”) in the event that upon an Event of Default (assuch term is used in the Loan Documents), the Administrative Agent or any Secured Party takes possession of, sells, assigns, grants alicense with respect to or otherwise exercises its rights and remedies under the Loan Documents with respect to all or any portion of thecollateral constituting Licensed Property (in each case, a “Foreclosure”).NOW, THEREFORE, in consideration for the foregoing and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, and of the mutual benefits to accrue to the parties hereto, it is hereby declared,understood and agreed as follows:1. The Administrative Agent, acting on its own behalf and on behalf of the other Secured Parties, acknowledges that it has receivedand reviewed a copy of the License Agreement attached hereto as Exhibit A. To the extent consent is required under the LoanDocuments for Licensor to execute, deliver or perform under the License Agreement, the Administrative Agent, acting on its ownbehalf and on behalf of the other Secured Parties, consents to Licensor’s execution, delivery and performance of the LicenseAgreement attached hereto as Exhibit A, provided that such consent shall not extend to Licensor’s execution, delivery andperformance of[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit J-1 an amended License Agreement that (A) is materially different from the form attached hereto as Exhibit A, or (B) would constitute abreach or default under the Loan Documents. Licensee acknowledges that the Licensed Property and the License Agreement willconstitute Collateral under the Security Agreement [and][,] consents to the Security Interest [, and consents to the transfer of theLicensed Property and the License Agreement in connection with any Foreclosure subject to the provisions of Section 2 hereof].2. In the event of a Foreclosure, it is agreed as follows:(a) Any transfer of Licensor’s rights in the Licensed Property or the License Agreement to Secured Parties or any otherpurchaser at a secured parties’ sale or other disposition (any such transferee of the Licensed Property, a “Successor Licensor”) shall besubject to and not free and clear of the Licensee Rights and none of the Licensee Rights shall be discharged, waived, modified,impaired or terminated solely as a result of such transfer of the Licensed Property, in each case subject to the terms of Section 2(b) andSection 2(d).(b) Provided that (i) the License Agreement is in full force and effect and (ii) Licensee is not in default or breach of theLicense Agreement in a manner that would permit the Licensor to terminate the License Rights, (x) neither Secured Parties nor anySuccessor Licensor will disturb, diminish or interfere with the Licensee Rights, including, without limitation, any sublicenses grantedor permitted to be granted thereunder, and (y) the Administrative Agent, on behalf of itself and the other Secured Parties, undertakesthat it shall notify any Successor Licensor of Licensee’s rights to use the Licensed Property (including, if applicable, any rights to useLicensed Property on an exclusive basis) described in the License Agreement and cause the Successor Licensor to acknowledge thesame.(c) Subject solely to the limitations set forth in Sections 2(a) and (b), the Secured Parties and any Successor Licensor shallhave any rights of Licensor in the Licensed Property and the License Agreement to the extent such rights were transferred to SecuredParties or Successor Licensor by operation of the Foreclosure or applicable law.(d) Notwithstanding the foregoing, except to the extent expressly undertaken in writing, neither Secured Parties nor anySuccessor Licensor who acquires an interest in the Licensed Property or the License Agreement as a result of any such Foreclosure orother enforcement action or proceeding (the date on which the Secured Parties, Successor Licensor, or such other party acquires suchinterest, hereinafter called the “Acquisition Date”) shall be (i) liable for any act or omission of Licensor under the License Agreementor otherwise or for any damages arising as a result of a breach of the License Agreement by the Licensor (and Licensee shall have noright to offset against royalties due to the Successor Licensor under the License Agreement or any other defenses that Licensee wouldhave against Licensor); (ii) liable for the return of any payments made by the Licensee to the Licensor under the License Agreementprior to the Acquisition Date; or (iii) required to perform or be liable for any affirmative obligations or covenants of the Licensor underthe License Agreement, or liable for any of the representations or warranties of the Licensor under the License Agreement, or liable forany indemnities of the Licensor (other than, with respect to any Successor Licensor, any violation by the Successor[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit J-2 Licensor of any exclusive rights of Licensee to use the Licensee Rights after the Acquisition Date).3. This Agreement is for the express benefit of Licensee, any of its successors-in-interest, and any of its sublicensees under theLicense Agreement.4. This Agreement may be executed in one or more counterparts, all of which when taken together shall constitute a singleinstrument.5. This Agreement was prepared in the English language, which language shall govern the interpretation of, and any disputeregarding, the terms of this Agreement. This Agreement and all disputes arising out of or related to this Agreement or any breachhereof shall be governed by and construed under the laws of the State of New York, without giving effect to any choice of lawprinciples that would require the application of the laws of a different state.IN WITNESS WHEREOF, the undersigned have executed this instrument as of the day and year first above written.[INSERT NAME OF LICENSEE], as LicenseeBy _______________________________Name:Title:NANOSTRING TECHNOLOGIES, INC., as LicensorBy _______________________________Name:Title:CRG SERVICING LLCBy _______________________________Name:Title:[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit J-3 EXHIBIT A to Non-Disturbance AgreementLICENSE AGREEMENT[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit J-4 Exhibit 10.39AMENDED AND RESTATED LOAN AND SECURITY AGREEMENTTHIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of November 16, 2018 (the “EffectiveDate”) between SILICON VALLEY BANK, a California corporation (“Bank”), and NANOSTRING TECHNOLOGIES, INC., a Delaware corporation(“Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank.RECITALSA. Bank and Borrower entered into that certain Loan and Security Agreement (as the same has been amended, modified, supplemented, renewed, orotherwise modified, from time to time, the “Prior Loan Agreement”) dated as of January 5, 2018 (the “Prior Loan Agreement Effective Date”).B. Borrower has requested, and Bank has agreed to replace, amend and restate the Prior Loan Agreement in its entirety.AGREEMENTThe parties hereby agree that the Prior Loan Agreement is hereby amended, restated, and replaced in its entirety as follows:1. ACCOUNTING AND OTHER TERMSAccounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made followingGAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in thisAgreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.2. LOAN AND TERMS OF PAYMENT2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions andaccrued and unpaid interest thereon as and when due in accordance with this Agreement.2.2 Revolving Line.(a)Availability. Subject to the terms and conditions of this Agreement and to deduction of Reserves, Bank shall make Advancesnot exceeding the Availability Amount. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date,reborrowed, subject to the applicable terms and conditions precedent herein.(b)Termination; Repayment. The Revolving Line terminates on the Revolving Line Maturity Date or upon termination byBorrower subject to Section 12.1, when the principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the RevolvingLine shall be immediately due and payable, including the fees set forth in Section 2.5(d).2.3 Overadvances. If, at any time, the outstanding principal amount of any Advances exceeds the lesser of either the Revolving Line or theBorrowing Base, Borrower shall immediately pay to Bank in cash the amount of such excess (such excess, the “Overadvance”). Without limiting Borrower’sobligation to repay Bank any Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at a per annumrate equal to the rate that is otherwise applicable to Advances plus five percent (5.0%).2.4 Payment of Interest on the Credit Extensions.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION (a)Interest Rate. Subject to Section 2.4(b), the principal amount outstanding under the Revolving Line shall accrue interest at afloating per annum rate equal to the greater of (i) one half of one percent (0.50%) above the Prime Rate, and (ii) four and three quarters of one percent(4.75%), which interest shall be payable monthly in accordance with Section 2.4(d) below.(b)Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bearinterest at a rate per annum which is four percent (4.0%) above the rate that is otherwise applicable thereto (the “Default Rate”) unless Bank elects to imposea smaller increase in its sole discretion. Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, withoutlimitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations. Payment oracceptance of the increased interest rate provided in this Section 2.4(b) is not a permitted alternative to timely payment and shall not constitute a waiver ofany Event of Default or otherwise prejudice or limit any rights or remedies of Bank.(c)Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall beeffective on the effective date of any change to the Prime Rate and to the extent of any such change.(d)Payment; Interest Computation. Interest is payable monthly on the Payment Date of each month and shall be computed on thebasis of a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after 12:00 p.m. Pacific time on any day shallbe deemed received at the opening of business on the next Business Day, and (ii) the date of the making of any Credit Extension shall be included and thedate of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be includedin computing interest on such Credit Extension.2.5 Fees. Borrower shall pay to Bank:(a)Intentionally Omitted.(b)Amendment Fee and First Anniversary Fee. (i) A fully earned, non-refundable amendment fee of Eighty-Seven Thousand FiveHundred Dollars ($87,500) (the “Amendment Fee”) is earned as of, and due and payable on, the Effective Date; and (ii) a fully earned, non-refundableanniversary fee of One Hundred Thousand Dollars ($100,000) (the “First Anniversary Fee”) is earned as of the Effective Date and is due and payable on theearlier to occur of (i) the one (1) year anniversary of the Effective Date, (ii) the termination of this Agreement or (iii) the occurrence of an Event of Default;(c)Second Anniversary Fee. A fully earned, non-refundable anniversary fee of One Hundred Thousand Dollars ($100,000) (the“Second Anniversary Fee”, and together with the First Anniversary Fee, collectively, the “Anniversary Fees”) is earned as of the Effective Date and is dueand payable on the earlier to occur of (i) the two (2) year anniversary of the Effective Date, (ii) the termination of this Agreement or (iii) the occurrence of anEvent of Default.(d)Termination Fee. Upon termination of this Agreement or the termination of the Revolving Line for any reason prior to theRevolving Line Maturity Date, in addition to the payment of any other amounts then-owing, a termination fee in an amount equal to (1) Four HundredThousand Dollars ($400,000) if terminated on or before November 16, 2020, or (2) Two Hundred Thousand Dollars ($200,000) if terminated on or afterNovember 16, 2020 and prior to the Revolving Line Maturity Date provided that no termination fee shall be charged if the credit facility hereunder isreplaced with a new facility from Bank.(e)Good Faith Deposit. Borrower has paid to Bank a deposit of Twenty-Five Thousand Dollars ($25,000) (the “Good FaithDeposit”) to initiate Bank’s due diligence review process. Any portion of the Good Faith Deposit not utilized to pay Bank Expenses through the EffectiveDate will be applied to the Amendment Fee.(f)Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation ofthis Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank).(g)Fees Fully Earned. Unless otherwise provided in this Agreement or in a separate writing by Bank, Borrower shall not be entitledto any credit, rebate, or repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination of this Agreement or thesuspension or termination of Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under the clauses ofthis Section 2.5 pursuant to the terms of Section 2.6(c). Bank shall provide Borrower written notice of deductions made from the Designated Deposit Accountpursuant to the terms of the clauses of this Section 2.52.6 Payments; Application of Payments; Debit of Accounts.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION (a)All payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars,without setoff or counterclaim, before 12:00 p.m. Pacific time on the date when due. Payments of principal and/or interest received after 12:00 p.m. Pacifictime are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the paymentshall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.(b)Bank has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may beapplied. Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made byBorrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this Agreement.(c)Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interestpayments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off.2.7 Withholding. Payments received by Bank from Borrower under this Agreement will be made free and clear of and without deduction for anyand all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority(including any interest, additions to tax or penalties applicable thereto). Specifically, however, if at any time any Governmental Authority, applicable law,regulation or international agreement requires Borrower to make any withholding or deduction from any such payment or other sum payable hereunder toBank, Borrower hereby covenants and agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will beincreased to the extent necessary to ensure that, after the making of such required withholding or deduction, Bank receives a net sum equal to the sum whichit would have received had no withholding or deduction been required, and Borrower shall pay the full amount withheld or deducted to the relevantGovernmental Authority. Borrower will, upon request, furnish Bank with proof reasonably satisfactory to Bank indicating that Borrower has made suchwithholding payment; provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment iscontested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Borrower. The agreementsand obligations of Borrower contained in this Section 2.7 shall survive the termination of this Agreement.3. CONDITIONS OF LOANS3.1 Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition precedentthat Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonablydeem necessary or appropriate, including, without limitation:(a)duly executed signatures to this Agreement;(b)the completion of the Initial Audit;(c)with respect to the initial Advance, a completed Borrowing Base Statement (and any schedules related thereto and includingany other information requested by Bank with respect to Borrower’s Accounts); and(d)payment of the fees and Bank Expenses then due as specified in Section 2.5 hereof.3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit Extension, issubject to the following conditions precedent:(a)timely receipt of the Credit Extension request and any materials and documents required by Section 3.4;(b)the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date ofthe proposed Credit Extension, and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicableto any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representationsand warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shallhave occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that therepresentations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided, however, that such materialityqualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided,further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of suchdate; and[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION (c)Bank determines to its satisfaction that there has not been any Material Adverse Change.3.3 Covenant to Deliver. Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a conditionprecedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not constitutea waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit Extension in the absence of a required item shall be in Bank’ssole discretion.3.4 Procedures for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in thisAgreement, to obtain an Advance, Borrower (via an individual duly authorized by an Administrator) shall notify Bank (which notice shall be irrevocable) byelectronic mail by 12:00 p.m. Pacific time on the Funding Date of the Advance. Such notice shall be made by Borrower through Bank’s online bankingprogram, provided, however, if Borrower is not utilizing Bank’s online banking program, then such notice shall be in a written format acceptable to Bank thatis executed by an Authorized Signer. Bank shall have received satisfactory evidence that the Board has approved that such Authorized Signer may providesuch notices and request Advances. In connection with any such notification, Borrower must promptly deliver to Bank by electronic mail or through Bank’sonline banking program such reports and information, including without limitation, sales journals, cash receipts journals, accounts receivable aging reports,as Bank may request in its sole discretion. Bank shall credit proceeds of an Advance to the Designated Deposit Account. Bank may make Advances underthis Agreement based on instructions from an Authorized Signer or without instructions if the Advances are necessary to meet Obligations which havebecome due.4. CREATION OF SECURITY INTEREST4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations (other thaninchoate indemnity obligations), a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafteracquired or arising, and all proceeds and products thereof.Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of theterms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder andthat it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security interest in the Collateral granted herein(subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien in this Agreement).If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations andBank Services obligations that are fully cash collateralized as set forth in this Section 4.1) are repaid in full in cash. Upon payment in full in cash of theObligations (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at thesole cost and expense of Borrower, promptly terminate the security interest granted herein and release its Liens in the Collateral and all rights therein shallrevert to Borrower. In the event (x) all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) thisAgreement is terminated, Bank shall terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its goodfaith business judgment for Bank Services, if any. In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to Bankcash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one hundred five percent (105.0%); and (y) if suchLetters of Credit are denominated in a Foreign Currency, then at least one hundred ten percent (110.0%), of the Dollar Equivalent of the face amount of allsuch Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith businessjudgment), to secure all of the Obligations relating to such Letters of Credit.4.2 Priority of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all timescontinue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that are permitted pursuant to the terms of thisAgreement to have superior priority to Bank’s Lien under this Agreement and subject to the CRG Intercreditor Agreement).4.3 Authorization to File Financing Statements. Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, withall appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral in violation ofthis Agreement, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code.5. REPRESENTATIONS AND WARRANTIESBorrower represents and warrants as follows:5.1 Due Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing as a Registered Organization in itsjurisdiction of formation and is qualified and licensed to do business and is in good standing[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could notreasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has delivered to Bank acompleted certificate signed by Borrower, entitled “Perfection Certificate” (the “Perfection Certificate”). Borrower represents and warrants to Bank that(a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the typeand is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizationalidentification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if morethan one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each of itspredecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assignedby its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate andcomplete in all material respects (it being understood and agreed that Borrower may from time to time update certain information in the Perfection Certificateafter the Effective Date to the extent permitted by one or more specific provisions in this Agreement). Bank hereby agrees that the Perfection Certificate shallbe deemed to be updated to reflect information provided in any notice delivered by Borrower to Bank as required pursuant to Section 6.2(i) or Section 7.2below.The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not(i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement ofLaw, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority bywhich Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, orqualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtainedand are in full force and effect or are being obtained pursuant to Section 6.1(b)), or (v) conflict with, contravene, constitute a default or breach under, or resultin or permit the termination or acceleration of, any material agreement by which Borrower is bound. Borrower is not in default under any agreement to whichit is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrower’s business.5.2 Collateral. Borrower has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lienhereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no Collateral Accounts at or with any bank or financial institution otherthan Bank or Bank’s Affiliates except for the Collateral Accounts described in the Perfection Certificate delivered to Bank in connection herewith and whichBorrower has taken such actions as requested by Bank to give Bank a perfected security interest therein, pursuant to the terms of Section 6.8(b) (and upondelivery of such notice the Perfection Certificate will be deemed to be updated with the information contained in such notice). The Accounts are bona fide,existing obligations of the Account Debtors.The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate.None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as permitted pursuant toSection 7.2.All Inventory is in all material respects of good and marketable quality, free from material defects.Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for licenses granted to its customers in the ordinarycourse of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual Property licensed to Borrower andnoted on the Perfection Certificate (as may be updated from time to time pursuant to Section 6.8(b)). Each Patent which it owns or purports to own and whichis material to Borrower’s business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which ismaterial to Borrower’s business has been judged invalid or unenforceable, in whole or in part. To the best of Borrower’s knowledge, no claim has been madethat any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be expected to have amaterial adverse effect on Borrower’s business.Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.5.3 Accounts Receivable.(a)For each Account with respect to which Advances are requested, on the date each Advance is requested and made, such Accountshall be an Eligible Account.(b)All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing theEligible Accounts are and shall be true and correct and all such invoices, instruments and other documents, and all of Borrower’s Books are genuine and inall respects what they purport to be. All sales and other transactions underlying or giving rise to each Eligible Account shall comply in all material respectswith all applicable laws and[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts areEligible Accounts in any Borrowing Base Statement. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments,and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance withtheir terms.(c)For any item of Inventory consisting of Eligible Inventory in any Borrowing Base Report, such Inventory (i) consists of finishedgoods, in good, new, and salable condition, which is not perishable, returned, consigned, obsolete, not sellable, damaged, or defective, and is not comprisedof demonstrative or custom inventory, works in progress, packaging or shipping materials, or supplies; (ii) meets all applicable governmental standards in allmaterial respects; (iii) has been manufactured in compliance with the Fair Labor Standards Act; (iv) is not subject to any Liens, except the first priority Liensgranted or in favor of Bank under this Agreement or any of the other Loan Documents and Permitted Liens; and (v) is located in the United States at thelocations identified by Borrower in the Perfection Certificate where it maintains Inventory (or at any location permitted under Section 7.2).5.4 Litigation. Except as may be disclosed to Bank pursuant to Section 6.2(i), there are no actions or proceedings pending or, to the knowledge ofany Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, FiveHundred Thousand Dollars ($500,000).5.5 Financial Statements; Financial Condition. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bankby submission to the Financial Statement Repository or otherwise submitted to Bank fairly present in all material respects Borrower’s consolidated financialcondition and Borrower’s consolidated results of operations as of the dates and for the periods presented (subject to year-end adjustments and the absence offootnotes). There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statementssubmitted to the Financial Statement Repository or otherwise submitted to Bank.5.6 Solvency. The fair salable value of Borrower’s consolidated assets (including goodwill minus disposition costs) exceeds the fair value ofBorrower’s liabilities as they mature; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to payits debts (including trade debts) as they mature.5.7 Regulatory Compliance. Borrower is not an “investment company” or a company “controlled” by an “investment company” under theInvestment Company Act of 1940, as amended. Borrower is not engaged as one of its important activities in extending credit for margin stock (underRegulations X, T and U of the Federal Reserve Board of Governors). Borrower (a) has complied in all material respects with all Requirements of Law, and(b) has not violated any Requirements of Law the violation of which could reasonably be expected to have a material adverse effect on its business. None ofBorrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previousPersons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries haveobtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that arenecessary to continue their respective businesses as currently conducted, except where failure to obtain or make such consents, declarations, filings or noticescould not reasonably be expected to have a material adverse effect on Borrower’s business.5.8 Subsidiaries; Investments. Borrower does not own any stock, partnership, or other ownership interest or other equity securities except forPermitted Investments.5.9 Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports or extensions thereof, andBorrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except (a) to the extent suchtaxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriateprovision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions donot, individually or in the aggregate, exceed Fifty Thousand Dollars ($50,000).To the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and anymaterial development in, the proceedings, and (ii) post bonds or take any other steps required to prevent the Governmental Authority levying such contestedtaxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien.” Borrower is unaware of any claims or adjustments proposed forany of Borrower’s prior tax years which could result in additional taxes becoming due and payable by Borrower in excess of Fifty Thousand Dollars($50,000). Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with theirterms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of anyother event with respect to, any such plan which could reasonably be[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any othergovernmental agency.5.10 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as working capital and to fund its general businessrequirements and not for personal, family, household or agricultural purposes.5.11 Full Disclosure. No written representation, warranty or other statement of Borrower in any report, certificate, or written statement submitted tothe Financial Statement Repository or otherwise submitted to Bank, as of the date such representation, warranty, or other statement was made, taken togetherwith all such written reports, written certificates, and written statements submitted to the Financial Statement Repository or otherwise submitted to Bank,contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the written reports, writtencertificates, or written statements not misleading when made (it being recognized by Bank that the projections and forecasts provided by Borrower in goodfaith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections andforecasts may differ from the projected or forecasted results).5.12 Definition of “Knowledge.” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s knowledge orawareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonableinvestigation, of any Responsible Officer.6. AFFIRMATIVE COVENANTSBorrower shall do all of the following:6.1 Government Compliance.(a)Maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation andmaintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower’sbusiness or operations. Borrower shall comply, and have each Subsidiary comply, in all material respects, with all laws, ordinances and regulations to whichit is subject, except to the extent noncompliance with which could not reasonably be expected to have a material adverse effect on Borrower’s business.(b)Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the LoanDocuments to which it is a party and the grant of a security interest to Bank in all of the Collateral. Borrower shall promptly provide copies of any suchobtained Governmental Approvals to Bank.6.2 Financial Statements, Reports. Provide Bank with the following by submitting to the Financial Statement Repository or otherwise submittingto Bank:(a)a Borrowing Base Statement accompanied by a detailed accounts receivable ledger (and any schedules related thereto andincluding any other information requested by Bank with respect to Borrower’s Accounts) (i) with each request for an Advance, (ii) no later than Friday of eachweek when a Streamline Period is not in effect and any Advances are outstanding, (iii) within thirty (30) days after the end of each month when a StreamlinePeriod is in effect and any Advances are outstanding, and (iv) within forty-five (45) days after the end of each fiscal quarter of Borrower when no Advancesare outstanding;(b)within forty-five (45) days after the end of each fiscal quarter of Borrower, (A) accounts receivable agings, aged by invoice date,(B) accounts payable agings, aged by invoice date, and (C) if any Advances are outstanding, reconciliations of accounts receivable agings (aged by invoicedate), general ledger, detailed accounts receivable ledger, and detailed listing of Account Debtors, and (D) monthly perpetual inventory reports for Inventoryvalued on a first-in, first-out basis at the lower of cost or market (in accordance with GAAP) or such other inventory reports as are requested by Bank in itsgood faith business judgment;(c)as soon as available, but no later than forty-five (45) days after the end of each fiscal quarter of Borrower (except for the fourth(4th) fiscal quarter of each fiscal year), a consolidated balance sheet and income statement covering Borrower’s consolidated operations for such fiscal in formconsistent with such reports filed with the SEC (the “Quarterly Financial Statements”);(d)within forty-five (45) days after the end of each fiscal quarter of Borrower and together with the Quarterly Financial Statements,a completed Compliance Statement, confirming that, as of the end of such fiscal quarter, Borrower was in full compliance with all of the terms and conditionsof this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information asBank may reasonably request;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION (e)within sixty (60) days after the end of each fiscal year of Borrower, and contemporaneously with any updates or amendmentsthereto, (A) annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for the upcoming fiscal year ofBorrower, and (B) annual financial projections for the subsequent fiscal year, in each case as approved by the Board, together with any related businessforecasts presented together with such annual financial projections (for example, Borrower shall deliver its operating budget and financial projections for itsfiscal year ending December 31, 2018 within 60 days after the last day of its fiscal year ending December 31, 2017);(f)as soon as available, and in any event within ninety (90) days following the end of Borrower’s fiscal year, annual consolidatedfinancial statements covering Borrower’s consolidated operations for such fiscal in form consistent with such reports filed with the SEC;(g)prompt written notice of any changes to the beneficial ownership information set out in Item 13 of the Perfection Certificate.Borrower understands and acknowledges that Bank relies on such true, accurate and up-to-date beneficial ownership information to meet Bank’s regulatoryobligations to obtain, verify and record information about the beneficial owners of its legal entity customers;(h)within five (5) days of filing, copies of all periodic and other reports, proxy statements and other materials filed by Borrowerand/or any Guarantor with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national securitiesexchange, or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the terms hereof (to the extent any suchdocuments are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have beendelivered on the date on which Borrower posts such documents on Borrower’s website on the internet at Borrower’s website address, or provides a link orother access thereto to an email account specified by Bank;(i)within five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s security holders or toany holders of Subordinated Debt;(j)prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could resultin damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Five Hundred Thousand Dollars ($500,000) or more;(k)together with the next Compliance Statement to be delivered after the closing of any Permitted Commercialization Arrangementfor which the value of the cash and tangible property Investments by Borrower (valued at cost) would exceed Two Million Five Hundred Thousand Dollars($2,500,000), executed copies of the transaction documents for such Permitted Commercialization Arrangement; and(l)promptly, from time to time, such other information regarding Borrower or compliance with the terms of any Loan Documents asreasonably requested by Bank.Any submission by Borrower of a Compliance Statement, a Borrowing Base Statement or any other financial statement submitted to the Financial StatementRepository pursuant to this Section 6.2 or otherwise submitted to Bank shall be deemed to be a representation by Borrower that (i) as of the date of suchCompliance Statement, Borrowing Base Statement or other financial statement, the information and calculations set forth therein are true, accurate andcorrect, (ii) as of the end of the compliance period set forth in such submission, Borrower is in complete compliance with all required covenants except asnoted in such Compliance Statement, Borrowing Base Statement or other financial statement, as applicable, (iii) as of the date of such submission, no Eventsof Default have occurred or are continuing, (iv) all representations and warranties other than any representations or warranties that are made as of a specificdate in Section 5 remain true and correct in all material respects as of the date of such submission except as noted in such Compliance Statement, BorrowingBase Statement or other financial statement, as applicable, (v) as of the date of such submission, Borrower and each of its Subsidiaries has timely filed allrequired tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed byBorrower except as otherwise permitted pursuant to the terms of Section 5.9, and (vi) as of the date of such submission, no Liens have been levied or claimsmade against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided writtennotification to Bank.6.3 Accounts Receivable.(a)Schedules and Documents Relating to Accounts. Borrower shall deliver to Bank transaction reports and schedules ofcollections, as provided in Section 6.2, on Bank’s standard forms; provided, however, that Borrower’s failure to execute and deliver the same shall not affector limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to advance or lend against a specific Account affect or limitBank’s Lien and other rights therein. If reasonably requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request, originals) of allcontracts, orders, invoices,[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale ordisposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on its reasonable request, the originals of all instruments, chattelpaper, security agreements, guarantees and other documents and property evidencing or securing any Accounts, in the same form as received, with allnecessary indorsements, and copies of all credit memos.(b)Disputes. Borrower shall promptly notify Bank of all disputes or claims relating to Accounts in excess of Five HundredThousand Dollars ($500,000). Borrower may forgive (completely or partially), compromise, or settle any Account for less than payment in full, or agree to doany of the foregoing so long as (i) Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, in arm’s-lengthtransactions, and reports the same in excess of Fifty Thousand Dollars ($50,000) to Bank in the regular reports provided to Bank; (ii) no Event of Default hasoccurred and is continuing; and (iii) after taking into account all such discounts, settlements and forgiveness, the total outstanding Advances will not exceedthe lesser of the Revolving Line or the Borrowing Base.(c)Collection of Accounts. Borrower shall direct Account Debtors to deliver or transmit all proceeds of Accounts into a lockboxaccount, or such other “blocked account” as specified by Bank (either such account, the “Cash Collateral Account”). Whether or not an Event of Default hasoccurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts to the Cash Collateral Account. Subject to Bank’sright to maintain a reserve pursuant to Section 6.3(d), all amounts received in the Cash Collateral Account shall be (i) when a Streamline Period is not ineffect, applied to immediately reduce the Obligations under the Revolving Line (unless Bank, in its sole discretion, at times when an Event of Default exists,elects not to so apply such amounts), or (ii) when a Streamline Period is in effect, transferred on a daily basis to Borrower’s operating account with Bank.Borrower hereby authorizes Bank to transfer to the Cash Collateral Account any amounts that Bank reasonably determines are proceeds of the Accounts(provided that Bank is under no obligation to do so and this allowance shall in no event relieve Borrower of its obligations hereunder).(d)Reserves. Notwithstanding any terms in this Agreement to the contrary, at times when an Event of Default exists, Bank mayhold any proceeds of the Accounts and any amounts in the Cash Collateral Account that are not applied to the Obligations pursuant to Section 6.3(c) above(including amounts otherwise required to be transferred to Borrower’s operating account with Bank when a Streamline Period is in effect) as a reserve to beapplied to any Obligations regardless of whether such Obligations are then due and payable.(e)Returns. Provided no Event of Default has occurred and is continuing, if any Account Debtor returns any Inventory to Borrower,Borrower shall promptly (i) determine the reason for such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate amount, and (iii) forreturns in excess of Five Hundred Thousand Dollars ($500,000), provide a copy of such credit memorandum to Bank, upon request from Bank. In the eventany attempted return occurs after the occurrence and during the continuance of any Event of Default, Borrower shall hold the returned Inventory in trust forBank, and immediately notify Bank of the return of the Inventory.(f)Verifications; Confirmations; Credit Quality; Notifications. Bank may, from time to time, (i) verify and confirm directly with therespective Account Debtors the validity, amount and other matters relating to the Accounts, either in the name of Borrower or Bank or such other name asBank may choose, and notify any Account Debtor of Bank’s security interest in such Account after consultation and notice to Borrower (unless an Event ofDefault is continuing) and/or (ii) conduct a credit check of any Account Debtor to approve any such Account Debtor’s credit.(g)No Liability. Bank shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, anygoods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in the settlement, failureto settle, collection or failure to collect any Account, or for settling any Account in good faith for less than the full amount thereof, nor shall Bank be deemedto be responsible for any of Borrower’s obligations under any contract or agreement giving rise to an Account. Nothing herein shall, however, relieve Bankfrom liability for its own gross negligence or willful misconduct.6.4 Remittance of Proceeds. Except as otherwise provided in Section 6.3(c), deliver, in kind, all proceeds arising from the disposition of anyCollateral to Bank in the original form in which received by Borrower not later than the following Business Day after receipt by Borrower, to be applied tothe Obligations (a) prior to an Event of Default, pursuant to the terms of Section 6.3(c) hereof, and (b) after the occurrence and during the continuance of anEvent of Default, pursuant to the terms of Section 9.4 hereof; provided that, if no Event of Default has occurred and is continuing, Borrower shall not beobligated to remit to Bank the proceeds of any Collateral. Nothing in this Section 6.4 limits the restrictions on disposition of Collateral set forth elsewhere inthis Agreement.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION 6.5 Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports (or extensions thereof) andtimely pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed byBorrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and shall deliver toBank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferredcompensation plans in accordance with their terms.6.6 Access to Collateral; Books and Records. At reasonable times, on three (3) Business Days’ notice (provided no notice is required if an Eventof Default has occurred and is continuing), Bank, or its agents, shall have the right to inspect the Collateral and the right to audit and copy Borrower’s Books.The foregoing inspections and audits shall be conducted no more often than once every twelve (12) months (or more frequently as Bank in its sole discretiondetermines that conditions warrant) unless an Event of Default has occurred and is continuing in which case such inspections and audits shall occur as oftenas Bank shall determine is necessary. The foregoing inspections and audits shall be conducted at Borrower’s expense and the charge therefor shall be OneThousand Dollars ($1,000) per person per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonableout-of-pocket expenses. In the event Borrower and Bank schedule an audit more than eight (8) days in advance, and Borrower cancels or seeks to orreschedules the audit with less than eight (8) days written notice to Bank, then (without limiting any of Bank’s rights or remedies) Borrower shall pay Bank afee of Two Thousand Dollars ($2,000) plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of thecancellation or rescheduling. Borrower hereby acknowledges that the Initial Audit will be conducted prior to the initial Advance but not later than ninety(90) days after the Effective Date. In addition, Bank reserves the right, in its good faith business judgment as conditions warrant, to conduct an independentthird party appraisal of Borrower’s Inventory at Borrower’s sole cost and expense.6.7 Insurance.(a)Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and locationand as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance companies that are not Affiliates ofBorrower, and in amounts that are satisfactory to Bank. All property policies shall have a lender’s loss payable endorsement showing Bank as a lender losspayee. All liability policies shall show, or have endorsements showing, Bank as an additional insured. Bank shall be named as lender loss payee and/oradditional insured with respect to any such insurance providing coverage in respect of any Collateral.(b)Ensure that proceeds payable under any property policy with respect to Collateral are, at Bank’s option, payable to Bank onaccount of the Obligations. Notwithstanding the foregoing, (i) so long as no Event of Default has occurred and is continuing, Borrower shall have the optionof applying the proceeds of any casualty policy with respect to casualties to Collateral of up to Five Hundred Thousand Dollars ($500,000) in the aggregatefor all losses under all casualty policies in any one year, toward the replacement or repair of destroyed or damaged property; provided that any such replacedor repaired property (A) shall be of equal or like value as the replaced or repaired Collateral and (B) shall be deemed Collateral in which Bank has beengranted a first priority security interest, and (ii) after the occurrence and during the continuance of an Event of Default, all proceeds payable under suchcasualty policy shall, at the option of Bank, be payable to Bank on account of the Obligations.(c)At Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Eachprovider of any such insurance required under this Section 6.7 shall agree, by endorsement upon the policy or policies issued by it or by independentinstruments furnished to Bank, that it will give Bank twenty (20) days (ten (10) days for non-payment of premium) prior written notice before any such policyor policies shall be canceled. If Borrower fails to obtain insurance as required under this Section 6.7 or to pay any amount or furnish any required proof ofpayment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.7, and take anyaction under the policies Bank deems prudent.6.8 Accounts.(a)Maintain with Bank and Bank’s Affiliates (i) the Cash Collateral Account and (ii) its primary banking relationship, including,without limitation, operating and other deposit accounts, and securities/investment accounts, cash management, asset management, letters of credit andcorporate credit cards. Notwithstanding the foregoing, Borrower may maintain corporate credit cards with American Express as permitted under clause (e) ofthe definition of Permitted Indebtedness and Excluded Accounts. Any Guarantor shall maintain all depository, operating and securities/investment accountswith Bank and Bank’s Affiliates.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION (b)In addition to and without limiting the restrictions in clause (a), Borrower shall provide Bank five (5) days prior written noticebefore establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account thatBorrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Accountis maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien insuch Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior written consent of Bank.The provisions of the previous sentence shall not apply to Excluded Accounts.6.9 Financial Covenants. Maintain:(a)Minimum Liquidity. At all times, Liquidity of greater than Two Million Dollars ($2,000,000).(b)Minimum Revenue. Tested as of the last day of each fiscal year of Borrower for the trailing twelve (12) month period thenended, minimum revenue (determined in accordance with GAAP) of at least the following amounts: Fiscal Year EndingMinimum RevenueDecember 31, 2019$[†]December 31, 2020$[†]Notwithstanding anything to the contrary contained in this Section 6.9, in the event that Borrower fails to comply with the covenantscontained in Section 6.9 (a) and (b) (such covenants for such applicable periods being the “Specified Financial Covenants”), Borrower shall have the right atany time in the twelve (12) months prior to, or within ninety (90) days of, the end of the respective calendar year:(i) to issue additional shares of equity interests of Borrower in exchange for cash (the “Equity Cure Right”), or(ii) to borrow Permitted Cure Debt (the “Subordinated Debt Cure Right” and, collectively with the Equity Cure Right, the “Cure Right”),in an amount equal to the revenue required in section 6.9(b) less Borrower’s annual revenue (the “Cure Amount”). The cash therefromimmediately shall be contributed as equity or subordinated debt, as applicable, to Borrower, and upon the receipt by Borrower of the Cure Amount pursuantto the exercise of such Cure Right, such Cure Amount shall be deemed to constitute revenue of Borrower for purposes of the Specified Financial Covenantsand the Specified Financial Covenants shall be recalculated for all purposes under the Loan Documents. If, after giving effect to the foregoing recalculation,Borrower shall then be in compliance with the requirements of the Specified Financial Covenants, Borrower shall be deemed to have satisfied therequirements of the Specified Financial Covenants as of the relevant date of determination with the same effect as though there had been no failure to complytherewith at such date, and the applicable breach of the Specified Financial Covenants that had occurred, the related Default and Event of Default, shall bedeemed cured without any further action of Borrower or Bank for all purposes under the Loan Documents (the “Financial Covenant Cure”). Notwithstandingthe foregoing, upon the violation of any Specified Financial Covenants (regardless of the occurrence of any Financial Covenant Cure), (x) Bank shall nolonger be obligated to fund additional Credit Extensions hereunder and (y) any Streamline Period shall immediately terminate and Borrower shall not beeligible to enter into a subsequent Streamline Period until Bank otherwise consents in writing.6.10 Protection of Intellectual Property Rights. Use commercially reasonable efforts to protect, defend and maintain the validity andenforceability of its Intellectual Property material to Borrower’s business; (a) promptly advise Bank in writing of material infringements or any other eventthat could reasonably be expected to materially and adversely affect the value of its Intellectual Property material to Borrower’s business; and (b) not allowany Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent.6.11 Litigation Cooperation. From the date hereof and continuing through the termination of this Agreement, make available to Bank, withoutexpense to Bank, Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Bank may deem them reasonablynecessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower.6.12 Online Banking.(a)Utilize Bank’s online banking platform for all matters requested by Bank which shall include, without limitation (and withoutrequest by Bank for the following matters), uploading information pertaining to Accounts and Account Debtors, requesting approval for exceptions,requesting Credit Extensions, and uploading financial statements and[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION other reports required to be delivered by this Agreement (including, without limitation, those described in Section 6.2 of this Agreement).(b)Comply with the terms of Bank’s Online Banking Agreement as in effect from time to time and ensure that all persons utilizingBank’s online banking platform are duly authorized to do so by an Administrator. Bank shall be entitled to assume the authenticity, accuracy andcompleteness on any information, instruction or request for a Credit Extension submitted via Bank’s online banking platform and to further assume that anysubmissions or requests made via Bank’s online banking platform have been duly authorized by an Administrator.6.13 Formation or Acquisition of Subsidiaries; Immaterial Subsidiaries. Notwithstanding and without limiting the negative covenantscontained in Sections 7.3 and 7.7 hereof, at the time that (x) Borrower or any Guarantor forms any direct or indirect Subsidiary or acquires any direct orindirect Subsidiary after the Effective Date or (y) any Immaterial Subsidiary ceases to be an Immaterial Subsidiary, then at Bank’s option, Borrower and suchGuarantor shall (a) cause such new Subsidiary (other than an Immaterial Subsidiary) or such Subsidiary that ceased to be an Immaterial Subsidiary to provideto Bank a joinder to this Agreement to become a co-borrower or Guarantor hereunder, together with such appropriate financing statements and/or ControlAgreements, all in form and substance reasonably satisfactory to Bank (including being sufficient to grant Bank a first priority Lien (subject to PermittedLiens) in and to the assets of such newly formed or acquired Subsidiary (other than an Immaterial Subsidiary) or former Immaterial Subsidiary to the extentsuch assets would constitute Collateral if owned by Borrower), (b) provide to Bank all other documentation in form and substance reasonably satisfactory toBank, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document,agreement, or instrument executed or issued pursuant to this Section 6.13 shall be a Loan Document; provided, however, that solely in the circumstance inwhich Borrower or any Guarantor creates or acquires a Foreign Subsidiary, such Foreign Subsidiary shall not be required to guarantee the Obligations ofBorrower under the Loan Documents and shall not be required to grant a continuing pledge and security interest in and to the assets of such ForeignSubsidiary that would constitute Collateral if owned by Borrower, if (i) Borrower demonstrates to the reasonable satisfaction of Bank that such ForeignSubsidiary becoming a co-Borrower or providing such guarantee or pledge and security interest would create an adverse tax consequence to Borrower orGuarantor under the U.S. Internal Revenue Code or (ii) such Foreign Subsidiary is an Immaterial Subsidiary.6.14 Further Assurances. Execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s Lienin the Collateral or to effect the purposes of this Agreement. Deliver to Bank, within five (5) days after the same are sent or received, copies of all materialcorrespondence, reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of GovernmentalApprovals or Requirements of Law or that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on theoperations of Borrower or any of its Subsidiaries.7. NEGATIVE COVENANTSBorrower shall not do any of the following without Bank’s prior written consent:7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of its Subsidiaries toTransfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsoleteEquipment that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of business ofBorrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of Borrower’s use or transfer of money or Cash Equivalents in theordinary course of its business for the payment of ordinary course business expenses in a manner that is not prohibited by the terms of this Agreement or theother Loan Documents; (e) tangible property transfers to a Permitted Commercialization Arrangement Vehicle but subject to the monetary limit in clause (l)of the defined term “Permitted Investments”; (f) transfers of Property by any Loan Party to any other Loan Party; (g) placements of specialized equipment formanufacturing, with a fair market value not to exceed the sum of Three Million Dollars ($3,000,000) in the aggregate, with foreign or domestic contractmanufacturers where Borrower retains title to such equipment; (h) subject to Section 6.3(b) of this Agreement, dispositions consisting of the sale, transfer,assignment or other disposition of unpaid and overdue accounts receivable in connection with the collection, compromise or settlement thereof in theordinary course of business and not as part of a financing transaction, provided that (i) no Event of Default nor any Overadvance is continuing nor wouldresult therefrom, and (ii) such accounts receivable shall be excluded from the Borrowing Base; (i) dispositions of property that is not Collateral to the extentthat (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such disposition are applied tothe purchase price of such replacement property within one hundred eighty (180) days; (j) subject to Section 6.7 of this Agreement, dispositions resultingfrom casualty events; (k) non-exclusive licenses of Borrower’s and its Subsidiaries’ Intellectual Property; (l) licenses for the use of the Intellectual Property ofBorrower or its Subsidiaries (but not to any of[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION Borrower’s other Affiliates, except for a Permitted Commercialization Arrangement Vehicle) that are approved by the Board and which would not result in alegal transfer of title of the licensed property but that may be exclusive (i) in respects other than territory (such as field of use or scope) and (ii) as to territory,only as to discrete areas outside of the United States; provided that any such license of such Intellectual Property covering the Product may be exclusive onlyas to territory and only as to discrete areas outside of the United States; (m) exclusive and non-exclusive licenses covering nCounter Elements or diagnosticgene content other than for nCounter-based Prosigna™ Breast Cancer Prognostic Gene Signature Assay; (n) any transaction permitted under Section 7.3; and(o) the disposition of other property in aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000) in any single year.7.2 Changes in Business, Management, Control, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any businessother than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; or(c) permit or suffer any Change in Control.Borrower shall not, without at least ten (10) days prior written notice to Bank: (1) add any new offices or business locations, including warehouses(unless such new offices or business locations contain less than Five Hundred Thousand Dollars ($500,000) in Borrower’s assets or property) or deliver anyportion of the Collateral valued, individually or in the aggregate, in excess of Five Hundred Thousand Dollars ($500,000) to a bailee at a location other thanto a bailee and at a location already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3) change its organizational structureor type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. If Borrower intends to deliverany portion of the Collateral valued, individually or in the aggregate, in excess of Five Hundred Thousand Dollars ($500,000) to a bailee in the UnitedStates, and Bank and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends todeliver the Collateral, then Borrower will cause such bailee to execute and deliver a bailee agreement in form and substance reasonably satisfactory to Bankwithin sixty (60) days after the delivery of Collateral thereto (or such later date as agreed to by Bank).7.3 Mergers or Acquisitions. Without Bank’s prior written consent which shall not be unreasonably withheld, merge or consolidate, or permit anyof its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capitalstock or property of another Person (including, without limitation, by the formation of any Subsidiary), except (a) any Subsidiary may merge or consolidatewith or into any Borrower or any Guarantor; (b) any Subsidiary may sell, lease, transfer, or otherwise dispose of any or all of its property to any Borrower orany Guarantor; and (c) Borrower and its Subsidiaries may enter into Permitted Commercialization Arrangements. A Subsidiary may merge or consolidate intoanother Subsidiary or into Borrower.7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including thesale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens and Transfers permitted by Section 7.1, permit any Collateral not tobe subject to the first priority security interest granted herein, or enter into any agreement, document, instrument or other arrangement (except with or in favorof Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging,pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s Intellectual Property, except as is otherwise permittedin Section 7.1 hereof and the definition of “Permitted Liens” herein and other than under the CRG Loan Agreement.7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8(b) hereof.7.7 Distributions; Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock exceptthat (i) Borrower may declare and pay dividends with respect to its capital stock payable solely in additional shares of its common stock; (ii) Borrower maypurchase, redeem, retire, or otherwise acquire shares of its capital stock or other equity interests with the proceeds received from a substantially concurrentissue of new shares of its capital stock or other equity interests; (iii) for payments pursuant to employee stock plans, which payments must be approved by theBoard comprised of disinterested members; (iv) for the payment of dividends by any Guarantor to Borrower or to any other Guarantor; (v) any Subsidiary maymake a payment or distribution to any Borrower or any other Guarantor, and (vi) any Subsidiary that is not a Guarantor may make a payment or distributionto Borrower or any other Subsidiary; or (b) directly or indirectly make any Investment (including, without limitation, by the formation of any Subsidiary)other than Permitted Investments, or permit any of its Subsidiaries to do so.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION 7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, exceptfor transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would beobtained in an arm’s length transaction with a non-affiliated Person; provided that the foregoing restriction shall not apply to the following: (a) transactionsbetween or among Loan Parties; (b) transactions consented to by Bank, which consent shall not be unreasonably withheld, which increase the tax efficiencyof Borrower and its Subsidiaries as a whole that are undertaken between Borrower and its Subsidiaries in good faith based on advice of external legal counseland that comply with arm’s length principles pursuant to Section 482 of the Code and regulations thereunder; (c) the transactions disclosed to Bank inwriting prior to the Prior Loan Agreement Effective Date; (d) transactions permitted under clauses (j) and (k) of the defined term “Permitted Indebtedness,”Section 7.3(a), clauses (a), (f) (g) and (j) of the defined term “Permitted Investments”, and Sections 7.7(a)(i), (iii) and (iv); and (e) transactions under PermittedCommercialization Arrangements, but only if such transactions have first been approved by a majority of the board members of the Board, exclusive of anyinterested board members, exercising their reasonable business judgment and fiduciary duties to Borrower, and, only so long as Borrower is a PubliclyReporting Company.7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, orother similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt whichwould increase the amount thereof, provide for earlier or greater principal, interest, or other payments thereon, or adversely affect the subordination thereof toObligations owed to Bank except as permitted under the terms of the subordination, intercreditor, or other similar agreement to which such SubordinatedDebt is subject.7.10 Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Actof 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of theBoard of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to (a) meet the minimum fundingrequirements of ERISA, (b) prevent a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, or (c) comply with the Federal Fair LaborStandards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business,or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, orpermit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably beexpected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any othergovernmental agency.8. EVENTS OF DEFAULTAny one of the following shall constitute an event of default (an “Event of Default”) under this Agreement:8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or (b) pay any otherObligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to paymentsdue on the Revolving Line Maturity Date). During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not anEvent of Default (but no Credit Extension will be made during the cure period);8.2 Covenant Default.(a)Borrower fails or neglects to perform any obligation in Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 0, or 6.12 or violates anycovenant in Section 7; or(b)Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained inthis Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition,covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the defaultcannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and suchdefault is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) toattempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no CreditExtensions shall be made during such cure period). Cure periods provided under this section shall not apply, among other things, to financial covenants orany other covenants set forth in clause (a) above;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION 8.3 Material Adverse Change. A Material Adverse Change occurs;8.4 Attachment; Levy; Restraint on Business.(a)(i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under thecontrol of Borrower (including a Subsidiary) in excess of Five Hundred Thousand Dollars ($500,000), or (ii) a notice of lien or levy is filed against any ofBorrower’s assets by any Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof,discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) daycure period; or(b)(i) any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver, or(ii) any court order enjoins, restrains, or prevents Borrower from conducting all or any material part of its business;8.5 Insolvency. (a) Borrower or any of its Subsidiaries is unable to pay its debts (including trade debts) as they become due or otherwise becomesinsolvent; (b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower or any of itsSubsidiaries and is not dismissed or stayed within forty-five (45) days (but no Credit Extensions shall be made while any of the conditions described inclause (a) exist and/or until any Insolvency Proceeding is dismissed);8.6 Other Agreements. There is, under any agreement to which Borrower or any Guarantor is a party with a third party or parties, (a) any defaultresulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in theaggregate in excess of One Million Dollars ($1,000,000) after any applicable grace or cure period; or (b) any breach or default by Borrower or Guarantor, theresult of which could have a material adverse effect on Borrower’s or any Guarantor’s business; provided, however, that the Event of Default under thisSection 8.6 caused by the occurrence of a breach or default under such other agreement shall be cured or waived for purposes of this Agreement upon Bankreceiving written notice from the party asserting such breach or default of such cure or waiver of the breach or default under such other agreement, if at thetime of such cure or waiver under such other agreement (x) Bank has not declared an Event of Default under this Agreement and exercised any rights withrespect thereto; (y) any such cure or waiver does not result in an Event of Default under any other provision of this Agreement or any Loan Document; and(z) in connection with any such cure or waiver under such other agreement, the terms of any agreement with such third party are not modified or amended inany manner which could in the good faith business judgment of Bank be materially less advantageous to Borrower or any Guarantor;8.7 Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individuallyor in the aggregate, of at least One Million Dollars ($1,000,000) (not covered by independent third-party insurance as to which liability has been accepted bysuch insurance carrier) shall be rendered against Borrower by any Governmental Authority, and the same are not, within ten (10) days after the entry,assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are notdischarged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, orbonding of such fine, penalty, judgment, order or decree);8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in thisAgreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and suchrepresentation, warranty, or other statement is incorrect in any material respect when made;8.9 Subordinated Debt. Any document, instrument, or agreement evidencing any Subordinated Debt shall for any reason be revoked or invalidatedor otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or denythat it has any further liability or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated bythis Agreement or any applicable subordination or intercreditor agreement;8.10 Guaranty. (a) Any guaranty of any Obligations terminates or ceases for any reason to be in full force and effect; (b) any Guarantor does notperform any obligation or covenant under any guaranty of the Obligations; (c) any circumstance described in Sections 8.3, 8.4, 8.5, 8.6, 8.7, or 8.8 of thisAgreement occurs with respect to any Guarantor, (d) the death, liquidation, winding up, or termination of existence of any Guarantor; or (e)(i) a materialimpairment in the perfection or priority of Bank’s Lien in the collateral provided by Guarantor or in the value of such collateral or (ii) a material adversechange in the general affairs, management, results of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations occurs withrespect to any Guarantor;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION 8.11 Governmental Approvals. Any material Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in a materialadverse manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates a hearing withrespect to any applications for renewal of any of such Governmental Approval or that could result in the Governmental Authority taking any of the actionsdescribed in clause (a) above, and such decision or such revocation, rescission, suspension, modification or non-renewal (i) causes, or could reasonably beexpected to cause, a Material Adverse Change, or (ii) materially adversely affects the legal qualifications of Borrower to hold such Governmental Approval inany applicable jurisdiction and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to materially adverselyaffect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction; or8.12 Cross-Default with CRG Loan Documents. An event of default (as such term is defined in the CRG Loan Documents) shall occur and becontinuing under the CRG Loan Documents and such event of default is not waived or cured within any applicable grace period provided therein; provided,however, that the Event of Default under this Section 8.12 caused by the occurrence of a breach or default under the CRG Loan Documents shall be cured orwaived for purposes of this Agreement upon Bank receiving written notice from CRG of the breach or default under such other agreement, if at the time ofsuch cure or waiver under the CRG Loan Documents (x) Bank has not declared an Event of Default under this Agreement and exercised any rights withrespect thereto; (y) any such cure or waiver does not result in an Event of Default under any other provision of this Agreement or any Loan Document; and(z) in connection with any such cure or waiver under such other agreement, the terms of any CRG Loan Documents are not modified or amended in anymanner which could in the good faith business judgment of Bank be materially less advantageous to Borrower or any Guarantor.9. BANK’S RIGHTS AND REMEDIES9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, without notice or demand, do any orall of the following:(a)declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligationsare immediately due and payable without any action by Bank);(b)stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement betweenBorrower and Bank;(c)demand that Borrower (i) deposit cash with Bank in an amount equal to at least (A) one hundred five percent (105.0%) of theDollar Equivalent of the aggregate face amount of all Letters of Credit denominated in Dollars remaining undrawn, and (B) one hundred ten percent (110.0%)of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in a Foreign Currency remaining undrawn (plus, in each case, allinterest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of theObligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shallforthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Lettersof Credit;(d)terminate any FX Contracts;(e)verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle oradjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, and notify any Person owingBorrower money of Bank’s security interest in such funds. Borrower shall collect all payments in trust for Bank and, if requested by Bank, immediatelydeliver the payments to Bank in the form received from the Account Debtor, with proper endorsements for deposit;(f)make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest inthe Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where theCollateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prioror superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, toexercise any of Bank’s rights or remedies;(g)apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) amount held by Bank owing to or for thecredit or the account of Borrower;(h)ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is herebygranted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, mask works, rights of use of anyname, trade secrets, trade names, Trademarks, and advertising matter, or[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection withBank’s exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;(i)place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or otherdirections or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;(j)demand and receive possession of Borrower’s Books; and(k)exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remediesprovided under the Code (including disposal of the Collateral pursuant to the terms thereof).9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable following the occurrence and duringthe continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks, payment instruments, or other forms of payment or security; (b) signBorrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) demand, collect, sue, and give releases to anyAccount Debtor for monies due, settle and adjust disputes and claims about the Accounts directly with Account Debtors, and compromise, prosecute, ordefend any action, claim, case, or proceeding about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Bank’s or Borrower’sname, as Bank chooses); (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance,security interest, or other claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and(f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to signBorrower’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Eventof Default has occurred until all Obligations (other than inchoate indemnity obligations) have been satisfied in full and the Loan Documents have beenterminated. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable untilall Obligations (other than inchoate indemnity obligations) have been fully repaid and performed and the Loan Documents have been terminated.9.3 Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.7 or fails to pay any premium thereon or fails to pay anyother amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required to preserve the Collateral,Bank may obtain such insurance or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearinginterest at the then highest rate applicable to the Obligations, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower withnotice of Bank obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement tomake similar payments in the future or Bank’s waiver of any Event of Default.9.4 Application of Payments and Proceeds. If an Event of Default has occurred and is continuing, Bank shall have the right to apply in any orderany funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or otherdisposition of the Collateral, or otherwise, to the Obligations. Bank shall pay any surplus to Borrower by credit to the Designated Deposit Account or to otherPersons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, directly or indirectly, enters into a deferred payment orother credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations bythe principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.9.5 Bank’s Liability for Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral inthe possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to theCollateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Except as set forthin the preceding sentence, Borrower bears all risk of loss, damage or destruction of the Collateral.9.6 No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict performance by Borrower of any provision of thisAgreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and complianceherewith or therewith. No waiver hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specificinstance and purpose for which it is given. Bank’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Bank has allrights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election and shall not preclude Bank fromexercising any other remedy under this Agreement or other remedy available at law or in equity, and[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence.9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default,nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held byBank on which Borrower is liable.10. NOTICESAll notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be inwriting and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit inthe U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mailor facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below.Bank or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance withthe terms of this Section 10.If to Borrower:NanoString Technologies, Inc.530 Fairview Avenue N.Seattle, Washington 98109Attn: [†]Email: [†]If to Bank:Silicon Valley Bank2400 Hanover St.Palo Alto, California 94304Attn: [†]Email: [†]11. CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCEExcept as otherwise expressly provided in any of the Loan Documents, California law governs the Loan Documents without regard to principles ofconflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in California; provided, however, that nothing inthis Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to realize on theCollateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consentsin advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based uponlack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemedappropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agreesthat service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, orsubsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier tooccur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURYTRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANYCONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS AMATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITHITS COUNSEL.WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY,if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature betweenthem arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge ofthe Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to comparableprovisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California;and the parties hereby submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with theprovisions of California Code of Civil Procedure[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION Sections 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without limitation,entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to thepublic and confidential and all records relating thereto shall be permanently sealed. If during the course of any dispute, a party desires to seek provisionalrelief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the Santa Clara County,California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court underthe rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it wouldbe before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discoveryrules and orders applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judgeshall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant toCalifornia Code of Civil Procedure Section 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies,foreclose against collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, andenforceability of this paragraph.This Section 11 shall survive the termination of this Agreement.12. GENERAL PROVISIONS12.1 Termination Prior to Maturity Date; Survival. All covenants, representations and warranties made in this Agreement shall continue in fullforce until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied. So long as Borrower has satisfied the Obligations(other than inchoate indemnity obligations, and any other obligations which, by their terms, are to survive the termination of this Agreement, and anyObligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement), this Agreement may beterminated prior to the Revolving Line Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank.Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding thisAgreement’s termination.12.2 Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may notassign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may be granted or withheld in Bank’s discretion).Bank has the right, without the consent of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interestin, Bank’s obligations, rights, and benefits under this Agreement and the other Loan Documents.12.3 Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any otherPerson affiliated with or representing Bank (each, an “Indemnified Person”) harmless against: (i) all obligations, demands, claims, and liabilities(collectively, “Claims”) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (ii) all lossesor expenses (including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, orarising from transactions between Bank and Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused bysuch Indemnified Person’s gross negligence or willful misconduct.This Section 12.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shallhave run.12.4 Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement.12.5 Severability of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of anyprovision.12.6 Correction of Loan Documents. Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreementof the parties.12.7 Amendments in Writing; Waiver; Integration. No purported amendment or modification of any Loan Document, or waiver, discharge ortermination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writingsigned by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor anyaction, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have anyother effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to anysubsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. TheLoan Documents represent the entire agreement about this subject[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the partiesabout the subject matter of the Loan Documents merge into the Loan Documents.12.8 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each ofwhich, when executed and delivered, is an original, and all taken together, constitute one Agreement.12.9 Confidentiality. In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietaryinformation, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Bank,collectively, “Bank Entities”); (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall use its bestefforts to obtain any prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or otherorder; (d) to Bank’s regulators or as otherwise required in connection with Bank’s examination or audit; (e) as Bank considers appropriate in exercisingremedies under the Loan Documents; and (f) to third-party service providers of Bank so long as such service providers have executed a confidentialityagreement with Bank with terms no less restrictive than those contained herein. Confidential information does not include information that is either: (i) in thepublic domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain (other than as a result of its disclosure by Bank inviolation of this Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does not know that the third party is prohibited fromdisclosing the information.Bank Entities may use anonymous forms of confidential information for aggregate datasets, for analyses or reporting, and for any other uses notexpressly prohibited in writing by Borrower. The provisions of the immediately preceding sentence shall survive the termination of this Agreement.12.10 Attorneys’ Fees, Costs and Expenses. In any action or proceeding between Borrower and Bank arising out of or relating to the LoanDocuments, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any otherrelief to which it may be entitled.12.11 Electronic Execution of Documents. The words “execution,” “signed,” “signature” and words of like import in any Loan Document shall bedeemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity andenforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for inany applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.12.12 Right of Setoff. Borrower hereby grants to Bank a Lien and a right of setoff as security for all Obligations to Bank, whether now existing orhereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank orany entity under the control of Bank (including a subsidiary of Bank) or in transit to any of them. At any time after the occurrence and during thecontinuance of an Event of Default, without demand or notice, Bank may setoff the same or any part thereof and apply the same to any liability or Obligationof Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIREBANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TOEXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBYKNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.12.13 Captions. The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.12.14 Construction of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation andnegotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty toexist.12.15 Relationship. The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement. The parties do notintend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.12.16 Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies under or byreason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge theobligation or liability of any person not an express party to this Agreement; or (c) give any person not an express party to this Agreement any right ofsubrogation or action against any party to this Agreement.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION 12.17 Transitional Arrangements. On the Effective Date, this Agreement shall amend, restate and supersede the Prior Loan Agreement in itsentirety, except as provided in this Section. This Agreement is not intended to, and does not, novate the Prior Loan Agreement. On the Effective Date, therights and obligations of the parties evidenced by the Prior Loan Agreement shall be evidenced by this Agreement and the other Loan Documents and thegrant of security interest in the Collateral by the Borrower under the Prior Loan Agreement and the other “Loan Documents” (as defined in the Prior LoanAgreement) shall continue under this Agreement and the other Loan Documents, and such security interest and any other rights and obligations which bytheir express terms survive the termination of the Loan Documents shall not in any event be terminated, extinguished or annulled but shall hereafter begoverned by this Agreement and the other Loan Documents. All references to the Prior Loan Agreement in any Loan Document or other document orinstrument delivered in connection therewith shall be deemed to refer to this Agreement and the provisions hereof as amended, restated, or otherwisemodified from time to time.13. DEFINITIONS13.1 Definitions. As used in the Loan Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, thewords “includes” and “including” are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative.As used in this Agreement, the following capitalized terms have the following meanings:“Account” is, as to any Person, any “account” of such Person as “account” is defined in the Code with such additions to such term as may hereafterbe made, and includes, without limitation, all accounts receivable and other sums owing to such Person.“Account Debtor” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.“Administrator” is an individual that is named:(a) as an “Administrator” in the “SVB Online Services” form completed by Borrower with the authority to determine who will beauthorized to use SVB Online Services (as defined in Bank’s Online Banking Agreement as in effect from time to time) on behalf of Borrower; and(b) as an Authorized Signer of Borrower in an approval by the Board.“Advance” or “Advances” means a revolving credit loan (or revolving credit loans) under the Revolving Line.“Affiliate” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or iscontrolled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is alimited liability company, that Person’s managers and members. For purposes of the definition of Eligible Accounts, Affiliate shall include a SpecifiedAffiliate.“Agreement” is defined in the preamble hereof.“Anniversary Fees” is defined in Section 2.5(c).“Authorized Signer” is any individual listed in Borrower’s Borrowing Resolution who is authorized to execute the Loan Documents, includingmaking (and executing if applicable) any Credit Extension request, on behalf of Borrower.“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b) the outstandingprincipal balance of any Advances.“Bank” is defined in the preamble hereof.“Bank Entities” is defined in Section 12.9.“Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending,negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals orInsolvency Proceedings) or otherwise incurred with respect to Borrower or any Guarantor.“Bank Services” are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of itsSubsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without limitation,merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange servicesas any such products or services may be identified in Bank’s various agreements related thereto (each, a “Bank Services Agreement”).[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION “Bank Services Agreement” is defined in the definition of Bank Services.“Board” is Borrower’s board of directors.“Borrower” is defined in the preamble hereof.“Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding Borrower’s assets orliabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.“Borrowing Base” is (a) eighty percent (80%) of Eligible Accounts plus, solely if a Streamline Period is in effect, (b) the lesser of (i) fifty percent(50%) of the value of Borrower’s Eligible Inventory (valued at the lower of cost or wholesale fair market value) or (ii) Four Million Dollars ($4,000,000)(provided that the aggregate amount in this clause (b) shall not comprise more than twenty-five percent (25%) of the Borrowing Base), each as determined byBank from Borrower’s most recent Borrowing Base Statement (and as may subsequently be updated by Bank based upon information received by Bankincluding, without limitation, Accounts that are paid and/or billed following the date of the Borrowing Base Statement); provided, however, that Bank hasthe right to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of events, conditions, contingencies, or risks whichmay adversely affect the Collateral or its value. Upon the termination of a Streamline Period, Borrower shall repay outstanding Advances to the extentnecessary to cure any Overadvance resulting from the removal of Inventory from the Borrowing Base.“Borrowing Base Statement” is that certain report of the value of certain Collateral in the form specified by Bank to Borrower from time to time.“Borrowing Resolutions” are, with respect to any Person, those resolutions adopted by such Person’s board of directors (and, if required under theterms of such Person’s Operating Documents, stockholders) and delivered by such Person to Bank approving the Loan Documents to which such Person is aparty and the transactions contemplated thereby, together with a certificate executed by its secretary on behalf of such Person certifying (a) such Person hasthe authority to execute, deliver, and perform its obligations under each of the Loan Documents to which it is a party, (b) that set forth as a part of or attachedas an exhibit to such certificate is a true, correct, and complete copy of the resolutions then in full force and effect authorizing and ratifying the execution,delivery, and performance by such Person of the Loan Documents to which it is a party, (c) the name(s) of the Person(s) authorized to execute the LoanDocuments, including making (and executing if applicable) any Credit Extension request, on behalf of such Person, together with a sample of the truesignature(s) of such Person(s), and (d) that Bank may conclusively rely on such certificate unless and until such Person shall have delivered to Bank a furthercertificate canceling or amending such prior certificate.“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed.“Cash Collateral Account” is defined in Section 6.3(c).“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any Statethereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after itscreation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; (c) Bank’s certificates of depositissued maturing no more than one (1) year after issue; and (d) money market funds at least ninety-five percent (95%) of the assets of which constitute CashEquivalents of the kinds described in clauses (a) through (c) of this definition.“Change in Control” means (a) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), shallbecome, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)‑5under the Exchange Act), directly or indirectly, of 50% or more of the ordinary voting power for the election of directors of Borrower (determined on a fullydiluted basis as-converted to common stock) other than (i) by the sale of Borrower’s equity securities in a follow-on offering of its equity securities or (ii) toventure capital or private equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least seven (7) BusinessDays prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction; or (b) at any time, Borrower shall ceaseto own and control, of record and beneficially, directly or indirectly, one hundred percent (100.0%) of each class of outstanding capital stock of eachsubsidiary of Borrower free and clear of all Liens (except Liens created by this Agreement).“Claims” is defined in Section 12.3.“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of California; provided, that, tothe extent that the Code is used to define any term herein or in any Loan Document and such term[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; providedfurther, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to,Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term “Code”shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to suchattachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.“Collateral” is any and all properties, rights and assets of Borrower described on Exhibit A.“Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.“Commodity Account” is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.“Compliance Statement” is that certain statement in the form attached hereto as Exhibit B.“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend,letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed, co made, discounted or sold withrecourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person;and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangementdesignated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does notinclude endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primaryobligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Personin good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.“Control Agreement” is any control agreement entered into among the depository institution at which Borrower maintains a Deposit Account or thesecurities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank pursuantto which Bank obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity Account.“Copyrights” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship andderivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.“Cost-Plus Arrangements” means cost-plus arrangements among Borrower and/or its Subsidiaries in the ordinary course of business pursuant towhich Borrower or one of its Subsidiaries pays Borrower or another Subsidiary for certain services (including research and development) for the cost of suchservices plus a reasonable mark-up.“Credit Extension” is any Advance, any Overadvance, or any other extension of credit by Bank for Borrower’s benefit.“CRG” means, collectively, CRG Servicing and the CRG Lenders.“CRG Cash Collateral” has the meaning set forth in the CRG Intercreditor Agreement.“CRG Indebtedness” is Indebtedness of Borrower to the CRG Lenders under the CRG Loan Documents in the principal amount not to exceed OneHundred Million Dollars ($100,000,000).“CRG Intercreditor Agreement” is that certain Intercreditor Agreement by and between Bank and CRG Servicing dated as of January 5, 2018, asamended.“CRG Lenders” means the lenders party to the CRG Loan Agreement.“CRG Loan Agreement” means that certain Amended and Restated Term Loan Agreement dated as of October 12, 2018 among Borrower and CRG,as may from time to time be amended, modified, supplemented, extended, renewed, restated or replaced.“CRG Loan Documents” means the CRG Loan Agreement, that certain Security Agreement dated as of April 1, 2014 between Borrower and CRGServicing, and any other agreement, document, promissory note, financing statement, or instrument executed by Borrower in favor of CRG pursuant to or inconnection with the CRG Indebtedness, as the same may from time to time be amended, modified, supplemented, extended, renewed, restated or replaced.“CRG Senior Collateral” has the meaning set forth in the CRG Intercreditor Agreement.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION “CRG Servicing” means CRG Servicing LLC, a Delaware limited liability company, as Administrative Agent for the CRG Lenders.“Currency” is coined money and such other banknotes or other paper money as are authorized by law and circulate as a medium of exchange.“Default Rate” is defined in Section 2.4(b).“Deferred Revenue” is all amounts received or invoiced in advance of performance under contracts and not yet recognized as revenue.“Deposit Account” is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.“Designated Deposit Account” is the account number ending [†] (last three digits) maintained by Borrower with Bank (provided, however, if nosuch account number is included, then the Designated Deposit Account shall be any deposit account of Borrower maintained with Bank as chosen by Bank).“Dollars,” “dollars” or use of the sign “$” means only lawful money of the United States and not any other currency, regardless of whether thatcurrency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United States.“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amountdenominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing rate ofexchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.“Effective Date” is defined in the preamble hereof.“Eligible Accounts” means Accounts owing to Borrower which arise in the ordinary course of Borrower’s business that meet all Borrower’srepresentations and warranties in Section 5.3, that have been, at the option of Bank, confirmed in accordance with Section 6.3(f) of this Agreement, and aredue and owing from Account Debtors deemed creditworthy by Bank in its good faith business judgment. Bank reserves the right at any time after theEffective Date to adjust any of the criteria set forth below and to establish new criteria in its good faith business judgment. Unless Bank otherwise agrees inwriting, Eligible Accounts shall not include:(a)Accounts (i) for which the Account Debtor is Borrower’s Affiliate, officer, employee, investor, or agent, or (ii) that areintercompany Accounts;(b)Accounts that the Account Debtor has not paid within ninety (90) days (or up to one hundred twenty (120) days for Net 60 PlusAccounts) of invoice date regardless of invoice payment period terms;(c)Accounts representing credit balances over ninety (90) days (or up to one hundred twenty (120) days for Net 60 Plus Accounts)from invoice date;(d)Accounts owing from an Account Debtor if more than fifty percent (50%) of the dollar amount of Accounts owing from suchAccount Debtor have not been paid within ninety (90) days (or up to one hundred twenty (120) days for Net 60 Plus Accounts) of invoice date;(e)[Intentionally omitted];(f)Accounts billed from and/or payable to Borrower outside of the United States (sometimes called foreign invoiced accounts);(g)Accounts in which Bank does not have a first priority, perfected security interest under all applicable laws;(h)Accounts billed and/or payable in a Currency other than Dollars outstanding to the extent the aggregate amount of Advancesmade against such Accounts exceeds thirty-five percent (35%) of the aggregate outstanding Advances;(i)Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated in any manner to the AccountDebtor (as creditor, lessor, supplier or otherwise - sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts);[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION (j)Accounts with or in respect of accruals for marketing allowances, incentive rebates, price protection, cooperative advertising andother similar marketing credits, unless otherwise approved by Bank in writing;(k)Accounts owing from an Account Debtor which is a United States government entity or any department, agency, orinstrumentality thereof unless Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment ofClaims Act of 1940, as amended;(l)Accounts with customer deposits and/or with respect to which Borrower has received an upfront payment, to the extent of suchcustomer deposit and/or upfront payment;(m)Accounts for demonstration or promotional equipment, or in which goods are consigned, or sold on a “sale guaranteed”, “saleor return”, “sale on approval”, or other terms if Account Debtor’s payment may be conditional;(n)Accounts owing from an Account Debtor where goods or services have not yet been rendered to the Account Debtor (sometimescalled memo billings or pre-billings);(o)Accounts subject to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled ordue according to completion or fulfillment requirements (sometimes called contracts accounts receivable, progress billings, milestone billings, or fulfillmentcontracts);(p)Accounts owing from an Account Debtor the amount of which may be subject to withholding based on the Account Debtor’ssatisfaction of Borrower’s complete performance (but only to the extent of the amount withheld; sometimes called retainage billings);(q)Accounts subject to trust provisions, subrogation rights of a bonding company, or a statutory trust;(r)Accounts owing from an Account Debtor that has been invoiced for goods that have not been shipped to the Account Debtorunless Bank, Borrower, and the Account Debtor have entered into an agreement acceptable to Bank wherein the Account Debtor acknowledges that (i) it hastitle to and has ownership of the goods wherever located, (ii) a bona fide sale of the goods has occurred, and (iii) it owes payment for such goods inaccordance with invoices from Borrower (sometimes called “bill and hold” accounts);(s)Accounts for which the Account Debtor has not been invoiced;(t)Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’sbusiness;(u)Accounts for which Borrower has permitted Account Debtor’s payment terms to extend beyond one hundred twenty (120) daysfrom invoice date;(v)Accounts arising from chargebacks, debit memos or other payment deductions taken by an Account Debtor;(w)Accounts arising from product returns and/or exchanges (sometimes called “warranty” or “RMA” accounts);(x)Accounts in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), orif the Account Debtor is subject to an Insolvency Proceeding (whether voluntary or involuntary), or becomes insolvent, or goes out of business;(y)Accounts owing from an Account Debtor with respect to which Borrower has received Deferred Revenue (but only to the extentof such Deferred Revenue) other than Accounts owing for extended maintenance contracts or that are non-refundable according to contract terms;(z)Accounts owing from an Account Debtor, whose total obligations to Borrower exceed twenty percent (20%) of all Accounts, forthe amounts that exceed that percentage, unless Bank approves in writing; and(aa)Accounts for which Bank in its good faith business judgment determines collection to be doubtful, including, withoutlimitation, accounts represented by “refreshed” or “recycled” invoices.“Eligible Inventory” means Inventory that meets all of Borrower’s representations and warranties in Section 5.3 and is otherwise acceptable to Bankin all respects.“Equipment” is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without limitationall machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION “Equivalent Amount” means, with respect to an amount denominated in one currency, the amount in another currency that would be purchased bythe amount in the first currency determined by reference to the Exchange Rate at the time of determination.“ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.“Event of Default” is defined in Section 8.“Exchange Act” is the Securities Exchange Act of 1934, as amended.“Exchange Rate” means the rate at which any currency (the “Pre-Exchange Currency”) may be exchanged into another currency (the “Post-Exchange Currency”), as quoted in the Wall Street Journal print edition on such day (or, if such day is not a day on which the Wall Street Journal ispublished, the immediately preceding day on which the Wall Street Journal was published). In the event that such rate does not appear in the Wall StreetJournal print edition, the “Exchange Rate” with respect to exchanging such Pre-Exchange Currency into such Post-Exchange Currency shall be determinedby reference to such other publicly available service for displaying exchange rates as may be agreed upon by Borrower and Bank or, in the absence of suchagreement, such Exchange Rate shall instead be determined by Bank by any reasonable method as they deem applicable to determine such rate, and suchdetermination shall be conclusive absent manifest error.“Excluded Accounts” means (a) any Deposit Account of that is used by Borrower solely as a payroll account for the employees of Borrower or itsSubsidiaries or the funds in which consist solely of funds held by Borrower in trust for any director, officer or employee of the Borrower or any employeebenefit plan maintained by Borrower or funds representing deferred compensation for the directors and employees of Borrower, (b) Deposit Accounts andSecurities Accounts of Borrower’s Foreign Subsidiaries held in jurisdictions outside the United States, except to the extent the value of all such accounts inthis subclause (b) shall exceed Two Million Dollars ($2,000,000) in the aggregate, in which case such accounts in any individual jurisdiction that exceedOne Million Dollars ($1,000,000) shall not be “Excluded Accounts”, and (c) trust accounts holding assets that are pledged or otherwise encumbered pursuantto Permitted Liens.“Financial Statement Repository” is each of (a) Bank’s e-mail address L43f1c@svb.com, or such other means of collecting information approvedand designated by Bank after providing notice thereof to Borrower from time to time and (b) Bank’s online banking platform as described in Section 6.12.“Foreign Currency” means lawful money of a country other than the United States.“Foreign Subsidiary” is a Subsidiary that is not an entity organized under the laws of the United States or any territory thereof.“Funding Date” is any date on which a Credit Extension is made to or for the account of Borrower which shall be a Business Day.“GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of theAmerican Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such otherstatements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as ofthe date of determination.“General Intangibles” is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as mayhereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, paymentintangibles, contract rights, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract,tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insuranceand rights to payment of any kind.“Good Faith Deposit” is defined in Section 2.5(e).“Governmental Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing ornotice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.“Governmental Authority” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality,regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertainingto government, any securities exchange and any self-regulatory organization.“Guarantor” is any Person providing a Guaranty in favor of Bank.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION “Guaranty” is any guarantee of all or any part of the Obligations, as the same may from time to time be amended, restated, modified or otherwisesupplemented.“Hedging Agreement” means any interest rate exchange agreement, foreign currency exchange agreement, commodity price protection agreementor other interest or currency exchange rate or commodity price hedging arrangement.“Immaterial Subsidiary” means, as of any date of determination, any direct or indirect Subsidiary of a Borrower that has been designated by suchBorrower to Bank in writing as an “Immaterial Subsidiary” including NanoString Technologies International, Inc., a company formed under the laws of theState of Delaware; provided that at no time shall the assets of such Subsidiary (excluding the value of any intercompany Accounts) exceed One MillionDollars ($1,000,000).“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations forsurety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and (d)Contingent Obligations. For purposes of clarification, operating lease obligations shall not be deemed to be “Indebtedness” hereunder.“Indemnified Person” is defined in Section 12.3.“Initial Audit” is Bank’s inspection of Borrower’s Accounts, the Collateral, and Borrower’s Books, with results satisfactory to Bank in its sole andabsolute discretion.“Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy orinsolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seekingreorganization, arrangement, or other relief.“Intellectual Property” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:(a)its Copyrights, Trademarks and Patents;(b)any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-howand operating manuals;(c)any and all source code;(d)any and all design rights which may be available to such Person;(e)any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but notthe obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and(f)all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.“Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, andincludes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, includingwithout limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and anydocuments of title representing any of the above.“Investment” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance orcapital contribution to any Person.“Key Person” is Borrower’s Chief Executive Officer, who is Brad Gray as of the Effective Date.“Letter of Credit” is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon an application, guarantee,indemnity, or similar agreement.“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred orarising by operation of law or otherwise against any property.“Liquidity” is, at any time, the sum of the aggregate amount of unrestricted and unencumbered (except Liens in favor of Bank and CRG) cash andCash Equivalents held at such time by Borrower in Deposit Accounts or Securities Accounts maintained with Bank or its Affiliates (which for the sake ofclarity shall exclude any such amounts constituting CRG Senior Collateral or which are otherwise pledged or secure obligations to Persons other than Bank).[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION “Loan Documents” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to thisAgreement, any Bank Services Agreement, the CRG Intercreditor Agreement, any subordination agreement, any note, or notes or guaranties executed byBorrower or any Guarantor, and any other present or future agreement by Borrower and/or any Guarantor with or for the benefit of Bank, all as amended,restated, or otherwise modified.“Loan Party” or “Loan Parties” means, individually or collectively, Borrower and each of its Subsidiaries that is a Guarantor, if any, to the extentsuch Guarantor has (a) executed and delivered to Bank a security agreement in form and substance reasonably satisfactory to Bank pursuant to which suchGuarantor has granted Bank a first priority perfected Lien in the types of assets substantially similar to the Collateral to secure the Obligations, free and clearof all Liens other than Permitted Liens; (b) delivered to Bank such appropriate Control Agreements in form and substance reasonably satisfactory to Bank ifand to the extent required under Section 6.8(b); and (c) provided to Bank all other documentation in form and substance satisfactory to Bank, which in itsopinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above.“Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or in the value of suchCollateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; or (c) a material impairment of theprospect of repayment of any portion of the Obligations.“nCounter Elements” means general purpose reagents containing generic reporter probes and capture probes that customers can combine withindependently sourced oligonucleotides to create their own customized reagents.“Net 60 Plus Accounts” means any Accounts for which the net amount thereof is due in full more than sixty (60) days after the invoice date.“Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, Bank Expenses, the Termination Fee, the AnniversaryFees, and other amounts Borrower owes Bank now or later, whether under this Agreement, the other Loan Documents, or otherwise, including, withoutlimitation, all obligations relating to Bank Services and interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrowerassigned to Bank, and to perform Borrower’s duties under the Loan Documents.“Operating Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of suchPerson’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date, and, (a) if such Person is a corporation, itsbylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Personis a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.“Overadvance” is defined in Section 2.3.“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals,reissues, extensions and continuations-in-part of the same.“Payment Date” is the last calendar day of each month.“Perfection Certificate” is defined in Section 5.1.“Permitted Commercialization Arrangement” means such commercialization, research and development, co-marketing and other collaborativearrangements, including joint ventures, whether or not such arrangements provide for licenses to Patents, Trademarks, Copyrights or other IntellectualProperty rights of Borrower, with Persons (including a Permitted Commercialization Arrangement Vehicle) with a primary line of business in thedevelopment, commercialization or manufacture of medical, diagnostic or pharmaceutical products or devices; provided that any such licenses andarrangements must be bona fide arms’-length transfers of the right to use such Intellectual Property that do not have the economic substance of a sale andBorrower retains legal ownership of such Intellectual Property.“Permitted Commercialization Arrangement Vehicle” means an entity, which may be a joint venture enterprise, engaged in the business of aPermitted Commercialization Arrangement and in which Borrower or its Subsidiaries have substantial representation in the governing body of such entity.“Permitted Cure Debt” means Indebtedness incurred in connection with the exercise of the Subordinated Debt Cure Right and (i) that is governedby documentation containing representations, warranties, covenants and events of default no more burdensome or restrictive than those contained in theLoan Documents unless such terms are also offered to Bank hereunder, (ii) that has a maturity date later than the Revolving Line Maturity Date, (iii) inrespect of which no cash payments of principal or interest are required prior to the Revolving Line Maturity Date, and (iv) in respect of which the holdershave agreed in favor of Borrower and Bank (A) that such Indebtedness is unsecured, and (B) to terms of subordination acceptable to Bank pursuant[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into among Bank and such holders. NeitherCRG nor its affiliates shall be permitted to be holders of such Permitted Cure Debt for purposes of this Agreement without Bank’s prior written consent.“Permitted Indebtedness” is:(a)Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;(b)Indebtedness existing on the Prior Loan Agreement Effective Date which is shown on the Perfection Certificate;(c)Subordinated Debt;(d)unsecured Indebtedness to trade creditors incurred in the ordinary course of business;(e)unsecured Indebtedness pursuant to corporate credit cards (other than with Bank) in an aggregate principal amount outstandingnot to exceed One Million Dollars ($1,000,000);(f)the CRG Indebtedness provided that the aggregate principal amount outstanding does not exceed the amount permitted in theCRG Intercreditor Agreement;(g)Indebtedness among the Borrowers and its Subsidiaries to the extent the same is permitted as a Permitted Investment pursuant toclauses (e) and (f) of the definition thereof;(h)accounts payable and purchasing card balances owing to trade creditors for goods and services and current operating liabilities(not the result of the borrowing of money) incurred in the ordinary course of Borrower’s or its Subsidiary’s business in accordance with customary terms andpaid within the specified time, unless contested in good faith by appropriate proceedings and reserved for in accordance with GAAP;(i)Indebtedness consisting of guarantees resulting from endorsement of negotiable instruments for collection by Borrower or anySubsidiary in the ordinary course of business;(j)Indebtedness (i) of Loan Parties to each other; (ii) of any Subsidiary not a Guarantor to any other Subsidiary not a Guarantor; and(iii) of a Loan Party to a Subsidiary that is not a Guarantor incurred in the ordinary course of business in an aggregate amount in any fiscal year not to exceedTwo Million Five Hundred Thousand Dollars ($2,500,000) (or the Equivalent Amount in other currencies) plus Indebtedness pursuant to Cost-PlusArrangements;(k)Guarantees (i) by a Loan Party of Indebtedness of another Loan Party and (ii) by any Subsidiary not a Guarantor of Indebtednessof any other Subsidiary not a Guarantor;(l)normal course of business equipment financing, provided that (i) at the time of incurrence thereof, the outstanding principalamount of such Indebtedness or the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement orinstrument that would appear on a balance sheet of such Person as of such date in accordance with GAAP, shall not exceed Five Million Dollars ($5,000,000)(or the Equivalent Amount in other currencies), and (ii) if secured, the collateral therefor consists solely of the assets being financed, the products andproceeds thereof and books and records related thereto;(m)contingent return obligations consistent with market practice in respect of unspent advances to Borrower or its Subsidiaries bya third-party entity (each such entity a “Research Partner”) whereby such funds and any interest thereon are used to pay costs and expenses for the researchperformed and expenses incurred in compliance with agreements between Borrower or its Subsidiaries and such Research Partner;(n)advance or deposits from customers or vendors received in the ordinary course of business and held with a deposit bank insuredby the Federal Deposit Insurance Corporation;(o)other unsecured Indebtedness in an aggregate principal amount not to exceed One Million Dollars ($1,000,000) at any timeoutstanding;(p)workers’ compensation claims, payment obligations in connection with health disability or other types of social securitybenefits, unemployment or other insurance obligations, reclamation and statutory obligations, in each case incurred in the ordinary course of Borrower’s orits Subsidiary’s business;(q)Indebtedness of Foreign Subsidiaries in respect of any agreement providing for treasury, depositary, cash management services,including in connection with any automated clearing house transfers of funds or any similar[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION transactions, securities settlements, foreign exchange contracts, assumed settlement, netting services, overdraft protections and other cash management,intercompany cash pooling and similar arrangements, in each case in the ordinary course of business;(r)Indebtedness of Foreign Subsidiaries with respect to letters of credit outstanding, provided that at any time in any givencalendar year, the outstanding principal amount of such Indebtedness shall not exceed Five Hundred Thousand Dollars ($500,000) at any time outstanding;(s)Indebtedness (other than for borrowed money) that may be deemed to exist pursuant to any (i) warranty or contractual serviceobligations or take-or-pay obligations contained in supply or similar agreements, in each case incurred in the ordinary course of business, or (ii) orperformance or surety bonds or similar obligations incurred in the ordinary course of business provided the aggregate outstanding amount of suchIndebtedness described in this subclause (ii) does not exceed Five Hundred Thousand Dollars ($500,000) at any time;(t) Indebtedness consisting of the bona fide financing of insurance premiums or self-insurance obligations (which must becommercially reasonable and consistent with insurance practices generally), in each case to the extent, (x) in the ordinary course of business, (y) suchfinancing arrangement has been approved in writing by Bank and (y) the aggregate outstanding amount thereof does not exceed Five Hundred ThousandDollars ($500,000) at any time; and(u)extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (t)above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower orits Subsidiary, as the case may be.“Permitted Investments” are:(a)Investments shown on the Perfection Certificate and existing on the Prior Loan Agreement Effective Date;(b)Investments consisting of Cash Equivalents;(c)Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in theordinary course of Borrower or a Subsidiary;(d)Investments consisting of deposit and securities accounts in which Bank has a perfected security interest except as otherwisepermitted by Section 6.8(b);(e)extensions of credit in the nature of accounts receivable or notes receivable arising from the sales or leases of goods or servicesin the ordinary course of business;(f)Investments by Borrower or Loan Parties in Loan Parties;(g)Investments by Borrower or Loan Parties in Subsidiaries that are not Loan Parties in an aggregate amount at any time (net ofpayments for inventory and equipment, any intercompany loan repayments and returns of cash, inventory and equipment, whether made by cash payment orby offset of amounts owed by Borrower or such Loan Party to such Subsidiary) not to exceed Two Million Five Hundred Thousand Dollars ($2,500,000) (orthe Equivalent Amount in other currencies) in any fiscal year plus any Investments pursuant to Cost-Plus Arrangements, it being understood that transfers ofinventory and equipment in the ordinary course of business will be counted against the foregoing limits at an amount no less than the GAAP value of suchasset (which shall not be less than cost or depreciated value); provided that any such offset in respect of payment for services shall not exceed an amount thatis consistent with the application of arm’s length principles under Section 482 of the Code and regulations thereunder;(h)Hedging Agreements entered into in the ordinary course of Borrower’s financial planning solely to hedge currency risks (andnot for speculative purposes) and in an aggregate net exposure amount for all such Hedging Agreements not in excess of Two Million Dollars ($2,000,000)(or the Equivalent Amount in other currencies);(i)Investments consisting of security deposits with utilities, landlords and other like Persons made in the ordinary course ofbusiness not to exceed One Million Dollars ($1,000,000) outstanding at any time;(j)employee loans, travel advances and guarantees in accordance with Borrower’s usual and customary practices with respectthereto (if permitted by applicable law) which in the aggregate shall not exceed One Million Dollars ($1,000,000) outstanding at any time (or the EquivalentAmount in other currencies);(k)Investments received in connection with any Insolvency Proceedings in respect of any customers, suppliers or clients and insettlement of delinquent obligations of, and other disputes with, customers, suppliers or clients;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION (l)Investments (excluding non-exclusive licenses of Intellectual Property and exclusive (with respect to jurisdiction only) licensesof Intellectual Property outside of the U.S.) as part of a Permitted Commercialization Arrangement, provided that the value of the cash and tangible propertycomponents of such Investment (valued at cost) shall not in any fiscal year exceed Five Million Dollars ($5,000,000) (or such greater amount approved byBank, such approval not to be unreasonably withheld), provided the portion of such limit not used in any fiscal year shall not be available in any succeedingfiscal year;(m)Investments permitted by Borrower’s investment policy as in effect as of the date of this Agreement, with such changes theretoas shall be approved by Borrower’s Board of Directors with the consent of Bank, which consent shall not be unreasonably withheld; and(n)other Investments not to exceed Five Hundred Thousand Dollars ($500,000) in the aggregate (i) outstanding at any time and (ii)in any fiscal year.“Permitted Liens” are:(a)Liens securing Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;(b)Liens existing on the Prior Loan Agreement Effective Date which are shown on the Perfection Certificate or arising under thisAgreement or the other Loan Documents;(c)Liens for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested ingood faith and for which Borrower maintains adequate reserves on Borrower’s Books, provided that no notice of any such Lien has been filed or recordedunder the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder;(d)Liens (i) securing Indebtedness permitted under clause (l) of the defined term “Permitted Indebtedness,” or (ii) existing onEquipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment;(e)Liens in favor of CRG Servicing securing the CRG Indebtedness permitted under clause (f) of the definition of “PermittedIndebtedness” and subject to the CRG Intercreditor Agreement(f)Liens that are possessory in nature and imposed by law which were incurred in the ordinary course of business, including (butnot limited to) carriers’, warehousemen’s and mechanics’ liens, liens relating to leasehold improvements and other similar liens arising in the ordinary courseof business and which (x) do not in the aggregate materially detract from the value of the Property subject thereto or materially impair the use thereof in theoperations of the business of such Person or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect ofpreventing the forfeiture or sale of the Property subject to such liens and for which adequate reserves have been made if required in accordance with GAAP;(g)Liens, pledges or deposits made in connection with and to secure payment of workers’ compensation, unemployment insuranceor other similar social security legislation in the ordinary course of business (other than Liens imposed by ERISA);(h)servitudes, easements, rights of way, restrictions and other similar encumbrances on real Property imposed by applicable Lawsand encumbrances consisting of zoning or building restrictions, easements, licenses, restrictions on the use of property or minor imperfections in title theretowhich, in the aggregate, are not material, and which do not in any case materially detract from the value of the property subject thereto or interfere with theordinary conduct of the business of any of the Loan Parties;(i)with respect to any real Property, (A) (i) such defects or encroachments as might be revealed by an up-to-date survey of such realProperty; (ii) the reservations, limitations, provisos and conditions expressed in the original grant, deed or patent of such property by the original owner ofsuch real Property pursuant to applicable Laws; and (iii) rights of expropriation, access or user or any similar right conferred or reserved by or in applicableLaws, which, in the aggregate for (i), (ii) and (iii), are not material, and which do not in any case materially detract from the value of the property subjectthereto or interfere with the ordinary conduct of the business of any of the Loan Parties, and (B) leases or subleases granted in the ordinary course of business;(j)bankers’ liens, rights of setoff and similar Liens incurred on Excluded Accounts made in the ordinary course of business;[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION (k)non-exclusive licenses or sublicenses, leases or subleases of property (other than real Property or Intellectual Property) grantedin the ordinary course of Borrower’s business, if the leases, subleases, licenses and sublicenses do not prohibit any Loan Party from granting Bank a securityinterest in such property;(l)Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default;(m)cash collateral arrangements made with respect to letters of credit permitted by clause (r) of the defined term “PermittedIndebtedness” but not exceeding the amount of the Indebtedness permitted by clause (r) of the defined term “Permitted Indebtedness”;(n)Liens on assets which are Transferred in accordance with clause (e) of Section 7.1 of this Agreement;(o)Liens consisting of the Transfers permitted under clauses (k), (l) and (m) of Section 7.1 of this Agreement; and(p)Liens the creation of which did not involve Borrower’s or its Subsidiaries’ consensual participation or involvementencumbering assets not to exceed Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate in any fiscal year.“Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization,association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.“Prime Rate” is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successorpublication thereto as the “prime rate” then in effect; provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero forpurposes of this Agreement; and provided further that if such rate of interest, as set forth from time to time in the money rates section of The Wall StreetJournal, becomes unavailable for any reason as determined by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank as itsprime rate in effect at its principal office in the State of California (such Bank announced Prime Rate not being intended to be the lowest rate of interestcharged by Bank in connection with extensions of credit to debtors); provided that, in the event such rate of interest is less than zero, such rate shall bedeemed to be zero for purposes of this Agreement.“Prior Loan Agreement Effective Date” is defined in the Recitals.“Product” means the principal version in the market of (a) the nCounter® Analysis System and its essential components, or (b) the nCounter-basedProsigna™ Breast Cancer Prognostic Gene Signature Assay, and each of their respective commercially available successors.“Property” of any Person means any property or assets, or interest therein, of such Person.“Publicly Reporting Company” means an issuer generally subject to the public reporting requirements of the Securities and Exchange Act of 1934.“Quarterly Financial Statements” is defined in Section 6.2(c).“Registered Organization” is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made.“Requirement of Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty,rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or anyof its property or to which such Person or any of its property is subject.“Reserves” means, as of any date of determination, such amounts as Bank may from time to time establish and revise in its good faith businessjudgment, reducing the amount of Advances and other financial accommodations which would otherwise be available to Borrower (a) to reflect events,conditions, contingencies or risks which, as determined by Bank in its good faith business judgment, do or may adversely affect (i) the Collateral or any otherproperty which is security for the Obligations or its value (including without limitation any increase in delinquencies of Accounts), (ii) the assets, business orprospects of Borrower or any Guarantor, or (iii) the security interests and other rights of Bank in the Collateral (including the enforceability, perfection andpriority thereof); or (b) to reflect Bank’s reasonable belief that any collateral report or financial information furnished by or on behalf of Borrower or anyGuarantor to Bank is or may have been incomplete, inaccurate or[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION misleading in any material respect; or (c) in respect of any state of facts which Bank determines constitutes an Event of Default or may, with notice or passageof time or both, constitute an Event of Default.“Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower.“Restricted License” is any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restrictsBorrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under ortermination of could interfere with Bank’s right to sell any Collateral.“Revolving Line” is an aggregate amount equal to Twenty Million Dollars ($20,000,000).“Revolving Line Maturity Date” is November 16, 2021.“SEC” shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.“Securities Account” is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.“Specified Affiliate” is any Person (a) more than ten percent (10.0%) of whose aggregate issued and outstanding equity or ownership securities orinterests, voting, non-voting or both, are owned or held directly or indirectly, beneficially or of record, by Borrower, and/or (ii) whose equity or ownershipsecurities or interests representing more than ten percent (10.0%) of such Person’s total outstanding combined voting power are owned or held directly orindirectly, beneficially or of record, by Borrower.“Streamline Period” is, on and after the Effective Date, provided no Event of Default has occurred and is continuing, the period (a) commencing onthe first day of the month following the day that Borrower provides to Bank a written report that Borrower has, for each consecutive day in the immediatelypreceding month, maintained Liquidity, as determined by Bank in its discretion, in an amount at all times greater than or equal to Twenty-Five MillionDollars ($25,000,000) (the “Streamline Balance”); and (b) terminating on the earlier to occur of (i) the occurrence of an Event of Default, and (ii) the first daythereafter in which Borrower fails to maintain the Streamline Balance, as determined by Bank in its reasonable discretion. Upon the termination of aStreamline Period, Borrower must maintain the Streamline Balance each consecutive day for one (1) month as determined by Bank in its discretion, prior toentering into a subsequent Streamline Period. Each Streamline Period, and each such Streamline Period shall commence on the first day of the monthly periodfollowing the date Bank determines, in its reasonable discretion, that the Streamline Balance has been achieved.“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to Bank (pursuant to asubordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into between Bank and the other creditor), onterms acceptable to Bank.“Subsidiary” is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownershipinterests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of acontingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or themanagement of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless the context otherwiserequires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and likeprotections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.“Transfer” is defined in Section 7.1.[Signature page follows.][†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date.BORROWER:NANOSTRING TECHNOLOGIES, INC.By:/s/ R. Bradley Gray Name:R. Bradley Gray Title:President and Chief Executive Officer BANK: SILICON VALLEY BANK By:/s/ Shawn Parry Name:Shawn Parry Title:Director [†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSION EXHIBIT A - COLLATERAL DESCRIPTIONThe Collateral consists of all of Borrower’s right, title and interest in and to the following personal property:(i) Accounts (other than IP/Equipment Accounts (as defined below)), (ii) Inventory, (iii) cash, Cash Equivalents, short and long term investments (butexcluding, for the avoidance of doubt, any other marketable equity securities in a Subsidiary of Borrower or owned by Borrower as part of a joint venture), allbank accounts including, without limitation, all operating accounts, depository accounts, savings accounts, and investment accounts, and all propertycontained therein, (iv) all Proceeds of all of the foregoing, and (v) all Borrower’s Books relating to the foregoing Collateral; provided however, the Collateralshall not include the following: (A) any right, title or interest of Borrower in any Intellectual Property or any licenses thereof, (B) any Accounts or proceedsarising from the sale, transfer, license or other disposition of any Intellectual Property (or licenses thereto), except for Product Sale Licenses, or from the sale,transfer, lease or other disposition of equipment (collectively, “IP/Equipment Accounts”), (C) equipment, (D) to the extent evidencing, governing, securingor otherwise related to Equipment, any general intangibles, chattel paper, instruments or documents, (E) proceeds of the foregoing clauses (A) through (D)and the proceeds of insurance policies with respect thereof, (F) CRG Cash Collateral, or (G) Excluded Accounts.Notwithstanding the foregoing, the Collateral does not include any property or assets of Borrower solely to the extent that (i) such property or assetsconstitute CRG Senior Collateral and are securing the obligations Borrower under the CRG Loan Agreement and (ii) the CRG Loan Agreement has not beenterminated.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit A-1 EXHIBIT BCOMPLIANCE STATEMENTTO:SILICON VALLEY BANK Date: FROM:NANOSTRING TECHNOLOGIES, INC. Under the terms and conditions of the Amended and Restated Loan and Security Agreement between Borrower and Bank (the “Agreement”),Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below. Attached are the requireddocuments evidencing such compliance, setting forth calculations prepared in accordance with GAAP consistently applied from one period to the nextexcept as explained in an accompanying letter or footnotes. Capitalized terms used but not otherwise defined herein shall have the meanings given them inthe Agreement.Please indicate compliance status by circling Yes/No under “Complies” column. Reporting CovenantsRequiredComplies Quarterly financial statements withCompliance StatementQuarterly within 45 days (other than 4th quarter)Yes NoAnnual financial statements (4th quarter)FYE within 90 daysYes No10-Q, 10-K and 8-KWithin 5 days after filing withSECYes NoA/R & A/P Agings, detailed accounts receivable ledger and detailed listingof Account DebtorsQuarterly within 45 daysYes NoInventory ReportQuarterly within 45 daysYes NoBoard approved projectionsFYE within 30 days and as amended/updatedYes NoBorrowing Base Statements (including detailed accounts receivableledger)(i) Weekly if Streamline Period not in Effect and Advances outstanding,(ii) monthly within 30 days ifStreamline Period in effect andAdvances outstanding, and(iii) quarterly within 45 days if no AdvancesoutstandingYes No Streamline Period LiquidityStreamline PeriodAppliesLiquidity > $25,000,000YesYes NoLiquidity < $25,000,000NoYes No[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit B-1 Financial CovenantRequiredActualComplies Maintain as indicated: Minimum LiquidityGreater than$2,000,000$________Yes NoMinimum Revenue (trailing 12 month) December 31, 2019$ [†]$________Yes No December 31, 2020$ [†]$________Yes NoExcept as noted below, (i) as of the date of this Compliance Statement, the information and calculations set forth therein are true, accurate andcorrect, (ii) as of the end of the compliance period set forth in this submission, Borrower is in complete compliance with all required covenants except asnoted in such Compliance Statement, (iii) as of the date of this submission, no Events of Default have occurred or are continuing, (iv) all representations andwarranties other than any representations or warranties that are made as of a specific date in Section 5 remain true and correct in all material respects as of thedate of this submission except as noted below, (v) as of the date of this submission, Borrower and each of its Subsidiaries has timely filed all required taxreturns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower exceptas otherwise permitted pursuant to the terms of Section 5.9, and (vi) as of the date of this submission, no Liens have been levied or claims made againstBorrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification toBank. (If no exceptions exist, state “No exceptions to note.”)-------------------------------------------------------------------------------------------------------------------------Has Borrower entered into any Permitted Commercialization Arrangement with Investments exceeding $2,500,000 in the most recent quarter? ____. If so,attach copies of the applicable transaction documents.[†]DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTFILED SEPARATELY WITH THE COMMISSIONExhibit B-2 Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-189883, 333-194844, 333-202768, 333-210210, 333-216584, 333-222567, and 333-222568) and Form S-3 (No. 333-220255) of NanoString Technologies, Inc. of our report dated March 11, 2019relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10‑K./s/ PricewaterhouseCoopers LLPSeattle, WashingtonMarch 11, 2019 Exhibit 31.1CERTIFICATIONSI, R. Bradley Gray, certify that:1.I have reviewed this Annual Report on Form 10-K of NanoString Technologies, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: March 11, 2019/s/ R. Bradley Gray R. Bradley Gray President and Chief Executive Officer (Principal Executive Officer) Exhibit 31.2CERTIFICATIONSI, K. Thomas Bailey, certify that:1.I have reviewed this Annual Report on Form 10-K of NanoString Technologies, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: March 11, 2019/s/ K. Thomas Bailey K. Thomas Bailey Chief Financial Officer (Principal Financial and Accounting Officer) Exhibit 32.1NANOSTRING TECHNOLOGIES, INC.CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of NanoString Technologies, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2018, asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Bradley Gray, President and Chief Executive Officer (PrincipalExecutive Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, thatto my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany./s/ R. Bradley Gray R. Bradley Gray President and Chief Executive Officer (Principal Executive Officer) Date: March 11, 2019A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and willbe retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.This certification accompanies the Report to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to beincorporated by reference into any filing of NanoString Technologies, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing. Exhibit 32.2NANOSTRING TECHNOLOGIES, INC.CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of NanoString Technologies, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2018, asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, K. Thomas Bailey, Chief Financial Officer (Principal Financial andAccounting Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, thatto my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany./s/ K. Thomas BaileyK. Thomas BaileyChief Financial Officer(Principal Financial and Accounting Officer)Date: March 11, 2019A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and willbe retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.This certification accompanies the Report to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to beincorporated by reference into any filing of NanoString Technologies, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.
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