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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K (Mark One)

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934

For the fiscal year ended December 31, 2015.

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 001-33528

OPKO Health, Inc.(Exact Name of Registrant as Specified in Its Charter)

Delaware 75-2402409

(State or Other Jurisdiction ofIncorporation or Organization)

(I.R.S. EmployerIdentification No.)

4400 Biscayne Blvd., Miami, FL 33137(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, Including Area Code): (305) 575-4100

Securities registered pursuant to section 12(b) of the Act:

Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, $.01 par value per share New York Stock Exchange

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 theAct. Yes ¨ No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 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 filing requirements for the past 90 days. Yes ý No ¨

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Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, everyInteractive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or forsuch shorter period that the registrant was required to submit and post 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 notbe contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III ofthis Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smallerreporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of theExchange Act.

(in Rule 12b-2 of the Exchange Act) (Check one): Large accelerated filer ý Accelerated filer oNon-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ý

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price atwhich the common equity was last sold, as of the last business day of the registrant’s most recently completed second fiscal quarter was:$3,877,294,326.

As of February 16, 2016, the registrant had 545,696,849 shares of Common Stock outstanding.

Documents Incorporated by Reference

Portions of the registrant’s definitive proxy statement for its 2016 Annual Meeting of Stockholders are incorporated by reference inItems 10, 11, 12, 13, and 14 of Part III of this Annual Report on Form 10-K.

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PagePart I. Item 1. Business 5Item 1A. Risk Factors 22Item 1B. Unresolved Staff Comments 50Item 2. Properties 50Item 3. Legal Proceedings 50Item 4. Mine Safety Disclosures 51Part II.

Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities 52

Item 6. Selected Financial Data 54Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 55Item 7A. Quantitative and Qualitative Disclosures about Market Risk 70Item 8. Financial Statements and Supplementary Data 71Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 123Item 9A. Controls and Procedures 123Item 9B. Other Information 124Part III. Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions and Director Independence Item 14. Principal Accounting Fees and Services Part IV. Item 15. Exhibits, Financial Statement Schedules 126Signatures 131Certifications 131

EX-21 EX-23.1 EX-23.2 EX-31.1 EX-31.2 EX-32.1 EX-32.2 EX-101. INS XBRL Instance Document

EX-101.SCH XBRL Taxonomy Extension Schema Document

EX-101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

EX-101.DEF XBRL Taxonomy Extension Definition Linkbase Document

EX-101.LAB XBRL Taxonomy Extension Label Linkbase Document

EX-101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements,” as that term is defined under the Private SecuritiesLitigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended. Forward-looking statements include statements about our expectations, beliefs or intentions regardingour product development efforts, business, financial condition, results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statementsrelate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relateto matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results todiffer materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actualactivities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include thosedescribed below and in “Item 1A-Risk Factors” of this Annual Report on Form 10-K. We do not undertake an obligation to update forward-looking statements. We intend that all forward-looking statements be subject to the safe-harbor provisions of thePSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to futureevents and financial performance.

Risks and uncertainties, the occurrence of which could adversely affect our business, include the following:

• we have a history of losses and may not become profitable in the nearfuture;

• the risks inherent in funding, developing and obtaining regulatory approvals of new, commercially-viable and competitive productsand treatments;

• our research and development activities may not result in commercially viableproducts;

• that earlier clinical results of effectiveness and safety may not be reproducible or indicative of futureresults;

• that we may fail to obtain regulatory approval for or successfully commercialize Rayaldee and hGH-CTP;

• that we may not generate profits or cash flow from our laboratory operations or substantial revenue from our diagnosticproducts;

• that currently available over-the-counter and prescription products, as well as products under development by others, may prove tobe as or more effective than our products for the indications being studied;

• our ability to develop a pharmaceutical sales and marketinginfrastructure;

• our ability and our distribution and marketing partners’ ability to comply with regulatory requirements regarding the sales,marketing and manufacturing of our products and product candidates and the operation of our laboratories;

• the performance of our third-party distribution partners, licensees and manufacturers over which we have limitedcontrol;

• our success is dependent on the involvement and continued efforts of our Chairman and Chief ExecutiveOfficer;

• integration challenges for Bio-Reference, EirGen and other acquiredbusinesses;

• changes in regulation and policies in the United States and other countries, including increasing downward pressure on health carereimbursement;

• our ability to manage our growth and our expandedoperations;

• increased competition, including pricecompetition;

• changing relationships with payers, including the various state and multi-state Blues programs, suppliers and strategicpartners;

• efforts by third-party payors to reduce utilization and reimbursement for clinical testingservices;

• failure to timely or accurately bill for ourservices;

• failure to obtain and retain new clients and business partners, or a reduction in tests ordered or specimens submitted by existingclients;

• failure to establish, and perform to, appropriate quality standards to assure that the highest level of quality is observed in theperformance of our testing services;

• failure to maintain the security of patient-relatedinformation;

• our ability to obtain and maintain intellectual property protection for ourproducts;

• our ability to defend our intellectual property rights with respect to ourproducts;

• our ability to operate our business without infringing the intellectual property rights ofothers;

• our ability to attract and retain key scientific and managementpersonnel;

• our need for, and ability to obtain, additionalfinancing;

• adverse results in material litigation matters or governmental

inquiries;• failure to obtain and maintain regulatory approval outside the U.S.;

and• legal, economic, political, regulatory, currency exchange, and other risks associated with international

operations;

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PART I

Unless the context otherwise requires, all references in this Annual Report on Form 10-K to the “Company”, “OPKO”, “we”, “our”,“ours”, and “us” refer to OPKO Health, Inc., a Delaware corporation, including our wholly-owned subsidiaries.

ITEM 1. BUSINESS

OVERVIEW

We are a diversified healthcare company that seeks to establish industry-leading positions in large and rapidly growing medicalmarkets. Our diagnostics business includes Bio-Reference Laboratories (“Bio-Reference”), the nation’s third-largest clinical laboratorywith a core genetic testing business and a 420-person sales force to drive growth and leverage new products, including the 4Kscore prostatecancer test and the Claros 1 in-office immunoassay platform. Our pharmaceutical business features Rayaldee, a treatment for secondaryhyperparathyroidism (“SHPT”) in patients with stage 3 or 4 chronic kidney disease (“CKD”) and vitamin D insufficiency (target March 29,2016 PDUFA date) and VARUBI™ for chemotherapy-induced nausea and vomiting (launched by partner TESARO in November 2015).Our pharmaceutical business includes OPKO Biologics, which features hGH-CTP, a once-weekly human growth hormone injection (inPhase 3 and partnered with Pfizer), and a longer acting Factor VIIa drug for hemophilia (Phase 2a).

In addition to our pharmaceutical and diagnostic development programs, we own established pharmaceutical platforms in Ireland,Chile, Spain and Mexico which generate revenue and which we expect to facilitate future market entry for our products currently indevelopment. We have a development and commercial supply pharmaceutical company, as well as a global supply chain operation andholding company in Ireland, which we expect will play an important role in the development, manufacturing, distribution and approval of awide variety of drugs with an emphasis on high potency products. We also own a specialty active pharmaceutical ingredients (“APIs”)manufacturer in Israel, which we expect will facilitate the development of our pipeline of molecules and compounds for our proprietarymolecular diagnostic and therapeutic products.

We have a highly experienced management team that we believe has demonstrated an ability to successfully build and managepharmaceutical and healthcare businesses. Based on their experience in the industry, we believe that our management team has extensivedevelopment, regulatory and commercialization expertise and relationships that provide access to commercial opportunities.

All product or service marks appearing in type form different from that of the surrounding text are trademarks or service marksowned, licensed to, promoted or distributed by OPKO, its subsidiaries or affiliates, except as noted. All other trademarks or services marksare those of their respective owners.

GROWTH STRATEGY

We expect our future growth to come from leveraging our commercial infrastructure, proprietary technology and developmentstrengths, and by opportunistically pursuing complementary, accretive, or strategic acquisitions and investments.

We have under development a broad and diversified portfolio of diagnostic tests, vaccines, small molecules, and biologics targeting abroad range of unmet medical needs. We also operate the third largest full service clinical laboratory in the United States. We intend tocontinue to leverage our proprietary technology and our strengths in all phases of research and development to further develop andcommercialize our portfolio of proprietary pharmaceutical and diagnostic products. In support of our strategy, we intend to:

• obtain requisite regulatory approval and compile clinical data for our most advanced productcandidates;

• develop a focused commercialization capability both internationally and in the U.S.;and

• expand into other medical markets that provide significant opportunities and that we believe are complementary to andsynergistic with our business.

In addition, we expect to leverage the Bio-Reference business and infrastructure to drive rapid and widespread uptake of ourdiagnostic products, including the 4Kscore test and the Claros 1 in-office immunoassay platform. We also intend to leverage the geneticand genomic data generated and accumulated through Bio-Reference’s genetic sequencing laboratory to enhance drug discovery andclinical trial programs.

We have and expect to continue to be opportunistic and to pursue complementary or strategic acquisitions, licenses and investments.Our management team has significant experience in identifying, executing and integrating these transactions. We expect to use well-timed,carefully selected acquisitions, licenses and investments to continue to drive our growth, including:

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• Products and technologies. We intend to continue to pursue product and technology acquisitions and licenses that willcomplement our existing businesses and provide new product and market opportunities, enhance our profitability, leverage ourexisting assets, and contribute to our own organic growth.

• Commercial businesses. We intend to continue to pursue acquisitions of commercial businesses that will both drive ourgrowth and provide geographically diverse sales and distribution opportunities.

• Early stage investments. We have and may continue to make investments in early stage companies that we perceive to havevaluable proprietary technology and significant potential to create value for OPKO as a shareholder.

CORPORATE INFORMATION

We were originally incorporated in Delaware in October 1991 under the name Cytoclonal Pharmaceutics, Inc., which was laterchanged to eXegenics, Inc. (“eXegenics”). On March 27, 2007, we were part of a three-way merger with Froptix Corporation (“Froptix”)and Acuity Pharmaceuticals, Inc. (“Acuity”), both research and development companies. On June 8, 2007, we changed our name to OPKOHealth, Inc. Our shares are publicly traded on the NYSE under the ticker “OPK” and on the Tel Aviv Stock Exchange. Our principalexecutive offices are located in leased office space in Miami, Florida.

We currently manage our operations in two reportable segments, diagnostics and pharmaceutical. The pharmaceutical segmentconsists of our pharmaceutical operations we acquired in Chile, Mexico, Ireland, Israel and Spain and our pharmaceutical research anddevelopment operations. The diagnostics segment primarily consists of our clinical laboratory operations we acquired through theacquisitions of Bio-Reference and OPKO Lab and our point-of-care operations. There are no significant inter-segment sales. We evaluatethe performance of each segment based on operating profit or loss. There is no inter-segment allocation of interest expense and incometaxes. Refer to Note 16 for financial information about the segments and geographic areas.

CURRENT PRODUCTS AND SERVICES AND RELATED MARKETS

Diagnostics

Bio-Reference Laboratories

In August 2015, we completed the acquisition of Bio-Reference, the third largest full service clinical laboratory in the United States.Through Bio-Reference, we now offer comprehensive laboratory testing services utilized by healthcare providers in the detection,diagnosis, evaluation, monitoring, and treatment of diseases, including esoteric testing, molecular diagnostics, anatomical pathology,genetics, women’s health and correctional healthcare. We market and sell these services to physician offices, clinics, hospitals, employersand governmental units nationally, with the largest concentration of business in the larger metropolitan areas across New York, NewJersey, Maryland, Pennsylvania, Delaware, Washington DC, Florida, California, Texas, Illinois and Massachusetts. Bio-Reference has a420-person sales force and operates a network of more than 180 patient service centers for collection of patient specimens.

Our Bio-Reference laboratory testing business consists of routine testing and esoteric testing. Routine tests measure various healthparameters, such as the functions of the heart, kidney, liver, thyroid and other organs, including such tests as blood cell counts, cholesterollevels, pregnancy, substance abuse and urinalysis. These tests are primarily performed at our main processing facility in Elmwood Park,New Jersey, as well as satellite facilities in Florida, Texas, Maryland, Ohio, New York and Connecticut. We typically operate 24 hours perday, 365 days per year and perform and report most routine test results within 24 hours.

The esoteric tests we perform require sophisticated equipment and materials, highly skilled personnel and professional attention.Esoteric tests are ordered less frequently than routine tests but typically are priced higher than routine tests. Esoteric tests include testsrelated to endocrinology, genetics and genomics, immunology, microbiology, HIV tests, molecular diagnostics, oncology, serology, andtoxicology. We perform cancer cytogenetic testing at our main processing facility in Elmwood Park, and at our facilities in Clarksburg,MD, and Milford, MA, and genetic testing at our GeneDx facility in Gaithersburg, MD, as well as at our Elmwood Park facility. Weperform cytology testing in Frederik, MD, Milford, MA, Columbus, OH, Houston, TX, Melbourne, FL and Campbell, CA, and at ourElmwood Park facility.

Through Bio-Reference, we operate in the following highly specialized laboratory divisions:

• Bio-Reference Laboratories. Bio-Reference constitutes our core clinical testing laboratory offering automated, high volumeroutine testing services, STAT testing, informatics, HIV, Hep C and other molecular tests.

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• GenPath (Oncology). National Oncology presence with expertise in cancer pathology and diagnostics, as well as moleculardiagnostics. Core tests include FLOW, IHC, MicroArray, FISH, ISH, Morphology, full service oncology.

• GenPath (Women’s Health). Innovative technology platform for sexually transmitted infections has enabled expansionnationally with specimens coming from 48 contiguous states, including Image Directed Paps, HPV Plus, and STI Testing.

• GeneDx. Industry leading national laboratory for testing rare and ultra-rare genetic diseases with international reach,performing testings on specimens from more than 50 countries.

• Laboratorio Bueno Salud. National testing laboratory dedicated to serving the Spanish-speaking population in the UnitedStates, where all business is conducted in Spanish including patient and physician interaction.

We have one of the largest marketing staffs of any laboratory in the country with sales and marketing groups dedicated to urology,oncology, women’s health, genetic testing and correctional health, as well as cross-over groups selling to large institutions. All of our salesand marketing personnel operate in a dual capacity, as both marketing and client support representatives, which we believe provides bettercustomer service and a strong connection with our customers.

We expect the clinical laboratory testing industry will continue to experience growth in testing volumes due to aging of the populationin the U.S., patient awareness of the value of laboratory tests, a decrease in the cost of tests, the development of sophisticated andspecialized tests for detection and management of disease, increased recognition of early detection and prevention as a means of reducinghealthcare costs, and ongoing research and development in genetics and genomics and personalized medicine. Our mission is to berecognized by our clients as the premier provider of clinical laboratory testing, information and related services.

Bio-Reference provides us a significant diagnostics commercial infrastructure for marketing and sales that reaches more than 10million patients a year. In addition, its large team of managed care experts complement our efforts to ensure that payors recognize the valueof our diagnostic and laboratory tests for reimbursement purposes. Since the acquisition of Bio-Reference, we have begun to leverage thenational marketing, sales and distribution resources of Bio-Reference, along with its 420-person sales force, to enhance sales of andreimbursement for our 4Kscore test, a laboratory developed blood test that provides a personalized risk score for aggressive prostate cancer.We plan to continue to leverage the Bio-Reference commercial infrastructure and capabilities, as well as its extensive relationships withpayers, to commercialize OPKO’s other diagnostic products under development, including the Claros 1.

4Kscore

We began selling the 4Kscore test in the U.S. in March 2014 and in Europe and Mexico in September 2014 and January 2015,respectively. The 4Kscore test is a laboratory developed test that measures the blood plasma levels of four different prostate-derivedkallikrein proteins: Total PSA, Free PSA, Intact PSA and Human Kallikrein-2 (“hK2”). These biomarkers are then combined with apatient’s age, DRE status (nodule / no nodule), and prior negative biopsy status (yes / no) using a proprietary algorithm to calculate the risk(probability) of finding a Gleason Score 7 or higher prostate cancer. The four kallikrein panel of biomarkers utilized in the 4Kscore test isbased on decades of research conducted by scientists at Memorial Sloan-Kettering Cancer Center and leading European institutions.Investigators at the University of Malmo, Sweden, University of Turku, Finland and Memorial Sloan Kettering Cancer Center, New York,have also demonstrated that an algorithm integrating these biomarkers along with patient data can predict prostate biopsy results to identifypatients with the greatest risk of having aggressive prostate cancer.

The 4Kscore test was developed by OPKO Lab and validated in 2014 in a prospective, blinded study of 1,012 men in collaborationwith 26 urology centers across the U.S. Results showed that the 4Kscore test was highly accurate for predicting the presence of high-gradecancer (Gleason score 7 or higher) prior to prostate biopsy. The full data from the blinded, prospective U.S. clinical validation study werepresented at the AUA Annual Meeting in Orlando, FL on May 18, 2014 at Plenary Session and published in the online edition of EuropeanUrology in October 2014.

The clinical data presented at the AUA annual meeting included 1,012 men scheduled for prostate biopsy. Patients were enrolledregardless of their PSA, age, DRE result, or primary versus repeat biopsy status, and represent contemporary practice in the U.S. Theresults demonstrated the ability of the 4Kscore test to discriminate between men with high-grade, aggressive prostate cancer and those menwho had no findings of cancer or had low-grade or indolent form of the disease. The discrimination, measured by Area Under the Curve(“AUC”) analysis, was 0.82 and was significantly higher than previously developed tests. Furthermore, the 4Kscore test demonstratedexcellent risk calibration, indicating the accuracy of the result for an individual patient. The high value of AUC and the excellent riskcalibration make the 4Kscore test result valuable information for the shared decision-making between the urologist and patient on whetheror not to perform a prostate biopsy.

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A recent study indicated that the 4Kscore test led to 64.6% fewer biopsies. The study, “The 4Kscore® Test Reduces Prostate BiopsyRates in Community and Academic Urology Practices”, published in the January 2016 edition of Reviews in Urology, which included 611patients seen by 35 academic and community urologists across the U.S., evaluated the influence of the 4Kscore test on urologist-patientdecisions about whether to perform a biopsy in men who had an abnormal PSA and or DRE result. Test results for patients were stratifiedinto low risk (< 7.5%), intermediate risk (7.5%-19.9%) and high risk (≥20%) for developing aggressive prostate cancer. Nearly half(49.3%) of the men were categorized as low risk; 25.7% and 25.0% fell into the intermediate-risk and high-risk categories, respectively.Notably, the 4Kscore test results influenced biopsy decisions in 88.7% of the men. In the three risk groups, a biopsy was avoided in 94.0%,52.9%, and 19.0% of men in the low, intermediate, and high-risk categories, respectively.

We have been granted a Category I CPT code by the AMA for our 4Kscore test, which will be published in August 2016 andeffective January 1, 2017. This upgrades the 4Kscore test from a Category III Administrative code to a Category I CPT code, a designationreserved for established diagnostic tests. CPT codes are used by insurance companies and government payers to describe health careservices and procedures, and having a Category I CPT code is critical to facilitate reimbursement in government programs such as Medicareand Medicaid, as well as private insurance programs. We believe having the Category I CPT code will help facilitate obtaining broadercoverage from payers for the 4Kscore test and allow greater access to the test for a broader group of patients across the U.S.

The National Comprehensive Cancer Network (“NCCN”) also included the 4Kscore test as a recommended test in their 2015Guidelines for Prostate Cancer Early Detection. The panel making this recommendation concluded that the 4Kscore test is indicated for useprior to a first prostate biopsy, or after a negative biopsy, to assist patients and physicians in further defining the probability of high-gradecancer.

As a result of our leveraging the Bio-Reference commercial infrastructure and managed care expertise, together with the NCCNGuidelines publication and receipt of a Category I CPT Code, we expect to significantly expand our efforts to obtain broad reimbursementfor the 4Kscore test throughout 2016 and beyond.

Point-of-Care Diagnostics

OPKO Diagnostics, LLC (“OPKO Diagnostics”), formerly Claros Diagnostics, Inc., is developing a novel diagnostic instrumentsystem to provide rapid, high performance blood test results and enable tests to be run in point-of-care settings. The instrument, amicrofluidics-based diagnostic test system consisting of a credit card-sized disposable test cassette that works with a small but sophisticateddesktop analyzer, provides high performance quantitative blood test results within minutes and permits the transition of compleximmunoassays and other tests from the centralized reference laboratory to the physician’s office or hospital nurses station. The technologyonly requires a finger stick drop of blood introduced into the test cassette which can simultaneously run multiple tests (multiplex) on thesingle droplet of blood.

We have already obtained a CE Mark for the Claros 1 point-of-care analyzer and a diagnostic test for prostate specific antigen(“PSA”) performed on the Claros 1. We intend to update our CE Mark with all product improvements made to the Claros 1 and SangiaTotal PSA test since the initial CE mark approval and introduce the Claros 1 system for PSA in Europe in 2016.

We intend to commence clinical trials and submit our application to the FDA for a pre-marketing authorization (“PMA”) for thePSA test in late 2016 or early 2017. We also intend to submit our application to the FDA for clearance of a testosterone diagnostic test forour point-of-care system in late 2016 or early 2017. We expect to fully leverage Bio-Reference’s marketing, sales and distribution resourcesfor the launch of the Claros 1 system and associated diagnostic tests in the U.S after FDA clearance or approval.

We are also presently working to add additional tests for our point-of-care system, including vitamin D, and we believe that there aremany more applications for the technology, including infectious disease, cardiology, women’s health, and companion diagnostics.

Pharmaceutical Business

We presently have several pharmaceutical compounds and technologies in research and development for a broad range of indicationsand conditions. Our product development candidates are in various stages of development and include the following:

Renal Products

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Our two lead renal products are Rayaldee (CTAP101), a vitamin D prohormone to treat SHPT in patients with stage 3 or 4 CKD andvitamin D insufficiency, and Alpharen (Fermagate Tablets), a new and potent non-absorbed phosphate binder to treat hyperphosphatemia inStage 5 patients on chronic hemodialysis. In May 2015, we submitted an NDA for Rayaldee to the FDA. Our NDA was accepted by theFDA for review in July 2015 and the FDA set a PDUFA target date of March 29, 2016. We announced successful top-line results from twopivotal phase 3 trials of Rayaldee in the third quarter of 2014. These trials were identical randomized, double-blind, placebo-controlled,multi-site studies intended to establish the safety and efficacy of Rayaldee as a new treatment for SHPT in patients with stage 3 or 4 CKDand vitamin D insufficiency.

Vitamin D insufficiency arises in CKD due to the abnormal upregulation of CYP24, an enzyme that destroys vitamin D and itsmetabolites. Studies in CKD patients have demonstrated that currently available over-the-counter and prescription vitamin D productscannot reliably raise blood vitamin D prohormone levels and effectively treat SHPT, a condition commonly associated with CKD in whichthe parathyroid glands secrete excessive amounts of parathyroid hormone (“PTH”). Prolonged elevation of blood PTH causes excessivecalcium and phosphorus to be released from bone, leading to elevated serum calcium and phosphorus levels, softening of the bones(osteomalacia) and calcification of vascular and renal tissues. SHPT affects 40-82% of patients with stage 3 or 4 CKD and approximately95% of patients with stage 5.

The completed pivotal trials for Rayaldee successfully met all primary efficacy and safety endpoints. The primary efficacy endpointwas a responder analysis in which “responder” was defined as any treated subject who demonstrated an average 30% decrease in PTH frompre-treatment baseline during the last six weeks of the 26-week treatment period. A significantly higher response rate was observed withRayaldee which steadily increased with treatment duration. The response rate with Rayaldee was similar in CKD stages 3 and 4. Safety andtolerability data were comparable in both treatment groups. Patients completing the two pivotal trials were treated, at their election, for anadditional six months with Rayaldee during an open-label extension study.

In addition to SHPT in CKD patients, we also are developing Rayaldee for other indications, and in August 2014, announced thesubmission of an IND to the FDA to evaluate Rayaldee as an adjunctive therapy for the prevention of skeletal-related events in patientswith bone metastases undergoing anti-resorptive therapy. We commenced a phase 1 dose escalation study in the fourth quarter of 2014 inbreast and prostate cancer patients with bone metastases who are receiving anti-resorptive therapy. The study is evaluating safety, markersof mineral metabolism and tumor progression.

Our phosphate binder, Alpharen (Fermagate Tablets), has been shown to be safe and effective in treating hyperphosphatemia in phase2 and 3 trials in stage 5 CKD patients undergoing chronic hemodialysis. Hyperphosphatemia, or elevated serum phosphorus, is common indialysis patients and tightly linked to the progression of SHPT. The kidneys provide the primary route of excretion for excess phosphorusabsorbed from ingested food. As kidney function worsens, serum phosphorus levels increase and directly stimulate PTH secretion. Stage 5CKD patients must reduce their dietary phosphate intake and usually require regular treatment with phosphate binding agents to lowerserum phosphorus to meet the recommendations of the National Kidney Foundation’s Clinical Practice Guidelines that serum phosphoruslevels should be maintained at or below 5.5 mg/dL. Hyperphosphatemia contributes to soft tissue mineralization and affects approximately90% of dialysis patients. Dialysis patients require ongoing phosphate binder treatment to maintain controlled serum phosphorus levels. Weare currently preparing a single remaining Phase 3 clinical trial in the U.S., but are first studying novel characteristics of Alpharen whichmay offer additional competitive advantages.

We believe the CKD patient population is large and growing as a result of obesity, hypertension and diabetes; therefore this patientpopulation represents a significant market opportunity. According to the National Kidney Foundation, CKD afflicts over 26 million peoplein the U.S., including more than 20 million patients with stage 3 or 4 CKD. In stage 5, kidney function is minimal to absent and patientsrequire regular dialysis or a kidney transplant for survival. An estimated 71-97% of CKD patients have vitamin D insufficiency which canlead to SHPT and its debilitating consequences. CKD continues to be associated with poor outcomes, reflecting the inadequacies of thecurrent standard of care. Vitamin D insufficiency, hyperphosphatemia and SHPT, when inadequately treated, are major contributors to poorCKD outcomes. We intend to develop Rayaldee and Alpharen to constitute part of the foundation for a new and markedly improvedstandard of care for CKD patients having SHPT and/or hyperphosphatemia.

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OPKO Biologics

OPKO Biologics is our biopharmaceutical business focused on developing and commercializing longer-acting proprietary versions ofalready approved therapeutic proteins. One of our innovative platform technologies uses a short, naturally-occurring amino acid sequence(carboxl terminal peptide or “CTP”) that has the effect of slowing the removal from the body of the therapeutic protein to which it isattached. This CTP can be readily attached to a wide array of existing therapeutic proteins, stabilizing the therapeutic protein in thebloodstream and extending its life span without additional toxicity or loss of desired biological activity. We are using the CTP technologyto develop new, proprietary versions of certain existing therapeutic proteins that have longer life spans than therapeutic proteins withoutCTP. We believe that our products will have greatly improved therapeutic profiles and distinct market advantages.

There are two existing biopharmaceuticals on the market that currently utilize CTP technology. The first product is human chorionicgonadotropin (“hCG”), of which CTP is naturally a part. Besides being present normally in high amounts during pregnancy, it is also giventherapeutically to women or men as a fertility treatment (sold by Merck-Serono, Merck & Co. and Ferring). The second product isELONVA® (FSH-CTP), which is sold by Merck & Co. The data from the clinical and therapeutic use of these products gave us confidencethat the CTP technology is able to address the major problems faced by the other attempted approaches to increase protein lifespan. Clinicaland therapeutic data from these products also reassured us that CTP can be used safely and that it is effective in extending the serumlifetime and activity. We are the exclusive licensee for the utilization of CTP technology in all therapeutic proteins, peptides and theirmodified forms except for human FSH, LH, TSH and hCG.

Our lead product candidate utilizing CTP, hGH-CTP, is a recombinant human growth hormone product under development for thetreatment of growth hormone deficiency (“GHD”), which is a pituitary disorder resulting in short stature in children and other physicalailments in both children and adults.

In December 2014, we entered into an exclusive worldwide agreement with Pfizer for the development and commercialization ofhGH-CTP for the treatment of GHD in adults and children, as well as for the treatment of growth failure in children born SGA. Inconnection with the transaction, we granted Pfizer an exclusive license to commercialize hGH-CTP worldwide, and we received non-refundable and non-creditable upfront payments of $295 million and are eligible to receive up to an additional $275 million upon theachievement of certain regulatory milestones. In addition, we are eligible to receive initial tiered royalty payments associated with thecommercialization of hGH-CTP for Adult GHD with percentage rates ranging from the high teens to mid-twenties. Upon the launch ofhGH-CTP for Pediatric GHD in certain major markets, the royalties will transition to regional, tiered gross profit sharing for both hGH-CTPand Pfizer’s Genotropin®.

Pursuant to our agreement with Pfizer, we will lead the clinical development activities for the hGH-CTP program and will beresponsible for funding the development programs for the key indications, which includes Adult and Pediatric GHD and Pediatric SGA.Pfizer will be responsible for all development costs for additional indications as well as all post-marketing studies. In addition, Pfizer willfund the commercialization activities for all indications and lead the manufacturing activities covered by the global development plan.

GHD occurs when the production of growth hormone, secreted by the pituitary gland, is disrupted. Since growth hormone plays acritical role in stimulating body growth and development, and is involved in the production of muscle protein and in the breakdown of fats,a decrease in the hormone affects numerous body processes. hGH is used for the long-term treatment of children and adults with inadequatesecretion of endogenous growth hormone. The primary indications it treats in children are GHD, SGA, kidney disease, Prader-WilliSyndrome and Turner’s Syndrome. In adults, the primary indications are replacement of endogenous growth hormone and the treatment ofAIDS-induced weight loss. Patients using hGH receive daily injections six or seven times a week. This is particularly burdensome forpediatric patients. We believe a significant market opportunity exists for a longer-lasting version of hGH that would require fewerinjections.

hGH-CTP is currently in a global Phase 3 trial in adults and a global phase 2 trial in children and has orphan drug designation in theU.S. and Europe for both adults and children with GHD. We anticipate commencing our global phase 3 trial in children in the second halfof 2016.

In addition to hGH-CTP, we are developing a product to extend the life span of Factor VIIa (hemophilia) using the CTP technology.In February 2013, the FDA granted orphan drug designation to our longer-acting version of clotting Factor VIIa, Factor VIIa-CTP, for thetreatment of bleeding episodes in patients with hemophilia A or B with inhibitors to Factor VIII or Factor IX. These patients are currentlybeing treated by commercially-available Factor VIIa, with estimated 2013 worldwide sales of $1.7 billion. Currently, Factor VIIa therapy isavailable only as an intravenous (IV) formulation which, due to Factor VIIa’s short half-life, requires multiple infusions to treat a bleedingepisode. In addition, frequent infusions are onerous when used as preventative prophylactic therapy, especially for children.

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Pre-clinical studies of IV and subcutaneous formulations of our product in hemophilic animal models demonstrated its duration ofaction and significantly increased survival. In January 2015, we submitted an IND to the FDA to conduct a Phase 2a study of Factor VIIa-CTP for the treatment of bleeding episodes in hemophilia A or B patients with inhibitors to Factor VIII or Factor IX, which was acceptedby the FDA in March 2015. The Phase 2a study commenced in February 2016. Factor VIIa-CTP has been granted orphan designation inEurope as well as the U.S.

We believe that the CTP technology may also be broadly applicable to other best-selling therapeutic proteins in the market andprovide several key advantages over our competitor’s existing products: significant reduction in the number of injections required toachieve the same or superior therapeutic effect from the same dosage; faster commercialization with greater chance of success and lowercosts than those typically associated with a new therapeutic protein; and manufacturing using industry-standard biotechnology-basedprotein production processes.

In addition to hGH-CTP and Factor VII-CTP, our internal product development program is currently focused on extending thecirculatory half life of oxyntomodulin. Oxyntomodulin, a natural appetite suppressor, is a peptide hormone secreted by the intestinefollowing food intake that induces satiety when it reaches the brain. Oxyntomodulin activates both the glucagon-like peptide-1 receptor(“GLP1R”) and glucagon receptor (“GCGR”) and has been found to decrease food intake and body weight as well as lower glucose inoverweight human volunteers.

We believe oxyntomodulin has potential to be a safe, long term therapy for obese and diabetes type II patients, representing significantmarket opportunities. More than 380 million are living with diabetes worldwide, of which approximately 90% have type II diabetes.According to the World Health Organization, there are more than 500 million severely overweight or obese people.

The clinical utility of oxyntomodulin has been limited mostly because of its short circulating half life. We are developing a long-acting oxyntomodulin comprising oxyntomodulin linked at its N-terminus to a polyethylene glycol (“PEG”) linear chain through aproprietary bi-functional hydrolysable linker. Administration of the conjugate into the blood results in slow release of the non-modifiednatural oxyntomodulin. Our preclinical studies have shown that a single weekly injection of our compound in development significantlyinhibited food intake and reduced body weight in obese and diabetic animal models, as well as improving the lipid profile by reducingcholesterol levels in obese and diabetic mice. We expect to initiate a phase 1 study of oxyntomodulin in the first quarter of 2016.

APIs

FineTech Pharmaceutical, Ltd. (“FineTech”), is our Israeli-based subsidiary that develops and produces high value, high potencyspecialty APIs. Through its FDA registered facility in Nesher, Israel, FineTech currently manufactures commercial APIs for sale or licenseto pharmaceutical companies in the U.S., Canada, Europe and Israel. We believe that FineTech’s significant know-how and experiencewith analytical chemistry and organic syntheses, together with its production capabilities, may play a valuable role in the development ofour pipeline of proprietary molecules and compounds for diagnostic and therapeutic products, while providing revenues and profits from itsexisting API business.

Oligonucleotide Therapeutics

OPKO CURNA, LLC (“CURNA”), previously CURNA Inc., is engaged in the discovery of new drugs for the treatment of a widevariety of illnesses, including cancer, heart disease, metabolic disorders and a range of genetic anomalies. CURNA’s broad platformtechnology utilizes a short, single strand oligonucleotide and is based on the up-regulation of protein production through interference withnon-coding RNA’s, or natural antisense. This strategy contrasts with established approaches which down-regulate protein production.CURNA has designed a novel type of therapeutic modality, termed AntagoNAT, and has initially demonstrated this approach for up-regulation of several therapeutically relevant proteins in in vitro and animal models. We believe that this short, single strandoligonucleotide can be delivered intravenously or subcutaneously without the drug delivery or cell penetration complications typicallyassociated with double stranded siRNA therapeutics. CURNA has identified and developed compounds which increase the production ofover 80 key proteins involved in a large number of individual diseases. We have ongoing pre-clinical studies for several of thesecompounds, with an initial focus on orphan diseases including Dravet Syndrome, Rett Syndrome and MPS-1.

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NK-1 Program

We acquired rolapitant and other neurokinin-1 (“NK-1”) assets from Merck & Co. In December 2010, we exclusively out-licensed thedevelopment, manufacture and commercialization of our lead NK-1 candidate, VARUBI™ (rolapitant), to TESARO. VARUBI™, a potentand selective competitive antagonist of the NK-1 receptor, had successfully completed phase 2 clinical testing for prevention ofchemotherapy induced nausea and vomiting, or CINV, and post-operative induced nausea and vomiting. TESARO submitted its NDA tothe FDA for approval of oral VARUBI™ in September 2014. TESARO’s NDA for oral VARUBI™ was approved by the FDA in September2015, and in November 2015, TESARO commenced the commercial launch of VARUBI™ in the United States.

Under the terms of the license, we received a $6.0 million upfront payment from TESARO and are eligible to receive milestonepayments of up to $30.0 million upon achievement of certain regulatory and commercial sale milestones (of which $20.0 million has beenpaid to date) and additional commercial milestone payments of up to $85.0 million if specified levels of annual net sales are achieved.TESARO is also obligated to pay us tiered royalties on annual net sales achieved in the United States and Europe at percentage rates thatrange from the low double digits to the low twenties, and outside of the United States and Europe at low double-digit percentage rates.TESARO assumed responsibility for clinical development and commercialization of licensed products at its expense. Under the agreement,we will continue to receive royalties on a county-by-country and product-by-product basis until the later of the date that all of the patentsrights licensed from us and covering rolapitant expire, are invalidated or are not enforceable, and 12 years from the date of the firstcommercial sale of the product.

If TESARO elects to develop and commercialize VARUBI™ in Japan through a third-party licensee, TESARO will share equallywith us all amounts it receives in connection with such activities, subject to certain exceptions and deductions. In addition, we will have anoption to market the products in Latin America. The term of the license will remain in force until the expiration of the royalty term unlesswe terminate the license earlier for TESARO’s material breach of the license or bankruptcy. TESARO has a right to terminate the licenseduring the term for any reason on three month’s written notice.

Asthma and COPD

In May 2010, we acquired worldwide rights to a novel heparin-derived oligosaccharide which has significant potential in treatingasthma and chronic obstructive pulmonary disease (“COPD”). Over 22 million people in the U.S. live with asthma, including nearly6 million children. Additionally, there are more than 12 million people in the U.S. who have COPD. Currently available therapies ofteninclude unwanted side effects and may have limited efficacy. We believe that our product may have an improved efficacy and side effectprofile. Our initial studies have demonstrated anti-inflammatory and anti-allergic activity when administered orally or inhaled with inhalersor nebulizers in sheep and mice asthma models. We have also successfully completed human feasibility studies in asthma.

To complement our portfolio of respiratory products, we acquired Inspiro Medical Ltd., a medical device firm developing a newplatform to deliver small molecule drugs like corticosteroids and beta agonists or larger molecules to treat respiratory disease. Inspiro’sInspiromatic is a “smart” easy-to-use dry powder inhaler with several advantages over existing devices. In a First In Man double blindedclinical study conducted in 30 asthmatic children comparing Inspiromatic to a market leading dry powder inhaler, Inspiromaticdemonstrated superior pulmonary delivery of the active drug.

Commercial Operations

We also intend to continue to leverage our global commercialization expertise to pursue acquisitions of commercial businesses thatwill both drive our growth and provide geographically diverse sales and distribution opportunities. During 2015, we acquired EirGen, agrowing, profitable and cash flow positive specialty pharmaceutical company based in Ireland. EirGen is focused on the development andcommercial supply of high potency, high barrier to entry, pharmaceutical products. Through its facility in Waterford, Ireland, EirGencurrently manufactures high potency pharmaceutical products and exports to over 40 countries all over the world. High potency drugs suchas those used for cancer chemotherapy are typically unsuitable for manufacture in normal multi-product facilities due to crosscontamination risks.

To date, EirGen and its commercial partners have filed 10 product applications with the FDA and 7 in Europe and 5 in Japan. EirGenhas a strong research and development portfolio of high barrier to entry drugs and we expect to rapidly expand its drug portfolio. Webelieve EirGen will play an important role in the development, manufacturing, distribution and approval of a wide variety of drugs in avariety of dosage forms with an emphasis on high potency products.

OPKO Health Europe (previously Farmadiet Group Holding, S.L.) operates primarily in Spain and has more than 20 years ofexperience in the development, manufacture, marketing, and sale of pharmaceutical, nutraceutical, and veterinary products in Europe.

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OPKO Mexico (previously Pharmacos Exakta S.A. de C.V.), is engaged in the manufacture, marketing, sale, and distribution ofophthalmic and other pharmaceutical products to private and public customers in Mexico. OPKO Mexico manufacturers and sells productsprimarily in the generics market in Mexico, although it has recently increased its focus on the development of proprietary products as well.

OPKO Chile (previously Pharma Genexx, S.A.) markets, sells and distributes pharmaceutical and natural products to the private,hospital, pharmacy and public institutional markets in Chile for a wide range of indications, including, cardiovascular products, vaccines,antibiotics, gastro-intestinal products, and hormones, among others. ALS Distribuidora Limitada (“ALS”) is engaged in the business ofimportation, commercialization and distribution of pharmaceutical products for private markets in Chile. ALS started operations in 2009 asthe exclusive product distributor of Arama Laboratorios y Compañía Limitada (“Arama”), a company with more than 20 years ofexperience in the pharmaceutical products market. In connection with the acquisition of ALS, OPKO acquired all of the productregistrations and trademarks previously owned by Arama, as well as the Arama name.

Strategic Investments

We have and may continue to make investments in other early stage companies that we perceive to have valuable proprietarytechnology and significant potential to create value for OPKO as a shareholder.

RESEARCH AND DEVELOPMENT EXPENSES

During the years ended December 31, 2015, 2014, and 2013, we incurred $99.5 million, $83.6 million, and $53.9 million,respectively, of research and development expenses related to our various product candidates. During the years ended December 31, 2015,2014 and 2013, our research and development expenses primarily consisted of OPKO Biologics and OPKO Renal development programsincluding expenses related to the development of hGH-CTP and phase 3 clinical trials for Rayaldee.

INTELLECTUAL PROPERTY

We believe that technology innovation is driving breakthroughs in healthcare. We have adopted a comprehensive intellectualproperty strategy which blends the efforts to innovate in a focused manner with the efforts of our business development activities tostrategically in-license intellectual property rights. We develop, protect, and defend our own intellectual property rights as dictated by thedeveloping competitive environment. We value our intellectual property assets and believe we have benefited from early and insightfulefforts at understanding diagnostics, as well as the disease and the molecular basis of potential pharmaceutical intervention.

We actively seek, when appropriate and available, protection for our products and proprietary information by means of U.S. andforeign patents, trademarks, trade secrets, copyrights, and contractual arrangements. Patent protection in the pharmaceutical and diagnosticfields, however, can involve complex legal and factual issues. There can be no assurance that any steps taken to protect such proprietaryinformation will be effective.

We own or license-in over a thousand U.S. and foreign patents and applications for our products, product candidates and ouroutlicensed product candidates. These patents cover pharmaceuticals, diagnostics and other products and their uses, pharmaceutical anddiagnostic compositions and formulations and product manufacturing processes. Our patents are filed in various locations worldwide as isappropriate to the particular patent and its use.

Rayaldee

We have multiple U.S. patent families relating to Rayaldee. These patents are also filed in multiple countries worldwide. One patentfamily claims a sustained release oral dosage formulation and a method of treating 25-hydroxy vitamin D insufficiency or deficiency andwill not expire until at least February 2027. A second patent family claims a method of administering 25-hydroxy vitamin D3 by controlledrelease, a formulation for controlled release of a vitamin D compound, a controlled release oral dosage formulation of a vitamin Dcompound and a method of treatment, and will not expire until at least April 2028. We also have additional patent applications pendingrelating to the sustained release formulation and its use which will expire in 2034 and have licensed patents covering the capsule shell.

Rolapitant

The rolapitant line of patents, licensed to TESARO, includes multiple patent families that cover anti-nausea treatment forchemotherapy patients. These U.S. patents are also filed and granted in many countries around the world. One patent family covers thechemical composition of rolapitant and related compounds and expires in December 2023 (with the patent term

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adjustment.) A patent term extension request was submitted to the USPTO in October 2015 to obtain an additional 1,716 days which will,upon approval, extend the rolapitant compound patent expiration date to August 2028.The second patent family covers pharmaceuticalformulations, including a capsule formulation with a related method of use and expires in April of 2027. The third patent family coversparticular aspects of the chemical composition of rolapitant as well as certain methods of treating delayed onset nausea and expires in April2027. The fourth patent family covers a powdered pharmaceutical composition of a crystalline salt of rolapitant and expires in March 2028.The current line of rolapitant patents are approved for oral treatment. Patent applications directed towards IV formulation of rolapitant arecurrently pending.

hGH-CTP

The hGH-CTP line of patents, which is currently licensed to Pfizer, Inc., includes two main patent families that cover modifiedhuman grown hormone treatment. These U.S. patents are also filed in multiple countries around the world. One patent family covers certainCTP modified hGH polypeptides relating to growth hormones and their method of use and expires in February of 2027 (with the exceptionof two US patents, namely US 8,304,386 and US 8,097,435, which expire in Jan 2028 and April 2027, respectively, due to Patent TermAdjustment for each). The second patent family covers cytokine-based polypeptides relating to human growth hormone treatment andexpires in 2027. In addition to the CTP patents and applications licensed to Pfizer, OPKO has multiple patent families covering similarbiologicals with patents and applications pending in the U.S. and internationally.

Because the patent positions of pharmaceutical, biotechnology, and diagnostics companies are highly uncertain and involve complexlegal and factual questions, the patents owned and licensed by us, or any future patents, may not prevent other companies from developingsimilar or therapeutically equivalent products or ensure that others will not be issued patents that may prevent the sale of our products orrequire licensing and the payment of significant fees or royalties. Furthermore, to the extent that any of our future products or methods arenot patentable, that such products or methods infringe upon the patents of third parties, or that our patents or future patents fail to give us anexclusive position in the subject matter claimed by those patents, we will be adversely affected. We may be unable to avoid infringement ofthird party patents and may have to obtain a license, defend an infringement action, or challenge the validity of the patents in court. Alicense may be unavailable on terms and conditions acceptable to us, if at all. Patent litigation is costly and time consuming, and we may beunable to prevail in any such patent litigation or devote sufficient resources to even pursue such litigation.

LICENSES AND COLLABORATIVE RELATIONSHIPS

Our strategy is to develop a portfolio of product candidates through a combination of internal development, acquisition, and externalpartnerships. Collaborations are key to our strategy and we continue to build relationships and forge partnerships in various areas whereunmet medical need and commercial opportunities exist. In December 2014, we entered into an exclusive agreement with Pfizer for thedevelopment and commercialization of our long-acting hGH-CTP for the treatment of GHD in adults and children, as well as for thetreatment of growth failure in children born small for gestational age. Previously, we (or entities we have acquired) have completedstrategic licensing transactions with the University of Texas Southwestern Medical Center at Dallas, the President and Fellows of HarvardCollege, Academia Sinica, The Scripps Research Institute, TESARO, INEOS Healthcare, Arctic Partners, and Washington University,among others.

COMPETITION

The pharmaceutical and diagnostic testing industries are highly competitive and require an ongoing, extensive search fortechnological innovation. The industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis onproprietary products. They also require, among other things, the ability to effectively discover, develop, test and obtain regulatoryapprovals for products, as well as the ability to effectively commercialize, market and promote approved products.

Numerous companies, including major pharmaceutical companies, specialty pharmaceutical companies and specialized biotechnologycompanies, are engaged in the development, manufacture and marketing of pharmaceutical products competitive with those that we intendto commercialize ourselves and through our partners. Competitors to our diagnostics business include major diagnostic companies,reference laboratories, molecular diagnostic firms, universities and research institutions. Most of these companies have substantially greaterfinancial and other resources, larger research and development staffs and more extensive marketing and manufacturing organizations thanours. This enables them, among other things, to make greater research and development investments and efficiently utilize their researchand development costs, as well as their marketing and promotion costs, over a broader revenue base. This also provides our competitorswith a competitive advantage in connection with the highly competitive product acquisition and product in-licensing process, which mayinclude auctions in which the highest bidder wins. Our competitors may also have more experience and expertise in obtaining marketingapprovals from the FDA and other regulatory authorities. In addition to product development, testing, approval, and promotion, other

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competitive factors in the pharmaceutical and diagnostics industry include industry consolidation, product quality and price, producttechnology, reputation, customer service, and access to technical information.

In our clinical laboratory operations, we compete with three types of providers in a highly fragmented and competitive industry:hospital laboratories, physician-office laboratories and other independent clinical laboratories. Our major competitors in the New Yorkmetropolitan area are two of the largest national laboratories, Quest Diagnostics and Laboratory Corporation of America. Although we aremuch smaller than these national laboratories, we believe that we compete successfully with them in our region due to our innovativetesting services and our level of service. We believe our responses to medical consultation are faster and more personalized than those ofthe national laboratories. Our client service staff deals only with basic technical questions and those that have medical or scientificsignificance are referred directly to our senior scientists and medical staff.

We are seeking to commercialize our 4Kscore product in the U.S., Europe and Mexico in a laboratory setting and to capitalize onnear-term commercialization opportunities for our proprietary diagnostic point-of-care system by transitioning laboratory-based tests,including the 4Kscore, PSA, testosterone and other tests to our point-of-care system. We expect to leverage Bio-Reference’s nationalmarketing, sales and distribution resources, along with its 420-person sales force to support commercialization of the 4Kscore and Claros 1products. Competitors to our diagnostics business are many and include major diagnostic companies, molecular diagnostic firms,universities, and research institutions.

Our ability to commercialize our pharmaceutical and diagnostic test product candidates and compete effectively will depend, in largepart, on:

• our ability to meet all necessary regulatory requirements to advance our product candidates through clinical trials and theregulatory approval process in the U.S. and abroad;

• the perception by physicians and other members of the health care community of the safety, efficacy, and benefits of ourproducts compared to those of competing products or therapies;

• our ability to manufacture products we may develop on a commercialscale;

• the effectiveness of our sales and marketingefforts;

• the willingness of physicians to adopt a new diagnostic or treatment regimen represented by ourtechnology;

• our ability to secure reimbursement for our productcandidates;

• the price of the products we may develop and commercialize relative to competingproducts;

• our ability to accurately forecast and meet demand for our product candidates if regulatory approvals areachieved;

• our ability to develop a commercial scale infrastructure either on our own or with a collaborator, which would includeexpansion of existing facilities, including our manufacturing facilities, development of a sales and distribution network, andother operational and financial systems necessary to support our increased scale;

• our ability to maintain a proprietary position in our technologies;and

• our ability to rapidly expand the existing information technology infrastructure and configure existing operational,manufacturing, and financial systems (on our own or with third party collaborators) necessary to support our increased scale,which would include existing or additional facilities and or partners.

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GOVERNMENT REGULATION

The U.S. government regulates healthcare through various agencies, including but not limited to the following: (i) the FDA, whichadministers the Federal Food, Drug and Cosmetic Act (“FDCA”), as well as other relevant laws; (ii) the Centers for Medicare & MedicaidServices (“CMS”), which administers the Medicare and Medicaid programs; (iii) the Office of Inspector General (“OIG”), which enforcesvarious laws aimed at curtailing fraudulent or abusive practices, including by way of example, the Anti-Kickback Statute, the PhysicianSelf-Referral Law, commonly referred to as the Stark law, the Anti-Inducement Law, the Civil Money Penalty Law, and the laws thatauthorize the OIG to exclude healthcare providers and others from participating in federal healthcare programs; and (iv) the Office of CivilRights, which administers the privacy aspects of the Health Insurance Portability and Accountability Act of 1996. All of theaforementioned are agencies within the Department of Health and Human Services (“HHS”). Healthcare is also provided or regulated, asthe case may be, by the Department of Defense through its TriCare program, the Department of Veterans Affairs, especially through theVeterans Health Care Act of 1992, the Public Health Service within HHS under Public Health Service Act § 340B (42 U.S.C. § 256b), theDepartment of Justice through the Federal False Claims Act and various criminal statutes, and state governments under the Medicaid andother state sponsored or funded programs and their internal laws regulating all healthcare activities.

The testing, manufacture, distribution, advertising, and marketing of drug and diagnostic products and medical devices, as well as theperformance of clinical testing services, are subject to extensive regulation by federal, state, and local governmental authorities in the U.S.,including the FDA, and by similar agencies in other countries. Any drug, diagnostic, or device product that we develop must receive allrelevant regulatory approvals or clearances, as the case may be, before it may be marketed in a particular country.

Clinical Laboratory Operations

Our clinical laboratory operations are subject to regulations, which are designed to ensure the quality and reliability of clinicallaboratories by mandating specific standards in the areas of personnel qualifications, administration and participation in proficiency testing,patient test management, quality control, quality assurance and inspections. Laboratories must undergo on-site surveys at least every twoyears, which may be conducted by the Federal CLIA program or by a private CMS approved accrediting agency. The sanction for failure tocomply with CLIA requirements may be suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary toconduct business, as well as significant fines and/or criminal penalties. We are also subject to regulation of laboratory operations understate clinical laboratory laws. State clinical laboratory laws may require that laboratories and/or laboratory personnel meet certainqualifications, specify certain quality controls or require maintenance of certain records. Certain states, such as California and Florida, eachrequire that we obtain licenses to test specimens from patients residing in those states and additional states may require similar licenses inthe future. Only Washington and New York State are exempt under CLIA, as these states have established laboratory quality standards atleast as stringent as CLIA’s. Potential sanctions for violation of these statutes and regulations include significant fines and the suspensionor loss of various licenses, certificates and authorizations.

Our clinical laboratory operations are subject to complex laws, regulations and licensure requirements relating to billing and paymentfor laboratory services, sales and marketing interactions with ordering physicians, security and confidentiality of health information, andenvironmental and occupational safety, among others. Changes in regulations often increase the cost of testing or processing claims. Also,these laws may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to makechanges in our operations, including in our pricing, billing and/or marketing practices in a manner that could adversely affect operations.

Drug Development

The regulatory process, which includes overseeing preclinical studies and clinical trials of each pharmaceutical compound to establishits safety and efficacy and confirmation by the FDA that good laboratory, clinical, and manufacturing practices were maintained duringtesting and manufacturing, can take many years, requires the expenditure of substantial resources, and gives larger companies with greaterfinancial resources a competitive advantage over us. Delays or terminations of clinical trials that we undertake would likely impair ourdevelopment of product candidates. Delays or terminations could result from a number of factors, including stringent enrollment criteria,slow rate of enrollment, size of patient population, having to compete with other clinical trials for eligible patients, geographicalconsiderations, and others.

Although accelerated pathways for approval exist for certain drugs, generally, FDA review processes can be lengthy andunpredictable, and we may encounter delays or rejections of our applications when submitted. Generally, in order to gain FDA approval, wemust first conduct preclinical studies in a laboratory and in animal models to obtain preliminary information on a compound and to identifyany safety problems. The results of these studies are submitted as part of an IND application that the FDA must review before humanclinical trials of an investigational drug can commence.

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Clinical trials are normally done in three sequential phases and generally take two to five years or longer to complete. Phase 1consists of testing the drug product in a small number of humans, normally healthy volunteers, to determine preliminary safety andtolerable dose range. Phase 2 usually involves studies in a limited patient population to evaluate the effectiveness of the drug product inhumans having the disease or medical condition for which the product is indicated, determine dosage tolerance and optimal dosage, andidentify possible common adverse effects and safety risks. Phase 3 consists of additional controlled testing at multiple clinical sites toestablish clinical safety and effectiveness in an expanded patient population of geographically dispersed test sites to evaluate the overallbenefit-risk relationship for administering the product and to provide an adequate basis for product labeling. Phase 4 clinical trials may beconducted after approval to gain additional experience from the treatment of patients in the intended therapeutic indication.

After completion of clinical trials of a new drug product, FDA and foreign regulatory authority marketing approval must be obtained.Assuming that the clinical data support the product’s safety and effectiveness for its intended use, a NDA is submitted to the FDA for itsreview. Generally, it takes one to three years to obtain approval. If questions arise during the FDA review process, approval may take asignificantly longer period of time. The testing and approval processes require substantial time and effort and we may not receive approvalon a timely basis, if at all, or the approval that we receive may be for a narrower indication than we had originally sought, potentiallyundermining the commercial viability of the product. Even if regulatory approvals are obtained, a marketed product is subject to continualreview, and later discovery of previously unknown problems or failure to comply with the applicable regulatory requirements may result inrestrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions. Formarketing outside the U.S., we also will be subject to foreign regulatory requirements governing human clinical trials and marketingapproval for pharmaceutical products. The requirements governing the conduct of clinical trials, product licensing, pricing, andreimbursement vary widely from country to country.

None of our pharmaceutical products under development have been approved for marketing in the U.S. or elsewhere. We may not beable to obtain regulatory approval for any such products under development in a timely manner, if at all. Failure to obtain requisitegovernmental approvals or failure to obtain approvals of the scope requested will delay or preclude us, or our licensees or marketingpartners, from marketing our products, or limit the commercial use of our products, and thereby would have a material adverse effect onour business, financial condition, and results of operations. See “Risk Factors — The results of pre-clinical trials and previous clinical trialsfor our products may not be predictive of future results, and our current and planned clinical trials may not satisfy the requirements of theFDA or other non-U.S. regulatory authorities.”

Device Development

Devices are subject to varying levels of premarket regulatory control, the most comprehensive of which requires that a clinicalevaluation be conducted before a device receives approval for commercial distribution. The FDA classifies medical devices into one ofthree classes: Class I devices are relatively simple and can be manufactured and distributed with general controls; Class II devices aresomewhat more complex and require greater scrutiny; Class III devices are new and frequently help sustain life.

In the U.S., a company generally can obtain permission to distribute a new device in one of two ways. The first applies to any devicethat is substantially equivalent to a device first marketed prior to May 1976, or to another device marketed after that date, but which wassubstantially equivalent to a pre-May 1976 device. These devices are either Class I or Class II devices. To obtain FDA permission todistribute the device, a company generally must submit a section 510(k) submission, and receive an FDA order finding substantialequivalence to a predicate device (pre-May 1976 or post-May 1976 device that was substantially equivalent to a pre-May 1976 device) andpermitting commercial distribution of that device for its intended use. A 510(k) submission must provide information supporting a claim ofsubstantial equivalence to the predicate device. If clinical data from human experience are required to support the 510(k) submission, thesedata must be gathered in compliance with investigational device exemption (“IDE”), regulations for investigations performed in the U.S.The 510(k) process is normally used for products of the type that the Company proposes distributing. The FDA review process forpremarket notifications submitted pursuant to section 510(k) takes, on average, about 90 days, but it can take substantially longer if theFDA has concerns, and there is no guarantee that the FDA will “clear” the device for marketing, in which case the device cannot bedistributed in the U.S. There is also no guarantee that the FDA will deem the applicable device subject to the 510(k) process, as opposed tothe more time-consuming, resource-intensive and problematic, PMA process described below.

The second, more comprehensive, PMA process, which can take a year or longer, applies to a new device that is not substantiallyequivalent to a pre-1976 product or that is to be used in supporting or sustaining life or preventing impairment. These devices are normallyClass III devices. For example, most implantable devices are subject to the approval process. Two steps of FDA approval are generallyrequired before a company can market a product in the U.S. that is subject to approval, as opposed to clearance. First, a company mustcomply with IDE regulations in connection with any human clinical investigation of the device. These regulations permit a company toundertake a clinical study of a “non-significant risk” device without

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formal FDA approval. Prior express FDA approval is required if the device is a significant risk device. Second, the FDA must review thecompany’s PMA application, which contains, among other things, clinical information acquired under the IDE. The FDA will approve thePMA application if it finds there is reasonable assurance that the device is safe and effective for its intended use. The PMA process takessubstantially longer than the 510(k) process and it is conceivable that the FDA would not agree with our assessment that a device that wepropose to distribute should be a Class I or Class II device. If that were to occur we would be required to undertake the more complex andcostly PMA process. However, for either the 510(k) or the PMA process, the FDA could require us to run clinical trials, which would poseall of the same risks and uncertainties associated with the clinical trials of drugs, described above.

Even when a clinical study has been approved by the FDA or deemed approved, the study is subject to factors beyond amanufacturer’s control, including, but not limited to the fact that the institutional review board at a given clinical site might not approve thestudy, might decline to renew approval which is required annually, or might suspend or terminate the study before the study has beencompleted. Also, the interim results of a study may not be satisfactory, leading the sponsor to terminate or suspend the study on its owninitiative or the FDA may terminate or suspend the study. There is no assurance that a clinical study at any given site will progress asanticipated; there may be an insufficient number of patients who qualify for the study or who agree to participate in the study or theinvestigator at the site may have priorities other than the study. Also, there can be no assurance that the clinical study will providesufficient evidence to assure the FDA that the product is safe and effective, a prerequisite for FDA approval of a PMA, or substantiallyequivalent in terms of safety and effectiveness to a predicate device, a prerequisite for clearance under 510(k). Even if the FDA approves orclears a device, it may limit its intended uses in such a way that manufacturing and distributing the device may not be commerciallyfeasible. For marketing outside the U.S., we also will be subject to foreign regulatory requirements governing clinical trials and marketingapproval for medical devices. The requirements governing the conduct of clinical trials, device clearance/approval, pricing, andreimbursement vary widely from country to country. In addition to the regulatory clearance and approval processes described herein, theFDA periodically issues draft guidance documents designed to provide additional detail on or reform aspects of the 510(k) and PMAclearance and approval processes. To the extent the FDA finalizes and implements these documents, the average 510(k) and PMAsubmission requirements and review times may change and devices that might previously have been cleared under the 510(k) process mayrequire approval under the PMA process (and vice-versa). Additionally, the Medical User Fee Amendments of 2012 authorized the FDA tocollect user fees for the review of certain premarket submissions received on or after October 1, 2012, including 510(k) and PMAapplications. These fees are intended to improve the device review process, but it is still too early to assess the actual impact on theindustry.

After clearance or approval to market is given, the FDA and foreign regulatory agencies, upon the occurrence of certain events, areauthorized under various circumstances to withdraw the clearance or approval or require changes to a device, its manufacturing process orits labeling or additional proof that regulatory requirements have been met.

A manufacturer of a device approved through the PMA is not permitted to make changes to the device, which affects its safety oreffectiveness without first submitting a supplement application to its PMA and obtaining FDA approval for that supplement. In someinstances, the FDA may require clinical trials to support a supplement application. A manufacturer of a device cleared through the 510(k)process must submit another premarket notification if it intends to make a change or modification in the device that could significantlyaffect the safety or effectiveness of the device, such as a significant change or modification in design, material, chemical composition,energy source or manufacturing process. Any change in the intended uses of a PMA device or a 510(k) device requires an approvalsupplement or cleared premarket notification. Exported devices are subject to the regulatory requirements of each country to which thedevice is exported, as well as certain FDA export requirements.

A company that intends to manufacture medical devices is required to register with the FDA before it begins to manufacture thedevice for commercial distribution. As a result, we and any entity that manufactures products on our behalf will be subject to periodicinspection by the FDA for compliance with the FDA’s Quality System Regulation requirements and other regulations. In the EuropeanCommunity, we will be required to maintain certain International Organization for Standardization (“ISO”), certifications in order to sellproducts and we or our manufacturers undergo periodic inspections by notified bodies to obtain and maintain these certifications. Theseregulations require us or our manufacturers to manufacture products and maintain documents in a prescribed manner with respect to design,manufacturing, testing and control activities. Further, we are required to comply with various FDA and other agency requirements forlabeling and promotion. The Medical Device Reporting regulations require that we provide information to the FDA whenever there isevidence to reasonably suggest that a device may have caused or contributed to a death or serious injury or, if a malfunction were to occur,could cause or contribute to a death or serious injury. In addition, the FDA prohibits us from promoting a medical device for unapprovedindications.

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Diagnostic Products

Certain of our diagnostic products in development are subject to regulation by the FDA and similar international health authorities.We have an obligation to adhere to the FDA’s cGMP regulations. Additionally, we are subject to periodic FDA inspections, quality controlprocedures, and other detailed validation procedures. If the FDA finds deficiencies in the validation of our manufacturing and qualitycontrol practices, they may impose restrictions on marketing specific products until corrected.

Regulation by governmental authorities in the U.S. and other countries may be a significant factor in how we develop, test, produceand market our diagnostic test products. Diagnostic tests like ours may not fall squarely within the regulatory approval process forpharmaceutical or device products as described above, and the regulatory pathway is not as clear. Although the FDA regulates in vitrodiagnostic devices, some companies have successfully commercialized diagnostic tests for various conditions and disease states withoutseeking clearance or approval for such tests through a 510(k) or PMA approval process. These tests are known as laboratory developed tests(“LDTs”) and are designed, manufactured, and used within a single laboratory that is certified under the Clinical Laboratory ImprovementAmendments of 1988 (“CLIA”). CLIA is a federal law that regulates clinical laboratories that perform testing on specimens derived fromhumans for the purpose of providing information for diagnostic, preventative or treatment purpose. Such LDT testing is currently under thepurview of CMS and state agencies that provide oversight of the safe and effective use of LDTs.

However, the FDA has consistently asserted that it has the regulatory authority to regulate LDTs despite historically exercisingenforcement discretion. In furtherance of that position, the FDA issued two draft guidance documents in October 2014: (1) Framework forRegulatory Oversight of Laboratory Developed Tests (the “Framework Guidance”); and (2) FDA Notification and Medical DeviceReporting for Laboratory Developed Tests (the “Notification Guidance”). The Framework Guidance outlines the FDA’s plan to adopt overtime a risk-based approach to regulating LDTs whereby different classifications of LDTs would be subject to different levels of FDAoversight and enforcement, including, for example, prohibitions on adulteration and misbranding, establishment registration and devicelisting, premarket notification, banned devices, records and reports, good manufacturing practices, adverse event reporting, premarketreview of safety, effectiveness, and clinical validity, and quality system requirements. The Notification Guidance is intended to explainhow clinical laboratories should notify the FDA of the LDTs they develop and how to satisfy Medical Device Reporting requirements.

If finalized, the Framework Guidance and the Notification Guidance may have a materially adverse effect on the time, cost, and riskassociated with the Company’s development and commercialization of LDTs for the U.S. market, and there can be no assurance thatclearances or approvals sought by the Company will be granted and maintained. However, the FDA’s authority to regulate LDTs continuesto be challenged, and the timeline and process for finalizing the draft guidance documents is unknown. We will continue to monitorchanges to all domestic and international LDT regulatory policy so as to ensure compliance with the current regulatory scheme.

Impact of Regulation

The FDA in the course of enforcing the FDCA may subject a company to various sanctions for violating FDA regulations orprovisions of the FDCA, including requiring recalls, issuing Warning Letters, seeking to impose civil money penalties, seizing devices thatthe agency believes are non-compliant, seeking to enjoin distribution of a specific type of device or other product, seeking to revoke aclearance or approval, seeking disgorgement of profits and seeking to criminally prosecute a company and its officers and other responsibleparties.

The levels of revenues and profitability of biopharmaceutical companies may be affected by the continuing efforts of government andthird party payers to contain or reduce the costs of health care through various means. For example, in certain foreign markets, pricing orprofitability of therapeutic and other pharmaceutical products is subject to governmental control. In the U.S., there have been, and weexpect that there will continue to be, a number of federal and state proposals to implement similar governmental control. In addition, in theU.S. and elsewhere, sales of therapeutic and other pharmaceutical products are dependent in part on the availability and adequacy ofreimbursement from third party payers, such as the government or private insurance plans. Third party payers are increasingly challengingestablished prices, and new products that are more expensive than existing treatments may have difficulty finding ready acceptance unlessthere is a clear therapeutic benefit. On April 1, 2014, the Protecting Access to Medicare Act of 2014 (“PAMA”) was enacted into law.Under PAMA, Medicare payment for clinical diagnostic laboratory tests will be established by calculating a weighted mean of private payerrates starting in 2017. Further, applicable laboratories will be required to report payment rates for covered tests starting in 2016. Failure toreport such data may result in a civil money penalty in an amount of up to $10,000 per day. It is anticipated that the market-based paymentsystem will result in lower reimbursement rates for clinical diagnostic laboratory tests. Even though the permitted annual decrease will becapped through 2022, the cap does not apply to new tests or new advanced diagnostic tests. We cannot assure you that any of our productswill be considered cost effective, or that reimbursement will be available or sufficient to allow us to sell them competitively and profitably.

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State and Federal Security and Privacy Regulations

The privacy and security regulations under the Health Insurance Portability and Accountability Act of 1996, as amended by theHealth Information Technology for Economic and Clinical Health Act of 2009 ( the “HITECH Act”, and collectively, “HIPAA”), establishcomprehensive federal standards with respect to the uses and disclosures of protected health information, or PHI, by health plans and healthcare providers, in addition to setting standards to protect the confidentiality, integrity and availability of electronic PHI. The regulationsestablish a complex regulatory framework on a variety of subjects, including:

• the circumstances under which uses and disclosures of PHI are permitted or required without a specific authorization by thepatient, including but not limited to treatment purposes, to obtain payments for services and health care operations activities;

• a patient’s rights to access, amend and receive an accounting of certain disclosures ofPHI;

• the content of notices of privacy practices for PHI;and

• administrative, technical and physical safeguards required of entities that use or receive PHIelectronically.

The final “omnibus” rule implementing the HITECH Act took effect on March 26, 2013. The rule is broad in scope, but certainprovisions are particularly significant in light of our business operations. For example, the final “omnibus” rule implementing the HITECHAct:

• Makes clear that situations involving impermissible access, acquisition, use or disclosure of protected health information arenow presumed to be a breach unless the covered entity or business associate is able to demonstrate that there is a lowprobability that the information has been compromised;

• Defines the term “business associate” to include subcontractors and agents that receive, create, maintain or transmit protectedhealth information on behalf of the business associate;

• Establishes new parameters for covered entities and business associates on uses and disclosures of PHI for fundraising andmarketing; and

• Establishes clear restrictions on the sale of PHI without patientauthorization.

As a provider of clinical laboratory services and as we launch commercial diagnostic tests, we must continue to implement policiesand procedures related to compliance with the HIPAA privacy and security regulations, as required by law. The privacy and securityregulations provide for significant fines and other penalties for wrongful use or disclosure of PHI, including potential civil and criminalfines and penalties.

Anti-Kickback Laws, Physician Self-Referral Laws, False Claims Act, Civil Monetary Penalties

We are also subject to various federal, state, and international laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claims laws. The federal Anti-Kickback Statute prohibits anyone from knowingly and willfully soliciting,receiving, offering, or paying any remuneration with the intent to refer, or to arrange for the referral or order of, services or items payableunder a federal health care program, including the purchase or prescription of a particular drug or the use of a service or device.Recognizing that the Anti-Kickback Statute is broad and may technically prohibit many innocuous or beneficial arrangements, Congressauthorized the U.S. Department of Health and Human Services Office of Inspector General, or OIG, to issue a series of regulations, knownas “safe harbors.” These safe harbors set forth requirements that, if met in their entirety, will assure health care providers and other partiesthat they will not be prosecuted under the Anti-Kickback Statute. The failure of a transaction or arrangement to fit precisely within one ormore safe harbors does not necessarily mean that it is illegal, or that prosecution will be pursued. However, conduct and businessarrangements that do not fully satisfy each applicable safe harbor may result in increased scrutiny by government enforcement authorities,such as the OIG.

Violations of the Anti-Kickback Statute are punishable by the imposition of criminal fines, civil money penalties, treble damages,and/or exclusion from participation in federal health care programs. Many states have also enacted similar anti-kickback laws. The Anti-Kickback Statute and similar state laws and regulations are expansive. If the government were to allege against or convict us of violatingthese laws, there could be a material adverse effect on our business, results of operations, financial condition, and our stock price. Even anunsuccessful challenge could cause adverse publicity and be costly to respond to, which could have a materially adverse effect on ourbusiness, results of operations and financial condition. We will consult counsel concerning the potential application of these and other lawsto our business and our sales, marketing and other activities and will make good faith efforts to comply with them. However, given thebroad reach of federal and state anti-kickback laws and the increasing attention given by law enforcement authorities, we are unable topredict whether any of our activities will be challenged or deemed to violate these laws.

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We are also subject to the physician self-referral laws, commonly referred to as the Stark law, which is a strict liability statute thatgenerally prohibits physicians from referring Medicare patients to providers of “designated health services,” including clinical laboratories,with whom the physician or the physician’s immediate family member has an ownership interest or compensation arrangement, unless anapplicable exception applies. Moreover, many states have adopted or are considering adopting similar laws, some of which extend beyondthe scope of the Stark law to prohibit the payment or receipt of remuneration for the prohibited referral of patients for designated healthcareservices and physician self-referrals, regardless of the source of the payment for the patient’s care. If it is determined that certain of ourpractices or operations violate the Stark law or similar statutes, we could become subject to civil and criminal penalties, including exclusionfrom the Medicare programs and loss of government reimbursement. The imposition of any such penalties could harm our business.

Another development affecting the health care industry is the increased use of the federal civil False Claims Act and, in particular,actions brought pursuant to the False Claims Act’s “whistleblower” or “qui tam” provisions. The False Claims Act, as amended by theFraud Enforcement and Recovery Act of 2009 and the Patient Protection and Affordable Care Act of 2010, imposes liability on any personor entity who, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal healthcare program. We submit claims for services performed at our laboratories. The qui tam provisions of the False Claims Act allow a privateindividual to bring actions on behalf of the federal government alleging that the defendant has submitted a false claim to the federalgovernment, and to share in any monetary recovery. In recent years, the number of suits brought by private individuals has increaseddramatically. In addition, various states have enacted false claim laws analogous to the False Claims Act. Many of these state laws applywhere a claim is submitted to any third-party payor and not merely a federal health care program. When an entity is determined to haveviolated the False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civilpenalties for each separate false claim. There are many potential bases for liability under the False Claims Act. Liability arises, primarily,when an entity knowingly submits, or causes another to submit, a false claim for reimbursement to the federal government. The FalseClaims Act has been used to assert liability on the basis of inadequate care, kickbacks and other improper referrals, improper use ofMedicare numbers when detailing the provider of services, and allegations as to misrepresentations with respect to the services rendered.Our activities relating to the sale and marketing of our products may be subject to scrutiny under these laws. We are unable to predictwhether we would be subject to actions under the False Claims Act or a similar state law, or the impact of such actions. However, the costsof defending such claims, as well as any sanctions imposed, could significantly adversely affect our financial performance.

Further, federal law prohibits any entity from offering or transferring to a Medicare or Medicaid beneficiary any remuneration that theentity knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of Medicareor Medicaid payable items or services, including waivers of copayments and deductible amounts (or any part thereof) and transfers of itemsor services for free or for other than fair market value. Entities found in violation may be liable for civil monetary penalties of up to$10,000 for each wrongful act. Although we believe that our sales and marketing practices are in material compliance with all applicablefederal and state laws and regulations, relevant regulatory authorities may disagree and violation of these laws, or, our exclusion from suchprograms as Medicaid and other governmental programs as a result of a violation of such laws, could have a material adverse effect on ourbusiness, results of operations, financial condition and cash flows.

Foreign Corrupt Practices Act

We are also subject to the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits corporations and individuals from paying,offering to pay, or authorizing the payment of anything of value to any foreign government official, government staff member, politicalparty, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity. TheFCPA also requires public companies to make and keep books and records that accurately and fairly reflect their transactions and to deviseand maintain an adequate system of internal accounting controls. Our international activities create the risk of unauthorized payments oroffers of payments by our employees, consultants, sales agents or distributors, even though they may not always be subject to our control.We discourage these practices by our employees and agents. However, our existing safeguards and any future improvements may prove tobe less than effective, and our employees, consultants, sales agents or distributors may engage in conduct for which we might be heldresponsible. Any failure by us to adopt appropriate compliance procedures and ensure that our employees and agents comply with theFCPA and applicable laws and regulations in foreign jurisdictions could result in substantial penalties or restrictions on our ability toconduct business in certain foreign jurisdictions.

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MANUFACTURING AND QUALITY

Other than our facilities in Waterford, Ireland, Guadalajara, Mexico, Nesher, Israel, and Banyoles, Spain, we currently have nopharmaceutical manufacturing facilities. We have entered into agreements with various third parties for the formulation and manufacture ofour pharmaceutical clinical supplies. These suppliers and their manufacturing facilities must comply with FDA regulations, current goodlaboratory practices (“cGLPs”) and current good manufacturing practices (“cGMPs”). We plan to outsource the manufacturing andformulation of our clinical supplies.

The FDA and similar regulatory bodies may inspect our facilities and the facilities of those who manufacture on our behalfworldwide. If the FDA or similar regulatory bodies inspecting our facilities or the facilities of our suppliers find regulatory violations inmanufacturing and quality control practices or procedures they may require us to cease partial or complete manufacturing operations untilthe violations are corrected. They may also impose restrictions on distribution of specific products until the violations are corrected.

Our point-of-care diagnostic system consists of a disposable test cassette and an analyzer. We prepare all necessary test reagents andassemble and package the disposable cassettes at our facility in Woburn, Massachusetts. We rely on third parties for the manufacture of theanalyzer.

We are committed to providing high quality products to our customers, and we plan to meet this commitment by working diligently tocontinue implementing updated and improved quality systems and concepts throughout our organization.

SALES & MARKETING

Our diagnostics business includes Bio-Reference’s 420-person sales force in the U.S. to drive growth and leverage new products,including the 4Kscore prostate cancer test and the Claros 1 in-office immunoassay platform. We currently do not have pharmaceutical salesor marketing personnel in the U.S., and we have limited personnel in Ireland, Chile, Spain, Mexico and Israel. In order to commercializeany pharmaceutical products that are approved for commercial sale, we must either build a sales and marketing infrastructure or collaboratewith third parties with sales and marketing experience.

EMPLOYEES

As of December 31, 2015, we had 5,936 full-time employees worldwide. None of our employees are represented by a collectivebargaining agreement.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics. We require all employees, including our principal executive officer andprincipal accounting officer and other senior officers and our employee directors, to read and to adhere to the Code of Business Conductand Ethics in discharging their work-related responsibilities. Employees are required to report any conduct that they believe in good faith tobe an actual or apparent violation of the Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is available onour website at http://www.OPKO.com.

Available Information

We make available free of charge on or through our web site, at www.opko.com, our Annual Reports on Form 10-K, QuarterlyReports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after suchmaterial is electronically filed with the SEC. Additionally, the public may read and copy any materials we file with the SEC at the SEC’sPublic Reference Room at 100 F Street, NE, Room 1580, Washington, D.C., 20549. Information regarding operation of the PublicReference Room is available by calling the SEC at 1-800-SEC-0330. Information that we file with the SEC is also available at the SEC’sWeb-site at www.sec.gov.

ITEM 1A. RISK FACTORS.

You should carefully consider the risks described below, as well as other information contained in this report, including theconsolidated financial statements and the notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results ofOperations.” The occurrence of any of the events discussed below could significantly and adversely affect our business, prospects, resultsof operations, financial condition, and cash flows.

RISKS RELATED TO OUR BUSINESS

We have a history of operating losses and may not become profitable in the near future.

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We are not profitable and have incurred losses since our inception. We do not anticipate that we will generate revenue from the saleof proprietary pharmaceutical products or certain of our diagnostic products for some time and we have generated only limited revenuefrom our pharmaceutical operations in Chile, Mexico, Israel, Spain, and Ireland, and from sale of the 4Kscore test. Although we expect toleverage the national marketing, sales and distribution resources of Bio-Reference to enhance sales of, and reimbursement for, our 4Kscoretest and our other diagnostic products under development, we may not be successful in our integration of Bio-Reference which wouldadversely impact our ability to generate substantial revenue from the sale of these products for some time. We do not currently have rightsto any pharmaceutical product candidates that have been approved for marketing, other than those products sold by our Chilean, Mexican,Israeli, Spanish, and Irish subsidiaries. We continue to incur substantial research and development and general and administrative expensesrelated to our operations and, to date, we have devoted most of our financial resources to research and development, including our pre-clinical development activities and clinical trials. We may incur losses from our operations for the foreseeable future and these losses couldincrease as we continue our research activities and conduct development of, and seek regulatory approvals and clearances for, our productcandidates, and prepare for and begin to commercialize any approved or cleared products, particularly if we are unable to generate profitsand cash flow from Bio‑Reference and our other commercial businesses. If we are unable to generate profits and cash flow from Bio-Reference and our other commercial businesses, our product candidates fail in clinical trials or do not gain regulatory approval orclearance, or if our product candidates do not achieve market acceptance, we may never become profitable. In addition, if we are requiredby the U.S. Food and Drug Administration (“FDA”), to perform studies in addition to those we currently anticipate, our expenses willincrease beyond current expectations and the timing of any potential product approval may be delayed. Even if we achieve profitability inthe future, we may not be able to sustain profitability in subsequent periods.

We may require substantial additional funding, which may not be available to us on acceptable terms, or at all.

As of December 31, 2015, we have cash and cash equivalents of $193.6 million. We believe we have sufficient cash and cashequivalents on hand or available to us from operations or through lines of credit to meet our anticipated cash requirements for operationsand debt service beyond the next 12 months. We have based this estimate on assumptions that may prove to be wrong or subject to change,and we may be required to use our available capital resources sooner than we currently expect or curtail aspects of our operations in order topreserve our capital. Because of the numerous risks and uncertainties associated with the development and commercialization of ourproduct candidates, the success of our relationship with Pfizer and the success of our acquisition of Bio-Reference, we are unable toestimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical trials andour expanded commercial operations. Our future capital requirements will depend on a number of factors, including our relationship withPfizer, the success of the Bio-Reference acquisition and costs associated with the integration of the Bio-Reference operations, thecontinued progress of our research and development of product candidates, the timing and outcome of clinical trials and regulatoryapprovals, the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims and other intellectualproperty rights, the status of competitive products, the availability of financing, and our success in developing markets for our productcandidates.

Until we can generate a sufficient amount of product and service revenue to finance our cash requirements for research, developmentand operations, we will need to finance future cash needs primarily through public or private equity offerings, debt financings, or strategiccollaborations. Our ability to obtain additional capital may depend on prevailing economic conditions and financial, business and otherfactors beyond our control. Disruptions in the U.S. and global financial markets may adversely impact the availability and cost of credit, aswell as our ability to raise money in the capital markets. Economic conditions have been, and continue to be, volatile. Continued instabilityin these market conditions may limit our ability to replace, in a timely manner, maturing liabilities and access the capital necessary to fundand grow our business. There can be no assurance that additional capital will be available to us on acceptable terms, or at all, which couldadversely impact our business, results of operations, liquidity, capital resources and financial condition. If we are not able to secureadditional funding when needed, we may have to delay, reduce the scope of, or eliminate one or more of our clinical trials or research anddevelopment programs. To the extent that we raise additional funds by issuing equity securities, our stockholders may experienceadditional significant dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additionalfunds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or our productcandidates or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets wheneverconditions are favorable, even if we do not have an immediate need for additional capital at that time.

Our research and development activities may not result in commercially viable products.

Many of our product candidates are in the early stages of development and are prone to the risks of failure inherent in drug,diagnostic, and medical device product development. These risks further include the possibility that such products would:

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• be found to be ineffective, unreliable, or otherwise inadequate or otherwise fail to receive regulatoryapproval;

• be difficult or impossible to manufacture on a commercialscale;

• be uneconomical to market or otherwise not be effectivelymarketed;

• fail to be successfully commercialized if adequate reimbursement from government health administration authorities, privatehealth insurers, and other organizations for the costs of these products is unavailable;

• be impossible to commercialize because they infringe on the proprietary rights of others or compete with products marketedby others that are superior; or

• fail to be commercialized prior to the successful marketing of similar products bycompetitors.

The results of pre-clinical trials and previous clinical trials for our products may not be predictive of future results, and our currentand planned clinical trials may not satisfy the requirements of the FDA or other non-U.S. regulatory authorities.

Positive results from pre-clinical studies and early clinical trial experience should not be relied upon as evidence that later-stage orlarge-scale clinical trials will succeed. Likewise, there can be no assurance that the results of studies conducted by collaborators or otherthird parties will be viewed favorably or are indicative of our own future study results. We may be required to demonstrate with substantialevidence through well-controlled clinical trials that our product candidates are either (i) with respect to drugs or Class III devices, safe andeffective for use in a diverse population of their intended uses or (ii) with respect to Class I or Class II devices, are substantially equivalentin terms of safety and effectiveness to devices that are already marketed under section 510(k) of the Food, Drug and Cosmetic Act. Successin early clinical trials does not mean that future clinical trials will be successful because product candidates in later-stage clinical trials mayfail to demonstrate sufficient safety and efficacy to the satisfaction of the FDA and other non-U.S. regulatory authorities despite havingprogressed through initial clinical trials.

Further, our drug candidates may not be approved or cleared even if they achieve their primary endpoints in phase 3 clinical trials orregistration trials. In addition our diagnostic test candidates may not be approved or cleared, as the case may be, even though clinical orother data are, in our view, adequate to support an approval or clearance. The FDA or other non-regulatory authorities may disagree withour trial design and our interpretation of data from pre-clinical studies and clinical trials. In addition, any of these regulatory authorities maychange requirements for the approval or clearance of a product candidate even after reviewing and providing comment on a protocol for apivotal clinical trial that has the potential to result in FDA and other non-U.S. regulatory authorities’ approval. Any of these regulatoryauthorities may also approve or clear a product candidate for fewer or more limited indications or uses than we request or may grantapproval or clearance contingent on the performance of costly post-marketing clinical trials. The FDA or other non-U.S. regulatoryauthorities may not approve the labeling claims necessary or desirable for the successful commercialization of our product candidates.

The results of our clinical trials may show that our product candidates may cause undesirable side effects, which could interrupt,delay or halt clinical trials, resulting in the denial of regulatory approval by the FDA and other non-U.S. regulatory authorities.

In light of widely publicized events concerning the safety risk of certain drug products, regulatory authorities, members of Congress,the Government Accounting Office, medical professionals, and the general public have raised concerns about potential drug safety issues.These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products, andestablishment of risk management programs that may, for instance, restrict distribution of drug products. The increased attention to drugsafety issues may result in a more cautious approach by the FDA to clinical trials. Data from clinical trials may receive greater scrutinywith respect to safety, which may make the FDA or other regulatory authorities more likely to terminate clinical trials before completion, orrequire longer or additional clinical trials that may result in substantial additional expense and a delay or failure in obtaining approval orapproval for a more limited indication than originally sought.

The failure to obtain approval for or successfully commercialize Rayaldee would have a material adverse effect on our business.

The NDA for Rayaldee is currently pending before the FDA with a PDUFA target date of March 28, 2016. Upon approval, we expectto begin the commercial launch of Rayaldee in the second half of 2016. There can be no assurance that we will obtain regulatory approvalor be able to launch Rayaldee by such dates. Further even if we obtain regulatory approval of Rayaldee, there can be no assurance that wewill be able to successfully commercialize Rayaldee. To successfully launch and commercialize Rayaldee, we will need to establish a salesand marketing and clinical support infrastructure, educate the medical community about Rayaldee’s benefits, and establish commerciallyviable pricing and obtain adequate reimbursement

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from third-party and government payors. Our failure to successfully commercialize Rayaldee within the expected time frame, or at all,would have a material adverse effect on our business.

Our exclusive worldwide agreement with Pfizer Inc. is important to our business. If we do not successfully develop hGH- CTP and/orPfizer Inc. does not successfully commercialize hGH-CTP, our business could be adversely affected.

In December 2014, we entered into a development and commercialization agreement with Pfizer relating to our long-acting hGH-CTP for the treatment of growth hormone deficiency in adults and children. Under the terms of the agreements with Pfizer, we receivednon-refundable and non-creditable upfront payments of $295 million and are eligible to receive up to an additional $275 million upon theachievement of certain regulatory milestones. In addition, we are eligible to receive initial royalty payments associated with thecommercialization of hGH-CTP for Adult GHD. Upon the launch of hGH-CTP for Pediatric GHD, the royalties will transition to aregional, tiered gross profit sharing for both hGH-CTP and Pfizer’s Genotropin®. We are also responsible for the development programand are obligated to pay for the development up to an agreed cap, which may be exceeded under certain circumstances. If we are requiredto exceed the agreed cap, it could have a material adverse impact on the expected benefits to us from the Pfizer transaction and our overallfinancial condition. In the event that the parties are able to obtain regulatory approvals to market a product covered by the agreement, wewill be substantially dependent on Pfizer for the successful commercialization of such product. The success of the collaborationarrangement with Pfizer is dependent in part on, among other things, the skills, experience and efforts of Pfizer’s employees responsible forthe project, Pfizer’s commitment to the arrangement, and the financial condition of Pfizer, all of which are beyond our control. In the eventthat Pfizer, for any reason, including but not limited to early termination of the agreement, fails to devote sufficient resources tosuccessfully develop and commercialize any product resulting from the collaboration arrangement, our ability to earn milestone paymentsor receive royalty or profit sharing payments would be adversely affected, which would have a material adverse effect on our financialcondition and prospects.

Our business is substantially dependent on the success of phase 3 clinical trials for hGH-CTP and our ability to achieve regulatoryapproval for the marketing of this product.

There is no assurance that phase 3 trials for hGH-CTP will continue to be successful or support marketing approval, or that we will beable to obtain marketing approval for the product, or any other product candidate we are developing. Before they can be marketed, ourproducts in development must be approved by the FDA or similar foreign governmental agencies. The process for obtaining FDA approvalis both time-consuming and costly, with no certainty of a successful outcome. Before obtaining regulatory approval for the sale of any drugcandidate, we must conduct extensive preclinical tests and clinical trials to demonstrate the safety and efficacy in humans of our productcandidates. Although hGH-CTP has exhibited no serious adverse events associated with the drug administration in the clinical trialsconducted to date, further testing or patient use may undermine those determinations or unexpected side effects may arise. A failure of anypreclinical study or clinical trial can occur at any stage of testing. The results of preclinical and initial clinical testing of these products maynot necessarily indicate the results that will be obtained from later or more extensive testing. It also is possible to suffer significant setbacksin advanced clinical trials, even after obtaining promising results in earlier trials. If phase 3 clinical trials for hGH-CTP are not successful orwe are unable to achieve regulatory approval for this product, our business will be significantly adversely impacted, which could have amaterially adverse effect on our business, financial condition and results of operations.

Our business is substantially dependent on our ability to develop, launch and generate revenue from our diagnostic products.

Our business is dependent on our ability to successfully commercialize the 4Kscore test and other diagnostic products, including theClaros 1. We are committing significant resources to the development and commercialization of these products, and there is no guaranteethat we will be able to successfully commercialize these tests. We have limited experience in developing, manufacturing, selling, marketingor distributing diagnostic tests. Although we expect to leverage the national marketing, sales and distribution resources of Bio-Reference toenhance sale of, and reimbursement for, the 4Kscore test and other diagnostic products including the Claros 1, we may not be successful inour integration with Bio-Reference or be able to successfully commercialize our diagnostic products utilizing the Bio-Referenceinfrastructure. If we are not able to successfully develop, market or sell diagnostic tests we develop for any reason, including the failure toobtain any required regulatory approvals, obtain reimbursement for, or successfully integrate Bio-Reference, we will not generate anymeaningful revenue from the sale of such tests. Even if we are able to develop effective diagnostic tests for sale in the marketplace, anumber of factors could impact our ability to sell such tests or generate any significant revenue from the sale of such tests, includingwithout limitation:

▪ our ability to establish and maintain adequate infrastructure to support the commercial launch and sale of our diagnostic tests,including establishing adequate laboratory space, information technology infrastructure, sample collection and trackingsystems, electronic ordering and reporting systems and other infrastructure and hiring adequate laboratory and otherpersonnel;

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▪ the success of the validation studies for our diagnostic tests under development and our ability to publish study results in peer-reviewed journals;

▪ the availability of alternative and competing tests or products and technological innovations or other advances in medicinethat cause our technologies to be less competitive;

▪ the accuracy rates of such tests, including rates of false-negatives and/or false-positives;

▪ concerns regarding the safety or effectiveness or clinical utility of our diagnostictests;

▪ changes in the regulatory environment affecting health care and health care providers, including changes in laws regulatinglaboratory testing and/or device manufacturers;

▪ the extent and success of our sales and marketing efforts and ability to drive adoption of our diagnostictests;

▪ coverage and reimbursement levels by government payors and privateinsurers;

▪ pricing pressures and changes in third-party payor reimbursement policies;and

▪ intellectual property rights held by others or others infringing our intellectual propertyrights.

Our business is substantially dependent on our ability to generate profits and cash flow from our laboratory operations.

We have made a significant investment in our laboratory operations through the acquisitions of OPKO Lab and Bio-Reference. Wecompete in the clinical laboratory market primarily on the basis of the quality of testing, reporting and information systems, reputation inthe medical community, the pricing of services and ability to employ qualified personnel. Our failure to successfully compete on any ofthese factors could result in the loss of clients and a reduction in our revenues and profits. To offset efforts by payors to reduce the cost andutilization of clinical laboratory services, we will need to obtain and retain new clients and business partners and grow the laboratoryoperations. A reduction in tests ordered or specimens submitted by existing clients, without offsetting growth in our client base, couldimpact our ability to successfully grow our business and could have a material adverse impact on our ability to generate profits and cashflow from the laboratory operations.

Discontinuation or recalls of existing testing products, failure to develop, or acquire, licenses for new or improved testing technologies;or our clients using new technologies to perform their own tests could adversely affect our business.

From time to time, manufacturers discontinue or recall reagents, test kits or instruments used by us to perform laboratory testing. Suchdiscontinuations or recalls could adversely affect our costs, testing volume and revenue.

The clinical laboratory industry is subject to changing technology and new product introductions. Our success in maintaining aleadership position in genomic and other advanced testing technologies will depend, in part, on our ability to develop, acquire or licensenew and improved technologies on favorable terms and to obtain appropriate coverage and reimbursement for these technologies. We maynot be able to negotiate acceptable licensing arrangements and it cannot be certain that such arrangements will yield commerciallysuccessful diagnostic tests. If we are unable to license these testing methods at competitive rates, our research and development costs mayincrease as a result. In addition, if we are unable to license new or improved technologies to expand our esoteric testing operations, ourtesting methods may become outdated when compared with our competition and testing volume and revenue may be materially andadversely affected.

Currently, most clinical laboratory testing is categorized as “high” or “moderate” complexity, and thereby is subject to extensive andcostly regulation under CLIA. The cost of compliance with CLIA makes it impractical for most physicians to operate clinical laboratoriesin their offices, and other laws limit the ability of physicians to have ownership in a laboratory and to refer tests to such a laboratory.Manufacturers of laboratory equipment and test kits could seek to increase their sales by marketing point-of-care laboratory equipment tophysicians and by selling test kits approved for home or physician office use to both physicians and patients. Diagnostic tests approved forhome use are automatically deemed to be “waived” tests under CLIA and may be performed in physician office laboratories as well as bypatients in their homes with minimal regulatory oversight. Other tests meeting certain FDA criteria also may be classified as “waived” forCLIA purposes. The FDA has regulatory responsibility over instruments, test kits, reagents and other devices used by clinical laboratoriesand has taken responsibility from the Centers for Disease Control for classifying the complexity of tests for CLIA purposes. Increasedapproval of “waived” test kits could lead to increased testing by physicians in their offices or by patients at home, which could affect ourmarket for laboratory testing services and negatively impact our revenues. If our competitors develop and market products that are moreeffective, safer or less expensive than our current diagnostic products and our future product candidates, our net revenues, profitability andcommercial opportunities will be negatively impacted.

If our competitors develop and market products or services that are more effective, safer or less expensive than our current and futureproducts or services, our revenues, profitability and commercial opportunities will be negatively impacted.

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The pharmaceutical, diagnostic, and laboratory testing industries are highly competitive and require an ongoing, extensive search fortechnological innovation. The industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis onproprietary products. They also require, among other things, the ability to effectively discover, develop, test and obtain regulatoryapprovals for products, as well as the ability to effectively commercialize, market and promote approved products.

Numerous companies, including major pharmaceutical companies, specialty pharmaceutical companies and specialized biotechnologycompanies, are engaged in the development, manufacture and marketing of pharmaceutical products competitive with those that we intendto commercialize ourselves and through our partners. Competitors to our diagnostics business include major diagnostic companies,reference laboratories, molecular diagnostic firms, universities and research institutions. Most of these companies have substantially greaterfinancial and other resources, larger research and development staffs and more extensive marketing and manufacturing organizations thanours. This enables them, among other things, to make greater research and development investments and efficiently utilize their researchand development costs, as well as their marketing and promotion costs, over a broader revenue base. This also provides our competitorswith a competitive advantage in connection with the highly competitive product acquisition and product in-licensing process, which mayinclude auctions in which the highest bidder wins. Our competitors may also have more experience and expertise in obtaining marketingapprovals from the FDA and other regulatory authorities. In addition to product development, testing, approval, and promotion, othercompetitive factors in the pharmaceutical and diagnostics industry include industry consolidation, product quality and price, producttechnology, reputation, customer service, and access to technical information.

In our clinical laboratory operations, we compete with three types of providers in a highly fragmented and competitive industry:hospital laboratories, physician-office laboratories and other independent clinical laboratories. Our major competitors in the New Yorkmetropolitan area are two of the largest national laboratories, Quest Diagnostics and Laboratory Corporation of America. We are muchsmaller than these national laboratories.

The clinical laboratory business is intensely competitive both in terms of price and service. Pricing of laboratory testing services isoften one of the most significant factors used by health care providers and third-party payors in selecting a laboratory. As a result of theclinical laboratory industry undergoing significant consolidation, larger clinical laboratory providers are able to increase cost efficienciesafforded by large-scale automated testing. This consolidation results in greater price competition. We may be unable to increase costefficiencies sufficiently, if at all, and as a result, our net earnings and cash flows could be negatively impacted by such price competition.Additionally, we may also face changes in fee schedules, competitive bidding for laboratory services or other actions or pressures reducingpayment schedules as a result of increased or additional competition.

If our competitors market products that are more effective, safer, easier to use or less expensive than our current products and futureproduct candidates, or that reach the market sooner than our future product candidates, if any, we may not achieve commercial success. Inaddition, the biopharmaceutical, diagnostic, medical device, and laboratory industries are characterized by rapid technological change.Because our research approach integrates many technologies, it may be difficult for us to stay abreast of the rapid changes in eachtechnology. If we fail to stay at the forefront of technological change, we may be unable to compete effectively. Technological advances orproducts developed by our competitors may render our technologies or product candidates obsolete or less competitive.

Our product development activities could be delayed or stopped.

We do not know whether our current or planned pre-clinical and clinical studies will be completed on schedule, or at all. Furthermore,we cannot guarantee that our planned pre-clinical and clinical studies will begin on time or at all. The commencement of our plannedclinical trials could be substantially delayed or prevented by several factors, including:

▪ a limited number of, and competition for, suitable patients with the particular types of disease required for enrollment in ourclinical trials or that otherwise meet the protocol’s inclusion criteria and do not meet any of the exclusion criteria;

▪ a limited number of, and competition for, suitable serum or other samples from patients with particular types of diseaserequired for our validation studies;

▪ a limited number of, and competition for, suitable sites to conduct our clinicaltrials;

▪ delay or failure to obtain FDA or other non-U.S. regulatory authorities’ approval or agreement to commence a clinicaltrial;

▪ delay or failure to obtain sufficient supplies of the product candidate for our clinicaltrials;

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▪ requirements to provide the drugs, diagnostic tests, or medical devices required in our clinical trial protocols or clinical trialsat no cost or cost, which may require significant expenditures that we are unable or unwilling to make;

▪ delay or failure to reach agreement on acceptable clinical trial agreement terms or clinical trial protocols with prospective sitesor investigators; and

▪ delay or failure to obtain institutional review board (“IRB”) approval to conduct or renew a clinical trial at a prospectivesite.

The completion of our clinical trials could also be substantially delayed or prevented by several factors, including:

▪ slower than expected rates of patient recruitment andenrollment;

▪ failure of patients to complete the clinicaltrial;

▪ unforeseen safetyissues;

▪ lack of efficacy evidenced during clinicaltrials;

▪ termination of our clinical trials by one or more clinical trialsites;

▪ inability or unwillingness of patients or medical investigators to follow our clinical trial protocols;and

▪ inability to monitor patients adequately during or aftertreatment.

Our clinical trials may be suspended or terminated at any time by the FDA, other regulatory authorities, the IRB for any given site, orus. Additionally, changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflectthese changes with appropriate regulatory authorities. Amendments may require us to resubmit our clinical trial protocols to IRBs for re-examination, which may impact the costs, timing, or successful completion of a clinical trial. Any failure or significant delay incommencing or completing clinical trials for our product candidates could materially harm our results of operations and financial condition,as well as the commercial prospects for our product candidates.

We currently have limited marketing staff and no pharmaceutical sales or distribution capabilities in the U.S. If we are unable todevelop our sales, marketing and distribution capability on our own or through collaborations with marketing partners, we will not besuccessful in commercializing our pharmaceutical product candidates in the U.S.

We currently have no pharmaceutical marketing, sales or distribution capabilities in the U.S. We intend to establish our sales andmarketing organization with technical expertise and supporting distribution capabilities to commercialize our pharmaceutical productcandidates, which will be expensive and time-consuming. Any failure or delay in the development of any of our internal sales, marketing,and distribution capabilities would adversely impact the commercialization of our pharmaceutical products. With respect to our existing andfuture product candidates, we may choose to collaborate with third parties that have direct sales forces and established distribution systems,either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems. To the extent thatwe enter into co-promotion or other licensing arrangements, our product revenue and profit is likely to be lower than if we directlymarketed or sold our products. In addition, any revenue we receive will depend in whole or in part upon the efforts of such third parties,which may not be successful and are generally not within our control. If we are unable to enter into such arrangements on acceptable termsor at all, we may not be able to successfully commercialize our existing and future product candidates. If we are not successful incommercializing our existing and future pharmaceutical product candidates, either on our own or through collaborations with one or morethird parties, our future product revenue will suffer and we may incur significant additional losses.

Our product candidates may have undesirable side effects and cause our approved products to be taken off the market.

If a product candidate receives marketing approval and we or others later identify undesirable side effects caused by such products:

• regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication, or field alerts tophysicians and pharmacies;

• regulatory authorities may withdraw their approval of the product and require us to take our approved product off themarket;

• we may be required to change the way the product is administered, conduct additional clinical trials, or change the labeling ofthe product;

• we may have limitations on how we promote ourproducts;

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• sales of products may decreasesignificantly;

• we may be subject to litigation or product liability claims;and

• our reputation maysuffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the affected product or could substantiallyincrease our commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenues from itssale.

Our inability to meet regulatory quality standards applicable to our manufacturing and quality processes and to address quality controlissues in a timely manner could delay the production and sale of our products or result in recalls of products.

Manufacturing or design defects, unanticipated use of our products, or inadequate disclosure of risks relating to the use of ourproducts could lead to injury or other adverse events. These events could lead to recalls or safety alerts relating to our products (eithervoluntary or required by governmental authorities) and could result, in certain cases, in the removal of a product from the market. Anyrecall could result in significant costs as well as negative publicity that could reduce demand for our products. Personal injuries relating tothe use of our products can also result in product liability claims being brought against us. In some circumstances, such adverse eventscould also cause delays in new product approvals.

We are committed to providing high quality products to our customers, and we plan to meet this commitment by working diligently tocontinue implementing updated and improved quality systems and concepts throughout our organization. We cannot assure you that wewill not have quality control issues in the future, which may result in warning letters and citations from the FDA. If we receive any warningletters from the FDA in the future, there can be no assurances regarding the length of time or cost it will take us to resolve such qualityissues to our satisfaction and to the satisfaction of the FDA. If our remedial actions are not satisfactory to the FDA, we may have to devoteadditional financial and human resources to our efforts, and the FDA may take further regulatory actions against us including, but notlimited to, assessing civil monetary penalties or imposing a consent decree on us, which could result in further regulatory constraints,including the governance of our quality system by a third party. Our inability to resolve these issues or the taking of further regulatoryaction by the FDA may weaken our competitive position and have a material adverse effect on our business, results of operations andfinancial condition.

We manufacture pharmaceutical products in Ireland, Mexico, Spain, and Israel. We also prepare necessary test reagents and assembleand package the cassettes for our point-of-care diagnostic system at our facility in Woburn, Massachusetts. Any quality control issues at ourfacilities may weaken our competitive position and have a material adverse effect on our business results of operations and financialcondition.

As a medical device manufacturer, we are required to register with the FDA and are subject to periodic inspection by the FDA forcompliance with its Quality System Regulation (“QSR”) requirements, which require manufacturers of medical devices to adhere to certainregulations, including testing, quality control and documentation procedures. Compliance with applicable regulatory requirements is subjectto continual review and is monitored rigorously through periodic inspections by the FDA. In addition, most international jurisdictions haveadopted regulatory approval and periodic renewal requirements for medical devices, and we must comply with these requirements in orderto market our products in these jurisdictions. In the European Community, we are required to maintain certain ISO certifications in order tosell our products and must undergo periodic inspections by notified bodies to obtain and maintain these certifications. Further, someemerging markets rely on the FDA’s Certificate for Foreign Government (“CFG”) in lieu of their own regulatory approval requirements.Our failure, or our manufacturers’ failure to meet QSR ISO, or any other regulatory requirements or industry standards could delayproduction of our products and lead to fines, difficulties in obtaining regulatory clearances, recalls or other consequences, which could, inturn, have a material adverse effect on our business, results of operations, and our financial condition.

Failure to establish, and perform to, appropriate quality standards to assure that the highest level of quality is observed in theperformance of our testing services could adversely affect the results of our operations and adversely impact our reputation.

The provision of clinical testing services, including anatomic pathology services, and related services, and the design, manufactureand marketing of diagnostic products involve certain inherent risks. The services that we provide and the products that we design,manufacture and market are intended to provide information for healthcare providers in providing patient care. Therefore, users of ourservices and products may have a greater sensitivity to errors than the users of services or products that are intended for other purposes.

Similarly, negligence in performing our services can lead to injury or other adverse events. We may be sued under physician liabilityor other liability law for acts or omissions by our pathologists, laboratory personnel and hospital employees

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who are under the supervision of our hospital-based pathologists. We are subject to the attendant risk of substantial damages awards andrisk to our reputation.

Even if we receive regulatory approval or clearance to market our product candidates, the market may not be receptive to our products.

Even if our product candidates obtain marketing approval or clearance, our products may not gain market acceptance amongphysicians, patients, health care payors and/or the medical community. We believe that the degree of market acceptance will depend on anumber of factors, including:

• timing of market introduction of competitiveproducts;

• safety and efficacy of our product compared to otherproducts;

• prevalence and severity of any sideeffects;

• potential advantages or disadvantages over alternativetreatments;

• strength of marketing and distributionsupport;

• price of our products, both in absolute terms and relative to alternativetreatments;

• availability of coverage and reimbursement from government and other third-partypayors;

• potential product liabilityclaims;

• limitations or warnings contained in a product’s regulatory authority-approved labeling;and

• changes in the standard of care for the targeted indications for any of our product candidates, which could reduce themarketing impact of any claims that we could make following applicable regulatory authority approval.

In addition, our efforts to educate the medical community and health care payors on the benefits of our product candidates mayrequire significant resources and may never be successful. If our products do not gain market acceptance, it would have a material adverseeffect on our business, results of operations, and financial condition.

If our existing and future product candidates are not covered and eligible for reimbursement from government and third party payors,we may not be able to generate significant revenue or achieve or sustain profitability.

The coverage and reimbursement status of newly approved or cleared drugs, diagnostic and laboratory tests is uncertain, and failure ofour pharmaceutical products, diagnostic tests or laboratory to be adequately covered by insurance and eligible for adequate reimbursementcould limit our ability to market any future product candidates we may develop and decrease our ability to generate revenue from any ofour existing and future product candidates that may be approved or cleared. The commercial success of our existing and future productcandidates in both domestic and international markets will depend in part on the availability of coverage and adequate reimbursement fromthird-party payors, including government payors, such as the Medicare and Medicaid programs, managed care organizations, and otherthird-party payors. The government and other third-party payors are increasingly attempting to contain health care costs by limiting bothinsurance coverage and the level of reimbursement for new drugs and diagnostic tests and, as a result, they may not cover or provideadequate payment for our product candidates. These payors may conclude that our product candidates are less safe, less effective, or lesscost-effective than existing or later-introduced products. These payors may also conclude that the overall cost of the procedure using one ofour devices exceeds the overall cost of the competing procedure using another type of device, and third-party payors may not approve ourproduct candidates for insurance coverage and adequate reimbursement.

The failure to obtain coverage and adequate or any reimbursement for our product candidates, or health care cost containmentinitiatives that limit or restrict reimbursement for our product candidates, may reduce any future product revenue. Even though a drug (notadministered by a physician) may be approved by the FDA, this does not mean that a Prescription Drug Plan (“PDP”), a private insureroperating under Medicare Part D, will list that drug on its formulary or will set a reimbursement level. PDPs are not required to make everyFDA-approved drug available on their formularies. If our drug products are not listed on sufficient number of PDP formularies or if thePDPs’ levels of reimbursement are inadequate, our business, results of operations, and financial condition could be materially adverselyaffected.

Additionally, our failure to comply with applicable Medicare, Medicaid and other governmental payor rules could result in ourinability to participate in a governmental payor program, our returning funds already paid to us, civil monetary penalties, criminal penaltiesand/or limitations on the operational function of our laboratory. If we were unable to receive reimbursement under a governmental payorprogram, a substantial portion of our revenues would be lost, which would adversely affect our results of operations and financial condition.

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As we evolve from a company primarily involved in development to a company also involved in commercialization of ourpharmaceutical and diagnostic products as well as our laboratory testing services, we may encounter difficulties in managing ourgrowth and expanding our operations successfully.

As we advance our product candidates and expand our business, we will need to expand our development, regulatory and commercialinfrastructure. As our operations expand, we expect that we will need to manage additional relationships with various third parties,collaborators and suppliers. Maintaining these relationships and managing our future growth will impose significant added responsibilitieson members of our management. We must be able to: manage our development efforts and operations effectively; manage our clinical trialseffectively; hire, train and integrate additional management, administrative and sales and marketing personnel; improve our managerial,development, operational and finance systems; implement and manage an effective marketing strategy; and expand our facilities, all ofwhich may impose a strain on our administrative and operational infrastructure.

Furthermore, we may acquire additional businesses, products or product candidates that complement or augment our existingbusiness. Integrating any newly acquired business or product could be expensive and time-consuming. We may not be able to integrate anyacquired business or product successfully or operate any acquired business profitably. Our future financial performance will depend, inpart, on our ability to manage any future growth effectively and our ability to integrate any acquired businesses. We may not be able toaccomplish these tasks, and our failure to accomplish any of them could prevent us from successfully growing our company, which wouldhave a material adverse effect on our business, results of operations and financial condition.

Our success is dependent to a significant degree upon the involvement and efforts of our Chairman and Chief Executive Officer, PhillipFrost, M.D.

Our success is dependent to a significant degree upon the efforts of our Chairman and Chief Executive Officer, Phillip Frost, M.D.,who is essential to our business. The departure of our CEO for whatever reason or the inability of our CEO to continue to serve in hispresent capacity could have a material adverse effect upon our business, financial condition, and results of operations. Our CEO has ahighly regarded reputation in the pharmaceutical and medical industry and attracts business opportunities and assists both in negotiationswith acquisition targets, investment targets, and potential joint venture partners. Our CEO has also provided financing to the Company,both in terms of a credit agreement and equity investments. If we lost his services, our relationships with acquisition and investment targets,joint ventures, and investors may suffer and could cause a material adverse impact on our operations, financial condition, and the value ofour Common Stock.

If we fail to attract and retain key management and scientific personnel, we may be unable to successfully operate our business anddevelop or commercialize our product candidates.

We will need to expand and effectively manage our managerial, operational, sales, financial, development, and other resources inorder to successfully operate our business and pursue our research, development, and commercialization efforts for our product candidates.Our success depends on our continued ability to attract, retain, and motivate highly qualified management and pre-clinical and clinicalpersonnel. The loss of the services or support of any of our senior management, particularly Dr. Phillip Frost, our Chairman of the Boardand CEO, could delay or prevent the development and commercialization of our product candidates.

If the FDA or other applicable regulatory authorities approve generic products that compete with any of our products or productcandidates, the sale of our products or product candidates may be adversely affected.

Once an NDA is approved, the product covered thereby becomes a “listed drug” which, in turn can be relied upon by potentialcompetitors in support of an approval of an abbreviated new drug application, or ANDA, or 505(b)(2) application. U.S. laws and otherapplicable policies provide incentives to manufacturers to create modified, non-infringing versions of a drug to facilitate the approval of anANDA or other application for a generic substitute. These manufacturers might only be required to conduct a relatively inexpensive studyto show that their product has the same active ingredient(s), dosage form, strength, route of administration, and conditions of use, orlabeling, as our product or product candidate and that the generic product is bioequivalent to ours, meaning it is absorbed in the body at thesame rate and to the same extent as our product or product candidate. These generic equivalents, which must meet the same qualitystandards as branded pharmaceuticals, would be significantly less costly than ours to bring to market and companies that produce genericequivalents are generally able to offer their products at lower prices. Thus, after the introduction of a generic competitor, a significantpercentage of sales of any branded product is typically lost to the generic product. Accordingly, competition from generic equivalents to ourproducts or product candidates would materially adversely impact our revenues, profitability and cash flows and substantially limit ourability to obtain a return on the investments that we have made in our product candidates.

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If we fail to acquire and develop other products or product candidates at all or on commercially reasonable terms, we may be unable todiversify or grow our business.

We intend to continue to rely on acquisitions and in-licensing as a source of our products and product candidates for development andcommercialization. The success of this strategy depends upon our ability to identify, select, and acquire pharmaceutical and diagnosticproducts, drug delivery technologies, and medical device product candidates. Proposing, negotiating, and implementing an economicallyviable product acquisition or license is a lengthy and complex process. We compete for partnering arrangements and license agreementswith pharmaceutical, biotechnology and medical device companies, and academic research institutions. Our competitors may have strongerrelationships with third parties with whom we are interested in collaborating and/or may have more established histories of developing andcommercializing products.

Most of our competitors also have substantially greater financial and other resources than us. As a result, our competitors may have acompetitive advantage in entering into partnering arrangements with such third parties, as such partnering arrangements are often decidedin an auction process in which the highest bidder wins. In addition, even if we find promising product candidates, and generate interest in apartnering or strategic arrangement to acquire such product candidates, we may not be able to acquire rights to additional productcandidates or approved products on terms that we find acceptable, or at all.

We expect that any product candidate to which we acquire rights will require additional development efforts prior to commercial sale,including extensive clinical testing and approval or clearance by the FDA and other non-U.S. regulatory authorities. All product candidatesare subject to the risks of failure inherent in pharmaceutical, diagnostic test or medical device product development, including thepossibility that the product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities. Even ifthe product candidates are approved or cleared for marketing, we cannot be sure that they would be capable of economically feasibleproduction or commercial success. If we fail to acquire or develop other product candidates that are capable of economically feasibleproduction and commercial success, our business, results of operations and financial condition and cash flows may be materially adverselyaffected.We rely on third parties to manufacture and supply our pharmaceutical and diagnostic product candidates.

If our manufacturing partners are unable to produce our products in the amounts that we require, we may not be able to establish acontract and obtain a sufficient alternative supply from another supplier on a timely basis and in the quantities we require. We expect tocontinue to depend on third-party contract manufacturers for the foreseeable future.

Our product candidates require precise, high quality manufacturing. Any of our contract manufacturers will be subject to ongoingperiodic unannounced inspection by the FDA and other non-U.S. regulatory authorities to ensure strict compliance with QSR regulations fordevices or cGMPs for drugs, and other applicable government regulations and corresponding standards relating to matters such as testing,quality control, and documentation procedures. If our contract manufacturers fail to achieve and maintain high manufacturing standards incompliance with QSR or cGMPs, we may experience manufacturing errors resulting in patient injury or death, product recalls orwithdrawals, delays or interruptions of production or failures in product testing or delivery, delay or prevention of filing or approval ofmarketing applications for our products, cost overruns, or other problems that could seriously harm our business.

Any performance failure on the part of our contract manufacturers could delay clinical development or regulatory approval orclearance of our product candidates or commercialization of our future product candidates, depriving us of potential product revenue andresulting in additional losses. In addition, our dependence on a third party for manufacturing may adversely affect our future profitmargins. Our ability to replace an existing manufacturer may be difficult because the number of potential manufacturers is limited and theFDA must approve any replacement manufacturer before it can begin manufacturing our product candidates. Such approval would result inadditional non-clinical testing and compliance inspections. It may be difficult or impossible for us to identify and engage a replacementmanufacturer on acceptable terms in a timely manner, or at all.

Independent clinical investigators and contract research organizations that we engage to conduct our clinical trials may not be diligent,careful or timely.

We depend on independent clinical investigators to conduct our clinical trials. Contract research organizations may also assist us inthe collection and analysis of data. These investigators and contract research organizations will not be our employees, and we will not beable to control, other than by contract, the amount of resources, including time, that they devote to products that we develop. If independentinvestigators fail to devote sufficient resources to the development of product candidates or clinical trials, or if their performance issubstandard, it will delay the marketing approval or clearance and commercialization of any products that we develop. Further, the FDArequires that we comply with standards, commonly referred to as good clinical practice, for conducting, recording and reporting clinicaltrials to assure that data and reported results are credible and accurate and that the rights, integrity, and confidentiality of trial subjects areprotected. If our

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independent clinical investigators and contract research organizations fail to comply with good clinical practice, the results of our clinicaltrials could be called into question and the clinical development of our product candidates could be delayed.

Failure of clinical investigators or contract research organizations to meet their obligations to us or comply with federal regulationsand good clinical practice procedures could adversely affect the clinical development of our product candidates and harm our business,results of operations, and financial condition.

If the validity of an informed consent from a subject was to be challenged, it may negatively impact our product development efforts.

We take steps to ensure that all clinical data and genetic and other biological samples are collected from subjects who provideinformed consent for the data and samples and we work to ensure that the subjects from whom our data and samples are collected do notretain any proprietary or commercial rights to the data or samples or any discoveries derived from them. However, because we may collectdata and samples from countries that are governed by a number of different regulatory regimes, there are many complex legal questionsrelating to the adequacy of informed consent that we must continually address. The adequacy of any given subject’s informed consent maybe challenged in the future, and any given informed consent may prove unlawful or otherwise inadequate for our purposes. Any findingsagainst us, or our clinical collaborators, could obligate us to stop using some of our clinical samples, which in turn may hinder our productdevelopment efforts. Such a result would also likely involve legal challenges that may consume our management and financial resources.

Failure to timely or accurately bill for our services could have a material adverse effect on our business.

Billing for laboratory testing services is extremely complicated and is subject to extensive and non-uniform rules and administrativerequirements. Depending on the billing arrangement and applicable law, we bill various payors, such as patients, insurance companies,Medicare, Medicaid, physicians, hospitals and employer groups. Changes in laws and regulations could increase the complexity and cost ofour billing process. Additionally, in the U.S., third-party payors generally require billing codes on claims for reimbursement that describethe services provided. For laboratory services, the American Medical Association establishes most of the billing codes using a data code setcalled Current Procedural Terminology, or CPT, codes. Each third-party payor generally develops payment amounts and coverage policiesfor their beneficiaries or members that ties to the CPT code established for the laboratory test and, therefore, coverage and reimbursementmay differ by payor even if the same billing code is reported for claims filing purposes. For laboratory tests without a specific billing code,payors often review claims on a claim-by-claim basis and there are increased uncertainties as to coverage and eligibility for reimbursement.

We intend to implement a new billing system for our laboratory business in 2016. The adoption of the new billing system, which willreplace the existing billing system, poses several challenges relating to, among other things, training of personnel, communication of newrules and procedures, changes in corporate culture, migration of data, and the potential instability of the new system. If the remainingimplementation of the billing system is delayed, in whole or in part, we would continue to use our current systems which may not besufficient to support our planned operations and significant upgrades to the current systems may be warranted or required to meet ourbusiness needs pending the new billing system implementation.

Incorrect or incomplete documentation and billing information could result in non-payment for services rendered or having to payback amounts incorrectly billed and collected. Further, the failure to timely or correctly bill could lead to various penalties, including: (1)exclusion from participation in CMS and other government programs; (2) asset forfeitures; (3) civil and criminal fines and penalties; and (4)the loss of various licenses, certificates and authorizations necessary to operate our business, any of which could have a material adverseeffect on our results of operations or cash flows.

Failure in our information technology systems, including by cybersecurity attacks or other data security incidents, could significantlyincrease testing turn-around time or billing processes and otherwise disrupt our operations.

Our operations depend, in part, on the continued performance of our information technology systems. Our information technologysystems are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptions. In addition, we are in theprocess of integrating the information technology systems of our recently acquired subsidiaries, and we may experience system failures orinterruptions as a result of this process. Sustained system failures or interruption of our systems in one or more of our laboratory operationscould disrupt our ability to process laboratory requisitions, perform testing, provide test results in a timely manner and/or bill theappropriate party. Failure of our information technology systems could adversely affect our business, profitability and financial condition.

Although we have information technology security systems, a successful cybersecurity attack or other data security incident couldresult in the misappropriation and/or loss of confidential or personal information, create system interruptions, or deploy malicious softwarethat attacks our systems. It is possible that a cybersecurity attack might not be noticed for some

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period of time. The occurrence of a cybersecurity attack or incident could result in business interruptions from the disruption of ourinformation technology systems, or negative publicity resulting in reputational damage with our customers, shareholders and otherstakeholders and/or increased costs to prevent, respond to or mitigate cybersecurity events. In addition, the unauthorized dissemination ofsensitive personal information or proprietary or confidential information could expose us or other third-parties to regulatory fines orpenalties, litigation and potential liability, or otherwise harm our business.

Healthcare plans have taken steps to control the utilization and reimbursement of healthcare services, including clinical test services.

We also face efforts by non-governmental third-party payors, including healthcare plans, to reduce utilization and reimbursement forclinical testing services.

The healthcare industry has experienced a trend of consolidation among healthcare insurance plans, resulting in fewer but largerinsurance plans with significant bargaining power to negotiate fee arrangements with healthcare providers, including clinical testingproviders. These healthcare plans, and independent physician associations, may demand that clinical testing providers accept discounted feestructures or assume all or a portion of the financial risk associated with providing testing services to their members through cappedpayment arrangements. In addition, some healthcare plans have been willing to limit the PPO or POS laboratory network to only a singlenational laboratory to obtain improved fee-for-service pricing. There are also an increasing number of patients enrolling in consumer drivenproducts and high deductible plans that involve greater patient cost-sharing.

The increased consolidation among healthcare plans also has increased the potential adverse impact of ceasing to be a contractedprovider with any such insurer. The Health Care Reform Law includes provisions, such as the creation of healthcare exchanges, which mayencourage healthcare insurance plans to increase exclusive contracting.

We expect continuing efforts to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of clinicaltest services. These efforts, including future changes in third-party payor rules, practices and policies, or ceasing to be a contracted providerto a healthcare plan, may have a material adverse effect on our business.

The success of our business may be dependent on the actions of our collaborative partners.

We have entered into and expect in the future to enter into collaborative arrangements with established multi-national pharmaceutical,diagnostic, and medical device companies, which will finance or otherwise assist in the development, manufacture and marketing ofproducts incorporating our technology. We anticipate deriving some revenues from research and development fees, license fees, milestonepayments, and royalties from collaborative partners. Our prospects, therefore, may depend to some extent upon our ability to attract andretain collaborative partners and to develop technologies and products that meet the requirements of prospective collaborative partners. Inaddition, our collaborative partners may have the right to abandon research projects, guide strategy regarding prosecution of relevant patentapplications and terminate applicable agreements, including funding obligations, prior to or upon the expiration of the agreed-upon researchterms. There can be no assurance that we will be successful in establishing collaborative arrangements on acceptable terms or at all, thatcollaborative partners will not terminate funding before completion of projects, that our collaborative arrangements will result in successfulproduct commercialization, or that we will derive any revenues from such arrangements. To the extent that we are unable to develop andmaintain collaborative arrangements, we would need substantial additional capital to undertake research, development, andcommercialization activities on our own.

If we are unable to obtain and enforce patent protection for our products, our business could be materially harmed.

Our success depends, in part, on our ability to protect proprietary methods and technologies that we develop or license under thepatent and other intellectual property laws of the U.S. and other countries, so that we can prevent others from unlawfully using ourinventions and proprietary information. However, we may not hold proprietary rights to some patents required for us to commercialize ourproduct candidates. Because certain U.S. patent applications are confidential until patents issue, such as applications filed prior toNovember 29, 2000, or applications filed after such date for which nonpublication has been requested, third parties may have filed patentapplications for technology covered by our pending patent applications without our being aware of those applications, and our patentapplications may not have priority over those applications. For this and other reasons, we or our third-party collaborators may be unable tosecure desired patent rights, thereby losing desired exclusivity. If licenses are not available to us on acceptable terms, we may not be able tomarket the affected products or conduct the desired activities, unless we challenge the validity, enforceability, or infringement of the third-party patent or otherwise circumvent the third-party patent.

Our strategy depends on our ability to rapidly identify and seek patent protection for our discoveries. In addition, we will rely onthird-party collaborators to file patent applications relating to proprietary technology that we develop jointly during

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certain collaborations. The process of obtaining patent protection is expensive and time-consuming. If our present or future collaboratorsfail to file and prosecute all necessary and desirable patent applications at a reasonable cost and in a timely manner, our business will beadversely affected. Despite our efforts and the efforts of our collaborators to protect our proprietary rights, unauthorized parties may be ableto obtain and use information that we regard as proprietary.

The issuance of a patent does not guarantee that it is valid or enforceable. Any patents we have obtained, or obtain in the future, maybe challenged, invalidated, unenforceable, or circumvented. Moreover, the U.S. Patent and Trademark Office (“USPTO”) may commenceinterference proceedings involving our patents or patent applications. In addition, court decisions may introduce uncertainty in theenforceability or scope of patents owned by biotechnology, pharmaceutical, and medical device companies. Any challenge to, finding ofunenforceability or invalidation or circumvention of, our patents or patent applications would be costly, would require significant time andattention of our management, and could have a material adverse effect on our business, results of operations and financial condition.

Our pending patent applications may not result in issued patents. The patent position of pharmaceutical, biotechnology, diagnostic,and medical device companies, including ours, is generally uncertain and involves complex legal and factual considerations. The standardsthat the USPTO and its foreign counterparts use to grant patents are not always applied predictably or uniformly and can change. There isalso no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable in pharmaceutical, biotechnology,diagnostic, or medical device patents. Accordingly, we do not know the degree of future protection for our proprietary rights or the breadthof claims that will be allowed in any patents issued to us or to others. The legal systems of certain countries do not favor the aggressiveenforcement of patents, and the laws of foreign countries may not protect our rights to the same extent as the laws of the U.S. Therefore,the enforceability or scope of our owned or licensed patents in the U.S. or in foreign countries cannot be predicted with certainty, and, as aresult, any patents that we own or license may not provide sufficient protection against competitors. We may not be able to obtain ormaintain patent protection for our pending patent applications, those we may file in the future, or those we may license from third parties.

While we believe that our patent rights are enforceable, we cannot assure you that any patents that have issued, that may issue, or thatmay be licensed to us will be enforceable or valid, or will not expire prior to the commercialization of our product candidates, thus allowingothers to more effectively compete with us. Therefore, any patents that we own or license may not adequately protect our productcandidates or our future products, which could have a material adverse effect on our business, results of operations, and financial condition.

If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and productscould be adversely affected.

In addition to patent protection, we also rely on other proprietary rights, including protection of trade secrets, know-how, andconfidential and proprietary information. To maintain the confidentiality of trade secrets and proprietary information, we will seek to enterinto confidentiality agreements with our employees, consultants, and collaborators upon the commencement of their relationships with us.These agreements generally require that all confidential information developed by the individual or made known to the individual by usduring the course of the individual’s relationship with us be kept confidential and not disclosed to third parties. Our agreements withemployees also generally provide that any inventions conceived by the individual in the course of rendering services to us shall be ourexclusive property.

However, we may not obtain these agreements in all circumstances, and individuals with whom we have these agreements may notcomply with their terms. In the event of unauthorized use or disclosure of our trade secrets or proprietary information, these agreements,even if obtained, may not provide meaningful protection, particularly for our trade secrets or other confidential information. To the extentthat our employees, consultants, or contractors use technology or know-how owned by third parties in their work for us, disputes may arisebetween us and those third parties as to the rights in related inventions.

Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidential information. The disclosure of ourtrade secrets would impair our competitive position and may materially harm our business, financial condition, and results of operations.

We will rely heavily on licenses from third parties. Failure to comply with the provisions of these licenses could result in the loss of ourrights under the license agreements.

Many of the patents and patent applications in our patent portfolio are not owned by us, but are licensed from third parties. Suchlicense agreements give us rights for the commercial exploitation of the patents resulting from the respective patent applications, subject tocertain provisions of the license agreements. Failure to comply with these provisions could result in the loss of our rights under theselicense agreements. Our inability to rely on these patents and patent applications,

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which are the basis of our technology, would have a material adverse effect on our business, results of operations and financial condition.

We license patent rights to certain of our technology from third-party owners. If such owners do not properly maintain or enforce thepatents underlying such licenses, our competitive position and business prospects will be harmed.

We have obtained licenses from, among others, INEOS Healthcare, Washington University, UT Southwestern, the President andFellows of Harvard College, The Scripps Research Institute, Arctic Partners, and Academia Sinica, among others, that are necessary oruseful for our business. In addition, we intend to enter into additional licenses of third-party intellectual property in the future. Althoughour goal is to obtain exclusivity in our licensing transactions, we cannot guarantee that no third parties will step forward and assertinventorship or ownership in our in-licensed patents. In some cases, we may rely on the assurances of our licensors that all ownership rightshave been secured and that all necessary agreements are intact or forthcoming.

Our success will depend in part on our ability or the ability of our licensors to obtain, maintain, and enforce patent protection for ourlicensed intellectual property and, in particular, those patents to which we have secured exclusive rights in our field. We or our licensorsmay not successfully prosecute the patent applications which are licensed to us. Even if patents issue in respect of these patent applications,we or our licensors may fail to maintain these patents, may determine not to pursue litigation against other companies that are infringingthese patents, or may pursue such litigation less aggressively than we would. Without protection for the intellectual property we havelicensed, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitivebusiness position and harm our business, results of operations and financial condition.

Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights ofthird parties.

Other entities may have or obtain patents or proprietary rights that could limit our ability to develop, manufacture, use, sell, offer forsale or import products, or impair our competitive position. In addition, other entities may have or obtain patents or proprietary rights thatcover our current research and preclinical studies. While there are statutory exemptions to patent infringement for those who are using thirdparty patented technology in the process of pursuing FDA regulatory approval, the U.S. case law pertaining to such exemptions changesover time. Lawsuits involving such exemptions are very fact intensive and it is currently unclear under U.S. case law whether preclinicalstudies would always qualify for such an exemption, and whether such exemptions would apply to research tools. To the extent that ourcurrent research and preclinical studies may be covered by the patent rights of others, the risk of suit may continue after such patents expirebecause the statute of limitations for patent infringement runs for six years. To the extent that a third party develops and patents technologythat covers our products, we may be required to obtain licenses to that technology, which licenses may not be available or may not beavailable on commercially reasonable terms, if at all. If licenses are not available to us on acceptable terms, we will not be able to marketthe affected products or conduct the desired activities, unless we challenge the validity, enforceability or infringement of the third-partypatent, or circumvent the third-party patent, which would be costly and would require significant time and attention of our management.Third parties may have or obtain by license or assignment valid and enforceable patents or proprietary rights that could block us fromdeveloping products using our technology. Our failure to obtain a license to any technology that we require may materially harm ourbusiness, financial condition, and results of operations.

If we become involved in patent litigation or other proceedings related to a determination of rights, we could incur substantial costs andexpenses, substantial liability for damages or be required to stop our product development and commercialization efforts.

Third parties may sue us for infringing their patent rights. Likewise, we may need to resort to litigation to enforce a patent issued orlicensed to us or to determine the scope and validity of proprietary rights of others. In addition, a third-party may claim that we haveimproperly obtained or used its confidential or proprietary information. Furthermore, in connection with our third-party license agreements,we generally have agreed to indemnify the licensor for costs incurred in connection with litigation relating to intellectual property rights.The cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial,and the litigation would divert our management’s efforts. Some of our competitors may be able to sustain the costs of complex patentlitigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from the initiation andcontinuation of any litigation could limit our ability to continue our operations. Our involvement in patent litigation and other proceedingscould have a material adverse effect on our business, results of operations, and financial condition.

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If any parties successfully claim that our creation or use of proprietary technologies infringes upon their intellectual property rights,we might be forced to pay damages, potentially including treble damages, if we are found to have willfully infringed on such parties’ patentrights. In addition to any damages we might have to pay, a court could require us to stop the infringing activity or obtain a license. Anylicense required under any patent may not be made available on commercially acceptable terms, if at all. In addition, such licenses are likelyto be non-exclusive and, therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a requiredlicense and are unable to design around a patent, we may be unable to effectively market some of our technology and products, which couldlimit our ability to generate revenues or achieve profitability and possibly prevent us from generating revenue sufficient to sustain ouroperations.

We have faced, and may in the future face, intellectual property infringement claims that could be time-consuming and costly to defend,and could result in our loss of significant rights and the assessment of treble damages.

We may from time to time receive notices of claims of infringement and misappropriation or misuse of other parties’ proprietaryrights. Some of these additional claims may also lead to litigation. We cannot assure you that we will prevail in such actions, or that otheractions alleging misappropriation or misuse by us of third-party trade secrets, infringement by us of third-party patents and trademarks orthe validity of our patents, will not be asserted or prosecuted against us.

We may also initiate claims to defend our intellectual property or to seek relief on allegations that we use, sell, or offer to selltechnology that incorporates third party intellectual property. Intellectual property litigation, regardless of outcome, is expensive and time-consuming, could divert management’s attention from our business and have a material negative effect on our business, operating results orfinancial condition. If there is a successful claim of infringement against us, we may be required to pay substantial damages (includingtreble damages if we were to be found to have willfully infringed a third party’s patent) to the party claiming infringement, develop non-infringing technology, stop selling our tests or using technology that contains the allegedly infringing intellectual property or enter intoroyalty or license agreements that may not be available on acceptable or commercially practical terms, if at all. Our failure to develop non-infringing technologies or license the proprietary rights on a timely basis could harm our business.

It is possible that a third party or patent office might take the position that one or more patents or patent applications constitute priorart in the field of genomic-based diagnostics. In such a case, we might be required to pay royalties, damages and costs to firms who own therights to these patents, or we might be restricted from using any of the inventions claimed in those patents.

We may become subject to product liability for our diagnostic tests, clinical trials, pharmaceutical products and medical deviceproducts.

Our success depends on the market’s confidence that we can provide reliable, high-quality pharmaceuticals, medical devices, anddiagnostics tests. Our reputation and the public image of our products or technologies may be impaired if our products fail to perform asexpected or our products are perceived as difficult to use. Our products are complex and may develop or contain undetected defects orerrors. Furthermore, if a future product candidate harms people, or is alleged to be harmful, we may be subject to costly and damagingproduct liability claims brought against us by clinical trial participants, consumers, health care providers, corporate partners or others. Wehave product liability insurance covering commercial sales of current products and our ongoing clinical trials. Any defects or errors couldlead to the filing of product liability claims, which could be costly and time-consuming to defend and result in substantial damages. If weexperience a sustained material defect or error, this could result in loss or delay of revenues, delayed market acceptance, damagedreputation, diversion of development resources, legal claims, increased insurance costs or increased service and warranty costs, any ofwhich could materially harm our business. We cannot assure you that our product liability insurance would protect our assets from thefinancial impact of defending a product liability claim. A product liability claim could have a serious adverse effect on our business,financial condition and results of operations.

Adverse results in material litigation matters or governmental inquiries could have a material adverse effect upon our business andfinancial condition.

We may from time to time become subject in the ordinary course of business to material legal action related to, among other things,intellectual property disputes, professional liability, contractual and employee-related matters, as well as inquiries from governmentalagencies and Medicare or Medicaid carriers requesting comment and information on allegations of billing irregularities and other mattersthat are brought to their attention through billing audits, third parties or other sources. The health care industry is subject to substantialfederal and state government regulation and audit. Legal actions could result in substantial monetary damages as well as damage to theCompany’s reputation with customers, which could have a material adverse effect upon our results of operations and financial position.

RISKS RELATED TO REGULATORY COMPLIANCE

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Our ability to successfully operate our laboratories and develop and commercialize certain of our diagnostic tests and LDTs will dependon our ability to maintain required regulatory licensures and comply with all the CLIA requirements.

In order to successfully operate our laboratory business and offer certain of our diagnostic tests and LDTs, we must maintain ourCLIA certification and comply with all the CLIA requirements. CLIA is designed to ensure the quality and reliability of clinicallaboratories by mandating specific standards in the areas of personnel qualifications, administration and participation in proficiency testing,patient test management, quality control, quality assurance and inspections. The sanction for failure to comply with CLIA requirementsmay be suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, as well assignificant fines and/or criminal penalties. Laboratories must undergo on-site surveys at least every two years, which may be conducted bythe Federal CLIA program or by a private CMS approved accrediting agency such as CAP, among others. Our laboratories are also subjectto regulation of laboratory operations under state clinical laboratory laws as will be any new CLIA-certified laboratory that we establish oracquire. State clinical laboratory laws may require that laboratories and/or laboratory personnel meet certain qualifications, specify certainquality controls or require maintenance of certain records. Certain states, such as California, Florida, Maryland, New York, Pennsylvaniaand Rhode Island, require that laboratories obtain licenses to test specimens from patients residing in those states and additional states mayrequire similar licenses in the future. If we are unable to obtain and maintain licenses from states where required, we will not be able toprocess any samples from patients located in those states. Only Washington and New York States are exempt under CLIA, as these stateshave established laboratory quality standards at least as stringent as CLIA’s. Potential sanctions for violation of these statutes andregulations include significant fines and the suspension or loss of various licenses, certificates and authorizations, which could adverselyaffect our business and results of operations.

If we fail to comply with CLIA requirements, HHS or state agencies could require us to cease diagnostic testing. Even if it werepossible for us to bring our laboratories back into compliance after failure to comply with such requirements, we could incur significantexpenses and potentially lose revenues in doing so. Moreover, new interpretations of current regulations or future changes in regulationsunder CLIA may make it difficult or impossible for us to comply with the CLIA classification, which would significantly harm ourbusiness and materially adversely affect our financial condition.

The regulatory approval process is expensive, time consuming and uncertain and may prevent us or our collaboration partners fromobtaining approvals for the commercialization of some or all of our product candidates.

The research, testing, manufacturing, labeling, approval, selling, marketing, and distribution of drug products, diagnostic products, ormedical devices are subject to extensive regulation by the FDA and other non-U.S. regulatory authorities, which regulations differ fromcountry to country. In general, we are not permitted to market our product candidates in the U.S. until we receive approval of a NDA, aclearance letter under the premarket notification process, or 510(k) process, or an approval of a PMA from the FDA. We have onlysubmitted one NDA to date, which has not yet been approved. We have not received marketing approval or clearance for any of ourdiagnostic product candidates, other than a CE Mark for our point-of-care PSA test and a CE Mark for our 4Kscore test. Obtainingapproval of a NDA or PMA can be a lengthy, expensive, and uncertain process. With respect to medical devices, while the FDA reviewsand clears a premarket notification in as little as three months, there is no guarantee that our products will qualify for this more expeditiousregulatory process, which is reserved for Class I and II devices, nor is there any assurance that even if a device is reviewed under the 510(k)process that the FDA will review it expeditiously or determine that the device is substantially equivalent to a lawfully marketed non-PMAdevice. If the FDA fails to make this finding, then we cannot market the device. In lieu of acting on a premarket notification, the FDA mayseek additional information or additional data which would further delay our ability to market the product. Furthermore, we are notpermitted to make changes to a device approved through the PMA or 510(k) which affects the safety or efficacy of the device without firstsubmitting a supplement application to the PMA and obtaining FDA approval or cleared premarket notification for that supplement. Insome cases, the FDA may require clinical trials to support a supplement application. In addition, failure to comply with FDA, non-U.S.regulatory authorities, or other applicable U.S. and non-U.S. regulatory requirements may, either before or after product approval orclearance, if any, subject our company to administrative or judicially imposed sanctions, including, but not limited to the following:

▪ restrictions on the products, manufacturers, or manufacturingprocess;

▪ adverse inspectional observations (Form 483), warning letters, or non-warning letters incorporating inspectionalobservations;

▪ civil and criminalpenalties;

▪ injunctions;

▪ suspension or withdrawal of regulatory approvals orclearances;

▪ product seizures, detentions, or importbans;

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▪ voluntary or mandatory product recalls and publicityrequirements;

▪ total or partial suspension ofproduction;

▪ imposition of restrictions on operations, including costly new manufacturing requirements;and

▪ refusal to approve or clear pending NDAs or supplements to approved NDAs, applications or pre-marketnotifications.

Regulatory approval of an NDA or NDA supplement, PMA, PMA supplement or clearance pursuant to a pre-market notification is notguaranteed, and the approval or clearance process, as the case may be, is expensive and may, especially in the case of an NDA or PMAapplication, take several years. The FDA also has substantial discretion in the drug and medical device approval and clearance process.Despite the time and expense exerted, failure can occur at any stage, and we could encounter problems that cause us to abandon clinicaltrials or to repeat or perform additional pre-clinical studies and clinical trials. The number of pre-clinical studies and clinical trials that willbe required for FDA approval or clearance varies depending on the drug or medical device candidate, the disease or condition that the drugor medical device candidate is designed to address, and the regulations applicable to any particular drug or medical device candidate. TheFDA can delay, limit or deny approval or clearance of a drug or medical device candidate for many reasons, including:

▪ a drug candidate may not be deemed safe oreffective;

▪ a medical device candidate may not be deemed to be substantially equivalent to a lawfully marketed non-PMA device, in thecase of a premarket notification;

▪ the FDA may not find the data from pre-clinical studies and clinical trialssufficient;

▪ the FDA may not approve our or our third-party manufacturer’s processes or facilities;or

▪ the FDA may change its approval or clearance policies or adopt newregulations.

Beyond these risks, there is also a possibility that our licensees or collaborators could decide to discontinue a study at any time forcommercial, scientific or other reasons.

Regulation by governmental authorities in the U.S. and other countries may be a significant factor in how we develop, test, produceand market our diagnostic test products. Diagnostic tests like ours may not fall squarely within the regulatory approval process forpharmaceutical or device products as described above, and the regulatory pathway is not as clear. It is possible that the diagnostic productsdeveloped by us or our collaborators will be regulated as medical devices by the FDA and comparable agencies of other countries andrequire either PMA or 510(k) clearance from the FDA prior to marketing. Some companies that have successfully commercializeddiagnostic tests for various conditions and disease states have not sought clearance or approval for such tests through the traditional 510(k)or PMA processes, and have instead utilized a process involving LDTs through a CLIA- certified laboratory. CLIA is a federal law thatregulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information fordiagnostic, preventative or treatment purpose. In such instances, the CLIA lab is solely responsible for the development, validation andcommercialization of the assay.

Such LDT testing is currently under the purview of CMS and state agencies that provide oversight of the safe and effective use ofLDTs. However, the FDA has consistently asserted that it has the regulatory authority to regulate LDTs despite historically exercisingenforcement discretion. In furtherance of that position, the FDA issued two draft guidance documents in October 2014: Framework forRegulatory Oversight of Laboratory Developed Tests (the “Framework Guidance”); and (2) FDA Notification and Medical DeviceReporting for Laboratory Developed Tests (the “Notification Guidance”). The Framework Guidance outlines the FDA’s plan to adopt overtime a risk-based approach to regulating LDTs whereby different classifications of LDTs would be subject to different levels of FDAoversight and enforcement, including, for example, prohibitions on adulteration and misbranding, establishment registration and devicelisting, premarket notification, banned devices, records and reports, good manufacturing practices, adverse event reporting, premarketreview of safety, effectiveness, and clinical validity, and quality system requirements. The Notification Guidance is intended to explainhow clinical laboratories should notify the FDA of the LDTs they develop and how to satisfy Medical Device Reporting requirements. Iffinalized, the Framework Guidance and the Notification Guidance may have a materially adverse effect on the time, cost, and riskassociated with the Company’s development and commercialization of LDTs for the U.S. market, and there can be no assurance thatclearances or approvals sought by the Company will be granted and maintained. However, the FDA’s authority to regulate LDTs continuesto be challenged, and the timeline and process for finalizing the draft guidance documents is unknown. We will continue to monitorchanges to all domestic and international LDT regulatory policy so as to ensure compliance with the current regulatory scheme.

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Even if we obtain marketing approvals or clearances for our product candidates, the terms of approvals and ongoing regulation of ourproducts may limit how we manufacture and market our product candidates, which could materially impair our ability to generateanticipated revenues.

Once regulatory approval has been granted to market a product, the approved or cleared product and its manufacturer are subject tocontinual review. Any approved or cleared product may only be promoted for its indicated uses. In addition, if the FDA or other non-U.S.regulatory authorities approve any of our product candidates for marketing, the labeling, packaging, adverse event reporting, storage,advertising, and promotion for the product will be subject to extensive regulatory requirements. We and the manufacturers of our productsare also required to comply with current Good Manufacturing Practices (“cGMP”) regulations or the FDA’s QSR regulations, whichinclude requirements relating to quality control and quality assurance as well as the corresponding maintenance of records anddocumentation. Moreover, device manufacturers are required to report adverse events by filing Medical Device Reports with the FDA,which reports are publicly available.

Further, regulatory agencies must approve manufacturing facilities before they can be used to manufacture our products, and thesefacilities are subject to ongoing regulatory inspection. If we fail to comply with the regulatory requirements of the FDA and other non-U.S.regulatory authorities, or if previously unknown problems with our products, manufacturers, or manufacturing processes are discovered, wecould be subject to administrative or judicially imposed sanctions. Furthermore, any limitation on indicated uses for a product candidate orour ability to manufacture and promote a product candidate could significantly and adversely affect our business, results of operations, andfinancial condition.

In addition, the FDA and other non-U.S. regulatory authorities may change their policies and additional regulations may be enactedthat could prevent or delay marketing approval or clearance of our product candidates. We cannot predict the likelihood, nature or extent ofgovernment regulation that may arise from future legislation or administrative action, either in the U.S. or abroad. If we are not able tomaintain regulatory compliance, we would likely not be permitted to market our future product candidates and we may not achieve orsustain profitability, which would materially impair our ability to generate anticipated revenues.

If we fail to comply with complex and rapidly evolving laws and regulations, we could suffer penalties, be required to pay substantialdamages or make significant changes to our operations.

We are subject to numerous federal and state regulations, including, but not limited to:

• federal and state laws applicable to billing and claimspayment;

• federal and state laboratory anti-mark-uplaws;

• federal and state anti-kickbacklaws;

• physician self-referrallaw;

• federal and state false claimslaws;

• federal self-referral and financial inducement prohibition laws, commonly known as the Stark Law, and the stateequivalents;

• federal and state laws governing laboratory licensing and testing, includingCLIA;

• federal and state laws governing the development, use and distribution ofLDTs;

• HIPAA, along with the revisions to HIPPA as a result of the HITECH Act, and analogous statelaws;

• federal, state and foreign regulation of privacy, security, electronic transactions and identitytheft;

• federal, state and local laws governing the handling, transportation and disposal of medical and hazardouswaste;

• Occupational Safety and Health Administration rules andregulations;

• changes to laws, regulations and rules as a result of the Health Care Reform Law;and

• changes to other federal, state and local laws, regulations and rules, including taxlaws.

If we fail to comply with existing or future applicable laws and regulations, we could suffer civil or criminal penalties, including theloss of our licenses to operate our laboratories and our ability to participate in federal and state healthcare programs. Although we believethat we are substantially compliant with all existing statutes and regulations applicable to our business, different interpretations andenforcement policies of these laws and regulations could subject our current practices to allegations of impropriety or illegality, or couldrequire us to make significant changes to our operations. In addition, we

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cannot predict the impact of future legislation and regulatory changes on our business or assure that we will be able to obtain or maintainthe regulatory approvals required to operate our business.

As a result of political, economic, and regulatory influences, the healthcare delivery industry in the U.S. is under intense scrutiny andsubject to fundamental changes. We cannot predict which reform proposals will be adopted, when they may be adopted, or what impactthey may have on us. The costs associated with complying with federal and state regulations could be significant and the failure to complywith any such legal requirements could have a material adverse effect on our financial condition, results of operations, and liquidity.

Failure to maintain the security of patient-related information or compliance with security requirements could damage our reputationwith customers, cause us to incur substantial additional costs and become subject to litigation.

Pursuant to HIPAA, and certain similar state laws, we must comply with comprehensive privacy and security standards with respect tothe use and disclosure of protected health information. Under the HITECH amendments to HIPAA, HIPAA was expanded to requirecertain data breach notification, to extend certain HIPAA privacy and security standards directly to business associates, to heightenpenalties for noncompliance, and enhance enforcement efforts.

In March 2014 CareEvolve, Bio-Reference’s wholly-owned connectivity subsidiary, became aware that there had been a HIPAAbreach with regard to one of its servers managed at an internet service provider site called XAND. CareEvolve immediately identified andresolved the breach issue, but in the meantime an Internet data googlebot, a data collection “robot” operated by Google, Inc. had brieflyacquired data from a server and made it available to Internet searches. To the best of our knowledge, there were no known disclosures ofthis Patient Health Information (“PHI”) to unauthorized parties and Bio-Reference took immediate steps to have the PHI removed from theInternet. Bio-Reference self-reported this incident to the appropriate government agency, the Office of Civil Rights (“OCR”) and isawaiting further discussions, investigation and action by OCR.

We receive certain personal and financial information about our clients and their patients. In addition, we depend upon the securetransmission of confidential information over public networks. While we take all reasonable and prudent steps to protect this protectedinformation, a compromise in our security systems that results in client or patient personal information being obtained by unauthorizedpersons or our failure to comply with security requirements for financial transactions could adversely affect our reputation with our clientsand result in litigation against us or the imposition of penalties, all of which may adversely impact our results of operations, financialcondition and liquidity.

Failure to comply with environmental, health and safety laws and regulations, including the Federal Occupational Safety and HealthAdministration Act, the Needlestick Safety and Prevention Act and the Comprehensive Medical Waste Management Act, could result infines and penalties and loss of licensure, and have a material adverse effect upon our business.

We are subject to licensing and regulation under federal, state and local laws and regulations relating to the protection of theenvironment and human health and safety, including laws and regulations relating to the handling, transportation and disposal of medicalspecimens, infectious and hazardous waste and radioactive materials, as well as regulations relating to the safety and health of laboratoryemployees. The Federal Occupational Safety and Health Administration has established extensive requirements relating to workplacesafety for health care employers, including clinical laboratories, whose workers may be exposed to blood-borne pathogens such as HIV andthe hepatitis B virus. These requirements, among other things, require work practice controls, protective clothing and equipment, training,medical follow-up, vaccinations and other measures designed to minimize exposure to, and transmission of, blood-borne pathogens. Inaddition, the Needlestick Safety and Prevention Act requires, among other things, that we include in our safety programs the evaluation anduse of engineering controls such as safety needles if found to be effective at reducing the risk of needlestick injuries in the workplace.

Waste management is subject to federal and state regulations governing the transportation and disposal of medical waste includingbodily fluids. Federal regulations require licensure of interstate transporters of medical waste. In New Jersey, we are subject to theComprehensive Medical Waste Management Act (“CMWMA”), which requires us to register as a generator of special medical waste. All ofour medical waste is disposed of by a licensed interstate hauler. The hauler provides a manifest of the disposition of the waste products aswell as a certificate of incineration, which is retained by us. These records are audited by the State of New Jersey on a yearly basis. We arealso subject to the Federal Hazardous materials transportation law, 49 U.S.C. 5101 et seq., and the Hazardous Materials Regulations(“HMR”), 49 CFR parts 171-180. The federal government has classified hazardous medical waste as hazardous materials for the purpose ofregulation. These regulations preempt state regulation, which must be “substantively the same,” “the non-federal requirement must conform“in every significant respect to the federal requirement. Editorial and other similar de minimis changes are permitted,” 49 CFR 107.202(d).

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Failure to comply with such federal, state and local laws and regulations could subject us to denial of the right to conduct business,fines, criminal penalties and/or other enforcement actions, any of which could have a material adverse effect on our business. In addition,compliance with future legislation could impose additional requirements us, which may be costly.

Our failure or the failure of third-party payors or physicians to comply with ICD-10-CM Code Set, and our failure to comply with otheremerging electronic transaction standards could adversely impact our business.

We are within the assessment and inventory phase to adopt the ICD-10-CM Code Set issued by HHS on January 16, 2009.Compliance with the ICD-10-CM Code Set was required to be in place by October 1, 2015. The Company will continue its assessment ofinformation systems, applications and processes for compliance with these requirements. Clinical laboratories are typically required tosubmit health care claims with diagnosis codes to third party payors. The diagnosis codes must be obtained from the ordering physician.Our failure or the failure of third party payors or physicians to transition within the required timeframe could have an adverse impact onreimbursement, days sales outstanding and cash collections.

Also, the failure of our IT systems to keep pace with technological advances may significantly reduce our revenues or increase ourexpenses. Public and private initiatives to create healthcare information technology (“HCIT”) standards and to mandate standardizedclinical coding systems for the electronic exchange of clinical information, including test orders and test results, could require costlymodifications to our existing HCIT systems. While we do not expect HCIT standards to be adopted or implemented without adequate timeto comply, if we fail to adopt or delay in implementing HCIT standards, we could lose customers and business opportunities.

Failure to comply with complex federal and state laws and regulations related to submission of claims for clinical laboratory servicescould result in significant monetary damages and penalties and exclusion from the Medicare and Medicaid programs.

We are subject to extensive federal and state laws and regulations relating to the submission of claims for payment for clinicallaboratory services, including those that relate to coverage of our services under Medicare, Medicaid and other governmental health careprograms, the amounts that may be billed for our services and to whom claims for services may be submitted. These rules may also affectthe Company in light of the practice management products that we market, to the extent that these products are considered to affect themanner in which our customers’ submit their own claims for services. Submission of our claims is particularly complex because we provideboth anatomic pathology services and clinical laboratory tests, which generally are paid using different reimbursement principles. Theclinical laboratory tests are often paid under a clinical laboratory fee schedule, and the anatomic pathology services are often paid under aphysician fee schedule.

Our failure to comply with applicable laws and regulations could result in our inability to receive payment for our services or result inattempts by third-party payors, such as Medicare and Medicaid, to recover payments from us that have already been made. Submission ofclaims in violation of certain statutory or regulatory requirements can result in penalties, including substantial civil money penalties foreach item or service billed to Medicare in violation of the legal requirement, and exclusion from participation in Medicare and Medicaid.Government authorities may also assert that violations of laws and regulations related to submission or causing the submission of claimsviolate the federal False Claims Act (“FCA”) or other laws related to fraud and abuse, including submission of claims for services that werenot medically necessary. Violations of the FCA could result in enormous economic liability. The FCA provides that all damages aretrebled, and each false claim submitted is subject to a penalty of up to $11,000. For example, we could be subject to FCA liability if it wasdetermined that the services we provided were not medically necessary and not reimbursable, particularly if it were asserted that wecontributed to the physician’s referrals of unnecessary services to us. It is also possible that the government could attempt to hold us liableunder fraud and abuse laws for improper claims submitted by an entity for services that we performed if we were found to have knowinglyparticipated in the arrangement that resulted in submission of the improper claims.

Changes in regulation and policies, including increasing downward pressure on health care reimbursement, may adversely affectreimbursement for diagnostic services and could have a material adverse impact on our business.

Reimbursement levels for health care services are subject to continuous and often unexpected changes in policies, and we face avariety of efforts by government payors to reduce utilization and reimbursement for diagnostic testing services. Changes in governmentalreimbursement may result from statutory and regulatory changes, retroactive rate adjustments, administrative rulings, competitive biddinginitiatives, and other policy changes.

The U.S. Congress has considered, at least yearly in conjunction with budgetary legislation, changes to one or both of the Medicarefee schedules under which we receive reimbursement, which include the physician fee schedule for anatomical pathology services, and theclinical laboratory fee schedule for our clinical laboratory services. For example, currently there is no copayment or coinsurance requiredfor clinical laboratory services, although there is for our physician services. However, Congress has periodically considered imposing a 20percent coinsurance on laboratory services. If enacted, this would require

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us to attempt to collect this amount from patients, although in many cases the costs of collection would exceed the amount actuallyreceived.

Our reimbursement for our pathology services is paid primarily under the physician fee schedule of Medicare and Medicaid and istherefore governed by a complex formula, referred to as the Sustainable Growth Rate, or SGR. As the use of this formula could result in asignificant reduction in reimbursement for all physician services, Congress usually acts each year to prevent the full amount of suchreductions from taking effect. In 2011, Congress acted to prevent reductions in for 2012, and on January 1, 2013, Congress acted to preventsignificant reductions for 2013. The SGR has currently been postponed until March 2014 and Congress continues to work on both a shortterm and a long term fix to this annual problem. If Congress fails to take such action in the future, implementation of this formula couldadversely affect our business.

The Center for Medicare and Medicaid Services (“CMS”) pays laboratories on the basis of a fee schedule that is reviewed and re-calculated on an annual basis. CMS may change the fee schedule upward or downward on billing codes that we submit for reimbursementon a regular basis. Our revenue and business may be adversely affected if the reimbursement rates associated with such codes are reduced.Even when reimbursement rates are not reduced, policy changes add to our costs by increasing the complexity and volume ofadministrative requirements. Medicaid reimbursement, which varies by state, is also subject to administrative and billing requirements andbudget pressures. Recently, state budget pressures have caused states to consider several policy changes that may impact our financialcondition and results of operations, such as delaying payments, reducing reimbursement, restricting coverage eligibility and servicecoverage, and imposing taxes on our services.

Change in the billing and/or reimbursement procedures by the federal government could affect our ability to be paid as we have in thepast for services rendered.

CMS has changed or discussed making changes to certain types of reimbursement which could affect our rate of reimbursement.Certain cases are comprised of both a technical component (“TC”) and a professional component (“PC”). In certain specified areas oftesting, primarily in the area of anatomic pathology, CMS has determined that some providers have over-utilized these testing proceduresand CMS has introduced changes in reimbursement policies to discourage over-utilization. While we do not currently over-utilize servicesfor self-gain, we are always subject to review by CMS and cannot be certain that CMS won’t interpret our practices differently than we do.

CMS has announced planned changes in the area of Molecular Diagnostics’ reimbursement, primarily designed to improvetransparency in billing. Molecular Diagnostics is a rapidly changing and evolving area of clinical testing. Whereas other areas of clinicaltesting are well vetted and established with specific codes for reimbursement, Molecular Diagnostics has moved at a faster pace than CMScan proceed. Clinical laboratories accordingly use a process called cross-walking to get reimbursed by CMS. Cross-walking requires thatthe clinical laboratory identify the individual processes used to process the patient’s specimen and identify diagnostic results that arealready reimbursed in established tests. CMS seeks to specifically identify the testing routine being done and reimburse providersuniversally for the test actually being performed. CMS has not established all of the molecular diagnostic tests that will be included in thisrevised schedule for reimbursement and it has not determined how much will be reimbursed to providers for these tests. We expect CMS toimplement fair and reasonable reimbursement for such tests, but until such pricing decisions are disclosed we cannot be certain what CMSwill finally implement.

Effective July 1, 2012, CMS eliminated an exemption that had been in place since 1999, which allowed commercial laboratories tobill for certain diagnostic tests performed on in-patient and certain outreach recipients by commercial laboratories. From 1999 through July1, 2012, commercial laboratories were allowed to bill CMS for such tests despite the fact that the recipient was a hospital patient as long asthe hospital had been submitting such tests for diagnosis to commercial laboratories prior to 1999. Upon termination of the exemption, wewere required to find out from the hospital submitting the test whether the recipient’s bill for diagnostic testing will be reimbursed by thehospital or should be billed to CMS. We have systems in place to manage this change, but these systems are dependent upon our gettingproper information from the hospital clients.

The federal government is faced with significant economic decisions in the coming years. Some solutions being offered in thegovernment could substantially change the way laboratory testing is reimbursed by government entities. We cannot be certain what or howany such government changes may affect our business.

Medicare legislation and future legislative or regulatory reform of the health care system may affect our ability to sell our productsprofitably.

In the U.S., there have been a number of legislative and regulatory initiatives, at both the federal and state government levels, tochange the healthcare system in ways that, if approved, could affect our ability to sell our products and provide our laboratory servicesprofitably. While many of the proposed policy changes require congressional approval to implement, we

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cannot assure you that reimbursement payments under governmental and private third party payor programs will remain at levelscomparable to present levels or will be sufficient to cover the costs allocable to patients eligible for reimbursement under these programs.Any changes that lower reimbursement rates under Medicare, Medicaid or private payor programs could negatively affect our business.

Most significantly, on March 23, 2010, President Obama signed into law both the Patient Protection and Affordable Care Act (the“Affordable Care Act”) and the reconciliation law known as Health Care and Education Affordability Reconciliation Act (the“Reconciliation Act”) and, combined we refer to both Acts as the “2010 Health Care Reform Legislation.” The constitutionality of the 2010Health Care Reform Legislation was confirmed on June 28, 2012 by the Supreme Court of the United States (the “Supreme Court”).Specifically, the Supreme Court upheld the individual mandate and includes changes to extend medical benefits to those who currently lackinsurance coverage. Extending coverage to a large population could substantially change the structure of the health insurance system andthe methodology for reimbursing medical services, drugs and devices. These structural changes could entail modifications to the existingsystem of third-party payors and government programs, such as Medicare and Medicaid, the creation of a government-sponsored healthcareinsurance source, or some combination of both, as well as other changes. Additionally, restructuring the coverage of medical care in theU.S. could impact the reimbursement for diagnostic tests. If reimbursement for our diagnostic tests is substantially less than we or ourclinical laboratory customers expect, or rebate obligations associated with them are substantially increased, our business could be materiallyand adversely impacted.

Beyond coverage and reimbursement changes, the 2010 Health Care Reform Legislation subjects manufacturers of medical devices toan excise tax of 2.3% on certain U.S. sales of medical devices in January 2013. This excise tax will likely increase our expenses in thefuture.

Further, the 2010 Health Care Reform Legislation includes the Physician Payments Sunshine Act, which, in conjunction with itsimplementing regulations, requires manufacturers of certain drugs, biologics, and devices that are covered by Medicare and Medicaid torecord all transfers of value to physicians and teaching hospitals starting on August 1, 2013 and to begin reporting the same for publicdisclosure to the Centers for Medicare and Medicaid Services by March 31, 2014. Several other states and a number of countries worldwidehave adopted or are considering the adoption of similar transparency laws. The failure to report appropriate data may result in civil orcriminal fines and/or penalties.

Additionally, the 2010 Health Care Reform Legislation includes significant new fraud and abuse measures, including requireddisclosures under Physician Payments Sunshine Act described above, lower thresholds for violations and increasing potential penalties forsuch violations. Federal funding available for combating health care fraud and abuse generally has increased. While we seek to conduct ourbusiness in compliance with all applicable laws and regulations, many of the laws and regulations applicable to our business, particularlythose relating to billing and reimbursement of tests and those relating to relationships with physicians, hospitals and patients, containlanguage that has not been interpreted by courts. We must rely on our interpretation of these laws and regulations based on the advice ofour counsel and regulatory or law enforcement authorities may not agree with our interpretation of these laws and regulations and may seekto enforce legal remedies or penalties against us for violations. From time to time we may need to change our operations, particularlypricing or billing practices, in response to changing interpretations of these laws and regulations or regulatory or judicial determinationswith respect to these laws and regulations. These occurrences, regardless of their outcome, could damage our reputation and harmimportant business relationships that we have with healthcare providers, payors and others. Furthermore, if a regulatory or judicial authorityfinds that we have not complied with applicable laws and regulations, we could be required to refund amounts that were billed and collectedin violation of such laws and regulations. In addition, we may voluntarily refund amounts that were alleged to have been billed andcollected in violation of applicable laws and regulations. In either case, we could suffer civil and criminal damages, fines and penalties,exclusion from participation in governmental healthcare programs and the loss of licenses, certificates and authorizations necessary tooperate our business, as well as incur liabilities from third-party claims, all of which could harm our operating results and financialcondition. Moreover, regardless of the outcome, if we or physicians or other third parties with whom we do business are investigated by aregulatory or law enforcement authority we could incur substantial costs, including legal fees, and our management may be required todivert a substantial amount of time to an investigation.

To enhance compliance with applicable health care laws, and mitigate potential liability in the event of noncompliance, regulatoryauthorities, such as the United States Health and Human Services Department Office of Inspector General (“OIG”), have recommended theadoption and implementation of a comprehensive health care compliance program that generally contains the elements of an effectivecompliance and ethics program described in Section 8B2.1 of the United States Sentencing Commission Guidelines Manual, and for manyyears the OIG has made available a model compliance program targeted to the clinical laboratory industry. In addition, certain states, suchas New York, requires that health care providers, such as clinical laboratories, that engage in substantial business under the state Medicaidprogram have a compliance program that generally adheres to the standards set forth in the Model Compliance Program. Also, under theHealth Care Reform Law,

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the U.S. Department of Health and Human Services, or HHS, will require suppliers, such as the Company, to adopt, as a condition ofMedicare participation, compliance programs that meet a core set of requirements. While we have adopted U.S. healthcare compliance andethics programs that generally incorporate the OIG’s recommendations, and train our employees in such compliance, having such aprogram can be no assurance that we will avoid any compliance issues.

Regulations under the 2010 Health Care Reform Legislation are expected to continue being drafted, released and finalized throughoutthe next several years. Pending the promulgation of these regulations, we are unable to fully evaluate the impact of the 2010 Health CareReform Legislation.

RISKS RELATED TO INTERNATIONAL OPERATIONS

Failure to obtain regulatory approval outside the U.S. will prevent us from marketing our product candidates abroad.

We intend to market certain of our existing and future product candidates in non-U.S. markets. In order to market our existing andfuture product candidates in the European Union and many other non-U.S. jurisdictions, we must obtain separate regulatory approvals. Wehave had limited interactions with non-U.S. regulatory authorities, the approval procedures vary among countries and can involveadditional testing, and the time required to obtain approval may differ from that required to obtain FDA approval or clearance. Approval orclearance by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one or more non-U.S.regulatory authority does not ensure approval by other regulatory authorities in other countries or by the FDA. The non-U.S. regulatoryapproval process may include all of the risks associated with obtaining FDA approval or clearance. We may not obtain non-U.S. regulatoryapprovals on a timely basis, if at all. We may not be able to file for non-U.S. regulatory approvals and may not receive necessary approvalsto commercialize our existing and future product candidates in any market, which would have a material adverse effect on our business,results of operations and financial condition.

Non-U.S. governments often impose strict price controls, which may adversely affect our future profitability.

We intend to seek approval to market certain of our existing and future product candidates in both the U.S. and in non‑U.S.jurisdictions. If we obtain approval in one or more non-U.S. jurisdictions, we will be subject to rules and regulations in those jurisdictionsrelating to our product. In some countries, particularly countries of the European Union, each of which has developed its own rules andregulations, pricing is subject to governmental control. In these countries, pricing negotiations with governmental authorities can takeconsiderable time after the receipt of marketing approval for a drug or medical device candidate. To obtain reimbursement or pricingapproval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our existing and futureproduct candidates to other available products. If reimbursement of our future product candidates is unavailable or limited in scope oramount, or if pricing is set at unsatisfactory levels, we may be unable to generate revenues and achieve or sustain profitability, which wouldhave a material adverse effect on our business, results of operations and financial condition.

Potential political, economic and military instability in the State of Israel, where we have office, laboratory and manufacturingoperations, may adversely affect our results of operations.

We maintain office, laboratory and manufacturing facilities in the State of Israel. Political, economic and military conditions in Israelmay directly affect our ability to conduct business. Since the State of Israel was established in 1948, a number of armed conflicts haveoccurred between Israel and its neighbors. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and itspresent trading partners, or a significant downturn in the economic or financial condition of Israel, could affect adversely our operations.Ongoing and revived hostilities or other Israeli political or economic factors could harm our operations and product development and causeour revenues to decrease.

Due to the international scope of our business activities, our results of operations may be significantly affected by currency fluctuations.

We derive a significant portion of our consolidated net revenues from international sales, subjecting us to risks relating to fluctuationsin currency exchange rates. Currency variations can adversely affect margins on sales of our products in countries outside of the U.S. andmargins on sales of products that include components obtained from suppliers located outside of the U.S. Through our subsidiaries, weoperate in a wide variety of jurisdictions. Certain countries in which we operate or may operate have experienced geopolitical instability,economic problems and other uncertainties from time to time. To the extent that world events or economic conditions negatively affect ourfuture sales to customers in these and other regions of the world, or the collectability of receivables, our future results of operations,liquidity and financial condition may be adversely affected. Although we do not speculate in the foreign exchange market, we may manageexposures arising in the normal course of business related to fluctuations in foreign currency exchange rates by entering into offsettingpositions through the use of foreign exchange forward contracts. Certain firmly committed transactions are hedged with foreign exchangeforward

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contracts whereby exchange rates change, gains and losses on the exposed transactions are partially offset by gains and losses related to thehedging contracts. However, our subsidiaries receive their income and pay their expenses primarily in their local currencies. To the extentthat transactions of these subsidiaries are settled in their local currencies, a devaluation of those currencies versus the U.S. dollar couldreduce the contribution from these subsidiaries to our consolidated results of operations as reported in U.S. dollars. For financial reportingpurposes, such depreciation will negatively affect our reported results of operations since earnings denominated in foreign currencies wouldbe converted to U.S. dollars at a decreased value. While we have employed economic cash flow and fair value hedges to minimize the risksassociated with these exchange rate fluctuations, the hedging activities may be ineffective or may not offset more than a portion of theadverse financial impact resulting from currency variations. Accordingly, we cannot assure you that fluctuations in the values of thecurrencies of countries in which we operate will not materially adversely affect our future results of operations.

We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign CorruptPractices Act could have a material adverse effect on our business.

We are subject to the Foreign Corrupt Practice Act (“FCPA”) and other laws that prohibit U.S. companies or their agents andemployees from providing anything of value to a foreign official or political party for the purposes of influencing any act or decision ofthese individuals in their official capacity to help obtain or retain business, direct business to any person or corporate entity or obtain anyunfair advantage. We have operations and agreements with third parties and we generate sales internationally. Our international activitiescreate the risk of unauthorized and illegal payments or offers of payments by our employees, consultants, sales agents or distributors, eventhough they may not always be subject to our control. We discourage these practices by our employees and agents. However, our existingsafeguards and any future improvements may prove to be less than effective, and our employees, consultants, sales agents or distributorsmay engage in conduct for which we might be held responsible. Any failure by us to adopt appropriate compliance procedures and ensurethat our employees and agents comply with the FCPA and applicable laws and regulations in foreign jurisdictions could result in substantialpenalties or restrictions on our ability to conduct business in certain foreign jurisdictions.

Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which couldnegatively affect our business, operating results and financial condition. In addition, the U.S. government may seek to hold our Companyliable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

We are subject to risks associated with doing business globally.

Our operations, both within and outside the U.S., are subject to risks inherent in conducting business globally and under the laws,regulations and customs of various jurisdictions and geographies. These risks include fluctuations in currency exchange rates, changes inexchange controls, loss of business in government tenders that are held annually in many cases, nationalization, increasingly complex laborenvironments, expropriation and other governmental actions, changes in taxation, including legislative changes in U.S. and internationaltaxation of income earned outside of the U.S., importation limitations, export control restrictions, violations of U.S. or local laws, includingthe FCPA, dependence on a few government entities as customers, pricing restrictions, economic destabilization, political and economicinstability, disruption or destruction in a significant geographic region - due to the location of manufacturing facilities, distribution facilitiesor customers - regardless of cause, including war, terrorism, riot, civil insurrection or social unrest, or natural or man-made disasters,including famine, flood, fire, earthquake, storm or disease. Failure to comply with the laws and regulations that affect our global operations,could have an adverse effect on our business, financial condition or results of operations.

RISKS RELATED TO ACQUISITIONS AND INVESTMENTS

Acquisitions, investments and strategic alliances that we have made or may make in the future may use significant resources, result indisruptions to our business or distractions of our management, may not proceed as planned, and could expose us to unforeseen liabilities.We intend to continue to expand our business through the acquisition of, investments in and strategic alliances with companies,technologies, products, and services. Acquisitions, investments and strategic alliances involve a number of special problems and risks,including, but not limited to:

• difficulty integrating acquired technologies, products, services, operations, and personnel with the existingbusinesses;

• diversion of management’s attention in connection with both negotiating the acquisitions and integrating thebusinesses;

• strain on managerial and operational resources as management tries to oversee larger operations andinvestments;

• difficulty implementing and maintaining effective internal control over financial reporting at businesses thatwe

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acquire or invest in, particularly if they are not located near our existing operations;

• exposure to unforeseen liabilities of acquired companies or companies in which weinvest;

• potential costly and time-consuming litigation, including stockholderlawsuits;

• potential issuance of securities to equity holders of the company being acquired with rights that are superior to the rights ofholders of our Common Stock, or which may have a dilutive effect on our stockholders;

• the need to incur additional debt or use cash;and

• the requirement to record potentially significant additional future operating costs for the amortization of intangibleassets.

As a result of these or other problems and risks, businesses we acquire or invest in may not produce the revenues, earnings, orbusiness synergies that we anticipated, and acquired products, services, or technologies might not perform as we expected. As a result, wemay incur higher costs and realize lower revenues than we had anticipated. We may not be able to successfully address these problems andwe cannot assure you that the acquisitions or investments will be successfully identified and completed or that, if completed, the acquiredbusinesses, investments, products, services, or technologies will generate sufficient revenue to offset the associated costs or other negativeeffects on our business.

Any of these risks can be greater if an acquisition or investment is large relative to our size. Failure to manage effectively our growththrough acquisitions could adversely affect our growth prospects, business, results of operations, financial condition and cash flows.

We may fail to realize the anticipated benefits of the merger with Bio-Reference.

The success of the merger will depend on, among other things, our ability to combine our business with that of Bio-Reference in amanner that facilitates growth opportunities and realizes synergies and cost savings. We believe that the merger will provide an opportunityfor revenue growth. However, we must successfully combine our and Bio-Reference’s businesses in a manner that permits these benefits tobe realized. In addition, we must achieve the anticipated growth and cost savings without adversely affecting current revenues andinvestments in future growth. If we are not able to successfully achieve these objectives, the anticipated benefits of the merger may not berealized fully, or at all, or may take longer to realize than expected.

The failure to integrate successfully the business and operations of Bio-Reference in the expected time frame may adversely affect ourfuture results.

Historically, we and Bio-Reference have operated as independent companies. There can be no assurances that our and Bio-Reference’s businesses can be integrated successfully. It is possible that the integration process could result in the loss of our or Bio-Reference’s key employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses or inunexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longerthan originally anticipated. Specifically, the following issues, among others, must be addressed in integrating our operations with Bio-Reference’s operations in order to realize the anticipated benefits of the merger so we perform as expected:

• combining the companies’ operations and corporate functions, as well as obtaining anticipatedsynergies;

• combining our business with Bio-Reference’s business and meeting the capital requirements of the combined company, in amanner that permits us to achieve the cost savings or revenue synergies anticipated to result from the merger, the failure ofwhich would result in the anticipated benefits of the merger not being realized in the time frame currently anticipated or at all;

• integrating the companies’technologies;

• integrating and unifying the offerings and services available tocustomers;

• identifying and eliminating redundant and underperforming functions andassets;

• harmonizing and/or addressing differences in the companies’ operating practices, employee development and compensationprograms, internal controls and other policies, procedures and processes;

• maintaining existing agreements with customers, distributors, providers and vendors and avoiding delays in entering into newagreements with prospective customers, distributors, providers and vendors;

• addressing possible differences in business backgrounds, corporate cultures and managementphilosophies;

• consolidating the companies’ administrative and information technologyinfrastructure;

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• coordinating distribution and marketingefforts;

• managing the movement of certain positions to differentlocations;

• coordinating geographically dispersed organizations;and

• effecting actions that may be required in connection with obtaining regulatoryapprovals.

In addition, at times the attention of our management and resources may be focused on the integration of the businesses of the twocompanies and diverted from day-to-day business operations, which may disrupt our ongoing business.

Funding may not be available for us to continue to make acquisitions, investments and strategic alliances in order to grow our business.

We have made and anticipate that we may continue to make acquisitions, investments and strategic alliances with complementarybusinesses, technologies, products and services to expand our business. Our growth plans rely, in part, on the successful completion offuture acquisitions. At any particular time, we may need to raise substantial additional capital or to issue additional equity to finance suchacquisitions, investments, and strategic alliances. There is no assurance that we will be able to secure additional funding on acceptableterms, or at all, or obtain the stockholder approvals necessary to issue additional equity to finance such acquisitions, investments, andstrategic alliances. If we are unsuccessful in obtaining the financing, our business would be adversely impacted.

We have a large amount of goodwill and other intangible assets as a result of acquisitions and a significant write-down of goodwilland/or other intangible assets would have a material adverse effect on our reported results of operations and net worth.

We have a large amount of goodwill and other intangible assets and we are required to perform an annual, or in certain situations amore frequent, assessment for possible impairment for accounting purposes. At December 31, 2015, we have goodwill and other intangibleassets of $2.2 billion, or approximately 78% of our total assets. If we do not achieve our planned operating results, we may be required toincur a non-cash impairment charge. Any impairment charges in the future will adversely affect our results of operations. A significantwrite down of goodwill and/or other intangible assets would have a material adverse effect on our reported results of operations and networth.

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

The market price of our Common Stock may fluctuate significantly.

The market price of our Common Stock may fluctuate significantly in response to numerous factors, some of which are beyond ourcontrol, such as:

• the announcement of new products or product enhancements by us or ourcompetitors;

• results of our clinical trials and other developmentefforts;

• developments concerning intellectual property rights and regulatoryapprovals;

• variations in our and our competitors’ results ofoperations;

• changes in earnings estimates or recommendations by securities analysts, if our Common Stock is covered byanalysts;

• developments in the biotechnology, pharmaceutical, diagnostic, and medical deviceindustry;

• the results of product liability or intellectual propertylawsuits;

• future issuances of our Common Stock or other securities, includingdebt;

• purchases and sales of our Common Stock by our officers, directors oraffiliates;

• the addition or departure of keypersonnel;

• announcements by us or our competitors of acquisitions, investments, or strategic alliances;and

• general market conditions and other factors, including factors unrelated to our operatingperformance.

Further, the stock market in general, and the market for biotechnology, pharmaceutical, diagnostic, and medical device companies inparticular, has experienced extreme price and volume fluctuations in recent years. Continued market fluctuations

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could result in extreme volatility in the price of our Common Stock, which could cause a decline in the value of our Common Stock.

Directors, executive officers, principal stockholders and affiliated entities own a substantial amount of our capital stock, and they maymake decisions that you do not consider to be in the best interests of our stockholders.

As of February 16, 2016, our directors, executive officers, principal stockholders, and affiliated entities beneficially owned, in theaggregate 40.73% of our outstanding voting securities. Frost Gamma Investments Trust (“Gamma Trust”), of which Phillip Frost, M.D., theCompany’s Chairman and CEO, is the sole trustee, is deemed to beneficially own in the aggregate approximately 32.8% of our CommonStock as of February 16, 2016. As a result, Dr. Frost acting with other members of management, would have the ability to significantlyimpact the election of our Board of Directors, the adoption or amendment of provisions in the Company’s Certificate of Incorporation, theapproval of mergers and other significant corporate transactions, and the outcome of issues requiring approval by our stockholders. Thisconcentration of ownership may also have the effect of delaying or preventing a change in control of our company that may be favored byother stockholders. This could prevent transactions in which stockholders might otherwise recover a premium for their shares over currentmarket prices.

A significant short position in our stock could have a substantial impact on the trading price of our stock.

Historically, there has been a significant “short” position in our common stock. As of February 12, 2016, investors held a shortposition of approximately 65,465,949 million shares of our common stock which represented approximately 20.15% of our public float.The anticipated downward pressure on our stock price due to actual or anticipated sales of our stock by some institutions or individuals whoengage in short sales of our common stock could cause our stock price to decline. Such stock price decrease could encourage further short-sales that could place additional downward pressure on our stock price. This could lead to further increases in the already large shortposition in our common stock and cause volatility in our stock price.

The volatility of our stock may cause the value of a stockholder’s investment to decline rapidly. Additionally, if our stock pricedeclines, it may be more difficult for us to raise capital and may have other adverse effects on our business.

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act, including with respect tocompanies we acquire, could have a material adverse effect on our business and operating results. In addition, current and potentialstockholders could lose confidence in our financial reporting, which could have a material adverse effect on the price of our CommonStock.

Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal controlover financial reporting and a report by our independent registered public accounting firm on the effectiveness of internal control overfinancial reporting as of year end. We are required to report, among other things, control deficiencies that constitute material weaknesses orchanges in internal control that, or that are reasonably likely to, materially affect internal control over financial reporting. A “materialweakness” is a significant deficiency or combination of significant deficiencies that results in more than a remote likelihood that a materialmisstatement of the annual or interim financial statements will not be prevented or detected.

We have identified and remediated control deficiencies in the past, and we cannot assure you that we will at all times in the future beable to report that our internal controls are effective. In addition, material weaknesses in the design and operation of the internal controlover financial reporting of companies that we acquire could have a material adverse effect on our business and operating results. Ouracquisition of Bio-Reference and possible future acquisitions may increase this risk by expanding the scope and nature of operations overwhich we must develop and maintain internal control over financial reporting. If we cannot provide reliable financial reports or preventfraud, our results of operation could be harmed. Our failure to maintain the effective internal control over financial reporting could causethe cost related to remediation to increase and could cause our stock price to decline. In addition, we may not be able to accurately reportour financial results, may be subject to regulatory sanction, and investors may lose confidence in our financial statements.

Compliance with changing regulations concerning corporate governance and public disclosure may result in additional expenses.

There have been changing laws, regulations, and standards relating to corporate governance and public disclosure, including theSarbanes-Oxley Act of 2002, the Dodd-Frank Act, regulations promulgated by the Securities and Exchange Commission and rulespromulgated by the NYSE and the other national securities exchanges. These new or changed laws, regulations, and standards are subjectto varying interpretations in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time asnew guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance mattersand higher costs necessitated by ongoing revisions to

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disclosure and governance practices. As a result, our efforts to comply with evolving laws, regulations, and standards are likely to continueto result in increased general and administrative expenses and a diversion of management time and attention from revenue-generatingactivities to compliance activities. Our board members, Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officercould face an increased risk of personal liability in connection with the performance of their duties. As a result, we may have difficultyattracting and retaining qualified board members and executive officers, which could harm our business. If our efforts to comply with newor changed laws, regulations, and standards differ from the activities intended by regulatory or governing bodies, we could be subject toliability under applicable laws or our reputation may be harmed, which could materially adversely affect our business, results of operationsand financial condition.

The conversion and redemption features of our 2033 Senior Notes are classified as embedded derivatives and may continue to result involatility in our financial statements, including having a material impact on our results of operations and the derivative liabilityrecorded.

The conversion rights and redemption options of our 2033 Senior Notes are classified as embedded derivatives and as a result, aremarked-to-market to reflect their fair value at each reporting period. The fair value of the embedded derivatives is influenced by a varietyof factors, including the actual and anticipated behavior of the holders of the 2033 Senior Notes, the expected volatility of our CommonStock price and our Common Stock price as of the fair value measurement date. Some of these factors are outside of our control. As aresult, changes in these factors may have a material impact on our results of operations and the derivative liability recorded in ourConsolidated Balance Sheets. Consequently, our financial statements may vary periodically, based on factors other than our revenues andexpenses.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

Our principal corporate office is located at 4400 Biscayne Blvd, Miami, Florida. We lease this space from Frost Real EstateHoldings, LLC (“Frost Real Estate”), an entity which is controlled by Dr. Phillip Frost, our Chairman of the Board and Chief ExecutiveOfficer. Pursuant to the lease agreement with Frost Real Estate Holdings, we lease approximately 25,000 square feet, which encompassesspace for our corporate offices and administrative services. Effective May 28, 2015, we entered into an amendment to our lease agreementwith Frost Real-Estate Holdings. The lease, as amended, is for a five-year term. The lease provides for payments of approximately $66thousand per month in the first year increasing annually to $75 thousand per month in the fifth year, plus applicable sale tax.

The table below summarizes certain information as to our most significant physical properties as of December 31, 2015:

Location Segment and Purpose Type of OccupancyMiami, FL Diagnostics & Pharmaceutical: Corporate Headquarters Leased

Elmwood Park, NJ Diagnostics: Main Laboratory LeasedGaithersburg, MD Diagnostics: Genetics Laboratory LeasedNes Ziona, Israel Pharmaceutical: Research and Development, CTP LeasedWoburn, MA Diagnostics LeasedNesher, Israel Pharmaceuticals: API Manufacturing LeasedGuadalajara, Mexico Pharmaceuticals: Pharmaceutical Manufacturing OwnedBanyoles, Spain Pharmaceuticals: Pharmaceutical Manufacturing OwnedBarcelona, Spain Pharmaceuticals: Research and Development LeasedWaterford, Ireland Pharmaceuticals: Pharmaceutical Manufacturing LeasedSantiago, Chile

Pharmaceuticals: Office; Warehouse Leased

ITEM 3. LEGAL PROCEEDINGS.

Following the announcement of entry into an agreement and plan of merger with Bio-Reference, four putative class actioncomplaints challenging the merger were filed in the Superior Court of New Jersey in Bergen County (the “Court”). The partiessubsequently executed a stipulated consent order that the actions would be consolidated for all purposes, including trial,

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in the Chancery Division under Docket No. C-207-15, bearing the caption In re Bio-Reference Laboratories, Inc. Shareholder Litigation.The complaints name Bio-Reference, OPKO, a wholly-owned merger subsidiary of OPKO (“Merger Sub”) and members of the Bio-Reference board as defendants. The complaints generally allege, among other things, that members of the Bio-Reference board breachedtheir fiduciary duties to Bio-Reference’s shareholders by agreeing to sell Bio-Reference for an inadequate price and agreeing toinappropriate deal protection provisions in the merger agreement that may preclude Bio-Reference from soliciting any potential acquirersand limit the ability of the Bio-Reference board to act with respect to investigating and pursuing superior proposals and alternatives. Thecomplaints also allege that Bio-Reference, OPKO and Merger Sub have aided and abetted the Bio-Reference board members’ breaches oftheir fiduciary duties. In August, the parties executed a memorandum of understanding reflecting terms of a settlement, which was replacedin September 2015 by a stipulation and agreement of compromise, settlement and release resolving all matters between them. In January2016, the Court entered an order finally approving the settlement. The settlement did not have a material impact on our business, financialcondition, results of operations or cash flows.

On December 18, 2013, Bio-Reference filed an action in the Superior Court of New Jersey against Horizon Blue Cross Blue Shield ofNew Jersey (“Horizon”), captioned Bio-Reference Laboratories, Inc. v. Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross BlueShield of New Jersey, Docket No. BER L-009748-13 (N.J. Super. Ct. Bergen Cnty.). Bio-Reference has been an in-network provider toHorizon’s preferred provider organization (“PPO”) members for more than 20 years and filed the lawsuit after attempts to resolve itsdispute with Horizon were unsuccessful.

Bio-Reference currently provides services to Horizon pursuant to an Ancillary Services Provider Agreement entered into in 2003 andamended in 2007. The central claims in the lawsuit arise from Bio-Reference’s performance of laboratory services since at least 2008 formembers of Horizon’s NJ DIRECT plan, who receive benefits under a program that Horizon has bid, promoted, and represented to be aPPO product for New Jersey state, county, and municipal workers and teachers. The lawsuit alleges that, despite these representations,Horizon has been improperly treating NJ DIRECT as a Managed Care program in its dealings with Bio-Reference, thereby costing Bio-Reference more than $20,000,000 in unreimbursed services and depriving state beneficiaries of valuable rights and benefits to which theyare entitled. The lawsuit alleges that Horizon furthered its fraud against Bio-Reference by means of a sham Request for Proposal issued in2011 and through false and incorrect communications to Bio-Reference and other providers. Bio-Reference asserts claims for breach ofcontract, breach of the implied covenant of good faith and fair dealing, and fraud against Horizon. In addition to compensatory damages,Bio-Reference seeks to recover punitive damages from Horizon due to Horizon’s intentional and malicious misconduct. Bio-Reference alsoseeks declaratory and injunctive relief.

Bio-Reference and Horizon have completed discovery, and Horizon has filed a motion for summary judgment, which Bio-Referenceis opposing, and which will be argued before the Court on March 18, 2016. Trial in the matter is currently set for April 2016. Bio-Referenceintends to vigorously prosecute its claims against Horizon.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIES.

Our Common Stock is traded publicly on the New York Stock Exchange (“NYSE”) and the Tel Aviv Stock Exchange under thesymbol “OPK”.

The following table sets forth for the periods indicated the high and low sales prices per share of our Common Stock during each ofthe quarters set forth below as reported on the NYSE:

High Low2015 First Quarter $ 15.23 $ 9.81Second Quarter 19.20 13.71Third Quarter 17.51 8.23Fourth Quarter 11.49 8.202014 First Quarter $ 10.25 $ 7.32Second Quarter 9.83 7.82Third Quarter 9.62 8.09Fourth Quarter 10.16 8.02

As of February 16, 2016, there were approximately 628 holders of record of our Common Stock.

We have not declared or paid any cash dividends on our Common Stock. No cash dividends have been previously paid on ourCommon Stock and none are anticipated in fiscal 2016.

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Stock Performance Graph

The following graph compares the five-year cumulative total return of our Common Stock with the S&P 500 Index and the NASDAQBiotechnology Index. The graph assumes $100 invested on December 31, 2010 in our Common Stock and in each of the foregoing indices.The stock price performance reflected in the graph below is not necessarily indicative of future price performance.

12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015

OPKO Health, Inc. $ 100.00 $ 133.51 $ 131.06 $ 229.97 $ 272.21 $ 273.84S&P 500 100.00 102.11 118.45 156.82 178.29 180.75NASDAQ Biotechnology 100.00 113.92 153.97 263.29 348.49 369.06

Recent Sales of Unregistered Securities

None.

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ITEM 6. SELECTED FINANCIAL DATA.The following selected historical consolidated statement of operations data for the years ended December 31, 2015, 2014, 2013,

2012, and 2011 and the consolidated balance sheet data as of December 31, 2015, 2014, 2013, 2012, and 2011, below are derived from ouraudited consolidated financial statements and related notes thereto. This data should be read in conjunction with our “Management’sDiscussion and Analysis of Financial Condition and Results of Operation” and our consolidated financial statements and the related notesthereto.

For the years ended December 31,

(In thousands, except share and per share information) 2015 2014 2013 2012 2011Statement of operations data: Revenues $ 491,738 $ 91,125 $ 96,530 $ 47,044 $ 27,979Costs and expenses:

Cost of revenue 235,239 48,009 48,860 27,878 17,243Operating expenses 354,980 188,931 127,302 56,435 33,925

Total costs and expenses 590,219 236,940 176,162 84,313 51,168Operating loss from continuing operations (98,481) (145,815) (79,632) (37,269) (23,189)Other income and (expense), net (39,517) (25,212) (24,586) 165 (1,044)Income tax benefit (provision) 113,675 (24) (1,672) 9,626 19,358Loss from continuing operations (31,428) (174,638) (117,346) (29,540) (6,464)Net loss attributable to common shareholders $ (30,028) $ (171,666) $ (114,827) $ (31,288) $ (3,662)Loss per share, basic and diluted:

Loss from continuing operations $ (0.06) $ (0.41) $ (0.32) $ (0.11) $ (0.03)Weighted average number of common sharesoutstanding basic and diluted: 488,065,908 422,014,039 355,095,701 295,750,077 280,673,122Balance sheet data: Total assets $ 2,799,614 $ 1,267,664 $ 1,391,516 $ 289,830 $ 229,489Long-term liabilities $ 567,918 $ 348,812 $ 426,687 $ 34,168 $ 25,443Series D Preferred Stock $ — $ — $ — $ 24,386 $ 24,386Total shareholders’ equity $ 1,979,794 $ 835,741 $ 872,979 $ 178,894 $ 160,882

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS.

This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”), and Section 21Eof the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), about our expectations, beliefs, or intentions regarding ourproduct development efforts, business, financial condition, results of operations, strategies, or prospects. You can identify forward-lookingstatements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relateto anticipated or expected events, activities, trends, or results as of the date they are made. Because forward-looking statements relate tomatters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results todiffer materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actualactivities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include thosecontained in “Item 1A — Risk Factors” of this Annual Report on Form 10-K. We do not undertake any obligation to update forward-looking statements. We intend that all forward-looking statements be subject to the safe harbor provisions of PSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financialperformance.

OVERVIEWWe are a diversified healthcare company that seeks to establish industry-leading positions in large and rapidly growing medical

markets. Our diagnostics business includes Bio-Reference Laboratories, the nation’s third-largest clinical laboratory with a core genetictesting business and a 420-person salesforce to drive growth and leverage new products, including the 4Kscore prostate cancer test and theClaros1 in-office immunoassay platform. Our pharmaceutical operations feature Rayaldee, a treatment for secondary hyperparathyroidism(“SHPT”) in patients with stage 3 or 4 chronic kidney disease (“CKD”) and vitamin D insufficiency (March 29, 2016 PDUFA date) andVARUBI™ for chemotherapy-induced nausea and vomiting (launched by partner TESARO in November 2015). Our pharmaceuticalbusiness includes OPKO Biologics, which features hGH-CTP, a once-weekly human growth hormone injection (in Phase 3 and partneredwith Pfizer), and a once-daily Factor VIIa drug for hemophilia (Phase 2a).

We operate established pharmaceutical platforms in Spain, Ireland, Chile and Mexico, which are generating revenue and from whichwe expect to generate positive cash flow and facilitate future market entry for our products currently in development. EirGen, our specialtypharmaceutical manufacturing and development site in Ireland, is focused on the development and commercial supply of high potency, highbarrier to entry pharmaceutical products. In addition, we operate a specialty active pharmaceutical ingredients (“APIs”) manufacturer inIsrael, which we expect will facilitate the development of our pipeline of molecules and compounds for our proprietary products.

RECENT DEVELOPMENTS

In August 2015, we completed the acquisition of Bio-Reference, the third largest full service clinical laboratory in the United States,known for its innovative technological solutions and pioneering leadership in the areas of genomics and genetic sequencing. Holders ofBio-Reference common stock received 76,566,147 shares of OPKO Common Stock for the outstanding shares of Bio-Reference commonstock. The transaction was valued at approximately $950.1 million, based on a closing price per share of our Common Stock of $12.38 asreported by the New York Stock Exchange on the closing date, or $34.05 per share of Bio-Reference common stock. Included in thetransaction value is $2.3 million related to the value of replacement stock option awards attributable to pre-merger service.

In May 2015, we entered into a series of purchase agreements to acquire all of the issued and outstanding shares of EirGen, aspecialty pharmaceutical company incorporated in Ireland focused on the development and commercial supply of high potency, high barrierto entry pharmaceutical products, for $133.8 million in the aggregate. We acquired the outstanding shares of EirGen for approximately$100.2 million in cash and delivered 2,420,487 shares of our Common Stock valued at approximately $33.6 million based on the closingprice per share of our Common Stock as reported by the New York Stock Exchange on the closing date of the acquisition, $13.88 per share.

TESARO’s NDA for approval of oral VARUBI™, an investigational neurokinin-1 receptor antagonist in development for theprevention of chemotherapy-induced nausea and vomiting, was approved by the U.S. FDA in September 2015, and in November 2015,TESARO announced the commercial launch of VARUBI™ in the United States. Under the terms of the TESARO license, TESARO isobligated to pay us tiered royalties on annual net sales of licensed products achieved in the

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United States and Europe at percentage rates that range from the low double digits to the low twenties, and outside of the United States andEurope at low double-digit percentage rates.

We have been granted a Category I CPT code by the AMA for our 4Kscore test, which will be published in August 2016 andeffective January 1, 2017. This upgrades the 4Kscore test from a Category III Administrative code to a Category I CPT code, a designationreserved for established diagnostic tests. CPT codes are used by insurance companies and government payers to describe health careservices and procedures, and having a Category I CPT code is critical to facilitate reimbursement in government programs such as Medicareand Medicaid, as well as private insurance programs. We believe having the Category I CPT code will help facilitate obtaining broadercoverage from payers for the 4Kscore test and allow greater access to the test for a broader group of patients across the U.S.

RESULTS OF OPERATIONS

For The Years Ended December 31, 2015 and December 31, 2014

Revenues. Revenues for the year ended December 31, 2015 increased $400.6 million compared to the prior year. Our acquisition ofBio-Reference in August 2015 accounted for $321.9 million of the year-over-year revenue growth. Revenues for the years endedDecember 31, 2015 and 2014 were as follows:

Revenues For the year ended December 31, (In thousands) 2015 2014 Change

Revenue from services $ 329,739 $ 8,666 $ 321,073Revenue from products 80,146 76,983 3,163Revenue from transfer of intellectual property and other 81,853 5,476 76,377Total revenues $ 491,738 $ 91,125 $ 400,613

The increase in Revenue from services is attributable to the acquisition of Bio-Reference in August 2015. The increase in Revenuefrom products principally reflects $12.1 million of revenue from EirGen, which we acquired in May 2015, which was partially offset by theunfavorable impact of foreign exchange rates of approximately $8.7 million, and decreased revenue from SciVac Therapeutics Inc. (“STI”),a VIE we deconsolidated in July 2015. The increase in Revenue from transfer of intellectual property principally reflects $65.5 million ofrevenue from the transfer of intellectual property related to the Pfizer Transaction and $15.0 million of revenue from a milestone paymentfrom our licensee TESARO in the fourth quarter of 2015 compared to $5.0 million of revenue from a milestone payment from our licenseeTESARO in 2014. We are recognizing the non-refundable $295.0 million upfront payments received in the Pfizer Transaction on astraight-line basis over the expected performance period. The performance period is expected to continue through 2019, when weanticipate completing the various research and development services that are specified in the Pfizer Transaction.

Costs of revenue. Costs of revenue for the year ended December 31, 2015 increased $187.2 million compared to the prior year. Ouracquisition of Bio-Reference in August 2015 accounted for $183.3 million of the year-over-year cost of revenue growth. Cost of revenuefor the years ended December 31, 2015 and 2014 were as follows:

Cost of Revenue For the year ended December 31, (In thousands) 2015 2014 Change

Cost of service revenue $ 193,305 $ 9,372 $ 183,933Cost of product revenue 41,934 38,637 3,297Total cost of revenue $ 235,239 $ 48,009 $ 187,230

The increase in cost of service revenue is attributable to the acquisition of Bio-Reference in August 2015. The increase in cost ofproduct revenue principally reflects cost of revenue of $6.8 million from EirGen, which we acquired in May 2015, which was partiallyoffset by the impact of foreign exchange rates of approximately $5.2 million and the deconsolidation of STI in July 2015.

Selling, general and administrative expenses. Selling, general and administrative expenses for the years ended December 31, 2015and 2014 were $196.6 million and $57.9 million, respectively. The increase in selling, general and administrative expenses for the yearended December 31, 2015 was primarily due to the acquisitions of Bio-Reference and EirGen in 2015,

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which recognized $118.1 million and $1.8 million of selling, general and administrative expenses in 2015, respectively, increased personnelexpenses as we expand our sales, marketing and administrative staff and add infrastructure, and an increase in professional fees attributableto our acquisitions of Bio-Reference and EirGen. Selling, general and administrative expenses during the years ended December 31, 2015and 2014, include bad debt expense of $24.6 million and $0.7 million, respectively, and equity-based compensation expense of $17.4million and $9.7 million, respectively. The increase in bad debt expense is due to the acquisition of Bio-Reference. The increase in equity-based compensation expense is due to additional options grants made in 2015 and fluctuations in the price of our common stock.

Research and development expenses . Research and development expenses for the years ended December 31, 2015 and 2014 were$99.5 million and $83.6 million, respectively. Research and development costs include external and internal expenses, partially offset bythird-party grants and funding arising from collaboration agreements. External expenses include clinical and non-clinical activitiesperformed by contract research organizations, lab services, purchases of drug and diagnostic product materials and manufacturingdevelopment costs. We track external research and development expenses by individual program for phase 3 clinical trials for drugapproval and PMA’s (pre-market approval) for diagnostics tests, if any. Internal expenses include employee-related expenses includingsalaries, benefits and stock-based compensation expense. Other internal research and development expenses are incurred to support overallresearch and development activities and include expenses related to general overhead and facilities.

The following table summarizes the components of our research and development expenses:

For the years ended December 31,

2015 2014

External expenses: Phase 3 clinical trials $ 12,178 $ 14,512Manufacturing expense for biological products 22,674 18,692Earlier-stage programs 6,900 9,093

Research and development employee-related expenses 27,363 21,642Other internal research and development expenses 32,689 21,982Third-party grants and funding from collaboration agreements (2,316 ) (2,350 )

Total research and development expenses $ 99,488 $ 83,571

The increase in research and development expenses during the year ended December 31, 2015, is primarily due to a $16.7 millionincrease in research and development expenses related to hGH-CTP, a long acting human growth hormone which was outlicensed to Pfizerin 2015, including manufacturing expense for biological products, and the recognition of $2.3 million of expense for our NDA submissionto the FDA for oral Rayaldee in May 2015. Research and development expenses for the year ended December 31, 2015 also include $4.1million from the acquisitions of Bio-Reference and EirGen in August 2015 and May 2015, respectively. This was partially offset bydecreased expenses incurred by OPKO Renal related to phase 3 clinical trials for Rayaldee, which were completed in 2014. In addition,during the year ended December 31, 2015 and 2014, we recorded, as an offset to research and development expenses, $2.3 million and $2.4million, respectively, related to research and development grants received from our collaboration and funding agreements. Research anddevelopment expenses for the year ended December 31, 2015 and 2014 include equity-based compensation expense of $7.9 million and$5.0 million, respectively. We expect our research and development expense to increase as we continue to expand our research anddevelopment of potential future products.

In-Process Research and Development. In May 2014, we acquired Inspiro in a stock for stock transaction. We recorded thetransaction as an asset acquisition and recorded the assets and liabilities at fair value, and as a result, we recorded $10.1 million of acquiredin-process research and development expense. In addition, pursuant to our agreement with Merck & Co. (“Merck”), we were required tomake a $2.0 million payment upon the achievement of a milestone for VARUBI™ which was achieved in the fourth quarter of 2014. Theagreement was accounted for as an asset acquisition and the entire $2.0 million milestone payment was allocated to in-process research anddevelopment expense. No In-process research and development expense was incurred during the year ended December 31, 2015.

Contingent consideration. Contingent consideration expenses for the years ended December 31, 2015 and 2014, were $5.0 millionand $24.4 million, respectively. The decrease in contingent consideration expense was attributable to OPKO Renal resulting from anincrease in the fair value of our contingent obligations to OPKO Renal in 2014 due to changes in assumptions regarding probabilities ofsuccessful achievement of future milestones driven by the two successful phase 3 trials of Rayaldee in 2014. The contingent considerationliabilities at December 31, 2015 relate to potential amounts payable to

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former stockholders of CURNA, OPKO Diagnostics, OPKO Health Europe and OPKO Renal pursuant to our acquisition agreements inJanuary 2011, October 2011, August 2012 and March 2013, respectively.

Amortization of intangible assets. Amortization of intangible assets was $28.0 million and $10.9 million, respectively, for the yearsended December 31, 2015 and 2014. Amortization expense reflects the amortization of acquired intangible assets with defined useful lives.Amortization of intangible assets for the year ended December 31, 2015 includes $14.6 million and $1.7 million from Bio-Reference andEirGen which we acquired in August 2015 and May 2015, respectively. Our IPR&D assets will not be amortized until the underlyingdevelopment programs are completed. Upon obtaining regulatory approval by the U.S. FDA, the IPR&D assets will then be accounted foras a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life.

Grant repayment. During the year ended December 31, 2015, we made a payment of $25.9 million to the Office of the ChiefScientist of the Israeli Ministry of Economy (“OCS”) in connection with repayment obligations resulting from grants previously made bythe OCS to OPKO Biologics to support development of hGH-CTP and the outlicense of the technology outside of Israel.

Interest income. Interest income for the years ended December 31, 2015 and 2014, was not significant as our cash investment strategyemphasizes the security of the principal invested and fulfillment of liquidity needs.

Interest expense. Interest expense for the years ended December 31, 2015 and 2014, was $8.4 million and $12.3 million, respectively.Interest expense is principally related to interest incurred on the 2033 Senior Notes and the amortization of related deferred financing costs.The decrease in interest expense for the year ended December 31, 2015 compared to 2014 is due to a decrease in the principal amount of2033 Senior Notes outstanding from $87.6 million at December 31, 2014 to $32.2 million as of December 31, 2015. This was partiallyoffset by interest expense of $1.9 million from Bio-Reference due to outstanding debt under their credit facility. Interest expense for theyears ended December 31, 2015 and 2014 also reflect non-cash write-offs of deferred financing costs of $1.0 million and $1.5 million asinterest expense related to exchange or conversion of $55.4 million and $70.4 million principal of 2033 Senior Notes during the yearsended December 31, 2015 and 2014, respectively.

Fair value changes of derivative instruments, net. Fair value changes of derivative instruments, net for the years ended December 31,2015 and 2014, were $39.1 million and $10.6 million of expense, respectively. Fair value changes of derivative instruments, net principallyrelated to non-cash expense related to the changes in the fair value of the embedded derivatives in the 2033 Senior Notes of $36.6 millionand $12.2 million for the years ended December 31, 2015 and 2014, respectively.

Other income and (expense), net. Other income and (expense), net for the years ended December 31, 2015 and 2014, were $7.7million of income and $(3.1) million of expense, respectively. The increase in other income and (expense), net for the year endedDecember 31, 2015 compared to 2014 is primarily due to a $15.9 million gain recognized on the deconsolidation of STI in the third quarterof 2015. This was partially offset by a $7.3 million other-than-temporary impairment charge to write our investment in RXiPharmaceuticals Corporation down to its fair value of $0.9 million as of December 31, 2015 compared to a $1.4 million other-than-temporary impairment charge to our investment in ARNO Therapeutics in 2014.

Income tax benefit (provision). Our income tax benefit is due to a $93.4 million release of OPKO’s valuation allowance on our U.S.deferred tax assets as a result of the merger with Bio-Reference. This was partially offset by expense recognized on taxable income fromthe Pfizer Transaction during the year ended December 31, 2015. In addition, our income tax benefit (provision) reflects the projectedincome tax payable in the U.S., Ireland, Israel, Chile, Spain, Mexico, and Luxembourg.

Loss from investments in investees. We have made investments in other early stage companies that we perceive to have valuableproprietary technology and significant potential to create value for us as a shareholder or member. We account for these investments underthe equity method of accounting, resulting in the recording of our proportionate share of their losses until our share of their loss exceedsour investment. Until the investees’ technologies are commercialized, if ever, we anticipate they will continue to report a net loss. Lossfrom investments in investees was $7.1 million and $3.6 million for the years ended December 31, 2015 and 2014, respectively. In the thirdquarter of 2015 we deconsolidated STI, and account for our retained interest in STI as an equity method investment.

For The Years Ended December 31, 2014 and December 31, 2013

Revenues. Revenues for the year ended December 31, 2014, were $91.1 million, compared to $96.5 million for the year endedDecember 31, 2013. The decrease in revenue principally reflects non-recurring, non-cash revenue related to the transfer of technologyunder the RXi Asset Purchase Agreement of $12.5 million in 2013, which was partially offset by (i) a milestone payment of $5.0 millionfrom TESARO during the year ended December 31, 2014, which we recognized in Revenue from transfer of intellectual property and (ii) a14% increase in pharmaceutical product revenue principally from FineTech of $6.2

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million for the year ended December 31, 2014. In addition, pharmaceutical product revenue from our European and Mexican operationsincreased by $2.5 million and $1.6 million, respectively, during the year ended December 31, 2014, primarily due to increased sales byOPKO Health Europe and an increase in government tenders in Mexico. Revenue related to OPKO Lab decreased $2.9 million during theyear ended December 31, 2014, compared to the year ended December 31, 2013, primarily related to decreased reimbursement rates fromgovernment payors and decreased specimen volume, partially offset by revenue from the launch of our 4Kscore test and a price increase tonon-government payors initiated in June 2014.

Costs of revenue. Costs of revenue for the year ended December 31, 2014, were $48.0 million, compared to $48.9 million for the yearended December 31, 2013. Costs of revenue for the year ended December 31, 2014 decreased principally due to decreased revenue atOPKO Lab, which has a lower margin than pharmaceutical product sales. In addition, inventory obsolescence charges decreased $0.9million for the year ended December 31, 2014 compared to 2013. This was partially offset by increased cost of revenue due to increasedpharmaceutical product sales.

Selling, general and administrative expenses. Selling, general and administrative expenses for the year ended December 31, 2014were $57.9 million, compared to $55.3 million for the year ended December 31, 2013. The increase in selling, general and administrativeexpenses for the year ended December 31, 2014 was a result of increased personnel expenses including equity based compensation as wellas sales and marketing activities related to the launch of our 4Kscore test in the U.S. in March 2014 and Europe in September 2014. Theseincreases were partially offset by decreased professional fees as the 2013 period included expenses related to the acquisitions of OPKORenal and OPKO Biologics. Selling, general and administrative expenses during the years ended December 31, 2014 and 2013, includeequity-based compensation expense of $9.7 million and $7.3 million, respectively.

Research and development expenses. Research and development expenses for the year ended December 31, 2014 were $83.6 million,compared to $53.9 million for the year ended December 31, 2013. Research and development costs include external and internal expenses,partially offset by third-party grants and funding arising from collaboration agreements. External expenses include clinical and non-clinicalactivities performed by contract research organizations, lab services, purchases of drug and diagnostic product materials and manufacturingdevelopment costs. We track external research and development expenses by individual program for phase 3 clinical trials for drugapproval and PMA’s (pre-market approval) for diagnostics tests, if any. Internal expenses include employee-related expenses includingsalaries, benefits and stock-based compensation expense. Other internal research and development expenses are incurred to support overallresearch and development activities and include expenses related to general overhead and facilities.

The following table summarizes the components of our research and development expenses:

For the years ended December 31,

2014 2013

External expenses: Phase 3 clinical trials $ 14,512 $ 13,078CMC expense for biological products 18,692 1,765Earlier-stage programs 9,093 4,599

Research and development employee-related expenses 21,642 17,215Other internal research and development expenses 21,982 18,998Third-party grants and funding from collaboration agreements (2,350 ) (1,753 )

Total research and development expenses $ 83,571 $ 53,902

The increase in research and development expenses during the year ended December 31, 2014, as compared to the year endedDecember 31, 2013, principally resulted from $38.6 million of costs related to OPKO Biologics which we acquired in August 2013 and anincrease related to research and development expenses incurred by OPKO Renal related to the external costs of two pivotal phase 3 clinicaltrials for Rayaldee which were completed in 2014, and a third open-label phase 3 trial completed in 2015. OPKO Biologics principallyincurred development and clinical manufacturing costs (“CMC”) related to hGH-CTP, a long acting human growth hormone which wasoutlicensed to Pfizer in 2015. Research and development expenses for the years ended December 31, 2014 and 2013 include equity-basedcompensation expense of $5.0 million and $3.6 million, respectively. Research and development expenses for the year ended December 31,2013, includes an offset to research and development expenses of $2.7 million related to the correction of an error related to equity awardsgranted to non-employees with performance based vesting.

Contingent consideration. Contingent consideration expenses for the years ended December 31, 2014 and 2013, were $24.4 millionand $6.9 million, respectively. The increase in contingent consideration expense was primarily attributable to an

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increase in the fair value of our contingent obligations to the former stockholders of OPKO Renal due to changes in assumptions regardingprobabilities of successful achievement of future milestones driven by the two successful phase 3 trials of Rayaldee in 2014. Thecontingent consideration liabilities at December 31, 2014 relate to potential amounts payable to former stockholders of CURNA, OPKODiagnostics, OPKO Health Europe and OPKO Renal pursuant to our acquisition agreements in January 2011, October 2011, August 2012and March 2013, respectively.

Amortization of intangible assets. Amortization of intangible assets was $10.9 million and $11.1 million, respectively, for the yearsended December 31, 2014 and 2013. Amortization expense reflects the amortization of acquired intangible assets with defined useful lives.The acquisitions of OPKO Renal and OPKO Biologics resulted in principally acquiring IPR&D assets which will not be amortized until theunderlying development programs are completed. Upon obtaining regulatory approval by the FDA, the IPR&D asset will then beaccounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life.

In-Process Research and Development. In May 2014, we acquired Inspiro, a privately held company that is developing theInspiromatic, a “smart” easy-to-use dry powder inhaler with several advantages over existing devices. We recorded the transaction as anasset acquisition and recorded the assets and liabilities at fair value. As the asset had no alternative future use, we recorded $10.1 million ofacquired in-process research and development expense. In addition, pursuant to our agreement with Merck, we were required to make a $2.0million payment upon the achievement of a milestone for rolapitant which was achieved in the fourth quarter of 2014. The agreement wasaccounted for as an asset acquisition and the entire $2.0 million milestone payment was allocated to in-process research and developmentexpense. We did not have any such activity during the year ended December 31, 2013.

We record expense for in-process research and development projects accounted for as asset acquisitions which have not reachedtechnological feasibility and which have no alternative future use. Inspiromatic and rolapitant have not reached a stage of technologicalfeasibility and have no alternative future use.

Other income and (expense), net. Other income and (expense), net for the years ended December 31, 2014 and 2013 was ($25.2)million and $24.6 million of expense, respectively. During the year ended December 31, 2014, we recorded $12.2 million non-cash othercharge, net, related to the changes in the fair value of the embedded derivatives in the 2033 Senior Notes, and a $2.7 million gain as theresult of the exchange of $70.4 million principal of 2033 Senior Notes in June 2014. Other income and (expense), net, for the year endedDecember 31, 2014, also included $12.3 million of interest expense principally related to interest incurred on the 2033 Senior Notes and theamortization of related deferred financing costs. Other income and (expense), net for the year ended December 31, 2014, includes a $1.4million other-than-temporary impairment charge to write our investment in ARNO Therapeutics down to its fair value of $0.6 million as ofDecember 31, 2014.

For the year ended December 31, 2013, we recorded a $52.7 million non-cash charge, net, related to the changes in the fair value ofthe embedded derivatives in the 2033 Senior Notes, partially offset by a $1.0 million gain on early partial conversion of the 2033 SeniorNotes, income of $6.5 million related to changes in the fair value of the Pharmsynthez Note Receivable, a certain Pharmsynthez purchaseoption, warrants and options received in connection with our investment in Neovasc and ARNO, and by a gain of $29.9 million on the saleof certain of our strategic investments. Other income and (expense), net, for the year ended December 31, 2013, also included $13.8 millionof interest expense primarily related to the 2033 Senior Notes and the amortization of related deferred financing costs. The decrease ininterest expense for the year ended December 31, 2014 compared to the same period in 2013 is due to the exchange of $70.4 millionprincipal of 2033 Senior Notes in June 2014, which was partially offset by a non-cash write-off of deferred financing costs of $1.5 millionas interest expense related to exchange of the 2033 Senior Notes in June 2014.

Income tax benefit (provision). Our income tax provision reflects the projected income tax payable in Israel, Chile, Spain, Mexico,Canada and SciVac Ltd, a consolidated variable interest entity. We have recorded a full valuation allowance against our deferred tax assetsin the U.S.

Loss from investments in investees. We have made investments in other early stage companies that we perceive to have valuableproprietary technology and significant potential to create value for us as a shareholder. We account for these investments under the equitymethod of accounting, resulting in the recording of our proportionate share of their losses until our share of their loss exceeds ourinvestment. Until the investees’ technologies are commercialized, if ever, we anticipate they will continue to report a net loss. Loss frominvestments in investees was $3.6 million and $11.5 million for the years ended December 31, 2014 and 2013, respectively. The decrease inloss from investments in investees is primarily due to decreased losses at RXi Pharmaceuticals Corporation and Cocrystal Pharma, Inc.During the third quarter of 2014, we discontinued applying the equity method of accounting for RXi and account for our investment in RXias an available for sale investment.

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LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2015, we had cash and cash equivalents of approximately $193.6 million. Cash provided by operations during 2015principally reflects the $295.0 million upfront payments received from the Pfizer Transaction, partially offset by a payment of $25.9million to the OCS for obligations from grants previously made by the OCS to OPKO Biologics, expenses related to selling, general andadministrative activities related to our corporate operations, research and development activities and our operations at Bio-Reference,OPKO Biologics, OPKO Renal and OPKO Diagnostics. We recognized $65.5 million of revenue related to the $295.0 million upfrontpayments received from Pfizer during the year ended December 31, 2015, and will recognize the remainder as revenue on a straight-linebasis over the expected performance period. Cash used in investing activities includes the net cash used in acquisitions of $79.0 million,which reflects cash used to acquire EirGen, net and cash provided by the Bio-Reference acquisition. Cash provided by financing activitiesprimarily reflects $25.9 million received from Common Stock option and Common Stock warrant exercises. During the year endedDecember 31, 2015, we also satisfied a $20.0 million contingent payment to the former owners of OPKO Renal through the issuance of1,194,337 shares of our common stock in the third quarter of 2015. Since our inception, we have not generated gross margins sufficient tooffset our operating and other expenses and our primary source of cash has been from the public and private placement of stock, theissuance of the 2033 Senior Notes and credit facilities available to us.

In January 2015, we partnered with Pfizer through a worldwide agreement for the development and commercialization of our long-acting hGH-CTP for the treatment of growth hormone deficiency (“GHD”) in adults and children, as well as for the treatment of growthfailure in children born small for gestational age (“SGA”). Under the terms of the agreements with Pfizer, we received non-refundable andnon-creditable upfront payments of $295.0 million in the first quarter of 2015 and are eligible to receive up to an additional $275.0 millionupon the achievement of certain regulatory milestones. Pfizer received the exclusive license to commercialize hGH-CTP worldwide. Inaddition, we are eligible to receive initial tiered royalty payments associated with the commercialization of hGH-CTP for Adult GHD withpercentage rates ranging from the high teens to mid-twenties. Upon the launch of hGH-CTP for Pediatric GHD in certain major markets,the royalties will transition to regional, tiered gross profit sharing for both hGH-CTP and Pfizer’s Genotropin®.

We will lead the clinical activities and will be responsible for funding the development programs for the key indications, whichincludes Adult and Pediatric GHD and Pediatric SGA. Pfizer will be responsible for all development costs for additional indications as wellas all post-marketing studies. In addition, Pfizer will fund the commercialization activities for all indications and lead the manufacturingactivities covered by the global development plan.

In August 2015, we completed the acquisition of Bio-Reference, the third largest full service clinical laboratory in the United States,known for its innovative technological solutions and pioneering leadership in the areas of genomics and genetic sequencing. Holders ofBio-Reference common stock received 76,566,147 shares of OPKO Common Stock for the outstanding shares of Bio-Reference commonstock. The transaction was valued at approximately $950.1 million, based on a closing price per share of our Common Stock of $12.38 asreported by the New York Stock Exchange on the closing date, or $34.05 per share of Bio-Reference common stock. Included in thetransaction value is $2.3 million related to the value of replacement stock option awards attributable to pre-merger service.

In May 2015, we entered into a series of purchase agreements to acquire all of the issued and outstanding shares of EirGen, aspecialty pharmaceutical company incorporated in Ireland focused on the development and commercial supply of high potency, high barrierto entry pharmaceutical products, for $133.8 million in the aggregate. We acquired the outstanding shares of EirGen for approximately$100.2 million in cash and delivered 2,420,487 shares of our Common Stock valued at approximately $33.6 million based on the closingprice per share of our Common Stock as reported by the New York Stock Exchange on the closing date of the acquisition, $13.88 per share.

Our licensee, TESARO, received approval by the U.S. FDA in September 2015 for oral VARUBI™, a neurokinin-1 receptorantagonist for the prevention of chemotherapy-induced nausea and vomiting. In November 2015, TESARO announced the commerciallaunch of VARUBI™ in the United States. We are eligible to receive milestone payments of up to $30.0 million (of which $20.0 millionhas been received to date) upon achievement of certain regulatory and commercial sale milestones and additional commercial milestonepayments of up to $85.0 million if specified levels of annual net sales are achieved. During the years ended December 31, 2015 and 2014,$15.0 million and $5.0 million of revenue, respectively, has been recognized related to the achievement of the milestones under theTESARO License. TESARO is also obligated to pay us tiered royalties on annual net sales achieved in the United States and Europe atpercentage rates that range from the low double digits to the low twenties, and outside of the United States and Europe at low double-digitpercentage rates.

Under the terms of our agreement with Merck, upon approval by the FDA of the TESARO’s NDA for oral VARUBI™, whichoccurred in September 2015, we were required to pay Merck a $5.0 million milestone payment. In addition, $5.0 million will be due andpayable each year thereafter for the next four (4) years on the anniversary date of the NDA approval. We

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recognized the present value of the milestone payments on FDA approval of $23.0 million as an intangible asset which will be amortized toexpense over the expected useful life of the asset, which is approximately 13 years. The present value of the future payments to Merck of$18.2 million at December 31, 2015 is recorded as a liability in our Consolidated Balance Sheet with $5.0 million in Accrued expenses and$13.2 million in Other long-term liabilities.

2033 Senior Notes. In January 2013, we issued $175.0 million of the 2033 Senior Notes. The 2033 Senior Notes were sold in a privateplacement in reliance on exemptions from registration under the Securities Act. Net cash proceeds from the offering totaled $170.2 million.Holders of the 2033 Senior Notes may require us to repurchase the 2033 Senior Notes for 100% of their principal amount, plus accrued andunpaid interest, on February 1, 2019, February 1, 2023 and February 1, 2028, or following the occurrence of a fundamental change asdefined in the indenture governing the 2033 Senior Notes.

In August 2013 and June 2014, holders exchanged or converted $16.9 million and $70.4 million principal amount of 2033 SeniorNotes, respectively.

On April 1, 2015, we announced that our 2033 Senior Notes were convertible through June 2015 by holders of such notes. Thisconversion right was triggered because the closing price per share of our Common Stock had exceeded $9.19, or 130% of the initialconversion price of $7.07, for at least 3 of 30 consecutive trading days during the period ending on March 31, 2015. Our 2033 Senior Notescontinued to be convertible by holders of such notes for the remainder of 2015 and the first quarter of 2016. During 2015, pursuant to theconversion right or through exchange agreements we entered with certain holders of our 2033 Senior Notes, holders of our 2033 SeniorNotes converted or exchanged $55.4 million in aggregate principal amount of 2033 Senior Notes for 8,118,062 shares of the Company’sCommon Stock. At December 31, 2015, $32.2 million principal amount of 2033 Senior Notes was outstanding.

In connection with our acquisitions of CURNA, OPKO Diagnostics, OPKO Health Europe and OPKO Renal, we agreed to pay futureconsideration to the sellers upon the achievement of certain events, including up to an additional $19.1 million in shares of our CommonStock to the former stockholders of OPKO Diagnostics upon and subject to the achievement of certain milestones; and up to an additional$150.0 million in either shares of our Common Stock or cash, at our option subject to the achievement of certain milestones, to the formershareholders of OPKO Renal.

As of December 31, 2015, the total availability under our Credit Agreement with JPMorgan Chase Bank, N.A. (“CB”) and our lines ofcredit with financial institutions in Chile and Spain was $189.8 million, of which $82.7 million was used and outstanding at December 31,2015. The weighted average interest rate on these lines of credit is approximately 4.3%. These lines of credit are short-term and are usedprimarily as a source of working capital. The highest balance at any time during the year ended December 31, 2015, was $91.5 million. Weintend to continue to enter into these lines of credit as needed. There is no assurance that these lines of credit or other funding sources willbe available to us on acceptable terms, or at all, in the future.

On November 5, 2015, Bio-Reference and certain of its subsidiaries entered into a credit agreement with CB, as lender andadministrative agent (the “Credit Agreement”), which replaced Bio-Reference’s existing Credit Facility with PNC Bank, NationalAssociation (“PNC”). The Credit Agreement provides for a $175.0 million secured revolving credit facility and includes a $20.0 millionsub-facility for swingline loans and a $20.0 million sub-facility for the issuance of letters of credit. Bio-Reference may increase the creditfacility to up to $275.0 million on a secured basis, subject to the satisfaction of specified conditions. The Credit Agreement matures onNovember 5, 2020 and is guaranteed by all of Bio-Reference’s domestic subsidiaries. The Credit Agreement is also secured bysubstantially all assets of Bio-Reference and its domestic subsidiaries, as well as a non-recourse pledge by us of our equity interest in Bio-Reference. Availability under the Credit Agreement is based on a borrowing base comprised of eligible accounts receivables of Bio-Reference and certain of its subsidiaries, as specified therein. The proceeds of the new credit facility were used to refinance existingindebtedness, including amounts outstanding under the credit facility with PNC which was terminated in 2015 in accordance with its terms,to finance working capital needs and for general corporate purposes of Bio-Reference and its subsidiaries.

We expect to continue to incur losses from operations. We expect to incur substantial research and development expenses, includingexpenses related to the hiring of personnel and additional clinical trials. We expect that selling, general and administrative expenses willalso increase as we expand our sales, marketing and administrative staff and add infrastructure.

We believe that the cash and cash equivalents on hand at December 31, 2015, and the amounts available to be borrowed under ourlines of credit are sufficient to meet our anticipated cash requirements for operations and debt service beyond the next 12 months. We basedthis estimate on assumptions that may prove to be wrong or are subject to change, and we may be required to use our available cashresources sooner than we currently expect. If we acquire additional assets or companies, accelerate our product development programs orinitiate additional clinical trials, we will need additional funds. Our future cash requirements will depend on a number of factors, includingour relationship with Pfizer, our merger with Bio-Reference, possible acquisitions, the continued progress of research and development ofour product candidates, the timing and outcome of

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clinical trials and regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patentclaims and other intellectual property rights, the status of competitive products, the availability of financing, and our success in developingmarkets for our product candidates. If we are not able to secure additional funding when needed, we may have to delay, reduce the scopeof, or eliminate one or more of our clinical trials or research and development programs or possible acquisitions.

The following table provides information as of December 31, 2015, with respect to the amounts and timing of our known contractualobligation payments due by period.

Contractual obligations(In thousands) 2016 2017 2018 2019 2020 Thereafter TotalOpen purchase orders $ 48,258 $ — $ — $ — $ — $ — $ 48,258Operating leases 15,830 10,749 7,862 6,558 3,208 7,525 51,732Capital leases 5,762 3,951 2,607 1,386 603 794 15,1032033 Senior Notes — — — 32,200 — — 32,200Deferred payments 5,000 5,000 5,000 5,000 — — 20,000Mortgages and other debts payable 2,493 293 245 236 234 955 4,456Lines of credit 83,250 — — — — — 83,250Interest commitments 1,351 1,031 1,020 207 32 60 3,701Total $ 161,944 $ 21,024 $ 16,734 $ 45,587 $ 4,077 $ 9,334 $ 258,700

The preceding table does not include information where the amounts of the obligations are not currently determinable, including thefollowing:

- Contractual obligations in connection with clinical trials, which span over two years, and that depend on patient enrollment. The totalamount of expenditures is dependent on the actual number of patients enrolled and as such, the contracts do not specify the maximumamount we may owe.

- Product license agreements effective during the lesser of 15 years or patent expiration whereby payments and amounts aredetermined by applying a royalty rate on uncapped future sales.

- Contingent consideration that includes payments upon achievement of certain milestones including meeting development milestonessuch as the completion of successful clinical trials, NDA approvals by the FDA and revenue milestones upon the achievement ofcertain revenue targets all of which are anticipated to be paid within the next seven years and are payable in either shares of ourCommon Stock or cash, at our option, and that may aggregate up to $189.6 million.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Accounting estimates. The preparation of financial statements in conformity with accounting principles generally accepted in theUnited States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ significantly from these estimates.

Goodwill and Intangible Assets. Goodwill represents the difference between the purchase price and the estimated fair value of the netassets acquired when accounted for by the acquisition method of accounting. Goodwill and other intangible assets, including IPR&D,acquired in business combinations, licensing and other transactions was $2.2 billion and $1.1 billion at both December 31, 2015 and 2014,respectively, representing approximately 78% and 85% of total assets, respectively.

Assets acquired and liabilities assumed in business combinations, licensing and other transactions are generally recognized at the dateof acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired isrecognized as goodwill. We determined the fair value of intangible assets, including IPR&D, using the “income method.” This methodstarts with a forecast of net cash flows, risk adjusted for estimated probabilities of technical and regulatory success (for IPR&D) andadjusted to present value using an appropriate discount rate that reflects the risk associated with the cash flow streams. All assets are valuedfrom a market participant view which might be different than our specific views. The valuation process is very complex and requiressignificant input and judgment using internal and external sources. Although the valuations are required to be finalized within a one-yearperiod, it must consider all and only those facts and evidence which existed at the acquisition date. The most complex and judgmentalmatters applicable to the valuation process are summarized below:

• Unit of account – Most intangible assets are valued as single global assets rather than multiple assets for each jurisdiction orindication after considering the development stage, expected levels of incremental costs to obtain additional approvals, risksassociated with further development, amount and timing of benefits expected to be derived in the future, expected patent livesin various jurisdictions and the intention to promote the asset as a global brand.

• Estimated useful life – The asset life expected to contribute meaningful cash flows is determined after considering allpertinent matters associated with the asset, including expected regulatory approval dates (if unapproved), exclusivity periodsand other legal, regulatory or contractual provisions as well as the effects of any obsolescence, demand, competition, and othereconomic factors, including barriers to entry.

• Probability of Technical and Regulatory Success (“PTRS”) Rate – PTRS rates are determined based upon industry averagesconsidering the respective programs development stage and disease indication and adjusted for specific information or dataknown at the acquisition date. Subsequent clinical results or other internal or external data obtained could alter the PTRS rateand materially impact the estimated fair value of the intangible asset in subsequent periods leading to impairment charges.

• Projections – Future revenues are estimated after considering many factors such as initial market opportunity, pricing, salestrajectories to peak sales levels, competitive environment and product evolution. Future costs and expenses are estimated afterconsidering historical market trends, market participant synergies and the timing and level of additional development costs toobtain the initial or additional regulatory approvals, maintain or further enhance the product. We generally assume initialpositive cash flows to commence shortly after the receipt of expected regulatory approvals which typically may not occur fora number of years. Actual cash flows attributed to the project are likely to be different than those assumed since projectionsare subjected to multiple factors including trial results and regulatory matters which could materially change the ultimatecommercial success of the asset as well as significantly alter the costs to develop the respective asset into commercially viableproducts.

• Tax rates – The expected future income is tax effected using a market participant tax rate. Our recent valuations typically usea U.S. tax rate (and applicable state taxes) after considering the jurisdiction in which the intellectual property is held andlocation of research and manufacturing infrastructure. We also considered that any repatriation of earnings would likely haveU.S. tax consequences.

• Discount rate – Discount rates are selected after considering the risks inherent in the future cash flows; the assessment of theasset’s life cycle and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory, oreconomic barriers to entry, as well as expected changes in standards of practice for indications addressed by the asset.

Goodwill was $743.3 million and $224.3 million, respectively, at December 31, 2015 and 2014. The increase in goodwill fromDecember 31, 2014 to 2015 is due to goodwill recognized from the acquisitions of Bio-Reference and EirGen in August 2015 and May2015, respectively. Goodwill is tested at least annually for impairment or when events or changes in

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circumstances indicate that the carrying amount of such assets may not be recoverable, on an enterprise level by assessing qualitativefactors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value.Examples of qualitative factors include our share price, our financial performance compared to budgets, long-term financial plans,macroeconomic, industry and market conditions as well as the substantial excess of fair value over the carrying value of net assets from theannual impairment test previously performed. We recorded $87,000 of goodwill impairment during the year ended December 31, 2015 as aresult of our testing. No goodwill impairment was recorded for the year ended December 31, 2014 as a result of our testing.

The estimated fair value of a reporting unit is highly sensitive to changes in projections and assumptions; therefore, in some instanceschanges in these assumptions could potentially lead to impairment. We perform sensitivity analyses around our assumptions in order toassess the reasonableness of the assumptions and the results of our testing. Ultimately, future potential changes in these assumptions mayimpact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value. We believethat our estimates are consistent with assumptions that marketplace participants would use in their estimates of fair value. However, ifactual results are not consistent with our estimates and assumptions, we may be exposed to an impairment charge that could be material.

Intangible assets were $1.4 billion and $855.8 million, including IPR&D of $792.3 million and $793.2 million, respectively, atDecember 31, 2015 and 2014. The increase in intangible assets from December 31, 2014 to 2015 is due to intangible assets recognized fromthe acquisitions of Bio-Reference and EirGen in August 2015 and May 2015, respectively. Intangible assets are tested for impairmentwhenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, although IPR&D isrequired to be tested at least annually until the project is completed or abandoned. Upon obtaining regulatory approval, the IPR&D asset isthen accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life. If the project isabandoned, the IPR&D asset is charged to expense.

Intangible assets are highly vulnerable to impairment charges, particularly newly acquired assets for recently launched products orIPR&D. These assets are initially measured at fair value and therefore any reduction in expectations used in the valuations could potentiallylead to impairment. Some of the more common potential risks leading to impairment include competition, earlier than expected loss ofexclusivity, pricing pressures, adverse regulatory changes or clinical trial results, delay or failure to obtain regulatory approval andadditional development costs, inability to achieve expected synergies, higher operating costs, changes in tax laws and other macro-economic changes. The complexity in estimating the fair value of intangible assets in connection with an impairment test is similar to theinitial valuation.

Considering the high risk nature of research and development and the industry’s success rate of bringing developmental compoundsto market, IPR&D impairment charges are likely to occur in future periods. IPR&D is closely monitored and assessed each period forimpairment.

We amortize intangible assets with definite lives on a straight-line basis over their estimated useful lives, currently ranging from 3 to20 years. We use the straight-line method of amortization as there is no reliably determinable pattern in which the economic benefits of ourintangible assets are consumed or otherwise used up. Amortization expense was $28.0 million and $10.9 million for the years endedDecember 31, 2015 and 2014, respectively.

Revenue recognition. Revenue for laboratory services is recognized at the time test results are reported, which approximates whenservices are provided. Services are provided to patients covered by various third-party payer programs including various managed careorganizations, as well as the Medicare and Medicaid programs. Billings for services under third-party payer programs are included inrevenue net of allowances for contractual discounts and allowances for differences between the amounts billed and estimated programpayment amounts. Adjustments to the estimated payment amounts based on final settlement with the programs are recorded uponsettlement as an adjustment to revenue. For the years ended December 31, 2015 and 2014, approximately 9% and 5%, respectively, of ourrevenues were derived directly from the Medicare and Medicaid programs. The increase in revenues from laboratory services, includingrevenue from Medicare and Medicaid programs, is due to the acquisition of Bio-Reference in August 2015.

Generally, we recognize revenue from product sales when goods are shipped and title and risk of loss transfer to our customers. Ourestimates for sales returns and allowances are based upon the historical patterns of product returns and allowances taken, matched againstthe sales from which they originated, and management’s evaluation of specific factors that may increase or decrease the risk of productreturns.

Revenue from transfer of intellectual property includes revenue related to the sale, license or transfer of intellectual property such asupfront license payments, license fees and milestone payments received through our license, collaboration and commercializationagreements. We analyze our multiple-element arrangements to determine whether the elements can be separated and accounted forindividually as separate units of accounting.

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Non-refundable license fees for the out-license of our technology are recognized depending on the provisions of each agreement. Werecognize non-refundable upfront license payments as revenue upon receipt if the license has standalone value and qualifies for treatment asa separate unit of accounting under multiple-element arrangement guidance. License fees with ongoing involvement or performanceobligations that do not have standalone value are recorded as deferred revenue, included in Accrued expenses or Other long-term liabilities,when received and generally are recognized ratably over the period of such performance obligations only after both the license period hascommenced and we have delivered the technology.

The assessment of our obligations and related performance periods requires significant management judgment. If an agreementcontains research and development obligations, the relevant time period for the research and development phase is based on managementestimates and could vary depending on the outcome of clinical trials and the regulatory approval process. Such changes could materiallyimpact the revenue recognized, and as a result, management reviews the estimates related to the relevant time period of research anddevelopment on a quarterly basis.

Revenue from milestone payments related to arrangements under which we have continuing performance obligations is recognized asRevenue from transfer of intellectual property upon achievement of the milestone only if all of the following conditions are met: themilestone payments are non-refundable; there was substantive uncertainty at the date of entering into the arrangement that the milestonewould be achieved; the milestone is commensurate with either our performance to achieve the milestone or the enhancement of the value ofthe delivered item by us; the milestone relates solely to past performance; and the amount of the milestone is reasonable in relation to theeffort expended or the risk associated with the achievement of the milestone. If any of these conditions are not met, the milestone paymentsare not considered to be substantive and are, therefore, deferred and recognized as Revenue from transfer of intellectual property over theterm of the arrangement as we complete our performance obligations.

Concentration of Credit Risk and Allowance for doubtful accounts. Financial instruments that potentially subject us to concentrationsof credit risk consist primarily of accounts receivable. Substantially all of our accounts receivable are with companies in the health careindustry and individuals. However, concentrations of credit risk are limited due to the number of our clients as well as their dispersionacross many different geographic regions.

While we have receivables due from federal and state governmental agencies, we do not believe that such receivables represent acredit risk since the related health care programs are funded by federal and state governments, and payment is primarily dependent uponsubmitting appropriate documentation. Accounts receivable balances (prior to allowance for doubtful accounts and net of contractualadjustments) from Medicare and Medicaid were $26.1 million and $0.6 million at December 31, 2015 and 2014, respectively.

The portion of our accounts receivable due from patients comprises the largest portion of credit risk. At December 31, 2015 and 2014,receivables due from patients represent approximately 7.5% and 0.5% of our consolidated accounts receivable (prior to allowance fordoubtful accounts and net of contractual adjustments).

We assess the collectability of accounts receivable balances by considering factors such as historical collection experience, customercredit worthiness, the age of accounts receivable balances, regulatory changes and current economic conditions and trends that may affect acustomer’s ability to pay. Actual results could differ from those estimates. Our reported net income (loss) is directly affected by ourestimate of the collectability of accounts receivable. The allowance for doubtful accounts recognized in our Consolidated Balance Sheetswas $25.2 million and $1.9 million at December 31, 2015 and 2014, respectively.

Income Taxes. Income taxes are accounted for under the asset-and-liability method. Deferred tax assets and liabilities are recognizedfor the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilitiesand the respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enactedtax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Theeffect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.We periodically evaluate the realizability of our net deferred tax assets. Our tax accruals are analyzed periodically and adjustments aremade as events occur to warrant such adjustment.

Equity-based compensation. We measure the cost of employee services received in exchange for an award of equity instrumentsbased on the grant-date fair value of the award. That cost is recognized in the Consolidated Statement of Operations over the period duringwhich an employee is required to provide service in exchange for the award. We record excess tax benefits, realized from the exercise ofstock options as a financing cash inflow and as a reduction of taxes paid in cash flow from operations. Equity-based compensationarrangements to non-employees are recorded at their fair value on the measurement date. The measurement of equity-based compensationto non-employees is subject to periodic adjustment as the underlying equity instruments vest. We estimate the grant-date fair value of ourstock option grants using a valuation model

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known as the Black-Scholes-Merton formula or the “Black-Scholes Model.” The Black-Scholes Model requires the use of several variablesto estimate the grant-date fair value of stock options including expected term, expected volatility, expected dividends and risk-free interestrate. We perform analyses to calculate and select the appropriate variable assumptions used in the Black-Scholes Model and to estimateforfeitures of equity-based awards. We are required to adjust our forfeiture estimates on at least an annual basis based on the number ofshare-based awards that ultimately vest. The selection of assumptions and estimated forfeiture rates is subject to significant judgment andfuture changes to our assumptions and estimates which may have a material impact on our Consolidated Financial Statements.

Inventories. Inventories are valued at the lower of cost or market (net realizable value). Cost is determined by the first-in, first-outmethod. We consider such factors as the amount of inventory on hand, estimated time required to sell such inventories, remaining shelf-life, and current market conditions to determine whether inventories are stated at the lower of cost or market. Inventories at our diagnosticssegment consist primarily of purchased laboratory supplies, which is used in our testing laboratories.

Pre-launch inventories. We may accumulate commercial quantities of certain product candidates prior to the date we anticipate thatsuch products will receive final U.S. FDA approval. The accumulation of such pre-launch inventories involves the risk that such productsmay not be approved for marketing by the FDA on a timely basis, or ever. This risk notwithstanding, we may accumulate pre-launchinventories of certain products when such action is appropriate in relation to the commercial value of the product launch opportunity. Inaccordance with our policy, this pre-launch inventory is expensed.

Contingent consideration. Each period we revalue the contingent consideration obligations associated with certain acquisitions totheir fair value and record increases in the fair value as contingent consideration expense and decreases in the fair value as contingentconsideration income. Changes in contingent consideration result from changes in the assumptions regarding probabilities of successfulachievement of related milestones, the estimated timing in which the milestones are achieved and the discount rate used to estimate the fairvalue of the liability. Contingent consideration may change significantly as our development programs progress, revenue estimates evolveand additional data is obtained, impacting our assumptions. The assumptions used in estimating fair value require significant judgment. Theuse of different assumptions and judgments could result in a materially different estimate of fair value which may have a material impact onour results from operations and financial position.

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RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued Accounting Standards Update (“ASU”), ASU No. 2014-09, “Revenue from Contracts withCustomers.” ASU No. 2014-09 clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP andInternational Financial Reporting Standards that removes inconsistencies and weaknesses in revenue requirements, provides a more robustframework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions,and capital markets, provides more useful information to users of financial statements through improved disclosure requirements andsimplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. ASU No. 2014-09is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Companies can choose to apply theASU using either the full retrospective approach or a modified retrospective approach. We are currently evaluating both methods ofadoption and the impact that the adoption of this ASU will have on our Consolidated Financial Statements.

In June 2014, the FASB issued ASU No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award ProvideThat a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force).”ASU No. 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period betreated as a performance condition. ASU No. 2014-12 is effective for fiscal years, and interim periods within those years, beginning afterDecember 15, 2015. Earlier adoption is permitted. The amendments can be applied either prospectively to all awards granted or modifiedafter the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliestannual period presented in the financial statements and to all new or modified awards. We expect to apply the ASU prospectively and donot expect the adoption to have an impact on our Consolidated Financial Statements.

In August 2014, the FASB issued ASU No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a GoingConcern,” to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability tocontinue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for annual periods ending after December15, 2016 with early adoption permitted. We do not believe the impact of our pending adoption of ASU 2014-15 on our ConsolidatedFinancial Statements will be material.

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,”which amends current consolidation guidance including changes to both the variable and voting interest models used by companies toevaluate whether an entity should be consolidated. The requirements from ASU 2015-02 are effective for interim and annual periodsbeginning after December 15, 2015, with early adoption permitted. We do not believe the impact of our pending adoption of ASU 2015-02on our Consolidated Financial Statements will be material.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” whichchanges the measurement principle for entities that do not measure inventory using the last-in, first-out (“LIFO”) or retail inventory methodfrom the lower of cost or market to lower of cost and net realizable value. ASU 2015-11 is effective for fiscal years beginning afterDecember 15, 2016, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating theimpact of this new guidance on our Consolidated Financial Statements.

In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting forMeasurement-Period Adjustments,” which replaces the requirement that an acquirer in a business combination account for measurementperiod adjustments retrospectively with a requirement that an acquirer recognize adjustments to the provisional amounts that are identifiedduring the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 requires that theacquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other incomeeffects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisitiondate. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Theguidance is to be applied prospectively to adjustments to provisional amounts that occur after the effective date of the guidance, with earlierapplication permitted for financial statements that have not been issued. Our early adoption of ASU 2015-16 in the third quarter of 2015did not have a material impact on our Consolidated Financial Statements.

In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of DeferredTaxes,” which requires deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. ASU2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within thoseannual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. We adopted theprovisions of this ASU prospectively in the fourth quarter of 2015, and did not retrospectively adjust the prior periods. The adoption of thisASU will simplify the presentation of deferred income taxes and reduce complexity without decreasing the usefulness of informationprovided to users of financial statements. The

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adoption of ASU 2015-17 did not have a significant impact on our financial position, results of operations and cash flows.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of doing business, we are exposed to the risks associated with foreign currency exchange rates and changes ininterest rates.

Foreign Currency Exchange Rate Risk – We operate globally and, as such, we are subject to foreign exchange risk in our commercialoperations as a significant portion of our revenues are exposed to changes in foreign currency exchange rates, primarily the Chilean peso,the Mexican peso, the Euro and the New Israeli shekel.

Although we do not speculate in the foreign exchange market, we may from time to time manage exposures that arise in the normalcourse of business related to fluctuations in foreign currency exchange rates by entering into offsetting positions through the use of foreignexchange forward contracts. Certain firmly committed transactions may be hedged with foreign exchange forward contracts. As exchangerates change, gains and losses on the exposed transactions are partially offset by gains and losses related to the hedging contracts. Both theexposed transactions and the hedging contracts are translated and fair valued, respectively, at current spot rates, with gains and lossesincluded in earnings.

Our derivative activities, which consist of foreign exchange forward contracts, are initiated to hedge forecasted cash flows that areexposed to foreign currency risk. The foreign exchange forward contracts generally require us to exchange local currencies for foreigncurrencies based on pre-established exchange rates at the contracts’ maturity dates. As exchange rates change, gains and losses on thesecontracts are generated based on the change in the exchange rates that are recognized in the Consolidated Statement of Operations andoffset the impact of the change in exchange rates on the foreign currency cash flows that are hedged. If the counterparties to the exchangecontracts do not fulfill their obligations to deliver the contracted currencies, we could be at risk for currency related fluctuations. We had$6.2 million in foreign exchange forward contracts outstanding at December 31, 2015, primarily to hedge Chilean-based operating cashflows against U.S. dollars. If Chilean pesos were to strengthen or weaken in relation to the U.S. dollar, our loss or gain on hedged foreigncurrency cash-flows would be offset by the derivative contracts, with a net effect of zero.

We do not engage in trading market risk sensitive instruments or purchasing hedging instruments or “other than trading” instrumentsthat are likely to expose us to significant market risk, whether interest rate, foreign currency exchange, commodity price, or equity pricerisk.

Interest Rate Risk – Our exposure to interest rate risk relates to our cash and investments and to our borrowings. We maintain aninvestment portfolio of money market funds. The securities in our investment portfolio are not leveraged, and are, due to their very short-term nature, subject to minimal interest rate risk. We currently do not hedge interest rate exposure. Because of the short-term maturities ofour investments, we do not believe that a change in market interest rates would have a significant negative impact on the value of ourinvestment portfolio except for reduced income in a low interest rate environment.

At December 31, 2015, we had cash and cash equivalents and marketable securities of $193.6 million. The weighted average interestrate related to our cash and cash equivalents for the years ended December 31, 2015 was 0%. As of December 31, 2015, the principaloutstanding balance under our Credit Agreement with JPMorgan Chase Bank, N.A. and our Chilean and Spanish credit lines was $82.7million in the aggregate at a weighted average interest rate of approximately 4.3%.

Our $32.2 million aggregate principal amount of our 2033 Senior Notes has a fixed interest rate, and therefore is not subject tofluctuations in market interest rates.

The primary objective of our investment activities is to preserve principal while at the same time maximizing yields withoutsignificantly increasing risk. To achieve this objective, we invest our excess cash in debt instruments of the U.S. Government and itsagencies, bank obligations, repurchase agreements and high-quality corporate issuers, and money market funds that invest in such debtinstruments, and, by policy, restrict our exposure to any single corporate issuer by imposing concentration limits. To minimize the exposuredue to adverse shifts in interest rates, we maintain investments at an average maturity of generally less than three months.

Equity Price Risk – We are subject to equity price risk related to the (i) rights to convert into shares of our Common Stock, includingupon a fundamental change; and (ii) a coupon make-whole payment in the event of a conversion by the holders of the 2033 Senior Notes onor after February 1, 2017 but prior to February 1, 2019. These terms are considered to be embedded derivatives. On a quarterly basis, weare required to record these embedded derivatives at fair value with the changes being recorded in our Consolidated Statement ofOperations. Accordingly, our results of operations are subject to exposure associated with increases or decreases in the estimated fair valueof our embedded derivatives.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

PageReports of Independent Registered Certified Public Accounting Firm 72Consolidated Balance Sheets 74Consolidated Statements of Operations 75Consolidated Statements of Comprehensive Loss 76Consolidated Statements of Equity 77Consolidated Statements of Cash Flows 80Notes to Consolidated Financial Statements 81

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Report of Independent Registered Certified Public Accounting Firm

The Board of Directors and Shareholders of OPKO Health, Inc. and subsidiaries

We have audited the accompanying consolidated balance sheets of OPKO Health, Inc. and subsidiaries as of December 31, 2015 and 2014,and the related consolidated statements of operations, comprehensive loss, equity and cash flows for each of the three years in the periodended December 31, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to expressan opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position ofOPKO Health, Inc. and subsidiaries at December 31, 2015 and 2014, and the consolidated results of their operations and their cash flowsfor each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), OPKOHealth, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2015, based on criteria established in InternalControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) andour report dated February 29, 2016 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Miami, FloridaFebruary 29, 2016

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Report of Independent Registered Certified Public Accounting Firm

The Board of Directors and Shareholders of OPKO Health, Inc. and subsidiaries

We have audited OPKO Health, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2015, based on criteriaestablished in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission(2013 framework) (the “COSO criteria”). OPKO Health, Inc. and subsidiaries’ management is responsible for maintaining effectiveinternal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included inthe accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinionon the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financialreporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based onthe assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our auditprovides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenanceof records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted 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 (3) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, 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 ofany evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, management’s assessmentof and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Bio-ReferenceLaboratories, Inc. and EirGen Pharma Limited, which are included in the December 31, 2015 consolidated financial statements of OPKOHealth, Inc. and subsidiaries and constituted 15% of consolidated total assets, as of December 31, 2015 and 68% of consolidated revenues,for the year then ended. Our audit of internal control over financial reporting of OPKO Health, Inc. and subsidiaries also did not include anevaluation of the internal control over financial reporting of Bio-Reference Laboratories, Inc. or EirGen Pharma Limited.

In our opinion, OPKO Health, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting asof December 31, 2015, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), theconsolidated balance sheets of OPKO Health, Inc. and subsidiaries as of December 31, 2015 and 2014, and the related consolidatedstatements of operations, comprehensive loss, equity and cash flows for each of the three years in the period ended December 31, 2015 ofOPKO Health, Inc. and subsidiaries and our report dated February 29, 2016 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Miami, FloridaFebruary 29, 2016

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OPKO Health, Inc. and SubsidiariesCONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

December 31,

2015 2014(1)

ASSETS Current assets:

Cash and cash equivalents $ 193,598 $ 96,907Accounts receivable, net 193,875 19,969Inventory, net 39,681 16,604Prepaid expenses and other current assets 26,904 9,389

Total current assets 454,058 142,869Property, plant and equipment, net 131,798 16,411Intangible assets, net 638,152 62,649In-process research and development 792,275 793,152Goodwill 743,348 224,292Investments, net 34,716 22,453Other assets 5,267 5,838

Total assets $ 2,799,614 $ 1,267,664

LIABILITIES AND EQUITY Current liabilities:

Accounts payable $ 72,535 $ 8,744Accrued expenses 167,899 60,912Current portion of lines of credit and notes payable 11,468 13,455

Total current liabilities 251,902 83,1112033 Senior Notes, net of discount and estimated fair value of embedded derivatives 49,412 131,454Deferred tax liabilities, net 226,036 167,153Other long-term liabilities, principally deferred revenue 292,470 50,205

Total long-term liabilities 567,918 348,812Total liabilities 819,820 431,923

Equity: Common Stock - $0.01 par value, 750,000,000 shares authorized; 546,188,516 and 433,421,677shares issued at December 31, 2015 and 2014, respectively 5,462 4,334Treasury Stock, at cost - 1,120,367 and 1,245,367 shares at December 31, 2015 and 2014, respectively (3,645 ) (4,051 )

Additional paid-in capital 2,705,385 1,529,096Accumulated other comprehensive loss (22,537) (12,392)Accumulated deficit (704,871) (674,843)

Total shareholders’ equity attributable to OPKO 1,979,794 842,144Noncontrolling interests — (6,403 )

Total shareholders’ equity 1,979,794 835,741Total liabilities and equity $ 2,799,614 $ 1,267,664

(1) As of December 31, 2014, total assets include $7.6 million and total liabilities include $12.1 million related to SciVac Ltd (“SciVac”). SciVac was a consolidatedvariable interest entity which we deconsolidated in July 2015. Refer to Note 4. SciVac’s consolidated assets were owned by SciVac and SciVac’s consolidatedliabilities had no recourse against us.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.74

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OPKO Health, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

For the years ended December 31,

2015 2014 2013

Revenues: Revenue from services $ 329,739 $ 8,666 $ 11,658Revenue from products 80,146 76,983 68,161Revenue from transfer of intellectual property and other 81,853 5,476 16,711

Total revenues 491,738 91,125 96,530Costs and expenses:

Costs of service revenue 193,305 9,372 10,419Cost of product revenue 41,934 38,637 38,441Selling, general and administrative 196,576 57,940 55,320Research and development 99,488 83,571 53,902In-process research and development — 12,055 —Contingent consideration 5,050 24,446 6,947Amortization of intangible assets 27,977 10,919 11,133Grant repayment 25,889 — —

Total costs and expenses 590,219 236,940 176,162Operating loss (98,481) (145,815) (79,632)Other income and (expense), net:

Interest income 255 771 376Interest expense (8,419) (12,263) (13,802)Fair value changes of derivative instruments, net (39,083) (10,632) (45,942)Other income (expense), net 7,730 (3,088) 34,782

Other income and (expense), net (39,517) (25,212) (24,586)Loss before income taxes and investment losses (137,998) (171,027) (104,218)Income tax benefit (provision) 113,675 (24) (1,672)Loss before investment losses (24,323) (171,051) (105,890)Loss from investments in investees (7,105) (3,587) (11,456)Net loss (31,428) (174,638) (117,346)Less: Net loss attributable to noncontrolling interests (1,400) (2,972) (2,939)Net loss attributable to common shareholders before preferred stock dividend (30,028) (171,666) (114,407)Preferred stock dividend — — (420)Net loss attributable to common shareholders $ (30,028) $ (171,666) $ (114,827)Loss per share, basic and diluted:

Net loss per share $ (0.06) $ (0.41) $ (0.32)Weighted average number of common shares outstanding, basic and diluted 488,065,908 422,014,039 355,095,701

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.75

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OPKO Health, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

For the years ended December 31,

2015 2014 2013Net loss $ (31,428) $ (174,638) $ (117,346)Other comprehensive income (loss), net of tax:

Change in foreign currency translation and other comprehensive income (loss)from equity investments (15,074) (8,088) (1,825)

Available for sale investments: Change in unrealized gain (loss), net of tax (2,378) (8,044) 2,467Less: reclassification adjustments for (gains) losses included in net loss, netof tax 7,307 322 (4,580)

Comprehensive loss (41,573) (190,448) (121,284)Less: Comprehensive loss attributable to noncontrolling interest (1,400) (2,972) (2,939)

Comprehensive loss attributable to common shareholders before preferred stockdividend (40,173) (187,476) (118,345)Preferred stock dividend — — (420)Comprehensive loss attributable to common shareholders $ (40,173) $ (187,476) $ (118,765)

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.76

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OPKO Health, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share and per share data)For the years ended December 31, 2015, 2014, 2013 (continued)

Common Stock Treasury Additional

Paid-InCapital

AccumulatedOther

ComprehensiveIncome

AccumulatedDeficit

NoncontrollingInterests

Total Shares Dollars Shares Dollars Balance at December 31, 2012 305,560,763 $ 3,056 (2,293,056) $(7,457) $ 565,201 $ 7,356 $ (388,770) $ (492) $178,894Equity-based compensationexpense — — — — 10,983 — — — 10,983Exercise of Common Stockoptions and warrants 10,732,745 107 — — 23,317 — — — 23,424Series D Preferred Stock dividend — — — — (3,015 ) — — — (3,015 )Conversion of Series D Preferred Stock 11,290,320 113 — — 24,273 — — — 24,386Conversion of 2033 Senior Notes 2,396,145 24 — — 20,815 — — — 20,839Issuance of Common Stock in connection with OPKO Brazil acquisition at $6.73 per share 64,684 1 — — 434 — — — 435Issuance of Common Stock in connection with OPKO Renal acquisition at $7.16 per share 20,517,030 205 — — 146,697 — — — 146,902Issuance of Common Stock in connection with OPKOBiologics acquisition at $8.49 per share and fair value of stock options and warrants exchanged 63,670,805 637 — — 586,006 — — — 586,643Issuance of Common Stock in connection with OPKO Health Europe’s first Deferred Payment at $7.52 per share 585,703 5 — — 4,430 — — — 4,435Issuance of Treasury Stock in connection with OPKO Health Europe’s Contingent Consideration at $11.60 pershare

28,993 95 242 337

Net loss attributable to common shareholders before preferred stock dividend — — — — — — (114,407) — (114,407)Net loss attributable to noncontrolling interests — — — — — — — (2,939 ) (2,939 )Other comprehensive loss — — — — (3,938 ) — — (3,938 )Balance at December 31, 2013 414,818,195 $ 4,148 (2,264,063) $(7,362) $1,379,383 $ 3,418 $ (503,177) $ (3,431) $872,979

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.77

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OPKO Health, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share and per share data)For the years ended December 31, 2015, 2014, 2013 (continued)

Common Stock Treasury Additional

Paid-InCapital

AccumulatedOther

ComprehensiveIncome (Loss)

AccumulatedDeficit

NoncontrollingInterests

Total Shares Dollars Shares Dollars Balance at December 31, 2013 414,818,195 $ 4,148 (2,264,063) $(7,362) $1,379,383 $ 3,418 $ (503,177) $ (3,431) $872,979Equity-based compensationexpense — — — — 14,737 — — — 14,737Exercise of Common Stockoptions and warrants 5,392,841 54 — — 12,874 — — — 12,928Issuance of Common Stock forOPKO Uruguay — — 19,140 61 98 — — — 159Issuance of Common Stock uponexchange of 2033 Senior Notes 10,974,431 110 — — 95,555 — — — 95,665Issuance of Common Stock forInspiro at $8.57 — — 999,556 3,250 5,316 — — — 8,566Issuance of Common Stock forOPKO Renal earnout 2,236,210 22 — — 21,133 — — — 21,155Net loss attributable to commonshareholders — — — — — — (171,666) — (171,666)Net loss attributable tononcontrollinginterests — — — — — — — (2,972 ) (2,972 )Other comprehensive loss — — — — — (15,810 ) — — (15,810)Balance at December 31, 2014 433,421,677 $ 4,334 (1,245,367) $(4,051) $1,529,096 $ (12,392) $ (674,843) $ (6,403) $835,741

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.78

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OPKO Health, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share and per share data)For the years ended December 31, 2015, 2014, 2013 (continued)

Common Stock Treasury Additional

Paid-InCapital

AccumulatedOther

ComprehensiveLoss

AccumulatedDeficit

NoncontrollingInterests

Total Shares Dollars Shares Dollars Balance at December 31, 2014 433,421,677 $ 4,334 (1,245,367) $(4,051) $1,529,096 $ (12,392) $ (674,843) $ (6,403) $ 835,741Equity-based compensationexpense — — — — 26,074 — — — 26,074Exercise of Common Stockoptions and warrants 24,467,806 245 — — 25,675 — — — 25,920Issuance of Common Stock forEirGen purchase 2,420,487 24 — — 33,572 — — — 33,596Issuance of Common Stock forBRL purchase 76,566,147 766 — — 949,244 — — — 950,010Issuance of Common Stock uponexchange of 2033 Senior Notes 8,118,062 81 — — 120,218 — — — 120,299Issuance of Treasury Stock inconnection with OPKO HealthEurope’s ContingentConsideration — — 125,000 406 1,406 — — — 1,812Issuance of Common Stock forOPKO Renal earnout 1,194,337 12 — — 20,100 — — — 20,112Net loss attributable to commonshareholders — — — — — — (30,028) — (30,028)Deconsolidation of SciVac — — — — — — — 6,403 6,403Other comprehensive loss — — — — — (10,145 ) — — (10,145)Balance at December 31, 2015 546,188,516 $ 5,462 (1,120,367) $(3,645) $2,705,385 $ (22,537) $ (704,871) $ — $1,979,794

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.79

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OPKO Health, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For the years ended December 31,

2015 2014 2013

Cash flows from operating activities: Net loss $ (31,428) $ (174,638) $ (117,346)Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 42,248 14,927 15,216Non-cash interest on 2033 Senior Notes 2,612 5,662 5,980Amortization of deferred financing costs 1,212 2,007 1,170Losses from investments in investees 7,105 3,587 11,456Equity-based compensation – employees and non-employees 26,074 14,779 10,983Provision for bad debts 24,548 646 979Provision for inventory obsolescence 926 1,082 2,015Revenue from receipt of equity (140) (240) (12,740)Realized gain (loss) on equity securities 7,091 167 (29,881)Gain on conversion of 3.00% convertible senior notes (943) (2,668) (972)Loss on sale of property, plant and equipment — — 60Change in fair value of derivative instruments 39,083 10,632 45,942In-process research and development — 12,055 —Change in fair value of contingent consideration 5,050 24,446 6,947Gain on deconsolidation of SciVac (15,940) — —Deferred income tax (benefit) provision (123,536) 1,017 599

Changes in assets and liabilities, net of the effects of acquisitions: Accounts receivable (29,393) (3,919) 754Inventory (5,879) (1,752) 1,892Prepaid expenses and other current assets (4,391) 3,182 (1,131)Other assets (305) (3,378) (544)Accounts payable (18,122) (3,852) 1,829Foreign currency measurement 979 945 (2,386)Deferred revenue 227,671 — —Accrued expenses and other liabilities 9,502 4,934 3,525

Net cash provided by (used in) operating activities 164,024 (90,379) (55,653)Cash flows from investing activities:

Investments in investees (4,375) (589) (17,441)Proceeds from sale of equity securities — 1,331 30,556Acquisition of businesses, net of cash acquired

(79,000) (1,683) 20,528Acquisition of intangible assets (5,000) — —Purchase of marketable securities — — (50,027)Maturities of short-term marketable securities — — 50,027Proceeds from the sale of property, plant and equipment — — 636Capital expenditures (10,846) (4,734) (3,962)

Net cash provided by (used in) investing activities (99,221) (5,675) 30,317Cash flows from financing activities:

Issuance of 2033 Senior Notes, net, including related parties — — 170,184Payment of Series D dividends, including related parties — — (3,015)Proceeds from the exercise of Common Stock options and warrants 25,921 12,928 23,425Cash from non-controlling interest 100 2,696 —Contingent consideration payments — (6,435) (2,539)Borrowings on lines of credit 261,339 26,443 34,577Repayments of lines of credit (254,355) (28,369) (38,997)

Net cash provided by financing activities 33,005 7,263 183,635Effect of exchange rate on cash and cash equivalents (1,117) (100) 138Net increase (decrease) in cash and cash equivalents 96,691 (88,891) 158,437Cash and cash equivalents at beginning of period 96,907 185,798 27,361Cash and cash equivalents at end of period $ 193,598 $ 96,907 $ 185,798SUPPLEMENTAL INFORMATION:

Interest paid $ 4,572 $ 6,276 $ 3,407Income taxes paid, net $ 4,879 $ 954 $ 1,321

RXi common stock received $ — $ — $ 12,500Pharmsynthez common stock received $ — $ 6,264 $ —Non-cash financing:

Assets acquired under capital leases Shares issued upon the conversion of:

Series D Preferred Stock $ — $ — $ 24,386

2033 Senior Notes $ 120,299 $ 95,665 $ 20,839Common Stock options and warrants, surrendered in netexercise $ 14,369 $ 3,494 $ 815

Issuance of capital stock to acquire or contingent considerationsettlement:

Bio-Reference Laboratories, Inc. $ 950,148 $ — $ —EirGen Pharma Limited $ 33,569 $ — $ —OPKO Biologics $ — $ — $ 586,643OPKO Renal $ 20,113 $ 21,155 $ 146,902OPKO Brazil $ — $ — $ 436OPKO Health Europe $ 1,813 $ — $ 4,404OPKO Uruguay Ltda. $ — $ 159 $ —Inspiro $ — $ 8,566 $ —

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.80

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OPKO Health, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Business and Organization

We are a diversified healthcare company that seeks to establish industry-leading positions in large and rapidly growing medicalmarkets. Our diagnostics business includes Bio-Reference Laboratories, the nation’s third-largest clinical laboratory with a core genetictesting business and a 420-person sales force to drive growth and leverage new products, including the 4Kscore prostate cancer test and theClaros 1 in-office immunoassay platform. Our pharmaceutical business features Rayaldee, a treatment for secondary hyperparathyroidism(“SHPT”) in patients with stage 3 or 4 chronic kidney disease (“CKD”) and vitamin D insufficiency (March 29, 2016 PDUFA date) andVARUBI™ for chemotherapy-induced nausea and vomiting (launched by partner TESARO in November 2015). Our pharmaceuticalbusiness includes OPKO Biologics, which features hGH-CTP, a once-weekly human growth hormone injection (in Phase 3 and partneredwith Pfizer), and a once-daily Factor VIIa drug for hemophilia (Phase 2a). We are incorporated in Delaware and our principal executiveoffices are located in leased offices in Miami, Florida.

In August 2015, we completed the acquisition of Bio-Reference, the third largest full service clinical laboratory in the United States,known for its innovative technological solutions and pioneering leadership in the areas of genomics and genetic sequencing. Holders ofBio-Reference common stock received 76,566,147 shares of OPKO Common Stock for the outstanding shares of Bio-Reference commonstock. The transaction was valued at approximately $950.1 million, based on a closing price per share of our Common Stock of $12.38 asreported by the New York Stock Exchange on the closing date, or $34.05 per share of Bio-Reference common stock. Included in thetransaction value is $2.3 million related to the value of replacement stock option awards attributable to pre-merger service.

Through our acquisition of Bio-Reference, we provide laboratory testing services, primarily to customers in the larger metropolitanareas across New York, New Jersey, Maryland, Pennsylvania, Delaware, Washington DC, Florida, California, Texas, Illinois andMassachusetts as well as to customers in a number of other states. We offer a comprehensive list of clinical diagnostic tests including bloodand urine analysis, blood chemistry, hematology services, serology, radio-immuno analysis, toxicology (including drug screening), papsmears, tissue pathology (biopsies) and other tissue analysis. We perform cancer cytogenetic testing at our leased facilities in ElmwoodPark, NJ, Smithtown, NY, Clarksburg, MD, Milford, MA, Miami, FL, and Campbell, CA and genetic testing at our leased facility inGaithersburg, MD, as well as at our Elmwood Park facility. We perform cytology testing at our leased facilities Frederick, MD, Milford,MA, Columbus, OH, Houston, TX and at our Elmwood Park facility. We market our laboratory testing services directly to physicians,geneticists, hospitals, clinics, correctional and other health facilities.

In May 2015, we acquired all of the issued and outstanding shares of EirGen Pharma Limited (“EirGen”), a specialty pharmaceuticalcompany incorporated in Ireland focused on the development and commercial supply of high potency, high barrier to entry pharmaceuticalproducts, for $133.8 million in the aggregate. We acquired the outstanding shares of EirGen for approximately $100.2 million in cash anddelivered 2,420,487 shares of our Common Stock valued at approximately $33.6 million based on the closing price per share of ourCommon Stock as reported by the New York Stock Exchange on the closing date of the acquisition, $13.88 per share.

We operate established pharmaceutical platforms in Ireland, Chile, Spain, and Mexico, which are generating revenue and which weexpect to facilitate future market entry for our products currently in development. In addition, we have a development and commercialsupply pharmaceutical company and a global supply chain operation and holding company in Ireland. We own a specialty activepharmaceutical ingredients (“APIs”) manufacturer in Israel, which we expect will facilitate the development of our pipeline of moleculesand compounds for our molecular diagnostic and therapeutic products.

Our research and development activities are primarily performed at leased facilities in Jupiter and Miramar, Florida, Woburn,Massachusetts, Waterford, Ireland, Nes Ziona, Israel, and Barcelona, Spain.

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Note 2 Summary of Significant Accounting Policies

Basis of presentation. The accompanying Consolidated Financial Statements have been prepared in accordance with accountingprinciples generally accepted in the U.S. and with the instructions to Form 10-K and of Regulation S-X.

Principles of consolidation. The accompanying Consolidated Financial Statements include the accounts of OPKO Health, Inc. and ofour wholly-owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

Use of estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the UnitedStates requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ significantly from these estimates.

Cash and cash equivalents. Cash and cash equivalents include short-term, interest-bearing instruments with original maturities of 90days or less at the date of purchase. We also consider all highly liquid investments with original maturities at the date of purchase of 90days or less as cash equivalents. These investments include money markets, bank deposits, certificates of deposit and U.S. treasurysecurities.

Inventories. Inventories are valued at the lower of cost or market (net realizable value). Cost is determined by the first-in, first-outmethod. We consider such factors as the amount of inventory on hand, estimated time required to sell such inventories, remaining shelf-life, and current market conditions to determine whether inventories are stated at the lower of cost or market. Inventories at our diagnosticssegment consist primarily of purchased laboratory supplies, which is used in our testing laboratories.

Pre-launch inventories. We may accumulate commercial quantities of certain product candidates prior to the date we anticipate thatsuch products will receive final U.S. FDA approval. The accumulation of such pre-launch inventories involves the risk that such productsmay not be approved for marketing by the FDA on a timely basis, or ever. This risk notwithstanding, we may accumulate pre-launchinventories of certain products when such action is appropriate in relation to the commercial value of the product launch opportunity. Inaccordance with our policy, this pre-launch inventory is expensed. At December 31, 2015 and 2014, there were no pre-launch inventories.

Goodwill and intangible assets. Goodwill represents the difference between the purchase price and the estimated fair value of the netassets acquired when accounted for by the acquisition method of accounting and arose from our acquisitions. Refer to Note 5. Goodwill, in-process research and development (“IPR&D”) and other intangible assets acquired in business combinations, licensing and othertransactions at December 31, 2015 and 2014, were $2.2 billion and $1.1 billion, respectively.

Assets acquired and liabilities assumed in business combinations, licensing and other transactions are generally recognized at the dateof acquisition at their respective fair values. We determined the fair value of intangible assets, including IPR&D, using the “incomemethod.”

Goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount ofsuch assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is morelikely than not that its fair value exceeds the carrying value.

Intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of suchassets may not be recoverable, although IPR&D is required to be tested at least annually until the project is completed or abandoned. Uponobtaining regulatory approval, the IPR&D asset is then accounted for as a finite-lived intangible asset and amortized on a straight-line basisover its estimated useful life. If the project is abandoned, the IPR&D asset is charged to expense.

We amortize intangible assets with definite lives on a straight-line basis over their estimated useful lives, currently ranging from 3 to20 years. We use the straight-line method of amortization as there is no reliably determinable pattern in which the economic benefits of ourintangible assets are consumed or otherwise used up. Amortization expense was $28.0 million, $10.9 million and $11.1 million for theyears ended December 31, 2015, 2014 and 2013, respectively. Amortization expense from operations for our intangible assets is expectedto be $51.3 million, $50.8 million, $47.7 million, $44.2 million and $42.9 million for the years ended December 2016, 2017, 2018, 2019and 2020, respectively.

Fair value measurements. The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximate their fair value due to the short-term maturities of these instruments. Investments that are considered available forsale as of December 31, 2015 and 2014 are carried at fair value.

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In evaluating the fair value information, considerable judgment is required to interpret the market data used to develop the estimates.The use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair valueamounts. Accordingly, the estimates of fair value presented herein may not be indicative of the amounts that could be realized in a currentmarket exchange. Refer to Note 17.

Contingent consideration. Each period we revalue the contingent consideration obligations associated with certain prior acquisitionsto their fair value and record increases in the fair value as contingent consideration expense and decreases in the fair value as a reduction incontingent consideration expense. Changes in contingent consideration result from changes in the assumptions regarding probabilities ofsuccessful achievement of related milestones, the estimated timing in which the milestones are achieved and the discount rate used toestimate the fair value of the liability. Contingent consideration may change significantly as our development programs progress, revenueestimates evolve and additional data is obtained, impacting our assumptions. The assumptions used in estimating fair value requiresignificant judgment. The use of different assumptions and judgments could result in a materially different estimate of fair value which mayhave a material impact on our results from operations and financial position.

Derivative financial instruments. We record derivative financial instruments on our Consolidated Balance Sheet at their fair valueand recognize the changes in the fair value in our Consolidated Statement of Operations when they occur, the only exception beingderivatives that qualify as hedges. For the derivative instrument to qualify as a hedge, we are required to meet strict hedge effectiveness andcontemporaneous documentation requirements at the initiation of the hedge and assess the hedge effectiveness on an ongoing basis over thelife of the hedge. At December 31, 2015 and 2014, our forward contracts for inventory purchases did not meet the documentationrequirements to be designated as hedges. Accordingly, we recognize all changes in the fair values of our derivatives instruments, net, in ourConsolidated Statement of Operations. Refer to Note 18.

Property, Plant and Equipment. Property, plant and equipment are recorded at cost. Depreciation is provided using the straight-linemethod over the estimated useful lives of the assets, generally five to ten years and includes amortization expense for assets capitalizedunder capital leases. The estimated useful lives by asset class are as follows: software - 3 years, machinery, medical and other equipment -5-8 years, furniture and fixtures - 5-10 years, leasehold improvements - the lesser of their useful life or the lease term, buildings andimprovements - 10-40 years, automobiles and aircraft - 5-7 years. Expenditures for repairs and maintenance are charged to expense asincurred. Depreciation expense was $14.2 million, $4.0 million and $4.1 million for the years ended December 31, 2015, 2014 and 2013,respectively. Assets held under capital leases are included within Property, plant and equipment, net in our Consolidated Balance Sheet andare amortized over the shorter of their useful lives or the term of their related leases.

Impairment of Long-Lived Assets. Long-lived assets, such as property and equipment, are reviewed for impairment whenever eventsor changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held andused is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generatedby the asset. If the carrying amount of an asset exceeds its estimated future cash flows, then an impairment charge is recognized for theamount by which the carrying amount of the asset exceeds the fair value, or carrying amount for cost basis assets, of the asset.

Income Taxes. Income taxes are accounted for under the asset-and-liability method. Deferred tax assets and liabilities are recognizedfor the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilitiesand the respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enactedtax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Theeffect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.We periodically evaluate the realizability of our net deferred tax assets. Our tax accruals are analyzed periodically and adjustments aremade as events occur to warrant such adjustment.

Income tax benefit for the year ended December 31, 2015 was primarily due to a $93.4 million release of a valuation allowance onour U.S. deferred tax assets due to a change in the assessment of recoverability following the merger with Bio-Reference in August 2015.This was partially offset by expense recognized on taxable income from the Pfizer Transaction during the year ended December 31, 2015.Refer to Note 14 for a discussion of the Pfizer Transaction.

Included in income tax benefit is an accrual of $2.3 million related to uncertain tax positions involving income recognition. Werecognize that local tax law is inherently complex and the local taxing authorities may not agree with certain tax positions taken.Consequently, it is reasonably possible that the ultimate resolution of tax matters in any jurisdiction may be significantly more or less thanestimated. We evaluated the estimated tax exposure for a range of current likely outcomes to be from $0 to approximately $50.0 million andrecorded our accrual to reflect our best expectation of ultimate resolution.

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Revenue recognition. Revenue for laboratory services is recognized at the time test results are reported, which approximates whenservices are provided. Services are provided to patients covered by various third-party payer programs including various managed careorganizations, as well as the Medicare and Medicaid programs. Billings for services under third-party payer programs are included inrevenue net of allowances for contractual discounts and allowances for differences between the amounts billed and estimated programpayment amounts. Adjustments to the estimated payment amounts based on final settlement with the programs are recorded uponsettlement as an adjustment to revenue. For the years ended December 31, 2015 and 2014, approximately 9% and 5%, respectively, of ourrevenues were derived directly from the Medicare and Medicaid programs. The increase in revenues from laboratory services, includingrevenue from Medicare and Medicaid programs, is due to the acquisition of Bio-Reference in August 2015.

Generally, we recognize revenue from product sales when goods are shipped and title and risk of loss transfer to our customers. Ourestimates for sales returns and allowances are based upon the historical patterns of product returns and allowances taken, matched againstthe sales from which they originated, and management’s evaluation of specific factors that may increase or decrease the risk of productreturns.

Revenue from transfer of intellectual property includes revenue related to the sale, license or transfer of intellectual property such asupfront license payments, license fees and milestone payments received through our license, collaboration and commercializationagreements. We analyze our multiple-element arrangements to determine whether the elements can be separated and accounted forindividually as separate units of accounting.

Non-refundable license fees for the out-license of our technology are recognized depending on the provisions of each agreement. Werecognize non-refundable upfront license payments as revenue upon receipt if the license has standalone value and qualifies for treatment asa separate unit of accounting under multiple-element arrangement guidance. License fees with ongoing involvement or performanceobligations that do not have standalone value are recorded as deferred revenue, included in Accrued expenses or Other long-term liabilities,when received and generally are recognized ratably over the period of such performance obligations only after both the license period hascommenced and we have delivered the technology.

The assessment of our obligations and related performance periods requires significant management judgment. If an agreementcontains research and development obligations, the relevant time period for the research and development phase is based on managementestimates and could vary depending on the outcome of clinical trials and the regulatory approval process. Such changes could materiallyimpact the revenue recognized, and as a result, management reviews the estimates related to the relevant time period of research anddevelopment on a quarterly basis. For the years ended December 31, 2015, 2014 and 2013 we recorded $81.9 million, $5.5 million and$16.7 million of revenue from the transfer of intellectual property, respectively. For the year ended December 31, 2015, revenue from thetransfer of intellectual property included $15.0 million related to a milestone payment that TESARO, Inc. (“TESARO”) paid us under ourlicense agreement with them and $65.5 million related to the Pfizer Transaction. Refer to Note 14. For the year ended December 31, 2014,$5.0 million related to a milestone payment that TESARO paid us under our license agreement with them. For the year ended December31, 2013, $12.5 million related to the sale of substantially all of our assets in the field of RNA interference to RXi PharmaceuticalsCorporation (“RXi”) and $3.8 million related to the rights granted to OAO Pharmsynthez (“Pharmsynthez”) for certain technologies.

Revenue from milestone payments related to arrangements under which we have continuing performance obligations are recognizedas Revenue from transfer of intellectual property upon achievement of the milestone only if all of the following conditions are met: themilestone payments are non-refundable; there was substantive uncertainty at the date of entering into the arrangement that the milestonewould be achieved; the milestone is commensurate with either our performance to achieve the milestone or the enhancement of the value ofthe delivered item by us; the milestone relates solely to past performance; and the amount of the milestone is reasonable in relation to theeffort expended or the risk associated with the achievement of the milestone. If any of these conditions are not met, the milestone paymentsare not considered to be substantive and are, therefore, deferred and recognized as Revenue from transfer of intellectual property over theterm of the arrangement as we complete our performance obligations.

Total deferred revenue included in Accrued expenses and Other long-term liabilities was $232.9 million and $6.7 million atDecember 31, 2015 and 2014, respectively. The deferred revenue balance at December 31, 2015 relates primarily to the Pfizer Transaction.Refer to Note 14.

Concentration of Credit Risk and Allowance for doubtful accounts . Financial instruments that potentially subject us to concentrationsof credit risk consist primarily of accounts receivable. Substantially all of our accounts receivable are with companies in the health careindustry and individuals. However, credit risk is limited due to the number of our clients as well as their dispersion across many differentgeographic regions.

While we have receivables due from federal and state governmental agencies, we do not believe that such receivables represent acredit risk since the related health care programs are funded by federal and state governments, and payment is

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primarily dependent upon submitting appropriate documentation. Accounts receivable balances (prior to allowance for doubtful accountsand net of contractual adjustments) from Medicare and Medicaid were $26.1 million and $0.6 million at December 31, 2015 and 2014,respectively.

The portion of our accounts receivable due from patients comprises the largest portion of credit risk. At December 31, 2015 and 2014,receivables due from patients represent approximately 7.5% and 0.5% of our consolidated accounts receivable (prior to allowance fordoubtful accounts and net of contractual adjustments).

We assess the collectability of accounts receivable balances by considering factors such as historical collection experience, customercredit worthiness, the age of accounts receivable balances, regulatory changes and current economic conditions and trends that may affect acustomer’s ability to pay. Actual results could differ from those estimates. Our reported net income (loss) is directly affected by ourestimate of the collectability of accounts receivable. The allowance for doubtful accounts recognized in our Consolidated Balance Sheetswas $25.2 million and $1.9 million at December 31, 2015 and 2014, respectively.

Equity-based compensation. We measure the cost of employee services received in exchange for an award of equity instrumentsbased on the grant-date fair value of the award. That cost is recognized in the Consolidated Statement of Operations over the period duringwhich an employee is required to provide service in exchange for the award. We record excess tax benefits, realized from the exercise ofstock options as a financing cash inflow and as a reduction of taxes paid in cash flow from operations. Equity-based compensationarrangements to non-employees are recorded at their fair value on the measurement date. The measurement of equity-based compensationto non-employees is subject to periodic adjustment as the underlying equity instruments vest. During the years ended December 31, 2015,2014 and 2013, we recorded $26.1 million, $14.8 million and $11.0 million, respectively, of equity-based compensation expense.

Research and development expenses . Research and development expenses include external and internal expenses, partially offset bythird-party grants and fundings arising from collaboration agreements. External expenses include clinical and non-clinical activitiesperformed by contract research organizations, lab services, purchases of drug and diagnostic product materials and manufacturingdevelopment costs. Research and development employee-related expenses include salaries, benefits and stock-based compensation expense.Other internal research and development expenses are incurred to support overall research and development activities and include expensesrelated to general overhead and facilities. We expense these costs in the period in which they are incurred. We estimate our liabilities forresearch and development expenses in order to match the recognition of expenses to the period in which the actual services are received. Assuch, accrued liabilities related to third party research and development activities are recognized based upon our estimate of servicesreceived and degree of completion of the services in accordance with the specific third party contract.

We record expense for in-process research and development projects acquired as asset acquisitions which have not reachedtechnological feasibility and which have no alternative future use. For in-process research and development projects acquired in businesscombinations, the in-process research and development project is capitalized and evaluated for impairment until the development processhas been completed. Once the development process has been completed the asset will be amortized over its remaining useful life.

Segment reporting. Our chief operating decision-maker (“CODM”) is Phillip Frost, M.D., our Chairman and Chief Executive Officer.Our CODM reviews our operating results and operating plans and makes resource allocation decisions on a Company-wide or aggregatebasis. We currently manage our operations in two reportable segments, pharmaceutical and diagnostics. The pharmaceutical segmentconsists of our pharmaceutical operations we acquired in Chile, Mexico, Ireland, Israel and Spain and our pharmaceutical research anddevelopment. The diagnostics segment primarily consists of our clinical laboratory operations we acquired through the acquisitions of Bio-Reference and OPKO Lab and our point-of-care operations. There are no significant inter-segment sales. We evaluate the performance ofeach segment based on operating profit or loss. There is no inter-segment allocation of interest expense and income taxes.

Shipping and Handling Costs. We do not charge customers for shipping and handling costs. Shipping and handling costs are classifiedas Cost of revenues in the Consolidated Statements of Operations.

Foreign Currency Translation. The financial statements of certain of our foreign operations are measured using the local currency asthe functional currency. The local currency assets and liabilities are generally translated at the rate of exchange to the United States(“U.S.”) dollar on the balance sheet date and the local currency revenues and expenses are translated at average rates of exchange to theU.S. dollar during the reporting periods. Foreign currency transaction gains (losses) have been reflected as a component of Other income(expense), net within the Consolidated Statements of Operations and foreign currency translation gains (losses) have been included as acomponent of the Consolidated Statements of Comprehensive Loss. During the years ended December 31, 2015, 2014 and 2013, werecorded $(2.4) million, $(4.8) million and $(0.3) million, respectively of transaction gains (losses).

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Variable interest entities. The consolidation of variable interest entities (“VIE”) is required when an enterprise has a controllingfinancial interest. A controlling financial interest in a VIE will have both of the following characteristics: (a) the power to direct theactivities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE thatcould potentially be significant to the VIE. In July 2015, we deconsolidated SciVac Therapeutics Inc., (“STI”), and account for our retainedinterest in STI as an equity method investment. Refer to Note 4.

Investments. We have made strategic investments in development stage and emerging companies. We record these investments asequity method investments or investments available for sale based on our percentage of ownership and whether we have significantinfluence over the operations of the investees. Investments for which it is not practical to estimate fair value and which we do not havesignificant influence are accounted for as cost method investments. For investments classified under the equity method of accounting, werecord our proportionate share of their losses in Losses from investments in investees in our Consolidated Statement of Operations. Refer toNote 4. For investments classified as available for sale, we record changes in their fair value as unrealized gain or loss in Othercomprehensive income (loss) based on their closing price per share at the end of each reporting period. Refer to Note 4.

Recent accounting pronouncements. In May 2014, the FASB issued Accounting Standards Update (“ASU”), ASU No. 2014-09,“Revenue from Contracts with Customers.” ASU No. 2014-09 clarifies the principles for recognizing revenue and develops a commonrevenue standard for GAAP and International Financial Reporting Standards that removes inconsistencies and weaknesses in revenuerequirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practicesacross entities, industries, jurisdictions, and capital markets, provides more useful information to users of financial statements throughimproved disclosure requirements and simplifies the preparation of financial statements by reducing the number of requirements to whichan entity must refer. ASU No. 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15,2017. Companies can choose to apply the ASU using either the full retrospective approach or a modified retrospective approach. We arecurrently evaluating both methods of adoption and the impact that the adoption of this ASU will have on our Consolidated FinancialStatements.

In June 2014, the FASB issued ASU No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award ProvideThat a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force).”ASU No. 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period betreated as a performance condition. ASU No. 2014-12 is effective for fiscal years, and interim periods within those years, beginning afterDecember 15, 2015. Earlier adoption is permitted. The amendments can be applied either prospectively to all awards granted or modifiedafter the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliestannual period presented in the financial statements and to all new or modified awards. We expect to apply the ASU prospectively and donot expect the adoption to have an impact on our Consolidated Financial Statements.

In August 2014, the FASB issued ASU No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a GoingConcern,” to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability tocontinue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for annual periods ending after December15, 2016 with early adoption permitted. We do not believe the impact of our pending adoption of ASU 2014-15 on our ConsolidatedFinancial Statements will be material.

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,”which amends current consolidation guidance including changes to both the variable and voting interest models used by companies toevaluate whether an entity should be consolidated. The requirements from ASU 2015-02 are effective for interim and annual periodsbeginning after December 15, 2015, with early adoption permitted. We do not believe the impact of our pending adoption of ASU 2015-02on our Consolidated Financial Statements will be material.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” whichchanges the measurement principle for entities that do not measure inventory using the last-in, first-out (“LIFO”) or retail inventory methodfrom the lower of cost or market to lower of cost and net realizable value. ASU 2015-11 is effective for fiscal years beginning afterDecember 15, 2016, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating theimpact of this new guidance on our Consolidated Financial Statements.

In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting forMeasurement-Period Adjustments,” which replaces the requirement that an acquirer in a business combination account for measurementperiod adjustments retrospectively with a requirement that an acquirer recognize adjustments to the provisional amounts that are identifiedduring the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 requires that theacquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other incomeeffects, if any, as a result of the change to the provisional amounts,

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calculated as if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for fiscal years beginning afterDecember 15, 2015, including interim periods within those fiscal years. The guidance is to be applied prospectively to adjustments toprovisional amounts that occur after the effective date of the guidance, with earlier application permitted for financial statements that havenot been issued. Our early adoption of ASU 2015-16 in the third quarter of 2015 did not have a material impact on our ConsolidatedFinancial Statements.

In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of DeferredTaxes,” which requires deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. ASU2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within thoseannual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. We adopted theprovisions of this ASU prospectively in the fourth quarter of 2015, and did not retrospectively adjust the prior periods. The adoption of thisASU will simplify the presentation of deferred income taxes and reduce complexity without decreasing the usefulness of informationprovided to users of financial statements. The adoption of ASU 2015-17 did not have a significant impact on our financial position, resultsof operations and cash flows.

Note 3 Loss Per Share

Basic loss per share is computed by dividing our net loss by the weighted average number of shares outstanding during the period.For diluted earnings per share, the dilutive impact of stock options, warrants and bifurcated conversion option of the 2033 Senior Notes isdetermined by applying the “treasury stock” method. In the periods in which their effect would be antidilutive, no effect has been given tooutstanding options, warrants or the potentially dilutive shares issuable pursuant to the 2033 Senior Notes (defined in Note 6) in the dilutivecomputation.

A total of 14,269,717, 28,456,149 and 32,105,859 potential shares of Common Stock have been excluded from the calculation ofdiluted net loss per share for the years ended December 31, 2015, 2014 and 2013, respectively, because their inclusion would beantidilutive.

During the year ended December 31, 2015, 25,686,153 Common Stock options and Common Stock warrants to purchase shares ofour Common Stock were exercised, resulting in the issuance of 24,466,106 shares of Common Stock. Of the 25,686,153 Common Stockoptions and Common Stock warrants exercised, 1,220,047 shares of Common Stock were surrendered in lieu of a cash payment via the netexercise feature of the agreements.

During the year ended December 31, 2014, 5,787,983 Common Stock options and Common Stock warrants to purchase shares of ourCommon Stock were exercised, resulting in the issuance of 5,392,741 shares of Common Stock. Of the 5,787,983 Common Stock optionsand Common Stock warrants exercised, 426 shares of Common Stock were surrendered in lieu of a cash payment via the net exercisefeature of the agreements.

During the year ended December 31, 2013, 10,881,570 Common Stock options and Common Stock warrants to purchase shares ofour Common Stock were exercised, resulting in the issuance of 10,732,745 shares of Common Stock. Of the 10,881,570 Common Stockoptions and Common Stock warrants exercised, 148,825 shares of Common Stock were surrendered in lieu of a cash payment via the netexercise feature of the agreements.

Note 4 Acquisitions, Investments and Licenses

Bio-Reference acquisition

In August 2015, we completed the acquisition of Bio-Reference, the third largest full service clinical laboratory in the United States,known for its innovative technological solutions and pioneering leadership in the areas of genomics and genetic sequencing. Holders ofBio-Reference common stock received 76,566,147 shares of OPKO Common Stock for the outstanding shares of Bio-Reference commonstock. The transaction was valued at approximately $950.1 million, based on a closing price per share of our Common Stock of $12.38 asreported by the New York Stock Exchange on the closing date, or $34.05 per share of Bio-Reference common stock. Included in thetransaction value is $2.3 million related to the value of replacement stock option awards attributable to pre-merger service.

The following table summarizes the preliminary purchase price allocation and the estimated fair value of the net assets acquired andliabilities assumed in the acquisition of Bio-Reference at the date of acquisition. The purchase price allocation for Bio-Reference ispreliminary pending completion of the fair value analysis of acquired assets and liabilities:

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(In thousands) Bio-ReferencePurchase price:

Value of OPKO Common Stock issued to Bio-Reference shareholders $ 947,889Value of replacement stock options awards to holders of Bio-Reference stock options 2,259

Total purchase price $ 950,148

Preliminary value of assets acquired and liabilities assumed: Current assets

Cash and cash equivalents $ 15,800Accounts receivable 168,164Inventory 19,674Other current assets, principally deferred tax assets 61,135

Total current assets 264,773Property, plant and equipment 112,457

Intangible assets: Trade name 47,100Customer relationships 395,200Technology 100,600

Total intangible assets 542,900Goodwill 441,158Investments 5,326Other assets 13,265

Total assets 1,379,879Accounts payable (77,908 )Accrued expenses (30,848 )Income taxes payable (437 )Lines of credit and notes payable (65,701 )Capital lease obligations (18,293 )Deferred tax liability (non-current) (236,544 )

Total purchase price $ 950,148

During the fourth quarter of 2015, we continued to finalize our purchase price allocation during the measurement period and obtainednew fair value information related to certain assets acquired and liabilities assumed of Bio-Reference. As a result, in the fourth quarter of2015 we adjusted the purchase price allocation initially recorded in the third quarter of 2015 by increasing accounts receivable by $5.2million, decreasing Inventory by $0.2 million, increasing Other current assets by $7.0 million, increasing Property, plant and equipment by$6.2 million, decreasing intangible assets by $6.9 million, decreasing Goodwill by $31.6 million, increasing Other assets (long-term) by$1.1 million, decreasing Accounts payable by $1.5 million, increasing accrued expenses by $1.6 million, decreasing Income taxes payableby $20.0 million and increasing Deferred tax liability by $0.5 million. These adjustments did not have a significant impact on our fourthquarter results of operations or cash flows.

Goodwill from the acquisition of Bio-Reference principally relates to intangible assets that do not qualify for separate recognition (forinstance, Bio-Reference’s assembled workforce), our expectation to develop and market new products, and the deferred tax liabilitygenerated as a result of the transaction. Goodwill is not tax deductible for income tax purposes and was assigned to the diagnosticsreporting segment.

Revenue and Net loss in the Consolidated Statement of Operations for the year ended December 31, 2015 includes revenue and netincome of Bio-Reference from the date of acquisition to December 31, 2015 of $321.9 million and $3.2 million, respectively.

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The preliminary amortization periods for intangible assets acquired are 5 years for trade name, 10-20 years for customer relationships,8-12 years for technology and 3 years for internally developed software.

We recognized $6.2 million of acquisition related costs for the acquisition of Bio-Reference that were expensed in the current periodas a component of Selling, general and administrative expense.

Pro forma disclosure for Bio-Reference acquisition

The pro forma information has been prepared utilizing period ends that differ by less than 93 days, as permitted by Regulation S-X.We are a registrant with a fiscal year that ends on December 31 and Bio-Reference was a registrant with a fiscal year that ended on October31. The pro forma results for the years ended December 31, 2015 and 2014 combines the results of operations of OPKO and Bio-Reference, giving effect to the merger as if it occurred on January 1, 2014, and are based on the individual consolidated statement ofoperations of OPKO as of December 31, 2015 and 2014 and Bio-Reference as of October 31, 2015 and 2014.

For the year ended December 31,(In thousands) 2015 2014

Revenues $1,052,462 $923,407Net loss (19,456) (140,854)Net loss attributable to common shareholders (18,055) (137,881)

The pro forma financial information is presented for information purposes only. The financial information may not necessarily reflectour future results of operations or what the results of operations would have been had we owned and operated Bio-Reference as of thebeginning of the period presented.

EirGen Pharma Limited acquisition

In May 2015, we acquired all of the issued and outstanding shares of EirGen, a specialty pharmaceutical company incorporated inIreland focused on the development and commercial supply of high potency, high barrier to entry pharmaceutical products, for $133.8million in the aggregate. We acquired the outstanding shares of EirGen for approximately $100.2 million in cash and delivered 2,420,487shares of our Common Stock valued at approximately $33.6 million based on the closing price per share of our Common Stock as reportedby the New York Stock Exchange on the closing date of the acquisition, $13.88 per share.

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The following table summarizes the preliminary purchase price allocation and the estimated fair value of the net assets acquired andliabilities assumed in the acquisition of EirGen at the date of acquisition. The purchase price allocation for EirGen is preliminary pendingcompletion of the fair value analysis of acquired assets and liabilities:

(In thousands) EirGenCurrent assets (1) $ 11,795Intangible assets:

IPR&D assets 560Customer relationships 34,155Currently marketed products 3,919

Total intangible assets 38,634Goodwill 83,373Property, plant and equipment 8,117Other assets 1,232Accounts payable and other liabilities (6,254 )Deferred tax liability (3,131 )

Total purchase price $ 133,766

(1) Current assets include cash, accounts receivable, inventory and other assets of $5.5 million, $2.7 million, $2.2 million and $1.4million, respectively, related to the EirGen acquisition. The fair value of the accounts receivable equals the gross contractual amount at thedate of acquisition.

During the fourth quarter of 2015, we continued to finalize our purchase price allocation during the measurement period and obtainednew fair value information related to certain assets acquired of EirGen. As a result, in the fourth quarter of 2015 we adjusted the purchaseprice allocation initially recorded in the third quarter of 2015 by decreasing IPR&D assets by $19.0 million, increasing Goodwill by $16.6million and decreasing Deferred tax liability by $2.5 million.

Goodwill from the acquisition of EirGen principally relates to intangible assets that do not qualify for separate recognition (forinstance, EirGen’s assembled workforce), our expectation to develop and market new products, and the deferred tax liability generated as aresult of this being a partial stock transaction. Goodwill is not tax deductible for income tax purposes and was assigned to thepharmaceutical reporting segment.

Revenue and Net loss in the Consolidated Statement of Operations for the year ended December 31, 2015 includes revenue and netincome of EirGen from the date of acquisition to December 31, 2015 of $13.5 million and $1.4 million, respectively.

Our IPR&D assets will not be amortized until the underlying development programs are completed. Upon obtaining regulatoryapproval, the IPR&D assets are then accounted for as finite-lived intangible assets and amortized on a straight-line basis over its estimateduseful life. We amortize intangible assets with definite lives on a straight-line basis over their estimated useful lives, currently ranging from3 to 20 years.

We recognized $0.5 million of acquisition related costs for the acquisition of EirGen that were expensed in the current period as acomponent of Selling, general and administrative expense.

Pro forma disclosure for EirGen acquisition

The following table includes the pro forma results for the years ended December 31, 2015 and 2014 of the combined companies asthough the acquisition of EirGen had been completed as of the beginning of the period presented.

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For the year ended December 31,(In thousands) 2015 2014

Revenues $495,993 $105,973Net loss (32,481) (176,563)Net loss attributable to common shareholders (31,081) (173,590)

The pro forma financial information is presented for information purposes only. The unaudited pro forma financial information maynot necessarily reflect our future results of operations or what the results of operations would have been had we owned and operated EirGenas of the beginning of the period presented.

Inspiro Medical Ltd. acquisition

In May 2014, we acquired 100% of the issued and outstanding share capital of Inspiro Medical Ltd. (“Inspiro”), an Israeli medicaldevice company developing a new platform to deliver small molecule drugs such as corticosteroids and beta agonists and larger moleculesto treat respiratory diseases.

In connection with the transaction, we paid $1.5 million in cash and delivered 999,556 shares of our Common Stock valued at $8.6million.

Inspiro’s Inspiromatic is a “smart” easy-to-use dry powder inhaler with several advantages over existing devices. We anticipate thatthis innovative device will play a valuable role in the improvement of therapy for asthma, chronic obstructive pulmonary disease, cysticfibrosis and other respiratory diseases. We recorded the transaction as an asset acquisition and recorded the assets and liabilities at fairvalue. As the asset had no alternative future use, we recorded $10.1 million of acquired in-process research and development expenses. Werecord expense for in-process research and development projects accounted for as asset acquisitions which have not reached technologicalfeasibility and which have no alternative future use.

Investments

The following table reflects the accounting method, carrying value and underlying equity in net assets of our unconsolidatedinvestments as of December 31, 2015:

(in thousands)

Investment type Investment Carrying Value Underlying Equity in Net

AssetsEquity method investments $ 24,495 $ 24,488Variable interest entity, equity method 1,268 91Available for sale investments 3,615 Warrants and options 5,338 Total carrying value of investments $ 34,716

Equity Method Investments

Our equity method investments consist of investments in Pharmsynthez (ownership 17%), Cocrystal Pharma, Inc. (“COCP”) (8%),Sevion Therapeutics, Inc. (“Sevion”) (3%), Non-Invasive Monitoring Systems, Inc. (1%), Neovasc Inc. (4%), STI (25%) and InCellDx, Inc.(27%). The total assets, liabilities, and net losses of our equity method investees as of and for the years ended December 31, 2015 were$383.1 million, $61.6 million, and $73.3 million, respectively. We have determined that we and/or our related parties can significantlyinfluence the success of our equity method investments through our board representation and voting power. Accordingly, we account forour investment in these entities under the equity method. For investments classified under the equity method of accounting, we record ourproportionate share of their losses in Loss from investments in investees in our Consolidated Statement of Operations. The aggregate valueof our equity method investments based on the quoted market price of their common stock and the number of shares held by us as ofDecember 31, 2015 is $89.6 million.

Available for Sale Investments

Our available for sale investments consist of investments in RXi Pharmaceuticals Corporation (“RXi”) (ownership 3%), ChromaDexCorporation (2%), MabVax Therapeutics Holdings, Inc. (“MabVax”) ( 1%) and ARNO Therapeutics, Inc. (“ARNO”) (4%) . We havedetermined that our ownership, along with that of our related parties, does not provide us with significant influence over the operations ofour available for sale investments. Accordingly, we account for our investment in these entities as available

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for sale, and we record changes in these investments as an unrealized gain or loss in Other comprehensive income (loss) each reportingperiod.

Based on our evaluation of the value of our investment in RXi, including RXi’s decreasing stock price during the year endedDecember 31, 2015, we determined that the decline in fair value of our RXi common shares was other-than-temporary and recorded animpairment charge of $7.3 million in Other income (expense), net in our Consolidated Statement of Operations for the year endedDecember 31, 2015 to write our investment in RXi common shares down to its fair value of $0.9 million as of December 31, 2015. Basedon our evaluation of the value of our investment in ARNO, including ARNO’s decreasing stock price during the year ended December 31,2014, we determined that the decline in fair value of our ARNO common shares was other-than-temporary and recorded an impairmentcharge of $1.4 million in Other income (expense), net in our Consolidated Statement of Operations for the year ended December 31, 2014to write our investment in ARNO common shares down to its fair value of $0.6 million as of December 31, 2014. Refer to Note 17 forfurther discussion of the fair value of our available for sale investments.

Sales of Investments

Gains (losses) included in earnings from sales of our investments for the years ended December 31, 2015, 2014 and 2013 were $0.0million, $1.3 million and $29.9 million, respectively, and were recorded in Other income (expense), net in our Consolidated Statement ofOperations. The cost of securities sold is based on the specific identification method.

Warrants and Options

In addition to our equity method investments and available for sale investments, we hold options to purchase 1.0 million additionalshares of Neovasc, which are fully vested as of December 31, 2015, and 1.0 million, 0.8 million, 0.5 million and 1.8 million warrants topurchase additional shares of COCP, ARNO, Sevion and MabVax, respectively. We recorded the changes in the fair value of the optionsand warrants in Fair value changes of derivative instruments, net in our Consolidated Statements of Operations. We record the fair value ofthe options and warrants in Investments, net in our Consolidated Balance Sheets. See further discussion of the Company’s options andwarrants in Note 17 and Note 18.

Investments in variable interest entities

We have determined that we hold variable interests in Zebra Biologics, Inc. (“Zebra”). We made this determination as a result of ourassessment that Zebra does not have sufficient resources to carry out its principal activities without additional financial support.

We own 1,260,000 shares of Zebra Series A-2 Preferred Stock and 900,000 shares of Zebra restricted common stock (ownership 29%at December 31, 2015). Zebra is a privately held biotechnology company focused on the discovery and development of biosuperiorantibody therapeutics and complex drugs. Dr. Richard Lerner, M.D., a member of our Board of Directors, is a founder of Zebra and, alongwith Dr. Frost, serves as a member of Zebra’s Board of Directors.

In order to determine the primary beneficiary of Zebra, we evaluated our investment and our related parties’ investment, as well asour investment combined with the related party group’s investment to identify if we had the power to direct the activities that mostsignificantly impact the economic performance of Zebra. We determined that we do not have the power to direct the activities that mostsignificantly impact Zebra’s economic performance. Based on the capital structure, governing documents and overall business operationsof Zebra, we determined that, while a VIE, we do not have the power to direct the activities that most significantly impact Zebra’seconomic performance. We did determine, however, that we can significantly influence the success of Zebra through our boardrepresentation and voting power. Therefore, we have the ability to exercise significant influence over Zebra’s operations and account forour investment in Zebra under the equity method.

Investment in SciVac

In June 2012, we acquired a 50% stock ownership in SciVac from FDS Pharma LLP (“FDS”). SciVac was a privately-held Israelicompany that produced a third-generation hepatitis B-vaccine. From November 2012 through June 2015, we loaned to SciVac a combined$7.9 million for working capital purposes. We determined that we held variable interests in SciVac based on our assessment that SciVacdid not have sufficient resources to carry out its principal activities without financial support. We had also determined we were the primarybeneficiary of SciVac through our representation on SciVac’s board of directors. SciVac’s board of directors consisted of 5 members, ofwhich 3 members had been appointed by us, representing 60% of SciVac’s board. As a result of this conclusion, we consolidated the resultsof operations and financial position of SciVac through June 2015 and recorded a reduction of equity for the portion of SciVac we do notown.

On July 9, 2015, SciVac Therapeutics Inc., formerly Levon Resources Ltd. (“STI”) completed a reverse takeover transaction (the“Arrangement”) pursuant to which STI acquired all of the issued and outstanding securities of SciVac. As a result of this transaction,OPKO’s ownership in STI decreased to 24.5%.

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Upon completion of the Arrangement, we determined that STI was not a VIE. We also determined that we do not have the power todirect the activities that most significantly impact the economic performance of STI that would require us to consolidate STI. STI’s boardof directors consists of 7 members, of which 3 independent members are initially members of our management. We do not have any rightsto appoint members to STI’s board. STI’s board members are approved by a vote of the shareholders. We recorded a $15.9 million gain onthe deconsolidation of SciVac in Other income (expense), net in our Consolidated Statement of Operations for the year ended December31, 2015. The recognized gain was primarily due to the fair value of the retained interest in STI based on Levon’s cash contribution ofapproximately $21.2 million under the Arrangement.

Following the deconsolidation, we account for our investment in STI under the equity method as we have determined that we and/orour related parties can significantly influence STI through our board representation and voting power. STI is considered a related party as aresult of our board representation in STI and executive management’s ownership interests in STI.

In October 2015, STI announced it entered into an agreement and plan of merger pursuant to which a newly-formed wholly-ownedsubsidiary of STI will merge with and into VBI Vaccines Inc. (“VBI”) with VBI surviving the merger as a wholly-owned subsidiary of STI,and STI will change its name to VBI Vaccines Inc. At the effective time of the merger, each share of VBI common stock will be convertedinto the right to receive 20.808356 common shares of STI (the “Exchange Ratio”). Upon closing of the transaction in 2016, holders ofVBI’s securities will receive shares, options and warrants of STI representing approximately 46% of the fully diluted outstanding shares ofthe combined company.

The following table represents the consolidated assets and non-recourse liabilities related to SciVac as of December 31, 2014. Theseassets were owned by, and these liabilities were obligations of, SciVac, not us.

(In thousands)December 31,

2014

Assets Current assets:

Cash and cash equivalents $ 393Accounts receivable, net 316Inventories, net 1,649Prepaid expenses and other current assets 718

Total current assets 3,076Property, plant and equipment, net 1,725Intangible assets, net 875Goodwill 1,553Other assets 384

Total assets $ 7,613Liabilities Current liabilities:

Accounts payable $ 445Accrued expenses 4,446Notes payable 5,189

Total current liabilities 10,080Other long-term liabilities 2,042

Total liabilities $ 12,122

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Note 5 Composition of Certain Financial Statement Captions

For the years ended December 31,

(In thousands) 2015 2014

Accounts receivable, net Accounts receivable $ 219,043 $ 21,875

Less: allowance for doubtful accounts (25,168) (1,906) $ 193,875 $ 19,969Inventories, net

Consumable supplies $ 22,265 $ —Finished products 13,404 12,116Work in-process 1,215 1,011Raw materials 3,848 4,116

Less: inventory reserve (1,051) (639) $ 39,681 $ 16,604Prepaid expenses and other current assets

Other receivables $ 11,946 $ 669Prepaid supplies 8,773 1,123Taxes recoverable 3,076 2,417Prepaid insurance 2,206 968Other 903 4,212

$ 26,904 $ 9,389Property, plant and equipment, net:

Machinery, medical and other equipment $ 89,936 $ 13,710Leasehold improvements 27,949 3,592Furniture and fixtures 11,403 2,148Automobiles and aircraft 10,271 —Software 10,497 1,695Building 5,965 3,171Land 2,394 2,391Construction in process 425 225Less: accumulated depreciation (27,042) (10,521)

$ 131,798 $ 16,411Intangible assets, net:

Customer relationships $ 449,972 $ 22,108Technologies 151,709 52,508Trade names 50,416 3,483Covenants not to compete 8,612 8,639Licenses 23,432 —

Product registrations7,512 8,763

Other 5,600 1,079Less: accumulated amortization (59,101) (33,931)

$ 638,152 $ 62,649Accrued expenses:

Deferred revenue 70,246 4,185Employee benefits 29,751 4,127Taxes payable $ 7,605 $ 77Contingent consideration 22,164 27,352

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For the years ended December 31,

Clinical trials 2,505 8,643Capital leases short-term 5,373 —Milestone payment 5,000 —Professional fees 1,506 1,860Other 23,749 14,668

$ 167,899 $ 60,912 Other long-term liabilities:

Deferred revenue $ 162,634 $ 2,526JP Morgan Chase line of credit 72,107 —Contingent consideration 32,258 44,215Capital leases long-term 9,285 —Mortgages and other debts payable 2,523 2,434Other 13,663 1,030

$ 292,470 $ 50,205

The following table summarizes the fair values assigned to our major intangible asset classes upon each acquisition:

(In thousands) Technologies

In-processresearch anddevelopment

Customerrelationships

Productregistrations

Covenants notto compete Trade names Other

Totalidentifiedintangible

assets GoodwillBio-Reference $ 100,600 $ — $ 395,200 $ — $ — $ 47,100 $ — $ 542,900 $ 441,158CURNA — 10,000 — — — — 290 10,290 4,827EirGen — 560 34,155 — — — 3,919 38,634 83,373FineTech 2,700 — 14,200 — 1,500 400 — 18,800 11,623OPKOBiologics — 590,200 — — — — — 590,200 139,784OPKOChile — — 3,945 5,829 — 1,032 — 10,806 5,441OPKODiagnostics 44,400 — — — — — — 44,400 17,977OPKO HealthEurope 3,017 1,459 436 2,930 187 349 — 8,378 8,062OPKO Lab 1,370 — 3,860 — 6,900 1,830 70 14,030 29,629OPKO Renal — 191,530 — — — — 210 191,740 2,411Weightedaverageamortizationperiod 8-12 years Indefinite 6-20 years 9 years 5 years 4-5 years 3-10 years Indefinite

All of the intangible assets and goodwill acquired relate to our acquisitions of principally OPKO Renal, OPKO Biologics, EirGen andBio-Reference. We do not anticipate capitalizing the cost of product registration renewals, rather we expect to expense these costs, asincurred. Our goodwill is not tax deductible for income tax purposes in any jurisdiction we operate in.

At December 31, 2015, the changes in value of the intangible assets and goodwill are primarily due to the acquisitions of Bio-Reference and EirGen and foreign currency fluctuations between the Chilean and Mexican pesos, the Euro and the Shekel against the U.S.dollar. At December 31, 2014, the changes in value of the intangible assets and goodwill are primarily due to foreign currency fluctuationsbetween the Chilean and Mexican pesos, the Euro and the Shekel against the U.S. dollar.

The following table reflects the changes in the allowance for doubtful accounts, provision for inventory reserve and tax valuationallowance accounts:

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(In thousands)Beginning

balance

Chargedto

expense Written-off Chargedto other

Endingbalance

2015 Allowance for doubtful accounts $ (1,906) (24,548) 928 358 $ (25,168)Inventory reserve $ (639) (926) 435 79 $ (1,051)Tax valuation allowance $ (131,931) — — 89,784 $ (42,147)

2014 Allowance for doubtful accounts $ (1,884) (646) 321 303 $ (1,906)Inventory reserve $ (777) (1,082) 1,028 192 $ (639)Tax valuation allowance $ (85,370) — — (46,561) $ (131,931)

The following table summarizes the changes in Goodwill during the year ended December 31, 2015.

2015 2014

(In thousands)

Balance atJanuary 1st

Acquisitions

Foreignexchange,

other

Balance atDecember

31st Balance atJanuary 1

Acquisitions

Foreignexchange,

other Balance at

December 31

Pharmaceuticals CURNA $ 4,827 $ — $ — $ 4,827 $ 4,827 $ — $ — $ 4,827EirGen — 83,373 (2,234) 81,139 — — — —FineTech 11,698 — — 11,698 11,698 — — 11,698OPKOBiologics 139,784 — — 139,784 139,784 — — 139,784OPKOChile 5,283 — (766) 4,517 6,102 — (819) 5,283OPKOHealthEurope 8,013 — (822) 7,191 9,075 — (1,062) 8,013OPKOMexico 100 — (100) — 114 — (14 ) 100OPKORenal 2,069 — — 2,069 2,069 — — 2,069SciVac 1,553 — (1,553) — 1,739 — (186) 1,553

Diagnostics Bio-Reference — 441,158 — 441,158 — — — —OPKODiagnostics 17,977 — — 17,977 17,977 — — 17,977OPKO Lab 32,988 — — 32,988 32,988 — — 32,988

$ 224,292 $ 524,531 $ (5,475) $ 743,348 $ 226,373 $ — $ (2,081) $ 224,292

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Note 6 Debt

In January 2013, we entered into note purchase agreements (the “2033 Senior Notes”) with qualified institutional buyers andaccredited investors (collectively, the “Purchaser”) in a private placement in reliance on exemptions from registration under the SecuritiesAct of 1933, (the “Securities Act”). The Purchasers of the 2033 Senior Notes include Frost Gamma Investments Trust, a trust affiliated withDr. Frost, and Hsu Gamma Investment, L.P., an entity affiliated with Dr. Jane H. Hsiao, our Vice Chairman and Chief Technology Officer.The 2033 Senior Notes were issued on January 30, 2013. The 2033 Senior Notes, which totaled $175.0 million, bear interest at the rate of3.00% per year, payable semiannually on February 1 and August 1 of each year, beginning August 1, 2013. The 2033 Senior Notes willmature on February 1, 2033, unless earlier repurchased, redeemed or converted. Upon a fundamental change as defined in the instrumentsgoverning the 2033 Senior Notes, subject to certain exceptions, the holders may require us to repurchase all or any portion of their 2033Senior Notes for cash at a repurchase price equal to 100% of the principal amount of the 2033 Senior Notes being repurchased, plus anyaccrued and unpaid interest to but not including the fundamental change repurchase date.

The following table sets forth information related to the 2033 Senior Notes which is included our Consolidated Balance Sheets as ofDecember 31, 2015:

(In thousands)Embedded

conversion option 2033 Senior Notes Discount Total

Balance at December 31, 2014 $ 65,947 $ 87,642 $ (22,135) $ 131,454Amortization of debt discount — — 2,613 2,613Change in fair value of embedded derivative 36,587 — — 36,587Conversion (78,797) (55,442) 12,997 (121,242)Balance at December 31, 2015 $ 23,737 $ 32,200 $ (6,525) $ 49,412

The following table sets forth information related to the 2033 Senior Notes which is included our Consolidated Balance Sheets as ofDecember 31, 2014:

(In thousands)Embedded

conversion option 2033 Senior Notes Discount Total

Balance at December 31, 2013 $ 101,087 $ 158,064 $ (47,239) $ 211,912Amortization of debt discount — — 5,662 5,662Change in fair value of embedded derivative 12,213 — — 12,213Conversion (47,353) (70,422) 19,442 (98,333)Balance at December 31, 2014 $ 65,947 $ 87,642 $ (22,135) $ 131,454

The 2033 Senior Notes will be convertible at any time on or after November 1, 2032, through the second scheduled trading dayimmediately preceding the maturity date, at the option of the holders. Additionally, holders may convert their 2033 Senior Notes prior tothe close of business on the scheduled trading day immediately preceding November 1, 2032, under the following circumstances:(1) conversion based upon satisfaction of the trading price condition relating to the 2033 Senior Notes; (2) conversion based on theCommon Stock price; (3) conversion based upon the occurrence of specified corporate events; or (4) if we call the 2033 Senior Notes forredemption. The 2033 Senior Notes will be convertible into cash, shares of our Common Stock, or a combination of cash and shares ofCommon Stock, at our election unless we have made an irrevocable election of net share settlement. The initial conversion rate for the2033 Senior Notes will be 141.48 shares of Common Stock per $1,000 principal amount of 2033 Senior Notes (equivalent to an initialconversion price of approximately $7.07 per share of Common Stock), and will be subject to adjustment upon the occurrence of certainevents. In addition, we will, in certain circumstances, increase the conversion rate for holders who convert their 2033 Senior Notes inconnection with a make-whole fundamental change (as defined in the Indenture) and holders who convert upon the occurrence of certainspecific events prior to February 1, 2017 (other than in connection with a make-whole fundamental change). Holders of the 2033 SeniorNotes may require us to repurchase the 2033 Senior Notes for 100% of their principal amount, plus accrued and unpaid interest, onFebruary 1, 2019, February 1, 2023 and February 1, 2028, or following the occurrence of a fundamental change as defined in the indenturegoverning the 2033 Senior Notes. See further discussion in Note 20.

We may not redeem the 2033 Senior Notes prior to February 1, 2017. On or after February 1, 2017 and before February 1, 2019, wemay redeem for cash any or all of the 2033 Senior Notes but only if the last reported sale price of our Common Stock exceeds 130% of theapplicable conversion price for at least 20 trading days during the 30 consecutive trading day period ending on the trading day immediatelyprior to the date on which we deliver the redemption notice. The redemption

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price will equal 100% of the principal amount of the 2033 Senior Notes to be redeemed, plus any accrued and unpaid interest to but notincluding the redemption date. On or after February 1, 2019, we may redeem for cash any or all of the 2033 Senior Notes at a redemptionprice of 100% of the principal amount of the 2033 Senior Notes to be redeemed, plus any accrued and unpaid interest up to but notincluding the redemption date.

The terms of the 2033 Senior Notes, include, among others: (i) rights to convert into shares of our Common Stock, including upon afundamental change; and (ii) a coupon make-whole payment in the event of a conversion by the holders of the 2033 Senior Notes on orafter February 1, 2017 but prior to February 1, 2019. We have determined that these specific terms are considered to be embeddedderivatives. Embedded derivatives are required to be separated from the host contract, the 2033 Senior Notes, and carried at fair valuewhen: (a) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economiccharacteristics of the host contract; and (b) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument.We have concluded that the embedded derivatives within the 2033 Senior Notes meet these criteria and, as such, must be valued separateand apart from the 2033 Senior Notes and recorded at fair value each reporting period.

For accounting and financial reporting purposes, we combine these embedded derivatives and value them together as one unit ofaccounting. At each reporting period, we record these embedded derivatives at fair value which is included as a component of the 2033Senior Notes on our Consolidated Balance Sheets.

On August 30, 2013, one of the conversion rights in the 2033 Senior Notes was triggered. Holders of the 2033 Senior Notes converted$16.9 million principal amount into 2,396,145 shares of our Common Stock at a rate of 141.48 shares of Common Stock per $1,000principal amount of 2033 Senior Notes. We recorded a $1.0 million non-cash gain related to the conversion. The gain on exchange isincluded within Other income (expense) on our Consolidated Statement of Operations.

In June 2014, we entered into an exchange agreement with a holder of the Company’s 2033 Senior Notes pursuant to which suchholder exchanged $70.4 million in aggregate principal amount of Notes for 10,974,431 shares of the Company’s Common Stock andapproximately $0.8 million in cash representing accrued interest through the date of completion of the exchange. We recorded a $2.7million non-cash gain related to the exchange.

On April 1, 2015, we announced that our 2033 Senior Notes are convertible by holders of such notes. We have elected to satisfy ourconversion obligation under the 2033 Senior Notes in shares of our Common Stock. This conversion right was triggered because theclosing price per share of our Common Stock has exceeded $9.19, or 130% of the initial conversion price of $7.07, for at least 3 of 30consecutive trading days during the period ending on March 31, 2015. The 2033 Senior Notes were convertible until June 30, 2015, andmay be convertible thereafter, if one or more of the conversion conditions specified in the Indenture, dated as of January 30, 2013, by andbetween the Company and Wells Fargo Bank N.A., is satisfied during future measurement periods. Pursuant to the Indenture, a holder whoelects to convert the 2033 Senior Notes will receive 141.4827 shares of our Common Stock plus such number of additional shares as isapplicable on the conversion date per $1,000 principal amount of 2033 Senior Notes based on the early conversion provisions in theIndenture. On July 1, 2015, October 1, 2015 and January 5, 2016, we announced that our 2033 Senior Notes continue to be convertible byholders of such notes during the third quarter of 2015, the fourth quarter of 2015 and the first quarter of 2016, respectively.

During 2015, pursuant to the conversion right or through exchange agreements we entered with certain holders of our 2033 SeniorNotes, holders of our 2033 Senior Notes converted or exchanged $55.4 million in aggregate principal amount of 2033 Senior Notes for8,118,062 shares of the Company’s Common Stock. We recorded a $0.9 million non-cash gain related to the conversion and exchanges.The gain is included within Other income (expense) in our Consolidated Statement of Operations.

We used a binomial lattice model in order to estimate the fair value of the embedded derivative in the 2033 Senior Notes. A binomiallattice model generates two probable outcomes — one up and another down —arising at each point in time, starting from the date ofvaluation until the maturity date. A lattice model was initially used to determine if the 2033 Senior Notes would be converted, called orheld at each decision point. Within the lattice model, the following assumptions are made: (i) the 2033 Senior Notes will be converted earlyif the conversion value is greater than the holding value; or (ii) the 2033 Senior Notes will be called if the holding value is greater than both(a) the redemption price (as defined in the Indenture) and (b) the conversion value plus the coupon make-whole payment at the time. If the2033 Senior Notes are called, then the holder will maximize their value by finding the optimal decision between (1) redeeming at theredemption price and (2) converting the 2033 Senior Notes.

Using this lattice model, we valued the embedded derivatives using the “with-and-without method,” where the value of the 2033Senior Notes including the embedded derivatives is defined as the “with,” and the value of the 2033 Senior Notes excluding the embeddedderivatives is defined as the “without.” This method estimates the value of the embedded derivatives

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by looking at the difference in the values between the 2033 Senior Notes with the embedded derivatives and the value of the 2033 SeniorNotes without the embedded derivatives.

The lattice model requires the following inputs: (i) price of our Common Stock; (ii) Conversion Rate (as defined in the Indenture);(iii) Conversion Price (as defined in the Indenture); (iv) maturity date; (v) risk-free interest rate; (vi) estimated stock volatility; and (vii)estimated credit spread for the Company.

The following table sets forth the inputs to the lattice model used to value the embedded derivative:

December 31, 2015 December 31, 2014 December 31, 2013

Stock price $10.05 $9.99 $8.44Conversion Rate 141.4827 141.4827 141.4827Conversion Price $7.07 $7.07 $7.07Maturity date February 1, 2033 February 1, 2033 February 1, 2033Risk-free interest rate 1.33% 1.40% 1.78%Estimated stock volatility 50% 39% 55%Estimated credit spread 1,142 basis points 1,081 basis points 828 basis points

The following table sets forth the fair value of the 2033 Senior Notes with and without the embedded derivatives, and the fair valueof the embedded derivatives at December 31, 2015, 2014 and 2013. At December 31, 2015, 2014 and 2013, the principal amount of the2033 Senior Notes was $32.2 million, $87.6 million and $158.1 million, respectively:

(In thousands) December 31, 2015 December 31, 2014 December 31, 2013

Fair value of 2033 Senior Notes: With the embedded derivatives $ 48,384 $ 129,009 $ 218,081Without the embedded derivatives $ 24,647 $ 63,062 $ 116,994Estimated fair value of the embedded derivatives $ 23,737 $ 65,947 $ 101,087

Changes in certain inputs into the lattice model can have a significant impact on changes in the estimated fair value of the embeddedderivatives. For example, a decrease in our estimated credit spread results in an increase in the estimated value of the embedded derivatives.Conversely, a decrease in the price of our Common Stock results in a decrease in the estimated fair value of the embedded derivatives. Forthe years ended December 31, 2015 and 2014, we observed an increase in the market price of our Common Stock which primarily resultedin a $36.6 million and $12.2 million increase, respectively, in the estimated fair value of our embedded derivatives recorded in Fair valuechanges of derivative instruments, net in our Consolidated Statements of Operations.

On November 5, 2015, Bio-Reference and certain of its subsidiaries entered into a credit agreement with JPMorgan Chase Bank, N.A.(“CB”), as lender and administrative agent (the “Credit Agreement”), which replaced Bio-Reference’s existing credit facility with PNCBank, National Association (“PNC”). The Credit Agreement provides for a $175.0 million secured revolving credit facility and includes a$20.0 million sub-facility for swingline loans and a $20.0 million sub-facility for the issuance of letters of credit. Bio-Reference mayincrease the credit facility to up to $275.0 million on a secured basis, subject to the satisfaction of specified conditions. The CreditAgreement matures on November 5, 2020 and is guaranteed by all of Bio-Reference’s domestic subsidiaries. The Credit Agreement is alsosecured by substantially all assets of Bio-Reference and its domestic subsidiaries, as well as a non-recourse pledge by us of our equityinterest in Bio-Reference. Availability under the Credit Agreement is based on a borrowing base comprised of eligible accounts receivablesof Bio-Reference and certain of its subsidiaries, as specified therein. The proceeds of the new credit facility were used to refinance existingindebtedness, including amounts outstanding under the credit facility with PNC which was terminated in 2015 in accordance with its terms,to finance working capital needs and for general corporate purposes of Bio-Reference and its subsidiaries.

At Bio-Reference’s option, borrowings under the Credit Agreement (other than swingline loans) will bear interest at (i) the CBfloating rate (defined as the higher of (a) the prime rate and (b) the LIBOR rate (adjusted for statutory reserve requirements forEurocurrency liabilities) for an interest period of one month plus 2.50%) plus an applicable margin of 0.35% for the first 12 months and0.50% thereafter or (ii) the LIBOR rate (adjusted for statutory reserve requirements for Eurocurrency liabilities) plus an applicable marginof 1.35% for the first 12 months and 1.50% thereafter. Swingline loans will bear interest at the CB floating rate plus the applicable margin.The Credit Agreement also calls for other customary fees and charges, including an unused commitment fee of 0.25% of the lendingcommitments.

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The Credit Agreement contains customary covenants and restrictions, including, without limitation, covenants that require Bio-Reference and its subsidiaries to maintain a minimum fixed charge coverage ratio if availability under the new credit facility falls below aspecified amount and to comply with laws, and restrictions on the ability of Bio-Reference and its subsidiaries to incur additionalindebtedness or to pay dividends and make certain other distributions to the Company, subject to certain exceptions as specified therein.Failure to comply with these covenants would constitute an event of default under the Credit Agreement, notwithstanding the ability of Bio-Reference to meet its debt service obligations. The Credit Agreement also includes various customary remedies for the lenders following anevent of default, including the acceleration of repayment of outstanding amounts under the Credit Agreement and execution upon thecollateral securing obligations under the Credit Agreement. Substantially all the assets of Bio-Reference and its subsidiaries are restrictedfrom sale, transfer, lease, disposal or distributions to the Company, subject to certain exceptions. Bio-Reference and its subsidiaries netassets as of December 31, 2015 was approximately $1.0 billion, which includes goodwill of $441.2 million and intangible assets of $528.3million.

We have line of credit agreements with ten financial institutions as of December 31, 2015 and ten financial institutions as ofDecember 31, 2014 in United States, Chile and Spain. These lines of credit are used primarily as a source of working capital for inventorypurchases.

The following table summarizes the amounts outstanding under the Bio-Reference, Chilean and Spanish lines of credit:

(Dollars in thousands) Balance Outstanding

Lender

Interest rate onborrowings at December

31, 2015 Credit linecapacity

December 31, 2015

December 31,2014

JP Morgan Chase 3.25% $ 175,000 $ 72,107 $ —Itau Bank 6.00% 1,500 282 965Bank of Chile 5.50% 2,500 2,313 1,410BICE Bank 5.50% 2,300 1,502 1,249BBVA Bank 5.50% 2,300 1,825 795Penta Bank 7.58% — — 1,008Security Bank 6.16% 150 145 361Estado Bank 5.30% 2,500 2,210 1,870Santander Bank 5.30% 2,000 1,345 —Scotiabank 5.00% 1,300 939 —Banco Bilbao Vizcaya 2.90% 273 — —

Total $ 189,823 $ 82,668 $ 7,658

At December 31, 2015 and 2014, the weighted average interest rate on our lines of credit was approximately 4.3% and 6.1%,respectively.

At December 31, 2015 and 2014, we had mortgage notes and other debt (excluding the 2033 Senior Notes, the Credit Agreement andamounts outstanding under lines of credit) as follows:

(In thousands)December 31,

2015 December 31,

2014

Current portion of notes payable $ 1,054 $ 608Other long-term liabilities 1,963 2,435

Total mortgage notes and other debt $ 3,017 $ 3,043

The mortgages and other debts mature at various dates ranging from 2015 through 2024 bearing variable interest rates from 2.4% upto 6.3%. The weighted average interest rate on the mortgage notes and other debt at December 31, 2015 and 2014, was 4.3% and 3.4%,respectively. The mortgages are secured by our office space in Barcelona.

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Note 7 Shareholders’ Equity

Our authorized capital stock consists of 750,000,000 shares of Common Stock, par value $0.01 per share, and 10,000,000 shares ofPreferred Stock, par value $0.01 per share.

Common Stock

Subject to the rights of the holders of any shares of Preferred Stock currently outstanding or which may be issued in the future, theholders of the Common Stock are entitled to receive dividends from our funds legally available when, as and if declared by our Board ofDirectors, and are entitled to share ratably in all of our assets available for distribution to holders of Common Stock upon the liquidation,dissolution or winding-up of our affairs subject to the liquidation preference, if any, of any then outstanding shares of Preferred Stock.Holders of our Common Stock do not have any preemptive, subscription, redemption or conversion rights. Holders of our Common Stockare entitled to one vote per share on all matters which they are entitled to vote upon at meetings of stockholders or upon actions taken bywritten consent pursuant to Delaware corporate law. The holders of our Common Stock do not have cumulative voting rights, which meansthat the holders of a plurality of the outstanding shares can elect all of our directors. All of the shares of our Common Stock currentlyissued and outstanding are fully-paid and nonassessable. No dividends have been paid to holders of our Common Stock since ourincorporation, and no cash dividends are anticipated to be declared or paid on our Common Stock in the reasonably foreseeable future.

In addition to our equity-based compensation plans, we have issued warrants to purchase our Common Stock. Refer to Note 9 foradditional information on our share-based compensation plans. The table below provides additional information for warrants outstanding asof December 31, 2015.

Warrants Number of

warrants

Weightedaverage

exercise price Expiration date

Outstanding at December 31, 2014 * 21,239,213 $ 0.75

Various fromJuly 2015

through March 2017Exercised (19,034,662) 0.74 Expired (30,828) 0.01

Outstanding and Exercisable at December 31, 2015 2,173,723 $ 0.85

Various fromJanuary 2017 through

March 2017

* Prior year reported amounts adjusted by 190,533 warrants that expired in September 2014.

Of the 19,034,662 Common Stock warrants exercised, 1,197,932 shares were surrendered in lieu of a cash payment via the netexercise feature of the warrant agreements.

Preferred Stock

Under our certificate of incorporation, our Board of Directors has the authority, without further action by stockholders, to designateup to 10 million shares of Preferred Stock in one or more series and to fix or alter, from time to time, the designations, powers and rights ofeach series of Preferred Stock and the qualifications, limitations or restrictions of any series of Preferred Stock, including dividend rights,dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price orprices, and the liquidation preference of any wholly issued series of Preferred Stock, any or all of which may be greater than the rights ofthe Common Stock, and to establish the number of shares constituting any such series.

Of the authorized Preferred Stock, 4,000,000 shares, 500,000 shares and 2,000,000 shares were designated Series A Preferred Stock,Series C Preferred Stock and Series D Preferred Stock, respectively. As of December 31, 2015 and 2014, there were no shares of Series APreferred Stock, Series C Preferred Stock or Series D Preferred Stock issued or outstanding.

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Note 8 Accumulated Other Comprehensive Income (Loss)

For the year ended December 31, 2015, changes in Accumulated other comprehensive income (loss), net of tax, were as follows:

(In thousands)

Foreigncurrency

translation

Unrealizedgain (loss) inAccumulated

OCI Total

Balance at December 31, 2014 $ (6,717) $ (5,675) $ (12,392)Other comprehensive income (loss) before reclassifications, net of tax (1) (15,074) (2,378) (17,452)Amounts reclassified from accumulated other comprehensive income (loss), net of

tax (1) — 7,307 7,307Net other comprehensive loss (15,074) 4,929 (10,145)Balance at December 31, 2015 $ (21,791) $ (746) $ (22,537)(1) Effective tax rate of

40.13%.

Amounts reclassified from Accumulated other comprehensive income (loss) for the year ended December 31, 2015 includes an other-than-temporary impairment charge on our investment in RXi as discussed in Note 4. Amounts reclassified for our available for saleinvestments were based on the specific identification method.

For the year ended December 31, 2014, changes in Accumulated other comprehensive income, net of tax, were as follows:

(In thousands)

Foreigncurrency

translation

Unrealizedgain (loss) inAccumulated

OCI Total

Balance at December 31, 2013 $ 1,371 $ 2,047 $ 3,418Other comprehensive income (loss) before reclassifications, net of tax (1) (8,088) (8,044) (16,132)Amounts reclassified from accumulated other comprehensive income, net of tax (1) — 322 322

Net other comprehensive loss (8,088) (7,722) (15,810)Balance at December 31, 2014 $ (6,717) $ (5,675) $ (12,392)(1) Effective tax rate of

40.13%.

Amounts reclassified from Accumulated other comprehensive income (loss) for the year ended December 31, 2014, includes $1.3million realized gain on the sales of certain of our investments available for sale. Of the $1.3 million gain on the sales of our investmentsavailable for sale, a $0.9 million gain was reclassified from unrealized gains in Accumulated other comprehensive income (loss) to Otherincome (expense), net for the year ended December 31, 2014. Amounts reclassified from Accumulated other comprehensive income (loss)also includes an other-than-temporary impairment charge on our investment in ARNO as discussed in Note 4. Amounts reclassified for ouravailable for sale investments were based on the specific identification method.

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Note 9 Equity-Based Compensation

We maintain five equity-based incentive compensation plans, the Acuity Pharmaceuticals, Inc. 2003 Equity Incentive Plan, the 2007Equity Incentive Plan, the 2000 Stock Option Plan, the Bio-Reference Laboratories, Inc. 2003 Employee Incentive Stock Option Plan, theModigene Inc. 2005 Stock Incentive Plan and the Modigene Inc. 2007 Equity Incentive Plan that provide for grants of stock options andrestricted stock to our directors, officers, key employees and certain outside consultants. Equity awards granted under our 2007 EquityIncentive Plan are exercisable for a period of either 7 years or 10 years from the date of grant. Equity awards granted under our 2000 StockOption Plan, 2003 Equity Incentive Plan and the two Modigene Plans are exercisable for a period of up to 10 years from date of grant.Vesting periods range from immediate to 5 years.

We classify the cash flows resulting from the tax benefit that arises when the tax deductions exceed the compensation costrecognized for those equity awards (excess tax benefits) as financing cash inflows. There were no excess tax benefits for the years endedDecember 31, 2015, 2014, and 2013.

Equity-based compensation arrangements to non-employees are accounted for at their fair value on the measurement date. Themeasurement of equity-based compensation to non-employees is subject to periodic adjustment over the vesting period of the equityinstruments.

Valuation and Expense Information

We recorded equity-based compensation expense of $26.1 million, $14.8 million and $11.0 million for the years ended December 31,2015, 2014, and 2013, respectively, all of which were reflected as operating expenses. Of the $26.1 million of equity based compensationexpense recorded in the year ended December 31, 2015, $17.4 million was recorded as selling, general and administrative expenses, $7.9million was recorded as research and development expenses and $0.8 million was recorded as a cost of revenue. Of the $14.8 million ofequity based compensation expense recorded in the year ended December 31, 2014, $9.7 million was recorded as selling, general andadministrative expense and $5.0 million was recorded as research and development expenses and $0.1 million was recorded as a cost ofrevenue. Of the $11.0 million of equity based compensation expense recorded in the year ended December 31, 2013, $7.3 million wasrecorded as selling, general and administrative expense and $3.6 million was recorded as research and development expenses.

We estimate forfeitures of stock options and recognize compensation cost only for those awards expected to vest. Forfeiture rates aredetermined for all employees and non-employee directors based on historical experience and our estimate of future vesting. Estimatedforfeiture rates are adjusted from time to time based on actual forfeiture experience.

As of December 31, 2015, there was $90.8 million of unrecognized compensation cost related to the stock options granted under ourequity-based incentive compensation plans. Such cost is expected to be recognized over a weighted-average period of approximately 3.0years.

Stock Options

We estimate the fair value of each stock option on the date of grant using the Black-Scholes-Merton Model option-pricing formulaand amortize the fair value to expense over the stock option’s vesting period using the straight-line attribution approach for employees andnon-employee directors, and for awards issued to non-employees we recognize compensation expense on a graded basis, with most of thecompensation expense being recorded during the initial periods of vesting. We apply the following assumptions in our Black-Scholes-Merton Model option-pricing formula:

Year EndedDecember 31,

2015

Year EndedDecember 31,

2014

Year EndedDecember 31,

2013Expected term (in years) 1.0 - 10.0 1.0 - 10.0 1.0 - 7.0Risk-free interest rate 0.26% - 2.42% 0.10% - 2.65% 0.15% - 2.45%Expected volatility '32% - 64% '31% - 72% '31% - 83%Expected dividend yield 0% 0% 0%

Expected Term: The expected term of the stock options granted to employees and non-employee directors was calculated using theshortcut method. We believe this method is appropriate as our equity shares have been publicly-traded for a limited period of time and assuch we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The expectedterm of stock options issued to non-employee consultants is the remaining contractual life of the options issued.

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Risk-Free Interest Rate: The risk-free interest rate is based on the rates paid on securities issued by the U.S. Treasury with a termapproximating the expected life of the option.

Expected Volatility: The expected volatility for stock options with an expected life of 8 years or less was based on the historicalvolatility of our stock. The expected volatility for stock options with an expected life of 9 years or greater was based on an average of thevolatility of a peer group of publicly-traded entities and the historical volatility of our stock, which we believe will be representative of thevolatility over the expected term of the options. We believe the use of peer group’s historical volatility is appropriate as our equity shareshave not been publicly-traded for 9 years.

Expected Dividend Yield: We do not intend to pay dividends on Common Stock for the foreseeable future. Accordingly, we used adividend yield of zero in the assumptions.

We maintain incentive stock plans that provide for the grants of stock options to our directors, officers, employees and non-employeeconsultants. As of December 31, 2015, there were 2,056,783 shares of Common Stock reserved for issuance under our 2007 Incentive Plan.We intend to issue new shares upon the exercise of stock options. Stock options granted under these plans have been granted at an optionprice equal to the closing market value of the stock on the date of the grant. Stock options granted under these plans to employees typicallybecome exercisable over four years in equal annual installments after the date of grant, and stock options granted to non-employee directorsbecome exercisable in full one-year after the grant date, subject to, in each case, continuous service with us during the applicable vestingperiod. We assumed stock options to grant Common Stock as part of the mergers with Acuity Pharmaceuticals, Inc., Froptix, Inc., OPKOBiologics and Bio-Reference, which reflected various vesting schedules, including monthly vesting to employees and non-employeeconsultants.

A summary of option activity under our stock option plans as of December 31, 2015, and the changes during the year is presentedbelow:

OptionsNumber of

options

Weightedaverageexercise

price

Weightedaverage

remainingcontractual

term (years)

Aggregateintrinsic value(in thousands)

Outstanding at December 31, 2014 23,299,919 $ 5.50 5.4 $ 104,797Granted 15,579,500 $ 13.09 Exercised (6,643,991) $ 3.93 Forfeited (710,250) $ 9.64 Expired (238,391) $ 1.58 Outstanding at December 31, 2015 31,286,787 $ 9.55 6.97 $ 63,902Vested and expected to vest at December 31, 2015 28,066,315 $ 9.35 6.82 $ 60,780Exercisable at December 31, 2015 8,779,201 $ 3.76 3.76 $ 41,891

The total intrinsic value of stock options exercised for the years ended December 31, 2015, 2014, and 2013 was $69.9 million, $14.6million and $59.5 million, respectively.

The weighted average grant date fair value of stock options granted for the years ended December 31, 2015, 2014, and 2013 was$5.00, $4.64, and $4, respectively. The total fair value of stock options vested during the years ended December 31, 2015, 2014, and 2013was $13.3 million, $10.9 million and $5.9 million, respectively.

Restricted Stock

In 2009, we issued 30,000 shares of restricted Common Stock to one of our independent board members. The restricted stock wasgranted under our 2007 Equity Incentive Plan with a term of 7 years and vesting occurring 5 years after the grant date with certain eventswhich would accelerate the vesting of the award. The restricted stock was valued using the grant date fair value which was equivalent tothe closing price of our Common Stock on the grant date. We record the cost of restricted stock over the vesting period.

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Note 10 Income Taxes

We operate and are required to file tax returns in the U.S. and various foreign jurisdictions.

The benefit (provision) for incomes taxes consists of the following:

For the years ended December 31,

(In thousands) 2015 2014 2013Current

Federal $ 430 $ 225 $ —State (2,157) 247 —Foreign (8,134) (1,514) (1,073)

(9,861) (1,042) (1,073)Deferred

Federal 109,286 — (1,161)State 12,327 (167) (104)Foreign 1,923 1,185 666

123,536 1,018 (599)Total, net $ 113,675 $ (24) $ (1,672)

Deferred income tax assets and liabilities as of December 31, 2015 and 2014 are comprised of the following:

(In thousands) December 31, 2015 December 31, 2014Deferred income tax assets:

Federal net operating loss $ 71,658 $ 63,004State net operating loss 14,227 12,050Foreign net operating loss 33,701 25,825Research and development expense 5,138 9,244Research and development tax credit 7,388 6,077Stock options 24,756 18,422Accruals 7,086 1,764Equity investments 4,420 8,038Bad debts 38,809 —Lease liability 7,022 —Other 7,104 4,702

Deferred income tax assets 221,309 149,126Deferred income tax liabilities:

Intangible assets (386,588) (177,074)Fixed assets (17,072) —Other (1,538) (4,305)

Deferred income tax liabilities (405,198) (181,379)Net deferred income tax liabilities (183,889) (32,253)Valuation allowance (42,147) (131,931)

Net deferred income tax liabilities $ (226,036) $ (164,184)

The changes in deferred income tax assets, liabilities and valuation allowances at December 31, 2015 reflect the acquisition ofvarious legal entities, including the tax attributes. The acquisitions were accounted for under U.S. GAAP as stock acquisitions and businesscombinations. As of December 31, 2015, we have federal, state and foreign net operating loss carryforwards of approximately $362.4million, $199.9 million and $126.6 million, respectively, that expire at various dates through 2035. Included in the foreign net operatinglosses is $112.9 million related to OPKO Biologics. As of December 31, 2015, we have research and development tax credit carryforwardsof approximately $7.4 million that expire in varying amounts

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through 2035. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of thefuture realization of deferred tax assets. As a result of the merger with Bio-Reference, OPKO released the full valuation allowancerecorded against OPKO’s U.S. deferred tax assets, which resulted in an income tax benefit of $93.4 million.

As a result of certain realization requirements of ASC 718, Compensation - Stock Compensation, the table of deferred tax assets andliabilities shown above does not include certain deferred tax assets as of December 31, 2015 and 2014, that arose directly from (or the useof which was postponed by) tax deductions related to equity compensation that are greater than the compensation recognized for financialreporting. Equity will be increased by $33.9 million if and when such deferred tax assets are ultimately realized. The Company uses ASC740 ordering when determining when excess tax benefits have been realized.

Under Section 382 of the Internal Revenue Code of 1986, as amended, certain significant changes in ownership may restrict thefuture utilization of our income tax loss carryforwards and income tax credit carryforwards in the U.S. The annual limitation is equal to thevalue of our stock immediately before the ownership change, multiplied by the long-term tax-exempt rate (i.e., the highest of the adjustedFederal long-term rates in effect for any month in the three-calendar-month period ending with the calendar month in which the changedate occurs). This limitation may be increased under the IRC§ 338 Approach (IRS approved methodology for determining recognizedBuilt-In Gain). As a result, federal net operating losses and tax credits may expire before we are able to fully utilize them.

During 2008, we conducted a study to determine the impact of the various ownership changes that occurred during 2007 and 2008. Asa result, we have concluded that the annual utilization of our net operating loss carryforwards (“NOLs”) and tax credits is subject to alimitation pursuant to Internal Revenue Code section 382. Under the tax law, such NOLs and tax credits are subject to expiration from 15 to20 years after they were generated. As a result of the annual limitation that may be imposed on such tax attributes and the statutoryexpiration period, some of these tax attributes may expire prior to our being able to use them. There is no current impact on these financialstatements as a result of the annual limitation. This study did not conclude as to whether eXegenics’ pre-merger NOLs were limited underSection 382. As such, of the $362.4 million of federal net operating loss carryforwards, at least approximately $50.9 million may not beable to be utilized.

Uncertain Income Tax Positions

We file federal income tax returns in the U.S. and various foreign jurisdictions, as well as with various U.S. states and the Ontario andQuebec provinces in Canada. We are subject to routine tax audits in all jurisdictions for which we file tax returns. Tax audits by their verynature are often complex and can require several years to complete. It is reasonably possible that some audits will close within the nexttwelve months, which we do not believe would result in a material change to our accrued uncertain tax positions. Additionally, included inincome tax expense is an accrual of $2.3 million related to uncertain tax positions involving income recognition from the PfizerTransaction. We recognize that local tax law is inherently complex and the local taxing authorities may not agree with certain tax positionstaken. Consequently, it is reasonably possible that ultimate resolution of these matters in any jurisdiction may be significantly more or lessthan estimated. We evaluated the estimated tax exposure for a range of current likely outcomes to be from $0 to approximately $50.0million and recorded our accrual to reflect our best expectation of ultimate resolution.

U.S. Federal: Under the tax statute of limitations applicable to the Internal Revenue Code, we are no longer subject to U.S. federalincome tax examinations by the Internal Revenue Service for years before 2012. However, because we are carrying forward income taxattributes, such as net operating losses and tax credits from 2012 and earlier tax years, these attributes can still be audited when utilized onreturns filed in the future.

State: Under the statutes of limitation applicable to most state income tax laws, we are no longer subject to state income taxexaminations by tax authorities for years before 2012 in states in which we have filed income tax returns. Certain states may take theposition that we are subject to income tax in such states even though we have not filed income tax returns in such states and, depending onthe varying state income tax statutes and administrative practices, the statute of limitations in such states may extend to years before 2012.

Foreign: Under the statutes of limitations applicable to our foreign operations, we are generally no longer subject to tax examinationfor years before 2010 in jurisdictions where we have filed income tax returns.

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Unrecognized Tax Benefits

As of December 31, 2015, 2014, and 2013, the total amount of gross unrecognized tax benefits was approximately $8.6 million, $5.9million, and $9.2 million, respectively. As of December 31, 2015, the total gross unrecognized tax benefit of $8.6 million consisted ofincreases of $3.5 million as a result of current year activity, and decreases of $0.8 million as a result of the lapse of statutes of limitations.As of December 31, 2015, the total amount of unrecognized tax benefits that, if recognized, would affect our effective income tax rate was$0.7 million. We account for any applicable interest and penalties on uncertain tax positions as a component of income tax expense. As ofDecember 31, 2014 and 2013, $0.9 million and $0.2 million of the unrecognized tax benefits, if recognized, would have affected oureffective income tax rate. We believe it is reasonably possible that approximately $0.1 million of unrecognized tax benefits may berecognized within the next twelve months.

The following summarizes the changes in our gross unrecognized income tax benefits.

For the years ended December 31,

(In thousands) 2015 2014 2013Unrecognized tax benefits at beginning of period $ 5,890 $ 9,231 $ 9,245Gross increases – tax positions in prior period 955 524 58Gross increases – tax positions in current period 2,543 193 517Gross decreases – tax positions in prior period (176) (396) (589)Lapse of Statute of Limitations (617) (472) —Settlements — (3,190) —Unrecognized tax benefits at end of period $ 8,595 $ 5,890 $ 9,231

Other Income Tax Disclosures

The significant elements contributing to the difference between the federal statutory tax rate and the effective tax rate are as follows:

For the years ended December 31,

2015 2014 2013Federal statutory rate 35.0 % 35.0 % 35.0 %State income taxes, net of federal benefit 2.8 % 2.5 % 2.4 %Foreign income tax (7.8)% (10.3)% (7.9)%Research and development tax credits — % 1.1 % 1.0 %Non-Deductible components of Convertible Debt (9.4)% (3.8)% (16.7)%Valuation allowance 61.1 % (25.3)% (11.4)%Other (1.7)% 0.8 % (3.9)%

Total 80.0 % — % (1.5)%

The following table reconciles our losses before income taxes between U.S. and foreign jurisdictions:

For the years ended December 31,

(In thousands) 2015 2014 2013Pre-tax loss:

U.S. $ (113,612) $ (84,075) $ (74,861)Foreign (30,091) (87,567) (37,874)

Total $ (143,703) $ (171,642) $ (112,735)

No additional provision has been made for U.S. or foreign income taxes on the undistributed earnings of subsidiaries or forunrecognized deferred tax liabilities for temporary differences related to investments in subsidiaries, as such earnings are expected to bepermanently reinvested.

Note 11 Related Party Transactions

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In February 2014, Dr. Frost, our Chairman and Chief Executive Officer, paid a filing fee of $280,000 to the Federal TradeCommission (the “FTC”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) in connection with filings madeby us and Dr. Frost. We reimbursed Dr. Frost for the HSR filing fee.

In October, 2013, we paid the $170,000 filing fee to the FTC in connection with filings made by us and Dr. Hsiao, our ViceChairman of the Board and Chief Technical Officer, under the HSR Act.

We hold investments in Zebra (ownership 29%), Sevion (3%), Neovasc (4%), ChromaDex Corporation (2%), MabVax (1%), andARNO (4%). These investments were considered related party transactions as a result of our executive management’s ownership interestsand/or board representation in these entities. See further discussion of our investments in Note 4. In July 2015, we made an additional $500thousand investment in a private placement transaction with Sevion pursuant to which we acquired 66,667 shares of Series C ConvertiblePreferred Stock convertible into 666,667 shares of common stock and warrants to purchase 333,333 shares of common stock. In October2015, we made an additional $375 thousand investment in MabVax pursuant to which we acquired 340,909 shares of common stock at$1.10 and 170,454 warrants to purchase shares of common stock. In November 2015, we made an additional $1.0 million investment inZebra pursuant to which we acquired 420,000 shares of Series A-2 Preferred Stock.

In August 2013, we acquired OPKO Biologics (formerly PROLOR) pursuant to an Agreement and Plan of Merger dated as of April23, 2013 in an all-stock transaction. Until completion of the acquisition, Dr. Frost was PROLOR’s Chairman of the Board and a greaterthan 5% stockholder of PROLOR. Dr. Hsiao and Mr. Rubin were also directors and less than 5% stockholders of PROLOR.

In January 2013, we sold $175.0 million aggregate principal amount of 2033 Senior Notes in a private placement in reliance onexemptions from registration under the Securities Act. The Purchasers of the 2033 Senior Notes include the Gamma Trust and Hsu Gamma.The 2033 Senior Notes were issued on January 30, 2013.

During the years ended December 31, 2014, and 2013, FineTech recorded revenue of $0.3 million and $0.3 million, respectively, forthe sale of APIs to Teva Pharmaceutical Industries, Limited (“Teva”). Dr. Frost previously served as the Chairman of the Board ofDirectors of Teva until 2015. No revenue was recorded for the year ended December 31, 2015.

In 2012, we made a $1.7 million investment in Biozone. Effective January 2, 2014, Biozone completed a merger with CocrystalDiscovery, Inc. (“Cocrystal”), another entity in which we had an equity investment. The name of the issuer was changed to CocrystalPharma, Inc. (“COCP”). Dr. Frost previously invested in both Biozone and Cocrystal. Effective January 16, 2014, we invested an additional$0.5 million in the company as part of a $2.75 million private placement and received 1.0 million shares of common stock and 1.0 million10-year warrants exercisable at $0.50 per share. At December 31, 2015, we hold an 8% ownership interest in COCP.

We lease office space from Frost Real Estate Holdings, LLC (“Frost Holdings”) in Miami, Florida, where our principal executiveoffices are located. Effective May 28, 2015, we entered into an amendment to our lease agreement with Frost Holdings. The lease, asamended, is for approximately 25,000 square feet of space. The lease provides for payments of approximately $66 thousand per month inthe first year increasing annually to $75 thousand per month in the fifth year, plus applicable sales taxes. The rent is inclusive of operatingexpenses, property taxes and parking. The rent was reduced by $216 thousand for the cost of tenant improvements.

Our wholly-owned subsidiary, Bio-Reference purchases and uses certain products acquired from InCellDx, Inc., a company in whichwe hold a 27% minority interest in.

We reimburse Dr. Frost for Company-related use by Dr. Frost and our other executives of an airplane owned by a company that isbeneficially owned by Dr. Frost. Prior to 2015, we reimbursed Dr. Frost in an amount equal to the cost of a first class airline ticket betweenthe travel cities for each executive, including Dr. Frost, traveling on the airplane for Company-related business. Beginning in the firstquarter of 2015, we reimburse Dr. Frost for out-of-pocket operating costs for the use of the airplane by Dr. Frost or Company executivesfor Company-related business. We do not reimburse Dr. Frost for personal use of the airplane by Dr. Frost or any other executive. For theyears ended December 31, 2015, 2014, and 2013, we recognized approximately $595 thousand, $175 thousand, and $93 thousand,respectively, for Company-related travel by Dr. Frost and other OPKO executives.

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Note 12 Employee Benefit Plans

Effective January 1, 2007, the OPKO Health Savings and Retirement Plan (the “Plan”) permits employees to contribute up to 100%of qualified pre-tax annual compensation up to annual statutory limitations. The discretionary company match for employee contributionsto the Plan is 100% up to the first 4% of the participant’s earnings contributed to the Plan. Our matching contributions to the Plan wereapproximately $0.8 million, $0.6 million and $0.5 million for the years ended December 31, 2015, 2014, and 2013 respectively.

Bio-Reference Laboratories, Inc. sponsors a 401(k) Profit-Sharing Plan (the “Plan”). Employees become eligible for participationafter attaining the age of eighteen and completing one year of service. Participants may elect to contribute up to 60% of theircompensation, as defined in the Plan, to a maximum allowed by the Internal Revenue Service. Bio-Reference makes a matchingcontribution to the plan for each participant who has elected to make tax-deferred contributions. The discretionary company match foremployee contributions to the Plan is 100% up to the first 3% of the participant’s earnings contributed to the Plan, with an annualmaximum match of $1 thousand. Bio-Reference Laboratories, Inc. elected to make a matching contribution which amounted to $1.5million for the year ended December 31, 2015.

GeneDx, Inc. sponsors a 401(k) Profit-Sharing Plan (the “Plan”). Employees become eligible for participation after attaining the ageof eighteen and completing one month of service. Participants may elect to contribute up to 100% of their compensation, as defined in thePlan, to a maximum allowed by the Internal Revenue Service. GeneDx, Inc. makes a matching contribution to the plan for each participantwho has elected to make tax-deferred contributions. The discretionary company match for employee contributions to the Plan is 100% up tothe first 3%, plus 50% of the next 2% of the participant’s earnings contributed to the Plan. GeneDx, Inc. elected to make a matchingcontribution which amounted to $0.8 million for the year ended December 31, 2015.

Note 13 Commitments and Contingencies

In connection with our acquisitions of CURNA, OPKO Diagnostics, OPKO Health Europe and OPKO Renal, we agreed to pay futureconsideration to the sellers upon the achievement of certain events. As a result, as of December 31, 2015, we recorded $54.4 million ascontingent consideration, with $22.2 million recorded within Accrued expenses and $32.3 million recorded within Other long-termliabilities in the accompanying Consolidated Balance Sheets. Refer to Note 5. During the year ended December 31, 2015, we satisfied a$20.0 million contingent payment to the former owners of OPKO Renal through the issuance of 1,194,337 shares of our common stock inthe third quarter of 2015.

In July 2012, OPKO Lab received a letter from AdvanceMed Corporation (“AdvanceMed”) regarding a post-payment reviewconducted by AdvanceMed (the “Post-Payment Review Letter”). The Post-Payment Review Letter originated with a post payment reviewaudit by AdvanceMed of 183 claims submitted by OPKO Lab to the Medicare program. OPKO Lab believes that its billing practices wereappropriate and it is following the appeal process set forth by Medicare. OPKO Lab received a partially favorable determination, whichreduced the amount of the alleged overpayment, and it continues to appeal the remaining alleged overpayments. No assurances can begiven about the outcome of the appeal.

On or around October 21, 2014, we received a Civil Investigative Demand (“Demand”) from the U.S. Attorney’s Office for theMiddle District of Tennessee (“Attorney’s Office”). The Demand concerns an investigation of allegations that the Company or one of itsaffiliated entities or other parties submitted false claims for payment related to services provided to government healthcare programbeneficiaries in violation of the False Claims Act, 31 U.S.C. Section 3729. We are fully cooperating with the investigation and areproducing documents responsive to the Demand. It is too early to assess the range of loss, if any.

Following the announcement of entry into an agreement and plan of merger with Bio-Reference, four putative class action complaintschallenging the merger were filed in the Superior Court of New Jersey in Bergen County (the “Court”). The parties executed a stipulatedconsent order that the actions would be consolidated for all purposes, including trial, in the Chancery Division under Docket No. C-207-15,bearing the caption In re Bio-Reference Laboratories, Inc. Shareholder Litigation (the “Consolidated Action”). The complaints name Bio-Reference, OPKO, a wholly-owned merger subsidiary of OPKO (“Merger Sub”) and members of the Bio-Reference board as defendants.The complaints generally allege, among other things, that members of the Bio-Reference board breached their fiduciary duties to Bio-Reference’s shareholders by agreeing to sell Bio-Reference for an inadequate price and agreeing to inappropriate deal protection provisionsin the merger agreement that may preclude Bio-Reference from soliciting any potential acquirers and limit the ability of the Bio-Referenceboard to act with respect to investigating and pursuing superior proposals and alternatives. In August, the parties executed a memorandumof understanding reflecting terms of a settlement, which was replaced in September 2015 by a stipulation and agreement of compromise,settlement and release resolving all matters between them. In January 2016, the Court entered an order finally

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approving the settlement. The settlement did not have a material impact on our business, financial condition, results of operations or cashflows.

Under a license agreement one of our subsidiaries has with Washington University in St. Louis, we are obligated to pay WashingtonUniversity a single digit percentage of any sublicensing payment we receive in connection with a sublicense of our rights to WashingtonUniversity patents subject to certain exceptions. In connection with the Pfizer Transaction, we sublicensed to Pfizer the sole remainingpatent licensed to us by Washington University and paid to Washington University the sublicensing payment we believe is due under thelicense agreement. Washington University has questioned the computation of the sublicense payment and has notified us that it would liketo review additional information relating to the sublicense and the Pfizer Transaction to determine whether additional amounts are owed toit.

We accrue a liability for legal contingencies when we believe that it is both probable that a liability has been incurred and that we canreasonably estimate the amount of the loss. We review these accruals and adjust them to reflect ongoing negotiations, settlements, rulings,advice of legal counsel and other relevant information. To the extent new information is obtained and our views on the probable outcomesof claims, suits, assessments, investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the periodin which such determination is made. For the matters referenced in the paragraph below, the amount of liability is not probable or theamount cannot be reasonably estimated; and, therefore, accruals have not been made. In addition, in accordance with the relevantauthoritative guidance, for matters which the likelihood of material loss is at least reasonably possible, we provide disclosure of thepossible loss or range of loss; however, if a reasonable estimate cannot be made, we will provide disclosure to that effect.

We are a party to other litigation in the ordinary course of business. We do not believe that any such litigation will have a materialadverse effect on our business, financial condition, results of operations or cash flows.

We expect to incur substantial losses as we continue the development of our product candidates, continue our other research anddevelopment activities, and establish a pharmaceutical sales and marketing infrastructure in anticipation of the commercialization of ourpharmaceutical product candidates. We currently have limited pharmaceutical commercialization capabilities, and it is possible that wemay never successfully commercialize any of our diagnostic and pharmaceutical product candidates. We do not currently generatesignificant revenue from any of our diagnostic and pharmaceutical product candidates. Our research and development activities arebudgeted to expand over a period of time and will require further resources if we are to be successful. As a result, we believe that ouroperating losses are likely to be substantial over the next several years. We may need to obtain additional funds to further develop ourresearch and development programs, and there can be no assurance that additional capital will be available to us on acceptable terms, or atall.

We have employment agreements with certain executives which provide for compensation and certain other benefits and forseverance payments under certain circumstances.

At December 31, 2015, we were committed to make future purchases for inventory and other items in 2016 that occur in the ordinarycourse of business under various purchase arrangements with fixed purchase provisions aggregating $48.3 million.

Note 14 Strategic Alliances

Pfizer Inc.

We plan to develop a portfolio of product candidates through a combination of internal development and external partnerships. InDecember 2014, we entered into an exclusive worldwide agreement with Pfizer Inc. (“Pfizer”) for the development and commercializationof our long-acting hGH-CTP for the treatment of growth hormone deficiency (“GHD”) in adults and children, as well as for the treatmentof growth failure in children born small for gestational age (“SGA”) (the “Pfizer Transaction”).

The Pfizer Transaction closed in January 2015 following the termination of the waiting period under the Hart-Scott-Rodino Act.Under the terms of the Pfizer Transaction, we received non-refundable and non-creditable upfront payments of $295.0 million and areeligible to receive up to an additional $275.0 million upon the achievement of certain regulatory milestones. Pfizer received the exclusivelicense to commercialize hGH-CTP worldwide. In addition, we are eligible to receive initial tiered royalty payments associated with thecommercialization of hGH-CTP for Adult GHD with percentage rates ranging from the high teens to mid-twenties. Upon the launch ofhGH-CTP for Pediatric GHD in certain major markets, the royalties will transition to regional, tiered gross profit sharing for both hGH-CTPand Pfizer’s Genotropin®.

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The agreement with Pfizer will remain in effect until the last sale of the licensed product, unless earlier terminated as permitted underthe agreement. In addition to termination rights for material breach and bankruptcy, Pfizer is permitted to terminate the Agreement in itsentirety, or with respect to one or more world regions, without cause after a specified notice period. If the Agreement is terminated by usfor Pfizer’s uncured material breach, or by Pfizer without cause, provision has been made for transition of product and productresponsibilities to us for the terminated regions, as well as continued supply of product by Pfizer or transfer of supply to us in order tosupport the terminated regions.

We will lead the clinical activities and will be responsible for funding the development programs for the key indications, whichincludes Adult and Pediatric GHD and Pediatric SGA. Pfizer will be responsible for all development costs for additional indications as wellas all post-marketing studies. In addition, Pfizer will fund the commercialization activities for all indications and lead the manufacturingactivities covered by the global development plan.

For revenue recognition purposes, we viewed the Pfizer Transaction as a multiple-element arrangement. Multiple-elementarrangements are analyzed to determine whether the various performance obligations, or elements, can be separated or whether they mustbe accounted for as a single unit of accounting. We evaluated whether a delivered element under an arrangement has standalone value andqualifies for treatment as a separate unit of accounting. Deliverables that do not meet these criteria are not evaluated separately for thepurpose of revenue recognition. For a single unit of accounting, payments received are recognized in a manner consistent with the finaldeliverable. We determined that the deliverables under the Pfizer Transaction, including the licenses granted to Pfizer, as well as ourobligations to provide various research and development services, will be accounted for as a single unit of account. This determination wasmade because the ongoing research and development services to be provided by us are essential to the overall arrangement as we havesignificant knowledge and technical know-how that is important to realizing the value of the licenses granted. The performance period overwhich the revenue will be recognized is expected to continue from the first quarter of 2015 through 2019, when we anticipate completingthe various research and development services that are specified in the Pfizer Transaction and our performance obligations are completed.We will continue to review the timing of when our research and development services will be completed in order to assess that theestimated performance period over which the revenue is to be recognized is appropriate. Any significant changes in the timing of theperformance period will result in a change in the revenue recognition period.

We are recognizing the non-refundable $295.0 million upfront payments on a straight-line basis over the performance period. Werecognized $65.5 million of revenue related to the Pfizer Transaction in Revenue from transfer of intellectual property in our ConsolidatedStatement of Operations during the year ended December 31, 2015, and had deferred revenue related to the Pfizer Transaction of $229.5million at December 31, 2015. As of December 31, 2015, $70.6 million of deferred revenue related to the Pfizer Transaction was classifiedin Accrued expenses and $158.9 million was classified in Other long-term liabilities in our Consolidated Balance Sheet. During the yearended December 31, 2015, we incurred $55.3 million in research and development expenses related to hGH-CTP.

The Pfizer Transaction includes milestone payments of $275.0 million upon the achievement of certain milestones. The milestonesrange from $20.0 million to $90.0 million each and are based on achievement of regulatory approval in the U.S. and regulatory approvaland price approval in other major markets. We evaluated each of these milestone payments and believe that all of the milestones aresubstantive as (i) there is substantive uncertainty at the close of the Pfizer Transaction that the milestones would be achieved as approvalfrom a regulatory authority must be received to achieve the milestones which would be commensurate with the enhancement of value of theunderlying intellectual property, (ii) the milestones relate solely to past performance and (iii) the amount of the milestone is reasonable inrelation to the effort expended and the risk associated with the achievement of the milestone. The milestone payments will be recognizedas revenue in full in the period in which the associated milestone is achieved, assuming all other revenue recognition criteria are met. Todate, no revenue has been recognized related to the achievement of the milestones.

In the first quarter of 2015, we made a payment of $25.9 million to the Office of the Chief Scientist of the Israeli Ministry ofEconomy (“OCS”) in connection with repayment obligations resulting from grants previously made by the OCS to OPKO Biologics tosupport development of hGH-CTP and the outlicense of the technology outside of Israel. We recognized the $25.9 million payment inGrant repayment expense in our Consolidated Statement of Operations during the year ended December 31, 2015.

TESARO

In November 2009, we entered into an asset purchase agreement (the “NK-1 Agreement”) under which we acquired VARUBI™(rolapitant) and other neurokinin-1 (“NK-1”) assets from Merck. In December 2010, we entered into an exclusive license agreement withTESARO, in which we out-licensed the development, manufacture, commercialization and distribution of our lead NK-1 candidate,VARUBI™ (the “TESARO License”). Under the terms of the license, we received a $6.0 million upfront payment from TESARO and areeligible to receive milestone payments of up to $30.0 million upon achievement of

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certain regulatory and commercial sale milestones (of which $20.0 million has been received to date) and additional commercial milestonepayments of up to $85.0 million if specified levels of annual net sales are achieved. During the years ended December 31, 2015 and 2014,$15.0 million and $5.0 million of revenue, respectively, has been recognized related to the achievement of the milestones under theTESARO License. TESARO is also obligated to pay us tiered royalties on annual net sales achieved in the United States and Europe atpercentage rates that range from the low double digits to the low twenties, and outside of the United States and Europe at low double-digitpercentage rates. TESARO assumed responsibility for clinical development and commercialization of licensed products at its expense.Under the Agreement, we will continue to receive royalties on a country-by-country and product-by-product basis until the later of the datethat all of the patent rights licensed from us and covering VARUBI™ expire, are invalidated or are not enforceable and 12 years from thefirst commercial sale of the product.

If TESARO elects to develop and commercialize VARUBI™ in Japan through a third-party licensee, TESARO will share equallywith us all amounts it receives in connection with such activities, subject to certain exceptions and deductions. In addition, we will have anoption to market the products in Latin America.

The term of the license will remain in force until the expiration of the royalty term in each country, unless we terminate the licenseearlier for TESARO’s material breach of the license or bankruptcy. TESARO has a right to terminate the license at any time during theterm for any reason on three months’ written notice.

TESARO’s New Drug Application (“NDA”) for approval of oral VARUBI™, a neurokinin-1 receptor antagonist in development forthe prevention of chemotherapy-induced nausea and vomiting, was approved by the U.S. FDA in September 2015, and in November 2015,TESARO announced the commercial launch of VARUBI™ in the United States. Under the terms of the NK-1 Agreement, upon approvalby the FDA of the TESARO’s NDA for oral VARUBI™, we were required to pay Merck a $5.0 million milestone payment. In addition,$5.0 million will be due and payable each year thereafter for the next four (4) years on the anniversary date of the NDA approval. Werecognized the present value of the milestone payments on FDA approval of $23.0 million as an intangible asset which will be amortized toexpense over the expected useful life of the asset, which is approximately 13 years. The present value of the future payments to Merck of$18.2 million at December 31, 2015 is recorded as a liability in our Consolidated Balance Sheet with $5.0 million in Accrued expenses and$13.2 million in Other long-term liabilities.

Pharmsynthez

In April 2013, we entered into a series of concurrent transactions with Pharmsynthez, a Russian pharmaceutical company traded onthe Moscow Stock Exchange pursuant to which we acquired an equity method investment in Pharmsynthez (ownership 17%). We alsogranted rights to certain technologies in the Russian Federation, Ukraine, Belarus, Azerbaijan and Kazakhstan (the “Territories”) toPharmsynthez and agreed to perform certain development activities. We will receive from Pharmsynthez royalties on net sales of productsincorporating the technologies in the Territories, as well as a percentage of any sublicense income from third parties for the technologies inthe Territories.

In July 2015, we entered into a Note Purchase Agreement with Pharmsynthez pursuant to which we delivered $3.0 million toPharmsynthez in exchange for a $3.0 million note (the “Pharmsynthez Note Receivable”). The Pharmsynthez Note Receivable is due on orbefore July 1, 2016, and Pharmsynthez may satisfy the note either in cash or shares of its capital stock. We recorded the Pharmsynthez NoteReceivable within Prepaid expenses and other current assets in our Consolidated Balance Sheet.

RXi Pharmaceuticals Corporation

In March 2013, we completed the sale to RXi of substantially all of our assets in the field of RNA interference (the “RNAi Assets”)(collectively, the “Asset Purchase Agreement”). In accounting for the sale of the RNAi Assets, we determined that we did not have anycontinuing involvement in the development of the RNAi Assets or any other future performance obligations and, as a result, during the yearended December 31, 2013, we recognized $12.5 million of Revenue from transfer of intellectual property in our Consolidated Statement ofOperations.

Pursuant to the Asset Purchase Agreement, RXi will be required to pay us up to $50.0 million in milestone payments upon thesuccessful development and commercialization of each drug developed by RXi, certain of its affiliates or any of its or their licensees orsublicensees utilizing patents included within the RNAi Assets (each, a “Qualified Drug”). In addition, RXi will also be required to pay usroyalties equal to: (a) a mid single-digit percentage of “Net Sales” (as defined in the Asset Purchase Agreement) with respect to eachQualified Drug sold for an ophthalmologic use during the applicable “Royalty Period” (as defined in the Asset Purchase Agreement); and(b) a low single-digit percentage of net sales with respect to each Qualified Drug sold for a non-ophthalmologic use during the applicableroyalty period.

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Other

We have completed strategic deals with UT Southwestern, Washington University, INEOS Healthcare, TSRI, the President andFellows of Harvard College, and Academia Sinica, among others. In connection with these agreements, upon the achievement of certainmilestones we are obligated to make certain payments and have royalty obligations upon sales of products developed under the licenseagreements. At this time, we are unable to estimate the timing and amounts of payments as the obligations are based on future developmentof the licensed products.

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Note 15 Leases

Operating Leases

We conduct certain of our operations under operating lease agreements. Rent expense under operating leases was approximately $7.8million, $2.6 million, and $1.9 million for the years ended December 31, 2015, 2014, and 2013, respectively.

As of December 31, 2015, the aggregate future minimum lease payments under all non-cancelable operating leases with initial orremaining lease terms in excess of one year are as follows:

Year Ending (In thousands)2016 $ 15,8302017 10,7492018 7,8622019 6,5582020 3,208Thereafter 7,525Total minimum operating lease commitments $ 51,732

Capital Leases

We acquired various assets under capital leases in connection with our acquisition of Bio-Reference in August 2015. Capital leasesare included within Property, plant and equipment, net in our Consolidated Balance Sheet with interest rates ranging from 2% to 7% asfollows:

Capital leasesYear ended December

31, 2015

Medical Equipment $ 50,139Automobiles 6,748Total 56,887Less: Accumulated Depreciation (6,798)Net capital leases in Property, plant and equipment $ 50,089

As of December 31, 2015, the aggregate future minimum lease payments under all non-cancelable capital leases with initial orremaining lease terms in excess of one year are as follows:

Year Ending (In thousands)2016 $ 5,7622017 3,9512018 2,6072019 1,3862020 603Thereafter 794Total minimum capital lease commitments $ 15,103

Less interest: $ 445

Present value of minimum lease payments $ 14,658

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Note 16 Segments

We currently manage our operations in two reportable segments, pharmaceutical and diagnostics. The pharmaceutical segmentconsists of our pharmaceutical operations we acquired in Chile, Mexico, Ireland, Israel and Spain and our pharmaceutical research anddevelopment. The diagnostics segment primarily consists of our clinical laboratory operations we acquired through the acquisitions of Bio-Reference and OPKO Lab and our point-of-care operations. There are no significant inter-segment sales. We evaluate the performance ofeach segment based on operating profit or loss. There is no inter-segment allocation of interest expense and income taxes.

Information regarding our operations and assets for our operating segments and the unallocated corporate operations as well asgeographic information are as follows:

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For the years ended December 31,

(In thousands) 2015 2014 2013

Revenue from services: Pharmaceutical $ — $ — $ —Diagnostics 329,599 8,426 10,833Corporate 140 240 825

$ 329,739 $ 8,666 $ 11,658Product revenues:

Pharmaceutical $ 80,146 $ 76,983 $ 68,161Diagnostics — — —Corporate — — —

$ 80,146 $ 76,983 $ 68,161Revenue from transfer of intellectual property:

Pharmaceutical $ 81,853 $ 5,285 $ 15,160Diagnostics — 191 1,551Corporate — — —

$ 81,853 $ 5,476 $ 16,711Operating (loss) income:

Pharmaceutical $ (40,395) $ (94,401) $ (29,809)Diagnostics (10,294) (21,647) (22,199)Corporate (46,512) (27,725) (24,473)Less: Operating loss attributable to noncontrolling interests (1,280) (2,042) (3,151)

$ (98,481) $ (145,815) $ (79,632)Depreciation and amortization:

Pharmaceutical $ 10,245 $ 7,936 $ 8,234Diagnostics 31,918 6,894 6,833Corporate 85 97 149

$ 42,248 $ 14,927 $ 15,216Net loss from investment in investees:

Pharmaceutical $ (7,105) $ (3,587) $ (11,456)Diagnostics — — —Corporate — — —

$ (7,105) $ (3,587) $ (11,456)Revenues:

United States $ 344,464 $ 14,142 $ 28,369Ireland 78,989 — —Chile 29,885 29,154 31,650Spain 16,622 21,323 18,800Israel 18,107 20,638 13,252Mexico 3,671 5,807 4,459Other — 61 —

$ 491,738 $ 91,125 $ 96,530

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(In thousands)December 31,

2015 December 31,

2014Assets:

Pharmaceutical $ 1,258,011 $ 1,064,498Diagnostics 1,479,841 108,072Corporate 61,762 95,094

$ 2,799,614 $ 1,267,664Goodwill:

Pharmaceutical $ 251,225 $ 173,327Diagnostics 492,123 50,965Corporate — —

$ 743,348 $ 224,292

During the year ended December 31, 2015, revenue recognized under the Pfizer Transaction represented 13% of our total revenue.During the year ended December 31, 2014, one customer of our pharmaceutical segment represented 13% of our total revenue. During theyear ended December 31, 2013, no customer represented more than 10% of our total revenue. As of December 31, 2015, one customerrepresented more than 10% of our accounts receivable balance. As of December 31, 2014 and 2013, no customer represented more than10% of our accounts receivable balance.

The following table reconciles our Property, plant and equipment, net between U.S. and foreign jurisdictions:

(In thousands) December 31, 2015 December 31, 2014PP&E:

U.S. $ 113,307 $ 4,286Foreign 18,491 12,125

Total $ 131,798 $ 16,411

Note 17 Fair Value Measurements

We record fair values at an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability inan orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based onassumptions that market participants would use in pricing an asset or liability. We utilize a three-tier fair value hierarchy, which prioritizesthe inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets;Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined asunobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

A summary of our investments classified as available for sale and carried at fair value, is as follows:

As of December 31, 2015

(In thousands)Amortized

Cost

Grossunrealized

gains inAccumulated

OCI

Grossunrealizedlosses in

AccumulatedOCI

Fairvalue

Common stock investments, available for sale $ 2,978 $ 904 $ (267) $ 3,615Total assets $ 2,978 $ 904 $ (267) $ 3,615

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As of December 31, 2014

(In thousands)Amortized

Cost

Grossunrealized

gains inAccumulated

OCI

Grossunrealizedlosses in

AccumulatedOCI

Fairvalue

Common stock investments, available for sale $ 10,038 $ 293 $ (4,573) $ 5,758Total assets $ 10,038 $ 293 $ (4,573) $ 5,758

Any future fluctuation in fair value related to our available for sale investments that is judged to be temporary, and any recoveries ofprevious write-downs, will be recorded in Accumulated other comprehensive income or loss. If we determine that any future valuationadjustment was other-than-temporary, we will record a loss during the period such determination is made. Any future changes in the fairvalue of option and warrant instruments will be recorded in Fair value changes of derivative instruments, net in our ConsolidatedStatements of Operations.

As of December 31, 2015, we have money market funds that qualify as cash equivalents, forward foreign currency exchangecontracts for inventory purchases (Refer to Note 18) and contingent consideration related to the acquisitions of CURNA, OPKODiagnostics, OPKO Health Europe, and OPKO Renal that are required to be measured at fair value on a recurring basis. In addition, inconnection with our investment and our consulting agreement with Neovasc, we record the related Neovasc options at fair value as well asthe warrants from COCP, ARNO, Sevion and MabVax.

Our financial assets and liabilities measured at fair value on a recurring basis are as follows:

Fair value measurements as of December 31, 2015

(In thousands)

Quotedprices in

activemarkets for

identicalassets

(Level 1)

Significantother

observableinputs

(Level 2)

Significantunobservable

inputs(Level 3) Total

Assets: Money market funds $ 84,421 $ — $ — $ 84,421Common stock investments, available for sale 3,615 — — 3,615Common stock options/warrants — 5,338 — 5,338Forward contracts — 9 — 9

Total assets $ 88,036 $ 5,347 $ — $ 93,383Liabilities:

Embedded conversion option $ — $ — $ 23,737 $ 23,737Contingent consideration:

CURNA — — 411 411OPKO Diagnostics — — 12,141 12,141OPKO Renal — — 41,400 41,400OPKO Health Europe — — 470 470

Total liabilities $ — $ — $ 78,159 $ 78,159

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Fair value measurements as of December 31, 2014

(In thousands)

Quotedprices in

activemarkets for

identicalassets

(Level 1)

Significantother

observableinputs

(Level 2)

Significantunobservable

inputs(Level 3) Total

Assets: Money market funds $ 71,286 $ — $ — $ 71,286Common stock investments, available for sale 5,758 — — 5,758Common stock options/warrants — 6,314 — 6,314Forward contracts — 36 — 36

Total assets $ 77,044 $ 6,350 $ — $ 83,394Liabilities:

Embedded conversion option $ — $ — $ 65,947 $ 65,947Contingent consideration:

CURNA — — 440 440OPKO Diagnostics — — 13,578 13,578OPKO Renal — — 55,780 55,780OPKO Health Europe — — 1,769 1,769

Total liabilities $ — $ — $ 137,514 $ 137,514

The carrying amount and estimated fair value of our 2033 Senior Notes without the embedded conversion option, as well as theapplicable fair value hierarchy tiers, are contained in the table below. The fair value of the 2033 Senior Notes is determined using abinomial lattice approach in order to estimate the fair value of the embedded derivative in the 2033 Senior Notes. Refer to Note 6.

December 31, 2015

(In thousands)Carrying

Value Total

Fair Value Level 1 Level 2 Level 32033 Senior Notes $ 25,675 $ 24,647 $ — $ — $ 24,647

There have been no transfers between Level 1 and Level 2 and no transfers to or from Level 3 of the fair value hierarchy.

December 31, 2014

(In thousands)Carrying

Value Total

Fair Value Level 1 Level 2 Level 32033 Senior Notes $ 65,507 $ 63,062 $ — $ — $ 63,062

There have been no transfers between Level 1 and Level 2 and no transfers to or from Level 3 of the fair value hierarchy.

As of December 31, 2015 and 2014, the carrying value of our other assets and liabilities approximates their fair value due to theirshort-term nature.

The following tables reconcile the beginning and ending balances of our Level 3 assets and liabilities as of December 31, 2015 and2014:

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December 31, 2015

(In thousands)Contingent

consideration

Embeddedconversion

optionBalance at December 31, 2014 $ 71,567 $ 65,947

Total losses (gains) for the period: Included in results of operations 5,050 36,587Foreign currency impact (269) —

Payments (21,926) —Conversion — (78,797)

Balance at December 31, 2015 $ 54,422 $ 23,737

December 31, 2014

(In thousands)Contingent

consideration

Deferredacquisition

payments, netof discount

Embeddedconversion

optionBalance at December 31, 2013 $ 71,620 $ 5,465 $ 101,087

Total losses (gains) for the period: Included in results of operations 24,446 (735) 12,213Foreign currency impact (130) — —

Payments (24,369) (4,730) —Conversion — — (47,353)

Balance at December 31, 2014 $ 71,567 $ — $ 65,947

The estimated fair values of our financial instruments have been determined by using available market information and what webelieve to be appropriate valuation methodologies. We use the following methods and assumptions in estimating fair value:

Contingent consideration – We estimate the fair value of the contingent consideration utilizing a discounted cash flow model for theexpected payments based on estimated timing and expected revenues. We use several discount rates depending on each type of contingentconsideration related to OPKO Diagnostics, CURNA, OPKO Health Europe, OPKO Renal and Merck (VARUBI™) transactions. Ifestimated future sales were to decrease by 10%, the contingent consideration related to OPKO Renal would decrease by $1.7 million. As ofDecember 31, 2015, of the $54.4 million of contingent consideration, $22.2 million is recorded in Accrued expenses and $32.3 million isrecorded in Other long-term liabilities. As of December 31, 2014, of the $71.6 million of contingent consideration, $27.4 million isrecorded in Accrued expenses and $44.2 million is recorded in Other long-term liabilities.

Deferred payments – We estimate the fair value of the deferred payments utilizing a discounted cash flow model for the expectedpayments.

Embedded conversion option – We estimate the fair value of the embedded conversion option related to the 2033 Senior Notes usinga binomial lattice model. Refer to Note 6 for detail description of the binomial lattice model and the fair value assumptions used.

Note 18 Derivative Contracts

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The following table summarizes the fair values and the presentation of our derivative financial instruments in the ConsolidatedBalance Sheets:

(In thousands) Balance Sheet Component December 31,

2015 December 31,

2014

Derivative financial instruments: Common stock options/warrants Investments, net $ 5,338 $ 6,314

Embedded conversion option 2033 Senior Notes, net of discount and estimatedfair value of embedded derivatives $ 23,737 $ 65,947

Forward contracts

Unrealized gains on forward contracts are recordedin Prepaid expenses and other current assets.Unrealized losses on forward contracts are recordedin Accrued expenses.

$ 9

$ 36

We enter into foreign currency forward exchange contracts to cover the risk of exposure to exchange rate differences arising frominventory purchases on letters of credit. Under these forward contracts, for any rate above or below the fixed rate, we receive or pay thedifference between the spot rate and the fixed rate for the given amount at the settlement date.

To qualify the derivative instrument as a hedge, we are required to meet strict hedge effectiveness and contemporaneousdocumentation requirements at the initiation of the hedge and assess the hedge effectiveness on an ongoing basis over the life of the hedge.At December 31, 2015 and 2014, our derivative financial instruments do not meet the documentation requirements to be designated ashedges. Accordingly, we recognize the changes in Fair value of derivative instruments, net in our Consolidated Statements of Operations.The following table summarizes the losses and gains recorded for the years ended December 31, 2015 and 2014:

For the years ended December 31,

(In thousands) 2015 2014 2013

Derivative gain (loss): Common stock options/warrants $ (2,854) $ 1,193 $ 6,5442033 Senior Notes (36,588) (12,213) (52,742)Forward contracts $ 359 $ 388 $ 256

Total $ (39,083) $ (10,632) $ (45,942)

Note 19 Selected Quarterly Financial Data (Unaudited)

For the 2015 Quarters Ended

(In thousands, except per share data) March 31 June 30 September 30 December 31Total revenues $ 30,084 $ 42,429 $ 143,034 $ 276,191Total costs and expenses 86,998 67,838 151,257 284,126Net income (loss) (118,037) (43,241) 128,247 1,603Net income (loss) attributable to common shareholders (117,112) (42,766) 128,247 1,603Earnings (loss) per share, basic $ (0.26) $ (0.09) $ 0.26 $ —Earnings (loss) per share, diluted $ (0.26) $ (0.09) $ 0.18 $ —

For the 2014 Quarters Ended(In thousands, except per share data) March 31 June 30 September 30 December 31Total revenues $ 22,274 $ 23,545 $ 19,773 $ 25,533Total costs and expenses 52,550 58,429 67,974 57,987Net loss (45,088) (26,075) (50,014) (53,461)

Net loss attributable to common shareholders (44,548) (25,478) (48,669) (52,971)Earnings (loss) per share, basic $ (0.11) $ (0.06) $ (0.11) $ (0.12)Earnings (loss) per share, diluted $ (0.11) $ (0.08) $ (0.11) $ (0.12)

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For the third quarter of 2015, we previously reported diluted earnings per share ("EPS") of $0.25. We have corrected the amount to$0.18 to reflect an immaterial adjustment calculation.

Note 20 Subsequent Events

On January 5, 2016, we announced that our 2033 Senior Notes continue to be convertible by holders of such notes. We have electedto satisfy our conversion obligation under the 2033 Senior Notes in shares of our Common Stock. This conversion right has been triggeredbecause the closing price per share of our Common Stock has exceeded $9.19, or 130% of the initial conversion price of $7.07, for at least20 of 30 consecutive trading days during the period ending on December 31, 2015. The conversion right was previously triggered duringthe quarters ended March 31, 2015, June 30, 2015 and September 30, 2015. The 2033 Senior Notes will continue to be convertible untilMarch 31, 2016, and may be convertible thereafter, if one or more of the conversion conditions specified in the Indenture, dated as ofJanuary 30, 2013, by and between the Company and Wells Fargo Bank N.A., is satisfied during future measurement periods. Pursuant tothe Indenture, a holder who elects to convert the 2033 Senior Notes will receive 141.4827 shares of our Common Stock plus such numberof additional shares as is applicable on the conversion date per $1,000 principal amount of 2033 Senior Notes based on the early conversionprovisions in the Indenture.

We have reviewed all subsequent events and transactions that occurred after the date of our December 31, 2015 Consolidated BalanceSheet date, through the time of filing this Annual Report on Form 10-K.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectivenessof the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of1934, as amended (the “Exchange Act”)) as of December 31, 2015. Our disclosure controls and procedures are designed to providereasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act isrecorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and ExchangeCommission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that informationrequired to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated tothe company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisionsregarding required disclosure. Based on this evaluation, management concluded that our disclosure controls and procedures were effectiveas of December 31, 2015.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term isdefined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Our internal control over financialreporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles. All internal control systems, nomatter how well designed, have inherent limitations. Therefore, even those systems determined effective could provide only reasonableassurance with respect to financial statement preparation and presentation.

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31,2015, based on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizationsof the Treadway Commission (the “2013 Internal Control-Integrated Framework”). Based on our evaluation under the framework in 2013Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as ofDecember 31, 2015. As permitted, our management’s assessment of and conclusion on the effectiveness of our internal control overfinancial reporting did not include the internal controls of EirGen Pharma Limited (“EirGen”) or Bio-Reference Laboratories, Inc. (“Bio-Reference”), because they were acquired by us in business combinations in May 2015 and August 2015, respectively. EirGen and Bio-Reference’s assets excluded from the annual assessment process were 15% of consolidated total assets as of December 31, 2015 and 68% ofconsolidated revenues for the year then ended as a result of the closing of the acquisitions in May 2015 and August 2015.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 has been audited by Ernst &Young LLP, our independent registered public accounting firm, who also audited our Consolidated Financial Statements included in thisAnnual Report on Form 10-K, as stated in their report which appears with our accompanying Consolidated Financial Statements.

Changes to the Company’s Internal Control Over Financial Reporting

In connection with the acquisitions of EirGen in May 2015 and Bio-Reference in August 2015, we began implementing standards andprocedures at EirGen and Bio-Reference, including establishing controls over accounting systems and establishing controls over thepreparation of financial statements in accordance with generally accepted accounting principles to ensure that we have in place appropriateinternal control over financial reporting at EirGen and Bio-Reference. We are continuing to integrate the acquired operations of EirGen andBio-Reference into our overall internal control over financial reporting process.

These changes to the Company’s internal control over financial reporting that occurred during the most recent quarter endedDecember 31, 2015 have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financialreporting.

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ITEM 9B. OTHER INFORMATION

None.

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PART III

The information required in Items 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation),Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (CertainRelationships and Related Transactions, and Director Independence), and Item 14 (Principal Accounting Fees and Services) is incorporatedby reference to the Company’s definitive proxy statement for the 2016 Annual Meeting of Stockholders to be filed with the Securities andExchange Commission within 120 days of December 31, 2015.

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PART IV.

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) (1) Financial Statements: See Part II, Item 8 of this report.

We will file the financial statement schedule entitled "Schedule I - Condensed Financial Information of Registrant" byamendment to this Part IV, Item 15 of this Form 10-K within 30 days. Additionally, the financial statement schedule entitled“Schedule II – Valuation and Qualifying Accounts” has been omitted since the information required is included in theconsolidated financial statements and notes thereto.

(2) Exhibits: See below.

ExhibitNumber Description

1.1(12)Underwriting Agreement, dated March 9, 2011, by and among OPKO Health, Inc., Jefferies & Company,Inc. and J.P. Morgan Securities LLC, as representatives for the underwriters named therein.

2.1(1)

Merger Agreement and Plan of Reorganization, dated as of March 27, 2007, by and among AcuityPharmaceuticals, Inc., Froptix Corporation, eXegenics, Inc., e-Acquisition Company I-A, LLC, and e-Acquisition Company II-B, LLC.

2.2(3)+Securities Purchase Agreement, dated May 2, 2008, by and among Vidus Ocular, Inc., OPKOInstrumentation, LLC, OPKO Health, Inc., and the individual sellers and noteholders named therein.

2.3(9)

Purchase Agreement, dated February 17, 2010, by and among Ignacio Levy García and José de Jesús LevyGarcía, Inmobiliaria Chapalita, S.A. de C.V., Pharmacos Exakta, S.A. de C.V., OPKO Health, Inc., OPKOHealth Mexicana S. de R.L. de C.V., and OPKO Manufacturing Facilities S. de R.L. de C.V.

2.4(14)+Agreement and Plan of Merger, dated January 28, 2011, by and among CURNA Inc., KUR, LLC, OPKOPharmaceuticals, LLC, OPKO CURNA, LLC, and certain individuals named therein.

2.5(15)

Agreement and Plan of Merger, dated October 13, 2011, by and among OPKO Health, Inc., Claros MergerSubsidiary, LLC, Claros Diagnostics, Inc., and Ellen Baron, Marc Goldberg and Michael Magliochetti onbehalf of the Shareholder Representative Committee.

2.6(17)+Stock Purchase Agreement, dated December 20, 2011, by and among FineTech Pharmaceutical Ltd., ArieGutman, OPKO Holdings Israel Ltd., and OPKO Health, Inc.

2.7(18)

Purchase Agreement, dated January 20, 2012, by and among OPKO Health, Inc., OPKO Chile S.A.,Samuel Alexandre Arama, Inversiones SVJV Limitada, Bruno Sergiani, Inversiones BS Limitada, Pierre-Yves LeGoff, and Inversiones PYTT Limitada.

2.8(19)+Stock Purchase Agreement, dated August 2, 2012, by and among Farmadiet Group Holding, S.L., theSellers party thereto, OPKO Health, Inc., and Shebeli XXI, S.L.U.

2.9(21)+

Agreement and Plan of Merger, dated October 18, 2012, by and among Prost-Data, Inc. d/b/a OurLab, OurLabs, Endo Labs and Gold Lab, Jonathan Oppenheimer, M.D., OPKO Health, Inc., OPKO LaboratoriesInc., and OPKO Labs, LLC.

2.10(22)+

Share Purchase Agreement, dated January 8, 2013, by among Cytochroma Inc., Cytochroma HoldingsULC, Cytochroma Canada Inc., Cytochroma Development Inc., Proventiv Therapeutics, LLC, CytochromaCayman Islands, Ltd., OPKO Health, Inc., and OPKO IP Holdings, Inc.

2.11(23)Asset Purchase Agreement, dated March 1, 2013, by and between RXi Pharmaceuticals Corporation andOPKO Health, Inc.

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2.12(24)Agreement and Plan of Merger, dated April 23, 2013, by and among OPKO Health, Inc., POM AcquisitionInc., and PROLOR Biotech, Inc.

2.13(28)+Agreement for the Sale and Purchase of Shares in EirGen Pharma Limited, dated May 5, 2015 by andamong OPKO Ireland Limited, OPKO Health, Inc. and the Sellers named therein.

2.14(28)+Form of Additional Agreement for the Sale and Purchase of Shares in EirGen Pharma Limited, datedMay 5, 2015 by and among OPKO Ireland Limited and the Sellers named therein.

2.15(29)+Agreement and Plan of Merger by and among the Company, Bamboo Acquisition, Inc. and Bio-ReferenceLaboratories, Inc. dated as of June 3, 2015.

3.1(27) Amended and Restated Certificate of Incorporation, as amended.

3.2(2) Amended and Restated Bylaws. 3.3(7) Certificate of Designation of Series D Preferred Stock. 4.1(1) Form of Common Stock Warrant. 4.2(7) Form of Common Stock Warrant.

4.3(25)Indenture, dated January 30, 2013, between OPKO Health, Inc. and Wells Fargo Bank, NationalAssociation.

10.1(1) Form of Lockup Agreement.

10.2(2)Stock Purchase Agreement, dated December 4, 2007, by and between OPKO Health, Inc. and themembers of The Frost Group, LLC.

10.3(2)* OPKO Health, Inc. 2007 Equity Incentive Plan. 10.4(26)* Amendment to OPKO Health, Inc. 2007 Equity Incentive Plan. 10.5(3) Form of Director Indemnification Agreement. 10.6(3) Form of Officer Indemnification Agreement.

10.7(4)Stock Purchase Agreement, dated August 8, 2008 by and between OPKO Health, Inc. and the Purchasersnamed therein.

10.8(5)Stock Purchase Agreement, dated February 23, 2009 by and between OPKO Health, Inc. and FrostGamma Investments Trust.

10.9(6)

Form of Stock Purchase Agreement for transactions between OPKO Health, Inc. and Nora Real EstateSA., Vector Group Ltd., Oracle Partners LP, Oracle Institutional Partners, LP., Chung Chia CompanyLimited, Gold Sino Assets Limited, and Grandtime Associates Limited.

10.10(6)Stock Purchase Agreement, dated June 10, 2009, by and among OPKO Health, Inc. and SorrentoTherapeutics, Inc.

10.11(7) Form of Securities Purchase Agreement for Series D Preferred Stock. 10.12(8)* Form of Restricted Share Award Agreement for Directors.

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10.13(8) Cocrystal Discovery, Inc. Agreements.

10.14(11)

Stock Purchase Agreement, dated October 1, 2009, by and among the Laboratoria Volta S.A., FarmaciasAhumada S.A., FASA Chile S.A., OPKO Chile Limitada and Inversones OPKO Limitada, subsidiaries ofOPKO Health, Inc.

10.15(10)+Asset Purchase Agreement, dated October 12, 2009, by and between OPKO Health, Inc. and ScheringCorporation.

10.16(10) Letter Agreement, dated June 29, 2010, by and between OPKO Health, Inc. and Schering Corporation.

10.17(16)+Exclusive License Agreement by and between TESARO, Inc. and OPKO Health, Inc. datedDecember 10, 2010.

10.18(13)Third Amended and Restated Subordinated Note and Security Agreement, dated February 22, 2011,between OPKO Health, Inc. and The Frost Group, LLC.

10.19(15)+Asset Purchase Agreement dated September 21, 2011, by and among Optos plc, Optos Inc., OPKOHealth, Inc., OPKO Instrumentation, LLC, Ophthalmic Technologies, Inc., and OTI (UK) Limited.

10.20(20)Form of Note Purchase Agreement, dated as of January 25, 2013, by and among OPKO Health, Inc. andeach purchaser a party thereto.

10.21(30)+Development and Commercialization License Agreement by and between OPKO Ireland, Ltd., asubsidiary of OPKO Health, Inc., and Pfizer, Inc. dated December 13, 2014.

10.22Credit Agreement by and between Bio-Reference Laboratories, Inc. and certain of its subsidiaries andJPMorgan Chase Bank, N.A. dated November 5, 2015.

21 Subsidiaries of the Company. 23.1 Consent of Ernst & Young LLP.

23.2Consent of MSPC Certified Public Accountants and Advisors, P.C. relating to Bio-ReferenceLaboratories, Inc.’s financial statements.

31.1

Certification by Phillip Frost, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a) of theSecurities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of2002 for the quarterly period ended December 31, 2015.

31.2

Certification by Adam Logal, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a) of theSecurities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of2002 for the quarterly period ended December 31, 2015.

32.1

Certification by Phillip Frost, Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended December 31,2015.

32.2

Certification by Adam Logal, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended December 31,2015.

99.1(31)

The audited consolidated balance sheets of Bio-Reference Laboratories, Inc. and its subsidiaries as ofOctober 31, 2014 and 2013, and the related consolidated statements of operations, shareholders’ equity,and cash flows for each of the years in the three-year period ended October 31, 2014, and the notes andthe independent auditor’s reports thereto.

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99.2(32)

The unaudited consolidated balance sheet of Bio-Reference Laboratories, Inc. and its subsidiaries as ofApril 30, 2015, the related unaudited consolidated statements of operations, and statements of cash flowsfor the three and six months ended April 30, 2015, and the notes thereto.

99.3(33)The unaudited pro forma condensed combined financial statements of the Company and Bio-ReferenceLaboratories, Inc.

101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

* Denotes management contract or compensatory plan orarrangement.

+ Certain confidential material contained in the document has been omitted and filed separately with the Securities and ExchangeCommission.

(1) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 2, 2007,and incorporated herein by reference.

(2) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2008and incorporated herein by reference.

(3) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 8,2008 for the Company’s three-month period ended June 30, 2008, and incorporated herein by reference.

(4) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission onNovember 12, 2008 for the Company’s three-month period ended September 30, 2008, and incorporated herein by reference.

(5) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2009for the Company’s three-month period ended March 31, 2009, and incorporated herein by reference.

(6) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 7,2009 for the Company’s three-month period ended June 30, 2009, and incorporated herein by reference.

(7) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 24,2009, and incorporated herein by reference.

(8) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9,2009 for the Company’s three-month period ended September 30, 2009, and incorporated herein by reference.

(9) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2010for the Company’s three-month period ended March 31, 2010, and incorporated herein by reference.

(10) Filed with the Company’s Amendment to Annual Report on Form 10-K filed with the Securities and Exchange Commission onFebruary 3, 2011.

(11) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17,2010.

(12) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2011,and incorporated herein by reference.

(13) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2011for the Company’s three-month period ended March 31, 2011, and incorporated herein by reference.

(14) Filed with the Company’s Quarterly Report on Form 10-Q/A filed with the Securities and Exchange Commission on July 5,2011, and incorporated herein by reference.

(15) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9,2011 for the Company’s three-month period ended September 30, 2011, and incorporated herein by reference.

(16) Filed with the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on July 28,2011.

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(17) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15,2012.

(18) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2012for the Company’s three-month period ended March 31, 2012, and incorporated herein by reference.

(19) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9,2012 for the Company’s three-month period ended September 30, 2012, and incorporated herein by reference.

(20) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29,2013, and incorporated herein by reference.

(21) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 18,2013.

(22) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2013for the Company’s three-month period ended March 31, 2013, and incorporated herein by reference.

(23) Filed with the Company’s Schedule 13D filed with the Securities and Exchange Commission on March 22, 2013, andincorporated herein by reference.

(24) Filed as Annex A to the Company’s Preliminary Joint Proxy Statement/Prospectus, Form S-4, with the Securities ExchangeCommission on June 27, 2013, as amended, and incorporated herein by reference.

(25) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 5,2013, and incorporated herein by reference.

(26) Filed with the Company’s Current Report on Form 8-K filed with the Securities Exchange Commission on August 30, 2013,and incorporated herein by reference.

(27) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November12, 2013 for the Company’s three month period ended September 30, 2013, and incorporated herein by reference.

(28) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 5,2015 for the Company’s three month period ended June 30, 2015, and incorporated herein by reference.

(29) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 4, 2015,and incorporated herein by reference.

(30) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27,2015, and incorporated herein by reference.

(31) Filed under Part II, Item 8, of the Bio-Reference Laboratories, Inc. Form 10-K filed with the Securities and ExchangeCommission on January 13, 2015 (File No. 0-15266), and incorporated herein by reference.

(32) Filed under Part I, Item 1, of the Bio-Reference Laboratories, Inc. Form 10-Q filed with the Securities and ExchangeCommission on June 9, 2015 (File No. 0-15266), and incorporated herein by reference.

(33) Filed under the heading “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 27 of theCompany’s Registration Statement on Form S-4/A filed with the Securities and Exchange Commission on July 15, 2015 (FileNo. 333-205480), and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 29, 2016 OPKO HEALTH, INC. By: /s/ Phillip Frost, M.D. Phillip Frost, M.D. Chairman of the Board and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons onbehalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date/s/ Phillip Frost, M.D. Chairman of the Board and Chief Executive February 29, 2016Phillip Frost, M.D.

Officer

(Principal Executive Officer) /s/ Jane H. Hsiao, Ph.D., MBA Vice Chairman and Chief Technical Officer February 29, 2016Jane H. Hsiao, Ph.D., MBA /s/ Steven D. Rubin Director and Executive Vice President – February 29, 2016Steven D. Rubin Administration /s/ Adam Logal Senior Vice President, Chief Financial Officer, February 29, 2016Adam Logal

Chief Accounting Officer and Treasurer

(Principal Financial Officer) /s/ Robert Baron Director February 29, 2016Robert Baron /s/ Thomas E. Beier Director February 29, 2016Thomas E. Beier /s/ Dmitry Kolosov Director February 29, 2016Dmitry Kolosov /s/ Richard A. Lerner, M.D. Director February 29, 2016Richard A. Lerner, M.D. /s/ John A. Paganelli Director February 29, 2016John A. Paganelli /s/ Richard C. Pfenniger, Jr. Director February 29, 2016Richard C. Pfenniger, Jr. /s/ Alice Lin-Tsing Yu, M.D., Ph.D. Director February 29, 2016Alice Lin-Tsing Yu, M.D., Ph.D.

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Exhibit Index

Exhibit Number Description 10.22 Credit Agreement by and between Bio-Reference Laboratories, Inc. and certain of its subsidiaries and

JPMorgan Chase Bank, N.A. dated November 5, 2015. 21 Subsidiaries of the Company. 23.1 Consent of Ernst & Young LLP. 23.2 Consent of MSPC Certified Public Accountants and Advisors, P.C. relating to Bio-Reference

Laboratories, Inc.’s financial statements. 31.1 Certification by Phillip Frost, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a) of the

Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of2002 for the quarterly period ended December 31, 2015.

31.2 Certification by Adam Logal, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a) of theSecurities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of2002 for the quarterly period ended December 31, 2015.

32.1 Certification by Phillip Frost, Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended December 31,2015.

32.2 Certification by Adam Logal, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended December 31,2015.

101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

132

EXECUTION VERSION

CREDIT AGREEMENT

dated as of

November 5, 2015,

among

BIO-REFERENCE LABORATORIES, INC.,as the Company,

The Subsidiaries from time to time party hereto as Subsidiary Borrowers,The other Loan Parties party hereto,

The Lenders Party Hereto,

and

JPMORGAN CHASE BANK, N.A.,as Administrative Agent

___________________________

J.P. MORGAN SECURITIES LLC,as Sole Bookrunner and Sole Lead Arranger

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TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS 1

Section 1.01. DefinedTerms 1

Section 1.02. Classification of Loans andBorrowings 38

Section 1.03. TermsGenerally 38

Section 1.04. Accounting Terms;GAAP 39

Section 1.05. Status ofObligations 39

Section 1.06. Adjustments for Acquisitions andDispositions 40

ARTICLE II THECREDITS 40

Section 2.01. Commitments 40

Section 2.02. Loans andBorrowings 40

Section 2.03. Requests forBorrowings 41

Section 2.04. ProtectiveAdvances 42

Section 2.05. Swingline Loans andOveradvances 43

Section 2.06. Letters of Credit 44

Section 2.07. Funding ofBorrowings 49

Section 2.08. InterestElections 50

Section 2.09. Termination and Reduction of Commitments; Increase in RevolvingCommitments 51

Section 2.10. Repayment and Amortization of Loans; Evidence ofDebt 53

Section 2.11. Prepayment ofLoans 54

Section 2.12. Fees 55

Section 2.13. Interest 56

Section 2.14. Alternate Rate of Interest 57

Section 2.15. IncreasedCosts 57

Section 2.16. Break FundingPayments 59

Section 2.17. Withholding of Taxes; Gross-Up 59

Section 2.18. Payments Generally; Allocation of Proceeds; Sharing of Set-offs 63

Section 2.19. Mitigation Obligations; Replacement ofLenders 66

Section 2.20. Defaulting

Lenders 67Section 2.21. Returned

Payments 68

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TABLE OF CONTENTS(continued)

Page

Section 2.22. Banking Services and SwapAgreements 69

ARTICLE III REPRESENTATIONS ANDWARRANTIES 69

Section 3.01. Organization;Powers 69

Section 3.02. Authorization;Enforceability 69

Section 3.03. Governmental Approvals; NoConflicts 70

Section 3.04. Financial Condition; No Material AdverseChange 70

Section 3.05. Properties 70

Section 3.06. Litigation and EnvironmentalMatters 70

Section 3.07. Compliance with Laws and Agreements; NoDefault 71

Section 3.08. Investment CompanyStatus 71

Section 3.09. Taxes 71

Section 3.10. ERISA 71

Section 3.11. Disclosure 72

Section 3.12. [Reserved.] 72

Section 3.13. Solvency 72

Section 3.14. Insurance 72

Section 3.15. Capitalization andSubsidiaries 72

Section 3.16. Security Interest in Collateral 72

Section 3.17. EmploymentMatters 73

Section 3.18. Federal ReserveRegulations 73

Section 3.19. Use ofProceeds 73

Section 3.20. No Burdensome Restrictions 73

Section 3.21. Anti-Corruption Laws andSanctions 73

Section 3.22. CommonEnterprise 73

Section 3.23. Healthcare ReimbursementMatters 74

ARTICLE IV CONDITIONS 74

Section 4.01. EffectiveDate 74

Section 4.02. Each Credit Event 77

ARTICLE V AFFIRMATIVECOVENANTS 78

Section 5.01. Financial Statements; Borrowing Base andOther

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TABLE OF CONTENTS(continued)

Page

Information 78

Section 5.02. Notices of MaterialEvents 81

Section 5.03. Existence; Conduct of Business; FiscalYear 82

Section 5.04. Payment ofObligations 82

Section 5.05. Maintenance of Properties 82

Section 5.06. Books and Records; InspectionRights 83

Section 5.07. Compliance withLaws 83

Section 5.08. Use ofProceeds 84

Section 5.09. Accuracy of Information 84

Section 5.10. Insurance 84

Section 5.11. Casualty andCondemnation 84

Section 5.12. Additional Collateral; FurtherAssurances 85

Section 5.13. Post ClosingCovenants 86

ARTICLE VI NEGATIVECOVENANTS 87

Section 6.01. Indebtedness 87

Section 6.02. Liens 89

Section 6.03. FundamentalChanges 90

Section 6.04. Investments, Loans, Advances, Guarantees and Acquisitions 91

Section 6.05. Asset Sales 92

Section 6.06. Sale and LeasebackTransactions 93

Section 6.07. SwapAgreements 93

Section 6.08. Restricted Payments; Certain Payments ofIndebtedness 94

Section 6.09. Transactions with Affiliates 94

Section 6.10. RestrictiveAgreements 94

Section 6.11. Amendment of OrganizationalDocuments 95

Section 6.12. Fixed Charge CoverageRatio 95

Section 6.13. HoldingCompany 95

ARTICLE VII EVENTS OF DEFAULT 96

ARTICLE VIII THE ADMINISTRATIVEAGENT 99

Section 8.01. Appointment 99

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TABLE OF CONTENTS(continued)

Page

Section 8.02. Rights as a Lender 100

Section 8.03. Duties andObligations 100

Section 8.04. Reliance 100

Section 8.05. Actions through Sub-Agents 101

Section 8.06. Resignation 101

Section 8.07. Non-Reliance 102

Section 8.08. Other Agency Titles 103

Section 8.09. Not Partners or Co-Venturers; Administrative Agent as Representative of the Secured Parties 103

Section 8.10. FloodLaws 103

ARTICLE IX MISCELLANEOUS 104

Section 9.01. Notices 104

Section 9.02. Waivers;Amendments 106

Section 9.03. Expenses; Indemnity; DamageWaiver 108

Section 9.04. Successors andAssigns 111

Section 9.05. Survival 115

Section 9.06. Counterparts; Integration; Effectiveness;Electronic

Execution 115

Section 9.07. Severability 116

Section 9.08. Right ofSetoff 116

Section 9.09. Governing Law; Jurisdiction; Consent to Service of Process 116

Section 9.10. WAIVER OF JURY TRIAL 117

Section 9.11. Headings 117

Section 9.12. Confidentiality 117

Section 9.13. Several Obligations; Nonreliance; Violation ofLaw 118

Section 9.14. USA PATRIOTAct 118

Section 9.15. Disclosure 119

Section 9.16. Appointment forPerfection 119

Section 9.17. Interest RateLimitation 119

Section 9.18. MarketingConsent 119

ARTICLE X LOANGUARANTY 119

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TABLE OF CONTENTS(continued)

Page

Section 10.01. Guaranty 119

Section 10.02. Guaranty of Payment 120

Section 10.03. No Discharge or Diminishment of Loan Guaranty 120

Section 10.04. DefensesWaived 121

Section 10.05. Rights ofSubrogation 121

Section 10.06. Reinstatement; Stay ofAcceleration 121

Section 10.07. Information 122

Section 10.08. Termination 122

Section 10.09. Taxes 122

Section 10.10. MaximumLiability 122

Section 10.11. Contribution 123

Section 10.12. LiabilityCumulative 123

Section 10.13. Keepwell 124

ARTICLE XI THE BORROWERREPRESENTATIVE 124

Section 11.01. Appointment; Nature ofRelationship 124

Section 11.02. Powers 124

Section 11.03. Employment of Agents 125

Section 11.04. Notices 125

Section 11.05. Successor BorrowerRepresentative 125

Section 11.06. Execution of Loan Documents; Borrowing Base Certificate 125

Section 11.07. Reporting 125

NAI-1500544456v14 v

SCHEDULES:

Commitment ScheduleSchedule 3.05 -- PropertiesSchedule 3.14 -- InsuranceSchedule 3.15 -- Capitalization and SubsidiariesSchedule 6.01 -- Existing IndebtednessSchedule 6.02 -- Existing LiensSchedule 6.04 -- Existing InvestmentsSchedule 6.10 -- Existing Restrictions

EXHIBITS:

Exhibit A -- Form of Assignment and AssumptionExhibit B -- Form of Borrowing Base CertificateExhibit C -- Form of Compliance CertificateExhibit D -- Joinder AgreementExhibit E-1 -- U.S. Tax Certificate (For Foreign Lenders that are not Partnerships for U.S. Federal Income Tax Purposes)Exhibit E-2 -- U.S. Tax Certificate (For Foreign Participants that are not Partnerships for U.S. Federal Income Tax Purposes)Exhibit E-3 -- U.S. Tax Certificate (For Foreign Participants that are Partnerships for U.S. Federal Income Tax Purposes)Exhibit E-4 -- U.S. Tax Certificate (For Foreign that are Partnerships for U.S. Federal Income Tax Purposes)

NAI-1500544456v14 vi

CREDIT AGREEMENT dated as of November 5, 2015 (this “ Agreement”), among BIO-REFERENCE LABORATORIES,INC., a New Jersey corporation (the “Company”), the Subsidiary Borrowers party hereto, the other Loan Parties party hereto, theLenders party hereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“Account” has the meaning assigned to such term in the Security Agreement.

“Account Debtor” means any Person obligated on an Account.

“Acquisition” means any transaction, or any series of related transactions, consummated on or after the Effective Date, bywhich any Loan Party, directly or indirectly, acquires (in one transaction or as the most recent transaction in a series of transactions)(a) all or substantially all of the assets of any Person or of any business of any Person, whether through purchase of assets, mergeror otherwise or (b) at least a majority (in voting power) of the Equity Interests of a Person which has ordinary voting power for theelection of directors or other similar management personnel of a Person (other than Equity Interests having such power only byreason of the happening of a contingency) or a majority of the outstanding Equity Interests of a Person causing such Person tobecome a Subsidiary of a Loan Party.

“Adjusted LIBO Rate ” means, with respect to any Eurodollar Borrowing for any Interest Period or for any CBFRBorrowing, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for suchInterest Period multiplied by (b) the Statutory Reserve Rate.

“Adjusted One Month LIBOR Rate ” means, for any day, an interest rate per annum equal to the sum of (i) 2.50% plus (ii)the Adjusted LIBO Rate for a one month interest period on such day (or if such day is not a Business Day, the immediatelypreceding Business Day); provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on theLIBO Screen Rate at approximately 11:00 a.m. London time on such day; provided further, that, if the LIBO Screen Rate at suchtime shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lendershereunder.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

NAI-1500544456v14

“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 specified Person.

“Aggregate Credit Exposure” means, at any time, the aggregate Credit Exposure of all the Lenders at such time.

“Aggregate Revolving Commitment” means, at any time, the aggregate of the Revolving Commitments of all of theLenders, as increased or reduced from time to time pursuant to the terms and conditions hereof. As of the Effective Date, theAggregate Revolving Commitment is $175,000,000.

“Aggregate Revolving Exposure” means, at any time, the aggregate Revolving Exposure of all the Lenders at such time.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Parent, IntermediateHoldco, the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.

“Applicable Percentage” means, with respect to any Lender, (a) with respect to Revolving Loans, LC Exposure,Overadvances or Swingline Loans, a percentage equal to a fraction the numerator of which is such Lender’s RevolvingCommitment and the denominator of which is the Aggregate Revolving Commitment, provided that, if the RevolvingCommitments have terminated or expired, the Applicable Percentages shall be determined based upon such Lender’s share of theAggregate Revolving Exposure at that time), and (b) with respect to Protective Advances or with respect to the Aggregate CreditExposure, a percentage based upon its share of the Aggregate Credit Exposure and the unused Commitments; provided that, inaccordance with Section 2.20, so long as any Lender shall be a Defaulting Lender, such Defaulting Lender’s Commitment shall bedisregarded in the calculations under clauses (a) and (b) above.

“Applicable Rate” means, for any day, (a) with respect to Eurodollar Loans and Letters of Credit, (i) until, but not including,the first anniversary of the Effective Date, 1.35% per annum, and (ii) thereafter, 1.50% per annum, and (b) with respect to CBFRLoans, (i) until, but not including, the first anniversary of the Effective Date, 0.35% per annum, and (ii) thereafter, 0.50% perannum.

“Approved Fund” has the meaning assigned to such term in Section 9.04.

“Assignment and Assumption ” means an assignment and assumption agreement entered into by a Lender and an assignee(with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form ofExhibit A or any other form approved by the Administrative Agent.

“Availability” means, at any time, an amount equal to (a) the lesser of (i) the Aggregate Revolving Commitment and (ii) theBorrowing Base minus (b) the Aggregate Revolving Exposure (calculated, with respect to any Defaulting Lender, as if suchDefaulting Lender had funded its

NAI-1500544456v14 2

Applicable Percentage of all outstanding Borrowings), all as determined by the Administrative Agent in its Permitted Discretion inaccordance with this Agreement.

“Availability Period ” means the period from and including the Effective Date to but excluding the earlier of the MaturityDate and the date of termination of the Commitments.

“Available Revolving Commitment” means, at any time, the Aggregate Revolving Commitment minus the AggregateRevolving Exposure (calculated, with respect to any Defaulting Lender, as if such Defaulting Lender had funded its ApplicablePercentage of all outstanding Borrowings).

“Banking Services” means each and any of the following bank services provided to any Loan Party or its Subsidiaries byany Lender or any of its Affiliates: (a) credit cards for commercial customers (including, without limitation, “commercial creditcards” and purchasing cards), (b) stored value cards, (c) merchant processing services, and (d) treasury management services(including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, any direct debit schemeor arrangement, overdrafts and interstate depository network services).

“Banking Services Obligations” means any and all obligations of the Loan Parties and their Subsidiaries, whether absoluteor contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions andmodifications thereof and substitutions therefor) in connection with Banking Services.

“Banking Services Reserves” means all Reserves which the Administrative Agent from time to time establishes in itsPermitted Discretion for Banking Services then provided or outstanding.

“Bankruptcy Event” means, with respect to any Person, when such Person becomes the subject of a bankruptcy orinsolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors orsimilar Person charged with the reorganization or liquidation of its business, appointed for it, or, in the good faith determination ofthe Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, anysuch proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or theacquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless suchownership interest results in or provides such Person with immunity from the jurisdiction of courts within the U.S. or from theenforcement of judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority orinstrumentality), to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

“Beneficial Owner” means, with respect to any U.S. Federal withholding Tax, the beneficial owner, for U.S. Federal incometax purposes, to whom such Tax relates.

“Board” means the Board of Governors of the Federal Reserve System of the U.S.

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“Borrower” or “Borrowers” means, individually and collectively as the context may require, the Company and eachSubsidiary Borrower.

“Borrower Representative” has the meaning assigned to such term in Section 11.01.

“Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the caseof Eurodollar Loans, as to which a single Interest Period is in effect, (b) Loans of the same Type, made, converted or continued onthe same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, (c) a Swingline Loan, (d) aProtective Advance and (e) an Overadvance.

“Borrowing Base” means, at any time, the sum of (a) the lesser of (i) 85% of the Borrowers’ Eligible Accounts at such timeand (ii) the Borrowers’ Eligible Collected A/R Amount at such time minus (b) Reserves.

The aggregate amount of Eligible Accounts attributable to any Borrower at any time shall not exceed the aggregate amountof net Accounts calculated in accordance with GAAP attributable to such Borrower as set forth on the most recent Borrowing BaseCertificate delivered to the Administrative Agent pursuant to Section 5.01(g) of this Agreement.

The Administrative Agent may, in its Permitted Discretion, reduce the advance rates set forth above, adjust Reserves orreduce one or more of the other elements used in computing the Borrowing Base, with any such changes to be effective three (3)Business Days after receipt of written notice thereof by the Borrower Representative and the Lenders. The Borrowing Base at anytime shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuantto Section 5.01(g) of this Agreement.

“Borrowing Base Certificate” means a certificate, signed and certified as accurate and complete by a Financial Officer ofthe Borrower Representative, in substantially the form of Exhibit B or another form which is acceptable to the Administrative Agentin its sole discretion.

“Borrowing Base Reporting Date” means (a) during any period that is not an Increased Reporting Period, twenty (20)Business Days after the end of each fiscal month of the Company and (b) during any Increased Reporting Period, five (5) BusinessDays after the end of each week.

“Borrowing Request” means a request by the Borrower Representative for a Borrowing in accordance with Section 2.03.

“Burdensome Restrictions” means any consensual encumbrance or restriction of the type described in clause (a) or (b) ofSection 6.10.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York Cityare authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term“Business Day” shall also exclude any day on which banks are not open for general business in London.

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“Capital Expenditures” means, without duplication, any expenditure or commitment to expend money for any purchase orother acquisition of any asset which would be classified as a fixed or capital asset on a consolidated balance sheet of the Companyand its Subsidiaries prepared in accordance with GAAP, including, without limitation, Capital Lease Obligations.

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under anylease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations arerequired to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of suchobligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Capped Adjustments” means (a) any additions to EBITDA pursuant to clause (a)(xii) of the definition of such term and (b)any Pro Forma Capped Adjustments.

“CB Floating Rate ” means the Prime Rate; provided that the CB Floating Rate shall never be less than the Adjusted OneMonth LIBOR Rate on such day (or if such day is not a Business Day, the immediately preceding Business Day). Any change in theCB Floating Rate due to a change in the Prime Rate or the Adjusted One Month LIBOR Rate shall be effective from and includingthe effective date of such change in the Prime Rate or the Adjusted One Month LIBOR Rate, respectively.

“CBFR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising suchBorrowing, bear interest at a rate determined by reference to the CB Floating Rate.

“Change in Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Personor group (within the meaning of Section 13(d) of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as ineffect on the date hereof) (other than Dr. Phillip Frost, M.D. or any Person or group Controlled by Dr. Phillip Frost, M.D.), ofEquity Interests representing more than 35% of the aggregate ordinary voting power (with equivalent economic interests)represented by the issued and outstanding Equity Interests of Parent; (b) the occupation of a majority of the seats (other than vacantseats) on the board of directors of the Parent by Persons who were neither (i) nominated, appointed and/or approved (or approvedfor election) by the board of directors of the Parent nor (ii) nominated, appointed and/or approved (or approved for election) bydirectors so nominated, appointed and/or approved; (c) either the Parent or Intermediate Holdco shall cease to own and Controldirectly, free and clear of all Liens or other encumbrances (other than Permitted Encumbrances and the Liens created pursuant theLoan Documents), 100% of the outstanding voting Equity Interests (with equivalent economic interests) of the Company on a fullydiluted basis; (d) after the formation of Intermediate Holdco, the Parent shall cease to own and Control directly, free and clear of allLiens or other encumbrances (other than Permitted Encumbrances and the Liens created pursuant the Loan Documents), 100% ofthe outstanding voting Equity Interests (with equivalent economic interests) of Intermediate Holdco on a fully diluted basis; or (e)the Company shall cease to own and Control, directly, free and clear of all Liens or other encumbrances (other than PermittedEncumbrances and the Liens created pursuant the Loan Documents), 100% of the outstanding voting Equity Interests (withequivalent economic interests) of the other Borrowers on a fully diluted basis.

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“Change in Law” means the occurrence after the date of this Agreement (or, with respect to any Lender, such later date onwhich such Lender becomes a party to this Agreement) of any of the following: (a) the adoption of or taking effect of any law, rule,regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or applicationthereof by any Governmental Authority; or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.15(b),by any lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request,guideline, requirement or directive (whether or not having the force of law) of any Governmental Authority made or issued after thedate of this Agreement; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform andConsumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewithor in the implementation thereof, and (y) all requests, rules, guidelines, requirements or directives promulgated by the Bank forInternational Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United Statesor foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,regardless of the date enacted, adopted, issued or implemented.

“Charges” has the meaning assigned to such term in Section 9.17.

“Chase” means JPMorgan Chase Bank, N.A., a national banking association, in its individual capacity, and its successors.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising suchBorrowing, are Revolving Loans, Swingline Loans or Protective Advances or Overadvances.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” means any and all property owned, leased or operated by a Person covered by the Collateral Documents andany and all other property of any Loan Party, now existing or hereafter acquired, that may at any time be, become or be intended tobe, subject to a security interest or Lien in favor of the Administrative Agent, on behalf of itself and the Lenders and other SecuredParties, to secure the Secured Obligations, in each case to the extent not constituting Excluded Property (as defined in the SecurityAgreement).

“Collateral Access Agreement” has the meaning assigned to such term in the Security Agreement.

“Collateral Documents” means, collectively, the Security Agreement, the Parent Pledge Agreement, the IntermediateHoldco Pledge Agreement, and any other agreements, instruments and documents executed in connection with this Agreement thatare intended to create, perfect or evidence Liens to secure the Secured Obligations, including, without limitation, all other securityagreements, pledge agreements, mortgages, deeds of trust, loan agreements, notes, guarantees, subordination agreements, pledges,powers of attorney, consents, assignments, contracts, fee letters, notices, leases, financing statements and other documents whethertheretofore, now or hereafter executed by any Loan Party and delivered to the Administrative Agent.

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“Collection Account” has the meaning assigned to such term in the Security Agreement.

“Commercial LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstandingcommercial Letters of Credit plus (b) the aggregate amount of all LC Disbursements relating to commercial Letters of Credit thathave not yet been reimbursed by or on behalf of the Borrowers. The Commercial LC Exposure of any Revolving Lender at any timeshall be its Applicable Percentage of the aggregate Commercial LC Exposure at such time.

“Commitment” means, with respect to each Lender, the sum of such Lender’s Revolving Commitment, together with thecommitment of such Lender to acquire participations in Protective Advances hereunder. The initial amount of each Lender’sCommitment is set forth on the Commitment Schedule, or in the Assignment and Assumption pursuant to which such Lender shallhave assumed its Commitment, as applicable.

“Commitment Schedule” means the Schedule attached hereto identified as such.

“Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time,and any successor statute.

“Communications” has the meaning assigned to such term in Section 9.01(d).

“Company” has the meaning assigned to such term in the preamble.

“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.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management orpolicies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”have meanings correlative thereto.

“Credit Exposure” means, as to any Lender at any time, the sum of (a) such Lender’s Revolving Exposure at such time, plus(b) an amount equal to its Applicable Percentage, if any, of the aggregate principal amount of Protective Advances outstanding atsuch time.

“Credit Party” means the Administrative Agent, the Issuing Bank, the Swingline Lender or any other Lender.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or bothwould, unless cured or waived, become an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded orpaid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swingline Loans or (iii)pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, suchLender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that acondition precedent to funding (specifically identified and including the particular Default, if any) has not been satisfied; (b) hasnotified any Borrower or any Credit Party

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in writing, or has made a public statement, to the effect that it does not intend or expect to comply with any of its fundingobligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’sgood faith determination that a condition precedent (specifically identified and including the particular Default, if any) to funding aLoan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) hasfailed, within three (3) Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing froman authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fundprospective Loans and participations in then outstanding Letters of Credit and Swingline Loans under this Agreement, provided thatsuch Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification inform and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event.

“Disqualified Stock” means any Equity Interests which, by its terms (or by the terms of any security into which it isconvertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the resultof an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, oris redeemable at the option of the holder thereof, in whole or in part, or requires the payment of any cash dividend or any otherscheduled payment constituting a return of capital, in each case at any time on or prior to the first anniversary of the Maturity Date,or (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) cash, (ii) debt securities or (iii) anyEquity Interests referred to in (a) above, in each case at any time prior to the first anniversary of the Maturity Date. Notwithstandingthe foregoing, any Equity Interests that would constitute Disqualified Stock solely because holders of the Equity Interests have theright to require the issuer of such Equity Interests to repurchase such Equity Interests upon the occurrence of a change of control oran asset sale will not constitute Disqualified Stock if the terms of such Equity Interests provide that the issuer may not repurchase orredeem any such Equity Interests pursuant to such provisions unless such repurchase or redemption is permitted under the terms ofthis Agreement.

“dollars” or “$” refers to lawful money of the U.S.

“Domestic Subsidiary” means a Subsidiary organized under the laws of a jurisdiction located in the U.S.

“Dominion Period” means (a) any period during which any Event of Default has occurred and is continuing or (b) anyperiod (i) commencing at any time when Availability shall be less than the greater of (A) $22,500,000 and (B) 12.5% of theAggregate Revolving Commitment, in each case under this clause (b), for a period of at least five (5) consecutive Business Days,and (ii) ending when Availability shall have been greater than the greater of (A) $22,500,000 and (B) 12.5% of the AggregateRevolving Commitment for a period of thirty (30) consecutive days.

“EBITDA” means, for any period, Net Income for such period plus

(a) without duplication and to the extent deducted in determining Net Income for such period, the sum of

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(i) Interest Expense for such period,

(ii) income tax expense for such period,

(iii) all amounts attributable to depreciation and amortization expense for such period, including, without limitation,amortization of financing costs of the Company and its Subsidiaries for such period,

(iv) any extraordinary non-cash charges for such period,

(v) any other non-cash charges for such period (but excluding any non-cash charge in respect of an item that wasincluded in Net Income in a prior period),

(vi) out-of-pocket fees, costs and expenses incurred in connection with the Merger,

(vii) prepayment premiums, fees, penalties, yield maintenance charges and similar costs incurred in connection withthe repayment or prepayment of any existing Indebtedness to be repaid from the proceeds of the initial Borrowing and anyother Indebtedness permitted to be repaid or prepaid pursuant to the terms of this Agreement,

(viii) out-of-pocket fees and expenses payable in connection with (1) the issuance of any stock or stock equivalentspermitted by this Agreement, (2) any Permitted Acquisition to the extent such fees and expenses are disclosed to andapproved by Agent, in its reasonable credit judgment and (3) the incurrence of any Indebtedness permitted by this Agreement(in each case whether or not consummated), to the extent not included in interest expense,

(ix) out-of-pocket costs, fees, and expenses incurred in connection with the Transactions occurring in connectionwith the initial closing of this Agreement,

(x) expenses with respect to liability or casualty events solely to the extent (A) deducted in computing Net Incomefor such period and (B) insurance proceeds in the amount of such expenses shall have been received during such period,

(xi) charges, losses, lost profits, expenses or write-offs to the extent actually indemnified or insured by third partiesand the related proceeds paid to a Loan Party, and

(xii) one-time non-recurring or unusual expenses not otherwise added back to EBITDA and certified as such in acertificate of an officer of the Borrower Representative describing such expenses in reasonable detail, including, withoutlimitation, restructuring expenses, severance expenses, relocation expenses, acquisition costs, integration costs, businessoptimization costs or signing, retention or completion bonuses, and approved by Agent, in its reasonable credit judgment;provided, that the amount of charges, costs and expenses added back pursuant to this clause (xii) for such period, togetherwith the aggregate amount of all other Capped Adjustments for such period, shall not exceed 10% of EBITDA for such perioddetermined prior to giving effect to any addback for any Capped Adjustments,

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minus

(b) without duplication and to the extent included in Net Income,

(i) any cash payments made during such period in respect of non-cash charges described in clause (a)(v) taken in aprior period and

(ii) any extraordinary gains and any non-cash items of income for such period, all calculated for the Company andits Subsidiaries on a consolidated basis in accordance with GAAP;

provided that, during any period that includes an Acquisition or disposition permitted under this Agreement, such calculation shallbe subject to the adjustments set forth in Section 1.06.

“ECP” means an “eligible contract participant” as defined in Section 1(a)(18) of the Commodity Exchange Act or anyregulations promulgated thereunder and the applicable rules issued by the Commodity Futures Trading Commission and/or theSEC.

“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordancewith Section 9.02).

“Effective Date EBITDA” means $90,500,000.

“Effective Date Fixed Charges” means $29,100,000.

“Effective Date Unfinanced Capital Expenditures” means $24,300,000.

“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or otherrecord and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

“Electronic System” means any electronic system, including e-mail, e-fax, Intralinks ®, ClearPar®, Debt Domain, Syndtrakand any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the AdministrativeAgent and the Issuing Bank and any of its respective Related Parties or any other Person, providing for access to data protected bypasscodes or other security system.

“Eligible Account Debtor” means each Account Debtor (other than a natural person) that is a Third Party Payor.

“Eligible Accounts” means each Account of a Borrower owing by an Eligible Account Debtor that, at the time of creationand at all times thereafter is not ineligible for inclusion in the calculation of the Borrowing Base pursuant to any of clauses below.Without limiting the Administrative Agent’s discretion provided herein, Eligible Accounts shall not include any Account:

(a) which is not subject to a first priority perfected security interest in favor of the Administrative Agent;

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(b) which is subject to any Lien other than (i) a Lien in favor of the Administrative Agent and (ii) a PermittedEncumbrance which does not have priority over the Lien in favor of the Administrative Agent;

(c) (i) except as set forth in the proviso below, with respect to which the scheduled due date is more than 120 days after thedate that the initial services giving rise to such Account are performed (e.g., the date specimens are first collected or proceduresfirst performed) (the “Service Performance Date”), or (ii) which is unpaid more than 120 days after the Service Performance Date(“Overage”) (when calculating the amount under this clause (ii), for the same Account Debtor, the Administrative Agent shallinclude the net amount of such Overage and add back any credits, but only to the extent that such credits do not exceed the totalgross receivables from such Account Debtor), or (iii) which has been written off the books of such Borrower or otherwisedesignated as uncollectible; provided that Accounts owing to GeneDX which are unpaid more than 120 days after the ServicePerformance Date but less than 150 days after the Service Performance Date and that otherwise constitute Eligible Accounts (suchAccounts, “Specified GeneDX Accounts ”) shall not be excluded pursuant to clauses (c)(i) or (ii) above except to the extent thatsuch Accounts exceed 10% of the Borrowing Base (but only to the extent of such excess and as such percentage shall be calculatedbefore giving Borrowing Base credit to the Specified GeneDX Accounts);

(d) (i) which is owing by an Account Debtor (other than Government Account Debtors) with an Investment Grade Ratingto the extent the aggregate amount of Accounts owing from such Account Debtor and its Affiliates to (A) such Borrower exceeds20% of the aggregate amount of all Accounts of such Borrower or (B) all Borrowers exceeds 20% of the aggregate amount of allAccounts of all Borrowers or (ii) which is owing by an Account Debtor (other than Government Account Debtors or AccountDebtors with an Investment Grade Rating) to the extent the aggregate amount of Accounts owing from such Account Debtor and itsAffiliates to (A) such Borrower exceeds 15% of the aggregate amount of all Accounts of such Borrower or (B) all Borrowersexceeds 15% of the aggregate amount of all Accounts of all Borrowers;

(e) with respect to which any covenant contained in this Agreement or in the Security Agreement has been breached orany representation or warranty contained in this Agreement is not true in any material respect;

(f) which (i) does not arise from the sale of goods or performance of services in the ordinary course of business, (ii) is notevidenced by an invoice or other documentation satisfactory to the Administrative Agent which has been sent to the AccountDebtor, (iii) represents a progress billing, (iv) is contingent upon such Borrower’s completion of any further performance, or (v)represents a sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment, cash-on-delivery or any otherrepurchase or return basis;

(g) with respect to which any check or other instrument of payment has been returned uncollected for any reason;

(h) which is owed by an Account Debtor which has (i) applied for, suffered, or consented to the appointment of anyreceiver, custodian, trustee, or liquidator of its assets, (ii) had possession of all or a material part of its property taken by anyreceiver, custodian, trustee or liquidator, (iii)

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filed, or had filed against it, any request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudicationas bankrupt, winding-up, or voluntary or involuntary case under any state or federal bankruptcy laws, (iv) admitted in writing itsinability, or is generally unable to, pay its debts as they become due, (v) become insolvent, or (vi) ceased operation of its business;

(i) which is owed by any Account Debtor which has sold all or substantially all of its assets;

(j) which is owed by an Account Debtor which (i) does not maintain its chief executive office in the U.S. or (ii) is notorganized under applicable law of the U.S., any state of the U.S., or the District of Columbia unless, in any such case, such Accountis backed by a Letter of Credit acceptable to the Administrative Agent which is in the possession of, and is directly drawable by, theAdministrative Agent;

(k) which is owed in any currency other than U.S. dollars;

(l) which is owed by (i) any Governmental Authority of any country other than the U.S., or (ii) any GovernmentalAuthority of the U.S., or any department, agency, public corporation, or instrumentality thereof (other than any GovernmentAccount Debtor), unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15et seq.), and any other steps necessary to perfect the Lien of the Administrative Agent in such Account have been complied with tothe Administrative Agent’s reasonable satisfaction;

(m) which is owed by any Affiliate of any Loan Party or any employee, officer, director, agent or stockholder of any LoanParty or any of its Affiliates;

(n) which is owed by an Account Debtor or any Affiliate of such Account Debtor to which any Loan Party is indebted, butonly to the extent of such indebtedness, or is subject to any security, deposit, progress payment, retainage or other similar advancemade by or for the benefit of an Account Debtor, in each case to the extent thereof;

(o) which is subject to any good faith counterclaim, deduction, defense, setoff or dispute but only to the extent of any suchcounterclaim, deduction, defense, setoff or dispute, in each case, whether in favor of the Account Debtor, any of its Affiliates, orotherwise;

(p) which is evidenced by any promissory note, chattel paper or instrument;

(q) (i) which is owed by an Account Debtor located in any jurisdiction which requires filing of a “Notice of BusinessActivities Report” or other similar report in order to permit such Borrower to seek judicial enforcement in such jurisdiction ofpayment of such Account, unless such Borrower has filed such report or qualified to do business in such jurisdiction or (ii) which isa Sanctioned Person;

(r) with respect to which such Borrower has made any agreement with the Account Debtor for any reduction thereof, otherthan discounts and adjustments given in the ordinary course

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of business but only to the extent of any such reduction, or any Account which was partially paid and such Borrower created a newreceivable for the unpaid portion of such Account;

(s) which does not comply in all material respects with the requirements of all applicable laws and regulations, whetherFederal, state or local, including without limitation the Federal Consumer Credit Protection Act, the Federal Truth in Lending Actand Regulation Z of the Board;

(t) which (i) relates to goods sold or services provided through discontinued operations (e.g., The Genetics Center) or otherassets and operations currently held for sale, (ii) for which Natera is the Account Debtor, (iii) was billed under the Hunter Labslegacy billing system, or (iv) relates to the CareEvolve.com business;

(u) as to which such Borrower is or has been audited by any Third Party Payor of such Account and either (i) any of suchaudits provides for adjustments in reimbursable costs or asserts claims for reimbursement or repayment by such Borrower of costsand/or payments theretofore made by such Third Party Payor that, if adversely determined, in the aggregate would reasonably beexpected to have a Material Adverse Effect or (ii) such Borrower has had requests or assertions of claims for reimbursement orrepayment by it of costs and/or payments theretofore made by any Third Party Payor that, if adversely determined, in the aggregatewould reasonably be expected to have a Material Adverse Effect; and

(v) which exceeds the amount such Borrower is entitled to receive under any capitation arrangement, fee schedule,discount formula, cost-based reimbursement or other adjustment or limitation to such Person’s usual charges (to the extent of suchexcess).

In the event that an Account of a Borrower which was previously an Eligible Account ceases to be an Eligible Accounthereunder, such Borrower or the Borrower Representative shall notify the Administrative Agent thereof on and at the time ofsubmission to the Administrative Agent of the next Borrowing Base Certificate. In determining the amount of an Eligible Accountof a Borrower, the face amount of an Account may, in the Administrative Agent’s Permitted Discretion, be reduced by, withoutduplication, to the extent not reflected in such face amount, (i) the amount of all accrued, actual, or anticipated discounts, claims,credits or credits pending, contractual allowances, price adjustments, finance charges or other allowances (including any amountthat such Borrower may be obligated to rebate to an Account Debtor pursuant to the terms of any agreement or understanding(written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account but not yet applied by such Borrowerto reduce the amount of such Account. Standards of eligibility may be made more restrictive from time to time by theAdministrative Agent in the exercise of its Permitted Discretion, with any such changes to be effective three (3) Business Days afterreceipt of written notice thereof by the Borrower Representative and the Lenders.

“Eligible Collected A/R Amount ” means, at any time of determination and as reported in the most recent Borrowing BaseCertificate delivered pursuant to Section 5.01(g), (a) with respect to Borrowing Base Certificates delivered during the fiscal monthsof February, March, April, or May, the aggregate cash proceeds of Eligible Accounts of a Borrower paid by the applicable AccountDebtors during the 75 consecutive calendar day period ending on the last day of the period for which such Borrowing BaseCertificate is delivered and (b) with respect to Borrowing Base Certificates

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delivered during any fiscal month (other than the fiscal months of February, March, April, or May), the aggregate cash proceeds ofEligible Accounts of a Borrower paid by the applicable Account Debtors during the 60 consecutive calendar day period ending onthe last day of the period for which such Borrowing Base Certificate is delivered.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, noticesor binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment,preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material or tohealth and safety matters.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs ofenvironmental remediation, fines, penalties or indemnities), of any Borrower or Subsidiary directly or indirectly resulting from orbased upon (a) any violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment ordisposal of any Hazardous Materials, (c) any exposure to any Hazardous Materials, (d) the Release or threatened Release of anyHazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to whichliability is assumed or imposed with respect to any of the foregoing.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company,beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling theholder thereof to purchase or acquire any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with a Borrower, is treated as asingle employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of theCode, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder,with respect to a Plan (other than an event for which the 30‑day notice period is waived); (b) the failure to satisfy the “minimumfunding standard” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuantto Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard withrespect to any Plan; (d) the incurrence by any Borrower or any ERISA Affiliate of any liability under Title IV of ERISA withrespect to the termination of any Plan; (e) the receipt by any Borrower or any ERISA Affiliate from the PBGC or a planadministrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)the incurrence by any Borrower or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal of anyBorrower or any ERISA Affiliate from any Plan or Multiemployer Plan; or (g) the receipt by any Borrower or any ERISA Affiliateof any notice, or the receipt by any Multiemployer Plan from any Borrower or any ERISA Affiliate of any notice,

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concerning the imposition upon any Borrower or any ERISA Affiliate of Withdrawal Liability or a determination that aMultiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising suchBorrowing, bear interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default ” has the meaning assigned to such term in Article VII.

“Excluded Subsidiary” means (a) any Subsidiary that is prohibited by applicable law (or, with respect to any joint venture,by any Requirement of Law) from guaranteeing or securing the Obligations or for which a guaranty of, or security interest withrespect to, the Obligations would require the consent, license, approval, or authorization of a Governmental Authority (or in thecase of any joint venture, any other Person) (but only for so long as such prohibition exists or such consent, license, approval, orauthorization is required), (b) any Foreign Subsidiary, (c) any Subsidiary that is not a Material Subsidiary, (d) any DomesticSubsidiary that is a Subsidiary of a Foreign Subsidiary, (e) any Domestic Subsidiary substantially all the assets of which consist ofthe Equity Interests of Foreign Subsidiaries and, if applicable, debt of such Foreign Subsidiaries, and (f) any other Subsidiary withrespect to which, in the reasonable judgment of the Administrative Agent and the Borrower Representative, the cost or burden ofproviding a guarantee shall outweigh the benefits to be obtained by the Lenders therefrom.

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or aportion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation(or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of theCommodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’sfailure for any reason to constitute an ECP at the time the Guarantee of such Guarantor or the grant of such security interestbecomes or would become effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreementgoverning more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swapsfor which such Guarantee or security interest is or becomes illegal.

“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), franchiseTaxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or havingits principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or anypolitical subdivision thereof) or (ii) that are Other Connection Taxes; (b) in the case of a Lender, U.S. Federal withholding Taxesimposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan, Letter of Credit orCommitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan, Letter of Credit orCommitment (other than pursuant to an assignment request by the Borrowers under Section 2.19(b)) or (ii) such Lender changes itslending office, except in each case to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were payableeither

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to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan, Letter of Credit orCommitment or to such Lender immediately before it changed its lending office; (c) Taxes attributable to such Recipient’s failure tocomply with Section 2.17(f); and (d) any U.S. Federal withholding Taxes imposed under FATCA.

“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 regulations orofficial interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal fundsbrokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not sopublished for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotationsfor such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standingselected by it; provided, that, if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero forpurposes of this Agreement.

“Financial Officer” means the chief financial officer, principal accounting officer, treasurer, controller, or any vice president(who is familiar with the business and financial condition of the Company and its Subsidiaries) of the Company or the BorrowerRepresentative, as applicable.

“Fixed Charge Coverage Ratio” means, at any date, the ratio of (a) LTM EBITDA minus LTM Unfinanced CapitalExpenditures to (b) LTM Fixed Charges.

“Fixed Charges” means, for any period, without duplication, cash Interest Expense, plus scheduled principal payments onIndebtedness, plus expenses for taxes paid in cash, plus dividends or distributions paid in cash (other than the Initial Post ClosingDividend), plus Capital Lease Obligation payments, all calculated for the Company and its Subsidiaries on a consolidated basis inaccordance with GAAP.

“Flood Laws” has the meaning assigned to such term in Section 8.10.

“Foreign Lender” means (a) if a Borrower is a U.S. Person, a Lender, with respect to such Borrower, that is not a U.S.Person, and (b) if a Borrower is not a U.S. Person, a Lender, with respect to such Borrower, that is resident or organized under thelaws of a jurisdiction other than that in which such Borrower is resident for tax purposes.

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“Funding Account” has the meaning assigned to such term in Section 4.01(h).

“GAAP” means generally accepted accounting principles in the U.S.

“GeneDX” means GeneDx, Inc., a New Jersey corporation.

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“Government Account Debtors” means, collectively, (a) Medicare, (b) Medicaid, and (c) any other a GovernmentalAuthority acceptable to the Administrative Agent in its Permitted Discretion.

“Governmental Authority” means the government of the U.S., any other nation or any political subdivision thereof, whetherstate or local, and any agency, authority, contractor, instrumentality, regulatory body, court, central bank or other entity exercisingexecutive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Government Receivables Account Agreements ” has the meaning assigned to such term in the Security Agreement.

“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) topurchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase(or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securitiesor services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintainworking capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable theprimary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter ofguaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements forcollection or deposit in the ordinary course of business.

“Guaranteed Obligations” has the meaning assigned to such term in Section 10.01.

“Guarantors” means (a) all Loan Guarantors, (b) only to the extent of its non-recourse obligations under the Parent PledgeAgreement, the Parent, (c) only to the extent of its non-recourse obligations under the Intermediate Holdco Pledge Agreement,Intermediate Holdco, and (d) any other Person that has delivered an Obligation Guaranty, and the term “Guarantor” means each orany one of them individually. For the avoidance of doubt, in no event shall (i) the Parent’s liability for the Obligations, as aGuarantor or otherwise, exceed its non-recourse pledge of the equity interests in the Company or Intermediate Holdco, asapplicable, pursuant to the Parent Pledge Agreement, other than as expressly set forth in the Parent Pledge Agreement or (ii)Intermediate Holdco’s liability for the Obligations, as a Guarantor or otherwise, exceed its non-recourse pledge of the equityinterests in the Company pursuant to the Intermediate Holdco Pledge Agreement, other than as expressly set forth in theIntermediate Holdco Pledge Agreement.

“Hazardous Materials” means: (a) any substance, material, or waste that is included within the definitions of “hazardoussubstances,” “hazardous materials,” “hazardous waste,” “toxic substances,” “toxic materials,” “toxic waste,” or words of similarimport in any Environmental Law; (b) those substances listed as hazardous substances by the United States Department ofTransportation (or any successor agency) (49 C.F.R. 172.101 and amendments thereto) or by the Environmental Protection Agency(or any successor agency) (40 C.F.R. Part 302 and amendments

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thereto); and (c) any substance, material, or waste that is petroleum, petroleum-related, or a petroleum by-product, asbestos orasbestos-containing material, polychlorinated biphenyls, flammable, explosive, radioactive, freon gas, radon, or a pesticide,herbicide, or any other agricultural chemical.

“Healthcare Facility” or “Healthcare Facilities” means, as applicable, any one or more of the healthcare facilities owned,operated or managed by the Company or its Subsidiaries and licensed under Healthcare Laws as a Healthcare Facility.

“Healthcare Laws” means applicable laws relating to laboratory testing, patient healthcare, patient healthcare information,the quality and adequacy of medical care, rate setting, equipment, personnel, operating policies, fee splitting, claims submissions,billing, reimbursement recordkeeping, referrals, the hiring of employees or acquisition of services or supplies from those who havebeen excluded from government healthcare programs, including, without limitation, (a) all federal and state fraud and abuse laws,including, without limitation, the Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) and state equivalents, the Stark Law (42 U.S.C.§1395nn), the civil False Claims Act (31 U.S.C. § 3729 et seq.) and state equivalents, (b) TRICARE, (c) HIPAA, HITECH Act,and all applicable federal and state laws, regulations and requirements for the protection of privacy and security of personal andmedical information and data breach notification, (d) Medicare, (e) Medicaid, (f) accreditation standards and requirements of allapplicable state laws or regulatory bodies, (g) all laws, policies, procedures, requirements and regulations pursuant to whichHealthcare Permits are issued, (h) the Federal Program Fraud Civil Remedies Act (31 U.S.C. §§ 3801-3812), (i) the Federal CivilMonetary Penalties Laws (42 U.S.C. § 1320a-7a), (j) the Exclusion Laws (42 U.S.C. § 1320a-7), (k) rules promulgated by the Foodand Drug Administration, Centers for Medicare & Medicaid Services, and/or Drug Enforcement Agency, (l) the Clinical LaboratoryImprovement Amendments, and (m) any and all other applicable health care laws, regulations, manual provisions, policies andadministrative guidance, where such policies and administrative guidance have the force and effect of law, each of (a) through (l) asmay be amended from time to time.

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996 and its Standards for Privacy ofindividually Identifiable Health Information and Security Standards for the Protection of Electronic Protected Health Information,as may be amended or otherwise modified by the Health Information Technology for Economic and Clinical Health (“HITECH”)Act of 2009, or as amended, modified or supplemented from time to time, and any successor statute thereto, and any and all rules orregulations promulgated from time to time thereunder.

“Impacted Interest Period” has the meaning assigned to such term in the definition of “LIBO Rate”.

“Increased Reporting Period ” means any period (a) commencing on the date when Availability is less than the greater of (i)$35,000,000 and (ii) 20% of the Aggregate Revolving Commitment, in each case for a period of five (5) consecutive BusinessDays, or an Event of Default occurs and is continuing, and (b) ending on the date when Availability shall have been equal to orgreater than the greater of (i) $35,000,000 and (ii) 20% of the Aggregate Revolving Commitment for a period of ten (10)consecutive days and no Event of Default is in existence.

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“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or withrespect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similarinstruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Personin respect of the deferred purchase price of property or services (excluding accrued expenses and current accounts payable incurredin the ordinary course of business) which would appear as liabilities on a balance sheet of such Person, (e) all obligations of suchPerson in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinarycourse of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right,contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtednesssecured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) the principal portion of allCapital Lease Obligations of such Person, (i) the face amount of all letters of credit issued for the account of such Person andwithout duplication, all drafts drawn thereunder and all reimbursement or payment obligations with respect to letters of credit andletters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) obligationsunder any liquidated earn-out, (l) any other Off-Balance Sheet Liability, (m) obligations, whether absolute or contingent andhowsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereofand substitutions therefor), under (i) any and all Swap Agreements, and (ii) any and all cancellations, buy backs, reversals,terminations or assignments of any Swap Agreement transaction, and (n) obligations, contingent or otherwise, with respect toDisqualified Stock. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership inwhich such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest inor other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liabletherefor.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by, oron account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in theforegoing clause (a) hereof, Other Taxes.

“Indemnitee” has the meaning assigned to such term in Section 9.03(b).

“Ineligible Institution” has the meaning assigned to such term in Section 9.04(b).

“Information” has the meaning assigned to such term in Section 9.12.

“Information and Collateral Disclosure Certificate ” means each Information and Collateral Disclosure Certificate (includingall schedules thereto), dated as of the date hereof, executed by the Loan Parties, as the same may be amended, restated,supplemented or otherwise modified from time to time.

“Initial Post Closing Dividend” has the meaning assigned to such term in the definition of Specified Post Closing Dividend.

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“Interest Election Request” means a request by the Borrower Representative to convert or continue a Borrowing inaccordance with Section 2.08.

“Interest Expense” means, for any period, total interest expense (including that attributable to Capital Lease Obligations) ofthe Company and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Company and its Subsidiaries(including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptances andnet costs under Swap Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordancewith GAAP), calculated on a consolidated basis for the Company and its Subsidiaries for such period in accordance with GAAP.

“Interest Payment Date” means (a) with respect to any CBFR Loan (other than a Swingline Loan), the first day of eachcalendar month and the Maturity Date, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable tothe Borrowing of which such Loan is a part (and, in the case of a Eurodollar Borrowing with an Interest Period of more than threemonths’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after thefirst day of such Interest Period) and the Maturity Date.

“Interest Period” means, with respect to any Eurodollar Borrowing, the period commencing on the date of such EurodollarBorrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter,as the Borrower Representative may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day,such Interest Period shall be extended to the next succeeding Business Day unless, such next succeeding Business Day would fall inthe next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any InterestPeriod that commences on the last Business Day of a calendar month (or on a day for which there is no numerically correspondingday in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such InterestPeriod. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereaftershall be the effective date of the most recent conversion or continuation of such Borrowing.

“Intermediate Holdco” means a direct domestic Subsidiary of the Parent formed after the Effective Date as a holdingcompany to directly own 100% of the outstanding Equity Interest of the Company.

“Intermediate Holdco Pledge Agreement” has the meaning assigned to such term in Section 5.12.

“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimalplaces as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and bindingabsent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate forthe longest period (for which the LIBO Screen Rate is available) that is shorter than the Impacted Interest Period and (b) the LIBOScreen Rate for the shortest period (for which the LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in eachcase, at such time.

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“Inventory” has the meaning assigned to such term in the Security Agreement.

“Investment Grade Rating” means a rating of Baa3 or higher from Moody’s Investors Service, Inc., and its successors, or arating of BBB- or higher from Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc., andits successors. References herein to a Person having an Investment Grade Rating includes when the Person’s direct or indirectwholly-owning parent company holds (or its long-term senior unsecured debt holds) an Investment Grade Rating.

“IRS” means the United States Internal Revenue Service.

“Issuing Bank” means Chase, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacityas provided in Section 2.06(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by itsAffiliates, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by suchAffiliate (it being agreed that such Issuing Bank shall, or shall cause such Affiliate to, comply with the requirements of Section 2.06with respect to such Letters of Credit).

“Joinder Agreement” means a Joinder Agreement in substantially the form of Exhibit D.

“LC Collateral Account” has the meaning assigned to such term in Section 2.06(j).

“LC Disbursement” means any payment made by an Issuing Bank pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the sum of the Commercial LC Exposure and the Standby LC Exposure at such time.The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the aggregate LC Exposure at suchtime.

“Lender Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, asubsidiary.

“Lenders” means the Persons listed on the Commitment Schedule and any other Person that shall have become a Lenderhereunder pursuant to Section 2.09 or an Assignment and Assumption, other than any such Person that ceases to be a Lenderhereunder pursuant to an Assignment and Assumption. Unless the context otherwise requires, the term “Lenders” includes theSwingline Lender and the Issuing Bank.

“Letters of Credit ” means the letters of credit issued pursuant to this Agreement, and the term “ Letter of Credit” means anyone of them or each of them singularly, as the context may require.

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any applicable Interest Period or for any CBFRBorrowing, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takesover the administration of such rate for Dollars) for a period equal in length to such Interest Period as displayed on pages LIBOR01or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, onany successor or substitute page on such screen that displays such

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rate, or on the appropriate page of such other information service that publishes such rate from time to time as shall be selected bythe Administrative Agent in its reasonable discretion), in each case at approximately 11:00 a.m., London time, two (2) BusinessDays prior to the commencement of such Interest Period (the “LIBO Screen Rate”); provided that, (x) if the LIBO Screen Rate shallbe less than zero, such rate shall be deemed to be zero for the purposes of this Agreement and (y) if the LIBO Screen Rate shall notbe available at such time for a period equal in length to such Interest Period (an “Impacted Interest Period”), then the LIBO Rateshall be the Interpolated Rate at such time, subject to Section 2.14 in the event that the Administrative Agent shall conclude that itshall not be possible to determine such Interpolated Rate (which conclusion shall be conclusive and binding absent manifest error);provided further, that, if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of thisAgreement. Notwithstanding the above, to the extent that “LIBO Rate” or “Adjusted LIBO Rate” is used in connection with aCBFR Borrowing, such rate shall be determined as modified by the definition of Adjusted One Month LIBOR Rate.

“LIBO Screen Rate ” has the meaning assigned to such term in the definition of “LIBO Rate”.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, chargeor security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital leaseor title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relatingto such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to suchsecurities.

“Loan Documents” means, collectively, this Agreement, any promissory notes issued pursuant to this Agreement, any Letterof Credit applications, the Collateral Documents, the Loan Guaranty, any Obligation Guaranty, the Information and CollateralDisclosure Certificates, and all other agreements, instruments, documents and certificates identified in Section 4.01 executed anddelivered to, or in favor of, the Administrative Agent or any Lender and including all other pledges, powers of attorney, consents,assignments, contracts, notices, letter of credit agreements and all other written matter whether heretofore, now or hereafterexecuted by or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to the Administrative Agent or anyLender in connection with this Agreement or the transactions contemplated hereby. Any reference in this Agreement or any otherLoan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements,supplements or other modifications thereto, and shall refer to this Agreement or such Loan Document as the same may be in effectat any and all times such reference becomes operative.

“Loan Guarantor” means each Loan Party that has executed and delivered a Loan Guaranty (including, without limitation,pursuant to a Joinder Agreement).

“Loan Guaranty” means Article X of this Agreement.

“Loan Parties” means, collectively, the Borrowers, the Borrowers’ Domestic Subsidiaries party hereto and any other Personwho becomes a party to this Agreement pursuant to a Joinder

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Agreement and their successors and assigns, and the term “Loan Party” shall mean any one of them or all of them individually, asthe context may require.

“Loans” means the loans and advances made by the Lenders pursuant to this Agreement, including Swingline Loans,Overadvances and Protective Advances.

“LTM EBITDA” means (a) for any date prior to, but not including, the last day of the fiscal quarter ending December 31,2015, Effective Date EBITDA, (b) for the fiscal quarter ending December 31, 2015, EBITDA for such fiscal quarter multiplied byfour, (c) for the fiscal quarter ending March 31, 2016, EBITDA for the most recently completed two consecutive fiscal quartersmultiplied by two, (d) for the fiscal quarter ending June 30, 2016, EBITDA for the most recently completed three consecutive fiscalquarters multiplied by four-thirds, and (e) for the fiscal quarter ending September 30, 2016, and for each fiscal quarter thereafter,EBITDA for the most recently completed four consecutive fiscal quarters.

“LTM Fixed Charges ” means (a) for any date prior to, but not including, the last day of the fiscal quarter ending December31, 2015, Effective Date Fixed Charges, (b) for the fiscal quarter ending December 31, 2015, Fixed Charges for such fiscal quartermultiplied by four, (c) for the fiscal quarter ending March 31, 2016, Fixed Charges for the most recently completed two consecutivefiscal quarters multiplied by two, (d) for the fiscal quarter ending June 30, 2016, Fixed Charges for the most recently completedthree consecutive fiscal quarters multiplied by four-thirds, and (e) for the Fiscal Quarter ending September 30, 2016, and for eachfiscal quarter thereafter, Fixed Charges for the most recently completed four consecutive fiscal quarters; provided that, for thepurposes of (b) through (d) above, dividends and distributions included in the definition of Fixed Charges shall not be annualizedbut shall be included in the amount actually paid in cash during the period from the Effective Date to the last day of the relevantfiscal quarter.

“LTM Unfinanced Capital Expenditures” means (a) for any date prior to, but not including, the last day of the fiscal quarterending December 31, 2015, Effective Date Unfinanced Capital Expenditures, (b) for the fiscal quarter ending December 31, 2015,Unfinanced Capital Expenditures for such fiscal quarter multiplied by four, (c) for the fiscal quarter ending March 31, 2016,Unfinanced Capital Expenditures for the most recently completed two consecutive fiscal quarters multiplied by two, (d) for thefiscal quarter ending June 30, 2016, Unfinanced Capital Expenditures for the most recently completed three consecutive fiscalquarters multiplied by four-thirds, and (e) for the Fiscal Quarter ending September 30, 2016, and for each fiscal quarter thereafter,Unfinanced Capital Expenditures for the most recently completed four consecutive fiscal quarters.

“Material Acquisition” means any Acquisition by the Company or any of its Subsidiaries for which the total considerationpaid or payable (including, without limitation, any earn-outs (calculated, for purposes of this definition only, at the time ofincurrence as the aggregate amount reasonably expected to be paid by the Company or its Subsidiaries in connection with suchearn-out, as determined by the Company in its reasonable business judgment)) with respect to, and all Indebtedness and otherliabilities assumed in connection with, such Acquisition exceeds $5,000,000.

“Material Adverse Effect ” means a material adverse effect on (a) the business, assets, operations, prospects or condition,financial or otherwise, of the Company and its Subsidiaries taken

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as a whole, (b) the ability of any Loan Party to perform any of its obligations under the Loan Documents to which it is a party, (c)the Collateral, or the Administrative Agent’s Liens (on behalf of itself and other Secured Parties) on the Collateral or the priority ofsuch Liens, or (d) the rights of or benefits available to the Administrative Agent, the Issuing Bank or the Lenders under any of theLoan Documents.

“Material Indebtedness” means Indebtedness (other than the Loans, the Letters of Credit and the Obligations), or obligationsin respect of one or more Swap Agreements, of any one or more of the Company and its Subsidiaries in an aggregate principalamount exceeding $7,500,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of theCompany or any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effectto any netting agreements) that the Company or such Subsidiary would be required to pay if such Swap Agreement were terminatedat such time.

“Material Subsidiary” means, at any date of determination, each Subsidiary of the Company (a) whose total assets at the lastday of the fiscal quarter ending on the last day of the most recent fiscal period for which the financial statements under Sections5.01(a) or (b) have been delivered were equal to or greater than 1% of the consolidated total assets of the Company and itsSubsidiaries at such date or (b) whose revenues as of the end of such period were equal to or greater than 1% of the consolidatedrevenues of the Company and its Subsidiaries for the four fiscal quarters then ending, in each case determined in accordance withGAAP.

“Maturity Date” means November 5, 2020, or any earlier date on which the Commitments are reduced to zero or otherwiseterminated pursuant to the terms hereof.

“Maximum Rate” has the meaning assigned to such term in Section 9.17.

“Merger” means the acquisition of the Company and its subsidiaries by Parent pursuant to that certain Agreement and Planof Merger, dated as of June 3, 2015, by and among the Company, the Parent and Bamboo Acquisition, Inc.

“Moody’s” means Moody’s Investors Service, Inc.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Net Income” means, for any period, the consolidated net income (or loss) of the Company and its Subsidiaries, determinedon a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Personaccrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Company or any of its Subsidiaries, (b)the income (or deficit) of any Person (other than a Subsidiary) in which the Company or any of its Subsidiaries has an ownershipinterest, except to the extent that any such income is actually received by the Company or such Subsidiary in the form of dividendsor similar distributions and (c) the undistributed earnings of any Subsidiary to the extent that the declaration or payment ofdividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual

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obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.

“Net Proceeds” means, with respect to any event, (a) the cash proceeds received in respect of such event including (i) anycash received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principalpursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but excluding any interestpayments), but only as and when received, (ii) in the case of a casualty, insurance proceeds and (iii) in the case of a condemnationor similar event, condemnation awards and similar payments, minus (b) the sum of (i) all fees and out-of-pocket expenses paid tothird parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset(including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of allpayments required to be made as a result of such event to repay Indebtedness (other than Loans) secured by such asset or otherwisesubject to mandatory prepayment as a result of such event and (iii) the amount of all taxes paid (or reasonably estimated to bepayable) and the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable, in each caseduring the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determinedreasonably and in good faith by a Financial Officer of the Borrower Representative).

“Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(d).

“Non-U.S. Lender” means a Lender that is not a U.S. Person.

“Obligated Party” has the meaning assigned to such term in Section 10.02.

“Obligation Guaranty” means (i) with respect to the Parent, the Parent Pledge Agreement, (ii) with respect to IntermediateHoldco, the Intermediate Holdco Pledge Agreement, and (iii) with respect to any other Person, any Guarantee of all or any portionof the Secured Obligations executed and delivered to the Administrative Agent for the benefit of the Secured Parties by a Personthat is not a Loan Party, the Parent, or Intermediate Holdco.

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued andunpaid fees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and feesaccruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whetherallowed or allowable in such proceeding), obligations and liabilities of any of the Loan Parties to any of the Lenders, theAdministrative Agent, the Issuing Bank or any indemnified party, individually or collectively, existing on the Effective Date orarising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated,secured or unsecured, arising by contract, operation of law or otherwise, arising or incurred under this Agreement or any of theother Loan Documents or in respect of any of the Loans made or reimbursement or other obligations incurred or any of the Lettersof Credit or other instruments at any time evidencing any thereof.

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“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or liability of such Person with respect toaccounts or notes receivable sold by such Person, (b) any indebtedness, liability or obligation under any so-called “synthetic lease”transaction entered into by such Person, or (c) any indebtedness, liability or obligation arising with respect to any other transactionwhich is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet ofsuch Person (other than operating leases).

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or formerconnection between such Recipient and the jurisdiction imposing such Taxes (other than a connection arising from such Recipienthaving executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected asecurity interest under, engaged in any other transaction pursuant to, or enforced, any Loan Document, or sold or assigned aninterest in any Loan, Letter of Credit or any Loan Document).

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes thatarise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt orperfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are OtherConnection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19).

“Overadvance” has the meaning assigned to such term in Section 2.05(b).

“Parent” means OPKO Health, Inc., a Delaware corporation.

“Parent Pledge Agreement ” means that certain Non-Recourse Pledge Agreement (including any and all supplementsthereto), dated as of the date hereof, between Parent and the Administrative Agent, for the benefit of the Administrative Agent andthe other Secured Parties, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Participant” has the meaning assigned to such term in Section 9.04(c).

“Participant Register” has the meaning assigned to such term in Section 9.04(c).

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entityperforming similar functions.

“Permitted Acquisition” means any Acquisition by the Company or any of its Subsidiaries in a transaction that satisfies eachof the following requirements:

(a) such Acquisition is not a hostile or contested acquisition;

(b) the business acquired in connection with such Acquisition is not engaged, directly or indirectly, in any material line ofbusiness other than the businesses in which the Loan Parties

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are engaged on the Effective Date and any business activities that are substantially similar, related, or incidental thereto or areasonable extension thereof;

(c) both before and after giving effect to such Acquisition and the Loans (if any) requested to be made in connectiontherewith, each of the representations and warranties in the Loan Documents is true and correct in all material respects (except anysuch representation or warranty which relates to a specified prior date) and no Default or Event of Default exists or would exist aftergiving effect thereto;

(d) with respect to any Material Acquisition, at least five (5) days prior to the consummation of such Acquisition, theBorrower Representative shall have (i) notified the Administrative Agent of such proposed Acquisition and (ii) furnished to theAdministrative Agent a copy of all business and financial information reasonably requested by the Administrative Agent includingpro forma financial statements, statements of cash flow, and Availability projections;

(e) if the Accounts acquired in connection with such Acquisition are proposed to be included in the determination of theBorrowing Base, prior to including such Accounts in the determination of the Borrowing Base, the Administrative Agent shall haveconducted a field examination of such Accounts, the results of which shall be satisfactory to the Administrative Agent in itsPermitted Discretion;

(f) if such Acquisition is an acquisition of the Equity Interests of a Person, such Acquisition is structured so that theacquired Person shall become a wholly-owned Subsidiary of a Loan Party;

(g) if such Acquisition is an acquisition of Equity Interests, such Acquisition will not result in any violation of RegulationU;

(h) if such Acquisition involves a merger or a consolidation involving a Borrower or any other Loan Party, such Borroweror such Loan Party, as applicable, shall be the surviving entity;

(i) no Loan Party shall, as a result of or in connection with any such Acquisition, assume or incur any direct or contingentliabilities (whether relating to environmental, tax, litigation, or other matters) that could have a Material Adverse Effect;

(j) in connection with an Acquisition of the Equity Interests of any Person, all Liens on property of such Person shall beterminated unless the Administrative Agent and the Lenders in their sole discretion consent otherwise, and in connection with anAcquisition of the assets of any Person, all Liens on such assets shall be terminated unless such Liens are permitted under Section6.02(k);

(k) the Fixed Charge Coverage Ratio on a pro forma basis after giving effect to such Acquisition shall be greater than 1.15to 1.00 for the most recently completed four quarter period prior to such acquisition for which financial statements and aCompliance Certificate have been delivered pursuant to Section 5.01(a) or (b) and (d);

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(l) the Borrower Representative shall certify to the Administrative Agent and the Lenders (and provide the AdministrativeAgent with a pro forma calculation in form and substance reasonably satisfactory to the Administrative Agent) that, after givingeffect to the completion of such Acquisition, (i) Availability will not be less than $50,000,000 on a pro forma basis which includesall consideration given in connection with such Acquisition, other than Equity Interests of the applicable Loan Party delivered to theseller(s) in such Acquisition, as having been paid in cash at the time of making such Acquisition and (ii) the Borrowers will be incompliance, on a pro forma basis, with the covenants contained in Section 6.12;

(m) to the extent applicable, any such newly acquired or formed wholly-owned Subsidiary of a Borrower or a Loan Party,as applicable, shall comply with the requirements of Section 5.12; and

(n) (i) with respect to any Material Acquisition, the Borrower Representative shall have delivered to the AdministrativeAgent the final executed material documentation relating to such Acquisition within 10 days following the consummation thereofand (ii) with respect to any other Acquisition, the Borrower Representative shall have delivered to the Administrative Agent thefinal executed material documentation relating to such Acquisition within 45 days following the consummation thereof.

“Permitted Discretion” means a determination made in good faith and in the exercise of reasonable (from the perspective ofa secured asset-based lender) business judgment.

“Permitted Encumbrances” means:

(a) Liens imposed by law for Taxes that are not yet due or remain payable without penalty, or are being contested incompliance with Section 5.04;

(b) carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s and other like Liens imposed by law,arising in the ordinary course of business and securing obligations that are not overdue by more than sixty (60) days or are beingcontested in compliance with Section 5.04;

(c) pledges and deposits made in the ordinary course of business in connection with workers’ compensation,unemployment insurance and other social security laws or regulations;

(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety, stay, customs andappeal bonds, performance and return of money bonds, governmental contracts, trade contracts and other obligations of a like natureor to secure liability to insurance carriers, in each case in the ordinary course of business;

(e) Liens consisting of judgment, appeal bonds or judicial attachment liens that do not constitute an Event of Default underclause (k) of Article VII;

(f) (i) easements, zoning restrictions, rights-of-way, site plan agreements, development agreements, cross-easement orreciprocal agreements, and similar encumbrances on real property

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imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not interfere withthe ordinary conduct of business of any Borrower or any Subsidiary or the ordinary operation of such real property or (ii) titledefects or irregularities with respect to real property which do not interfere with the ordinary conduct of business of any Borroweror any Subsidiary; and

(g) Liens representing any interest or title of, or granted by, a licensor, lessor or sublicensor or sublessor, or a licensee,lessee or sublicensee or sublessee, in the property subject to any lease (other than Capital Lease Obligations), license or sublicenseor concession agreement not otherwise prohibited by this Agreement;

(h) Liens arising from precautionary UCC financing statement filings regarding “true” operating leases; and

(i) Bankers’ liens, rights of setoff and other similar Liens in the ordinary course of business in favor of a bank or institutionwith which accounts or deposits are maintained, liens in favor of collecting banks arising under the UCC in the ordinary course ofbusiness, and other Liens that are contractual rights of set-off;

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness, except with respect to clause(e) above.

“Permitted Investments” means:

(a) investments in cash;

(b) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the U.S.(or by any agency thereof to the extent such obligations are backed by the full faith and credit of the U.S.), in each case maturingwithin one year from the date of acquisition thereof;

(c) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at suchdate of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

(d) investments in certificates of deposit, bankers’ acceptances and time deposits maturing within 180 days from the dateof acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, anydomestic office of any commercial bank organized under the laws of the U.S. or any State thereof which has a combined capital andsurplus and undivided profits of not less than $500,000,000;

(e) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a)above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

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(f) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a‑7 underthe Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least$5,000,000,000.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company,partnership, Governmental Authority or other entity.

“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 any Borrower or any ERISA Affiliate is (or, ifsuch plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) ofERISA.

“Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system.

“Prepayment Event” means the incurrence by any Loan Party or any Subsidiary of any Indebtedness, other thanIndebtedness permitted under Section 6.01.

“Prime Rate” means the rate of interest per annum publicly announced from time to time by Chase as its prime rate in effectat its principal offices in New York City. Each change in the Prime Rate shall be effective from and including the date such changeis publicly announced as being effective.

“Pro Forma Capped Adjustments ” has the meaning assigned to such term in Section 1.06.

“Projections” has the meaning assigned to such term in Section 5.01(f).

“Protective Advance” has the meaning assigned to such term in Section 2.04.

“Public-Sider” means any representative of a Lender that does not want to receive material non-public information withinthe meaning of federal and state securities laws.

“Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each Loan Guarantor or other Guarantor (other thanParent or Intermediate Holdco) that has total assets exceeding $10,000,000 at the time the relevant Loan Guaranty or ObligationGuaranty or grant of the relevant security interest becomes or would become effective with respect to such Swap Obligation or suchother person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgatedthereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwellunder Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“Recipient” means, as applicable, (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank, or anycombination thereof (as the context requires).

“Refinance Indebtedness” has the meaning assigned to such term in Section 6.01(f).

“Register” has the meaning assigned to such term in Section 9.04(b).

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“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers,partners, members, trustees, employees, agents, administrators, managers, representatives and advisors of such Person and suchPerson’s Affiliates.

“Release” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,leaching, migrating, disposing or dumping of any substance into the environment.

“Report” means reports prepared by the Administrative Agent or another Person showing the results of appraisals, fieldexaminations or audits pertaining to the assets of the Borrowers from information furnished by or on behalf of the Borrowers, afterthe Administrative Agent has exercised its rights of inspection pursuant to this Agreement, which Reports may be distributed to theLenders by the Administrative Agent subject to the confidentiality provisions herein.

“Required Lenders” means, at any time, Lenders (other than Defaulting Lenders) having Credit Exposures and unusedCommitments representing more than 50% of the sum of the Aggregate Credit Exposure and unused Commitments at such time.

“Requirement of Law” means, with respect to any Person, (a) the charter, articles or certificate of organization orincorporation and bylaws or other organizational or governing documents of such Person and (b) any statute, law (includingcommon law), treaty, rule, regulation, code, ordinance, order, decree, writ, judgment, injunction or determination of any arbitratoror court or other Governmental Authority (including Environmental Laws), in each case applicable to or binding upon such Personor any of its property or to which such Person or any of its property is subject.

“Reserves” means any and all reserves which the Administrative Agent deems necessary, in its Permitted Discretion, tomaintain with respect to the Collateral or any Loan Party (including, without limitation, rent reserves for any location for which theCompany is required to use commercially reasonable efforts to obtain a Collateral Access Agreement pursuant to the SecurityAgreement but such Collateral Access Agreement has not been obtained, reserves for accrued and unpaid interest on the SecuredObligations, Banking Services Reserves, reserves for dilution of Accounts, reserves for Swap Agreement Obligations, reserves forcontingent liabilities of any Loan Party, reserves for uninsured losses of any Loan Party, reserves for uninsured, underinsured, un-indemnified or under-indemnified liabilities or potential liabilities with respect to any investigation or litigation and reserves fortaxes, fees, assessments, and other governmental charges).

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect toany Equity Interests in the Company or any Subsidiary, or any payment (whether in cash, securities or other property), includingany sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination ofany such Equity Interests in the Company or any option, warrant or other right to acquire any such Equity Interests in the Company.

“Revolving Commitment” means, with respect to each Lender, the commitment, if any, of such Lender to make RevolvingLoans and to acquire participations in Letters of Credit,

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Overadvances and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate permitted amount ofsuch Lender’s Revolving Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to (a)Section 2.09 and (b) assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s RevolvingCommitment is set forth on the Commitment Schedule, or in the Assignment and Assumption pursuant to which such Lender shallhave assumed its Revolving Commitment, as applicable.

“Revolving Exposure” means, with respect to any Lender at any time, the sum of (a) the outstanding principal amount ofsuch Lender’s Revolving Loans, LC Exposure and Swingline Exposure at such time, plus (b) an amount equal to its ApplicablePercentage of the aggregate principal amount of Overadvances outstanding at such time.

“Revolving Lender” means, as of any date of determination, a Lender with a Revolving Commitment or, if the RevolvingCommitments have terminated or expired, a Lender with Revolving Exposure.

“Revolving Loan” means a Loan made pursuant to Section 2.01(a).

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.

“Sale and Leaseback Transaction” has the meaning assigned to such term in Section 6.06.

“Sanctioned Country” means, at any time, a country or territory which is itself the subject or target of any Sanctions (at thetime of this Agreement, Cuba, Iran, North Korea, Sudan and Syria).

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Personsmaintained by OFAC, the U.S. Department of State or by the United Nations Security Council, the European Union or anyEuropean Union member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned orcontrolled by any such Person or Persons described in the foregoing clauses (a) or (b).

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to timeby (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, or (b) the United NationsSecurity Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom.

“SEC” means the Securities and Exchange Commission of the U.S.

“Secured Obligations” means all Obligations, together with all (i) Banking Services Obligations and (ii) Swap AgreementObligations owing to one or more Lenders or their respective Affiliates; provided, however, that the definition of “SecuredObligations” shall not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support, asapplicable) any Excluded Swap Obligations of such Guarantor for purposes of determining any obligations of any Guarantor.

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“Secured Parties” means (a) the Administrative Agent, (b) the Lenders, (c) the Issuing Bank, (d) each provider of BankingServices, to the extent the Banking Services Obligations in respect thereof constitute Secured Obligations, (e) each counterparty toany Swap Agreement, to the extent the obligations thereunder constitute Secured Obligations, (f) the beneficiaries of eachindemnification obligation undertaken by any Loan Party under any Loan Document, and (g) the successors and assigns of each ofthe foregoing.

“Security Agreement” means that certain Pledge and Security Agreement (including any and all supplements thereto), datedas of the date hereof, among the Loan Parties and the Administrative Agent, for the benefit of the Administrative Agent and theother Secured Parties, and any other pledge or security agreement entered into, after the date of this Agreement by any other LoanParty (as required by this Agreement or any other Loan Document) or any other Person for the benefit of the Administrative Agentand the other Secured Parties, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Settlement” has the meaning assigned to such term in Section 2.05(d).

“Settlement Date” has the meaning assigned to such term in Section 2.05(d).

“Solvent” means, as to any Person, that (a) the fair value of the assets of such Person, at a fair valuation, will exceed itsdebts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of such Person will begreater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingentor otherwise, as such debts and other liabilities become absolute and matured; (c) such Person will be able to pay its debts andliabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) such Personwill not have unreasonably small capital with which to conduct the business in which it is engaged as such business is nowconducted and is proposed to be conducted after the Effective Date.

“Specified Audited Annual Financial Statements” means, with respect to each fiscal year, either (a) the audited consolidatedbalance sheets and related statements of operations, stockholders’ equity and cash flows of Parent and its Subsidiaries as of the endof and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, and containing a notesetting forth the consolidating balance sheets and related statements of operations, stockholders’ equity and cash flows of theCompany and its Subsidiaries as of the end of and for such year, all reported on by independent public accountants of recognizednational standing (without a “going concern” or like qualification, commentary or exception and without any qualification orexception as to the scope of such audit) to the effect that such financial statements present fairly in all material respects the financialcondition and results of operations of the Parent and its consolidated Subsidiaries on a consolidated basis in accordance with GAAPconsistently applied or (b) the audited consolidated balance sheet and related statements of operations, stockholders’ equity andcash flows of the Company and its Subsidiaries as of the end of and for such year, setting forth in each case in comparative formthe figures for the previous fiscal year, all reported on by independent public accountants of recognized national standing (without a“going concern” or like qualification, commentary or exception and without any qualification or exception as to the scope of suchaudit) to the effect that such consolidated financial statements present fairly in all material respects the

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financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordancewith GAAP consistently applied.

“Specified Monthly Financial Statements” means, with respect to each applicable fiscal month, either (a) the unauditedconsolidated balance sheet and related statements of operations, stockholders’ equity and cash flows of Parent and its Subsidiariesas of the end of and for such fiscal month and the then elapsed portion of the fiscal year, setting forth in each case in comparativeform the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscalyear, and containing a note setting forth the consolidating balance sheets and related statements of operations, stockholders’ equityand cash flows of the Company and its Subsidiaries as of the end of and for such fiscal month and the then elapsed portion of suchfiscal year, all certified by a Financial Officer of the Borrower Representative as presenting fairly in all material respects thefinancial condition and results of operations of (i) Parent and its consolidated Subsidiaries on a consolidated basis in accordancewith GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, and (ii) the Companyand its Subsidiaries in accordance with Parent’s standard internal practices consistently applied, subject to normal year-end auditadjustments and the absence of footnotes, or (b) the unaudited consolidated balance sheet and related statements of operations,stockholders’ equity and cash flows of the Company and its Subsidiaries as of the end of and for such fiscal month and the thenelapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periodsof (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by a Financial Officer of the BorrowerRepresentative as presenting fairly in all material respects the financial condition and results of operations of the Company and itsconsolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end auditadjustments and the absence of footnotes.

“Specified Post Closing Dividends ” means the following:

(a) a one-time cash dividend by the Company to Parent so long as (i) such dividend is made within fifteen (15) calendardays after the Effective Date, (ii) immediately before and after giving effect to such dividend no Default shall exist, (iii) after givingeffect to such dividend the Company is Solvent, (iv) after giving effect to such dividend, Availability shall not be less than thegreater of (A) $50,000,000 and (B) 25% of the Aggregate Revolving Commitment, and (v) prior to such dividend, the BorrowerRepresentative shall have delivered to the Administrative Agent an officer’s certificate from a Financial Officer of the BorrowerRepresentative, in form and substance reasonably satisfactory to the Administrative Agent, certifying that all of the foregoingconditions are satisfied (such dividend, the “Initial Post Closing Dividend”); and

(b) other cash dividends by the Company to Parent (through Intermediate Holdco if Intermediate Holdco is in existence)made after the date that is fifteen (15) calendar days after the Effective Date so long as (i) immediately before and after giving effectto such dividend no Default shall exist, (ii) after giving effect to such dividend Availability shall not be less than the greater of (A)$50,000,000 and (B) 25% of the Aggregate Revolving Commitment, (iii) after giving pro forma effect to such dividend, theCompany shall have a Fixed Charge Coverage Ratio of not less than 1.15 to 1.00 as of the last day of the most recent fiscal quarteror year, as applicable, for which

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financial statements and a Compliance Certificate have been delivered to the Administrative Agent pursuant to Sections 5.01(a) or(b) and (d), and (iv) prior to such dividend, the Borrower Representative shall have delivered to the Administrative Agent anofficer’s certificate from a Financial Officer of the Borrower Representative, containing calculations with respect to clause (iii) andotherwise in form and substance reasonably satisfactory to the Administrative Agent, certifying that all of the foregoing conditionsare satisfied.

“Specified Quarterly Financial Statements ” means, with respect to each applicable fiscal quarter, either (a) the unauditedconsolidated balance sheets and related statements of operations, stockholders’ equity and cash flows of Parent and its Subsidiariesas of the end of and for such fiscal quarter and the then elapsed portion of such fiscal year, setting forth in each case in comparativeform the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscalyear, and containing a note setting forth the consolidating balance sheets and related statements of operations, stockholders’ equityand cash flows of the Company and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of suchfiscal year, all certified by a Financial Officer of the Borrower Representative as presenting fairly in all material respects thefinancial condition and results of operations of (i) Parent and its consolidated Subsidiaries on a consolidated basis in accordancewith GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, and (ii) the Companyand its Subsidiaries in accordance with Parent’s standard internal practices consistently applied, subject to normal year-end auditadjustments and the absence of footnotes, or (b) the unaudited consolidated balance sheet and related statements of operations,stockholders’ equity and cash flows of the Company and its Subsidiaries as of the end of and for such fiscal quarter and the thenelapsed portion of such fiscal year, setting forth in each case in comparative form the figures for the corresponding period orperiods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by a Financial Officer of theBorrower Representative as presenting fairly in all material respects the financial condition and results of operations of theCompany and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject tonormal year-end audit adjustments and the absence of footnotes.

“Standby LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all standby Letters of Creditoutstanding at such time plus (b) the aggregate amount of all LC Disbursements relating to standby Letters of Credit that have notyet been reimbursed by or on behalf of the Borrowers at such time. The Standby LC Exposure of any Revolving Lender at any timeshall be its Applicable Percentage of the aggregate Standby LC Exposure at such time.

“Statements” has the meaning assigned to such term in Section 2.18(g).

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominatorof which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergencyor supplemental reserves) established by the Board to which the Administrative Agent is subject with respect to the Adjusted LIBORate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reservepercentages shall include those imposed pursuant to such Regulation D of the Board. Eurodollar Loans shall be deemed toconstitute eurocurrency funding

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and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be availablefrom time to time to any Lender under such Regulation D of the Board or any comparable regulation. The Statutory Reserve Rateshall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Subordinated Indebtedness” of a Person means any Indebtedness of such Person the payment of which is subordinated topayment of the Secured Obligations to the written satisfaction of the Administrative Agent.

“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 asany other corporation, limited liability company, partnership, association or other entity of which securities or other ownershipinterests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership,more than 50% of the general partnership interests are, as of such date, owned, controlled or held by the parent or one or moresubsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“Subsidiary” means any direct or indirect subsidiary of the Company or another Loan Party, as applicable, or, to the extentthe context requires, the Parent.

“Subsidiary Borrowers” means, collectively (a) each Domestic Subsidiary of the Company that is a party to this Agreementas a “Borrower” on the Effective Date and (b) each Domestic Subsidiary of the Company that becomes a party to this Agreement asa “Borrower” following the Effective Date pursuant to Section 5.12, in each case, until such time as such Domestic Subsidiary isreleased from its obligations under the Loan Documents in accordance with this Agreement.

“Supermajority Revolving Lenders” means, at any time, Lenders (other than Defaulting Lenders) having RevolvingExposures and unused Revolving Commitments representing at least 66 2/3% of the sum of the Aggregate Revolving Exposure andunused Revolving Commitments at such time.

“Swap Agreement” means any agreement with respect to any swap, forward, spot, future, credit default or derivativetransaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity ordebt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or valueor any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing forpayments only on account of services provided by current or former directors, officers, employees or consultants of the Borrowersor the Subsidiaries shall be a Swap Agreement.

“Swap Agreement Obligations” means any and all obligations of the Loan Parties, whether absolute or contingent andhowsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereofand substitutions therefor), under (a) any and all Swap Agreements permitted hereunder with a Lender or an Affiliate of a Lender,and

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(b) any and all cancellations, buy backs, reversals, terminations or assignments of any such Swap Agreement transaction.

“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract ortransaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act or any rules orregulations promulgated thereunder.

“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time.The Swingline Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total Swingline Exposure atsuch time.

“Swingline Lender” means Chase, in its capacity as lender of Swingline Loans hereunder. Any consent required of theAdministrative Agent or the Issuing Bank shall be deemed to be required of the Swingline Lender and any consent given by Chasein its capacity as Administrative Agent or Issuing Bank shall be deemed given by Chase in its capacity as Swingline Lender.

“Swingline Loan” has the meaning assigned to such term in Section 2.05(a).

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings, (including backupwithholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax orpenalties applicable thereto.

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

“Third Party Payor Programs ” means all payment and reimbursement programs sponsored by a Third Party Payor in whichthe Company or any of its Subsidiaries participates.

“Transactions” means the execution, delivery and performance by the Loan Parties and Parent of this Agreement and theother Loan Documents (as applicable), the borrowing of Loans and other credit extensions, the use of the proceeds thereof, thepayment of the Initial Post Closing Dividend and the issuance of Letters of Credit hereunder.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on theLoans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the CB Floating Rate.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or in any other statethe laws of which are required to be applied in connection with the issue of perfection of security interests.

“Unfinanced Capital Expenditures” means, for any period, Capital Expenditures made during such period which are notfinanced from the proceeds of any Indebtedness (other than the Revolving Loans; it being understood and agreed that, to the extentany Capital Expenditures are financed with Revolving Loans, such Capital Expenditures shall be deemed Unfinanced Capital

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Expenditures) or new equity financing of the Borrowers and their Subsidiaries provided by a Person that is not a Loan Party.

“Unliquidated Obligations” means, at any time, any Secured Obligations (or portion thereof) that are contingent in nature orunliquidated at such time, including any Secured Obligation that is: (i) an obligation to reimburse a bank for drawings not yet madeunder a letter of credit issued by it; (ii) any other obligation (including any guarantee) that is contingent in nature at such time; or(iii) an obligation to provide collateral to secure any of the foregoing types of obligations.

“U.S.” means the United States of America.

“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 assigned to such term in Section 2.17(f)(ii)(B)(3).

“USA PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Interceptand Obstruct Terrorism Act of 2001.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from suchMultiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Section 1.02. Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified andreferred to by Class (e.g., a “Revolving Loan”) or by Type ( e.g., a “Eurodollar Loan”) or by Class and Type ( e.g., a “EurodollarRevolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type ( e.g., a“Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

Section 1.03. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of theterms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuterforms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. Theword “law” shall be construed as referring to all statutes, rules, regulations, codes and other laws (including official rulings andinterpretations thereunder having the force of law or with which affected Persons customarily comply) and all judgments, ordersand decrees of all Governmental Authorities. The word “will” shall be construed to have the same meaning and effect as the word“shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other documentherein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated,supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modificationsset forth herein), (b) any definition of or reference to any statute, rule or regulation shall be construed as referring thereto as fromtime to time amended, supplemented or otherwise modified (including by succession of comparable successor laws), (c) anyreference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions onassignments

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set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded toany or all functions thereof, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed torefer to this Agreement in its entirety and not to any particular provision hereof, (e) all references herein to Articles, Sections,Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (f)any reference in any definition to the phrase “at any time” or “for any period” shall refer to the same time or period for allcalculations or determinations within such definition, and (g) the words “asset” and “property” shall be construed to have the samemeaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts andcontract rights.

Section 1.04. Accounting Terms; GAAP . Except as otherwise expressly provided herein, all terms of an accounting orfinancial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if after the date hereofthere occurs any change in GAAP or in the application thereof on the operation of any provision hereof and the BorrowerRepresentative notifies the Administrative Agent that the Borrowers request an amendment to any provision hereof to eliminate theeffect of such change in GAAP or in the application thereof (or if the Administrative Agent notifies the Borrower Representativethat the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such noticeis given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis ofGAAP as in effect and applied immediately before such change shall have become effective until such notice shall have beenwithdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, all terms ofan accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shallbe made (i) without giving effect to any election under Financial Accounting Standards Board Accounting Standards Codification825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) tovalue any Indebtedness or other liabilities of the Company or any Subsidiary at “fair value”, as defined therein and (ii) withoutgiving effect to any treatment of Indebtedness in respect of convertible debt instruments under Financial Accounting StandardsBoard Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial AccountingStandard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein,and such Indebtedness shall at all times be valued at the full stated principal amount thereof.

Section 1.05. Status of Obligations. In the event that any Borrower or any other Loan Party shall at any time issue or haveoutstanding any Subordinated Indebtedness, such Borrower shall take or cause such other Loan Party to take all such actions as shallbe necessary to cause the Secured Obligations to constitute senior indebtedness (however denominated) in respect of suchSubordinated Indebtedness and to enable the Administrative Agent and the Lenders to have and exercise any payment blockage orother remedies available or potentially available to holders of senior indebtedness under the terms of such SubordinatedIndebtedness. Without limiting the foregoing, the Secured Obligations are hereby designated as “senior indebtedness” and as“designated senior indebtedness” and words of similar import under and in respect of any indenture or other agreement orinstrument under which such Subordinated Indebtedness is outstanding and

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are further given all such other designations as shall be required under the terms of any such Subordinated Indebtedness in orderthat the Lenders may have and exercise any payment blockage or other remedies available or potentially available to holders ofsenior indebtedness under the terms of such Subordinated Indebtedness.

Section 1.06. Adjustments for Acquisitions and Dispositions . For each period of four consecutive fiscal quarter endingfollowing the date of any Acquisition or disposition permitted hereunder, for the purposes of determining EBITDA, theconsolidated results of operations of the Company and its Subsidiaries or the Loan Parties, as the case may be, shall include theresults of operations of the Person or assets subject to such Acquisition or exclude the results of operation of the Person or assetssubject to such disposition, as the case may be, on a historical pro forma basis to the extent information in sufficient detailconcerning such historical results of such Person or assets is reasonably available, and which amounts shall include expected costsavings, operating expense reductions, restructuring charges and expenses and cost-saving synergies projected by the Company ingood faith to result from actions with respect to which substantial steps have been, will be, or are expected to be, taken (in the goodfaith determination of the Company and evidence by a certificate of a Financial Officer of the Company) within 12 months aftersuch transaction; provided, that the aggregate additions to EBITDA, for any period being tested, pursuant to this Section 1.06 (the“Pro Forma Capped Adjustments ”), together with the aggregate amount of all other Capped Adjustments for such period, shall notexceed 10% of EBITDA for such period determined prior to giving effect to any addback for any Capped Adjustments.

ARTICLE II

THE CREDITS

Section 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender severally (and not jointly)agrees to make Revolving Loans in dollars to the Borrowers from time to time during the Availability Period in an aggregateprincipal amount that will not result in (i) such Lender’s Revolving Exposure exceeding such Lender’s Revolving Commitment or(ii) the Aggregate Revolving Exposure exceeding the lesser of (x) the Aggregate Revolving Commitment and (y) the BorrowingBase, subject to the Administrative Agent’s authority, in its sole discretion, to make Protective Advances and Overadvancespursuant to the terms of Sections 2.04 and 2.05. Within the foregoing limits and subject to the terms and conditions set forth herein,the Borrowers may borrow, prepay and reborrow Revolving Loans.

Section 2.02. Loans and Borrowings. (a) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowingconsisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments ofthe applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of itsobligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any otherLender’s failure to make Loans as required. Any Protective Advance, any Overadvance and any Swingline Loan shall be made inaccordance with the procedures set forth in Sections 2.04 and 2.05.

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(b) Subject to Section 2.14, each Revolving Borrowing shall be comprised entirely of CBFR Loans or Eurodollar Loans asthe Borrower Representative may request in accordance herewith, provided that all Borrowings made on the Effective Date must bemade as CBFR Borrowings but may be converted into Eurodollar Borrowings in accordance with Section 2.08. Each SwinglineLoan shall be a CBFR Loan. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branchor Affiliate of such Lender to make such Loan (and in the case of an Affiliate, the provisions of Sections 2.14, 2.15, 2.16, 2.17 and2.19 shall apply to such Affiliate to the same extent as to such Lender); provided that any exercise of such option shall not affect theobligation of the Borrowers to repay such Loan in accordance with the terms of this Agreement.

(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregateamount that is an integral multiple of $1,000,000 and not less than $5,000,000; provided that a Eurodollar Borrowing may be in anaggregate amount that is equal to the entire unused balance of the Aggregate Revolving Commitment. At the time that each CBFRBorrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than$1,000,000; provided that a CBFR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balanceof the Aggregate Revolving Commitment or that is required to finance the reimbursement of an LC Disbursement as contemplatedby Section 2.06(e). Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $200,000.Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time bemore than a total of seven Eurodollar Borrowings outstanding.

(d) Notwithstanding any other provision of this Agreement, the Borrower Representative shall not be entitled to request, orto elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the MaturityDate.

Section 2.03. Requests for Borrowings. To request a Borrowing, the Borrower Representative shall notify theAdministrative Agent of such request either in writing (delivered by hand or facsimile) in a form approved by the AdministrativeAgent and signed by the Borrower Representative or by telephone not later than (a) in the case of a Eurodollar Borrowing, 11:00a.m., New York time, three (3) Business Days before the date of the proposed Borrowing or (b) in the case of a CBFR Borrowing,1:00 p.m., New York time, on the date of the proposed Borrowing; provided that any such notice of a CBFR Revolving Borrowingto finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e) may be given not later than 10:00 a.m.,New York time, on the date of such proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shallbe confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Borrowing Request in a formapproved by the Administrative Agent and signed by the Borrower Representative. Each such telephonic and written BorrowingRequest shall specify the following information in compliance with Section 2.02:

(i) the name of the applicable Borrower(s);

(ii) the aggregate amount of the requested Borrowing and a breakdown of the separate wires comprising suchBorrowing;

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(iii) the date of such Borrowing, which shall be a Business Day;

(iv) whether such Borrowing is to be a CBFR Borrowing or a Eurodollar Borrowing; and

(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a periodcontemplated by the definition of the term “Interest Period.”

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be a CBFR Borrowing. If no InterestPeriod is specified with respect to any requested Eurodollar Borrowing, then the applicable Borrower(s) shall be deemed to haveselected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with thisSection, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to bemade as part of the requested Borrowing.

Section 2.04. Protective Advances . (a) Subject to the limitations set forth below, the Administrative Agent is authorizedby the Borrowers and the Lenders, from time to time in the Administrative Agent’s sole discretion (but shall have absolutely noobligation to), to make Loans to the Borrowers, on behalf of all Lenders, which the Administrative Agent, in its PermittedDiscretion, deems necessary or desirable (i) to preserve or protect the Collateral, or any portion thereof, (ii) to enhance thelikelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (iii) to pay any other amountchargeable to or required to be paid by the Borrowers pursuant to the terms of this Agreement, including payments of reimbursableexpenses (including costs, fees, and expenses as described in Section 9.03) and other sums payable under the Loan Documents (anyof such Loans are herein referred to as “Protective Advances”); provided that the aggregate principal amount of outstandingProtective Advances shall not, at any time, exceed (x) 5% of the Aggregate Commitments then in effect or (y) when aggregatedwith the aggregate outstanding principal amount of Overadvances, 10% of the Aggregate Commitments then in effect; providedfurther that, the aggregate amount of outstanding Protective Advances plus the Aggregate Revolving Exposure shall not exceed theAggregate Revolving Commitment. The Administrative Agent shall promptly notify the Borrowers and Lenders of any suchProtective Advances. Protective Advances may be made even if the conditions precedent set forth in Section 4.02 have not beensatisfied; provided, that, any such Protective Advance shall not, itself, result in a Default hereunder. The Protective Advances shallbe secured by the Liens in favor of the Administrative Agent in and to the Collateral and shall constitute Obligations hereunder. AllProtective Advances shall be CBFR Borrowings. The Administrative Agent’s authorization to make Protective Advances may berevoked at any time by the Required Lenders. Any such revocation must be in writing and shall become effective prospectivelyupon the Administrative Agent’s receipt thereof and the Administrative Agent shall promptly notify the Borrowers of any suchrevocation. At any time that there is sufficient Availability and the conditions precedent set forth in Section 4.02 have beensatisfied, the Administrative Agent may request the Revolving Lenders to make a Revolving Loan to repay a Protective Advance.At any other time the Administrative Agent may require the Lenders to fund their risk participations described in Section 2.04(b).

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(b) Upon the making of a Protective Advance by the Administrative Agent (whether before or after the occurrence of aDefault), each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocablypurchased from the Administrative Agent, without recourse or warranty, an undivided interest and participation in such ProtectiveAdvance in proportion to its Applicable Percentage. From and after the date, if any, on which any Lender is required to fund itsparticipation in any Protective Advance purchased hereunder, the Administrative Agent shall promptly distribute to such Lender,such Lender’s Applicable Percentage of all payments of principal and interest and all proceeds of Collateral received by theAdministrative Agent in respect of such Protective Advance.

Section 2.05. Swingline Loans and Overadvances.

(a) The Administrative Agent, the Swingline Lender and the Revolving Lenders agree that in order to facilitate theadministration of this Agreement and the other Loan Documents, promptly after the Borrower Representative requests a CBFRBorrowing, the Swingline Lender may elect to have the terms of this Section 2.05(a) apply to such Borrowing Request byadvancing, on behalf of the Revolving Lenders and in the amount requested, same day funds to the Borrowers, on the date of theapplicable Borrowing to the Funding Account(s) (each such Loan made solely by the Swingline Lender pursuant to this Section2.05(a) is referred to in this Agreement as a “Swingline Loan”), with settlement among them as to the Swingline Loans to take placeon a periodic basis as set forth in Section 2.05(d). Each Swingline Loan shall be subject to all the terms and conditions applicable toother CBFR Loans funded by the Revolving Lenders, except that all payments thereon shall be payable to the Swingline Lendersolely for its own account. The aggregate amount of Swingline Loans outstanding at any time shall not exceed $20,000,000. TheSwingline Lender shall not make any Swingline Loan if the requested Swingline Loan exceeds Availability (before or after givingeffect to such Swingline Loan). All Swingline Loans shall be CBFR Borrowings.

(b) Any provision of this Agreement to the contrary notwithstanding, at the request of the Borrower Representative, theAdministrative Agent may in its sole discretion (but with absolutely no obligation), make Revolving Loans to the Borrowers, onbehalf of the Revolving Lenders, in amounts that exceed Availability (any such excess Revolving Loans are herein referred tocollectively as “Overadvances”); provided that, no Overadvance shall result in a Default or Event of Default due to Borrowers’failure to comply with Section 2.01 for so long as such Overadvance remains outstanding in accordance with the terms of thisparagraph, but solely with respect to the amount of such Overadvance. In addition, Overadvances may be made even if thecondition precedent set forth in Section 4.02(c) has not been satisfied. All Overadvances shall constitute CBFR Borrowings. Theauthority of the Administrative Agent to make Overadvances is limited to an aggregate amount not to exceed at any time (x) 5% ofthe Aggregate Commitments then in effect or (y) when aggregated with the aggregate outstanding amount of Protective Advancesthen outstanding, 10% of the Aggregate Commitments then in effect, no Overadvance may remain outstanding for more than thirty(30) days and no Overadvance shall cause any Revolving Lender’s Revolving Exposure to exceed its Revolving Commitment;provided that, the Required Revolving Lenders may at any time revoke the Administrative Agent’s authorization to makeOveradvances.

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Any such revocation must be in writing and shall become effective prospectively upon the Administrative Agent’s receipt thereof.

(c) Upon the making of a Swingline Loan or an Overadvance (whether before or after the occurrence of a Default andregardless of whether a Settlement has been requested with respect to such Swingline Loan or Overadvance), each RevolvingLender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from theSwingline Lender or the Administrative Agent, as the case may be, without recourse or warranty, an undivided interest andparticipation in such Swingline Loan or Overadvance in proportion to its Applicable Percentage of the Revolving Commitment. TheSwingline Lender or the Administrative Agent may, at any time, require the Revolving Lenders to fund their participations. Fromand after the date, if any, on which any Revolving Lender is required to fund its participation in any Swingline Loan orOveradvance purchased hereunder, the Administrative Agent shall promptly distribute to such Lender, such Lender’s ApplicablePercentage of all payments of principal and interest and all proceeds of Collateral received by the Administrative Agent in respectof such Swingline Loan or Overadvance.

(d) The Administrative Agent, on behalf of the Swingline Lender, shall request settlement (a “ Settlement”) with theRevolving Lenders on at least a weekly basis or on any date that the Administrative Agent elects, by notifying the RevolvingLenders of such requested Settlement by facsimile, telephone, or e-mail no later than 1:00 p.m. New York time on the date of suchrequested Settlement (the “Settlement Date”) . Each Revolving Lender (other than the Swingline Lender, in the case of theSwingline Loans) shall transfer the amount of such Revolving Lender’s Applicable Percentage of the outstanding principal amountof the applicable Loan with respect to which Settlement is requested to the Administrative Agent, to such account of theAdministrative Agent as the Administrative Agent may designate, not later than 3:00 p.m., New York time, on such SettlementDate. Settlements may occur during the existence of a Default and whether or not the applicable conditions precedent set forth inSection 4.02 have then been satisfied. Such amounts transferred to the Administrative Agent shall be applied against the amounts ofthe Swingline Lender’s Swingline Loans and, together with Swingline Lender’s Applicable Percentage of such Swingline Loan,shall constitute Revolving Loans of such Revolving Lenders, respectively. If any such amount is not transferred to theAdministrative Agent by any Revolving Lender on such Settlement Date, the Swingline Lender shall be entitled to recover fromsuch Lender on demand such amount, together with interest thereon, as specified in Section 2.07.

Section 2.06. Letters of Credit . (a ) General. Subject to the terms and conditions set forth herein, the BorrowerRepresentative may request the issuance of Letters of Credit for its own account or for the account of another Borrowerdenominated in dollars as the applicant thereof for the support of its or its Subsidiaries’ obligations, in a form reasonably acceptableto the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period. In the event ofany inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of creditapplication or other agreement submitted by the Borrowers to, or entered into by the Borrowers with, the Issuing Bank relating toany Letter of Credit, the terms and conditions of this Agreement shall control. Each Borrower unconditionally and irrevocablyagrees that, in connection with any Letter of Credit issued for the support of any Subsidiary’s

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obligations as provided in the first sentence of this paragraph, such Borrower will be fully responsible for the reimbursement of LCDisbursements in accordance with the terms hereof, the payment of interest thereon and the payment of fees due under Section2.12(b) to the same extent as if it were the sole account party in respect of such Letter of Credit (such Borrower hereby irrevocablywaiving any defenses that might otherwise be available to it as a guarantor or surety of the obligations of such Subsidiary that is anaccount party in respect of any such Letter of Credit). Notwithstanding anything herein to the contrary, the Issuing Bank shall haveno obligation hereunder to issue, and shall not issue, any Letter of Credit (i) the proceeds of which would be made available to anyPerson (A) to fund any activity or business of or with any Sanctioned Person, or in any country or territory that, at the time of suchfunding, is the subject of any Sanctions or (B) in any manner that would result in a violation of any Sanctions by any party to thisAgreement, (ii) if any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin orrestrain the Issuing Bank from issuing such Letter of Credit, or any Requirement of Law relating to the Issuing Bank or any requestor directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shallprohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particularor shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for whichthe Issuing Bank is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon the IssuingBank any unreimbursed loss, cost or expense which was not applicable on the Effective Date and which the Issuing Bank in goodfaith deems material to it, or (iii) if the issuance of such Letter of Credit would violate one or more policies of the Issuing Bankapplicable to letters of credit generally; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank WallStreet Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued inconnection therewith or in the implementation thereof, and (y) all requests, rules, guidelines, requirements or directives promulgatedby the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) orthe United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed not to be in effecton the Effective Date for purposes of clause (ii) above, regardless of the date enacted, adopted, issued or implemented.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit(or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower Representative shall deliver by hand orfacsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to theIssuing Bank and the Administrative Agent (prior to 10:00 am, New York time, at least three (3) Business Days prior to therequested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifyingthe Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension(which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of thisSection), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall benecessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the applicable Borrower alsoshall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit.A Letter of Credit shall be issued, amended, renewed or extended

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only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrowers shall be deemed to representand warrant that), after giving effect to such issuance, amendment, renewal or extension the aggregate LC Exposure shall not exceed$20,000,000, (iv) no Revolving Lender’s Revolving Exposure shall exceed its Revolving Commitment and (v) the AggregateRevolving Exposure shall not exceed the lesser of the Aggregate Revolving Commitment and the Borrowing Base.

(c) Expiration Date. Each Letter of Credit shall expire (or be subject to termination or non-renewal by notice from theIssuing Bank to the beneficiary thereof) at or prior to the close of business on the earlier of (i) the date one year after the date of theissuance of such Letter of Credit (or, in the case of any renewal or extension thereof, including, without limitation, any automaticrenewal provision, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date.

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amountthereof) and without any further action on the part of the Issuing Bank or the Revolving Lenders, the Issuing Bank hereby grants toeach Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Creditequal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. Inconsideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to theAdministrative Agent, for the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made bythe Issuing Bank and not reimbursed by the Borrowers on the date due as provided in paragraph (e) of this Section, or of anyreimbursement payment required to be refunded to the Borrowers for any reason. Each Revolving Lender acknowledges and agreesthat its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditionaland shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Creditor the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shallbe made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrowersshall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement (i) notlater than 12:00 p.m., New York time, on the date that such LC Disbursement is made, if the Borrower Representative shall havereceived notice of such LC Disbursement prior to 10:00 a.m., New York time, on such date, or, (ii) if such notice has not beenreceived by the Borrower Representative prior to such time on such date, then not later than 12:00 p.m., New York time, on (A) theBusiness Day that the Borrower Representative receives such notice, if such notice is received prior to 10:00 a.m., New York time,on the day of receipt, or (B) the Business Day immediately following the day that the Borrower Representative receives such notice,if such notice is not received prior to such time on the day of receipt; provided that the Borrowers may, subject to the conditions toborrowing set forth herein, request in accordance with Section 2.03 or 2.05 that such payment be financed with a CBFR RevolvingBorrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the Borrowers’ obligation to make suchpayment shall be discharged and replaced by the resulting

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CBFR Revolving Borrowing or Swingline Loan. If the Borrowers fail to make such payment when due, the Administrative Agentshall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrowers in respect thereofand such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay tothe Administrative Agent its Applicable Percentage of the payment then due from the Borrowers, in the same manner as provided inSection 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the paymentobligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts soreceived by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from theBorrowers pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extentthat Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders andthe Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to this paragraph to reimbursethe Issuing Bank for any LC Disbursement (other than the funding of CBFR Revolving Loans or a Swingline Loan as contemplatedabove) shall not constitute a Loan and shall not relieve the Borrowers of their obligation to reimburse such LC Disbursement.

(f) Obligations Absolute . The Borrowers’ joint and several obligation to reimburse LC Disbursements as provided inparagraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with theterms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability ofany Letter of Credit or this Agreement, or any term or provision therein or herein, (ii) any draft or other document presented under aLetter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in anyrespect, (iii) any payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that doesnot comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar toany of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a rightof setoff against, the Borrowers’ obligations hereunder. None of the Administrative Agent, the Revolving Lenders, the IssuingBank or any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance ortransfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstancesreferred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft,notice or other communication under or relating to any Letter of Credit (including any document required to make a drawingthereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the IssuingBank; provided that the foregoing shall not be construed to excuse (i) any gross negligence, bad faith or willful misconduct onbehalf of any of the Administrative Agent, the Revolving Lenders, the Issuing Bank or any of their Related Parties, as determinedby a final nonappealable judgment of a court of competent jurisdiction, and (ii) the Issuing Bank from liability to the Borrowers tothe extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which arehereby waived by the Borrowers to the extent permitted by applicable law) suffered by any Borrower that are caused by the IssuingBank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit complywith the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence, bad faith or willful misconducton the part

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of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercisedcare in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that,with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit,the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for furtherinvestigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents ifsuch documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documentspurporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the AdministrativeAgent and the applicable Borrower by telephone (confirmed by facsimile) of such demand for payment and whether the IssuingBank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shallnot relieve the Borrowers of their obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LCDisbursement.

(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrowers shall reimburse suchLC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each dayfrom and including the date such LC Disbursement is made to but excluding the date that the Borrowers reimburse such LCDisbursement, at the rate per annum then applicable to CBFR Revolving Loans and such interest shall be payable on the date whensuch reimbursement is due; provided that, if the Borrowers fail to reimburse such LC Disbursement when due pursuant toparagraph (e) of this Section, then Section 2.13(d) shall apply. Interest accrued pursuant to this paragraph shall be for the account ofthe Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e)of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

(i) Replacement of the Issuing Bank . The Issuing Bank may be replaced at any time by written agreement among theBorrower Representative, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The AdministrativeAgent shall notify the Revolving Lenders of any such replacement of the Issuing Bank. At the time any such replacement shallbecome effective, the Borrowers shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section2.12(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights andobligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) referencesherein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successorand all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replacedIssuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under thisAgreement with respect to Letters of Credit then outstanding and issued by it prior to such replacement, but shall not be required toissue additional Letters of Credit.

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(j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the BorrowerRepresentative receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has beenaccelerated, Revolving Lenders with LC Exposure representing greater than 50% of the aggregate LC Exposure) demanding thedeposit of cash collateral pursuant to this paragraph, the Borrowers shall deposit in an account with the Administrative Agent, in thename of the Administrative Agent and for the benefit of the Revolving Lenders (the “LC Collateral Account”), an amount in cashequal to 103% of the amount of the LC Exposure as of such date plus accrued and unpaid interest thereon; provided that theobligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due andpayable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to any Borrowerdescribed in clause (h) or (i) of Article VII. Such deposit shall be held by the Administrative Agent as collateral for the paymentand performance of the Secured Obligations. The Administrative Agent shall have exclusive dominion and control, including theexclusive right of withdrawal, over the LC Collateral Account and the Borrowers hereby grant the Administrative Agent a securityinterest in the LC Collateral Account and all money or other assets on deposit therein or credited thereto. Other than any interestearned on the investment of such deposits, which investments shall be made at the option and sole discretion of the AdministrativeAgent and at the Borrowers’ risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investmentsshall accumulate in the LC Collateral Account. Moneys in the LC Collateral Account shall be applied by the Administrative Agentto reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall beheld for the satisfaction of the reimbursement obligations of the Borrowers for the LC Exposure at such time or, if the maturity ofthe Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% ofthe aggregate LC Exposure), be applied to satisfy other Secured Obligations. If the Borrowers are required to provide an amount ofcash collateral hereunder as a result of the occurrence and continuance of an Event of Default, such amount (to the extent notapplied as aforesaid) shall be returned to the Borrowers within three (3) Business Days after all such Events of Default have beencured or waived as confirmed in writing by the Administrative Agent.

(k) LC Exposure Determination . For all purposes of this Agreement, the amount of a Letter of Credit that, by its terms orthe terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof shall bedeemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not suchmaximum stated amount is in effect at the time of determination.

Section 2.07. Funding of Borrowings . (a) Each Lender shall make each Loan to be made by such Lender hereunder on theproposed date thereof by wire transfer of immediately available funds by 2:00 p.m., New York time, to the account of theAdministrative Agent most recently designated by it for such purpose by notice to the Lenders in an amount equal to such Lender’sApplicable Percentage; provided that, Swingline Loans shall be made as provided in Section 2.05. The Administrative Agent willmake such Loans available to the Borrower Representative by promptly crediting the amounts so received, in like funds, to theFunding Account; provided that CBFR Revolving Loans made to finance the reimbursement of (i) an LC Disbursement as provided

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in Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank and (ii) a Protective Advance or anOveradvance shall be retained by the Administrative Agent.

(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowingthat such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the AdministrativeAgent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Sectionand may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. In such event, if aLender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lenderand the Borrowers severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount withinterest thereon, for each day from and including the date such amount is made available to the applicable Borrower to butexcluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal FundsEffective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbankcompensation or (ii) in the case of the Borrowers, the interest rate applicable to the Loans comprising such Borrowing. If suchLender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in suchBorrowing.

Section 2.08. Interest Elections. (a) Each Borrowing initially shall be of the Type specified in the applicable BorrowingRequest and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.Thereafter, the Borrower Representative may elect to convert such Borrowing to a different Type or to continue such Borrowingand, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The BorrowerRepresentative may elect different options with respect to different portions of the affected Borrowing, in which case each suchportion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising eachsuch portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, Overadvances orProtective Advances, which may not be converted or continued.

(b) To make an election pursuant to this Section, the Borrower Representative shall notify the Administrative Agent ofsuch election (an “Interest Election Request”) by telephone by the time that a Borrowing Request would be required under Section2.03 if the Borrowers were requesting a Borrowing of the Type resulting from such election to be made on the effective date ofsuch election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by handdelivery or facsimile to the Administrative Agent of a written Interest Election Request in a form approved by the AdministrativeAgent and signed by the Borrower Representative.

(c) Each telephonic and written Interest Election Request shall specify the following information in compliance withSection 2.02:

(i) the name of the applicable Borrower and the Borrowing to which such Interest Election Request applies and, ifdifferent options are being elected with respect to different portions thereof, the portions thereof to be allocated to eachresulting Borrowing (in which

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case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a BusinessDay;

(iii) whether the resulting Borrowing is to be a CBFR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after givingeffect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrowersshall be deemed to have selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of thedetails thereof and of such Lender’s portion of each resulting Borrowing.

(e) If the Borrower Representative fails to deliver a timely Interest Election Request with respect to a EurodollarBorrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at theend of such Interest Period such Borrowing shall be converted to a CBFR Borrowing. Notwithstanding any contrary provisionhereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders,so notifies the Borrower Representative, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may beconverted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to aCBFR Borrowing at the end of the Interest Period applicable thereto.

Section 2.09. Termination and Reduction of Commitments; Increase in Revolving Commitments . (a) Unless previouslyterminated, the Revolving Commitments shall terminate on the Maturity Date.

(b) The Borrowers may at any time terminate the Revolving Commitments upon (i) the payment in full of all outstandingRevolving Loans, together with accrued and unpaid interest thereon and on any LC Exposure, (ii) the cancellation and return of alloutstanding Letters of Credit (or alternatively, with respect to each such Letter of Credit, the furnishing to the Administrative Agentof a cash deposit (or at the discretion of the Administrative Agent a back up standby letter of credit satisfactory to theAdministrative Agent and the Issuing Bank) in an amount equal to 103% of the LC Exposure as of such date), (iii) the payment infull of the accrued and unpaid fees, including any amounts payable pursuant to Section 2.16, and (iv) the payment in full of allreimbursable expenses (as provided herein) and other Obligations, together with accrued and unpaid interest thereon.

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(c) The Borrowers may from time to time reduce the Revolving Commitments; provided that (i) each reduction of theRevolving Commitments shall be in an amount that is an integral multiple of $1,000,000 and (ii) the Borrowers shall not terminateor reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordancewith Section 2.11, the Aggregate Revolving Exposure would exceed the lesser of the Aggregate Revolving Commitment and theBorrowing Base.

(d) The Borrower Representative shall notify the Administrative Agent of any election to terminate or reduce theCommitments under paragraph (b) or (c) of this Section at least three (3) Business Days prior to the effective date of suchtermination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, theAdministrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower Representativepursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the BorrowerRepresentative may state that such notice is conditioned upon the effectiveness of other credit facilities or the consummation of atransaction, the proceeds of which shall be used to repay the Obligations in full or in part, in which case such notice may berevoked by the Borrower Representative (by notice to the Administrative Agent on or prior to the specified effective date) if suchcondition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of theCommitments shall be made ratably among the Lenders in accordance with their respective Commitments.

(e) The Borrowers shall have the right to increase the Revolving Commitments by obtaining additional RevolvingCommitments, either from one or more of the Lenders or another lending institution; provided that (i) any such request for anincrease shall be in a minimum amount of $25,000,000, (ii) the Borrower Representative, on behalf of the Borrowers, may make amaximum of four such requests, (iii) after giving effect thereto, the sum of the total of the additional Commitments does not exceed$100,000,000, (iv) the Administrative Agent and the Issuing Bank have approved the identity of any such new Lender, suchapprovals not to be unreasonably withheld or delayed, (v) any such new Lender assumes all of the rights and obligations of a“Lender” hereunder, and (vi) the procedure described in Section 2.09(f) have been satisfied. Nothing contained in this Section 2.09shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Commitment hereunder atany time.

(f) Any amendment hereto for such an increase or addition shall be in form and substance reasonably satisfactory to theAdministrative Agent and shall only require the written signatures of the Administrative Agent, the Borrowers and each Lenderbeing added or increasing its Commitment, subject only to the approval of the Required Lenders if any such increase or additionwould cause the Revolving Commitments to exceed $300,000,000. As a condition precedent to such an increase or addition, theBorrowers shall deliver to the Administrative Agent (i) a certificate of each Loan Party signed by an authorized officer of such LoanParty (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (B) inthe case of the Borrowers, certifying that, before and after giving effect to such increase or addition, (1) the representations andwarranties contained in Article III and the other Loan Documents are true and correct in all material respects, except to the extentthat such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all materialrespects

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as of such earlier date, (2) no Default exists and (3) the Borrowers are in compliance (on a pro forma basis) with the covenantscontained in Section 6.12 and (ii) legal opinions and documents consistent with those delivered on the Effective Date, to the extentrequested by the Administrative Agent.

(g) On the effective date of any such increase or addition, (i) any Lender increasing (or, in the case of any newly addedLender, extending) its Revolving Commitment shall make available to the Administrative Agent such amounts in immediatelyavailable funds as the Administrative Agent shall determine, for the benefit of the other Lenders, as being required in order to cause,after giving effect to such increase or addition and the use of such amounts to make payments to such other Lenders, each Lender’sportion of the outstanding Revolving Loans of all the Lenders to equal its revised Applicable Percentage of such outstandingRevolving Loans, and the Administrative Agent shall make such other adjustments among the Lenders with respect to theRevolving Loans then outstanding and amounts of principal, interest, commitment fees and other amounts paid or payable withrespect thereto as shall be necessary, in the opinion of the Administrative Agent, in order to effect such reallocation and (ii) theBorrowers shall be deemed to have repaid and reborrowed all outstanding Revolving Loans as of the date of any increase (oraddition) in the Revolving Commitments (with such reborrowing to consist of the Types of Revolving Loans, with related InterestPeriods if applicable, specified in a notice delivered by the Borrower Representative, in accordance with the requirements ofSection 2.03). The deemed payments made pursuant to clause (ii) of the immediately preceding sentence shall be accompanied bypayment of all accrued interest on the amount prepaid and, in respect of each Eurodollar Loan, shall be subject to indemnificationby the Borrowers pursuant to the provisions of Section 2.16 if the deemed payment occurs other than on the last day of the relatedInterest Periods. Within a reasonable time after the effective date of any increase or addition, the Administrative Agent shall, and ishereby authorized and directed to, revise the Commitment Schedule to reflect such increase or addition and shall distribute suchrevised Commitment Schedule to each of the Lenders and the Borrower Representative, whereupon such revised CommitmentSchedule shall replace the old Commitment Schedule and become part of this Agreement.

Section 2.10. Repayment and Amortization of Loans; Evidence of Debt . (a) The Borrowers hereby unconditionallypromise to pay (i) to the Administrative Agent for the account of each Revolving Lender the then unpaid principal amount of eachRevolving Loan on the Maturity Date, (ii) to the Administrative Agent the then unpaid amount of each Protective Advance on theearlier of the Maturity Date and demand by the Administrative Agent, (iii) to the Swingline Lender the then unpaid principalamount of each Swingline Loan on the earlier of the Maturity Date and the fifth Business Day after such Swingline Loan is made;provided that on each date that a Revolving Loan is made, the Borrower shall repay all Swingline Loans then outstanding and theproceeds of any such Revolving Loan shall be applied by the Administrative Agent to repay any Swingline Loans outstanding, and(iv) to the Administrative Agent the then unpaid principal amount of each Overadvance on the earlier of the Maturity Date and thedemand by the Administrative Agent.

(b) On each Business Day during a Dominion Period, the Administrative Agent shall apply all funds credited to theCollection Account on such Business Day or the immediately preceding Business Day (at the discretion of the AdministrativeAgent, whether or not immediately available) first to prepay any Protective Advances and Overadvances that may be outstanding,pro

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rata, and second to prepay the Revolving Loans (including Swingline Loans) and to cash collateralize outstanding LC Exposure.Notwithstanding the foregoing, to the extent any funds credited to the Collection Account constitute Net Proceeds in respect of anyPrepayment Event, the application of such Net Proceeds shall be subject to Section 2.11(c).

(c) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness ofthe Borrowers to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interestpayable and paid to such Lender from time to time hereunder.

(d) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder,the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable orto become due and payable from the Borrowers to each Lender hereunder and (iii) the amount of any sum received by theAdministrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(e) The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this Section shall be prima facieevidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or theAdministrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowersto repay the Loans in accordance with the terms of this Agreement.

(f) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrowers shallprepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender,to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced bysuch promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented byone or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is aregistered note, to such payee and its registered assigns).

Section 2.11. Prepayment of Loans. (a) The Borrowers shall have the right at any time and from time to time to prepayany Borrowing in whole or in part, subject to prior notice in accordance with paragraph (e) of this Section and, if applicable,payment of any break funding expenses under Section 2.16.

(b) Except for Overadvances permitted under Section 2.05, in the event and on such occasion that the AggregateRevolving Exposure exceeds the lesser of (A) the Aggregate Revolving Commitment and (B) the Borrowing Base, the Borrowersshall prepay the Revolving Loans, LC Exposure and/or Swingline Loans or cash collateralize LC Exposure in an account with theAdministrative Agent pursuant to Section 2.06(j), as applicable, in an aggregate amount equal to such excess.

(c) In the event and on each occasion that any Net Proceeds are received by or on behalf of the Company or anySubsidiary in respect of any Prepayment Event, the Borrowers shall, immediately after such Net Proceeds are received by theCompany or any Subsidiary, prepay the

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Obligations and cash collateralize the LC Exposure as set forth in Section 2.11(d) below in an aggregate amount equal to 100% ofsuch Net Proceeds.

(d) All such amounts pursuant to Section 2.11(c) shall be applied, first to prepay any Protective Advances andOveradvances that may be outstanding, pro rata, and second to prepay the Revolving Loans (including Swingline Loans) without acorresponding reduction in the Revolving Commitments and to cash collateralize outstanding LC Exposure.

(e) The Borrower Representative shall notify the Administrative Agent (and, in the case of prepayment of a SwinglineLoan, the Swingline Lender) by telephone (confirmed by facsimile) of any prepayment hereunder not later than 11:00 a.m., NewYork time, (A) in the case of prepayment of a Eurodollar Revolving Borrowing, three (3) Business Days before the date ofprepayment, or (B) in the case of prepayment of a CBFR Revolving Borrowing, on the date of prepayment. Each such notice shallbe irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid;provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the RevolvingCommitments as contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice of termination isrevoked in accordance with Section 2.09. Promptly following receipt of any such notice relating to a Revolving Borrowing, theAdministrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shallbe in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided inSection 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably to the Revolving Loans included in the prepaidBorrowing. Prepayments shall be accompanied by (i) accrued interest to the extent required by Section 2.13 and (ii) break fundingpayments pursuant to Section 2.16.

Section 2.12. Fees. (a) The Borrowers agree to pay to the Administrative Agent for the account of each Lender acommitment fee, which shall accrue at 0.25% per annum on the average daily amount of the Available Revolving Commitment ofsuch Lender during the period from and including the Effective Date to but excluding the date on which the RevolvingCommitments terminate. Accrued commitment fees shall be payable in arrears on the first day of each calendar month and on thedate on which the Revolving Commitments terminate, commencing on the first such date to occur after the date hereof. Allcommitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed,(including the first day but excluding the last day).

(b) The Borrowers agree to pay (i) to the Administrative Agent for the account of each Revolving Lender a participationfee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine theinterest rate applicable to Eurodollar Revolving Loans on the average daily amount of such Lender’s LC Exposure (excluding anyportion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to butexcluding the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lenderceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum onthe average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements)attributable to Letters of Credit issued by the Issuing Bank during the period from

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and including the Effective Date to but excluding the later of the date of termination of the Revolving Commitments and the dateon which there ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees and commissions with respect to theissuance, amendment, cancellation, negotiation, transfer, presentment, renewal or extension of any Letter of Credit or processing ofdrawings thereunder. Participation fees and fronting fees accrued through and including the last day of each calendar month shall bepayable on the first day of each calendar month following such last day, commencing on the first such date to occur after theEffective Date; provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and anysuch fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other feespayable to the Issuing Bank pursuant to this paragraph shall be payable within ten (10) days after demand. All participation fees andfronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed(including the first day but excluding the last day).

(c) The Borrowers agree to pay to the Administrative Agent, for its own account, fees payable in the amounts and at thetimes separately agreed upon between the Borrowers and the Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent(or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, tothe Lenders. Fees paid shall not be refundable under any circumstances.

Section 2.13. Interest. (a) The Loans comprising each CBFR Borrowing (including each Swingline Loan) shall bearinterest at the CB Floating Rate plus the Applicable Rate.

(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Periodin effect for such Borrowing plus the Applicable Rate.

(c) Each Protective Advance and each Overadvance shall bear interest at the CB Floating Rate plus the Applicable Ratefor Revolving Loans plus 2%.

(d) Notwithstanding the foregoing, during the occurrence and continuance of an Event of Default (other than with respectto an Event of Default under clauses (h) and (i) of Article VII) the Administrative Agent or the Required Lenders may, at theiroption, by notice to the Borrower Representative (which notice may be revoked at the option of the Required Lendersnotwithstanding any provision of Section 9.02 requiring the consent of “each Lender affected thereby” for reductions in interestrates), declare that (i) all Loans shall bear interest at 2% plus the rate otherwise applicable to such Loans as provided in thepreceding paragraphs of this Section or (ii) in the case of any other amount outstanding hereunder, such amount shall accrue at 2%plus the rate applicable to such fee or other obligation as provided hereunder, provided that the interest increases in (i) and (ii) shalloccur automatically without notice to or action by any Person with respect to an Event of Default under clauses (h) and (i) of ArticleVII.

(e) Accrued interest on each Loan (for CBFR Loans, accrued through the last day of the prior calendar month) shall bepayable in arrears on each Interest Payment Date for such Loan

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and upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (d) of this Section shall bepayable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of a CBFR RevolvingLoan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on thedate of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the currentInterest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(f) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by referenceto the CB Floating Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall bepayable for the actual number of days elapsed (including the first day but excluding the last day). The applicable CB Floating Rate,Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusiveabsent manifest error.

Section 2.14. Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) thatadequate and reasonable means do not exist for ascertaining, (including, without limitation, by means of an Interpolated Rate) theAdjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or

(b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, asapplicable, for the applicable Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making ormaintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower Representative and the Lenders by electroniccommunication as provided in Section 9.01 as promptly as practicable thereafter and, until the Administrative Agent notifies theBorrower Representative and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest ElectionRequest that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall beineffective and any such Eurodollar Borrowing shall be repaid on the last day of the then current Interest Period applicable thereto,and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as a CBFR Borrowing.

Section 2.15. Increased Costs. (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including anycompulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, orcredit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the IssuingBank;

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(ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense(other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; or

(iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b)through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters ofcredit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing,converting into or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to suchLender, the Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit or to reduce theamount of any sum received or receivable by such Lender, the Issuing Bank or such other Recipient hereunder (whether ofprincipal, interest or otherwise), then, subject to Section 2.19 and clause (d) below, the Borrowers will pay to such Lender, theIssuing Bank or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, theIssuing Bank or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has orwould have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’sor the Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of, or the Loans made by, orparticipations in Letters of Credit or Swingline Loans held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to alevel below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could haveachieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies ofsuch Lender’s or the Issuing Bank’s holding company with respect to capital adequacy and liquidity), then, subject to Section 2.19and clause (d) below, from time to time the Borrowers will pay to such Lender or the Issuing Bank, as the case may be, suchadditional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holdingcompany for any such reduction suffered.

(c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lenderor the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be deliveredto the Borrower Representative and shall be conclusive absent manifest error. The Borrowers shall pay such Lender or the IssuingBank, as the case may be, the amount shown as due on any such certificate within thirty (30) days after receipt thereof.

(d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shallnot constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrowersshall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductionsincurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the BorrowerRepresentative of the Change in Law giving rise to such

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increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided furtherthat, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to aboveshall be extended to include the period of retroactive effect thereof.

Section 2.16. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other thanon the last day of an Interest Period applicable thereto (including as a result of an Event of Default or as a result of any prepaymentpursuant to Section 2.11), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicablethereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice deliveredpursuant hereto (regardless of whether such notice may be revoked under Section 2.09(d) and is revoked in accordance therewith),or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of arequest by the Borrower Representative pursuant to Section 2.19 or 9.02(d), then, in any such event, the Borrowers shallcompensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, costor expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) theamount of interest which would have accrued on the principal amount of such Eurodollar Loan had such event not occurred, at theAdjusted LIBO Rate that would have been applicable to such Eurodollar Loan, for the period from the date of such event to the lastday of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that wouldhave been the Interest Period for such Eurodollar Loan), over (ii) the amount of interest which would accrue on such principalamount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, fordollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender settingforth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the BorrowerRepresentative and shall be conclusive absent manifest error. The Borrowers shall pay such Lender the amount shown as due onany such certificate within thirty (30) days after receipt thereof.

Section 2.17. Withholding of Taxes; Gross-Up . (a) Payments Free of Taxes . Any and all payments by or on account ofany obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, exceptas required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent)requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholdingagent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to therelevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payableby the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (includingsuch deductions and withholdings applicable to additional sums payable under this Section 2.17) the applicable Recipient receivesan amount equal to the sum it would have received had no such deduction or withholding been made.

(b) Payment of Other Taxes by the Borrowers . The Loan Parties shall timely pay to the relevant Governmental Authorityin accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes.

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(c) Evidence of Payment . As soon as practicable after any payment of Taxes by any Loan Party to a GovernmentalAuthority pursuant to this Section 2.17, such Loan Party shall deliver to the Administrative Agent the original or a certified copy ofa 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 the Administrative Agent.

(d) Indemnification by the Loan Parties . The Loan Parties shall jointly and severally indemnify each Recipient, within ten(10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted onor attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deductedfrom a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not suchIndemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to theamount of such payment or liability delivered to any Loan Party by a Lender (with a copy to the Administrative Agent), or by theAdministrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) daysafter demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has notalready indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties todo so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating to themaintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paidby the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respectthereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Acertificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusiveabsent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any timeowing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to such Lender from any othersource against any amount due to the Administrative Agent under this paragraph (e).

(f) Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect topayments made under any Loan Document shall deliver to the Borrower Representative and the Administrative Agent, at the timeor times reasonably requested by the Borrower Representative or the Administrative Agent, such properly completed and executeddocumentation reasonably requested by the Borrower Representative or the Administrative Agent as will permit such payments tobe made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the BorrowerRepresentative or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonablyrequested by the Borrower Representative or the Administrative Agent as will enable the Borrowers or the Administrative Agent todetermine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstandinganything to the contrary in the preceding two sentences, the completion, execution and submission of such

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documentation (other than such documentation set forth in Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required ifin the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any materialunreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing, in the event that any Borrower is a U.S. Person,

(A) any Lender that is a U.S. Person shall deliver to the Borrower Representative and the AdministrativeAgent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to timethereafter upon the reasonable request of the Borrower Representative or the Administrative Agent), executedoriginals of IRS Form W-9 certifying that such Lender 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 the BorrowerRepresentative and the Administrative Agent (in such number of copies as shall be requested by the recipient) on orprior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to timethereafter upon the reasonable request of the Borrower Representative or the Administrative Agent), whichever of thefollowing 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 IRSForm W-8BEN or W-8BEN-E, as applicable (or successor form), establishing an exemption from, orreduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) withrespect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E, asapplicable (or successor form), establishing an exemption from, or reduction of, U.S. Federal withholding Taxpursuant to the “business profits” or “other income” article of such tax treaty;

(2) in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectivelyconnected income, executed originals of IRS Form W-8ECI;

(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 E-1 to the effect that suchForeign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percentshareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreigncorporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate ”) and (y)executed originals of IRS Form W-8BEN or W-8BEN-E, as applicable (or successor form); or

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(4) to the extent a Foreign Lender is not the Beneficial Owner, executed originals of IRS FormW‑8IMY, accompanied by IRS Form W‑8ECI, IRS Form W‑8BEN or W‑8BEN‑E, as applicable (or successorform), a U.S. Tax Compliance Certificate substantially in the form of Exhibit E‑2 or Exhibit E‑3, IRS FormW‑9, and/or other certification documents from each Beneficial Owner, as applicable; provided that if theForeign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender areclaiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax ComplianceCertificate substantially in the form of Exhibit E-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the BorrowerRepresentative and the Administrative Agent (in such number of copies as shall be requested by the recipient) on orprior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to timethereafter upon the reasonable request of the Borrower Representative or the Administrative Agent), executedoriginals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S.Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed byapplicable law to permit the Borrowers or the Administrative Agent to determine the withholding or deductionrequired to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. Federal withholdingTax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA(including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to theBorrower Representative and the Administrative Agent at the time or times prescribed by law and at such time ortimes reasonably requested by the Borrower Representative or the Administrative Agent such documentationprescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additionaldocumentation reasonably requested by the Borrower Representative or the Administrative Agent as may benecessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and todetermine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount todeduct 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.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in anyrespect, it shall update such form or certification or promptly notify the Borrower Representative and the Administrative Agent inwriting of its legal inability to do so.

(g) Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has receiveda refund of any Taxes as to which it has been indemnified pursuant

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to this Section 2.17 (including by the payment of additional amounts pursuant to this Section 2.17), it shall pay to the indemnifyingparty an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.17 with respect to theTaxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest(other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, uponthe request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g)(plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnifiedparty is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph(g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) thepayment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party wouldhave been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwiseimposed and the indemnification payments or additional amounts giving rise to such refund had never been paid. This paragraph (g)shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to itsTaxes that it deems confidential) to the indemnifying party or any other Person.

(h) Survival. Each party’s obligations under this Section 2.17 shall survive the resignation or replacement of theAdministrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and therepayment, satisfaction or discharge of all obligations under any Loan Document.

(i) Defined Terms . For purposes of this Section 2.17, the term “Lender” includes any Issuing Bank and the term“applicable law” includes FATCA.

Section 2.18. Payments Generally; Allocation of Proceeds; Sharing of Set-offs. (a) The Borrowers shall make eachpayment required to be made by them hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or ofamounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 3:00 p.m., New York time, on the date when due, inimmediately available funds, without set‑off or counterclaim. Any amounts received after such time on any date may, in thediscretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes ofcalculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 10 South Dearborn Street,22nd Floor, New York, New York, except payments to be made directly to the Issuing Bank or Swingline Lender as expresslyprovided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Personsentitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person tothe appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a BusinessDay, the date for payment 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. All payments hereunder shall be made in dollars.

(b) Any proceeds of Collateral received by the Administrative Agent (i) not constituting either (A) a specific payment ofprincipal, interest, fees or other sum payable under the Loan

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Documents (which shall be applied as specified by the Borrowers), (B) a mandatory prepayment (which shall be applied inaccordance with Section 2.11) or (C) amounts to be applied from the Collection Account during a Dominion Period (which shall beapplied in accordance with Section 2.10(b)) or (ii) after an Event of Default has occurred and is continuing and the AdministrativeAgent so elects or the Required Lenders so direct, shall be applied ratably first, to pay any fees, indemnities, or expensereimbursements including amounts then due to the Administrative Agent and the Issuing Bank from the Borrowers (other than inconnection with Banking Services Obligations or Swap Agreement Obligations), second, to pay any fees or expensereimbursements then due to the Lenders from the Borrowers (other than in connection with Banking Services Obligations or SwapAgreement Obligations), third, to pay interest due in respect of the Overadvances and Protective Advances, fourth, to pay theprincipal of the Overadvances and Protective Advances, fifth, to pay interest then due and payable on the Loans (other than theOveradvances and Protective Advances) ratably, sixth, to prepay principal on the Loans (other than the Overadvances andProtective Advances) and unreimbursed LC Disbursements ratably, seventh, to pay an amount to the Administrative Agent equal toone hundred three percent (103%) of the aggregate LC Exposure, to be held as cash collateral for such Obligations, eighth, topayment of any amounts owing with respect to Banking Services Obligations and Swap Agreement Obligations up to and includingthe amount most recently provided to the Administrative Agent pursuant to Section 2.22, and ninth, to the payment of any otherSecured Obligation due to the Administrative Agent or any Lender by the Borrowers . Notwithstanding the foregoing amountsreceived from any Loan Party shall not be applied to any Excluded Swap Obligation of such Loan Party. Notwithstanding anythingto the contrary contained in this Agreement, unless so directed by the Borrower Representative, or unless an Event of Default is inexistence, neither the Administrative Agent nor any Lender shall apply any payment which it receives to any Eurodollar Loan of aClass, except (a) on the expiration date of the Interest Period applicable thereto or (b) in the event, and only to the extent, that thereare no outstanding CBFR Loans of the same Class and, in any such event, the Borrowers shall pay the break funding paymentrequired in accordance with Section 2.16. The Administrative Agent and the Lenders shall have the continuing and exclusive rightto apply and reverse and reapply any and all such proceeds and payments to any portion of the Secured Obligations.

(c) At the election of the Administrative Agent, all payments of principal, interest, LC Disbursements, fees, premiums,reimbursable expenses (including, without limitation, all reimbursement for fees, costs and expenses pursuant to Section 9.03), andother sums payable under the Loan Documents, may be paid from the proceeds of Borrowings made hereunder whether madefollowing a request by the Borrower Representative pursuant to Section 2.03 or a deemed request as provided in this Section or maybe deducted from any deposit account of any Borrower maintained with the Administrative Agent. The Borrowers herebyirrevocably authorize (i) the Administrative Agent to make a Borrowing for the purpose of paying each payment of principal,interest and fees as it becomes due hereunder or any other amount due under the Loan Documents and agrees that all such amountscharged shall constitute Loans (including Swingline Loans and Overadvances, but such a Borrowing may only constitute aProtective Advance if it is to reimburse costs, fees and expenses as described in Section 9.03) and that all such Borrowings shall bedeemed to have been requested pursuant to Section 2.03, 2.04 or 2.05, as applicable, and (ii) the Administrative Agent to charge anydeposit account of any Borrower maintained with the Administrative Agent for each

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payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents.

(d) If, except as otherwise expressly provided herein, any Lender shall, by exercising any right of set‑off or counterclaimor otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursementsresulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LCDisbursements and Swingline Loans and accrued interest thereon than the proportion received by any other similarly situatedLender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans andparticipations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all suchpayments shall be shared by all such Lenders ratably in accordance with the aggregate amount of principal of and accrued intereston their respective Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participationsare purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and thepurchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not beconstrued to apply to any payment made by the Borrowers pursuant to and in accordance with the express terms of this Agreementor any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans orparticipations in LC Disbursements or Swingline Loans to any assignee or participant, other than to the Borrowers or anySubsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents to the foregoingand agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to theforegoing arrangements may exercise against such Borrower rights of set-off and counterclaim with respect to such participation asfully as if such Lender were a direct creditor of such Borrower in the amount of such participation.

(e) Unless the Administrative Agent shall have received notice from the Borrower Representative prior to the date onwhich any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that theBorrowers will not make such payment, the Administrative Agent may assume that the Borrowers have made such payment onsuch date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as thecase may be, the amount due. In such event, if the Borrowers have not in fact made such payment, then each of the Lenders or theIssuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount sodistributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount isdistributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rateand a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(f) If any Lender shall fail to make any payment required to be made by it hereunder, then the Administrative Agent may,in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the AdministrativeAgent for the account of such Lender to satisfy such Lender’s obligations hereunder until all such unsatisfied obligations are fullypaid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to,

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any future funding obligations of such Lender hereunder. Application of amounts pursuant to (i) and (ii) above shall be made in anyorder determined by the Administrative Agent in its discretion.

(g) The Administrative Agent may from time to time provide the Borrowers with account statements or invoices withrespect to any of the Secured Obligations (the “Statements”). The Administrative Agent is under no duty or obligation to provideStatements, which, if provided, will be solely for the Borrowers’ convenience. Statements may contain estimates of the amountsowed during the relevant billing period, whether of principal, interest, fees or other Secured Obligations. If the Borrowers pay thefull amount indicated on a Statement on or before the due date indicated on such Statement, the Borrowers shall not be in default;provided, that acceptance by the Administrative Agent, on behalf of the Lenders, of any payment that is less than the total amountactually due at that time (including but not limited to any past due amounts) shall not constitute a waiver of the AdministrativeAgent’s or the Lenders’ right to receive payment in full at another time.

Section 2.19. Mitigation Obligations; Replacement of Lenders .

(a) If any Lender requests compensation under Section 2.15, or if the Borrowers are required to pay any IndemnifiedTaxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17,then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or toassign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, suchdesignation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, inthe future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageousto such Lender. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection withany such designation or assignment.

(b) If any Lender requests compensation under Section 2.15, or if the Borrowers are required to pay any IndemnifiedTaxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17,or if any Lender becomes a Defaulting Lender, then the Borrowers may, at their sole expense and effort, upon notice to suchLender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subjectto the restrictions contained in Section 9.04), all its interests, rights (other than its existing rights to payments pursuant to Section2.15 or 2.17) and obligations under this Agreement and other Loan Documents to an assignee that shall assume such obligations(which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrowers shall have receivedthe prior written consent of the Administrative Agent (and in circumstances where its consent would be required under Section 9.04,the Issuing Bank and the Swingline Lender), which consent shall not unreasonably be withheld or delayed, (ii) such Lender shallhave received payment of an amount equal to the outstanding principal of its Loans and funded participations in LC Disbursementsand Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to theextent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts) and (iii) inthe case of any such assignment resulting from a claim for compensation under Section 2.15

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or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation orpayments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver bysuch Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

Section 2.20. Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lenderbecomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a) fees shall cease to accrue on the unfunded portion of the Revolving Commitment of such Defaulting Lender pursuantto Section 2.12(a);

(b) such Defaulting Lender shall not have the right to vote on any issue on which voting is required (other than to theextent expressly provided in Section 9.02(b)) and the Commitment and Revolving Exposure of such Defaulting Lender shall not beincluded in determining whether the Required Lenders or the Supermajority Lenders have taken or may take any action hereunder(including any consent to any amendment, waiver or other modification pursuant to Section 9.02) or under any other LoanDocument; provided, that, except as otherwise provided in Section 9.02, this clause (b) shall not apply to the vote of a DefaultingLender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender directlyaffected thereby;

(c) if any Swingline Exposure or LC Exposure exists at the time a Lender becomes a Defaulting Lender then:

(i) all or any part of the Swingline Exposure and LC Exposure of such Defaulting Lender shall be reallocated amongthe non-Defaulting Lenders in accordance with their respective Applicable Percentages but only (x) to the extent that theconditions set forth in Section 4.02 are satisfied at the time of such reallocation (and, unless the Borrower Representativeshall have otherwise notified the Administrative Agent at such time, the Borrowers shall be deemed to have represented andwarranted that such conditions are satisfied at such time) and (y) to the extent that such reallocation does not, as to any non-Defaulting Lender, cause such Defaulting Lender’s Revolving Exposure and to exceed its Revolving Commitment;

(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrowers shallwithin one (1) Business Day following notice by the Administrative Agent (x) first, prepay such Swingline Exposure and (y)second, cash collateralize, for the benefit of the Issuing Bank, the Borrowers’ obligations corresponding to such DefaultingLender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with theprocedures set forth in Section 2.06(j) for so long as such LC Exposure is outstanding;

(iii) if the Borrowers cash collateralize any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii)above, the Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respectto such Defaulting

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Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;

(d) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable tothe Lenders pursuant to Sections 2.12(a) and 2.12(b) shall be adjusted in accordance with such non-Defaulting Lenders’ ApplicablePercentages; and

(i) if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor cash collateralizedpursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of the Issuing Bank or any other Lenderhereunder, all letter of credit fees payable under Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure shallbe payable to the Issuing Bank until and to the extent that such LC Exposure is reallocated and/or cash collateralized; and

(e) so long as such Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan(if otherwise required to do so) and the Issuing Bank shall not be required to issue, amend, renew, extend or increase any Letter ofCredit, unless it is satisfied that the related exposure and such Defaulting Lender’s then outstanding LC Exposure will be 100%covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrowers in accordancewith Section 2.20(c), and Swingline Exposure related to any such newly made Swingline Loan or LC Exposure related to any newlyissued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.20(c)(i)(and such Defaulting Lender shall not participate therein).

If (i) a Bankruptcy Event with respect to a Lender Parent shall occur following the date hereof and for so long as such eventshall continue or (ii) the Swingline Lender or the Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling itsobligations under one or more other agreements in which such Lender commits to extend credit, the Swingline Lender shall not berequired to fund any Swingline Loan (if otherwise required to do so) and the Issuing Bank shall not be required to issue, amend orincrease any Letter of Credit, unless the Swingline Lender or the Issuing Bank, as the case may be, shall have entered intoarrangements with the Borrowers or such Lender, satisfactory to the Swingline Lender or the Issuing Bank, as the case may be, todefease any risk to it in respect of such Lender hereunder.

In the event that each of the Administrative Agent, the Borrower, the Swingline Lender and the Issuing Bank agrees that aDefaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the SwinglineExposure and LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Revolving Commitment andon the date of such readjustment such Lender shall purchase at par such of the Loans of the other Lenders (other than SwinglineLoans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordancewith its Applicable Percentage.

Section 2.21. Returned Payments. If after receipt of any payment which is applied to the payment of all or any part of theObligations (including a payment effected through exercise of a right of setoff), the Administrative Agent or any Lender is for anyreason compelled to surrender such payment or proceeds to any Person because such payment or application of proceeds is

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invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion oftrust funds, or for any other reason (including pursuant to any settlement entered into by the Administrative Agent or such Lender inits discretion), then the Obligations or part thereof intended to be satisfied shall be revived and continued and this Agreement shallcontinue in full force as if such payment or proceeds had not been received by the Administrative Agent or such Lender. Theprovisions of this Section 2.21 shall be and remain effective notwithstanding any contrary action which may have been taken by theAdministrative Agent or any Lender in reliance upon such payment or application of proceeds. The provisions of this Section 2.21shall survive the termination of this Agreement.

Section 2.22. Banking Services and Swap Agreements . Each Lender or Affiliate thereof providing Banking Services for,or having Swap Agreements with, any Loan Party or any Subsidiary or Affiliate of a Loan Party shall deliver to the AdministrativeAgent, promptly after entering into such Banking Services or Swap Agreements, written notice setting forth the aggregate amountof all Banking Services Obligations and Swap Agreement Obligations of such Loan Party or Subsidiary or Affiliate thereof to suchLender or Affiliate (whether matured or unmatured, absolute or contingent). In addition, each such Lender or Affiliate thereof shalldeliver to the Administrative Agent, following the end of each calendar month, a summary of the amounts due or to become due inrespect of such Banking Services Obligations and Swap Agreement Obligations. The most recent information provided to theAdministrative Agent shall be used in determining the amounts to be applied in respect of such Banking Services Obligationsand/or Swap Agreement Obligations pursuant to Section 2.18(b) and, if applicable, which tier of the waterfall, contained in Section2.18(b), such Banking Services Obligations and/or Swap Agreement Obligations will be placed.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Loan Party represents and warrants to the Lenders that:

Section 3.01. Organization; Powers. Each Loan Party and each Subsidiary is duly organized, validly existing and in goodstanding under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as nowconducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in aMaterial Adverse Effect, is qualified to do business, and is in good standing, in every jurisdiction where such qualification isrequired.

Section 3.02. Authorization; Enforceability. The Transactions are within each Loan Party’s organizational powers andhave been duly authorized by all necessary organizational actions and, if required, actions by equity holders. Each Loan Documentto which each Loan Party is a party has been duly executed and delivered by such Loan Party and constitutes a legal, valid andbinding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency,reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardlessof whether considered in a proceeding in equity or at law.

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Section 3.03. Governmental Approvals; No Conflicts . The Transactions (a) do not require any material consent orapproval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained ormade and are in full force and effect and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b)will not violate the charter, articles or certificate of organization or incorporation and bylaws or other organizational or governingdocuments of any Loan Party or any Subsidiary or any other material Requirement of Law applicable to any Loan Party or anySubsidiary, (c) will not violate or result in a default under any material indenture, agreement or other instrument binding upon anyLoan Party or any Subsidiary or the assets of any Loan Party or any Subsidiary, or give rise to a right thereunder to require anypayment to be made by any Loan Party or any Subsidiary, and (d) will not result in the creation or imposition of any Lien on anyasset of any Loan Party or any Subsidiary, except Liens created pursuant to the Loan Documents.

Section 3.04. Financial Condition; No Material Adverse Change . (a) The Company has heretofore furnished to theLenders its consolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the fiscal yearended October 31, 2014, reported on by MSPC Certified Public Accountants and Advisors, P.C., independent public accountants,and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended July 31, 2015, certified by its Financial Officer. Suchfinancial statements present fairly, in all material respects, the financial position and results of operations and cash flows of theCompany and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to normalyear‑end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.

(b) Other than the disclosure made in writing by the Company to the Administrative Agent on or prior to the date hereof,no event, change or condition has occurred that has had, or would reasonably be expected to have, a Material Adverse Effect sinceOctober 31, 2014.

Section 3.05. Properties. (a) As of the date of this Agreement, Schedule 3.05 sets forth the address of each material parcelof real property that is owned or leased by any Loan Party. Each of such leases and subleases is valid and enforceable in accordancewith its terms and is in full force and effect, and no material default by the applicable Loan Party, or to such Loan Party’sknowledge, by any other party to any such lease or sublease exists. Each of the Loan Parties and each of its Subsidiaries has goodand indefeasible title to, or except where the failure to do so could not reasonably be expected to have a Material Adverse Effect,valid leasehold interests in, all of its real and personal property, free of all Liens other than those permitted by Section 6.02.

(b) Each Loan Party and each Subsidiary owns, or is licensed to use, all trademarks, tradenames, copyrights, patents andother intellectual property necessary to its business as currently conducted, a correct and complete list of which, as of the date ofthis Agreement, is set forth on Schedule 3.05, and the use thereof by each Loan Party and each Subsidiary, to the best of theirknowledge, does not infringe in any material respect upon the rights of any other Person, and, except as would not reasonably beexpected to result in a Material Adverse Effect, each Loan Party’s and each Subsidiary’s rights thereto are not subject to anylicensing agreement or similar arrangement.

Section 3.06. Litigation and Environmental Matters . (a) There are no actions, suits or proceedings by or before anyarbitrator or Governmental Authority pending against or, to the

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knowledge of any Loan Party, threatened (in writing) against or affecting any Loan Party or any Subsidiary (i) that wouldreasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that challenge any LoanDocument or the Transactions.

(b) (i) No Loan Party or any Subsidiary has received notice of any claim with respect to any material EnvironmentalLiability or knows of any basis for any material Environmental Liability and (ii) except with respect to any other matters that,individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, no Loan Party or anySubsidiary (A) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or otherapproval required under any Environmental Law, (B) has become subject to any Environmental Liability, (C) has received notice ofany claim with respect to any Environmental Liability or (D) knows of any basis for any Environmental Liability.

Section 3.07. Compliance with Laws and Agreements; No Default . Except where the failure to do so, individually or inthe aggregate, could not reasonably be expected to result in a Material Adverse Effect, each Loan Party and each Subsidiary is incompliance with (i) all Requirements of Law (including without limitation Environmental Laws, but excluding Healthcare Laws)applicable to it or its property and (ii) all indentures, agreements and other instruments binding upon it or its property. Each LoanParty and each Subsidiary is in compliance with all Healthcare Laws, except where the failure to be in compliance, individually orin the aggregate, (i) could not reasonably be expected to result in a Material Adverse Effect and (ii) could not reasonably beexpected to result in (x) a settlement or judgment with any Governmental Authority and/or any Person who constitutes a“whistleblower” in respect of any such matter or (y) fines, in each case, in excess of $10,000,000. No Default has occurred and iscontinuing.

Section 3.08. Investment Company Status. No Loan Party or any Subsidiary is an “investment company” as defined in, orsubject to regulation under, the Investment Company Act of 1940.

Section 3.09. Taxes. Each Loan Party and each Subsidiary has timely filed or caused to be filed all Tax returns and reportsrequired to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that arebeing contested in good faith by appropriate proceedings and for which such Loan Party or such Subsidiary, as applicable, has setaside on its books adequate reserves or (b) to the extent that the failure to do so could not be expected to result in a MaterialAdverse Effect. No tax liens with respect to any such taxes have been filed and no claims are being asserted with respect to anysuch taxes.

Section 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with allother such ERISA Events for which liability is reasonably expected to occur, would reasonably be expected to result in a MaterialAdverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used forpurposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statementsreflecting such amounts, exceed the fair market value of the assets of such Plan by an amount that would reasonably be expected toresult in a Material Adverse Effect.

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Section 3.11. Disclosure. As of the Effective Date, the Loan Parties have disclosed to the Lenders all agreements,instruments and corporate or other restrictions to which any Loan Party or any Subsidiary is subject, and all other matters known toit, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect. None of the reports,financial statements, certificates or other information furnished by or on behalf of any Loan Party or any Subsidiary to theAdministrative Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document (asmodified or supplemented by other information so furnished), when taken as a whole, contains any material misstatement of fact oromits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they weremade, not misleading; provided that, with respect to projected financial information, the Loan Parties represent only that suchinformation was prepared in good faith based upon assumptions believed to be reasonable at the time made or delivered.

Section 3.12. [Reserved.]

Section 3.13. Solvency. (1) Immediately after the consummation of the Transactions to occur on the Effective Date, theLoan Parties and their Subsidiaries, taken as a whole, will be Solvent and (b) no Loan Party intends to, nor will permit anySubsidiary to, and no Loan Party believes that it or any Subsidiary will, incur debts beyond its ability to pay such debts as theymature, taking into account the timing of and amounts of cash to be received by it or any such Subsidiary and the timing of theamounts of cash to be payable on or in respect of its Indebtedness or the Indebtedness of any such Subsidiary.

Section 3.14. Insurance. Schedule 3.14 sets forth a description of all insurance maintained by or on behalf of the LoanParties and their Subsidiaries as of the Effective Date. As of the Effective Date, all premiums in respect of such insurance have beenpaid. Each Borrower maintains, and has caused each Subsidiary to maintain, with, to the Borrower’s knowledge, financially soundand reputable insurance companies, insurance on all their real and personal property in such amounts, subject to such deductiblesand self-insurance retentions and covering such properties and risks as are commercially prudent for similarly situated companiesengaged in the same or similar businesses operating in the same or similar locations.

Section 3.15. Capitalization and Subsidiaries. Schedule 3.15 sets forth (a) a correct and complete list of the name andrelationship to the Company of each and all of the Company’s Subsidiaries, (b) a true and complete listing of each class of eachBorrower’s authorized Equity Interests, all of which issued Equity Interests are validly issued, outstanding, fully paid and non-assessable, and owned beneficially and of record by the Persons identified on Schedule 3.15, and (c) the type of entity of theCompany and each of its Subsidiaries. All of the issued and outstanding Equity Interests owned by any Loan Party have been (tothe extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid andnon‑assessable. Except as set forth on Schedule 3.15, there are no outstanding commitments or other obligations of any Loan Partyto issue, and no options, warrants or other rights of any Person to acquire, any shares of any class of capital stock or other equityinterests of any Loan Party.

Section 3.16. Security Interest in Collateral . The provisions of this Agreement and the other Loan Documents create legaland valid Liens on all of the Collateral in favor of the

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Administrative Agent, for the benefit of the Secured Parties, and such Liens constitute perfected and continuing Liens on theCollateral, securing the Secured Obligations, enforceable against the applicable Loan Party and all third parties, and having priorityover all other Liens on the Collateral except in the case of (a) Permitted Encumbrances, to the extent any such PermittedEncumbrances would have priority over the Liens in favor of the Administrative Agent pursuant to any applicable law and (b) Liensperfected only by possession (including possession of any certificate of title) to the extent the Administrative Agent has notobtained or does not maintain possession of such Collateral.

Section 3.17. Employment Matters. As of the Effective Date, there are no strikes, lockouts or slowdowns against any LoanParty or any Subsidiary pending or, to the knowledge of any Loan Party, threatened (in writing), which could reasonably beexpected to result in a Material Adverse Effect. The hours worked by and payments made to employees of the Loan Parties andtheir Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreignlaw dealing with such matters other than any violations which could not reasonably be expected to result in a Material AdverseEffect. All payments due from any Loan Party or any Subsidiary, or for which any claim may reasonably be expected to be madeagainst any Loan Party or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, havebeen paid or accrued as a liability on the books of such Loan Party or such Subsidiary.

Section 3.18. Federal Reserve Regulations. No part of the proceeds of any Loan or Letter of Credit has been used or willbe used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, includingRegulations T, U and X.

Section 3.19. Use of Proceeds. The proceeds of the Loans have been used and will be used, whether directly or indirectlyas set forth in Section 5.08.

Section 3.20. No Burdensome Restrictions . No Loan Party is subject to any Burdensome Restrictions except BurdensomeRestrictions permitted under Section 6.10.

Section 3.21. Anti-Corruption Laws and Sanctions. Each Loan Party has implemented and maintains in effect policies andprocedures designed to ensure compliance by such Loan Party, its Subsidiaries and their respective directors, officers, employeesand agents with Anti-Corruption Laws and applicable Sanctions, and such Loan Party, its Subsidiaries and their respective officersand employees and, to the knowledge of such Loan Party, its directors and agents, are in compliance with Anti-Corruption Lawsand applicable Sanctions in all material respects. None of (a) any Loan Party, any Subsidiary or any of their respective directors,officers or employees, or (b) to the knowledge of any such Loan Party or Subsidiary, any agent of such Loan Party or anySubsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a SanctionedPerson. No Borrowing or Letter of Credit, use of proceeds, Transaction or other transaction contemplated by this Agreement or theother Loan Documents will violate Anti-Corruption Laws or applicable Sanctions.

Section 3.22. Common Enterprise. The successful operation and condition of each of the Loan Parties is dependent on thecontinued successful performance of the functions of the group

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of the Loan Parties as a whole and the successful operation of each of the Loan Parties is dependent on the successful performanceand operation of each other Loan Party. Each Loan Party expects to derive benefit (and its board of directors or other governingbody has determined that it may reasonably be expected to derive benefit), directly and indirectly, from (i) successful operations ofeach of the other Loan Parties and (ii) the credit extended by the Lenders to the Borrowers hereunder, both in their separatecapacities and as members of the group of companies. Each Loan Party has determined that execution, delivery, and performance ofthis Agreement and any other Loan Documents to be executed by such Loan Party is within its purpose, in furtherance of its directand/or indirect business interests, will be of direct and/or indirect benefit to such Loan Party, and is in its best interest.

Section 3.23. Healthcare Reimbursement Matters . Except as would not reasonably be expected to have, either individuallyor in the aggregate, a Material Adverse Effect, (a) the Company and its Subsidiaries maintains in full force and effect, and free fromrestrictions, probations, conditions or known conflicts which would materially impair the operation of their business or the use oroperation of any Healthcare Facility for its current use, all permits necessary under Healthcare Laws to continue to receivereimbursement under all material Third Party Payor Programs in which the Company or any of its Subsidiaries or any HealthcareFacility participates, and (b) the services provided by the Company and its Subsidiaries and the Healthcare Facilities operated bythe Company or any of its Subsidiaries are qualified for participation in the Third Party Payor Programs, and the Company and itsSubsidiaries are entitled to reimbursement under the Third Party Payor Programs for services rendered by them at such HealthcareFacilities or otherwise.

ARTICLE IV

CONDITIONS

Section 4.01. Effective Date. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters ofCredit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived inaccordance with Section 9.02):

(a) Credit Agreement and Other Loan Documents . The Administrative Agent (or its counsel) shall have received (i) fromeach party hereto either (A) a counterpart of this Agreement signed on behalf of such party or (B) written evidence satisfactory tothe Administrative Agent (which may include facsimile or other electronic transmission of a signed signature page of thisAgreement) that such party has signed a counterpart of this Agreement, (ii) either (A) a counterpart of each other Loan Documentsigned on behalf of each party thereto or (B) written evidence satisfactory to the Administrative Agent (which may includefacsimile or other electronic transmission of a signed signature page thereof) that each such party has signed a counterpart of suchLoan Document and (iii) such other certificates, documents, instruments and agreements as the Administrative Agent shallreasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, includingany promissory notes requested by a Lender pursuant to Section 2.10 payable to the order of each such requesting Lender and awritten opinion of the Loan Parties’ and Parent’s counsel, addressed to the Administrative Agent, the Issuing Bank and the Lenders,all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

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(b) Financial Statements and Projections. The Lenders shall have received (i) audited consolidated financial statements ofthe Company and its Subsidiaries for the fiscal year ending October 31, 2014 and (ii) unaudited interim consolidated financialstatements of the Company and its Subsidiaries for each fiscal quarter ended after the date of the latest applicable financialstatements delivered pursuant to clause (i) of this paragraph as to which such financial statements are available.

(c) Closing Certificates; Certified Certificate of Incorporation; Good Standing Certificates . The Administrative Agentshall have received (i) a certificate of each Loan Party and Parent, dated the Effective Date and executed by its Secretary orAssistant Secretary, which shall (A) certify the resolutions of its Board of Directors, members or other body authorizing theexecution, delivery and performance of the Loan Documents to which it is a party, (B) identify by name and title and bear thesignatures of the officers of such Loan Party and Parent authorized to sign the Loan Documents to which it is a party and, in thecase of the Borrower, its Financial Officers, and (C) contain appropriate attachments, including the certificate or articles ofincorporation or organization of each Loan Party and Parent certified by the relevant authority of the jurisdiction of organization ofsuch Loan Party or Parent and a true and correct copy of its by‑laws or operating, management or partnership agreement, or otherorganizational or governing documents, and (ii) a good standing certificate for each Loan Party and Parent from its jurisdiction oforganization or the substantive equivalent available in the jurisdiction of organization for each Loan Party and Parent from theappropriate governmental officer in such jurisdiction.

(d) No Default Certificate. The Administrative Agent shall have received a certificate, signed by a Financial Officer of theCompany, dated as of the Effective Date (i) stating that no Default has occurred and is continuing, (ii) stating that therepresentations and warranties contained in the Loan Documents are true and correct in all material respects as of such date, and (iii)certifying as to any other factual matters as may be reasonably requested by the Administrative Agent.

(e) Fees. The Lenders and the Administrative Agent shall have received all fees required to be paid, and all expenses forwhich invoices have been presented (including the reasonable fees and expenses of legal counsel as provided in Section 9.03) atleast two Business Days prior to the Effective Date. All such amounts will be paid with proceeds of Loans made on the EffectiveDate and will be reflected in the funding instructions given by the Borrower Representative to the Administrative Agent on orbefore the Effective Date.

(f) Lien Searches. The Administrative Agent shall have received the results of a recent lien searches in such locations asdetermined by the Administrative Agent, and such search shall reveal no Liens on any of the assets of the Loan Parties or Parentexcept for Liens permitted by Section 6.02 or discharged on or prior to the Effective Date pursuant to a pay-off letter or otherdocumentation satisfactory to the Administrative Agent.

(g) Pay-Off Letter. The Administrative Agent shall have received satisfactory pay-off letters for all existing Indebtednessto be repaid from the proceeds of the initial Borrowing, confirming that all Liens upon any of the property of the Loan Parties andParent constituting Collateral will be terminated concurrently with such payment and all letters of credit issued or guaranteed as partof such Indebtedness shall have been cash collateralized or supported by a Letter of Credit.

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(h) Funding Account . The Administrative Agent shall have received a notice setting forth the deposit account(s) of theBorrowers (the “Funding Account”) to which the Administrative Agent is authorized by the Borrowers to transfer the proceeds ofany Borrowings requested or authorized pursuant to this Agreement.

(i) Customer List. The Administrative Agent shall have received a true and complete customer list for each Borrower andits Subsidiaries, which list shall state the customer’s name, mailing address and phone number and shall be certified as true andcorrect by a Financial Officer of the Borrower Representative; provided, however, that such customer lists shall exclude anyindividual payors.

(j) Collateral Access and Control Agreements . The Administrative Agent shall have received (i) each Collateral AccessAgreement required to be provided pursuant to Section 4.13 of the Security Agreement and (ii) subject to Section 5.13, eachDeposit Account Control Agreement and Government Receivables Account Agreements required to be provided pursuant to theSecurity Agreement.

(k) Solvency. The Administrative Agent shall have received a solvency certificate signed by a Financial Officer of theCompany dated the Effective Date.

(l) Borrowing Base Certificate. The Administrative Agent shall have received a Borrowing Base Certificate whichcalculates the Borrowing Base as of July 31, 2015, together with customary supporting documentation and supplemental reportingto be agreed.

(m) Closing Availability. After giving effect to all Transactions occurring on the Effective Date and after giving pro formaeffect to the dividend to be made under clause (a) of the definition of Specified Post Closing Dividends, Availability shall not beless than $40,000,000.

(n) Pledged Equity Interests; Stock Powers; Pledged Notes . The Administrative Agent shall have received (i) thecertificates representing the Equity Interests pledged pursuant to the Security Agreement and Parent Pledge Agreement, togetherwith an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii)each promissory note (if any) pledged to the Administrative Agent to be delivered pursuant to the Security Agreement endorsed(without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof.

(o) Filings, Registrations and Recordings . Each document (including any Uniform Commercial Code financingstatement) required by the Collateral Documents or under law or reasonably requested by the Administrative Agent to be filed,registered or recorded in order to create in favor of the Administrative Agent, for the benefit of itself, the Lenders and the otherSecured Parties, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than withrespect to Liens expressly permitted by Section 6.02), shall be in proper form for filing, registration or recordation.

(p) Insurance. The Administrative Agent shall have received evidence of insurance coverage in form, scope, and substancereasonably satisfactory to the Administrative Agent and

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otherwise in compliance with the terms of Section 5.10 hereof and Section 4.12 of the Security Agreement.

(q) Letter of Credit Application . If a Letter of Credit is requested to be issued on the Effective Date, the AdministrativeAgent shall have received a properly completed letter of credit application (whether standalone or pursuant to a master agreement,as applicable).

(r) Tax Withholding. The Administrative Agent shall have received a properly completed and signed IRS Form W-8 or W-9, as applicable, for each Loan Party and Parent.

(s) USA PATRIOT Act, Etc . The Administrative Agent and the Lenders shall have received all documentation and otherinformation required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules andregulations, including the USA PATRIOT Act, for each Loan Party and Parent.

(t) Governmental Approvals. All governmental and third party approvals necessary in connection with the Transactions(including, without limitation, the Parent Pledge Agreement) shall have been obtained on satisfactory terms and shall be in fullforce and effect.

(u) Other Documents. The Administrative Agent shall have received such other documents as the Administrative Agent,the Issuing Bank, any Lender or their respective counsel may have reasonably requested.

The Administrative Agent shall notify the Borrowers, the Lenders and the Issuing Bank of the Effective Date, and such notice shallbe conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank toissue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuantto Section 9.02) at or prior to 3:00 p.m., New York time, on November 29, 2015 (and, in the event such conditions are not sosatisfied or waived, the Commitments shall terminate at such time).

Section 4.02. Each Credit Event . The obligation of each Lender to fund any Loan, and of the Issuing Bank to issue, amend,renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

(a) The representations and warranties of the Loan Parties and Guarantors set forth in the Loan Documents shall be trueand correct in all material respects with the same effect as though made on and as of the date such Loan is incurred or the date ofissuance, amendment, renewal or extension of such Letter of Credit, as applicable (it being understood and agreed that anyrepresentation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all materialrespects only as of such specified date, and that any representation or warranty which is subject to any materiality qualifier shall berequired to be true and correct in all respects).

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(b) At the time of and immediately after giving effect to such Loan or the issuance, amendment, renewal or extension ofsuch Letter of Credit, as applicable, (i) no Default shall have occurred and be continuing and (ii) no Protective Advance shall beoutstanding.

(c) After giving effect to any Loan or the issuance, amendment, renewal or extension of any Letter of Credit, Availabilityshall not be less than zero.

The request by the Borrower Representative and acceptance by the Borrowers of the proceeds of any Loan and each issuance,amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by theBorrowers on the date thereof as to the matters specified in paragraphs (a), (b), and (c) of this Section.

Notwithstanding the failure to satisfy the conditions precedent set forth in paragraphs (a) or (b) of this Section, unless otherwisedirected by the Required Lenders, the Administrative Agent may, but shall have no obligation to, continue to make Loans and anIssuing Bank may, but shall have no obligation to, issue, amend, renew or extend, or cause to be issued, amended, renewed orextended, any Letter of Credit for the ratable account and risk of Lenders from time to time if the Administrative Agent believesthat making such Loans or issuing, amending, renewing or extending, or causing the issuance, amendment, renewal or extension of,any such Letter of Credit is in the best interests of the Lenders.

ARTICLE V

AFFIRMATIVE COVENANTS

Until the Commitments shall have expired or been terminated and the principal of and interest on each Loan and all feespayable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated in each case without anypending draw, and all LC Disbursements shall have been reimbursed, each Loan Party executing this Agreement covenants andagrees, jointly and severally with all of the other Loan Parties, with the Lenders that:

Section 5.01. Financial Statements; Borrowing Base and Other Information . The Borrowers will furnish to theAdministrative Agent and each Lender:

(a) within ninety (90) days after the end of each fiscal year of the Company, the Specified Audited Annual FinancialStatements;

(b) within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company, theSpecified Quarterly Financial Statements;

(c) during any Increased Reporting Period, within thirty (30) days after the end of each fiscal month of the Company(beginning with the first fiscal month ending after such Increased Reporting Period commences), the Specified Monthly FinancialStatements;

(d) concurrently with any delivery of financial statements under clause (a), (b) or (c) above, a certificate of a FinancialOfficer of the Borrower Representative in substantially the form of Exhibit C (i) certifying, in the case of the financial statementsdelivered under clause (b) or (c),

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as to the matters described in the definitions of Specified Quarterly Financial Statements or Specified Monthly FinancialStatements, as applicable, (ii) certifying as to whether a Default has occurred and is continuing and, if a Default has occurred and iscontinuing, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) setting forthreasonably detailed calculations of the Fixed Charge Coverage Ratio (whether or not required to be tested pursuant to Section 6.12)and, if applicable, demonstrating compliance with Section 6.12, and (iv) stating whether any change in GAAP or in the applicationthereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change hasoccurred, specifying the effect of such change on the financial statements accompanying such certificate;

(e) as soon as available but in any event no later than the end of, and no earlier than 30 days prior to the end of, each fiscalyear of the Company, a copy of the plan and forecast (including a projected consolidated and consolidating balance sheet, incomestatement and funds flow statement) of the Company and its Subsidiaries for each month of the upcoming fiscal year (the“Projections”) in form reasonably satisfactory to the Administrative Agent;

(f) on or before each Borrowing Base Reporting Date, as of the period then ended, a Borrowing Base Certificate andsupporting information in connection therewith, together with any additional reports with respect to the Borrowing Base as theAdministrative Agent may reasonably request;

(g) on or before each Borrowing Base Reporting Date, as of the period then ended, all delivered electronically in a textformatted file acceptable to the Administrative Agent:

(i) a detailed aging of the Borrowers’ Accounts, including all invoices aged by invoice date and due date (with anexplanation of the terms offered), prepared in a manner reasonably acceptable to the Administrative Agent, together with asummary specifying the name, address, and balance due for each Account Debtor;

(ii) a worksheet of calculations prepared by the Borrowers to determine Eligible Accounts, such worksheets detailingthe Accounts excluded from Eligible Accounts and the reason for such exclusion; provided, that during any IncreasedReporting Period, the Borrower shall only be required to provide the information in this clause (ii) on a monthly basis;

(iii) a reconciliation of the Borrowers’ Accounts between (A) the amounts shown in the Borrowers’ general ledgerand financial statements and the reports delivered pursuant to clause (i) above and (B) the amounts and dates shown in thereports delivered pursuant to clause (i) above and the Borrowing Base Certificate delivered pursuant to clause (g) above as ofsuch date;

(iv) a reconciliation of the loan balance per the Borrowers’ general ledger to the loan balance under this Agreement;and

(v) a daily schedule of cash receipts from Eligible Accounts.

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(h) on or before each Borrowing Base Reporting Date, as of the month most recently ended, a schedule and aging of theBorrowers’ accounts payable, delivered electronically in a text formatted file reasonably acceptable to the Administrative Agent;

(i) within 45 days after the end of each fiscal year and at such other times as the Administrative Agent may reasonablyrequest, an updated customer list for each Borrower and its Subsidiaries, which list shall state the customer’s name, mailing addressand phone number, delivered electronically in a text formatted file acceptable to the Administrative Agent and certified as true andcorrect by a Financial Officer of the Borrower Representative;

(j) promptly upon the Administrative Agent’s request:

(i) copies of invoices issued by the Borrowers in connection with any Accounts, credit memos, shipping anddelivery documents, and other information related thereto; and

(ii) a schedule detailing the balance of all intercompany accounts of the Loan Parties;

(k) at such other times as may be reasonably requested by the Administrative Agent, as of the period then ended, theBorrowers’ sales journal, cash receipts journal (identifying trade and non-trade cash receipts) and debit memo/credit memo journal;

(l) within five days after the first Business Day of each March, a certificate of good standing or the substantive equivalentavailable in the jurisdiction of incorporation, formation or organization for each Loan Party from the appropriate governmentalofficer in such jurisdiction;

(m) promptly after any request therefor by the Administrative Agent or any Lender, copies of (i) any documents describedin Section 101(k)(1) of ERISA that any Borrower or any ERISA Affiliate may request with respect to any Multiemployer Plan and(ii) any notices described in Section 101(l)(1) of ERISA that any Borrower or any ERISA Affiliate may request with respect to anyMultiemployer Plan; provided that if a Borrower or any ERISA Affiliate has not requested such documents or notices from theadministrator or sponsor of the applicable Multiemployer Plan, the applicable Borrower or the applicable ERISA Affiliate shallpromptly make a request for such documents and notices from such administrator or sponsor and shall provide copies of suchdocuments and notices promptly after receipt thereof; and

(n) promptly following any request therefor, such other information regarding the operations, changes in ownership ofEquity Interests, business affairs and financial condition of Parent (to the extent not readily available on the website of the SEC athttp://www.sec.gov), Intermediate Holdco, any Loan Party or any Subsidiary, or compliance with the terms of this Agreement, asthe Administrative Agent or any Lender may reasonably request.

The Company represents and warrants that it, its controlling Person and any Subsidiary, in each case, if any, either (i) hasno registered or publicly traded securities outstanding, or (ii) files its financial statements with the SEC and/or makes its financialstatements available to potential holders of its 144A securities, and, accordingly, the Company hereby (i) authorizes the

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Administrative Agent to make the financial statements to be provided under Section 5.01(a) and (b) above (collectively orindividually, as the context requires, the “Financial Statements”), along with the Loan Documents, available to Public-Siders and(ii) agree that at the time such Financial Statements are provided hereunder, they shall already have been made available to holdersof its securities. The Company will not request that any other material be posted to Public-Siders without expressly representing andwarranting to the Administrative Agent in writing that such materials do not constitute material non-public information within themeaning of the federal securities laws or that the Company has no outstanding publicly traded securities, including 144A securities.

Section 5.02. Notices of Material Events . The Borrowers will furnish to the Administrative Agent and each Lender prompt(after becoming aware thereof, but in any event within any time period that may be specified below) written notice of the following:

(a) the occurrence of any Default;

(b) receipt of any notice of any investigation by a Governmental Authority or any litigation or proceeding commenced orthreatened (in writing) against any Loan Party or any Subsidiary that (i) seeks damages in excess of $5,000,000, (ii) seeks injunctiverelief, (iii) is asserted or instituted against any Plan, its fiduciaries or its assets, (iv) alleges criminal misconduct by any Loan Partyor any Subsidiary, (v) alleges a material violation of, or seeks to impose remedies under, any Environmental Law or relatedRequirement of Law, or seeks to impose Environmental Liability, (vi) asserts liability on the part of any Loan Party or anySubsidiary in excess of $5,000,000 in respect of any tax, fee, assessment, or other governmental charge, or (vii) involves anyproduct recall;

(c) any Lien (other than Permitted Encumbrances) or claim made or asserted against any of the Collateral;

(d) within seven (7) Business Days after receipt thereof, any and all material default notices received under or with respectto any leased location or public warehouse where Collateral is located;

(e) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, wouldreasonably be expected to result in liability of the Loan Parties and their Subsidiaries in an aggregate amount exceeding $1,000,000;

(f) (i) pending or threatened (in writing) proceedings related to, any material violation by the Company or any of itsSubsidiaries of any Healthcare Law, including (x) any investigation or audit (other than routine audits conducted by anGovernmental Authority so long as the potential liability under such routine audit does not exceed $1,000,000 for each such audit)or proceeding involving a material violation of any Healthcare Law and (y) any criminal or material civil investigation initiated,claim filed or disclosure required by the Office of Inspector General, the Department of Justice, Center for Medicare & MedicaidServices, or any other Governmental Authority or (ii) any criminal indictment or conviction of any officer or employee of theCompany or any Subsidiary under any Healthcare Law;

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(g) any written notice from any Governmental Authority or other regulatory body that the Company or any of itsSubsidiaries should have its material licensure, provider or supplier number or accreditation suspended, revoked or limited in anymaterial way, or have its eligibility to participate in Medicare, Medicaid or any other government program to accept assignments orrights to reimbursement under Medicaid, Medicare or any other government program regulations suspended, revoked or limited inany material way; and

(h) any other development that results, or would reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of theBorrower Representative setting forth the details of the event or development requiring such notice and any action taken orproposed to be taken with respect thereto.

Section 5.03. Existence; Conduct of Business; Fiscal Year . Each Loan Party will, and will cause each Subsidiary to, (a) door cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights,qualifications, licenses, permits, franchises, governmental authorizations, intellectual property rights, licenses and permits materialto the conduct of its business, and maintain all requisite authority to conduct its business in each jurisdiction in which its business isconducted, provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted underSection 6.03 or any asset sales permitted under Section 6.05 and except as would not reasonably be expected to have, eitherindividually or in the aggregate, a Material Adverse Effect, and (b) carry on and conduct its business in substantially the samemanner and in substantially the same fields of enterprise (or a reasonable extension thereof) as it is presently conducted (other thanoperations no longer commercially practicable, used or desirable in the ordinary course of business). On or before December 31,2015, the Company and its Subsidiaries shall change their fiscal year end from October 31 to December 31.

Section 5.04. Payment of Obligations. Each Loan Party will, and will cause each Subsidiary to, pay or discharge allmaterial Taxes and all other material liabilities and obligations owing to any Governmental Authority (other than MaterialIndebtedness) before the same shall become delinquent or in default, except where (a) the validity or amount thereof is beingcontested in good faith by appropriate proceedings, (b) such Loan Party or Subsidiary has set aside on its books adequate reserveswith respect thereto in accordance with GAAP and (c) such liabilities would not result in aggregate liabilities in excess of$5,000,000 and none of the Collateral would become subject to forfeiture or loss as a result of the contest; provided, however, thateach Loan Party will, and will cause each Subsidiary to, remit withholding taxes and other payroll taxes to appropriateGovernmental Authorities as and when claimed to be due, notwithstanding the foregoing exceptions.

Section 5.05. Maintenance of Properties . Each Loan Party will, and will cause each Subsidiary to, keep and maintain allproperty material to the conduct of its business in good working order and condition, ordinary wear and tear, casualty andcondemnation excepted, except where the failure to do so would not reasonably be expected to have, either individually or in theaggregate, a Material Adverse Effect.

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Section 5.06. Books and Records; Inspection Rights . Each Loan Party will, and will cause each Subsidiary to, (a) keepproper books of record and account in which full, true and correct (in all material respects) entries are made of all dealings andtransactions in relation to its business and activities and (b) permit any representatives designated by the Administrative Agent orany Lender (including employees of the Administrative Agent, any Lender or any consultants, accountants, lawyers, agents andappraisers retained by the Administrative Agent), upon reasonable prior notice, to visit and inspect its properties, to conduct at suchLoan Party’s premises field examinations of such Loan Party’s assets, liabilities, books and records, including examining andmaking extracts from its books and records, environmental assessment reports and Phase I or Phase II studies, and to discuss itsaffairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonablyrequested; provided, however, that, unless an Event of Default has occurred and is continuing, (i) only two such field examinationper calendar year shall be at the expense of the Loan Parties and (ii) the Loan Parties shall not be required to pay more than$20,000 per field examination for each such field examination performed after the Effective Date. For the avoidance of doubt, thereshall be no limit on the frequency of examinations and evaluations during the existence of an Event of Default and all suchexaminations and evaluations conducted during the existence of an Event of Default shall be at the expense of the Loan Parties.Each Loan Party acknowledges that the Administrative Agent, after exercising its rights of inspection, may prepare and distribute tothe Lenders certain Reports pertaining to each Loan Party’s assets for internal use by the Administrative Agent and the Lenders.

During the course of the above-described visits, inspections, examinations and discussions, representatives of theAdministrative Agent and the Lenders may encounter individually identifiable healthcare information as defined under HIPAA orother confidential information relating to healthcare patients (collectively, the “Confidential Healthcare Information ”). The Parentand its Subsidiaries maintaining such Confidential Healthcare Information shall, consistent with HIPAA’s “minimum necessary”provisions, permit such disclosure for their “healthcare operations” purposes. Unless otherwise required by law, the AdministrativeAgent and the Lenders and their respective representatives shall not require or perform any act that would cause the Parent or any ofits Subsidiaries to violate any laws, regulations or ordinances intended to protect the privacy rights of healthcare patients, including,without limitation, HIPAA.

Section 5.07. Compliance with Laws. Each Loan Party will, and will cause each Subsidiary to, comply with eachRequirement of Law applicable to it or its property (including without limitation Environmental Laws and Healthcare Laws), exceptwhere the failure to comply would not reasonably be expected to (a) result in, either individually or in the aggregate, liability on thepart of the Loan Parties and their Subsidiaries, or any of them, owing to any Governmental Authority and/or any Person whoconstitutes a “whistleblower” in respect of any such matter, in excess of $10,000,000 or (b) have a Material Adverse Effect. EachLoan Party will maintain in effect and enforce policies and procedures designed to ensure compliance by such Loan Party, itsSubsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

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Section 5.08. Use of Proceeds.

(a) The proceeds of the Loans and the Letters of Credit will be used only for general corporate purposes and workingcapital needs of the Loan Parties (including for Investments, Capital Expenditures and Restricted Payments) subject to therestrictions otherwise set forth in this Agreement, and to refinance certain Indebtedness on the Effective Date. No part of theproceeds of any Loan and no Letter of Credit will be used, whether directly or indirectly, (i) for any purpose that entails a violationof any of the Regulations of the Board, including Regulations T, U and X or (ii) to make any Acquisition other than a PermittedAcquisition.

(b) No Borrower will request any Borrowing or Letter of Credit, and no Borrower shall use, and each Borrower shallprocure that its Subsidiaries and its and their respective directors, officers, employees and agents shall not use, the proceeds of anyBorrowing or Letter of Credit (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving ofmoney, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financingor facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (c) in anymanner that would result in the violation of any Sanctions applicable to any party hereto.

Section 5.09. Accuracy of Information . The Loan Parties will ensure that any information, including financial statementsor other documents, furnished to the Administrative Agent or the Lenders in connection with this Agreement or any other LoanDocument or any amendment or modification hereof or thereof or waiver hereunder or thereunder contains no material misstatementof fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under whichthey were made, not misleading, and the furnishing of such information shall be deemed to be a representation and warranty by theBorrowers on the date thereof as to the matters specified in this Section 5.09; provided that, with respect to projected financialinformation, the Loan Parties will only ensure that such information was prepared in good faith based upon assumptions believed tobe reasonable at the time made or delivered.

Section 5.10. Insurance. Each Loan Party will, and will cause each Subsidiary to, maintain with financially sound andreputable carriers having a financial strength rating of at least A- by A.M. Best Company (a) insurance in such amounts (with nogreater risk retention) and against such risks (including, without limitation: loss or damage by fire and loss in transit; theft, burglary,pilferage, larceny, embezzlement, and other criminal activities; business interruption; and general liability) and such other hazards,as is customarily maintained by companies of established repute of a similar size engaged in the same or similar businessesoperating in the same or similar locations and (b) all insurance required pursuant to the Collateral Documents. The Borrowers willfurnish to the Lenders, upon request of the Administrative Agent, information in reasonable detail as to the insurance so maintained.

Section 5.11. Casualty and Condemnation. The Borrowers will (a) furnish to the Administrative Agent and the Lendersprompt written notice of any casualty or other insured damage to any material portion of the Collateral or the commencement of anyaction or proceeding for the taking of any material portion of the Collateral or interest therein under power of eminent domain or bycondemnation or similar proceeding and (b) ensure that the Net Proceeds of any such event

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(whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with theapplicable provisions of this Agreement and the Collateral Documents.

Section 5.12. Additional Collateral; Further Assurances .

(a) Subject to applicable Requirements of Law, each Loan Party will cause each Domestic Subsidiary (other than anExcluded Subsidiary) formed or acquired after the date of this Agreement to become a Loan Party by executing a JoinderAgreement. Upon execution and delivery thereof, each such Person (i) shall automatically become either a Loan Guarantor or, if itsAccounts are to be included in the Borrowing Base, a Borrower hereunder and thereupon shall have all of the rights, benefits, dutiesand obligations in such capacity under the Loan Documents and (ii) will grant Liens to the Administrative Agent, for the benefit ofthe Administrative Agent and the other Secured Parties, in any property of such Loan Party which constitutes Collateral.

(b) Each Loan Party will cause (i) 100% of the issued and outstanding Equity Interests of each of its Domestic Subsidiariesand (ii) 65% of the issued and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary directly owned by such Borrower or any Domestic Subsidiary to be subject at all times to a firstpriority, perfected Lien in favor of the Administrative Agent, for the benefit of the Administrative Agent and the other SecuredParties, pursuant to the terms and conditions of the Loan Documents or other security documents as the Administrative Agent shallreasonably request.

(c) Effective as of the date that Intermediate Holdco becomes the owner of 100% of the issued and outstanding EquityInterests of the Company (i) Intermediate Holdco shall execute a non-recourse pledge agreement in form and substancesubstantially similar to the Parent Pledge Agreement, or in another form reasonably satisfactory to the Administrative Agent (the“Intermediate Holdco Pledge Agreement ”), pursuant to which, among other things, 100% of the issued and outstanding EquityInterests of the Company shall be subject to a first priority, perfected Lien in favor of the Administrative Agent, for the benefit ofthe Administrative Agent and the other Secured Parties, (ii) the Parent shall execute an amendment of the Parent Pledge Agreementin form and substance reasonably satisfactory to the Administrative Agent, pursuant to which, among other things, 100% of theissued and outstanding Equity Interests of Intermediate Holdco shall be subject to a first priority, perfected Lien in favor of theAdministrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, and (iii) the Loan Parties shalldeliver a legal opinion in form and substance reasonably satisfactory to the Administrative Agent in connection therewith. Uponexecution and delivery of the Intermediate Holdco Pledge Agreement, Intermediate Holdco shall automatically become a Guarantorhereunder (only to the extent of its non-recourse obligations under the Intermediate Holdco Pledge Agreement).

(d) Without limiting the foregoing, each Loan Party will, and will cause each Subsidiary to, execute and deliver, or causeto be executed and delivered, to the Administrative Agent such documents, agreements and instruments, and will take or cause to betaken such further actions (including the execution, delivery, filing and recording, and maintenance of, as applicable, financing

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statements, Deposit Account Control Agreements, Government Receivables Account Agreements, and other documents and suchother actions or deliveries of the type required by Section 4.01, as applicable), which may be required by any Requirement of Lawor which the Administrative Agent may, from time to time, reasonably request to carry out the terms and conditions of thisAgreement and the other Loan Documents and to ensure perfection and priority of the Liens created or intended to be created by theCollateral Documents, all in form and substance reasonably satisfactory to the Administrative Agent and all at the expense of theLoan Parties.

(e) If any material assets are acquired by any Loan Party after the Effective Date (other than assets constituting Collateralunder the Security Agreement that become subject to the Lien under the Security Agreement upon acquisition thereof), theBorrower Representative will (i) notify the Administrative Agent and the Lenders thereof and, if requested by the AdministrativeAgent or the Required Lenders, cause such assets to be subjected to a Lien securing the Secured Obligations and (ii) take, and causeeach applicable Loan Party to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grantand perfect such Liens, including actions described in paragraph (d) of this Section, all at the expense of the Loan Parties.

(f) With respect to the Domestic Subsidiaries that are not Loan Parties, if any (each a “ Specified Person”), if, as of the endof any fiscal quarter for which financial statements have been delivered pursuant to Section 5.01(a) or (b), it is determined that (i)the consolidated total assets of all such Specified Persons on the last day of such fiscal quarter exceeds 2.5% of the consolidatedtotal assets of the Company and its Subsidiaries or (ii) the consolidated revenues of all such Specified Persons as of the last day ofsuch fiscal quarter for the four fiscal quarter period then ending exceeds 2.5% of the consolidated total revenues of the Companyand its Subsidiaries for such four fiscal quarter period, then the Borrowers shall, and shall cause their Subsidiaries to, cause suchnumber of such Specified Persons to become Loan Parties pursuant to this Section 5.12 as is necessary to cause the mattersdescribed in clauses (i) and (ii) above to cease to be true after giving pro forma effect to any such Specified Person’s becoming aLoan Party.

Section 5.13. Post Closing Covenants .

(a) On or before December 7, 2015 (or such later date as agreed in writing by the Administrative Agent), the Loan Partiesshall deliver to the Administrative Agent a duly executed Deposit Account Control Agreement (as defined in the SecurityAgreement) for each Deposit Account, securities account and similar account (other than any Excluded Account but specificallyincluding the Collection Account) of any Loan Party maintained with PNC Bank, National Association, or JPMorgan Chase Bank,N.A.

(b) On or before February 3, 2016 (or such later date as agreed in writing by the Administrative Agent), the Loan Partiesshall deliver to the Administrative Agent a duly executed Deposit Account Control Agreement (as defined in the SecurityAgreement) for each Deposit Account, securities account and similar account (other than any Excluded Account but specificallyincluding the Collection Account) of any Loan Party maintained with any depository bank (other than those covered by theforegoing clause (a)) to the extent necessary for the Loan Parties to comply with Section 7.1 of the Security Agreement.

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(c) On or before December 7, 2015 (or such later date as agreed in writing by the Administrative Agent), the Loan Partiesshall deliver to the Administrative Agent endorsements in form and substance reasonably satisfactory to the Administrative Agentfor all insurance policies required under the Security Agreement and under Section 5.20 to the extent necessary for the Loan Partiesto comply with Section 4.12(b) of the Security Agreement.

(d) On or before November 13, 2015 (or such later date as agreed in writing by the Administrative Agent), the LoanParties shall deliver to the Administrative Agent all certificates representing or evidencing Pledged Collateral (as defined in theSecurity Agreement and the Parent Pledge Agreement), together with stock powers executed in blank.

ARTICLE VI

NEGATIVE COVENANTS

Until the Commitments shall have expired or been terminated and the principal of and interest on each Loan and all fees,expenses and other amounts payable under any Loan Document shall have been paid in full and all Letters of Credit shall haveexpired or terminated, in each case without any pending draw, and all LC Disbursements shall have been reimbursed, each LoanParty executing this Agreement covenants and agrees, jointly and severally with all of the other Loan Parties, with the Lenders that:

Section 6.01. Indebtedness. No Loan Party will, nor will it permit any Subsidiary to, create, incur, assume or suffer to existany Indebtedness, except:

(a) the Secured Obligations;

(b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and extensions, renewals, refinancings andreplacements of any such Indebtedness in accordance with clause (f) hereof;

(c) Indebtedness of any Borrower to any Subsidiary and of any Subsidiary to any Borrower or any other Subsidiary,provided that (i) Indebtedness of any Subsidiary that is not a Loan Party to any Borrower or any other Loan Party shall be subject toSection 6.04 and (ii) Indebtedness of any Loan Party to any Subsidiary that is not a Loan Party shall be subordinated to the SecuredObligations on terms reasonably satisfactory to the Administrative Agent;

(d) Guarantees by any Borrower of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of anyBorrower or any other Subsidiary, provided that (i) the Indebtedness so Guaranteed is permitted by this Section 6.01, (ii)Guarantees by any Borrower or any other Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shall be subject toSection 6.04 and (iii) Guarantees by any Loan Party permitted under this clause (d) shall be subordinated to the Secured Obligationson the same terms as the Indebtedness so Guaranteed is subordinated to the Secured Obligations;

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(e) Indebtedness of any Borrower or any Subsidiary incurred to finance the acquisition, construction or improvement ofany fixed or capital assets (whether or not constituting purchase money Indebtedness), including Capital Lease Obligations and anyIndebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to theacquisition thereof, and extensions, renewals and replacements of any such Indebtedness in accordance with clause (f) below;provided that (i) such Indebtedness is incurred prior to or within 120 days after such acquisition or the completion of suchconstruction or improvement and (ii) the aggregate principal amount of Indebtedness permitted by this clause (e) together with anyRefinance Indebtedness in respect thereof permitted by clause (f) below, shall not exceed $20,000,000 at any time outstanding;

(f) Indebtedness which represents extensions, renewals, refinancing or replacements (such Indebtedness being so extended,renewed, refinanced or replaced being referred to herein as the “Refinance Indebtedness”) of any of the Indebtedness described inclause (b) hereof (such Indebtedness being referred to herein as the “Original Indebtedness”); provided that (i) such RefinanceIndebtedness does not increase the principal amount or interest rate of the Original Indebtedness, (ii) any Liens securing suchRefinance Indebtedness are not extended to any additional property of any Loan Party or any Subsidiary, (iii) no Loan Party or anySubsidiary that is not originally obligated with respect to repayment of such Original Indebtedness is required to become obligatedwith respect to such Refinance Indebtedness, (iv) such Refinance Indebtedness does not result in a shortening of the averageweighted maturity of such Original Indebtedness, and (v) if such Original Indebtedness was subordinated in right of payment to theSecured Obligations, then the terms and conditions of such Refinance Indebtedness must include subordination terms andconditions that are at least as favorable to the Administrative Agent and the Lenders as those that were applicable to such OriginalIndebtedness;

(g) Indebtedness owed to any Person providing workers’ compensation, health, disability or other employee benefits orproperty, casualty or liability insurance, pursuant to reimbursement or indemnification obligations to such Person, in each caseincurred in the ordinary course of business;

(h) Indebtedness of any Loan Party in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similarobligations, in each case provided in the ordinary course of business;

(i) Indebtedness incurred in the ordinary course of business in respect of netting services, overdraft protections, employeecredit card programs and other similar services in connection with cash management and deposit accounts, Indebtedness inconnection with drafts payable for payroll and other ordinary course expense items, and Indebtedness owed to depository banks forreturned items incurred in the ordinary course of business;

(j) Indebtedness assumed in connection with Permitted Acquisitions or Indebtedness of any Person existing at the timesuch Person is merged with or into or consolidated with, or becomes a Subsidiary of, a Borrower or any Subsidiary of a Borrower inconnection with Permitted Acquisitions; provided, that (i) such Indebtedness is not incurred in connection with or in contemplationof such other Person merging with or into, or becoming a Subsidiary of such Borrower or such Subsidiary, (ii) such Indebtedness isnot subject to any Guarantees except Guarantees or

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Persons acquired in such Permitted Acquisition not created in connection with, or in contemplation of, such Permitted Acquisition,and (iii) the aggregate principal amount of such Indebtedness shall not exceed $2,500,000 at any time outstanding; and

(k) other unsecured Indebtedness in an aggregate principal amount not exceeding $10,000,000 at any time outstanding;provided that the aggregate principal amount of Indebtedness of the Borrowers’ Subsidiaries that are not Loan Parties permitted bythis clause (k) shall not exceed $1,000,000 at any time outstanding.

Section 6.02. Liens. No Loan Party will, nor will it permit any Subsidiary to, create, incur, assume or permit to exist anyLien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including Accounts)or rights in respect of any thereof, except:

(a) Liens created pursuant to any Loan Document;

(b) Permitted Encumbrances;

(c) any Lien on any property or asset of any Borrower or any Subsidiary existing on the date hereof and set forth inSchedule 6.02; provided that (i) such Lien shall not apply to any other property or asset of such Borrower or Subsidiary or any otherBorrower or Subsidiary and (ii) 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;

(d) Liens on fixed or capital assets acquired, constructed or improved by any Borrower or any Subsidiary; provided that(i) such Liens secure Indebtedness permitted by clause (e) of Section 6.01, (ii) such Liens and the Indebtedness secured thereby areincurred prior to or within 120 days after such acquisition or the completion of such construction or improvement, and (iii) suchLiens shall not apply to any other property or assets of such Borrower or Subsidiary or any other Borrower or Subsidiary;

(e) any Lien existing on any property or asset (other than Accounts, Inventory, or any Deposit Account) prior to theacquisition thereof by any Borrower or any Subsidiary or existing on any property or asset (other than Accounts and Inventory) ofany Person that becomes a Loan Party after the date hereof prior to the time such Person becomes a Loan Party; provided that(i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Loan Party, as thecase may be, (ii) such Lien shall not apply to any other property or assets of the Loan Party and (iii) such Lien shall secure onlythose obligations which it secures on the date of such acquisition or the date such Person becomes a Loan Party, as the case maybe, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

(f) Liens of a collecting bank arising in the ordinary course of business under Section 4‑208 of the UCC in effect in therelevant jurisdiction covering only the items being collected upon;

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(g) Liens arising out of Sale and Leaseback Transactions permitted by Section 6.06;

(h) Licenses, sublicenses, leases and subleases granted by a Loan Party or any Subsidiary and leases and subleases (by aLoan Party or a Subsidiary as lessor or sublessor) in the ordinary course of business not interfering any material respect with thebusiness of the Loan Parties or any Subsidiaries;

(i) Liens consisting of an agreement to sell property which is the subject of an asset purchase agreement in connection withan asset sale permitted by Section 6.05;

(j) Liens consisting of earnest money deposits made in connection with Permitted Acquisitions or Investments permittedhereunder;

(k) Liens on fixed assets of a Subsidiary acquired pursuant to a Permitted Acquisition so long as (i) such Liens were notincurred in anticipation or contemplation of such Permitted Acquisition, (ii) such Liens do not extend to assets not subject to suchLien at the time of such Permitted Acquisition and (iii) are either Permitted Encumbrances hereunder or encumber assets of suchSubsidiary (other than stock of such Subsidiary) with an aggregate fair market value not in excess of $2,500,000;

(l) Liens consisting of initial prepayments and security deposits in connection with leases, utility services and similartransactions entered into by the applicable Loan Party or Subsidiary of a Loan party in the ordinary course of business and notrequired as a result of any breach of any agreement or default in payment of any obligation; and

(m) Liens granted by a Subsidiary that is not a Loan Party in favor of any Borrower or another Loan Party in respect ofIndebtedness owed by such Subsidiary.

Notwithstanding the foregoing, none of the Liens permitted pursuant to this Section 6.02 may at any time attach to any Loan Party’s(1) Accounts, other than those permitted under clause (a) of the definition of Permitted Encumbrances and clause (a) above and (2)Inventory, other than those permitted under clauses (a) and (b) of the definition of Permitted Encumbrances and clause (a) above.

Section 6.03. Fundamental Changes. (a) No Loan Party will, nor will it permit any Subsidiary to, merge into or consolidatewith any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that, if at thetime thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing (i) anySubsidiary of any Borrower may merge into a Borrower in a transaction in which such Borrower is the surviving entity, (ii) anyLoan Party (other than a Borrower) may merge into any other Loan Party in a transaction in which the surviving entity is a LoanParty and (iii) any Subsidiary that is not a Loan Party may liquidate or dissolve if the Borrower which owns such Subsidiarydetermines in good faith that such liquidation or dissolution is in the best interests of such Borrower and is not materiallydisadvantageous to the Lenders; provided that any such merger involving a Person that is not a wholly owned Subsidiaryimmediately prior to such merger shall not be permitted unless also permitted by Section 6.04.

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(b) No Loan Party will, nor will it permit any Subsidiary to, engage in any business other than businesses of the typeconducted by the Borrowers and their Subsidiaries on the date hereof and businesses reasonably related thereto.

(c) Subject to Section 5.03, no Loan Party, Parent, or Intermediate Holdco will, nor will it permit any Subsidiary of anyLoan Party to, change its fiscal year from the basis in effect on the Effective Date.

(d) No Loan Party, Parent, or Intermediate Holdco will change the accounting basis upon which its financial statements areprepared (except in accordance with GAAP) in any manner that would impact the calculation of the covenant in Section 6.12(whether or not required to be tested pursuant to Section 6.12) without the prior written consent of the Required Lenders.

Section 6.04. Investments, Loans, Advances, Guarantees and Acquisitions . No Loan Party will, nor will it permit anySubsidiary to, form any subsidiary after the Effective Date, or purchase, hold or acquire (including pursuant to any merger with anyPerson that was not a Loan Party and a wholly owned Subsidiary prior to such merger) any evidences of Indebtedness or EquityInterests (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans oradvances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, orpurchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a businessunit (whether through purchase of assets, merger or otherwise) (the each of the foregoing, an “Investment”), except:

(a) Permitted Investments;

(b) Investments in existence on the date hereof and described in Schedule 6.04;

(c) Investments by the Borrowers and the Subsidiaries in Equity Interests in their respective Subsidiaries, provided that(A) any such Equity Interests held by a Loan Party shall be pledged pursuant to the Security Agreement (subject to the limitationsapplicable to Equity Interests of a Foreign Subsidiary referred to in Section 5.12) and (B) the aggregate amount of Investments byLoan Parties in Subsidiaries that are not Loan Parties (together with outstanding intercompany loans permitted under clause (B) tothe proviso to Section 6.04(d) and outstanding Guarantees permitted under the proviso to Section 6.04(e)) shall not exceed$5,000,000 at any time outstanding (in each case determined without regard to any write-downs or write-offs);

(d) loans or advances made by any Loan Party to any Subsidiary and made by any Subsidiary to a Loan Party or any otherSubsidiary, provided that (A) any such loans and advances made by a Loan Party to a Subsidiary that is not a Loan Party shall beevidenced by a promissory note pledged pursuant to the Security Agreement and (B) the amount of such loans and advances madeby Loan Parties to Subsidiaries that are not Loan Parties (together with outstanding investments permitted under clause (B) to theproviso to Section 6.04(c) and outstanding Guarantees permitted under the proviso to Section 6.04(e)) shall not exceed $5,000,000at any time outstanding (in each case determined without regard to any write-downs or write-offs);

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(e) Guarantees constituting Indebtedness permitted by Section 6.01, provided that the aggregate principal amount ofIndebtedness of Subsidiaries that are not Loan Parties that is Guaranteed by any Loan Party (together with outstanding investmentspermitted under clause (B) to the proviso to Section 6.04(c) and outstanding intercompany loans permitted under clause (B) to theproviso to Section 6.04(d)) shall not exceed $5,000,000 at any time outstanding (in each case determined without regard to anywrite-downs or write-offs);

(f) Permitted Acquisitions;

(g) loans or advances made by a Loan Party to its employees on an arms-length basis in the ordinary course of businessconsistent with past practices for travel and entertainment expenses, relocation costs and similar purposes up to a maximum of$1,000,000 in the aggregate at any one time outstanding;

(h) notes payable, or stock or other securities issued by Account Debtors to a Loan Party pursuant to negotiated agreementswith respect to settlement of such Account Debtor’s Accounts in the ordinary course of business, consistent with past practices;

(i) Investments in the form of Swap Agreements permitted by Section 6.07;

(j) Investments of any Person existing at the time such Person becomes a Subsidiary of a Borrower or consolidates ormerges with a Borrower or any of the Subsidiaries (including in connection with a Permitted Acquisition) so long as suchInvestments were not made in contemplation of such Person becoming a Subsidiary or of such merger;

(k) Investments received in connection with the disposition of assets permitted by Section 6.05;

(l) other Investments not to exceed $1,000,000 in the aggregate at any time outstanding; and

(m) Investments constituting deposits described in clauses (c) and (d) of the definition of the term “PermittedEncumbrances”.

For the avoidance of doubt, Investments in the Parent and certain of its Subsidiaries shall be subject to Section 6.09(b).

Section 6.05. Asset Sales. No Loan Party will, nor will it permit any Subsidiary to, sell, transfer, lease or otherwise disposeof any asset, including any Equity Interest owned by it, nor will any Borrower permit any Subsidiary to issue any additional EquityInterest in such Subsidiary (other than to another Borrower or another Subsidiary in compliance with Section 6.04), except:

(a) sales, transfers and dispositions of (i) Inventory in the ordinary course of business, (ii) used, obsolete, worn out orsurplus equipment or property in the ordinary course of business, (iii) dispositions of fixed assets no longer used or useful in theordinary course of business;

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(b) sales, transfers and dispositions of assets to any Borrower or any Subsidiary, provided that any such sales, transfers ordispositions involving a Subsidiary that is not a Loan Party shall be made in compliance with Section 6.09;

(c) sales, transfers and dispositions of Accounts in connection with the compromise, settlement or collection thereof;

(d) sales, transfers and dispositions of Permitted Investments and other investments permitted by (i) clauses (i) and (m) ofSection 6.04 and (ii) clauses (j) and (k) of Section 6.04; provided, that, with respect to this subclause (ii), no Default is in existence;

(e) Sale and Leaseback Transactions permitted by Section 6.06;

(f) dispositions resulting from any casualty or other insured damage to, or any taking under power of eminent domain or bycondemnation or similar proceeding of, any property or asset of any Borrower or any Subsidiary; and

(g) terminations of leases by the applicable Loan Party or Subsidiary of a Loan Party in the ordinary course of businessthat do not interfere in any material respect with the business of the Loan Parties or their Subsidiaries;

(h) any sale, transfer, assignment, disposition, abandonment or lapse of Intellectual Property that is no longer commerciallypracticable, usable or desirable in the conduct of business, in the ordinary course of business; and

(i) sales, transfers and other dispositions of assets (other than (i) Equity Interests in a Subsidiary unless all Equity Interestsin such Subsidiary are sold and (ii) Accounts of a Borrower) that are not permitted by any other clause of this Section, provided thatthe aggregate fair market value of all assets sold, transferred or otherwise disposed of in reliance upon this paragraph (i) shall notexceed $5,000,000 during any fiscal year of the Company;

provided that all sales, transfers, leases and other dispositions permitted hereby (other than those permitted by paragraphs (b), (f),(g) and (h) above) shall be made for fair value and for at least 75% cash consideration.

Section 6.06. Sale and Leaseback Transactions. No Loan Party will, nor will it permit any Subsidiary to, enter into anyarrangement, directly or indirectly, whereby it shall sell or transfer any property, real or personal, used or useful in its business,whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use forsubstantially the same purpose or purposes as the property sold or transferred (a “Sale and Leaseback Transaction”).

Section 6.07. Swap Agreements. No Loan Party will, nor will it permit any Subsidiary to, enter into any Swap Agreement,except (a) Swap Agreements entered into to hedge or mitigate risks to which any Borrower or any Subsidiary has actual exposure(other than those in respect of Equity Interests of any Borrower or any of its Subsidiaries), and (b) Swap Agreements entered into

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in order to effectively cap, collar or exchange interest rates (from floating to fixed rates, from one floating rate to another floatingrate or otherwise) with respect to any interest-bearing liability or investment of any Borrower or any Subsidiary.

Section 6.08. Restricted Payments; Certain Payments of Indebtedness . (a) No Loan Party will, nor will it permit anySubsidiary to, declare or make, or agree to declare or make, directly or indirectly, any Restricted Payment, or incur any obligation(contingent or otherwise) to do so, except (i) each of Borrowers may declare and pay dividends with respect to its common stockpayable solely in additional shares of its common stock, and, with respect to its preferred stock, payable solely in additional sharesof such preferred stock or in shares of its common stock, (ii) Subsidiaries of the Company may declare and pay dividends ratablywith respect to their Equity Interests, and (iii) Specified Post Closing Dividends.

(b) No Loan Party will, nor will it permit any Subsidiary to, make or agree to pay or make, directly or indirectly, anypayment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on anySubordinated Indebtedness, or any payment or other distribution (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 anySubordinated Indebtedness, except payment of regularly scheduled interest and principal payments as and when due in respect ofany Subordinated Indebtedness permitted under Section 6.01, other than payments prohibited by the subordination provisionsthereof.

Section 6.09. Transactions with Affiliates.

(a) No Loan Party will, nor will it permit any Subsidiary to, sell, lease or otherwise transfer any property or assets to, orpurchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of itsAffiliates, except (a) transactions that (i) are in the ordinary course of business and (ii) are at prices and on terms and conditions notless favorable (except in de minimus respects) to such Loan Party or such Subsidiary than could be obtained on an arm’s-lengthbasis from unrelated third parties, (b) transactions between or among any Loan Parties not involving any other Affiliate, (c) anyinvestment permitted by Sections 6.04(c) or 6.04(d), (d) any Indebtedness permitted under Section 6.01(c), (e) any RestrictedPayment permitted by Section 6.08, (f) loans or advances to employees permitted under Section 6.04, (g) the payment of reasonablefees to directors of any Borrower or any Subsidiary who are not employees of such Borrower or Subsidiary, and compensation andemployee benefit arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of theBorrowers or their Subsidiaries in the ordinary course of business, and (h) any issuances of securities or other payments, awards orgrants in cash, securities or otherwise pursuant to, or the funding of, employment agreements, stock options and stock ownershipplans approved by a Borrower’s board of directors.

(b) No Loan Party will, nor will it permit any Subsidiary, to Guaranty or make any other Investment in the Parent or anySubsidiary of the Parent that is not also a Subsidiary of the Company.

Section 6.10. Restrictive Agreements . No Loan Party will, nor will it permit any Subsidiary to, directly or indirectly, enterinto, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) theability of such Loan Party or any Subsidiary

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to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends orother distributions with respect to any of its Equity Interests or to make or repay loans or advances to any Borrower or any otherSubsidiary or to Guarantee Indebtedness of any Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply torestrictions and conditions imposed by any Requirement of Law or by any Loan Document, (ii) the foregoing shall not apply torestrictions and conditions existing on the date hereof identified on Schedule 6.10 (but shall apply to any extension or renewal of,or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply tocustomary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided thatsuch restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause (a) ofthe foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted bythis Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (v) clause (a)of the foregoing shall not apply to customary provisions in leases restricting the assignment thereof.

Section 6.11. Amendment of Organizational Documents . No Loan Party will, nor will it permit any Subsidiary to, amend,modify or waive any of its rights under its charter, articles or certificate of incorporation or organization, by-laws, operating,management or partnership agreement or other organizational or governing documents to the extent any such amendment,modification or waiver would be materially adverse to the Lenders.

Section 6.12. Fixed Charge Coverage Ratio . The Borrowers will not permit the Fixed Charge Coverage Ratio as of the endof any fiscal quarter, commencing with the fiscal quarter ending immediately preceding the date on which the Borrowers’Availability is less than the greater of (a) $22,500,000 and (b) 12.5% of the Aggregate Revolving Commitment, to be less than 1.0to 1.0. Once such covenant is in effect, compliance with the covenant will be discontinued, so long as no Event of Default shallhave occurred and be continuing: (i) on the day immediately succeeding the last day of the fiscal quarter which includes the 30thconsecutive day on which the Borrowers’ Availability remains in excess of the greater of (a) $22,500,000 and (b) 12.5% of theAggregate Revolving Commitment, and (ii) no more than three (3) times in any period of twelve (12) consecutive months.

Section 6.13. Holding Company. Intermediate Holdco shall not, directly or indirectly, conduct, transact or otherwiseengage in, or commit to conduct, transact or otherwise engage in, any business or operations (including the making of anyInvestment, the incurrence of Indebtedness, or the granting of Liens), or own, lease, manage or otherwise operate any properties orassets, other than:

(a) its ownership of the Equity Interests of the Company;

(b) the maintenance of its legal existence (including the ability to incur fees, costs and expenses related to suchmaintenance);

(c) the performance of its obligations under the Loan Documents to which it is a party;

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(d) participating in tax, accounting and other administrative matters as a member of the consolidated group of the Parent,Intermediate Holdco, the Company, and the Subsidiaries;

(e) any issuance of Equity Interests;

(f) the making of Restricted Payments to the extent the Company is permitted to make such Restricted Payments underSection 6.08;

(g) the providing of compensation and indemnification to officers, consultants, managers and directors; and

(h) activities incidental to the business or activities described in the foregoing subclauses (a) through (g).

ARTICLE VII

EVENTS OF DEFAULT

If any of the following events (“ Events of Default”) shall occur:

(a) the Borrowers shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LCDisbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed forprepayment thereof or otherwise;

(b) the Borrowers shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referredto in clause (a) of this Article) payable under this Agreement or any other Loan Document, when and as the same shall become dueand 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 Parent, Intermediate Holdco, any Loan Partyor any Subsidiary in, or in connection with, this Agreement or any other Loan Document or any amendment or modification hereofor thereof or waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuantto or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiverhereunder or thereunder, shall prove to have been materially incorrect when made or deemed made;

(d) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02(a), 5.03(with respect to a Loan Party’s existence) or 5.08 or in Article VI;

(e) Parent, Intermediate Holdco, or any Loan Party shall fail to observe or perform any covenant, condition or agreementcontained in this Agreement (other than those which constitute a default under another Section of this Article), and such failure shallcontinue unremedied for a period of (i) five (5) days after the earlier of Parent’s, Intermediate Holdco’s, or any Loan Party’sknowledge of such breach or notice thereof from the Administrative Agent (which notice will be given at the request of anyLender) if such breach relates to terms or provisions of Section 5.01, 5.02 (other than Section 5.02(a)), 5.06, or 5.13 of thisAgreement or (ii) 30 days after the earlier of

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Parent’s, Intermediate Holdco’s, or any Loan Party’s knowledge of such breach or notice thereof from the Administrative Agent(which notice will be given at the request of any Lender) if such breach relates to terms or provisions of any other Section of thisAgreement;

(f) any Loan Party or Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount)in respect of any Material Indebtedness (other than any intercompany Indebtedness), when and as the same shall become due andpayable and such failure continues after the applicable grace or notice period, if any, specified in the document relating thereto;

(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity orthat enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any MaterialIndebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require theprepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall notapply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing suchIndebtedness to the extent such sale or transfer is permitted by Section 6.05;

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation,reorganization or other relief in respect of the Parent, Intermediate Holdco, a Loan Party or Subsidiary of a Loan Party or its debts,or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now orhereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Parent,Intermediate Holdco, any Loan Party or Subsidiary of a Loan Party or for a substantial part of its assets, and, in any such case, suchproceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of theforegoing shall be entered;

(i) the Parent, Intermediate Holdco, any Loan Party or Subsidiary of a Loan Party shall (i) voluntarily commence anyproceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy,insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely andappropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment ofa receiver, trustee, custodian, sequestrator, conservator or similar official for the Parent, Intermediate Holdco, such Loan Party orSubsidiary of a Loan Party or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petitionfiled against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for thepurpose of effecting any of the foregoing;

(j) the Parent, Intermediate Holdco, any Loan Party or Subsidiary of a Loan Party shall become unable, admit in writing itsinability, or publicly declare its intention not to, or fail generally to pay its debts as they become due;

(k) (i) one or more judgments for the payment of money in an aggregate amount in excess of $10,000,000 shall berendered against any Loan Party, any Subsidiary or any combination

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thereof and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not beeffectively stayed, or any action shall be legally taken by such judgment creditor to attach or levy upon any assets of any LoanParty or Subsidiary to enforce any such judgment; or (ii) any Loan Party or Subsidiary shall fail within thirty (30) days to dischargeone or more non-monetary judgments or orders which, individually or in the aggregate, would reasonably be expected to have aMaterial Adverse Effect, which judgments or orders, in any such case, are not stayed on appeal or otherwise being appropriatelycontested in good faith by proper proceedings diligently pursued;

(l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all otherERISA Events that have occurred, would reasonably be expected to result in a Material Adverse Effect;

(m) a Change in Control shall occur;

(n) the occurrence of any “default”, as defined in any Loan Document (other than this Agreement) or the breach of any ofthe terms or provisions of any Loan Document (other than this Agreement), which default or breach continues beyond any period ofgrace therein provided;

(o) the Loan Guaranty or any Obligation Guaranty shall fail to remain in full force or effect in all material respects or anyaction shall be taken to discontinue or to assert the invalidity or unenforceability of the Loan Guaranty or any Obligation Guaranty,or any Guarantor shall fail to comply with any of the terms or provisions of the Loan Guaranty or any Obligation Guaranty to whichit is a party, or any Guarantor shall deny that it has any further liability under the Loan Guaranty or any Obligation Guaranty towhich it is a party, or shall give notice to such effect, including, but not limited to notice of termination delivered pursuant toSection 10.08 or any notice of termination delivered pursuant to the terms of any Obligation Guaranty;

(p) except as permitted by the terms of any Collateral Document, (i) any Collateral Document shall for any reason fail tocreate a valid security interest in any Collateral not included in the Borrowing Base with an aggregate fair market value in excess of$250,000 purported to be covered thereby, or (ii) any Lien securing any Secured Obligation and covering any Collateral notincluded in the Borrowing Base with an aggregate fair market value in excess of $250,000 shall cease to be a perfected, first priorityLien (subject to Liens permitted by Section 6.02);

(q) any Collateral Document covering any Collateral not included in the Borrowing Base with an aggregate fair marketvalue in excess of $250,000 shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert theinvalidity or unenforceability of any Collateral Document;

(r) any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable in accordancewith its terms (or any Loan Party or Guarantor shall challenge the enforceability of any Loan Document or shall assert in writing, orengage in any action or inaction that evidences its assertion, that any provision of any of the Loan Documents has ceased to be orotherwise is not valid, binding and enforceable in accordance with its terms); or

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(s) any Loan Party or Subsidiary or any officer or employee thereof is criminally convicted under any Healthcare Law thatwould reasonably be expected to result in a Material Adverse Effect;

then, and in every such event (other than an event with respect to the Borrowers described in clause (h) or (i) of this Article), and atany time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lendersshall, by notice to the Borrower Representative, take either or both of the following actions, at the same or different times:(i) terminate the Commitments, whereupon the Commitments shall terminate immediately, and (ii) declare the Loans thenoutstanding to be due and payable in whole (or in part, but ratably as among the Classes of Loans and the Loans of each Class at thetime outstanding, in which case any principal not so declared to be due and payable may thereafter be declared to be due andpayable), whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and allfees and other obligations of the Borrowers accrued hereunder, shall become due and payable immediately, in each case withoutpresentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers; and in the case of anyevent with respect to the Borrowers described in clause (h) or (i) of this Article, the Commitments shall automatically terminate andthe principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of theBorrowers accrued hereunder, shall automatically become due and payable, in each case without presentment, demand, protest orother notice of any kind, all of which are hereby waived by the Borrowers. Upon the occurrence and during the continuance of anEvent of Default, the Administrative Agent may, and at the request of the Required Lenders shall, increase the rate of interestapplicable to the Loans and other Obligations as set forth in this Agreement and exercise any rights and remedies provided to theAdministrative Agent under the Loan Documents or at law or equity, including all remedies provided under the UCC.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

Section 8.01. Appointment. Each of the Lenders, on behalf of itself and any of its Affiliates that are Secured Parties andthe Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to takesuch actions on its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to theAdministrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidentalthereto. In addition, to the extent required under the laws of any jurisdiction other than the U.S., each of the Lenders and the IssuingBank hereby grants to the Administrative Agent any required powers of attorney to execute any Collateral Document governed bythe laws of such jurisdiction on such Lender’s or Issuing Bank’s behalf. The provisions of this Article are solely for the benefit ofthe Administrative Agent and the Lenders (including the Swingline Lender and the Issuing Bank), and the Loan Parties shall nothave rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” as usedherein or in any other Loan Documents (or any similar term) with reference to the Administrative Agent is not intended to connoteany fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term isused as a

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matter of market custom, and is intended to create or reflect only an administrative relationship between independent contractingparties.

Section 8.02. Rights as a Lender . The bank serving as the Administrative Agent hereunder shall have the same rights andpowers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent,and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with anyLoan Party or any Subsidiary or any Affiliate thereof as if it were not the Administrative Agent hereunder.

Section 8.03. Duties and Obligations. The Administrative Agent shall not have any duties or obligations except thoseexpressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall notbe subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) theAdministrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, exceptdiscretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required toexercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessaryunder the circumstances as provided in Section 9.02), and, (c) except as expressly set forth in the Loan Documents, theAdministrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relatingto any Loan Party or any Subsidiary that is communicated to or obtained by the bank serving as Administrative Agent or any of itsAffiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or atthe request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under thecircumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct as determined by afinal nonappealable judgment of a court of competent jurisdiction. The Administrative Agent shall be deemed not to haveknowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the BorrowerRepresentative or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into(i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate,report or other document delivered hereunder or in connection with any Loan Document, (iii) the performance or observance of anyof the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability,effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the creation, perfection orpriority of Liens on the Collateral or the existence of the Collateral, or (vi) the satisfaction of any condition set forth in Article IV orelsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the AdministrativeAgent.

Section 8.04. Reliance. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relyingupon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and tohave been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or bytelephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. TheAdministrative Agent may consult with legal counsel (who may be counsel

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for the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or nottaken by it in accordance with the advice of any such counsel, accountants or experts.

Section 8.05. Actions through Sub-Agents . The Administrative Agent may perform any and all of its duties and exerciseits rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agentand any such sub-agent may perform any and all of its duties and exercise its rights and powers through their respective RelatedParties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of theAdministrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of thecredit facilities provided for herein as well as activities as the Administrative Agent.

Section 8.06. Resignation. Subject to the appointment and acceptance of a successor Administrative Agent as provided inthis paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the BorrowerRepresentative. Upon any such resignation, the Required Lenders shall have the right, with the consent of the BorrowerRepresentative (unless an Event of Default shall have occurred and be continuing or unless such successor is an existing Lender), toappoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted suchappointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiringAdministrative Agent may, on behalf of the Lenders and the Issuing Bank and with the prior consent of the BorrowerRepresentative (unless an Event of Default shall have occurred and be continuing or unless such successor is an existing Lender),appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any suchbank. Upon the acceptance of its appointment as Administrative Agent hereunder by its successor, such successor shall succeed toand become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiringAdministrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. The feespayable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor, unlessotherwise agreed by the Borrowers and such successor. Notwithstanding the foregoing, in the event no successor AdministrativeAgent shall have been so appointed and shall have accepted such appointment within thirty (30) days after the retiringAdministrative Agent gives notice of its intent to resign, the retiring Administrative Agent may give notice of the effectiveness ofits resignation to the Lenders, the Issuing Bank and the Borrowers, whereupon, on the date of effectiveness of such resignationstated in such notice, (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and underthe other Loan Documents, provided that, solely for purposes of maintaining any security interest granted to the AdministrativeAgent under any Collateral Document for the benefit of the Secured Parties, the retiring Administrative Agent shall continue to bevested with such security interest as collateral agent for the benefit of the Secured Parties and, in the case of any Collateral in thepossession of the Administrative Agent, shall continue to hold such Collateral, in each case until such time as a successorAdministrative Agent is appointed and accepts such appointment in accordance with this paragraph (it being understood and agreedthat the retiring Administrative Agent shall have no duly or obligation to take any further action under any Collateral Document,including any action required to maintain the perfection of any such

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security interest), and (b) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and dutiesof the retiring Administrative Agent, provided that (i) all payments required to be made hereunder or under any other LoanDocument to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly tosuch Person and (ii) all notices and other communications required or contemplated to be given or made to the AdministrativeAgent shall also directly be given or made to each Lender and the Issuing Bank. Following the effectiveness of the AdministrativeAgent’s resignation from its capacity as such, the provisions of this Article, Section 2.17(d) and Section 9.03, as well as anyexculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for thebenefit of such retiring Administrative Agent, its sub‑agents and their respective Related Parties in respect of any actions taken oromitted to be taken by any of them while it was acting as Administrative Agent and in respect of the matters referred to in theproviso under clause (a) above.

Section 8.07. Non-Reliance.

(a) Each Lender acknowledges and agrees that the extensions of credit made hereunder are commercial loans and letters ofcredit and not investments in a business enterprise or securities. Each Lender further represents that it is engaged in making,acquiring or holding commercial loans in the ordinary course of its business and has, independently and without reliance upon theAdministrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made itsown credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. EachLender shall, independently and without reliance upon the Administrative Agent or any other Lender and based on such documentsand information (which may contain material, non-public information within the meaning of the United States securities lawsconcerning the Borrowers and their Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions intaking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or any documentfurnished hereunder or thereunder and in deciding whether or to the extent to which it will continue as a Lender or assign orotherwise transfer its rights, interests and obligations hereunder.

(b) Each Lender hereby agrees that (i) it has requested a copy of each Report prepared by or on behalf of theAdministrative Agent; (ii) the Administrative Agent (A) makes no representation or warranty, express or implied, as to thecompleteness or accuracy of any Report or any of the information contained therein or any inaccuracy or omission contained in orrelating to a Report and (B) shall not be liable for any information contained in any Report; (iii) the Reports are not comprehensiveaudits or examinations, and that any Person performing any field examination will inspect only specific information regarding theLoan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of the Loan Parties’personnel and that the Administrative Agent undertakes no obligation to update, correct or supplement the Reports; (iv) it will keepall Reports confidential and strictly for its internal use, not share the Report with any Loan Party or any other Person except asotherwise permitted pursuant to this Agreement; and (v) without limiting the generality of any other indemnification provisioncontained in this Agreement, (A) it will hold the Administrative Agent and any such other Person preparing a Report harmless fromany action the indemnifying Lender may take or conclusion the indemnifying Lender

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may reach or draw from any Report in connection with any extension of credit that the indemnifying Lender has made or may maketo the Borrower, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a Loan or Loans; and (B)it will pay and protect, and indemnify, defend, and hold the Administrative Agent and any such other Person preparing a Reportharmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including reasonableattorneys’ fees) incurred by the Administrative Agent or any such other Person as the direct or indirect result of any third partieswho might obtain all or part of any Report through the indemnifying Lender.

Section 8.08. Other Agency Titles . If and when applicable, no “arranger”, “Bookrunner”, “syndication agent”, or“documentation agent” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other thanthose applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders shall have or be deemed to have afiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to the relevant Lendersin their respective capacities as an “arranger”, “Bookrunner”, “syndication agent”, or “documentation agent”, as applicable, as itmakes with respect to the Administrative Agent in the preceding paragraph.

Section 8.09. Not Partners or Co-Venturers; Administrative Agent as Representative of the Secured Parties . (a) TheLenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forthherein in case of the Administrative Agent) authorized to act for, any other Lender. The Administrative Agent shall have theexclusive right on behalf of the Lenders to enforce the payment of the principal of and interest on any Loan after the date suchprincipal or interest has become due and payable pursuant to the terms of this Agreement.

(b) In its capacity, the Administrative Agent is a “representative” of the Secured Parties within the meaning of the term“secured party” as defined in the New York Uniform Commercial Code. Each Lender authorizes the Administrative Agent to enterinto each of the Collateral Documents to which it is a party and to take all action contemplated by such documents. Each Lenderagrees that no Secured Party (other than the Administrative Agent) shall have the right individually to seek to realize upon thesecurity granted by any Collateral Document, it being understood and agreed that such rights and remedies may be exercised solelyby the Administrative Agent for the benefit of the Secured Parties upon the terms of the Collateral Documents. In the event thatany Collateral is hereafter pledged by any Person as collateral security for the Secured Obligations, the Administrative Agent ishereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Secured Parties any LoanDocuments necessary or appropriate to grant and perfect a Lien on such Collateral in favor of the Administrative Agent on behalf ofthe Secured Parties.

Section 8.10. Flood Laws. Chase has adopted internal policies and procedures that address requirements placed onfederally regulated lenders under the National Flood Insurance Reform Act of 1994 and related legislation (the “Flood Laws”).Chase, as administrative agent or collateral agent on a syndicated facility, will post on the applicable electronic Platform (orotherwise distribute to each Lender in the syndicate) documents that it receives in connection with the Flood Laws.

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However, Chase reminds each Lender and Participant in the facility that, pursuant to the Flood Laws, each federally regulatedLender (whether acting as a Lender or Participant in the facility) is responsible for assuring its own compliance with the floodinsurance requirements.

ARTICLE IX

MISCELLANEOUS

Section 9.01. Notices. (a) Except in the case of notices and other communications expressly permitted to be given bytelephone or Electronic Systems (and subject in each case to paragraph (b) below), all notices and other communications providedfor herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail orsent by facsimile, as follows:

(i) if to any Loan Party, to the Borrower Representative at:

481 Edward H. Ross Drive Elmwood Park, NJ 07407 Attention: Nicholas Papazicos, Senior Vice President and Chief Financial Officer Facsimile No: (201) 475-8730

with a copy to:

OPKO Health, Inc. 4400 Biscayne Blvd. Miami, Florida 33137 Attention: Adam Logal, Senior Vice President and Chief Financial Officer Facsimile No: (305) 575-4140

(ii) if to the Administrative Agent, the Issuing Bank or the Swingline Lender, to JPMorgan Chase Bank, N.A. at:

JPMorgan Chase Bank, N.A. 3424 Peachtree Road NE, Suite 2300 Atlanta, GA 30326 Attention: Portfolio Manager Facsimile No: 404-926-2579

(iii) if to any other Lender, to it at its address or facsimile number set forth in its Administrative Questionnaire.

All such notices and other communications (i) sent by hand or overnight courier service, or mailed by certified or registered mail,shall be deemed to have been given when received, (ii) sent by facsimile shall be deemed to have been given when sent, providedthat if not given during normal business hours of the recipient, such notice or communication shall be deemed to have been given

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at the opening of business on the next Business Day of the recipient, or (iii) delivered through Electronic Systems to the extentprovided in paragraph (b) below shall be effective as provided in such paragraph.

(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by Electronic Systemspursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant toArticle II unless otherwise agreed by the Administrative Agent and the applicable Lender. Each of the Administrative Agent andthe Borrower Representative (on behalf of the Loan Parties) may, in its discretion, agree to accept notices and other communicationsto it hereunder by Electronic Systems pursuant to procedures approved by it; provided that approval of such procedures may belimited to particular notices or communications. Unless the Administrative Agent otherwise proscribes, all such notices and othercommunications (i) sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from theintended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement),provided that if not given during the normal business hours of the recipient, such notice or communication shall be deemed to havebeen given at the opening of business on the next Business Day for the recipient, and (ii) posted to an Internet or intranet websiteshall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoingclause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that,for both clauses (i) and (ii) above, if such notice, e-mail or other communication is not sent during the normal business hours of therecipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day ofthe recipient.

(c) Any party hereto may change its address, facsimile number or e-mail address for notices and other communicationshereunder by notice to the other parties hereto.

(d) Electronic Systems.

(i) Each Loan Party agrees that the Administrative Agent may, but shall not be obligated to, make Communications(as defined below) available to the Issuing Bank and the other Lenders by posting the Communications on Debt Domain,Intralinks, Syndtrak, ClearPar or a substantially similar Electronic System.

(ii) Any Electronic System used by the Administrative Agent is provided “as is” and “as available.” The AgentParties (as defined below) do not warrant the adequacy of such Electronic Systems and expressly disclaim liability for errorsor omissions in the Communications. No warranty of any kind, express, implied or statutory, including any warranty ofmerchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other codedefects, is made by any Agent Party in connection with the Communications or any Electronic System. In no event shall theAdministrative Agent or any of its Related Parties (collectively, the “ Agent Parties”) have any liability to the Borrowers orthe other Loan Parties, any Lender, the Issuing Bank or any other Person or entity for damages of any kind, including director indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arisingout of any Borrower’s, any Loan Party’s or the Administrative Agent’s

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transmission of communications through an Electronic System. “Communications” means, collectively, any notice, demand,communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any LoanDocument or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender or theIssuing Bank by means of electronic communications pursuant to this Section, including through an Electronic System.

Section 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lenderin exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any singleor partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power,preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of theAdministrative Agent, the Issuing Bank and the Lenders hereunder and under any other Loan Document are cumulative and are notexclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consentto any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) ofthis Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as awaiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice orknowledge of such Default at the time.

(b) Except as provided in the first sentence of Section 2.09(f) (with respect to any commitment increase), neither thisAgreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except (x) inthe case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrowers and the RequiredLenders or (y) in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by theAdministrative Agent and the Loan Party or Loan Parties that are parties thereto, with the consent of the Required Lenders;provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender(including any such Lender that is a Defaulting Lender), (ii) reduce or forgive the principal amount of any Loan or LCDisbursement or reduce the rate of interest thereon, or reduce or forgive any interest or fees payable hereunder, without the writtenconsent of each Lender (including any such Lender that is a Defaulting Lender) directly affected thereby (except in connection withthe waiver of applicability of any post-default increase in interest rates, which waiver shall be effective with the consent of theRequired Lenders), (iii) postpone any scheduled date of payment of the principal amount of any Loan or LC Disbursement, or anydate for the payment of any interest, fees or other Obligations payable hereunder, or reduce the amount of, waive or excuse anysuch payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender(including any such Lender that is a Defaulting Lender) directly affected thereby (except in connection with the waiver ofapplicability of any post-default increase in interest rates, which waiver shall be effective with the consent of the RequiredLenders), (iv) change Section 2.18(b) or (d) in a manner that would alter the manner in which payments are shared, without thewritten consent of each Lender (other than any Defaulting Lender), (v) increase the advance rate set forth in clause (a)(i) of thedefinition of Borrowing Base from that in effect on the Effective Date or add new categories of eligible assets,

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without the written consent of the Supermajority Revolving Lenders, (vi) change any of the provisions of this Section or thedefinition of “Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders (orLenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consentthereunder, without the written consent of each Lender (other than any Defaulting Lender) directly affected thereby, (vii) changeSection 2.20, without the consent of each Lender (other than any Defaulting Lender), (viii) release all or substantially all of thevalue of the guarantees provided by the Guarantors (except as otherwise permitted herein or in the other Loan Documents from timeto time), without the written consent of each Lender (other than any Defaulting Lender), or (ix) except as provided in clause (c) ofthis Section or in any Collateral Document, release all or substantially all of the Collateral, without the written consent of eachLender (other than any Defaulting Lender); provided further that no such agreement shall amend, modify or otherwise affect therights or duties of the Administrative Agent, the Issuing Bank or the Swingline Lender hereunder without the prior written consentof the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be (it being understood that anyamendment to Section 2.20 shall require the consent of the Administrative Agent, the Issuing Bank and the Swingline Lender). TheAdministrative Agent may also amend the Commitment Schedule to reflect assignments entered into pursuant to Section 9.04. Anyamendment, waiver or other modification of this Agreement or any other Loan Document that by its terms affects the rights orduties under this Agreement of the Lenders of one or more Classes (but not the Lenders of any other Class), may be effected by anagreement or agreements in writing entered into by the Borrower and the requisite number or percentage in interest of each affectedClass of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class ofLenders hereunder at the time.

(c) The Lenders and the Issuing Bank hereby irrevocably authorize the Administrative Agent, at its option and in its solediscretion, to release any Liens granted to the Administrative Agent by the Loan Parties on any Collateral (i) upon the terminationof all of the Commitments, payment and satisfaction in full in cash of all Secured Obligations (other than UnliquidatedObligations), and the cash collateralization of all Unliquidated Obligations in a manner satisfactory to each affected Lender,(ii) constituting property being sold or disposed of if the Loan Party disposing of such property certifies to the Administrative Agentthat the sale or disposition is made in compliance with the terms of this Agreement (and the Administrative Agent may relyconclusively on any such certificate, without further inquiry), and to the extent that the property being sold or disposed ofconstitutes 100% of the Equity Interests of a Subsidiary, the Administrative Agent is authorized to release any Loan Guaranty orObligation Guaranty provided by such Subsidiary, (iii) constituting property leased to a Loan Party under a lease which has expiredor been terminated in a transaction permitted under this Agreement, or (iv) as required to effect any sale or other disposition of suchCollateral in connection with any exercise of remedies of the Administrative Agent and the Lenders pursuant to Article VII. Exceptas provided in the preceding sentence, the Administrative Agent will not release any Liens on Collateral without the prior writtenauthorization of the Required Lenders; provided that, the Administrative Agent may in its discretion, release its Liens on Collateralvalued in the aggregate not in excess of $500,000 during any calendar year without the prior written authorization of the RequiredLenders(it being agreed that the Administrative Agent may rely conclusively on one or more certificates of the Borrowers as to thevalue of any Collateral to be so released, without further inquiry). Any such release shall not in any manner discharge, affect, or

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impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Loan Parties in respectof) all interests retained by the Loan Parties, including the proceeds of any sale, all of which shall continue to constitute part of theCollateral. Any execution and delivery by the Administrative Agent of documents in connection with any such release shall bewithout recourse to or warranty by the Administrative Agent.

(d) If, in connection with any proposed amendment, waiver or consent requiring the consent of “each Lender” or “eachLender affected thereby,” the consent of the Required Lenders is obtained, but the consent of other necessary Lenders is notobtained (any such Lender whose consent is necessary but has not been obtained being referred to herein as a “Non-ConsentingLender”), then the Borrowers may elect to replace a Non-Consenting Lender as a Lender party to this Agreement, provided that,concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to the Borrowers, theAdministrative Agent and the Issuing Bank shall agree, as of such date, to purchase for cash the Loans and other Obligations due tothe Non-Consenting Lender pursuant to an Assignment and Assumption and to become a Lender for all purposes under thisAgreement and to assume all obligations of the Non-Consenting Lender to be terminated as of such date and to comply with therequirements of clause (b) of Section 9.04, and (ii) the Borrowers shall pay to such Non-Consenting Lender in same day funds onthe day of such replacement (1) all interest, fees and other amounts then accrued but unpaid to such Non-Consenting Lender by theBorrowers hereunder to and including the date of termination, including without limitation payments due to such Non-ConsentingLender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to the payment which would have been due to such Lenderon the day of such replacement under Section 2.16 had the Loans of such Non-Consenting Lender been prepaid on such date ratherthan sold to the replacement Lender.

(e) Notwithstanding anything to the contrary herein the Administrative Agent may, with the consent of the BorrowerRepresentative only, amend, modify or supplement this Agreement or any of the other Loan Documents to cure any ambiguity,omission, mistake, defect or inconsistency.

Section 9.03. Expenses; Indemnity; Damage Waiver . (a) The Loan Parties shall, jointly and severally, pay all (i)reasonable and documented out‑of‑pocket expenses incurred by the Administrative Agent and its Affiliates, including thereasonable and documented fees, charges and disbursements of one primary outside counsel for the Administrative Agent andLenders, in connection with the syndication and distribution (including, without limitation, via the internet or through an ElectronicSystem) of the credit facilities provided for herein, the preparation and administration of the Loan Documents and any amendments,modifications or waivers of the provisions of the Loan Documents (whether or not the transactions contemplated hereby or therebyshall be consummated), subject to any written agreement between the Administrative Agent and the Company in effect on theEffective Date, (ii) reasonable and documented out-of-pocket expenses incurred by the Issuing Bank in connection with theissuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) out-of-pocketand documented expenses incurred by the Administrative Agent, the Issuing Bank or any Lender, including the fees, charges anddisbursements of any counsel and other professional advisors for the Administrative Agent, the Issuing Bank or any Lender, inconnection with the enforcement, collection or protection of its rights in connection with the Loan Documents, including its rightsunder this Section, or in

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connection with the Loans made or Letters of Credit issued hereunder, including all such out-of‑pocket expenses incurred duringany workout, restructuring or negotiations in respect of such Loans or Letters of Credit. Expenses being reimbursed by the LoanParties under this Section include, without limiting the generality of the foregoing, fees, costs and expenses incurred in connectionwith:

(i) appraisals and insurance reviews;

(ii) subject to Section 5.06, field examinations and the preparation of Reports based on the fees charged by a thirdparty retained by the Administrative Agent or the internally allocated fees for each Person employed by the AdministrativeAgent with respect to each field examination, together with the reasonable and documented fees and expenses associated withcollateral monitoring services performed by the Administrative Agent; provided that the Loan Parties shall not be liable forany such fees, costs and expenses in connection with the initial field exam conducted prior to the Effective Date in excess of$40,000;

(iii) background checks regarding senior management and/or key investors, as deemed necessary or appropriate inthe sole discretion of the Administrative Agent;

(iv) Taxes, fees and other charges for (A) lien and title searches and title insurance and (B) filing financingstatements and continuations, and other actions to perfect, protect, and continue the Administrative Agent’s Liens;

(v) sums paid or incurred to take any action required of any Loan Party under the Loan Documents that such LoanParty fails to pay or take; and

(vi) forwarding loan proceeds, collecting checks and other items of payment, and establishing and maintaining theaccounts and lock boxes, and costs and expenses of preserving and protecting the Collateral.

All of the foregoing fees, costs and expenses may be charged to the Borrowers as Revolving Loans or to another deposit account,all as described in Section 2.18(c).

(b) The Loan Parties shall, jointly and severally, indemnify the Administrative Agent, the Issuing Bank and each Lender,and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold eachIndemnitee harmless from, any and all losses, claims, damages, penalties, incremental taxes, liabilities and related expenses,including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against anyIndemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of the Loan Documents or any agreementor instrument contemplated thereby, the performance by the parties hereto of their respective obligations thereunder or theconsummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of theproceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if thedocuments presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actualor alleged presence

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or Release of Hazardous Materials on or from any property owned or operated by a Loan Party or a Subsidiary, or anyEnvironmental Liability related in any way to a Loan Party or a Subsidiary, (iv) the failure of a Loan Party to deliver to theAdministrative Agent the required receipts or other required documentary evidence with respect to a payment made by a Loan Partyfor Taxes pursuant to Section 2.17, or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any ofthe foregoing, whether or not such claim, litigation, investigation or proceeding is brought by any Loan Party or their respectiveequity holders, Affiliates, creditors or any other third Person and whether based on contract, tort or any other theory and regardlessof whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extentthat such losses, claims, damages, penalties, liabilities or related expenses (A) are determined by a court of competent jurisdictionby final and non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of suchIndemnitee or (B) arise from disputes solely among Indemnitees (other than (1) claims against an Indemnitee in its capacity, or infulfilling its role, as an administrative agent or arranger or similar role under the Loan Documents and (2) claims that arise from anymisrepresentation under or any default or the breach of any Loan Document, or from any actual or alleged performance or non-performance by the Parent, Intermediate Holdco, any Loan Party or any of its Subsidiaries or other Affiliates or any of theirrespective officers, directors, stockholders, partners, members, employees, agents, representatives or advisors, as determined by afinal, non-appealable judgment of a court having competent jurisdiction). This Section 9.03(b) shall not apply with respect to Taxesother than any Taxes that represent losses or damages arising from any non-Tax claim.

(c) To the extent that any Loan Party fails to pay any amount required to be paid by it to the Administrative Agent (or anysub-agent thereof), the Swingline Lender or the Issuing Bank (or any Related Party of any of the foregoing) under paragraph (a) or(b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Swingline Lender or the Issuing Bank (orany Related Party of any of the foregoing), as the case may be, such Lender’s Applicable Percentage (determined as of the time thatthe applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (it being understood that the LoanParties’ failure to pay any such amount shall not relieve any Loan Party of any default in the payment thereof); provided that theunreimbursed expense or indemnified loss, claim, damage, penalty, liability or related expense, as the case may be, was incurred byor asserted against the Administrative Agent, the Swingline Lender or the Issuing Bank in its capacity as such.

(d) To the extent permitted by applicable law, no Loan Party shall assert, and each Loan Party hereby waives, any claimagainst any Indemnitee (i) for any damages arising from the use by others of information or other materials obtained throughtelecommunications, electronic or other information transmission systems (including the Internet) other than any damagesdetermined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence,bad faith or willful misconduct of such Indemnitee or (ii) on any theory of liability, for special, indirect, consequential or punitivedamages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any otherLoan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit orthe use of the proceeds thereof; provided that, nothing in this paragraph (d) shall relieve any Loan Party of any obligation it mayhave to indemnify an Indemnitee against special, indirect,

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consequential or punitive damages asserted against such Indemnitee by a third party in accordance with this Agreement.

(e) All amounts due under this Section shall be payable promptly after written demand therefor.

Section 9.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefitof the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank thatissues any Letter of Credit), except that (i) no Borrower may assign or otherwise transfer any of its rights or obligations hereunderwithout the prior written consent of each Lender (and any attempted assignment or transfer by any Borrower without such consentshall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordancewith this Section. 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 (including any Affiliate of the Issuing Bank that issues anyLetter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplatedhereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right,remedy or claim under or by reason of this Agreement.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (otherthan an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of itsCommitment, participations in Letters of Credit and the Loans at the time owing to it) with the prior written consent (such consentnot to be unreasonably withheld or delayed) of:

(A) the Borrower Representative, provided that the Borrower Representative shall be deemed to haveconsented to any such assignment unless it shall object thereto by written notice to the Administrative Agent withinfive (5) Business Days after having received notice thereof, and provided further that no consent of the BorrowerRepresentative shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if anEvent of Default has occurred and is continuing, any other assignee;

(B) the Administrative Agent;

(C) the Issuing Bank; and

(D) the Swingline Lender.

(iii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund or anassignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amountof the Commitment or Loans of the assigning Lender subject to each such assignment

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(determined as of the date the Assignment and Assumption with respect to such assignment is delivered to theAdministrative Agent) shall not be less than $5,000,000 unless each of the Borrower Representative and theAdministrative Agent otherwise consent, provided that no such consent of the Borrower Representative shall berequired if an Event of Default has occurred and is continuing;

(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigningLender’s rights and obligations under this Agreement;

(C) the parties to each assignment shall execute and deliver to the Administrative Agent (x) an Assignmentand Assumption or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption byreference pursuant to a Platform as to which the Administrative Agent and the parties to the Assignment andAssumption are participants, together with a processing and recordation fee of $3,500; and

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an AdministrativeQuestionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information(which may contain material non-public information about the Company, the other Loan Parties and their RelatedParties or their respective securities) will be made available and who may receive such information in accordancewith the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

For the purposes of this Section 9.04(b), the terms “ Approved Fund” and “Ineligible Institution” have the followingmeanings:

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding orinvesting in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Ineligible Institution” means a (a) natural person, (b) a Defaulting Lender, its Subsidiary or its Lender Parent, (c) holdingcompany, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof;provided that, such holding company, investment vehicle or trust shall not constitute an Ineligible Institution if it (x) has not beenestablished for the primary purpose of acquiring any Loans or Commitments, (y) is managed by a professional advisor, who is notsuch natural person or a relative thereof, having significant experience in the business of making or purchasing commercial loans,and (z) has assets greater than $25,000,000 and a significant part of its activities consist of making or purchasing commercial loansand similar extensions of credit in the ordinary course of its business; or (d) a Loan Party or a Subsidiary or other Affiliate of aLoan Party.

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(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after theeffective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extentof the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under thisAgreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment andAssumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumptioncovering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a partyhereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by aLender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposesof this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c)of this Section.

(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrowers, shall maintain atone of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the namesand addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to,each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive,and the Borrowers, the Administrative Agent, the Issuing Bank and the Lenders shall treat each Person whose name isrecorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement,notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrowers, the Issuing Bank andany Lender, at any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and anassignee, or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference, pursuant toa Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, theassignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processingand recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required byparagraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record theinformation contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed tomake any payment required to be made by it pursuant to Section 2.05, 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c), theAdministrative Agent shall have no obligation to accept such Assignment and Assumption and record the information thereinin the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. Noassignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in thisparagraph.

(c) Any Lender may, without the consent of the Borrowers, the Administrative Agent, the Issuing Bank or the SwinglineLender, sell participations to one or more banks or other entities

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(a “Participant”) other than an Ineligible Institution in all or a portion of such Lender’s rights and obligations under this Agreement(including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under thisAgreement shall remain unchanged; (B) such Lender shall remain solely responsible to the other parties hereto for the performanceof such obligations; and (C) the Borrowers, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to dealsolely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreementor instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right toenforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided thatsuch agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to anyamendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. The Borrowersagree that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the requirements andlimitations therein, including the requirements under Section 2.17(f) and (g) (it being understood that the documentation requiredunder Section 2.17(f) shall be delivered to the participating Lender and the information and documentation required under Section2.17(g) will be delivered to the Borrowers and the Administrative Agent)) to the same extent as if it were a Lender and hadacquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subjectto the provisions of Sections 2.18 and 2.19 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitledto receive any greater payment under Section 2.15 or 2.17, with respect to any participation, than its participating Lender wouldhave been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law thatoccurs after the Participant acquired the applicable participation.

Each Lender that sells a participation agrees, at the Borrowers’ request and expense, to use reasonable efforts to cooperatewith the Borrowers to effectuate the provisions of Section 2.19(b) with respect to any Participant. To the extent permitted by law,each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees tobe subject to Section 2.18(c) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose asan agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts(and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement or any other LoanDocument (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 anyCommitments, Loans, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent thatsuch disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered formunder Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusiveabsent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner ofsuch participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, theAdministrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

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(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreementto secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a FederalReserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledgeor assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee orassignee for such Lender as a party hereto.

Section 9.05. Survival. All covenants, agreements, representations and warranties made by the Loan Parties in the LoanDocuments and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other LoanDocument shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery ofthe Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made byany such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may havehad notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, andshall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amountpayable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitmentshave not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain infull force and effect regardless of the repayment of the Loans, the expiration or termination of the Letters of Credit and theCommitments or the termination of this Agreement or any other Loan Document or any provision hereof or thereof.

Section 9.06. Counterparts; Integration; Effectiveness; Electronic Execution. (a) This Agreement may be executed incounterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of whichwhen taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letteragreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to thesubject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subjectmatter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by theAdministrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bearthe signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties heretoand their respective successors and assigns.

(b) Delivery of an executed counterpart of a signature page of this Agreement by telecopy, emailed .pdf or any otherelectronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manuallyexecuted counterpart of this Agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in orrelating to any document to be signed in connection with this Agreement and the transactions contemplated hereby or thereby shallbe deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of thesame legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-basedrecordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the

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Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act,or any other similar state laws based on the Uniform Electronic Transactions Act.

Section 9.07. Severability. Any provision of any Loan Document held to be invalid, illegal or unenforceable in anyjurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability withoutaffecting the validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in aparticular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of itsAffiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any andall deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing bysuch Lender or Affiliate to or for the credit or the account of any Loan Party against any of and all the Secured Obligations held bysuch Lender, irrespective of whether or not such Lender shall have made any demand under the Loan Documents and although suchobligations may be unmatured. The applicable Lender shall notify the Borrower Representative and the Administrative Agent ofsuch set-off or application, provided that any failure to give or any delay in giving such notice shall not affect the validity of anysuch set-off or application under this Section. The rights of each Lender under this Section are in addition to other rights andremedies (including other rights of setoff) which such Lender may have.

Section 9.09. Governing Law; Jurisdiction; Consent to Service of Process . (a) The Loan Documents (other than thosecontaining a contrary express choice of law provision) shall be governed by and construed in accordance with the internal laws (andnot the law of conflicts) of the State of New York, but giving effect to federal laws applicable to national banks.

(b) Each Loan Party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusivejurisdiction of any U.S. Federal or New York State court sitting in New York, New York in any action or proceeding arising out ofor relating to any Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto herebyirrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined insuch New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a finaljudgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment orin any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that theAdministrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to thisAgreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction.

(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively doso, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of orrelating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the partieshereto

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hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of suchaction or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices inSection 9.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serveprocess in any other manner permitted by law.

Section 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENTPERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDINGDIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOANDOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, OTHERAGENT (INCLUDING ANY ATTORNEY) OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOINGWAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TOENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS INTHIS SECTION.

Section 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience ofreference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting,this Agreement.

Section 9.12. Confidentiality. Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain theconfidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that thePersons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keepsuch Information confidential), (b) to the extent requested by any Governmental Authority (including any self-regulatory authority,such as the National Association of Insurance Commissioners), (c) to the extent required by any Requirement of Law or by anysubpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remediesunder this Agreement or any other Loan Document or any suit, action or proceeding relating to this Agreement or any other LoanDocument or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially thesame as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of itsrights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivativetransaction relating to the Loan Parties or their Subsidiaries and their obligations, (g) with the consent of Parent or the BorrowerRepresentative or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Sectionor (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a non-confidential basis from a sourceother than Parent, Intermediate Holdco, or the Borrowers. For the purposes of this Section, “Information” means all confidentialinformation received from

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Parent or the Borrowers relating to Parent, the Borrowers or their respective business, other than any such information that isavailable to the Administrative Agent, the Issuing Bank or any Lender on a non-confidential basis prior to disclosure by Parent orthe Borrowers and other than information pertaining to this Agreement routinely provided by arrangers to data service providers,including league table providers, that serve the lending industry. Any Person required to maintain the confidentiality of Informationas provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the samedegree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12 FURNISHED TOIT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNINGTHE COMPANY, AND ITS AFFILIATES, THE OTHER LOAN PARTIES AND THEIR RELATED PARTIES ORTHEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURESREGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCHMATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLELAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THEBORROWERS OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING,THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE COMPANY, THE LOAN PARTIES AND THEIR RELATED PARTIES ORTHEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWERS ANDTHE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE ACREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLICINFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW,INCLUDING FEDERAL AND STATE SECURITIES LAWS.

Section 9.13. Several Obligations; Nonreliance; Violation of Law . The respective obligations of the Lenders hereunder areseveral and not joint and the failure of any Lender to make any Loan or perform any of its obligations hereunder shall not relieveany other Lender from any of its obligations hereunder. Each Lender hereby represents that it is not relying on or looking to anymargin stock (as defined in Regulation U of the Board) for the repayment of the Borrowings provided for herein. Anythingcontained in this Agreement to the contrary notwithstanding, neither the Issuing Bank nor any Lender shall be obligated to extendcredit to the Borrowers in violation of any Requirement of Law.

Section 9.14. USA PATRIOT Act . Each Lender that is subject to the requirements of the USA PATRIOT Act herebynotifies each Loan Party that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and recordinformation that identifies such Loan Party,

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which information includes the name and address of such Loan Party and other information that will allow such Lender to identifysuch Loan Party in accordance with the USA PATRIOT Act.

Section 9.15. Disclosure. Each Loan Party, each Lender and the Issuing Bank hereby acknowledges and agrees that theAdministrative Agent and/or its Affiliates from time to time may hold investments in, make other loans to or have otherrelationships with any of the Loan Parties and their respective Affiliates.

Section 9.16. Appointment for Perfection. Each Lender hereby appoints each other Lender as its agent for the purpose ofperfecting Liens, for the benefit of the Administrative Agent and the other Secured Parties, in assets which, in accordance withArticle 9 of the UCC or any other applicable law can be perfected only by possession or control. Should any Lender (other than theAdministrative Agent) obtain possession or control of any such Collateral, such Lender shall notify the Administrative Agentthereof, and, promptly upon the Administrative Agent’s request therefor shall deliver such Collateral to the Administrative Agent orotherwise deal with such Collateral in accordance with the Administrative Agent’s instructions.

Section 9.17. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rateapplicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan underapplicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “ Maximum Rate”) which may be contractedfor, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interestpayable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the MaximumRate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payableas a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect ofother Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together withinterest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

Section 9.18. Marketing Consent. The Borrowers hereby authorize Chase and its affiliates (including without limitationJ.P. Morgan Securities LLC) (collectively, the “ Chase Parties”), at their respective sole expense, but without any prior approval bythe Borrowers, to publish such tombstones and give such other publicity to this Agreement as each may from time to time determinein its sole discretion. The foregoing authorization shall remain in effect unless and until the Borrower Representative notifies Chasein writing that such authorization is revoked.

ARTICLE X

LOAN GUARANTY

Section 10.01. Guaranty. Each Loan Guarantor (other than those that have delivered a separate Guaranty) hereby agreesthat it is jointly and severally liable for, and, as a primary obligor and not merely as surety, absolutely, unconditionally andirrevocably guarantees to the Secured Parties, the prompt payment when due, whether at stated maturity, upon acceleration orotherwise, and at all times thereafter, of the Secured Obligations and all costs and expenses payable pursuant

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to Section 9.03(a) (such costs and expenses, together with the Secured Obligations, collectively the “ Guaranteed Obligations”;provided, however, that the definition of “Guaranteed Obligations” shall not include, and shall not create any guarantee by anyLoan Guarantor of (or grant of security interest by any Loan Guarantor to support, as applicable), any Excluded Swap Obligationsof such Loan Guarantor for purposes of determining any obligations of any Loan Guarantor). Each Loan Guarantor further agreesthat the Guaranteed Obligations may be extended or renewed in whole or in part without notice to or further assent from it, and thatit remains bound upon its guarantee notwithstanding any such extension or renewal. All terms of this Loan Guaranty apply to andmay be enforced by or on behalf of any domestic or foreign branch or Affiliate of any Lender that extended any portion of theGuaranteed Obligations.

Section 10.02. Guaranty of Payment . This Loan Guaranty is a guaranty of payment and not of collection. Each LoanGuarantor waives any right to require the Administrative Agent, the Issuing Bank or any Lender to sue the Parent, IntermediateHoldco, any Borrower, any Loan Guarantor, any other guarantor of, or any other Person obligated for, all or any part of theGuaranteed Obligations (each, an “Obligated Party”), or otherwise to enforce its payment against any collateral securing all or anypart of the Guaranteed Obligations.

Section 10.03. No Discharge or Diminishment of Loan Guaranty . (a) Except as otherwise provided for herein, theobligations of each Loan Guarantor hereunder are unconditional and absolute and not subject to any reduction, limitation,impairment or termination for any reason (other than the indefeasible payment in full in cash of the Guaranteed Obligations),including: (i) any claim of waiver, release, extension, renewal, settlement, surrender, alteration or compromise of any of theGuaranteed Obligations, by operation of law or otherwise; (ii) any change in the corporate existence, structure or ownership of anyBorrower or any other Obligated Party liable for any of the Guaranteed Obligations; (iii) any insolvency, bankruptcy,reorganization or other similar proceeding affecting any Obligated Party or their assets or any resulting release or discharge of anyobligation of any Obligated Party; or (iv) the existence of any claim, setoff or other rights which any Loan Guarantor may have atany time against any Obligated Party, the Administrative Agent, the Issuing Bank, any Lender or any other Person, whether inconnection herewith or in any unrelated transactions.

(b) The obligations of each Loan Guarantor hereunder are not subject to any defense or setoff, counterclaim, recoupmentor termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Guaranteed Obligations orotherwise, or any provision of applicable law or regulation purporting to prohibit payment by any Obligated Party, of theGuaranteed Obligations or any part thereof.

(c) Further, the obligations of any Loan Guarantor hereunder are not discharged or impaired or otherwise affected by: (i)the failure of the Administrative Agent, the Issuing Bank or any Lender to assert any claim or demand or to enforce any remedywith respect to all or any part of the Guaranteed Obligations; (ii) any waiver or modification of or supplement to any provision ofany agreement relating to the Guaranteed Obligations; (iii) any release, non-perfection or invalidity of any indirect or direct securityfor the obligations of any Borrower for all or any part of the Guaranteed Obligations or any obligations of any other Obligated Partyliable for any of the

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Guaranteed Obligations; (iv) any action or failure to act by the Administrative Agent, the Issuing Bank or any Lender with respectto any collateral securing any part of the Guaranteed Obligations; or (v) any default, failure or delay, willful or otherwise, in thepayment or performance of any of the Guaranteed Obligations, or any other circumstance, act, omission or delay that might in anymanner or to any extent vary the risk of such Loan Guarantor or that would otherwise operate as a discharge of any Loan Guarantoras a matter of law or equity (other than the indefeasible payment in full in cash of the Guaranteed Obligations).

Section 10.04. Defenses Waived. To the fullest extent permitted by applicable law, each Loan Guarantor hereby waivesany defense based on or arising out of any defense of any Borrower or any Loan Guarantor or the unenforceability of all or any partof the Guaranteed Obligations from any cause, or the cessation from any cause of the liability of any Borrower, any LoanGuarantor or any other Obligated Party, other than the indefeasible payment in full in cash of the Guaranteed Obligations. Withoutlimiting the generality of the foregoing, each Loan Guarantor irrevocably waives acceptance hereof, presentment, demand, protestand, to the fullest extent permitted by law, any notice not provided for herein, as well as any requirement that at any time any actionbe taken by any Person against any Obligated Party or any other Person. Each Loan Guarantor confirms that it is not a surety underany state law and shall not raise any such law as a defense to its obligations hereunder. The Administrative Agent may, at itselection, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales, accept an assignment of any suchCollateral in lieu of foreclosure or otherwise act or fail to act with respect to any collateral securing all or a part of the GuaranteedObligations, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with any ObligatedParty or exercise any other right or remedy available to it against any Obligated Party, without affecting or impairing in any way theliability of such Loan Guarantor under this Loan Guaranty except to the extent the Guaranteed Obligations have been fully andindefeasibly paid in cash. To the fullest extent permitted by applicable law, each Loan Guarantor waives any defense arising out ofany such election even though that election may operate, pursuant to applicable law, to impair or extinguish any right ofreimbursement or subrogation or other right or remedy of any Loan Guarantor against any Obligated Party or any security.

Section 10.05. Rights of Subrogation . No Loan Guarantor will assert any right, claim or cause of action, including, withoutlimitation, a claim of subrogation, contribution or indemnification, that it has against any Obligated Party or any Collateral, until theLoan Parties and the Loan Guarantors have fully performed all their obligations to the Administrative Agent, the Issuing Bank andthe Lenders.

Section 10.06. Reinstatement; Stay of Acceleration . If at any time any payment of any portion of the GuaranteedObligations (including a payment effected through exercise of a right of setoff) is rescinded, or must otherwise be restored orreturned upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise (including pursuant to any settlemententered into by a Secured Party in its discretion), each Loan Guarantor’s obligations under this Loan Guaranty with respect to thatpayment shall be reinstated at such time as though the payment had not been made and whether or not the Administrative Agent,the Issuing Bank and the Lenders are in possession of this Loan Guaranty. If acceleration of the time for payment of any of theGuaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of any Borrower, all such amounts

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otherwise subject to acceleration under the terms of any agreement relating to the Guaranteed Obligations shall nonetheless bepayable by the Loan Guarantors forthwith on demand by the Administrative Agent.

Section 10.07. Information. Each Loan Guarantor assumes all responsibility for being and keeping itself informed of theBorrowers’ financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the GuaranteedObligations and the nature, scope and extent of the risks that each Loan Guarantor assumes and incurs under this Loan Guaranty,and agrees that none of the Administrative Agent, the Issuing Bank or any Lender shall have any duty to advise any Loan Guarantorof information known to it regarding those circumstances or risks.

Section 10.08. Termination. Each of the Lenders and the Issuing Bank may continue to make loans or extend credit to theBorrowers based on this Loan Guaranty until five (5) days after it receives written notice of termination from any Loan Guarantor.Notwithstanding receipt of any such notice, each Loan Guarantor will continue to be liable to the Lenders for any GuaranteedObligations created, assumed or committed to prior to the fifth day after receipt of the notice, and all subsequent renewals,extensions, modifications and amendments with respect to, or substitutions for, all or any part of such Guaranteed Obligations.Nothing in this Section 10.08 shall be deemed to constitute a waiver of, or eliminate, limit, reduce or otherwise impair any rights orremedies the Administrative Agent or any Lender may have in respect of, any Default or Event of Default that shall exist underclause (o) of Article VII hereof as a result of any such notice of termination.

Section 10.09. Taxes. Each payment of the Guaranteed Obligations will be made by each Loan Guarantor withoutwithholding for any Taxes, unless such withholding is required by law. If any Loan Guarantor determines, in its sole discretionexercised in good faith, that it is so required to withhold Taxes, then such Loan Guarantor may so withhold and shall timely pay thefull amount of withheld Taxes to the relevant Governmental Authority in accordance with applicable law. If such Taxes areIndemnified Taxes, then the amount payable by such Loan Guarantor shall be increased as necessary so that, net of suchwithholding (including such withholding applicable to additional amounts payable under this Section), the Administrative Agent,Lender or Issuing Bank (as the case may be) receives the amount it would have received had no such withholding been made.

Section 10.10. Maximum Liability. Notwithstanding any other provision of this Loan Guaranty, the amount guaranteed byeach Loan Guarantor hereunder shall be limited to the extent, if any, required so that its obligations hereunder shall not be subject toavoidance under Section 548 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, UniformFraudulent Conveyance Act or similar statute or common law. In determining the limitations, if any, on the amount of any LoanGuarantor’s obligations hereunder pursuant to the preceding sentence, it is the intention of the parties hereto that any rights ofsubrogation, indemnification or contribution which such Loan Guarantor may have under this Loan Guaranty, any other agreementor applicable law shall be taken into account.

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Section 10.11. Contribution.

(a) To the extent that any Loan Guarantor shall make a payment under this Loan Guaranty (a “Guarantor Payment”)which, taking into account all other Guarantor Payments then previously or concurrently made by any other Loan Guarantor,exceeds the amount which otherwise would have been paid by or attributable to such Loan Guarantor if each Loan Guarantor hadpaid the aggregate Guaranteed Obligations satisfied by such Guarantor Payment in the same proportion as such Loan Guarantor’s“Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregateAllocable Amounts of each of the Loan Guarantors as determined immediately prior to the making of such Guarantor Payment,then, following indefeasible payment in full in cash of the Guarantor Payment and the Guaranteed Obligations (other thanUnliquidated Obligations that have not yet arisen), and all Commitments and Letters of Credit have terminated or expired or, in thecase of all Letters of Credit, are fully collateralized on terms set forth in this Agreement, the Swap Agreement Obligations and theBanking Services Obligations have terminated, such Loan Guarantor shall be entitled to receive contribution and indemnificationpayments from, and be reimbursed by, each other Loan Guarantor for the amount of such excess, pro rata based upon theirrespective Allocable Amounts in effect immediately prior to such Guarantor Payment.

(b) As of any date of determination, the “Allocable Amount” of any Loan Guarantor shall be equal to the excess of the fairsaleable value of the property of such Loan Guarantor over the total liabilities of such Loan Guarantor (including the maximumamount reasonably expected to become due in respect of contingent liabilities, calculated, without duplication, assuming each otherLoan Guarantor that is also liable for such contingent liability pays its ratable share thereof), giving effect to all payments made byother Loan Guarantors as of such date in a manner to maximize the amount of such contributions.

(c) This Section 10.11 is intended only to define the relative rights of the Loan Guarantors, and nothing set forth in thisSection 10.11 is intended to or shall impair the obligations of the Loan Guarantors, jointly and severally, to pay any amounts as andwhen the same shall become due and payable in accordance with the terms of this Loan Guaranty.

(d) The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets ofthe Loan Guarantor or Loan Guarantors to which such contribution and indemnification is owing.

(e) The rights of the indemnifying Loan Guarantors against other Loan Guarantors under this Section 10.11 shall beexercisable upon the full and indefeasible payment of the Guaranteed Obligations in cash (other than Unliquidated Obligations thathave not yet arisen) and the termination or expiry (or, in the case of all Letters of Credit, full cash collateralization in accordancewith this Agreement), on terms reasonably acceptable to the Administrative Agent and the Issuing Bank, of the Commitments andall Letters of Credit issued hereunder and the termination of this Agreement, the Swap Agreement Obligations and the BankingServices Obligations.

Section 10.12. Liability Cumulative. The liability of each Loan Party as a Loan Guarantor under this Article X is inaddition to and shall be cumulative with all liabilities of each Loan Party

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to the Administrative Agent, the Issuing Bank and the Lenders under this Agreement and the other Loan Documents to which suchLoan Party is a party or in respect of any obligations or liabilities of the other Loan Parties, without any limitation as to amount,unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

Section 10.13. Keepwell. Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally andirrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Guarantor to honorall of its obligations under this Guarantee in respect of a Swap Obligation (provided, however, that each Qualified ECP Guarantorshall only be liable under this Section 10.13 for the maximum amount of such liability that can be hereby incurred without renderingits obligations under this Section 10.13 or otherwise under this Loan Guaranty or Obligation Guaranty, as applicable, voidable underapplicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). Except as otherwiseprovided herein, the obligations of each Qualified ECP Guarantor under this Section 10.13 shall remain in full force and effect untilthe termination of all Swap Obligations. Each Qualified ECP Guarantor intends that this Section 10.13 constitute, and this Section10.13 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for allpurposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

ARTICLE XI

THE BORROWER REPRESENTATIVE

Section 11.01. Appointment; Nature of Relationship . The Company is hereby appointed by each of the Borrowers as itscontractual representative (herein referred to as the “Borrower Representative”) hereunder and under each other Loan Document,and each of the Borrowers irrevocably authorizes the Borrower Representative to act as the contractual representative of suchBorrower with the rights and duties expressly set forth herein and in the other Loan Documents. The Borrower Representativeagrees to act as such contractual representative upon the express conditions contained in this Article XI. Additionally, theBorrowers hereby appoint the Borrower Representative as their agent to receive all of the proceeds of the Loans in the FundingAccount(s), at which time the Borrower Representative shall promptly disburse such Loans to the appropriate Borrower(s),provided that, in the case of a Revolving Loan, such amount shall not exceed Availability. The Administrative Agent and theLenders, and their respective officers, directors, agents or employees, shall not be liable to the Borrower Representative or anyBorrower for any action taken or omitted to be taken by the Borrower Representative or the Borrowers pursuant to this Section11.01.

Section 11.02. Powers. The Borrower Representative shall have and may exercise such powers under the Loan Documentsas are specifically delegated to the Borrower Representative by the terms of each thereof, together with such powers as arereasonably incidental thereto. The Borrower Representative shall have no implied duties to the Borrowers, or any obligation to theLenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the BorrowerRepresentative.

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Section 11.03. Employment of Agents . The Borrower Representative may execute any of its duties as the BorrowerRepresentative hereunder and under any other Loan Document by or through authorized officers.

Section 11.04. Notices. Each Borrower shall immediately notify the Borrower Representative of the occurrence of anyDefault hereunder referring to this Agreement describing such Default and stating that such notice is a “notice of default”. In theevent that the Borrower Representative receives such a notice, the Borrower Representative shall give prompt notice thereof to theAdministrative Agent and the Lenders as required in this Agreement. Any notice provided to the Borrower Representativehereunder shall constitute notice to each Borrower on the date received by the Borrower Representative.

Section 11.05. Successor Borrower Representative . Upon the prior written consent of the Administrative Agent, theBorrower Representative may resign at any time, such resignation to be effective upon the appointment of a successor BorrowerRepresentative. The Administrative Agent shall give prompt written notice of such resignation to the Lenders.

Section 11.06. Execution of Loan Documents; Borrowing Base Certificate . The Borrowers hereby empower and authorizethe Borrower Representative, on behalf of the Borrowers, to execute and deliver to the Administrative Agent and the Lenders theLoan Documents and all related agreements, certificates, documents, or instruments as shall be necessary or appropriate to effectthe purposes of the Loan Documents, including, without limitation, the Borrowing Base Certificates and the ComplianceCertificates. Each Borrower agrees that any action taken by the Borrower Representative or the Borrowers in accordance with theterms of this Agreement or the other Loan Documents, and the exercise by the Borrower Representative of its powers set forththerein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Borrowers.

Section 11.07. Reporting. Each Borrower hereby agrees that such Borrower shall furnish promptly after each fiscal monthto the Borrower Representative a copy of its Borrowing Base Certificate and any other certificate or report required hereunder orrequested by the Borrower Representative on which the Borrower Representative shall rely to prepare the Borrowing BaseCertificates and Compliance Certificate required pursuant to the provisions of this Agreement.

(Signature Pages Follow)

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorizedofficers as of the day and year first above written.

BORROWERS:

BIO-REFERENCE LABORATORIES, INC. GENEDX, INC.FLORIDA CLINICAL LABORATORY, INC.MERIDIAN CLINICAL LABORATORY CORP.

By: /s/ Nicholas Papazicos Name: Nicholas Papazicos Title: Senior Vice President andChiefFinancialOfficer

OTHER LOAN PARTIES:

CAREEVOLVE.COM, INC.BRLI-GENPATH DIAGNOSTICS INCGENEDX MENA LLC

By: /s/ Nicholas Papazicos Name: Nicholas Papazicos Title: Senior Vice President andChiefFinancialOfficer

[BRLI - CREDIT AGREEMENT]

JPMORGAN CHASE BANK, N.A., individually and as Administrative Agent,Issuing Bank and Swingline Lender

By /s/ Eric A. Anderson Name: Eric A. AndersonTitle: Authorized Officer

[BRLI - CREDIT AGREEMENT]

COMMITMENT SCHEDULE

Lender Revolving Commitment

JPMorgan Chase Bank, N.A. $175,000,000Total $175,000,000

NAI-1500544456v14

Exhibit 21

SUBSIDIARIES OF OPKO HEALTH, INC.

NAME JURISDICTION OF INCORPORATIONOPKO Instrumentation, LLC DelawareOPKO Pharmaceuticals, LLC DelawareOPKO Diagnostics, LLC DelawareOPKO Chile, S.A. ChileArama Natural Products Distribuidora, Ltda ChilePharmacos Exakta S.A. de C.V. MexicoFineTech Pharmaceutical Ltd IsraelFarmadiet Group Holdings, S.C. SpainOPKO Lab, LLC FloridaOPKO Biologics, Ltd IsraelOPKO Ireland Global Holdings, Ltd IrelandOPKO Ireland, Ltd IrelandOPKO Canada Corp, ULC CanadaOPKO Renal, LLC CanadaCurna, Inc. DelawareInspiro Medical, Ltd IsraelOPKO do Brasil Comercio de Produtos Farmaceuticos, Ltda

BrazilOPKO Uruguay, Ltd UruguayBio-Reference Laboratories, Inc. New JerseyGeneDX, Inc. New JerseyGenome Diagnostics, Ltd CanadaEirGen Pharma Limited Ireland

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

1. Registration Statement (Form S-8 No. 333-144040) of OPKO Health, Inc. andsubsidiaries,

2. Registration Statement (Form S-3 No. 333-189369) of OPKO Health, Inc. andsubsidiaries,

3. Registration Statement (Form S-3 No. 333-190360) of OPKO Health, Inc. andsubsidiaries,

4. Registration Statement (Form S-8 No. 333-190899) of OPKO Health, Inc. andsubsidiaries,

5. Registration Statement (Form S-8 No. 333-190900) of OPKO Health, Inc. and subsidiaries,and

6. Registration Statement (Form S-8 No. 333-206489) of OPKO Health, Inc. andsubsidiaries

of our reports dated February 29, 2016, with respect to the consolidated financial statements of OPKO Health Inc. and subsidiaries and theeffectiveness of internal control over financial reporting of OPKO Health Inc. and subsidiaries included in this Annual Report (Form 10-K)of OPKO Health Inc. and subsidiaries for the year ended December 31, 2015.

/s/ Ernst & Young LLP

Certified Public Accountants

Miami, FloridaFebruary 29, 2016

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

February 29, 2016

OPKO Health, Inc.4400 Biscayne Blvd.Miami, FL 33137

We consent to the incorporation by reference in the following Registration Statements:

1. Registration Statement on Form S-8 (No. 333-144040) of OPKO Health, Inc. and subsidiaries;

2. Registration Statement on Form S-3 (No. 333-189369) of OPKO Health, Inc. and subsidiaries,

3. Registration Statement on Form S-3 (No. 333-190360) of OPKO Health, Inc. and subsidiaries,

4. Registration Statement on Form S-8 (No. 333-190899) of OPKO Health, Inc. and subsidiaries;

5. Registration Statement on Form S-8 (No. 333-190900) of OPKO Health, Inc. and subsidiaries;

6. Registration Statement on Form S-8 (No. 333-206489) of OPKO Health, Inc. and subsidiaries;

of our reports dated January 13, 2015, with respect to the consolidated financial statements and internal controls over financial reporting ofBio-Reference Laboratories, Inc. and its subsidiaries which is incorporated by reference in this Annual Report on Form 10-K of OPKOHealth, Inc.

/s/ MSPCMSPCCertified Public Accountants and AdvisorsA Professional Corporation

Cranford, New JerseyFebruary 29, 2016

Exhibit 31.1

CERTIFICATIONS

I, Phillip Frost, certify that:

(1) I have reviewed this Annual Report on Form 10-K of OPKO Health,

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 the statements made, in light of the circumstances under which such statements were made, not misleading with

respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all

material respects the financial 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 in Exchange 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 within those 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the

preparation of financial statements for external 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 the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this

report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the

registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has

materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the 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 are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial

information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date: February 29, 2016 /s/Phillip Frost, M.D. Phillip Frost, M.D. Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Adam Logal, certify that:

(1) I have reviewed this Annual Report on Form 10-K of OPKO Health,

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 the statements made, in light of the circumstances under which such statements were made, not misleading with

respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all

material respects the financial 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 in Exchange 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 within those 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the

preparation of financial statements for external 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 the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this

report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the

registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has

materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the 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 are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial

information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date: February 29, 2016 /s/ Adam Logal Adam Logal

Senior Vice President, Chief Financial Officer,Chief Accounting Officer and Treasurer

Exhibit 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant section 906 of the Sarbanes-Oxley Act of 2002, I, Phillip Frost, Chief Executive

Officer of OPKO Health, Inc. (the “Company”), hereby certify that:

The Annual Report on Form 10-K for the year ended December 31, 2015 (the “Form 10-K”) of the Company fully complies with the

requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly

presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 29, 2016 /s/ Phillip Frost, M.D. Phillip Frost, M.D. Chief Executive Officer

Exhibit 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant section 906 of the Sarbanes-Oxley Act of 2002, I, Adam Logal, Chief Financial

Officer of OPKO Health, Inc. (the “Company”), hereby certify that:

The Annual Report on Form 10-K for the year ended December 31, 2015 (the “Form 10-K”) of the Company fully complies with the

requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly

presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 29, 2016 /s/ Adam Logal Adam Logal

Senior Vice President, Chief Financial OfficerChief Accounting Officer and Treasurer