Exhibit 10.1

 

SECOND AMENDMENT TO FACILITY AGREEMENT

 

SECOND AMENDMENT TO FACILITY AGREEMENT (this “Amendment”), dated as of
November 5, 2018, by and among NEOS THERAPEUTICS, INC., a Delaware corporation
(“Borrower”), NEOS THERAPEUTICS COMMERCIAL, LLC, NEOS THERAPEUTICS BRANDS, LLC,
NEOS THERAPEUTICS, LP, PHARMAFAB TEXAS, LLC (collectively, the “Guarantors”),
DEERFIELD PRIVATE DESIGN FUND III, L.P. (“DPDF”) and DEERFIELD SPECIAL
SITUATIONS FUND, L.P. (“DSSF”, and together with DPDF collectively referred to
as the “Lenders” and together with the Borrower and the Guarantors, the
“Parties”).

 

RECITALS:

 

A.            The Borrower and the Lenders have entered into that certain
Facility Agreement dated as of May 11, 2016, as amended by the First Amendment
to Facility Agreement, dated as of June 1, 2017 by an among the Borrower, the
Guarantors and the Lenders (together with all exhibits and schedules thereto and
as the same has been and may from time to time hereafter, be further amended,
modified, restated or otherwise supplemented, the “Facility Agreement”).

 

B.            Prior to the Second Amendment Date (as defined below), the
Facility Agreement provides for (i) originally, the issuance of Notes to
evidence the Loan in an original principal amount of $60,000,000 and (ii) on the
date of the First Amendment, the issuance of certain Senior Secured Convertible
Notes to evidence the additional loan of the Amendment Date Accrued Interest
Amount of $6,586,461.72 as of such date.  As of the date hereof, (i) principal
of the Notes described in clause (i) of the preceding sentence in the amount of
$60,000,000 remains outstanding and (ii) the foregoing Senior Secured
Convertible Notes have been satisfied in full and cancelled in connection
therewith in accordance with their terms.

 

C.            Pursuant to this Amendment (i) the Facility Agreement shall be
amended (A) to modify, subject to certain conditions, the schedule of principal
repayments thereunder and (B) to provide Borrower with a right, subject to the
terms and conditions of the Facility Agreement, to make interest and principal
payments through the issuance of Common Stock, (ii) the Notes shall be amended
and restated to provide each Lender with a right, subject to the terms and
conditions of the Facility Agreement, to convert principal under the Notes into
Common Stock, and (iii) the parties have agreed to make certain other
modifications to the Facility Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, the
Parties agree as follows:

 

1.             Defined Terms.  Capitalized terms used herein which are defined
in the Facility Agreement, unless otherwise defined herein, shall have the
meanings ascribed to them in the Facility Agreement.  The Recitals to this
Amendment are incorporated herein in their entirety by this reference thereto.

 

2.             Amendments to Facility Agreement.  Subject to the satisfaction of
the Conditions Precedent set forth in Section 4 of this Amendment, the Facility
Agreement is hereby amended as follows:

 

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a.             Section 1.1 of the Facility Agreement is hereby amended to add
the following additional defined terms:

 

“2019 10-K” has the meaning set forth in Section 2.3(a).

 

“2019 Principal Payment” has the meaning set forth in Section 2.3(a)(ii).

 

“2019 Threshold” has the meaning set forth in Section 2.3(a)(iii).

 

“2020 10-K” has the meaning set forth in Section 2.3(a).

 

“2020 Principal Payment” has the meaning set forth in Section 2.3(a)(iii).

 

“2020 Threshold” has the meaning set forth in Section 2.3(a)(iii).

 

“2021 Principal Payment” has the meaning set forth in Section 2.3(a)(iv).

 

“2022 Principal Payment” has the meaning set forth in Section 2.3(a)(iv).

 

“Conversion Shares” means “Conversion Shares” as defined in, and issued upon
conversion of, the Notes.

 

“Existing Notes” means each of (i) that certain Promissory Note dated as of
May 11, 2016 in the original principal amount of $20,000,000 issued by the
Borrower in favor of Deerfield Special Situations Fund, L.P., and (ii) that
certain Promissory Note dated as of May 11, 2016 in the original principal
amount of $40,000,000 issued by the Borrower in favor of Deerfield Private
Design Fund III, L.P.

 

“No Call Expiration Date” means, with respect to a prepayment  of Principal upon
the occurrence of a Change of Control as required pursuant to Section 2.3(b),
May 11, 2020, and with respect to any  other prepayment, December 31, 2020.

 

“Prepayment Fees and Make Whole Interest” has the meaning set forth in
Section 2.3(b).

 

“Pro Rata Share” shall means, with respect to any Lender, the applicable
percentage set forth on Schedule I to the Second Amendment or such other
percentage as the Lenders shall unanimously determine; provided that the Lenders
shall notify the Borrower of such determination at least three (3) days prior to
the effectiveness of such other percentage.

 

“Second Amendment” shall mean the Second Amendment to Facility Agreement dated
as of November 5, 2018 among the Borrower, Guarantors and Lenders.

 

“Second Amendment Date” shall mean November 5, 2018.

 

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“Second Amendment Principal Payment” has the meaning set forth in
Section 2.3(a)(i) hereto.

 

b.             The following definitions in Section 1.1 of the Facility
Agreement are hereby amended and restated in their entirety to read as follows:

 

“Common Stock” means the common stock of the Company.

 

“Loan Documents” means this Agreement, the Notes, the Security Agreement, the
First Amendment, the Second Amendment, the Registration Rights Agreement, the
Second Amendment Registration Rights Agreement and any other document or
instrument executed by the Borrower or any Subsidiary and delivered in
connection with any of the foregoing and dated the Agreement Date or subsequent
thereto, whether or not specifically mentioned herein or therein; provided that
Common Stock, Interest Payment Shares and Conversion Shares, each as defined in
the Senior Secured Convertible Note, are excluded from “Loan Documents.”

 

“Net Product Sales” means, in respect of any period, the net product sales of
the Borrower’s products (representing the gross product sales, less gross to net
sales adjustments) as disclosed in the Borrower’s financial statements included
in the periodic report for such period timely filed with the SEC.

 

“Notes” means the Amended and Restated Senior Secured Convertible Notes issued
to the Lenders evidencing the Loan in substantially the form of Exhibit A
attached to the Second Amendment, as amended, restated, supplemented or
otherwise modified from time to time.

 

“Obligations” means all obligations for the payment or repayment of the Loans,
interest, fees, premiums and all other amounts due with respect thereto or
otherwise arising under or in connection with this Agreement or the other Loan
Documents.

 

“Second Amendment Registration Rights Agreement” means that certain Registration
Rights Agreement dated as of November 5, 2018 by and among the Company and the
Lenders in the form attached as Exhibit C to the Second Amendment, as it may be
amended, restated, modified and supplemented from time to time.

 

“Securities” shall mean, collectively the Notes (including the guaranties
thereof by the Guarantors), the Conversion Shares, the Principal Payment Shares
(as defined in Exhibit 2.3 to the Second Amendment) and the Interest Payment
Shares (as defined in Exhibit 2.3 to the Second Amendment).

 

c.             Section 1.1 of the Facility Agreement is hereby amended by
deleting the defined term “Senior Secured Convertible Notes” set forth therein.

 

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d.             Section 1.1 of the Facility Agreement is hereby amended to add at
the end thereof the following sentence:

 

“In addition to the terms defined herein, certain terms are defined in
Exhibit 2.3 hereto.”

 

e.             Section 2.3 of the Facility Agreement is hereby amended and
restated in its entirety to read as follows:

 

“(a)         Borrowers shall repay the outstanding principal amount of the Loan
as follows:

 

(i)            $7,500,000 of the outstanding principal amount of the Loan shall
be repaid on the Effective Date (as defined in the Second Amendment) (the
“Second Amendment Principal Payment”)

 

(ii)           $7,500,000 of the outstanding principal amount of the Loan shall
be repaid on May 11, 2019 (the “2019 Principal Payment);

 

(iii)          $15,000,000 of the outstanding principal amount of the Loan shall
be repaid on May 11, 2020 (the “2020 Principal Payment”); provided, however,
that (A) if the Borrower’s Net Product Sales for the year ending December 31,
2019 exceed $75,000,000 (the “2019 Threshold”), then the 2020 Principal Payment
shall be deferred to, and shall be due and payable on, May 11, 2021 and (B) if
the 2020 Principal Payment is so deferred and the Borrower’s Net Product Sales
for the year ending December 31, 2020 exceed $100,000,000 (the “2020
Threshold”), then the 2020 Principal Payment shall be further deferred to, and
shall be due and payable on, the Maturity Date;

 

(iv)          $15,000,000 of the outstanding principal amount of the Loan shall
be repaid on May 11, 2021 (the “2021 Principal Payment”) (in addition to the
2020 Principal Payment that may then be due and payable); and

 

(v)           all outstanding principal and interest and all other outstanding
Obligations shall be due and payable on May 11, 2022 (the principal portion of
such payment, the “2022 Principal Payment” and such date, the “Maturity Date”).

 

Subject to Sections 2.3(b) and 2.3(c) the Borrowers (i) may prepay the
Obligations in whole or in part at any time and from time to time and (ii) shall
prepay all of the outstanding Obligations upon the occurrence of a Change of
Control.  The amount of any prepayment of the Obligations shall be allocated
among the Lenders in accordance with their respective Pro Rata Shares.

 

For purposes of Section 2.3(a)(iii), any deferral of the 2020 Principal Payment
pursuant to clause (A) of such provision shall become effective (if at all) upon
the timely filing of the Borrower’s Annual Report on Form 10-K for the year
ending December 31, 2019 (the “2019 10-K”) and any further deferral of the 2020
Principal Payment pursuant to clause (B) of such provision shall become
effective (if at all) upon the timely filing of the

 

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Borrower’s Annual Report on Form 10-K for the year ending December 31, 2020 (the
“2020 10-K”) and, in each case, delivery to the Lenders of a certificate of the
Chief Financial Officer of the Borrower, certifying that the Net Product Sales
for the annual period covered by the applicable 10-K are as set forth in such
10-K and exceed the 2019 Threshold or 2020 Threshold, as applicable.  In the
event that the Borrower fails to timely file the 2019 10-K with the SEC, the Net
Product Sales for the year ending December 31, 2019 shall be deemed to be less
than the 2019 Threshold, and in the event that the Borrower fails to timely file
the 2020 10-K with the SEC, the Net Product Sales for the year ending
December 31, 2020 shall be deemed to be less than the 2020 Threshold.

 

(b)           If the Obligations are prepaid (in cash, satisfied through the
issuance of Freely Tradeable Shares or otherwise) in whole or in part for any
reason (other than through the conversion by the Lenders of principal into
Conversion Shares (as defined in the Notes) pursuant to the Notes), whether
voluntarily, in connection with a Change of Control or as a result of
acceleration of the Obligations upon the occurrence of an Event of Default, such
prepayment shall be accompanied by payment by the Borrower to the Lenders of
(i) the amount of all accrued and unpaid interest on the principal amount of the
Notes prepaid through the date of such prepayment, plus (ii) a prepayment fee in
the amount of 6.25% of the amount of principal prepaid, if such prepayment
occurs on or before December 31, 2021, plus (iii) an amount equal to the amount
of all interest which, absent such prepayment, would have accrued on the
principal amount of the Notes prepaid from the date of such prepayment through
the No Call Expiration Date, if such prepayment occurs on or prior to the No
Call Expiration Date which amounts shall be payable in cash (the amounts payable
pursuant to clauses (i), (ii) and (iii) of this Section 2.3(b), collectively,
the “Prepayment Fees and Make Whole Interest”).  Notwithstanding anything to the
contrary contained herein, if the Borrower elects to prepay principal (in whole
or in part) through the issuance of Freely Tradeable Shares in accordance with
Exhibit 2.3, (A) for purposes of determining whether such prepayment occurred
prior to the No Call Expiration Date or December 31, 2021, as applicable, such
prepayment shall be deemed to have occurred on the date the applicable Share
Issuance Notice (as defined in Exhibit 2.3) is delivered; (B) the amounts
payable pursuant to clauses (i), (ii) and (iii) of this Section 2.3(b) in
respect of such prepayment shall be determined on a daily basis, based on the
Principal Credit Amount (as defined in Exhibit 2.3) for each Principal Share
Issuance Closing Date (as defined in Exhibit 2.3) relating to the applicable
Issuance Period (as defined in Exhibit 2.3); and (C) the sum of the Prepayment
Fees and Make Whole Interest in respect of such prepayments shall be due and
payable in cash on the second Trading Day following the expiration of the
applicable Issuance Period.  The Borrower shall provide Lenders two (2) Business
Days prior written notice of any voluntary prepayment of the Obligations (a
“Prepayment Notice”).  In the event the Borrower elects to make a voluntary
prepayment, the Borrower shall file with the SEC a Current Report on Form 8-K
disclosing its delivery of a Prepayment Notice, no later than 8:35 a.m., New
York City time, on the Trading Day immediately following the date the applicable
Prepayment Notice is sent by the Borrower.

 

(c)           Notwithstanding anything to the contrary in the Loan Documents
(and in addition to the amounts payable pursuant to Section 2.3(b)), upon the
payment in full of the Obligations (whether voluntarily, in the connection with
a Change of Control

 

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or as a result of acceleration of the Obligations upon the occurrence of an
Event of Default and whether before, at the time of or after the Maturity Date
), the Borrower shall pay to the Lenders a non-refundable exit fee in the amount
of $750,238.93, which shall be due and payable in cash.  The amount of such fee
shall be allocated among the Lenders in in accordance with their respective Pro
Rata Shares.

 

(d)           Each payment by the Borrower to the Lenders in respect of the
Obligations shall be applied (i) first, ratably to all fees, costs and expenses
(including any attorneys’ fees) owed to any Lender under the Loan Documents, but
only to the extent such fees, costs and expenses have been invoiced and are due
and payable, (iii) second, ratably to accrued and unpaid interest owed to the
Lenders, (iv) third, ratably to the outstanding principal amount of the Loans
owed to the Lenders (including any Prepayment Fees and Make Whole Interest with
respect thereto), and, (v) fourth, to all other Obligations owing to any Lender;
provided that voluntary prepayments of principal shall be applied against, and
reduce, principal payments in the order specified in Section 2.3(e); and,
provided, further, that during the continuance of a Default or an Event of
Default, payments shall be applied as determined by the Required Lenders in
their sole discretion.

 

(e)           From and after the Effective Date, any conversions of Notes by any
Lender into Conversion Shares (as defined in the Notes) and any prepayments of
principal by the Borrower (whether in cash or through the issuance of Freely
Tradeable Shares in accordance with Section 2.3(f) and Exhibit 2.3) shall be
applied against, and reduce, principal repayments required pursuant to
Section 2.3(a) with respect to each applicable Lender’s Notes in the order set
forth in Section 2.3(a) (after giving effect to any deferral(s) of the 2020
Principal Payment), in each case, as of the date of the applicable Conversion
Notice (as defined in the Notes), applicable Principal Share Issuance Closing
Date or applicable cash prepayment until the earlier to occur of (A) the time
such principal repayment obligation has been satisfied in full (whether by
repayment or as a result of Conversions (as defined in the Notes) by the
Lenders), and (B) 5:00 p.m. (New York City time) on the Trading Day immediately
preceding the date such principal repayment is due (i.e. following the earlier
of (A) and (B) such conversion or prepayment would be applied against the next
principal repayment requirement pursuant to Section 2.3(a)).”

 

(f)            The Borrower may elect in lieu of paying in cash the principal
payment otherwise due and payable hereunder on an applicable payment date set
forth in Section 2.3(a), to satisfy such principal payments in Freely Tradeable
Shares pursuant to the terms of Exhibit 2.3 attached to the Second Amendment.
The Borrower’s right to make such election shall not apply to the payment of the
amounts described in Section 2.3(b) or Section 2.3(c), which shall only be
payable in cash.

 

f.             The Facility Agreement is hereby amended by amending and
restating the second sentence of Section 2.7 as follows:

 

“Interest, including any interest on principal that is repaid through the
conversion of the Notes, shall be paid quarterly in arrears commencing on
June 1, 2016

 

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and on the first Business Day of each September, December, March and
June thereafter (each, an “Interest Payment Date”) and on the Maturity Date.”

 

g.             The Facility Agreement is hereby amended to add the following as
the last two sentences of Section 2.7 thereof:

 

“The Borrower may elect in lieu of paying in cash any accrued and unpaid
interest due and payable hereunder on an applicable Interest Payment Date to
satisfy such interest payment obligation in Freely Tradeable Shares pursuant to
the terms of Exhibit 2.3 hereto.  The Borrower’s right to make such election
shall not apply to the payment of the amount described in clause (iii) of
Section 2.3(b), which shall only be payable in cash.”

 

3.             Amendment of Notes.  Effective as of the Effective Date, each of
the Existing Notes shall be amended and restated automatically (without the need
for further action by any Party) to give effect to the amendments contained in
the form of amended and restated Notes attached hereto as Exhibit A.

 

4.             Conditions Precedent.  The amendments to the Facility Agreement
contemplated hereby shall be effective upon the consummation of the Offering (as
defined below) on the Offering Terms (as defined below) (the date of such
effectiveness, the “Effective Date”), subject to the fulfillment or waiver by
the Lenders of the following conditions (“Conditions Precedent”):

 

(i)            Delivery of Documents.  The Lenders shall have received the
instruments, documents and agreements listed and described on the closing
checklist attached hereto as Exhibit B, duly executed where appropriate by an
authorized representative of each Person a party thereto, in each case in form
and substance satisfactory to the Lenders.

 

(ii)           Performance; No Default.  The Borrower shall have performed and
complied with all agreements and conditions contained in the Facility Agreement
and the other Loan Documents to be performed by or complied with by the Borrower
prior to the Effective Date.  No Event of Default shall exist as  of the date
hereof or as of the Effective Date.

 

(iii)          Representations and Warranties.  The representations and
warranties of the Borrower and the Guarantors contained herein shall be true and
correct in all respects as of the date hereof and as of the Effective Date (as
defined below).

 

(iv)          Delivery of Notes.  The Borrower shall have delivered to each
Lender a Note substantially in the form of Exhibit A hereto in the aggregate
principal amount set forth opposite such Lender’s name on Schedule I hereto;
provided, for the avoidance of doubt, that upon the delivery of such Notes and
the effectiveness of this Amendment, the Existing Notes shall be immediately
cancelled and of no further force and effect.

 

(v)           Registration Rights Agreement.  The Borrower shall have delivered
to the Lenders the Second Amendment Registration Rights Agreement in the form of
Exhibit C attached hereto executed by it.

 

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(vi)          Opinion.  The Lenders shall have received customary opinions of
Goodwin Procter LLP, counsel to the Borrower.

 

(vii)         Payment of Principal.  The Borrower shall have paid to each Lender
its Pro Rata Share of the Second Amendment Principal Payment, together with
accrued interest thereon, by wire transfer of immediately available funds to
accounts specified by the Lenders.

 

(viii)        Offering.  The Borrower shall have consummated the Offering (as
defined below) on the Offering Terms (as defined below), prior to the
Termination Date (as defined below).

 

5.             Representations and Warranties of the Borrower.  The Borrower and
the Guarantors, jointly and severally, each hereby represent and warrant to the
Lenders as of the date of this Amendment as follows, which representations and
warranties shall survive the execution and delivery of this Amendment and
continue in full force and effect until all of the Notes have been repaid in
full:

 

a.             Organization and Good Standing. Each of the Borrower and the
Guarantors is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted.

 

b.             Authority.  Each of the Borrower and Guarantors has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Amendment, the Notes and the other Loan Documents as
amended hereby and otherwise to carry out its obligations hereunder and
thereunder.  The execution and delivery of this Amendment by each of the
Borrower and Guarantors, the execution and delivery of the Notes by the Borrower
and the consummation by it of the transactions contemplated hereby and by the
other Loan Documents as amended hereby have been duly authorized by all
necessary action on its part, and no further action of its board of directors,
managers, partners, stockholders or members is required in connection herewith
or therewith.

 

c.             Consents.  Each of the Borrower and Guarantors is not required to
obtain any consent from, authorization or order of, or make any filing or
registration with (other than the filing with the SEC of one or more
registration statements in accordance with the requirements of the Second
Amendment Registration Rights Agreement, one or more Exchange Act filings
disclosing the entry into this Amendment and the transactions contemplated
herby, one or more notifications to NASDAQ related to the Common Stock
underlying the Notes, and any filings as may be required by any state securities
agencies), any Governmental Authority or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or perform any of
its respective obligations under or contemplated by this Amendment, the Facility
Agreement, the Notes, the Second Amendment Registration Rights Agreement or the
other Loan Documents (as amended hereby), to which it is a party, in each case,
in accordance with the terms hereof or thereof.  Each of the Borrower and the
Guarantors shall obtain or make (as applicable) all consents, authorizations,
orders, filings and registrations which it is required to

 

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obtain pursuant to the preceding sentence on a timely basis, and it is not aware
of any facts or circumstances that would reasonably be expected to prevent it
from obtaining or effecting any of the registration, application or filings
contemplated by this Amendment, the Notes, the Second Amendment Registration
Rights Agreement or the other Loan Documents (as amended hereby).  The Borrower
is not in violation of the requirements of NASDAQ and has no knowledge of any
facts or circumstances which would reasonably be expected to lead to delisting
or suspension of the Common Stock in the foreseeable future.  The Borrower is
not, and never has been, a “shell company” (as defined in Rule 12b-2 under the
Exchange Act).  The Borrower is eligible to register the Conversion Shares for
resale by the holders thereof on a registration statement on Form S-3 under the
Securities Act.  The Common Stock is eligible for clearing through The
Depository Trust Company (“DTC”), through its Deposit/Withdrawal At Custodian
(DWAC) system, and the Borrower is eligible for and participating in the Direct
Registration System (DRS) of DTC with respect to the its Common Stock.  The
transfer agent for the Common Stock is a participant in, and the Common Stock is
eligible for transfer pursuant to, DTC’s Fast Automated Securities Transfer
Program.  The Common Stock is not, and has not at any time been, subject to any
DTC “chill,” “freeze” or similar restriction with respect to any DTC services,
including the clearing of transactions in shares of the Common Stock through
DTC.

 

d.             Valid and Binding Agreement.  Each of this Amendment and the
Notes has been duly executed and delivered by each of the Borrower and the
Guarantors, as applicable, and constitutes its valid and binding obligations,
enforceable against it in accordance with their respective terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or
other equitable remedies.

 

e.             Non-Contravention.  The execution and delivery of this Amendment
and the Notes and the performance by each of the Borrower and the Guarantors of
its obligations hereunder, thereunder and under the other Loan Documents as
amended hereby does not and will not (i) violate any provision of its
certificate of incorporation or formation, operating agreement, partnership
agreement, bylaws or other organizational documents, as applicable (ii) conflict
with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which it is subject, or by which any of its property or assets is bound or
affected, (iii) require any permit, authorization, consent, approval, exemption
or other action by, notice to or filing with, any court or other federal, state,
local or other governmental authority or other Person, (iv) violate, conflict
with, result in a material breach of, or constitute (with or without notice or
lapse of time or both) a material default under, or an event which would give
rise to any right of notice, modification, acceleration, payment, cancellation
or termination under, or in any manner release any party thereto from any
obligation under any permit or contract to which it is a party or by which any
of its properties or assets are bound, or (v) result in the creation or
imposition of any Lien on any part of its properties or assets.  No Default or
Event of Default exists.

 

f.             Issuance of Shares.  The Conversion Shares issuable upon a
conversion of the Notes, and any Principal Payment Shares and Interest Payment
Shares issuable pursuant to the Facility Agreement (as amended hereby) are duly
authorized and when issued upon any such conversion or in accordance with
Exhibit 2.3, as applicable, will be duly and validly issued, fully

 

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paid and non-assessable, free and clear of all Liens imposed by the Borrower,
and will not be issued in violation of, or subject to, any preemptive or similar
rights of any Person.  The Borrower has reserved from its duly authorized
capital stock the Conversion Shares issuable pursuant to the Notes (without
regard to the 4.985% Cap or the Conversion Cap (each as defined in the Notes)).

 

g.             SEC Reports.  The Borrower has filed all reports, schedules,
forms, statements and other documents required to be filed by it under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Borrower was subject to such requirements) (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”). 
As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

h.             Certain Fees.  No brokerage or finder’s fees or commissions are
or will be required to be paid by the Borrower or any of its affiliates or
representatives to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Amendment.  The Lenders shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this
Section 4(h) that may be due in connection with the transactions contemplated
hereby.

 

i.              Exemption from Registration.  Neither the Borrower, nor any of
its affiliates, nor any Person acting on its or their behalf, has offered or
issued any of the Securities by any form of general solicitation or general
advertising (as those terms are used in Regulation D promulgated under the
Securities Act).  Assuming the accuracy of the Lenders’ representations and
warranties set forth in Section 5, no registration under the Securities Act is
required for the offer and issuance of the Securities by the Borrower to the
Lenders as contemplated hereby.  The amendments and transactions contemplated
hereby, including the issuance and sale of the Securities, subject to the
Exchange Cap, do not contravene, or require stockholder approval pursuant to,
the rules and regulations of NASDAQ.

 

j.              No Integrated Offering.  Neither the Borrower, nor any of its
affiliates, nor any Person acting on its behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would cause this offering and issuance of the
Securities to be integrated with prior or contemporaneous offerings by the
Borrower (i) for purposes of the Securities Act and which would require the
registration of any such securities under the Securities Act, or (ii) for
purposes of any applicable stockholder approval provisions of NASDAQ.  Without
limiting the foregoing, the offering and the issuance of the Securities shall
not be integrated with the Offering.

 

k.             Protective Plans.  The Borrower and the Borrower’s board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share

 

10

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acquisition, business combination or other similar anti-takeover provision under
the Borrower’s certificate of incorporation, bylaws or the laws of the State of
Delaware that is or could become applicable to any of the Lenders as a result of
the transactions contemplated hereby or by the Notes and the other Loan
Documents (as amended hereby) and the Borrower’s fulfilling its obligations with
respect thereto, including the Borrower’s issuance of the Securities.  The
Borrower has not adopted a stockholders rights plan (or “poison pill”) or
similar arrangement relating to accumulations of beneficial ownership of Common
Stock or a change in control of the Borrower (an such plan or arrangement, a
“Rights Plan”), and after the date of this Amendment, the Borrower will not
adopt any Rights Plan that in any way limits or restricts any Lender’s (or any
permitted transferee’s) exercise in full of its rights under the Notes or
otherwise with respect to any Conversion Shares, Principal Payment Shares or
Interest Payment Shares.

 

l.              Underwritten Offering.  The Borrower will enter into the
Underwriting Agreement (as defined below) for purposes of effecting the Offering
(as defined below) on the Offering Terms (as defined below), and does not expect
that the closing of the transactions contemplated thereby will be prevented or
materially delayed, and is not aware of facts or circumstances that would
reasonably be expected to prevent or materially delay such closing.

 

6.             Representations and Warranties of the Lenders.  Each Lender
hereby severally represents and warrants to as follows:

 

a.             Organization and Good Standing.  Such Lender is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted.

 

b.             Authority.  Such Lender has the requisite power and authority to
enter into and to consummate the transactions contemplated by this Amendment and
the Second Amendment Registration Rights Agreement and otherwise to carry out
its obligations hereunder and thereunder.  The execution and delivery of each of
this Amendment and the Second Amendment Registration Rights Agreement by such
Lender and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the part of such
Lender and no further action is required in connection herewith or therewith.

 

c.             Valid and Binding Agreement.  This Amendment and the Second
Amendment Registration Rights Agreement have been duly executed by such Lender
and, when delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligations of such Lender, enforceable against
such Lender in accordance with their respective terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.

 

d.             Non-Contravention.  The execution and delivery of this Amendment
and the Second Amendment Registration Rights Agreement by such Lender and the
performance by such Lender of its obligations hereunder and thereunder does not
and will not (i) violate any provision of such Lender’s organizational or
charter documents, (ii) conflict with or result in a

 

11

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violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which such Lender is
subject, or by which any property or asset of such Lender is bound or affected,
(iii) violate or result in a material breach of contract to which such Lender is
a party or by which any of its properties or assets are bound.

 

e.             Exemption.  Such Lender understands that the Securities are being
offered, sold, issued and delivered to it in reliance upon specific provisions
of federal and applicable state securities laws, and that the Borrower is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Lenders set forth herein
for purposes of qualifying for exemptions from registration under the Securities
Act and applicable state securities laws.

 

f.             Knowledge; Sophistication.  Such Lender has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the investment in the Securities,
and has so evaluated the merits and risks of such investment.

 

g.             Accredited Investor Status.  Such Lender is an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D.

 

h.             Transfer or Resale.  Such Lender understands that the Securities
will be subject to restrictions on transfer, and bear restrictive legends, as
(and only to the extent) set forth in the Notes.

 

7.             Additional Covenants.  Borrower covenants and agrees that:

 

a.             Delivery of Notes.  Immediately upon the effectiveness of this
Agreement and the delivery of the Notes by the Borrower to the Lenders, the
Existing Notes shall be cancelled and of no further force and effect.  As
promptly as possible following the date hereof, each Lender shall deliver the
Existing Notes to the Borrower for destruction.  For the avoidance of doubt, the
amendment and restatement of the terms of the Notes as provided therein, and the
cancellation of the Existing Notes in connection therewith, shall not be
conditioned upon, or be subject to, the delivery of the Existing Notes by the
Lenders.

 

b.             Reservation of the Common Stock.  On and after the date hereof,
the Borrower shall at all times reserve and keep available, free of preemptive
rights, a sufficient number of shares of Common Stock for the purpose of
enabling the Borrower to issue Conversion Shares pursuant to the Notes (without
regard to the 4.985% Cap or the Conversion Cap).

 

c.             Blue Sky Filings.  The Borrower shall take such action as is
reasonably necessary in order to obtain an exemption for, or to qualify the
Securities for, issuance and sale to the Lenders under applicable securities or
“Blue Sky” laws of the states of the United States, and shall provide evidence
of such actions promptly upon request of any Lender.

 

d.             Listing. The Borrower has submitted a notification of listing of
additional shares for the listing of the Conversion Shares and the Interest
Payment Shares on The Nasdaq

 

12

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Global Market and will use its reasonable best efforts to secure such listing. 
The Borrower shall pay all fees and expenses in connection with satisfying its
obligations under this Section 7(d).

 

e.             Disclosure.

 

(i)            No later than 5:00 p.m., New York City time, on the date of this
Amendment, the Borrower will file with the Commission a preliminary prospectus
supplement, dated the date hereof (including the documents and information
incorporated by reference therein, the “Prospectus Supplement”), which
supplements the prospectus, dated August 12, 2016 (including the documents
incorporated by reference therein, the “Base Prospectus” and, together with the
Prospectus Supplement, the “Preliminary Prospectus”), forming a part of the
Registration Statement on Form S-3 (File No. 333-212809) filed by the Borrower
with the Commission on August 1, 2016 and declared effective by the Commission
on August 12, 2016.  On or before 9:00 a.m., New York City time, on the first
(1st) Business Day following the date of this Amendment, the Borrower expects to
enter into the underwriting agreement (the “Underwriting Agreement”) with Cantor
Fitzgerald & Co. (the “Underwriter”) referred to in the Prospectus Supplement,
pursuant to which the Borrower will agree to sell to the Underwriter, for resale
to the public, shares of its Common Stock for gross proceeds of at least
$30,000,000 (plus additional  shares of its Common Stock for additional gross
proceeds of at least $4,500,000) (the “Offering” and the foregoing terms
thereof, the “Offering Terms”).  The Borrower and each Guarantor jointly and
severally represents that the Preliminary Prospectus, as of its date and as of
the date hereof does not, and as of the effectiveness of this Amendment, the
Preliminary Prospectus will not, contain any untrue statement of a material fact
or omit to state any  material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

 

(ii)           The Borrower represents and warrants that, upon the filing of the
Prospectus Supplement it will have disclosed all material, non-public
information (if any) provided or made available to any Lender (or any Lender’s
agents or representatives) by Borrower or any of its respective officers,
directors, employees, affiliates or agents in connection with the transactions
contemplated by this Amendment, the Offering or otherwise on or prior to the
date hereof, including with respect to any actual, proposed or contemplated
transaction involving the Borrower, any subsidiary of the Borrower and/or any
third party, other than the Pricing Information (as defined below).

 

(iii)          On or before 5:00 p.m., New York time, on the date of this
Amendment, the Borrower shall file a Current Report on Form 8-K (the “8-K
Filing”) (1) describing all the material terms of the transactions contemplated
by this Amendment and attaching this Amendment (including the exhibits hereto),
and (2) disclosing any other presently material non-public information (if any)
provided or made available to any Lender (or any such Lender’s agents or
representatives) on or prior to the  filing of the 8-K Filing (other than the
Pricing Information).  On or before 9:00 a.m., New York City time, on the first
(1st) Business Day following the date of this Amendment, the Borrower shall
issue a widely disseminated press release (the “Pricing Press Release”)
disclosing any material information relating to the Offering (including the
number of shares being offered and the public offering price), in each case,
omitted from the Preliminary Prospectus (“Pricing Information”).  From and after
the filing of the 8-K Filing and the issuance of the Pricing Press Release, the
Borrower shall have

 

13

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disclosed all material, non-public information (if any) provided or made
available to any Lender (or any Lender’s agents or representatives) by Borrower
or any of its respective officers, directors, employees, Affiliates or agents in
connection with the transactions contemplated by this Amendment or otherwise on
or prior to the date hereof.  Notwithstanding anything contained in this
Amendment to the contrary and without implication that the contrary would
otherwise be true, after giving effect to the 8-K Filing, the Borrower expressly
acknowledges and agrees that no Lender shall have (unless expressly agreed to by
a particular Lender after the date hereof in a written definitive and binding
agreement executed by the Borrower and such particular Lender or customary oral 
(confirmed by e-mail) “wall-cross” agreement (it being understood and agreed
that no Lender may bind any other Lender with respect thereto)), any duty of
trust or confidence with respect to, or a duty not to trade in any securities on
the basis of, any information regarding the Borrower.  Notwithstanding the
forgoing, as soon as practicable following the closing of the Offering, and in
any event within one hour following such closing, if such closing occurs at or
before 4:00 p.m., New York time, on a Trading Day, and on or before 7:00 a.m.,
New York time, on the first (1st) Business Day after the date of such closing if
such closing occurs at any other time, the Borrower shall file a Current Report
on Form 8-K disclosing that the Offering has closed and that the Effective Date
shall have occurred.

 

(iv)          Notwithstanding any affirmative disclosure obligations of the
Borrower or Guarantor pursuant to the terms of this Amendment or any of the
other Loan Documents or anything else to the contrary contained herein or
therein, (a) subject to clause (b) below, each of the Borrower and Guarantor
shall not, and shall cause each of its officers, directors, employees and agents
to not on behalf of the Borrower, provide any Lender with any material
non-public information with respect to the Borrower from and after the filing of
the 8-K Filing with the SEC without the express prior written consent of such
Lender, and (b) in the event that the Borrower or Guarantor believes that a
notice or communication to any Lender contains material, nonpublic information
with respect to the Borrower, the Borrower shall so indicate to such Lender
prior to the delivery of such notice or communication, and such indication shall
provide such Lender the means to refuse to receive such notice or communication
(in which case any time period to deliver such notice or communication to any
Lender shall automatically be deemed tolled with respect to each Lender until
one Business Day after such Lender has advised the Borrower whether it wishes to
receive or refuse such notice or communication and any obligation of the
Borrower to provide such notice to such Lender under the Facility Agreement or
this Amendment shall be deemed waived if such Lender advises the Borrower that
it wishes to refuse such notice or communication).  In the absence of any such
indication by Borrower to a Lender, such Lender shall be allowed to presume that
all matters relating to such notice or communication do not constitute material
nonpublic information with respect to the Borrower.  Without limiting the
forgoing, neither any Lender nor any employee, partner, officer or Affiliate of
any Lender shall have any duty of trust or confidence with respect to, or any
obligation not to trade in any securities on the basis of, any material
nonpublic information regarding the Borrower, any of its subsidiaries or
Affiliates or any of their respective property, assets, securities or businesses
provided by, or on behalf of, the Borrower, any of its subsidiaries, any of
their respective Affiliates or any of their respective officers, directors,
employees, attorneys, representatives or agents, in violation of any of the
covenants set forth in this Section 7(e) or that is otherwise possessed (or
continued to be possessed) by any Deerfield Party as a result of a breach of any
of the covenants set forth in this Section 7(e).

 

14

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f.             Reporting. From the date of this Amendment until the first
Business Day on which (i) no Notes are convertible into shares of Common Stock
of the Borrower, other than by virtue of the 4.985% Cap thereunder, and (ii) the
Borrower is not, and will not become (upon the satisfaction of conditions,
passage of time or both), entitled to satisfy interest or principal through the
issuance of Common Stock (the “Reporting Period”), (A) the Borrower shall timely
(without giving effect to any extensions pursuant to Rule 12b-25 of the Exchange
Act) file all reports required to be filed with the SEC pursuant to the Exchange
Act, and (B) the Borrower shall not take any action that would reasonably be
expected to result in the termination of the registration of its Common Stock
under the Exchange Act or otherwise terminate its status as an issuer required
to file reports under the Exchange Act, even if the securities laws would
otherwise permits any such termination.  None of such reports, when filed, will
contained any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading and, without limiting the foregoing, the Net Product Sales reflected
in any such reports shall be accurate.  All financial statement filed by the
Borrower with the SEC during the Reporting Period shall fairly present the
consolidated financial position of the Borrower and its Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods presented and shall have been prepared in accordance with U.S.
generally accepted accounting principles, consistently applied (subject, in the
case of unaudited quarterly financial statements, to normal year-end adjustments
that are not material individually or in the aggregate and lack of footnote
disclosures).  The Borrower shall take all actions necessary to cause its Common
Stock to remain listed on the NASDAQ Global Market during the Reporting Period. 
The Borrower shall not take any action that would reasonably be expected to
result in the delisting or suspension or termination of trading of the Common
Stock of the Borrower on the NASDAQ Global Market.

 

g.             Fees & Expenses.  The Borrower shall promptly reimburse the
Lenders for all of their reasonable out-of-pocket, costs, fees and expenses,
including fees and disbursements of legal counsel, incurred in connection with
the negotiation, drafting and execution of this Amendment and the consummation
of the transactions contemplated hereby.

 

8.             Acknowledgements: Borrower and the Guarantors, jointly and
severally, irrevocably and unconditionally acknowledges, affirms and covenants
to each Lender that:

 

a.             such Lender is not in default under any of the Loan Documents and
has not otherwise breached any obligations to Borrower or Guarantors; and

 

b.             there are no offsets, counterclaims or defenses to the
Obligations, including the liabilities and obligations of the Borrower or any
Guarantor under the Notes and other Loan Documents (as amended hereby), or to
the rights, remedies or powers of such Lender in respect of any of the
Obligations or any of the Loan Documents, and the Borrower and each Guarantor
agrees not to interpose (and each does hereby waive and release) any such
defense, set-off or counterclaim in any action brought by such Lender with
respect thereto.

 

9.             This Amendment is an amendment contemplated under Section 6.6 of
the Facility Agreement. For the avoidance of doubt, this Amendment is governed
by and subject to the

 

15

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provisions of Article 6 of the Facility Agreement, which provisions are
incorporated herein in their entirety by this reference thereto.

 

10.          Effect of Amendment; Reservation of Rights.  The parties hereto
hereby agree that (a) the term “Notes” as used in the Loan Documents shall mean
the Notes as amended and restated pursuant to the terms hereof, and (b) the term
“Obligations” as used in the Loan Documents, as amended hereby, shall include
all liabilities and obligations of the Borrower and Guarantors under this
Amendment, under the Facility Agreement (including as amended hereby) under the
Notes and under the other Loan Documents, and each of the parties hereto agrees
not to take any contrary positions. Except as expressly set forth herein, none
of the Lenders has agreed to any modification of the Facility Agreement or any
other Loan Document, nor waived (nor hereby waives), any obligation of Borrower
or any Guarantor, or any breach, default or Event of Default that may exist,
under any of the Loan Documents, nor any of its rights or remedies thereunder,
including any rights or remedies arising from any breach, default or Event of
Default, and each of the Lenders expressly reserves all such rights and
remedies.

 

11.          Efforts; Termination  The Borrower and each Guarantor agrees to use
its commercially reasonable efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under to consummate the Offering upon the Offering Terms prior to
the Termination Date (as defined below) and to otherwise satisfy the conditions
to the effectiveness of the amendments to the Facility Agreement set forth
herein.  This Amendment shall terminate and be of no force or effect if the
Effective Date does not occur on or before November 8, 2018 (the “Termination
Date”) or if the Company does not enter into the Underwriting Agreement by 9:00
a.m. (New York City time) on November 6, 2018; provided, however, that
notwithstanding any such termination, the Borrower’s obligations under
Section 7(g) (Fees & Expenses) shall survive any such termination and remain in
full force and effect until discharged in full.

 

12.          Reaffirmation.  The execution and delivery of this Amendment shall
not operate as a waiver of any right, power or remedy of the Lenders, constitute
a waiver of any provision of the Facility Agreement or any other Loan Document
or serve to effect a novation of the obligations (including the Obligations). 
Each of the Borrower and the Guarantors, as issuer, debtor, grantor, pledgor,
mortgagor, guarantor or assignor, or in other any other similar capacity in
which such Person grants Liens or security interests in its property or
otherwise acts as accommodation party or guarantor, as the case may be, hereby
(i) acknowledges and agrees that it has reviewed this Amendment, (ii) ratifies
and reaffirms all of its obligations, contingent or otherwise, under each of the
Loan Documents (as amended hereby) to which it is a party (after giving effect
hereto), and (iii) to the extent such Person granted Liens on or security
interests in any of its property pursuant to any such Loan Document as security
for or otherwise guaranteed the Obligations under or with respect to the Loan
Documents, ratifies and reaffirms such guarantee and grant of security interests
and Liens and confirms and agrees that such security interests and Liens
hereafter secure all of the Obligations (as amended hereby).  Each of the
Borrower and the Guarantors hereby consents to this Amendment and acknowledges
that this Amendment is a Loan Document and that each of the Loan Documents (as
amended hereby) remains in full force and effect and is hereby ratified and
reaffirmed.  Neither this Amendment nor any prior amendment of any of the Loan
Documents shall be construed or deemed to be a satisfaction, novation, cure,
modification, amendment or release of the Obligations, the Facility

 

16

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Agreement or any of the other Loan Documents or establish a course of conduct
with respect to future requests for amendments, modifications or consents.

 

[Remainder of Page Intentionally Left Blank, signature page follows]

 

17

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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date
first set forth above.

 

 

 

BORROWER:

 

 

 

 

 

NEOS THERAPEUTICS, INC.

 

 

 

 

 

By:

/s/ Richard I. Eisenstadt

 

 

Name:

Richard I. Eisenstadt

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

GUARANTORS:

 

 

 

 

 

NEOS THERAPEUTICS COMMERCIAL, LLC

 

 

 

 

 

By:

/s/ Richard I. Eisenstadt

 

 

Name:

Richard I. Eisenstadt

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

NEOS THERAPEUTICS BRANDS, LLC

 

 

 

 

 

By:

/s/ Richard I. Eisenstadt

 

 

Name:

Richard I. Eisenstadt

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

NEOS THERAPEUTICS, LP

 

 

 

 

 

By:

PharmaFab Texas, LLC, its general partner

 

 

 

 

 

By:

/s/ Richard I. Eisenstadt

 

 

Name:

Richard I. Eisenstadt

 

 

Title:

Authorized Signatory

 

 

 

 

 

 

 

 

PHARMAFAB TEXAS, LLC

 

 

 

 

 

By:

/s/ Richard I. Eisenstadt

 

 

Name:

Richard I. Eisenstadt

 

 

Title:

Authorized Signatory

 

18

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LENDERS:

 

 

 

 

 

DEERFIELD PRIVATE DESIGN FUND III, L.P.

 

 

 

 

 

By:

Deerfield Mgmt III, L.P., its General Partner

 

 

By:

J.E. Flynn Capital III, LLC, its General Partner

 

 

 

 

 

 

 

 

 

 

By:

/s/ David J. Clark

 

 

Name:

David J. Clark

 

 

Title:

Authorized Signatory

 

 

 

 

 

 

 

 

 

 

DEERFIELD SPECIAL SITUATIONS FUND, L.P.

 

 

 

 

 

 

By:

Deerfield Mgmt., L.P., its General Partner

 

 

By:

J.E. Flynn Capital, LLC, its General Partner

 

 

 

 

 

 

 

 

 

 

By:

/s/ David J. Clark

 

 

Name:

David J. Clark

 

 

Title:

Authorized Signatory

 

19

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Exhibit 2.3

Share Payment Provisions

 

If the Borrower elects, in lieu of paying in cash any principal or interest due
and payable under Section 2.3 or Section 2.7 of the Facility Agreement (the
“Agreement”), as applicable, to satisfy any such amounts due through the
issuance of Freely Tradeable Shares (as defined below), pursuant to Section 2.3
or Section 2.7 of the Agreement, the following terms shall apply:

 

1.                                      Defined Terms.  Capitalized terms used
in this Exhibit 2.3 and not otherwise defined herein shall have the meanings set
forth in the Agreement.  To the extent there is any conflict between terms
defined in this Exhibit 2.3 and the use of such terms in any other Loan
Document, for purposes of this Exhibit 2.3 and Section 2.3, such terms shall
have the meanings set forth herein.  For purposes of this Exhibit, the following
terms shall have the following meanings:

 

“2019 Principal Payment Date” has the meaning set forth in Section 5(d) of this
Exhibit.

 

“Applicable Trading Period” has the meaning set forth in Section 4(b) of this
Exhibit.

 

“Bloomberg” means Bloomberg Financial Markets or an equivalent, reliable
reporting service mutually acceptable to and designated by the Borrower and the
Required Lenders.

 

“Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exchangeable or exercisable for
shares of Common Stock.

 

“Credit Amount” means any Interest Credit Amount or any Principal Credit Amount,
as applicable.

 

“Delisting Event” means any of the following: (i) the Common Stock is not listed
on a Principal Market (as defined in the Notes), (ii) trading in the Common
Stock on the Principal Market is suspended, or (iii) the Borrower is not in
compliance with any rule or regulation, which non-compliance would result in the
suspension or cessation of the trading or listing of the Common Stock on the
Principal Market.

 

“Failure Amount” has the meaning set forth in Section 8 of this Exhibit.

 

“Floor Price” has the meaning set forth in Section 3 of this Exhibit.

 

“Freely Tradeable Shares” means any shares of Common Stock which, at the time of
issuance thereof, (i) are duly authorized, validly issued, fully paid and
non-assessable; (ii) are eligible for resale by the Lenders, without limitation
or restriction (including any volume limitation, but excluding any current
public information requirement for so long as such current public information
requirement is satisfied) under state or Federal securities laws, pursuant to
Rule 144 under the Securities Act; and (iii) do not bear, and are not subject
to, any restrictive legend, stop transfer or similar restriction.

 

“Interest Credit Amount” has the meaning set forth in Section 4(a) of this
Exhibit.

 

“Interest Payment Shares” means a number of shares of Common Stock equal to the

 

20

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applicable Share Issuance Amount divided by the Interest Payment Share Price.

 

“Interest Payment Share Price” means 93% of the lesser of (i) the Last Bid Price
prior to the Interest Payment Date and (ii) the arithmetic average of the Volume
Weighted Average Price on each of the ten (10) consecutive Trading Days
immediately preceding the Interest Payment Date.

 

“Issuance Period” means, with respect to a Share Issuance Notice pursuant to
which the Borrower elects to repay principal, the period commencing on the third
Trading Day following delivery of the Share Issuance Notice and ending at the
completion of ten (10) consecutive Trading Days (including such initial Trading
Day) thereafter; provided, that in the event of the occurrence of a Share
Delivery Failure during any Issuance Period, such Issuance Period shall be
deemed to have ended at the completion of the date on which such Share Delivery
Failure has occurred and, provided, further, that the Issuance Period shall be
deemed to have ended at such time during an Issuance Period as Partial Reference
Date Shares are issuable in accordance with Section 4(b) of this Exhibit 2.3.

 

“Last Bid Price” means, with respect to any security as of any time of
determination, the last (closing) bid price on the Principal Market as reported
by, or based upon data reported by, Bloomberg.

 

“Market Capitalization” means, as of any date of determination, the product of
(i) the number of issued and outstanding shares of Common Stock as of such date
(exclusive of any shares of Common Stock issuable directly or indirectly upon
exercise of any Options or conversion of the Notes or any other Convertible
Securities), multiplied by (ii) the closing price per share of Common Stock as
of the preceding Trading Day on the Principal Market, as reported by, or based
upon data reported by, Bloomberg.

 

“Options” means any rights, warrants, options or restricted stock options to
subscribe for or purchase shares of Common Stock or Convertible Securities.

 

“Partial Reference Date Shares” has the meaning set forth in Section 4(b) of
this Exhibit.

 

“Principal Credit Amount” has the meaning set forth in Section 4(b) of this
Exhibit.

 

“Principal Market” means the principal securities exchange or trading market for
the Common Stock.

 

“Principal Share Issuance Closing Date” has the meaning set forth in
Section 4(b) of this Exhibit.

 

“Principal Share Issuance Notice” has the meaning set forth in Section 3 of this
Exhibit.

 

“Reference Date” has the meaning set forth in Section 4(b) of this Exhibit.

 

“Requisite Stockholder Approval” means approval of the Borrower’s stockholders
as required by the applicable rules of the Principal Market for issuances of
Common Stock pursuant to Exhibit 2.3 of the Facility Agreement and upon
conversion of the Notes in excess of the Share Issuance Limit and the Exchange
Cap (as defined in the Notes).  For the avoidance of doubt, any

 

21

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approval by the stockholders of the Borrower that does not result in the lapse
or other termination of the Exchange Cap shall not constitute the Requisite
Stockholder Approval.

 

“Share Delivery Failure” has the meaning set forth in Section 8 of this Exhibit.

 

“Share Issuance Amount” has the meaning set forth in Section 3 of this Exhibit.

 

“Share Issuance Closing Date” has the meaning set forth in Section 4(b) of this
Exhibit.

 

“Share Issuance Limit” means 2,135,625 shares of Common Stock, subject to
appropriate adjustment for any Stock Events occurring after November 5, 2018,
except that such limitation shall not apply in the event that the Company
obtains the Requisite Stockholder Approval (it being acknowledged, for the
avoidance of doubt, that the Company has no obligation to seek such approval),
and a “Lender’s Share Issuance Limit” means such Lender’s Pro Rata Share of the
Share Issuance Limit.

 

“Stock Event” shall have the meaning given to such term in the Notes.

 

“Trading Day” means any day on which the Common Stock is traded for at least six
hours on the Principal Market.

 

“Unsatisfied Principal Amount” has the meaning set forth in Section 9 of this
Exhibit.

 

“Volume Weighted Average Price” means, for the Common Stock as of any Trading
Day, the volume weighted average sale price of the Common Stock on the Principal
Market as reported by Bloomberg. Volume Weighted Average Price will be
determined without regard to after-hours trading or any other trading outside of
the regular trading hours.

 

“Withholding Date” means the first date on which the Borrower withholds or
determines that it is required to withhold any Taxes as a result of the
provisions of this Exhibit or the issuance of any shares of Common Stock, or
consummation of any transactions, as contemplated hereby.

 

2.                                      General.  Subject to the terms and
conditions of this Exhibit, the Borrower’s valid exercise of its share issuance
rights under this Exhibit and subsequent fulfillment of its obligations
hereunder (including the issuance of the applicable number of Freely Tradeable
Shares and payment of any applicable Prepayment Fees and Make Whole Interest)
shall be deemed to satisfy its obligation (i) to pay interest on the Interest
Payment Date for which such share issuance right is being exercised or (ii) to
repay the amount of principal for which such share issuance right is being
exercised, as applicable.

 

3.                                      Exercise of Share Issuance Rights. 
Subject to the terms and conditions of this Exhibit, the Borrower may deliver to
each of the Lenders notice by electronic mail (a “Share Issuance Notice”) of its
intention to issue Freely Tradeable Shares pursuant to the provisions of this
Exhibit in order to satisfy principal due under Section 2.3(a) of the Agreement
or interest due on any Interest Payment Date under Section 2.7 of the Agreement,
in each case, by delivering such Freely Tradeable Shares to the Lenders;
provided, however, that, in addition to the limitations set forth in Section 5
of this Exhibit, (i) the Borrower may not deliver a Share Issuance Notice in
respect of the satisfaction of principal or interest on or prior to the six
month anniversary

 

22

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of the Second Amendment Date, (ii) a Share Issuance Notice may only be delivered
between the close of regular trading on a Trading Day and three (3) hours prior
to the opening of regular hours on the following Trading Day; (iii) a Share
Issuance Notice in respect of the satisfaction of interest may only be delivered
on a date that is not more than fifteen (15) and not less than ten (10) Trading
Days prior to the Interest Payment Date for the interest payment being satisfied
through the issuance of Freely Tradable Shares; and (iv) the Borrower may not
deliver a Share Issuance Notice or issue shares of Common Stock to satisfy
interest or principal under this Exhibit (a) during the occurrence of a
Delisting Event, (b) at any time on or after the date on which the Borrower has
entered into, or publicly disclosed its intention to enter into, an agreement
with respect to, or is otherwise subject to a transaction that would result in,
a Change of Control, (c) at any time following the occurrence, and during the
continuance, of an Event of Default or a Default, (d) from and after a
Withholding Date, (e) if, as of the close of trading on the immediately
preceding Trading Day, the Market Capitalization is less than $100,000,000,
(f) to the extent that the aggregate number of shares of Common Stock issued
pursuant to prior Share Issuance Notices has equaled the Share Issuance Limit,
(g) unless all material information regarding the Borrower (including any
material information that may be included in, or reflected by, the Share
Issuance Notice) has been publicly disclosed in a report filed pursuant to the
Exchange Act or has been otherwise publicly disclosed in a manner compliant with
Regulation FD, (h) unless all shares of Common Stock issuable pursuant to such
Share Issuance Notice will, at the time of issuance, be Freely Tradeable Shares,
(i) if the transfer agent for the Common Stock is not participating in DTC’s
Fast Automated Securities Transfer Program, (j) if any Lender, after
consultation with outside counsel of its choosing, promptly advises the Borrower
that the receipt or resale of Common Stock issued or issuable hereunder would
result in such Lender being deemed an “underwriter” within the meaning of
Section 2(11) under the Securities Act, (k) if the arithmetic average of the
Volume Weighted Average Price on each of the ten (10) Trading Days immediately
preceding such date is less than $3.00, subject to appropriate adjustment for
any Stock Event following the Second Amendment Effective Date, or (l) if the
Common Stock is subject to any DTC “chill,” “freeze” or similar restriction with
respect to any DTC services, including the clearing of transactions in shares of
the Common Stock through DTC (collectively, the “Share Issuance Conditions”). 
Subject to such provisions, a Share Issuance Notice shall be irrevocable, shall
specify (x) the aggregate amount of interest or principal, as applicable,
subject to such Share Issuance Notice, in each case, broken out by the amount
due each Lender and (y) in the case of a Share Issuance Notice that provides for
the satisfaction of principal through the issuance of Freely Tradeable Shares, a
floor price (the “Floor Price”) that is no less than $3.00 per share, subject to
appropriate adjustment for any Stock Event (such amount, a “Share Issuance
Amount”).  If the Lenders do not confirm receipt of the Share Issuance Notice
within three (3) Trading Days of the delivery thereof, the Borrower shall
thereafter use its reasonable best efforts to confirm (by email, telephonically
or otherwise) such receipt, and in no event shall the Issuance Period commence
unless and until the Lenders have confirmed such receipt.  For the avoidance of
doubt, the Borrower may exercise its right under this Exhibit 2.3, and may
deliver a Share Issuance Notice, only one time with respect to the interest due
and payable on any Interest Payment Date.

 

4.                                      Share Issuance.

 

(a)                                 On each Interest Payment Date in respect of
which a Share Issuance Notice has been delivered hereunder to provide for the
satisfaction of interest through the issuance of Freely Tradeable Shares, by no
later than 9:00 a.m., New York City time, the Borrower shall deliver to each
Lender its Pro Rata Share of the applicable Interest Payment Shares by causing

 

23

--------------------------------------------------------------------------------

 

the transfer agent for the Common Stock to electronically transmit such Interest
Payment Shares to such Lender by crediting to the account of such Lender’s prime
broker (as specified by such Lender no later than one Trading Day prior to the
Interest Payment Date) with DTC through its Deposit/Withdrawal at Custodian
(DWAC) system its Pro Rata Share of such Interest Payment Shares determined
pursuant to Section 6 of this Exhibit.  Concurrently with the valid delivery of
the related Interest Payment Shares on the applicable Interest Payment Date, an
amount (the “Interest Credit Amount”) of interest payable on such Interest
Payment Date equal to the product of (x) the number of Interest Payment Shares
issued and delivered to a Lender on such date multiplied by (y) the applicable
Interest Payment Share Price, shall be deemed to have been satisfied.

 

(b)                                 To the extent that the Borrower elects to
satisfy principal in Freely Tradeable Shares pursuant to a Share Issuance
Notice, for each Trading Day during the applicable Issuance Period (each, a
“Reference Date”), the Borrower shall issue to each Lender such Lender’s Pro
Rata Share of an aggregate number of shares of Common Stock (rounded to the
nearest whole share, with 0.5 being rounded up) equal to the product of (x) the
number of shares of Common Stock traded at or above the Floor Price (on all
exchanges and quotation systems on which shares of Common Stock are cited as
having been traded, per the Bloomberg AQR function) on such Reference Date
between 9:35 a.m., New York City time, and 3:55 p.m., New York City time (the
“Applicable Trading Period”), multiplied by (y) 0.19 (the “Daily Issuance
Shares”); provided, that, at such time on any Reference Date as the value (as
determined in accordance with this Section 4(b)) of all shares issuable in
respect of such Reference Date (up to such time of such Reference Date) (the
“Partial Reference Date Shares”) together with the value of all shares issued or
issuable hereunder in respect of prior Reference Dates during such Issuance
Period are sufficient to satisfy the entire principal portion of the Share
Issuance Amount then the Daily Issuance Shares shall be equal to the Partial
Reference Date Shares and such Issuance Period and the Applicable Trading Period
shall thereafter be deemed terminated for all purposes hereunder.  Within two
hours following the close of regular trading hours on each Reference Date for
which Daily Issuance Shares are issuable hereunder, the Lenders shall deliver a
notice (a “Daily Share Notice”) to the Borrower setting forth the number of
Daily Issuance Shares and the portion of the Share Issuance Amount to be
satisfied on the Principal Share Issuance Closing Date (as defined below)
related to such Reference Date, together with appropriate calculations of such
amount.  By no later than 5:30 p.m., New York City time, on the second Trading
Day following each Reference Date (each, a “Principal Share Issuance Closing
Date”), the Company shall deliver to each Lender its Pro Rata Share of the
applicable Daily Issuance Shares by causing the Company’s transfer agent to
electronically transmit such Daily Issuance Shares to each Lender by crediting
to the account of each Lender’s prime broker (as specified by such Lender no
later than one Trading Day prior to the applicable Principal Share Issuance
Closing Date) with DTC through its Deposit/Withdrawal at Custodian (DWAC) system
its Pro Rata Share of such Daily Issuance Shares.  Concurrently with the valid
delivery of the related Daily Issuance Shares on each Principal Share Issuance
Closing Date, an amount (the “Principal Credit Amount”) equal to the product of
(x) the number of shares of Common Stock issued and delivered to a Lender on
such date multiplied by (y) 93% of the Volume Weighted Average Price for shares
of Common Stock that trade at or above the Floor Price during the Applicable
Trading Period (on all exchanges and quotation systems on which shares of Common
Stock are cited as having been traded, per the Bloomberg AQR function) on the
applicable Reference Date shall be applied to, and reduce, the principal amount
being satisfied through the issuance of Common Stock, in each case, in
accordance with Sections 2.3(e) of the Agreement.

 

24

--------------------------------------------------------------------------------

 

(c)                                  All shares of Common Stock issued and
delivered pursuant to this Section 4 shall be Freely Tradeable Shares (and for
the avoidance of doubt, only Freely Tradeable Shares shall be deemed to
constitute Interest Payment Shares or Daily Issuance Shares and be applied to
any Credit Amount).  In connection with the issuance and delivery of any shares
of Common Stock to the Lenders pursuant to this Section 4, the Borrower shall
deliver to the transfer agent for its Common Stock, by no later than (i) the
last Business Day prior to the Interest Payment Date for which a Share Issuance
Notice has been delivered to provide for the satisfaction of interest or
(ii) the first Principal Share Issuance Closing Date for each Issuance Period in
respect of a Share Issuance Notice delivered to provide for the satisfaction of
principal, as applicable, an opinion of counsel reasonably satisfactory to the
Lenders, substantially in the form attached as Annex 1 to this Exhibit,
 relating to all shares of Common Stock to be issued and delivered to the
Lenders as Freely Tradeable Shares, and such other instructions, documents and
instruments as may be reasonably required by such transfer agent in connection
with the issuance to the Lenders of Freely Tradeable Shares on the Interest
Payment Date or during such Issuance Period, as applicable.  Copies of such
instructions, documents and instruments shall be provided to the Lenders
promptly upon a request therefor.

 

5.                                      Limitations on Share Issuances. 
Notwithstanding anything herein to the contrary:

 

(a)                                 The Borrower shall not issue to any Lender,
and no Lender may acquire, a number of shares of Common Stock hereunder to the
extent that, upon such issuance, the number of shares of Common Stock then
beneficially owned by such Lender and its Affiliates and any other persons or
entities whose beneficial ownership of Common Stock would be aggregated with
such Lender’s for purposes of Section 13(d) of the Exchange Act (including
shares held by any “group” of which the Lender is a member, but excluding shares
beneficially owned by virtue of the ownership of securities or rights to acquire
securities (including the Notes) that have limitations on the right to convert,
exercise or acquire similar to the limitation set forth herein), would exceed
4.985% of the total number of shares of Common Stock then issued and outstanding
(the “4.985% Cap”).  For purposes hereof, “group” has the meaning set forth in
Section 13(d) of the Exchange Act and applicable regulations of the SEC, and the
percentage held by each Lender shall be determined in a manner consistent with
the provisions of Section 13(d) of the Exchange Act. All Share Issuance Notices
shall set forth the number of shares of Common Stock then outstanding.  Upon
written request of any Lender at any time, the Borrower shall, within one
(1) Business Day, confirm orally and in writing to such Lender the number of
shares of Common Stock then outstanding.  At any time following delivery of a
Share Issuance Notice and ending on the last Trading Day prior to the applicable
Interest Payment Date or any applicable Principal Share Issuance Closing Date,
each Lender shall have the right to deliver notice to the Borrower (a “Cap
Notice”) (and, if applicable, shall be entitled to include such Cap Notice in a
Daily Share Notice) stating the maximum number of shares of Common Stock that
may be issued to such Lender without exceeding the maximum number of shares that
such Lender may receive under the 4.985% Cap (the “Maximum Share Amount”), which
shall be conclusive and binding upon the Borrower and such Lender.
Notwithstanding anything herein to the contrary, in no event shall (i) the
number of shares issued to a Lender pursuant to any Share Issuance Notice
relating to interest or to a Lender on any Principal Share Issuance Closing Date
exceed such Lender’s applicable Maximum Share Amount specified in such Lender’s
Cap Notice; (ii) the aggregate number of shares issued to a Lender pursuant to
any Share Issuance Notice, together with the shares previously issued to such
Lender pursuant to Share Issuance Notices, exceed such Lender’s Share Issuance
Limit; or (iii) any shares be issued to any Lender pursuant to a Share Issuance
Notice relating to interest to the extent

 

25

--------------------------------------------------------------------------------

 

that all of the interest payment due on the applicable Interest Payment Dates
have been otherwise satisfied or all Interest Payment Dates have occurred. For
the avoidance of doubt, the Borrower shall not be entitled, or permitted, to
issue an aggregate number of shares of Common Stock pursuant to this Exhibit 2.3
in excess of the Share Issuance Limit.

 

(b)                                 The Borrower shall not deliver more than one
Share Issuance Notice on any day.  Following the delivery of any Share Issuance
Notice, from and after the delivery thereof, the Borrower shall not deliver a
subsequent Share Issuance Notice until three (3) Trading Days following: (i) if
the first such Share Issuance Notice provides for the satisfaction of interest
through the issuance of Freely Tradeable Shares, the date all of the interest
payable on the applicable Interest Payment Date shall have been satisfied in
full and (ii) if the first such Share Issuance Notice provides for the
satisfaction of principal through the issuance of Freely Tradeable Shares, the
date that the Borrower shall have delivered a number of Freely Tradeable Shares
equal to the Daily Issuance Shares for each Trading Day during the applicable
Issuance Period and satisfied its obligation to pay (in cash) the Prepayment
Fees and Make Whole Interest applicable to the principal repaid pursuant to such
Share Issuance Notice.

 

(c)                                  Following the delivery of any Conversion
Notice (as defined in the Notes) the Borrower shall not deliver a Share Issuance
Notice that provides for the satisfaction of principal through the issuance of
Freely Tradeable Shares until ten (10) Trading Days following the issuance of
Conversion Shares pursuant to such Conversion Notice.

 

(d)                                 The Borrower shall not deliver a Share
Issuance Notice that would result in any Issuance Period ending fewer than three
(3) Trading Days prior to a date on which principal is due under
Section 2.3(a) of the Purchase Agreement, except in connection with the 2019
Principal Payment so long as the Share Issuance Notice is delivered prior to the
date the 2019 Principal Payment is due (the “2019 Principal Payment Date”).  If
the Borrower delivers a Share Issuance Notice prior to the 2019 Principal
Payment Date and the Issuance Period with respect thereto shall not have ended
prior to the 2019 Principal Payment Date, then for the 2019 Principal Payment
Date and each calendar day thereafter, the difference between the Share Issuance
Amount and the sum of the Principal Credit Amounts as of the end of each such
day shall bear interest at the annual rate of 20%, compounded daily, and the
Share Issuance Amount shall increase daily by the amount of such interest until
the earlier of (i) such time as the sum of the Principal Credit Amounts equals
the Share Issuance Amount as so increased and (ii) such time as the excess of
the Share Issuance Amount, as so increased, over the sum of the Principal Credit
Amounts has been paid by the Borrower to the Purchasers in cash. 
Notwithstanding anything to the contrary contained herein, if the Borrower
delivers a Share Issuance Notice prior to the 2019 Principal Payment Date, then
the Borrower shall not be obligated to pay an amount equal to the Share Issuance
Amount on the 2019 Principal Payment Date, but (for the avoidance of doubt) the
Borrower shall remain obligated to pay the portion of the 2019 Principal Payment
in excess of the applicable Share Issuance Amount on the 2019 Principal Payment
Date in accordance with the terms of the Facility Agreement.  If, as of the end
of the Issuance Period in respect of any such Share Issuance Notice, the Share
Issuance Amount, as increased in accordance with this paragraph, exceeds the sum
of the applicable Principal Credit Amounts for such Issuance Period, the Company
shall pay such excess amount to the Lenders (ratably, based on their Pro Rata
Shares), in cash by wire transfer of immediately available funds, on the first
Business Day following the end of such Issuance Period.

 

26

--------------------------------------------------------------------------------

 

6.                                      Allocation Among Lenders.  All shares of
Common Stock issuable to the Lenders pursuant to this Exhibit, all Credit
Amounts and all Failure Amounts shall be allocated pro rata among the Lenders
based on each Lender’s Pro Rata Share.

 

7.                                      Termination of Right to Issue Shares. 
If any of the Share Issuance Conditions is not satisfied at any time following
the delivery of a Share Issuance Notice and prior to the Interest Payment Date
to which the Share Issuance Notice relates or prior to any Principal Share
Issuance Closing Date in respect of such Share Issuance Notice, the Borrower
shall immediately notify each of the Lenders of such failure and the Borrower
shall not be permitted to issue shares of Common Stock in lieu of the cash
interest owed on such Interest Payment Date and none of the Daily Issuance
Shares otherwise issuable on such Principal Share Issuance Closing Date shall be
considered to have been delivered to the Lenders for any purposes hereunder.

 

8.                                      Failure to Deliver Share Issuance
Shares.  If the Borrower fails on any Interest Payment Date or Principal Share
Issuance Closing Date to cause the delivery of the Interest Payment Shares or
Daily Issuance Shares, as applicable, required to be delivered on that date, and
such failure is not cured within one (1) Trading Day following such Interest
Payment Date or Principal Share Issuance Closing Date (a “Share Delivery
Failure”), the Share Issuance Amount in respect of such Interest Payment Date or
Principal Share Issuance Closing Date, as applicable, shall not be reduced in
respect of such Interest Payment Shares or Daily Issuance Shares until such
shares are actually issued and delivered, and in addition to all other rights
and remedies of the Lenders and the Lenders under this Exhibit, the Agreement
and the other Loan Documents,  the Borrower shall promptly pay to each of the
Lenders, for each day that such Share Delivery Failure occurs or continues, an
amount equal to five percent (5%) of the amount that would have constituted such
Lender’s Credit Amount on such day had such failure not occurred (the “Failure
Amount).

 

9.                                      Borrower Reporting.  The Borrower shall
file with the SEC a Current Report on Form 8-K disclosing its delivery of a
Share Issuance Notice include the amount of principal or interest to which such
Share Issuance Notice relates, no later than 8:35 a.m., New York City time, on
the Trading Day immediately following the date the applicable Share Issuance
Notice is sent by the Borrower.  In addition, if as of the end of the Issuance
Period in respect of any Share Issuance Notice, the Credit Amounts for such
Issuance Period are less than the Share Issuance Amount specified in the Share
Issuance Notice (such shortfall, the “Unsatisfied Principal Amount”), then no
later than 8:35 a.m., New York City time, on the Trading Day immediately
following the expiration of such Issuance Period, the Borrower shall file with
the SEC a Current Report on Form 8-K disclosing the portion of the Share
Issuance Amount that was satisfied through the issuance of Freely Tradeable
Shares, and the Unsatisfied Principal Amount as of the end of the Issuance
Period.

 

27

--------------------------------------------------------------------------------

 

Annex 1 to Exhibit 2.3 - Payment Share Provisions

 

28

--------------------------------------------------------------------------------

 

EXHIBIT A

 

Notes

 

29

--------------------------------------------------------------------------------

 

EXHIBIT B

 

Closing Document Checklist

 

30

--------------------------------------------------------------------------------

 

DEERFIELD / NEOS THERAPEUTICS SECOND AMENDMENT TO FACILITY AGREEMENT

 

CLOSING CHECKLIST

 

Borrower

 

Neos Therapeutics, Inc., a Delaware corporation

 

 

 

Deerfield

 

Deerfield Private Design Fund III, L.P. and Deerfield Special Situations fund,
L.P.

 

 

 

Goodwin

 

Goodwin Procter LLP, Borrower’s counsel

 

 

 

Katten

 

Katten Muchin Rosenman LLP, Deerfield’s counsel

 

 

 

Guarantors

 

Neos Therapeutics Commercial, LLC (DE) (NTC)
Neos Therapeutics Brands, LLC (DE) (NTB)
Neos Therapeutics, LP (TX) (NTLP)
PharmaFab Texas, LLC (TX) (PFT)

 

 

 

Document

 

Responsible
Party

 

Signatures

 

Status

1.

 

Second Amendment to Facility Agreement

 

Katten/Goodwin

 

¨ Borrower

¨ NTC

¨ NTB

¨ NTLP

¨ PFT

¨ Deerfield

 

 

2.

 

Exhibits to Second Amendment to Facility Agreement

 

 

 

N/A

 

 

 

 

Exhibit A—Amended and Restated Note

 

Katten/Goodwin

 

N/A

 

 

 

 

Exhibit B—Closing Checklist

 

Katten/Goodwin

 

N/A

 

 

 

 

Exhibit C—Registration Rights Agreement

 

Katten/Goodwin

 

N/A

 

 

3.

 

Schedules

 

Borrower

 

N/A

 

 

4.

 

Amended and Restated Senior Secured Convertible Notes in favor of each Lender

 

Katten

 

¨ Borrower

 

 

5.

 

Second Amendment Registration Rights Agreement

 

Katten/Goodwin

 

¨ Borrower

¨ Deerfield

 

 

6.

 

Legal Opinion

 

Goodwin

 

¨ Goodwin

 

 

A.

 

CERTIFICATES AND MISCELLANEOUS

7.

 

Secretary’s Certificate of Borrower, attaching the below

 

Goodwin

 

¨ R. Eisenstadt

¨ G. McLaughlin

 

 

 

31

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Document

 

Responsible
Party

 

Signatures

 

Status

 

 

A.         Certificate of Incorporation of Borrower

 

Goodwin

 

N/A

 

 

 

 

B.         Bylaws of Borrower

 

Goodwin

 

N/A

 

 

 

 

C.         Good Standing (DE) of Borrower

 

Goodwin

 

N/A

 

 

 

 

D.         Resolutions

 

Goodwin

 

¨ A. Heller

¨ G. McLaughlin

¨ B. Fong

¨ G. Robitaille

¨ J. Schmid

¨ L. Szyper

¨ B. Hecht

 

 

 

 

E.          Incumbency

 

Goodwin

 

¨ R. Eisenstadt

¨ G. McLaughlin

 

 

 

32

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EXHIBIT C

 

Form of Second Amendment Registration Rights Agreement

 

33

--------------------------------------------------------------------------------

 

Schedule I

 

Lender

 

Principal Amount of Note
at Second Amendment Date

 

Pro Rata Share

 

DEERFIELD PRIVATE DESIGN FUND III, L.P.

 

$

40,000,000

 

66 2/3%

 

DEERFIELD SPECIAL SITUATIONS FUND, L.P.

 

$

20,000,000

 

33 1/3%

 

 

34

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