Exhibit 10.2

Execution Version
 
 
LOAN AND SECURITY AGREEMENT
 
THIS LOAN AND SECURITY AGREEMENT is made and dated as of February 28, 2019 and
is entered into by and among TG THERAPEUTICS, INC., a Delaware corporation (the
“Parent”), TG BIOLOGICS, INC., a Delaware corporation (“TG Bio”; together with
Parent and each of Parent’s Subsidiaries that delivers a Joinder Agreement
pursuant to Section 7.13 of this Agreement, individually and collectively,
jointly and severally, the “Borrower”), the several banks and other financial
institutions or entities from time to time parties to this Agreement
(collectively, referred to as “Lender”) and HERCULES CAPITAL, INC., a Maryland
corporation, in its capacity as administrative agent and collateral agent for
itself and the Lender (in such capacity, the “Agent”).
 
RECITALS
 
A.
Borrower has requested Lender to make available to Borrower a loan in an
aggregate principal amount of up to Sixty Million Dollars ($60,000,000) (the
“Term Loan”); and
 
B.
Lender is willing to make the Term Loan on the terms and conditions set forth in
this Agreement.
 
AGREEMENT
 
NOW, THEREFORE, Borrower, Agent and Lender agree as follows:
 
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION
 
1.1 Unless otherwise defined herein, the following capitalized terms shall have
the following meanings:
 
“Account Control Agreement(s)” means any agreement entered into by and among the
Agent, Borrower and a third party Bank or other institution (including a
Securities Intermediary) in which Borrower maintains a Deposit Account or an
account holding Investment Property and which perfects Agent’s first priority
security interest in the subject account or accounts.
 
“ACH Authorization” means the ACH Debit Authorization Agreement in substantially
the form of Exhibit I, which account numbers shall be redacted for security
purposes if and when filed publicly by the Borrower.
 
“Advance(s)” means a Term Loan Advance.
 
“Advance Date” means the funding date of any Advance.
 
“Advance Request” means a request for an Advance submitted by Borrower to Agent
in substantially the form of Exhibit A, which account numbers shall be redacted
for security purposes if and when filed publicly by the Borrower.
 
“Affiliate” means (a) any Person that directly or indirectly controls, is
controlled by, or is under common control with the Person in question, (b) any
Person directly or indirectly owning, controlling or holding with power to vote
twenty percent (20%) or more of the outstanding voting securities of another
Person, or (c) any Person twenty percent (20%) or more of whose outstanding
voting securities are directly or indirectly owned, controlled or held by
another Person with power to vote such securities. As used in the definition of
“Affiliate,” the term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
 
“Agent” has the meaning assigned to such term in the preamble to this Agreement.
 
“Agreement” means this Loan and Security Agreement, as amended, restated,
amended and restated, supplemented or otherwise modified from time to time.
 
“Amortization Date” means October 1, 2020; provided however, if the Interest
Only Extension Conditions are satisfied, then April 1, 2021.
 
“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to Borrower or any of its Affiliates from time to time
concerning or relating to bribery or corruption, including without limitation
the United States Foreign Corrupt Practices Act of 1977, as amended, the UK
Bribery Act 2010 and other similar legislation in any other jurisdictions.
 
“Anti-Terrorism Laws” means any laws, rules, regulations or orders relating to
terrorism or money laundering, including without limitation Executive Order No.
13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising
or implementing the Bank Secrecy Act, and the laws administered by OFAC.
 
“Ariston” means Ariston Pharmaceuticals, Inc., a Delaware corporation.
 
“Ariston Notes” means those certain 5% Convertible Promissory Notes issued by
Ariston to the holders thereof, in an initial aggregate principal amount
outstanding not in excess of $15,500,000.
 
“Assignee” has the meaning assigned to such term in Section 11.13.
 
“Biologics License Application” means an application for licensure of a
biological product submitted to the FDA under 42 U.S.C. § 262(k) for permission
to introduce, or deliver for introduction, a biologic product into interstate
commerce.
 
“Blocked Person” means any Person: (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order No.
13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.
 
 

 
 
“Borrower Products” means all products, software, service offerings, technical
data or technology currently being designed, manufactured or sold by Borrower or
which Borrower intends to sell, license, or distribute in the future including
any products or service offerings under development, collectively, together with
all products, software, service offerings, technical data or technology that
have been sold, licensed or distributed by Borrower since its incorporation.
 
“Business Day” means any day other than Saturday, Sunday and any other day on
which banking institutions in the State of California are closed for business.
 
“Cash” means all cash, cash equivalents (including Cash Equivalents) and liquid
funds.
 
“Cash Equivalents” means: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one year from the date of acquisition thereof
having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation
or Moody’s Investors Services at the time of acquisition; (b) commercial paper
maturing no more than one year from the date of creation thereof and having a
rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or
Moody’s Investors Service at the time of acquisition; (c) certificates of
deposit issued by any bank with assets of at least $500,000,000 maturing no more
than one year from the date of investment therein; (d) money market accounts;
(e) repurchases of stock from former employees, directors, or consultants of
Borrower under the terms of applicable repurchase agreements at the original
issuance price of such securities in an aggregate amount not to exceed $250,000
in any fiscal year, provided that no Event of Default has occurred, is
continuing or could exist after giving effect to the repurchases; and (f) any
other Investments in cash equivalents as described in Borrower’s investment
policy, as such investment policy has been approved by Agent in writing.
 
“Cash Interest Reduction Amount” has the meaning set forth in Section
2.2(c)(iii).
 
“Change in Control” means any reorganization, recapitalization, consolidation or
merger (or similar transaction or series of related transactions) of Borrower,
sale or exchange of outstanding shares (or similar transaction or series of
related transactions) of Borrower in which the holders of Borrower’s outstanding
shares immediately before consummation of such transaction or series of related
transactions do not, immediately after consummation of such transaction or
series of related transactions, retain shares representing more than fifty
percent (50%) of the voting power of the surviving entity of such transaction or
series of related transactions (or the parent of such surviving entity if such
surviving entity is wholly owned by such parent), in each case without regard to
whether Borrower is the surviving entity.
 
“Claims” has the meaning assigned to such term in Section 11.10.
 
“Closing Date” means the date of this Agreement.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Collateral” means the property described in Section 3.
 
“Confidential Information” has the meaning assigned to such term in Section
11.12.
 
“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
Indebtedness, lease, dividend, letter of credit or other obligation of another,
including any such obligation directly or indirectly guaranteed, endorsed,
co-made or discounted or sold with recourse by that Person, or in respect of
which that Person is otherwise directly or indirectly liable; (ii) any
obligations with respect to undrawn letters of credit, corporate credit cards or
merchant services issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term “Contingent Obligation” shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
 
“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.
 
“Copyrights” means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States of America, any State thereof, or of
any other country.
 
“Default” means any event, circumstance or condition that has occurred or
exists, that could, with the passage of time or the requirement that notice be
given or both, unless cured or waived by Agent in its sole discretion, become an
Event of Default.
 
“Deposit Accounts” means any “deposit accounts,” as such term is defined in the
UCC, and includes any checking account, savings account, or certificate of
deposit.
 
“Disqualified Lender” means any financial institutions, investors or competitors
(and any Affiliates thereof clearly identifiable as such solely on the basis of
the name thereof) designated in writing by Borrower to the Agent on or prior to
the Closing Date; provided that any such modification after the Closing Date to
such list shall be subject to approval at the reasonable discretion of Agent,
and any additional direct competitors of Borrower and its Subsidiaries that are
separately identified in writing by Borrower to the Agent (and made available to
Lender upon request) from time to time; provided that any subsequent designation
of a competitor as a “Disqualified Lender” hereunder shall not retroactively
apply to disqualify any Persons that have acquired an interest in the Loans
prior to the date of such designation; provided further that Disqualified
Lenders shall exclude any Person that Borrower has designated as no longer being
a Disqualified Lender by written notice delivered to the Agent from time to
time. Notwithstanding anything to the contrary contained in this Agreement, (a)
the Agent shall not be responsible or have any liability for, or have any duty
to ascertain, inquire into, monitor or enforce, compliance with the provisions
hereof relating to Disqualified Lenders and (b) each of Borrower and Lender
acknowledge and agree that the Agent shall have no obligation to determine
whether any Lender or potential Lender is a Disqualified Lender and that the
Agent shall have no liability with respect to any assignment or participation
made to a Disqualified Lender.
 
“Domestic Subsidiary” means any Subsidiary that is not a Foreign Subsidiary.
 
“DSMB” means data safety monitoring board.
 
“Due Diligence Fee” means $40,000, which fee has been paid to Lender prior to
the Closing Date, and shall be deemed fully earned on such date regardless of
the early termination of this Agreement.
 
 

 
 
“End of Term Charge” means any end of term charge payable pursuant to Section
2.6.
 
“Equity Interests” means, with respect to any Person, the capital stock,
partnership or limited liability company interests, all warrants, options or
other rights for the purchase or acquisition from such Person of shares of
capital stock, partnership or limited liability company interests or other
equity securities or equity ownership interests of such Person.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.
 
“Event of Default” has the meaning assigned to such term in Section 9.
 
“Excluded Accounts” means any Deposit Accounts, securities accounts or other
similar accounts (i) into which there are deposited no funds other than those
intended solely to cover wages for employees (and related contributions to be
made on behalf of such employees to health and benefit plans) plus balances for
outstanding checks for wages from prior periods provided that the aggregate
amounts deposited in all such accounts shall not exceed the amount reasonably
expected to be due and payable for the next two (2) succeeding pay periods; (ii)
constituting Israel Discount Bank account ending XXX157 into which there are
deposited no funds other than funds constituting cash collateral and not to
exceed $1,500,000 at any time; (iii) into which there are deposited no funds
other than those that are deposited for employee benefits (e.g. health
insurance, flexible spending, retirement savings plans, etc.); (iv) zero balance
accounts; and (v) other Deposit Accounts, securities accounts or similar
accounts maintained in Australia by TG Australia if the amount on deposit and
value in security in such account does not exceed $250,000 in the aggregate at
any time, after the payment of any expenses paid or to be paid within the
then-next thirty (30) days pursuant to invoiced accounts payable, with any
amounts on deposit in such Deposit Accounts, securities accounts or similar
accounts.
 
“Excluded Foreign Subsidiary” means any Foreign Subsidiary and any Subsidiary
directly or indirectly owning any Foreign Subsidiary so long as such
Subsidiary’s sole assets are the shares of such Foreign Subsidiary for which a
guarantee or pledge by such Subsidiary or Subsidiaries would result in a
material adverse tax consequence to Borrower, Parent or such Subsidiary under
Section 956 of the Code, as determined by Borrower in good faith and in
consultation with the Agent and Lenders.
 
“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, withholding
Taxes imposed on amounts payable to or for the account of such Lender with
respect to an applicable interest in a Loan or Term Commitment pursuant to a law
in effect on the date on which (i) such Lender acquires such interest in the
Loan or Term Commitment or (ii) such Lender changes its lending office, except
in each case to the extent that, pursuant to Section 2.9, amounts with respect
to such Taxes were payable either to such Lender’s assignor immediately before
such Lender became a party hereto or to such Lender immediately before it
changed its lending office, (c) Taxes attributable to such Recipient’s failure
to comply with Section 2.9(g) and (d) any 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 successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory
legislation, rules or practices adopted pursuant to any intergovernmental
agreement, treaty or convention among governmental authorities and implementing
such Sections of the Code.
 
“FDA” means the U.S. Food and Drug Administration or any successor thereto or
any other comparable Governmental Authority.
 
“Financial Statements” has the meaning assigned to such term in Section 7.1.
 
“Foreign Lender” means any Lender that is not a U.S. Person.
 
“Foreign Subsidiary” means any Subsidiary other than a Subsidiary organized
under the laws of any state within the United States of America.
 
“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time.
 
“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services (excluding trade credit entered into in
the ordinary course of business due within one hundred and twenty (120) days or
being contested, challenged or discussed in good faith), including reimbursement
and other obligations with respect to surety bonds and letters of credit, (b)
all obligations evidenced by notes, bonds, debentures or similar instruments,
(c) all capital lease obligations, (d) equity securities of any Person subject
to repurchase or redemption other than at the sole option of such Person, (e)
“earnouts,” purchase price adjustments, profit sharing arrangements, deferred
purchase money amounts and similar payment obligations or continuing obligations
of any nature arising out of purchase and sale contracts, in each case that in
accordance with GAAP would be shown on the liabilities side of the balance sheet
of such Person, (f) obligations arising under bonus, deferred compensation,
incentive compensation or similar arrangements (other than those arising in the
ordinary course of business), (g) non-contingent obligations to reimburse any
bank or Person in respect of amounts paid under a letter of credit, banker’s
acceptance or similar instrument, and (h) all Contingent Obligations (other than
for the avoidance of doubt, any Contingent Obligations of the nature set forth
in clause (e) above).
 
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of the
Borrower under any Loan Document and (b) to the extent not otherwise described
in clause (a), Other Taxes.
 
“Initial Facility Charge” means a fee payable to Agent in an amount equal to
Five Hundred Thousand Dollars ($500,000), fully earned and due and payable on
the Closing Date.
 
“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
 
“Intellectual Property” means all of Borrower’s Copyrights; Trademarks; Patents;
Licenses; trade secrets and inventions; mask works; Borrower’s applications
therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill
associated with any of the foregoing, together with Borrower’s rights to sue for
past, present and future infringement of Intellectual Property and the goodwill
associated therewith.
 
“Intercompany Subordination Agreement” means that certain Omnibus Intercompany
Subordination Agreement, dated as of the date hereof, by and among Agent,
Borrower, and each of Borrower’s Subsidiaries, as amended, amended and restated,
supplemented or otherwise modified from time to time.
 
 

 
 
“Interest Only Extension Conditions” means satisfaction of each of the following
events: (a) no Default or Event of Default shall have occurred; and (b) on or
before September 30, 2020, Borrower achieves either Performance Milestone III or
Performance Milestone IV.
 
“Investment” means any beneficial ownership (including stock, partnership or
limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person or the acquisition of all or substantially
all of the assets of another Person.
 
“IRS” means the United States Internal Revenue Service.
 
“Joinder Agreements” means for each Subsidiary formed or acquired after the
Closing Date in accordance with Section 7.13, a completed and executed Joinder
Agreement in substantially the form attached hereto as Exhibit G.
 
“Lender” has the meaning assigned to such term in the preamble to this
Agreement.
 
“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests.
 
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest.
 
“Loan” means the Advances made under this Agreement.
 
“Loan Documents” means this Agreement, the Notes (if any), the ACH
Authorization, the Account Control Agreements, the Joinder Agreements, all UCC
Financing Statements, the Warrant, the Pledge Agreement and any other documents
executed in connection with the Secured Obligations or the transactions
contemplated hereby, as the same may from time to time be amended, restated,
amended and restated, supplemented or otherwise modified.
 
“Material Adverse Effect” means a material adverse effect upon: (i) the
business, operations, properties, assets or financial condition of Borrower and
its Subsidiaries taken as a whole; or (ii) the ability of Borrower taken as a
whole to perform or pay the Secured Obligations in accordance with the terms of
the Loan Documents, or the ability of Agent or Lender to enforce any of its
rights or remedies with respect to the Secured Obligations; or (iii) the
Collateral or Agent’s Liens on the Collateral or the priority of such Liens.
 
“Maximum Term Loan Amount” means Sixty Million and No/100 Dollars ($60,000,000).
 
“Maximum Rate” has the meaning assigned to such term in Section 2.3.
 
“MZL” means marginal zone lymphoma.
 
“New Drug Application” means a new drug application in the United States for
authorization to market a product, as defined in the applicable laws and
regulations and submitted to the FDA.
 
“Non-Disclosure Agreement” means that certain Non-Disclosure Agreement by and
between Hercules Capital, Inc. and TG Therapeutics, Inc. dated as of January 24,
2019.
 
“Note(s)” means a Term Note.
 
“OFAC” means the U.S. Department of Treasury Office of Foreign Assets Control.
 
“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed.
Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.
 
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).
 
“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment.
 
“Parent” has the meaning assigned to such term in the preamble to this
Agreement.
 
“Patent License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence or a Patent application is
pending, in which agreement Borrower now holds or hereafter acquires any
interest.
 
“Patents” means all letters patent of, or rights corresponding thereto, in the
United States of America or in any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights
corresponding thereto, in the United States of America or any other country.
 

“Performance Milestone I” means satisfaction of each of the following events:
(a) no Default or Event of Default shall have occurred and be continuing; and
(b) Borrower has announced efficacy data (including overall response rate as
assessed by an independent review committee) from the full Stage 1 cohort of
patients with MZL through six-months follow-up in the Phase 2b UNITY-NHL trial
of umbralisib (clinical trial protocol UTX-TGR-205 and ClinicalTrials.gov
identifier NCT02793583) that supports the submission of a New Drug Application
to the FDA under an FDA “accelerated approval” pathway, as such pathway is set
forth in 21 C.F.R. § 314 Subpart H, and with umbralisib demonstrating an
acceptable safety/tolerability profile such that Borrower’s executive officers
have approved proceeding towards the filing of a New Drug Application, in each
case subject to reasonable verification by Agent (including supporting
documentation reasonably requested by Agent).
 
 

 
 
“Performance Milestone II” means satisfaction of each of the following events:
(a) no Default or Event of Default shall have occurred and be continuing; and
(b) Borrower has announced that the Phase 3 UNITY-CLL trial (clinical trial
protocol UTX-TGR-304 and ClincalTrials.gov identifier NCT02612311) has achieved
the protocol-specified primary efficacy endpoint of a statistically significant
improvement in progression-free survival and with the combination of ublituximab
and umbralisib demonstrating an acceptable safety profile (including no
significantly detrimental mortality or overall survival trends unfavorable to
the combination of ublituximab and umbralisib study arm), which together is
sufficient to file a New Drug Application and a Biologics License Application
with the FDA for the combination of ublituximab and umbralisib for the treatment
of chronic lymphocytic leukemia, in each case subject to reasonable verification
by Agent (including supporting documentation reasonably requested by Agent).
 
“Performance Milestone III” means satisfaction of each of the following events:
(a) no Default or Event of Default shall have occurred and be continuing; and
(b) Borrower shall have achieved Performance Milestone II, subject to reasonable
verification by Agent (including supporting documentation reasonably requested
by Agent) and (c) the FDA shall have accepted for filing the New Drug
Application for umbralisib for the treatment of MZL, subject to in each case
reasonable verification by Agent (including supporting documentation reasonably
requested by Agent).
 
“Performance Milestone IV” means satisfaction of each of the following events:
(a) no Default or Event of Default shall have occurred and be continuing; and
(b) Parent has raised at least an amount equal to One Hundred Fifty Million
Dollars ($150,000,000.00) in unrestricted (including, not subject to any
redemption, clawback, escrow or similar encumbrance or restriction other than in
the case the Permitted Convertible Debt Financing) net cash proceeds from one or
more bona fide equity financings, Subordinated Indebtedness (which, for the
avoidance of doubt, may include the net proceeds received from any Permitted
Convertible Debt Financing) and/or upfront proceeds from business development
transactions permitted under this Agreement, in each case after February 7,
2019, and prior to September 30, 2020, in each case subject to verification by
Agent (including supporting documentation requested by Agent).
 
“Permitted Acquisition” shall mean any acquisition (including by way of merger)
by Borrower of all or substantially all of the assets of another Person, or of a
division or line of business of another Person, or capital stock of another
Person, in each case located entirely within the United States of America or
other such jurisdiction as approved by Agent in its reasonable discretion, which
is conducted in accordance with the following requirements:
 
(a) such acquisition is of a business or Person engaged in a line of business
related to that of the Borrower or its Subsidiaries;
 
(b) if such acquisition is structured as a stock acquisition, then the Person so
acquired shall either (i) become a wholly-owned Subsidiary of Borrower or of a
Subsidiary and the Borrower shall comply, or cause such Subsidiary to comply,
with 7.13 hereof or (ii) such Person shall be merged with and into Borrower
(with the Borrower being the surviving entity);
 
(c) if such acquisition is structured as the acquisition of assets, such assets
shall be acquired by Borrower, and shall be free and clear of Liens other than
Permitted Liens;
 
(d) the Borrower shall have delivered to Lender not less than ten (10) nor more
than forty-five (45) days prior to the date of such acquisition, notice of such
acquisition together with pro forma projected financial information, copies of
all material documents relating to such acquisition, and historical financial
statements for such acquired entity, division or line of business, in each case
in form and substance reasonably satisfactory to Lender and demonstrating
compliance with the covenants set forth in Section 7.21 hereof on a pro forma
basis as if the acquisition occurred on the first day of the most recent
measurement period;
 
(e) both immediately before and after such acquisition no Default or Event of
Default shall have occurred and be continuing;
 
(f) the sum of the cash portion of the purchase price of such proposed new
acquisition, computed on the basis of total acquisition consideration paid or
incurred, or to be paid or incurred, by Borrower with respect thereto, including
the amount of Permitted Indebtedness assumed or to which such assets, businesses
or business or ownership interest or shares, or any Person so acquired, is
subject (excluding Indebtedness comprised of performance-based milestones,
earnouts, or royalties that qualify as Indebtedness pursuant to clause (e) or
(h) of the definition of Indebtedness so long as no payments with respect to
such Indebtedness are paid or scheduled to be paid prior to the Term Loan
Maturity Date), shall not be greater than One Million Five Hundred Thousand
Dollars ($1,500,000) for all such acquisitions during the term of this
Agreement; and
 
(g) the sum of any consideration for all such acquisitions paid in Equity
Interests of Borrower shall not exceed One Million Five Hundred Thousand Dollars
($1,500,000) for all such acquisitions during the term of this Agreement.
 
“Permitted Convertible Debt Financing” means issuance by Parent of convertible
notes in an aggregate principal amount of not more than One Hundred Fifty
Million Dollars ($150,000,000); provided that such convertible notes shall (a)
have a scheduled maturity date no earlier than one hundred eighty (180) days
after the Term Loan Maturity Date, (b) be unsecured, (c) not be guaranteed by
any Subsidiary of Parent that is not a Borrower, (d) contain usual and customary
subordination terms for underwritten offerings of senior subordinated
convertible notes and (e) shall specifically designate this Agreement and all
Secured Obligations as “designated senior indebtedness” or similar term so that
the subordination terms referred to in clause (d) of this definition
specifically refer to such notes as being subordinated to the Secured
Obligations pursuant to such subordination terms.
 
“Permitted Indebtedness” means: (i) Indebtedness of Borrower in favor of Lender
or Agent arising under this Agreement or any other Loan Document; (ii)
Indebtedness existing on the Closing Date which is disclosed in Schedule 1A;
(iii) Indebtedness of up to $250,000 outstanding at any time secured by a Lien
described in clause (vii) of the defined term “Permitted Liens,” provided such
Indebtedness does not exceed the cost of the Equipment or the software or the
intellectual property financed with such Indebtedness; (iv) Indebtedness to
trade creditors incurred in the ordinary course of business, including vendor
financing, the deferred purchase price for goods and services rendered under
contract manufacturing and/or licensing arrangements, in each case in the
ordinary course of business, or Indebtedness incurred in the ordinary course of
business with corporate credit cards; (v) Indebtedness that also constitutes a
Permitted Investment; (vi) Subordinated Indebtedness; (vii) reimbursement
obligations in connection with letters of credit that are secured by Cash and
issued on behalf of the Borrower or a Subsidiary thereof in an amount not to
exceed $200,000 at any time outstanding; (viii) other unsecured Indebtedness in
an amount not to exceed $500,000 at any time outstanding; (ix) intercompany
Indebtedness subject to the Intercompany Subordination Agreement; (x) Permitted
Convertible Debt Financing; (xi) Indebtedness owed to any Person (including
obligations in respect of letters of credit for the benefit of such Person)
providing workers’ compensation, health, disability or other employee benefits
or property, casualty, liability insurance, self-insurance, pursuant to
reimbursement or indemnification obligations to such Person, in each case
incurred in the ordinary course of business, not to exceed $100,000 at any time
outstanding; (xii) Indebtedness in respect of or guarantee of performance bonds,
bid bonds, appeal bonds, surety bonds, performance and completion guarantees,
workers’ compensation claims, letters of credit, bank guarantees and banker’s
acceptances, warehouse receipts or similar instruments and similar obligations
(other than in respect of other Indebtedness for borrowed money) including those
incurred to secure health, safety and environmental obligations, in each case
provided in the ordinary course of business, not to exceed $100,000 at any time
outstanding; (xiii) Indebtedness consisting of the financing of insurance
premiums in an aggregate amount not exceeding $750,000 at any time outstanding;
(xiv) endorsement of instruments or other payment items for deposit in the
ordinary course of business and Indebtedness arising from the honoring by a bank
or other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business; (xv) Contingent Obligations in respect of Indebtedness otherwise
constituting Permitted Indebtedness; (xvi) any Indebtedness assumed or acquired
in accordance with clause (f) of the definition of Permitted Acquisition; and
(xvii) extensions, refinancings and renewals of any items of Permitted
Indebtedness, provided that the principal amount is not increased (except by an
amount equal to the lesser of (A) the existing unutilized commitments
thereunder, accrued but unpaid interest thereon and a reasonable premium paid,
and fees and expenses reasonably incurred, in connection with such extension,
refinancing or renewal (including any fees and original issue discount incurred
in respect of such resulting Indebtedness) and (B) five percent (5%) of such
principal amount) or the terms modified to impose materially more burdensome
terms upon Borrower or its Subsidiary, as the case may be.
 
 

 
 
“Permitted Investment” means: (i) Investments existing on the Closing Date which
are disclosed in Schedule 1B; (ii) Cash Equivalents; (iii) to the extent
constituting Investments, any transactions permitted pursuant to Section 7.7 or
Section 7.9; (iv) Investments accepted in connection with Permitted Transfers;
(v) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of Borrower’s business; (vi) Investments
consisting of notes receivable of, or prepaid royalties and other credit
extensions, to customers and suppliers who are not Affiliates, in the ordinary
course of business, provided that this subparagraph (vi) shall not apply to
Investments of Borrower in any Subsidiary; (vii) Investments consisting of loans
not involving the net transfer on a substantially contemporaneous basis of cash
proceeds to employees, officers or directors relating to the purchase of capital
stock of Borrower pursuant to employee stock purchase plans or other similar
agreements approved by Borrower’s Board of Directors; (viii) Investments
consisting of travel advances in the ordinary course of business; (ix)
Investments in newly-formed Domestic Subsidiaries, provided that each such
Subsidiary enters into a Joinder Agreement promptly after its formation by
Borrower and execute such other documents as shall be reasonably requested by
Agent; (x) Investments in Foreign Subsidiaries approved in advance in writing by
Agent; (xi) joint ventures, strategic alliances, collaboration arrangements or
non-exclusive licensing arrangements in the ordinary course of Borrower’s
business consisting of the nonexclusive licensing of technology, the development
of technology or the providing of technical support, provided that any cash
Investments by Borrower do not exceed $500,000 in the aggregate in any fiscal
year; (xii) Permitted Acquisitions; (xiii) Investments between and among
Borrowers; (xiv) Investments by any Borrower in TG Australia; provided that
prior to and immediately after giving effect to each such Investment, Borrower
is in compliance with Section 7.14 and such Investments are used solely to fund
research and development activities of TG Australia; (xv) Investments made by
any Subsidiary that is not a Borrower in any Borrower; (xvi) Investments of any
Person existing at the time such Person becomes a Subsidiary or consolidates,
amalgamates or merges with any Borrower or any Subsidiary; provided that such
Investment otherwise qualifies as a Permitted Investment and was not made in
contemplation of such Person becoming a Subsidiary or such consolidation or
merger; (xvii) loans or advances to officers, partners, directors, consultants
and employees of any Borrower or any Subsidiary for relocation, entertainment,
travel expenses, or similar expenditures in an aggregate amount not to exceed
$100,000 at any time outstanding; and (xviii) additional Investments (including
Investments in connection with in-licensing transactions) that do not exceed an
aggregate amount equal to One Million Five Hundred Thousand Dollars ($1,500,000)
minus the aggregate amount of all consideration paid for Permitted Acquisitions
pursuant to clause (f) of the definition of Permitted Acquisition and (xix)
other Investments described in Borrower’s investment policy, as such investment
policy has been approved by Agent in writing.
 
“Permitted Liens” means any and all of the following: (i) Liens in favor of
Agent or Lender; (ii) Liens existing on the Closing Date which are disclosed in
Schedule 1C; (iii) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or not overdue by more than 30 days or
being contested in good faith by appropriate proceedings; provided, that
Borrower maintains adequate reserves therefor in accordance with GAAP;
(iv) Liens securing claims or demands of materialmen, artisans, mechanics,
carriers, warehousemen, landlords and other like Persons arising in the ordinary
course of Borrower’s business and imposed by law or without action of such
parties; provided, that the payment thereof is either not yet required or not
overdue by more than 30 days or being contested in good faith by appropriate
proceedings; (v) Liens arising from judgments, decrees or attachments in
circumstances which do not constitute an Event of Default hereunder; (vi) the
following deposits, to the extent made in the ordinary course of business:
deposits under worker’s compensation, unemployment insurance, social security
and other similar laws, or to secure the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than Liens arising under ERISA or
environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds; (vii) Liens on Equipment or software or
other intellectual property constituting purchase money Liens and Liens in
connection with capital leases securing Indebtedness permitted by clause (iii)
of the definition of Permitted Indebtedness; (viii) Liens incurred in connection
with Subordinated Indebtedness; (ix) leasehold interests in leases or subleases;
(x) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of custom duties that are promptly paid on or before the date
they become due; (xi) Liens on insurance proceeds securing the payment of
financed insurance premiums that are promptly paid on or before the date they
become due (provided that such Liens extend only to such insurance proceeds and
not to any other property or assets); (xii) statutory and common law rights of
set-off and other similar rights as to deposits of cash and securities in favor
of banks, other depository institutions and brokerage firms; (xiii) easements,
zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by law or arising in the ordinary course of business so long as they do
not materially impair the value or marketability of the related property; (xiv)
(A) Liens on Cash or Cash Equivalents securing obligations permitted under
clause (vii) of the definition of Permitted Indebtedness and (B) security
deposits in connection with real property leases, the combination of (A) and (B)
in an aggregate amount not to exceed $500,000 at any time; (xv) any Lien
existing on any property or asset prior to the acquisition thereof by the
Borrower or any Subsidiary or existing on any property or asset of any Person
that became or becomes a Subsidiary after the Closing Date prior to the time
such Person became or becomes a Subsidiary, in each case as contemplated by the
definition of Permitted Acquisition and solely to the extent otherwise
constituting Permitted Liens; (xvi) Liens (of a collecting bank arising in the
ordinary course of business under Section 4-208 or Section 4-210, as applicable,
of the Uniform Commercial Code in effect in the relevant jurisdiction covering
only the items being collected upon; (xvii) the filing of Uniform Commercial
Code (or equivalent) financing statements solely as a precautionary measure in
connection with operating leases provided that such Liens and collateral
descriptions in such financing statements be limited to such specific operating
leases and not all assets or substantially all assets of any Borrower or
Subsidiary; (xviii) licenses or sublicenses permitted hereunder; and (xix) Liens
incurred in connection with the extension, renewal or refinancing of the
Indebtedness secured by Liens of the type described in clauses (i) through
(xviii) above; provided, that any extension, renewal or replacement Lien shall
be limited to the property encumbered by the existing Lien and the principal
amount of the Indebtedness being extended, renewed or refinanced (as may have
been reduced by any payment thereon) does not increase, except for the lesser of
(A) an amount equal to any accrued but unpaid interest (including any portion
thereof which is payable in kind in accordance with the terms of such extended,
renewed or replaced Indebtedness) and premium payable by the terms of such
obligations thereon and reasonable fees and expenses associated therewith and
(B) five percent (5%) of such principal amount.
 
“Permitted Transfers” means (i) sales of Inventory in the ordinary course of
business; (ii) non-exclusive licenses and similar arrangements for the use of
Intellectual Property in the ordinary course of business (including in the
context of joint ventures, strategic alliances, collaboration arrangements or
licensing arrangements) and licenses that could not result in a legal transfer
of title of the licensed property but that may be exclusive in respects other
than territory and that may be exclusive as to territory only as to discreet
geographical areas outside of the United States of America in the ordinary
course of business; (iii) dispositions of worn-out, obsolete or surplus
Equipment at fair market value in the ordinary course of business; (iv) other
Transfers of assets having a fair market value of not more than $250,000 in the
aggregate in any fiscal year; (v) any issuance or sale by Borrower or any
Subsidiary of its Equity Interests or other securities, in each case to the
extent otherwise permitted pursuant to this Agreement; (vi) sales, transfers,
leases and other dispositions of property to the extent that such property
constitutes an Investment that is a Permitted Investment; (vii) sales,
transfers, leases and other dispositions of property to any Borrower; (viii)
leases or licenses or subleases or sublicenses entered into in the ordinary
course of business (other than in respect of Intellectual Property), in each
case, in connection with real property; (ix) any distributions, dividends,
repurchases or redemptions permitted pursuant to Section 7.7; (x) converting any
Indebtedness to equity interests; and (xi) transfers of Cash pursuant to
transactions not prohibited herein and in the ordinary course of business.
 
“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.
 
“PIK Deferral Period” has the meaning set forth in 2.2(c)(iii).
 
“Pledge Agreement” means the Pledge Agreement dated as of the Closing Date
between Borrower and Agent, as the same may from time to time be amended,
restated, amended and restated, supplemented or otherwise modified.
 
“Prepayment Charge” has the meaning assigned to such term in Section 2.5.
 
 

 
 
 “Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents,
Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter
of credit, and Letter of Credit Rights, and (ii) all customer lists, software,
and business records related thereto.
 
“Recipient” means (a) the Agent, or (b) any Lender.
 
“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective partners, directors, officers, employees,
trustees, agents and advisors of such Person and such Person’s Affiliates.
 
“Required Lenders” means at any time, the holders of more than 50% of the sum of
the aggregate unpaid principal amount of the Term Loans then outstanding.
 
“Restricted License” is any material License or other agreement with respect to
which Borrower is the licensee (a) that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower’s interest in such
License or agreement or any other property, or (b) for which a default under or
termination of could interfere with the Agent’s right to sell any Collateral.
 
“Sanctioned Country” means, at any time, a country or territory which is the
subject or target of any Sanctions.
 
“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury or the U.S. Department of
State, or by the United Nations Security Council, the European Union or any EU
member state, (b) any Person operating, organized or resident in a Sanctioned
Country or (c) any Person controlled by any such Person.
 
“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including
those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State, or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.
 
“SBA” has the meaning assigned to such term in Section 7.16.
 
“SBIC” has the meaning assigned to such term in Section 7.16.
 
“SBIC Act” has the meaning assigned to such term in Section 7.16.
 
“SEC” means the Securities and Exchange Commission.
 
“Secured Obligations” means Borrower’s obligations under this Agreement and any
Loan Document (other than the Warrant), including any obligation to pay any
amount now owing or later arising.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Subordinated Indebtedness” means Indebtedness subordinated to the Secured
Obligations in amounts and on terms and conditions satisfactory to Agent in its
sole discretion and subject to a subordination agreement in form and substance
satisfactory to Agent in its sole discretion.
 
“Subsequent Financing” means the closing of any Borrower financing which becomes
effective after the Closing Date.
 
“Subsidiary” means an entity, whether corporate, partnership, limited liability
company, joint venture or otherwise, in which Borrower owns or controls 50% or
more of the outstanding voting securities, including each entity listed on
Schedule 1 hereto. Unless otherwise specifically set forth herein, reference to
a Subsidiary shall be deemed to be a reference to a Subsidiary of Parent.
 
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any governmental authority responsible for the assessment and
collection of taxes, including any interest, additions to tax or penalties
applicable thereto.
 
“Term Commitment” means as to any Lender, the obligation of such Lender, if any,
to make a Term Loan Advance to the Borrower in a principal amount not to exceed
the amount set forth under the heading “Term Commitment” opposite such Lender’s
name on Schedule 1.1.
 
“Term Loan Advance” means each Tranche 1 Advance, Tranche 2 Advance, Tranche 3
Advance, Tranche 4 Advance and any other Term Loan funds advanced under this
Agreement.
 
“Term Loan Cash Interest Rate” means, for any day a per annum rate of interest
equal to the greater of either (i) the “prime rate” as reported in The Wall
Street Journal plus 4.75%, and (ii) 10.25%; provided that the Term Loan Cash
Interest Rate may be reduced from time to time in accordance with Section
2.2(c)(iii).
 
“Term Loan PIK Interest” has the meaning set forth in Section 2.2(c)(ii).
 
“Term Loan PIK Interest Rate” means, for any day a per annum rate of interest
equal to (a) during any PIK Deferral Period, the Cash Interest Reduction Amount,
multiplied by 1.2, and (b) otherwise, 0.00%.
 
“Term Loan Maturity Date” means March 1, 2022.
 
“Term Note” means a Promissory Note in substantially the form of Exhibit B.
 
“TG Australia” means TG Therapeutics AUS Pty Ltd, a proprietary limited company
organized under the laws of Australia.
 
“TG Bio” has the meaning assigned to such term in the preamble to this
Agreement.
 
“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.
 
 

 
 
“Trademarks” means all trademarks (registered, common law or otherwise) and any
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States of America, any State thereof or any other
country or any political subdivision thereof.
 
“Tranche 1 Advance” has the meaning assigned to such term in Section 2.2(a).
 
“Tranche 2 Advance” has the meaning assigned to such term in Section 2.2(a).
 
“Tranche 3 Advance” has the meaning assigned to such term in Section 2.2(a).
 
“Tranche 4 Advance” has the meaning assigned to such term in Section 2.2(a).
 
“Tranche 4 Facility Charge” means one percent (1.0%) of the aggregate Tranche 4
Advances, which is payable to Lender in accordance with Section 4.2(d).
 
“UCC” means the Uniform Commercial Code as the same is, from time to time, in
effect in the State of California; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent’s Lien on any Collateral is
governed by the Uniform Commercial Code as the same is, from time to time, in
effect in a jurisdiction other than the State of California, then the term “UCC”
shall mean the Uniform Commercial Code as in effect, from time to time, in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.
 
“Unrestricted Cash” means unrestricted Cash held by Borrower in account(s)
subject to an Account Control Agreement in favor of Agent.
 
“U.S. Person” means any Person that is a “United States person” as defined in
Section 7701(a)(30) of the Code.
 
“Warrant” means any warrant entered into in connection with the Loan, as may be
amended, restated, amended and restated, supplemented or otherwise modified from
time to time.
 
“Withholding Agent” means the Borrower and the Agent.
 
Unless otherwise specified, all references in this Agreement or any Annex or
Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule”
shall refer to the corresponding Section, subsection, Exhibit, Annex, or
Schedule in or to this Agreement. Unless otherwise specifically provided herein,
any accounting term used in this Agreement or the other Loan Documents shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP,
consistently applied. Unless otherwise defined herein or in the other Loan
Documents, terms that are used herein or in the other Loan Documents and defined
in the UCC shall have the meanings given to them in the UCC. For all purposes
under the Loan Documents, in connection with any division or plan of division
under Delaware law (or any comparable event under a different jurisdiction’s
laws): (a) if any asset, right, obligation or liability of any Person becomes
the asset, right, obligation or liability of a different Person, then it shall
be deemed to have been transferred from the original Person to the subsequent
Person and (b) if any new Person comes into existence, such new Person shall be
deemed to have been organized on the first date of its existence by the holders
of its Equity Interests at such time.
 
SECTION 2. THE LOAN
 
2.1 [Reserved.]
 
2.2 Term Loan.
 
(a)    Advances. Subject to the terms and conditions of this Agreement, Lender
will severally (and not jointly) make in an amount not to exceed its respective
Term Commitment, and Borrower agrees to draw, a Term Loan Advance of Thirty
Million Dollars ($30,000,000) on the Closing Date (the “Tranche 1 Advance”).
Subject to the terms and conditions of this Agreement, beginning on the date
Borrower achieves Performance Milestone II and continuing through June 30, 2020,
Borrower may request and Lender shall make an additional Term Loan Advance in a
principal amount of Ten Million Dollars ($10,000,000) (the “Tranche 2 Advance”).
Subject to the terms and conditions of this Agreement, beginning on the date
Borrower achieves Performance Milestone III and continuing through June 30,
2020, Borrower may request and Lender shall make an additional Term Loan Advance
in an aggregate principal amount of up to Ten Million Dollars ($10,000,000) (the
“Tranche 3 Advance”). Subject to the terms and conditions of this Agreement, and
conditioned on approval by Lenders’ investment committee in its sole discretion,
on or before December 15, 2020, Borrower may request additional Term Loan
Advances in an aggregate principal amount of up to Ten Million Dollars
($10,000,000), in minimum increments of $5,000,000 (each, a “Tranche 4
Advance”). The aggregate outstanding Term Loan Advances may be up to but shall
not exceed the Maximum Term Loan Amount plus, for the avoidance of doubt, any
amount equal to the Term Loan PIK Interest added to principal pursuant to
Section 2.2(c)(ii).
 
(b) Advance Request. To obtain a Term Loan Advance, Borrower shall complete,
sign and deliver an Advance Request at least three (3) Business Days before the
proposed Advance Date (other than the Tranche 1 Advance to be made on the
Closing Date, for which Borrower shall complete, sign and deliver an Advance
Request at least one (1) Business Day prior to the Closing Date) to Agent.
Lender shall fund the Term Loan Advance in the manner requested by the Advance
Request provided that each of the conditions precedent to such Term Loan Advance
is satisfied as of the requested Advance Date.
 
(c) Interest.
 
(i) Term Loan Cash Interest Rate. In addition to interest accrued pursuant to
the Term Loan PIK Interest Rate, the principal balance (including, for the
avoidance of doubt, any amount equal to the Term Loan PIK Interest added to
principal pursuant to Section 2.2(c)(ii)) of each Term Loan Advance shall bear
interest thereon from such Advance Date (or from the date such amount equal to
the Term Loan PIK Interest is added to the principal) at the Term Loan Cash
Interest Rate (as such rate may be reduced for a given PIK Deferral Period in an
amount equal to the applicable Cash Interest Reduction Amount pursuant to
Section 2.2(c)(iii)) based on a year consisting of 360 days, with interest
computed daily based on the actual number of days elapsed. The Term Loan Cash
Interest Rate will float and change on the day the “prime rate” as reported in
the Wall Street Journal changes from time to time.
 
(ii) Term Loan PIK Interest Rate. In addition to interest accrued pursuant to
the Term Loan Cash Interest Rate, to the extent Parent has initiated a PIK
Deferral Period, the principal balance of each Term Loan Advance shall bear
interest thereon from such Advance Date at the Term Loan PIK Interest Rate based
on a year consisting of 360 days, with interest computed daily based on the
actual number of days elapsed (the “Term Loan PIK Interest”), which amount shall
be added to the outstanding principal balance and so capitalized so as to
increase the outstanding principal balance of such Term Loan Advance on each
payment date for such Advance and which amount shall be payable when the
principal amount of the applicable Advance is payable in accordance with Section
2.2(d).
 
 

 
 
(iii) Parent may elect, by prior written notice to Agent either: (a) prior to an
Advance Date, or (b) at least five (5) Business Days prior to the first Business
Day of a month, to reduce the then effective per annum Term Loan Cash Interest
Rate applicable to the Term Loan Advances, by up to 1.50% (the amount of such
reduction, the “Cash Interest Reduction Amount”) for a period specified in such
notice, provided that such period shall begin on the first (1st) Business Day of
the next month and shall end on the last day of the third (3rd) month or any
subsequent month thereafter (the “PIK Deferral Period”), provided that after the
expiration of any PIK Deferral Period, the reduction to the Term Loan Cash
Interest Rate by an amount equal to the Cash Interest Reduction Amount shall
cease to apply. If during a PIK Deferral Period, Parent desires to terminate
such PIK Deferral Period prior to the previously requested end date of such PIK
Deferral Period, Parent may by written notice to Agent at least five (5)
Business Days prior to the previously scheduled end date of such PIK Deferral
Period, elect an earlier end date (which must be the last day of a month that is
no earlier than the last day of the third (3rd) month after the commencement of
such PIK Deferral Period). If during a PIK Deferral Period, Parent desires to
change the Cash Interest Reduction Amount, Parent may by written notice to Agent
at least five (5) Business Days prior to the first (1st) Business Day of the
month when such change is to take effect, elect a different Cash Interest
Reduction Amount, provided that the Cash Interest Reduction Amount shall not be
changed more frequently than once during any consecutive three (3) month period.
 
(d) Payment. Borrower will pay interest on the Term Loan Advance on the first
(1st) Business Day of each month, beginning on the first (1st) Business Day of
the month after the Advance Date continuing until the Amortization Date.
Borrower shall repay the principal balance of the Term Loan Advance that is
outstanding as of the day immediately preceding the Amortization Date, in equal
monthly installments of principal and interest beginning on the Amortization
Date and continuing on the first (1st) Business Day of each month thereafter
until the Secured Obligations are repaid; provided, that if the Term Loan Cash
Interest Rate is adjusted in accordance with its terms, or the Amortization Date
or the Maturity Date is extended, or a PIK Deferral Period becomes effective,
the amount of each subsequent monthly installment shall be recalculated so that
the remaining payments shall be equal monthly installments of principal and
interest beginning on the first (1st) Business Day of the month following such
recalculation and continuing on the first (1st) Business Day of each month
thereafter until the Secured Obligations are repaid in full. The entire
remaining principal balance of the Term Loan Advance and all accrued but unpaid
interest hereunder, shall be due and payable on the Term Loan Maturity Date.
Borrower shall make all payments under this Agreement without setoff, recoupment
or deduction and regardless of any counterclaim or defense. Lender will initiate
debit entries to the Borrower’s account as authorized on the ACH Authorization
(i) on each payment date of all periodic obligations payable to Lender with
respect to the Term Loan Advance and (ii) out-of-pocket legal fees and costs
incurred by Agent or Lender in connection with Section 11.11 of this Agreement;
provided that, with respect to clause (i) above, in the event that Lender or
Agent informs Borrower that Lender will not initiate a debit entry to such
Borrower’s account for a certain amount of the periodic obligations due on a
specific payment date, Borrower shall pay to Lender such amount of periodic
obligations in full in immediately available funds on such payment date;
provided, further, that, with respect to clause (i) above, if Lender or Agent
informs Borrower that Lender will not initiate a debit entry as described above
later than the date that is three (3) Business Days prior to such payment date,
Borrower shall pay to Lender such amount of periodic obligations in full in
immediately available funds on the date that is three (3) Business Days after
the date on which Lender or Agent notifies Borrower thereof; provided, further,
that, with respect to clause (ii) above, in the event that Lender or Agent
informs Borrower that Lender will not initiate a debit entry to a Borrower’s
account for specified out-of-pocket legal fees and costs incurred by Agent or
Lender, Borrower shall pay to Lender such amount in full in immediately
available funds within three (3) Business Days.
 
2.3 Maximum Interest. Notwithstanding any provision in this Agreement or any
other Loan Document, it is the parties’ intent not to contract for, charge or
receive interest at a rate that is greater than the maximum rate permissible by
law that a court of competent jurisdiction shall deem applicable hereto (which
under the laws of the State of California shall be deemed to be the laws
relating to permissible rates of interest on commercial loans) (the “Maximum
Rate”). If a court of competent jurisdiction shall finally determine that
Borrower has actually paid to Lender an amount of interest in excess of the
amount that would have been payable if all of the Secured Obligations had at all
times borne interest at the Maximum Rate, then such excess interest actually
paid by Borrower shall be applied as follows: first, to the payment of the
Secured Obligations consisting of the outstanding principal; second, after all
principal is repaid, to the payment of Lender’s accrued interest, costs,
expenses, professional fees and any other Secured Obligations; and third, after
all Secured Obligations are repaid, the excess (if any) shall be refunded to
Borrower.
 
2.4 Default Interest. In the event any payment is not paid on the scheduled
payment date, an amount equal to four percent (4%) of the past due amount shall
be payable on demand. In addition, upon the occurrence and during the
continuation of an Event of Default hereunder, all Secured Obligations,
including principal, interest, compounded interest, and professional fees, shall
bear interest at a rate per annum equal to the rate set forth in Section 2.2(c),
plus four percent (4%) per annum. In the event any interest is not paid when due
hereunder, delinquent interest shall be added to principal and shall bear
interest on interest, compounded at the rate set forth in Section 2.2(c) or
Section 2.4, as applicable.
 
2.5 Prepayment. At its option upon at least seven (7) Business Days prior
written notice to Agent, Borrower may prepay all or any portion greater than or
equal to Five Million Dollars ($5,000,000) of the outstanding Advances by paying
the entire principal balance (or portion thereof), all accrued and unpaid
interest thereon, together with a prepayment charge equal to the following
percentage of the Advance amount being prepaid: with respect to each Advance, if
such Advance amounts are prepaid on or prior to the first (1st) anniversary of
the Closing Date, 3.00%; after the first (1st) anniversary but on or prior to
the second (2nd) anniversary of the Closing Date, 1.50%; and thereafter, 0.00%
(each, a “Prepayment Charge”). Borrower agrees that the Prepayment Charge is a
reasonable calculation of Lender’s lost profits in view of the difficulties and
impracticality of determining actual damages resulting from an early repayment
of the Advances. Borrower shall prepay the outstanding amount of all principal
and accrued interest through the prepayment date and the Prepayment Charge upon
the occurrence of a Change in Control. Notwithstanding the foregoing, no
Prepayment Charge will be required to be paid in connection with any prepayment
if such prepayment is made in connection with a refinancing of the Advances with
Agent and Lender (such refinancing to be made in Agent and Lenders’ sole and
absolute discretion) prior to the Term Loan Maturity Date. Any amounts paid
under this Section shall be applied by Agent to the then unpaid amount of any
Secured Obligations (including principal and interest) in such order and
priority as Agent may choose in its sole discretion.
 
2.6 End of Term Charge. On the earliest to occur of (i) the Term Loan Maturity
Date, (ii) the date that Borrower prepays the outstanding Secured Obligations
(other than any inchoate indemnity obligations and any other obligations which,
by their terms, are to survive the termination of this Agreement) in full, or
(iii) the date that the Secured Obligations become due and payable, Borrower
shall pay Lender a charge equal to 3.25% of the aggregate principal amount of
the Term Loan Advances. Notwithstanding the required payment date of such
charge, it shall be deemed earned by Lender as of the Closing Date.
 

2.7 Notes. If so requested by Lender by written notice to Borrower, then
Borrower shall execute and deliver to Lender (and/or, if applicable and if so
specified in such notice, to any Person who is an assignee of Lender pursuant to
Section 11.13) (promptly after the Borrower’s receipt of such notice) a Note or
Notes to evidence Lender’s Loans.
 
 

 
 
2.8 Pro Rata Treatment. Each payment (including prepayment) on account of any
fee and any reduction of the Term Loans shall be made pro rata according to the
Term Commitments of the relevant Lender.
 
2.9 Taxes.
 
(a) Defined Terms. For purposes of this Section, the term “applicable law”
includes FATCA.
 
(b) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower under any Loan Document shall be made without
deduction or withholding for any Taxes, except as 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 Withholding Agent shall
be entitled to make such deduction or withholding and shall timely pay the full
amount deducted or withheld to the relevant governmental authority in accordance
with applicable law and, if such Tax is an Indemnified Tax, then the sum payable
by the Borrower shall be increased as necessary so that after such deduction or
withholding has been made (including such deductions and withholdings applicable
to additional sums payable under this Section) the applicable Recipient receives
an amount equal to the sum it would have received had no such deduction or
withholding of Indemnified Taxes been made.
 
(c) Payment of Other Taxes by Borrower. The Borrower shall timely pay to the
relevant governmental authority in accordance with applicable law, or at the
option of the Agent timely reimburse it for the payment of, any Other Taxes.
 
(d) Indemnification by Borrower. The Borrower shall indemnify each Recipient,
within 10 days after demand therefor, for the full amount of any
Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section) payable or paid by such
Recipient or required to be withheld or deducted from a payment to such
Recipient and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant governmental authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender (with a copy
to the Agent), or by the 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
Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes
attributable to such Lender (but only to the extent that the Borrower has not
already indemnified the Agent for such Indemnified Taxes and without limiting
the obligation of the Borrower to do so), and (ii) any Excluded Taxes
attributable to such Lender, in each case, that are payable or paid by the Agent
in connection with any Loan Document, and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant governmental authority. A
certificate as to the amount of such payment or liability delivered to any
Lender by the Agent shall be conclusive absent manifest error. Each Lender
hereby authorizes the Agent to set off and apply any and all amounts at any time
owing to such Lender under any Loan Document or otherwise payable by the Agent
to the Lender from any other source against any amount due to the Agent under
this paragraph (e).
 
(f) Evidence of Payments. As soon as practicable after any payment of Taxes by
the Borrower to a governmental authority pursuant to this Section, the Borrower
shall deliver to the Agent the original or a certified copy of a receipt issued
by such governmental authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Agent.
 
(g) Status of Lenders.
 
(i) Any Lender that is entitled to an exemption from or reduction of withholding
Tax with respect to payments made under any Loan Document shall deliver to the
Borrower and the Agent, at the time or times reasonably requested by the
Borrower or the Agent, such properly completed and executed documentation
reasonably requested by the Borrower or the Agent as will permit such payments
to be made without withholding or at a reduced rate of withholding. In addition,
any Lender, if reasonably requested by the Borrower or the Agent, shall deliver
such other documentation prescribed by applicable law or reasonably requested by
the Borrower or the Agent as will enable the Borrower or the Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements. Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in paragraphs (g)(ii)(1),
(ii)(2) and (iv) of this Section) shall not be required if in the Lender’s
reasonable judgment such completion, execution or submission would subject such
Lender to any material unreimbursed 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 the
Borrower is a U.S. Person,
 
1. any Lender that is a U.S. Person shall deliver to the Borrower and the Agent
on or before the date on which such Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the reasonable request of the Borrower or
the Agent), executed copies of IRS Form W-9 certifying that such Lender is
exempt from U.S. federal backup withholding Tax;
 
2. any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Agent (in such number of copies as shall be
requested by the recipient) on or before the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Agent), whichever of the following is
applicable:
 
A. in the case of a Foreign Lender claiming the benefits of an income Tax treaty
to which the United States is a party (x) with respect to payments of interest
under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “interest” article of such Tax treaty and (y) with respect to
any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS
Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “business profits” or “other income” article of
such Tax treaty;
 
B. executed copies of IRS Form W-8ECI;
 
C. in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit K-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B)
of the Code, or a “controlled foreign corporation” related to the Borrower as
described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance
Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W 8BEN-E;
or
 
D. to the extent a Foreign Lender is not the beneficial owner, executed copies
of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W
8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit
K-2 or Exhibit K-3, IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender
are claiming the portfolio interest exemption, such Foreign Lender may provide a
U.S. Tax Compliance Certificate substantially in the form of Exhibit K-4 on
behalf of each such direct and indirect partner;
 
 

 
 
(iii) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Agent (in such number of copies as shall be
requested by the recipient) on or about the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Agent), executed copies 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 by applicable law to permit the
Borrower or the Agent to determine the withholding or deduction required to be
made; and
 
(iv) if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax 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 the Borrower and the Agent at the time or times prescribed by
law and at such time or times reasonably requested by the Borrower or the Agent
such documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Agent as may be necessary for the
Borrower and the Agent to comply with their obligations under FATCA and to
determine that such Lender has complied with such Lender’s obligations under
FATCA or to determine the amount, if any, to deduct and withhold from such
payment. Solely for purposes of this clause (iv), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement.
 
(h) Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Borrower and the Agent in writing
of its legal inability to do so.
 
(i) Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section (including by the
payment of additional amounts pursuant to this Section), it shall pay to the
indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section with respect to the Taxes 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, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this paragraph (i) (plus any
penalties, interest or other charges imposed by the relevant governmental
authority) in the event that such indemnified party is required to repay such
refund to such governmental authority. Notwithstanding anything to the contrary
in this paragraph (i), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (i) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This paragraph shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.
 
(j) Survival. Each party’s obligations under this Section shall survive the
resignation or replacement of the Agent or any assignment of rights by, or the
replacement of, a Lender, the termination of the Term Commitment and the
repayment, satisfaction or discharge of all obligations under any Loan Document.
 
2.10 Borrower agrees that any Prepayment Charge and any End of Term Charge
payable shall be presumed to be the liquidated damages sustained by each Lender
as the result of the early termination, and Borrower agrees that it is
reasonable under the circumstances existing as of the Closing Date. The
Prepayment Charge and the End of Term Charge shall also be payable in the event
the Secured Obligations (and/or this Agreement) are satisfied or released by
foreclosure (whether by power of judicial proceeding), deed in lieu of
foreclosure, or by any other means. Borrower expressly waives (to the fullest
extent it may lawfully do so) the provisions of any present or future statute or
law that prohibits or may prohibit the collection of the foregoing Prepayment
Charge and End of Term Charge in connection with any such acceleration. Borrower
agrees (to the fullest extent that each may lawfully do so): (a) each of the
Prepayment Charge and the End of Term Charge is reasonable and is the product of
an arm’s length transaction between sophisticated business people, ably
represented by counsel; (b) each of the Prepayment Charge and the End of Term
Charge shall be payable notwithstanding the then prevailing market rates at the
time payment is made; (c) there has been a course of conduct between the Lenders
and Borrower giving specific consideration in this transaction for such
agreement to pay the Prepayment Charge and the End of Term Charge as a charge
(and not interest) in the event of prepayment or acceleration; (d) Borrower
shall be estopped from claiming differently than as agreed to in this paragraph.
Borrower expressly acknowledges that their agreement to pay each of the
Prepayment Charge and the End of Term Charge to the Lenders as herein described
was on the Closing Date and continues to be a material inducement to the Lenders
to provide the Term Loans.
 
 

 
 
SECTION 3. SECURITY INTEREST
 
3.1 As security for the prompt and complete payment when due (whether on the
payment dates or otherwise) of all the Secured Obligations, Borrower grants to
Agent a security interest in all of Borrower’s right, title, and interest in, to
and under all of Borrower’s personal property and other assets (other than any
Intellectual Property) including without limitation the following (except as set
forth herein) whether now owned or hereafter acquired (collectively, the
“Collateral”): (a) Receivables; (b) Equipment; (c) Fixtures; (d) General
Intangibles (other than Intellectual Property); (e) Inventory; (f) Investment
Property; (g) Deposit Accounts; (h) Cash; (i) Goods; and all other tangible and
intangible personal property of Borrower whether now or hereafter owned or
existing, leased, consigned by or to, or acquired by, Borrower and wherever
located, and any of Borrower’s property in the possession or under the control
of Agent; and, to the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for, and rents,
profits and products of each of the foregoing; provided, however, that
the Collateral shall include all Accounts and General Intangibles that consist
of rights to payment and proceeds from the sale, licensing or disposition of all
or any part, or rights in, the Intellectual Property (the “Rights to Payment”).
Notwithstanding the foregoing, if a judicial authority (including a U.S.
Bankruptcy Court) holds that a security interest in the underlying Intellectual
Property is necessary to have a security interest in the Rights to Payment, then
the Collateral shall automatically, and effective as of the date of this
Agreement, include the Intellectual Property to the extent necessary to permit
perfection of Agent’s security interest in the Rights to Payment.
 
3.2 Notwithstanding the broad grant of the security interest set forth in
Section 3.1 above, the Collateral shall not include (a) licenses or other
contracts, which by their terms require the consent of the licensor thereof or
another party for a grant of a security interest therein or the assignment
thereof or in any assets subject thereto (but only to the extent such
prohibition on transfer is enforceable under applicable law, including, without
limitation, Sections 9406, 9407 and 9408 of the UCC), (b) any property and
assets the pledge of which would require governmental consent, approval, license
or authorization or is prohibited or restricted by applicable law (after giving
effect to the applicable anti-assignment provisions of the UCC or other
applicable law), (c) Equipment or other assets otherwise constituting Collateral
owned by Borrower on the date hereof or hereafter acquired that is subject to a
Lien securing purchase money Indebtedness or capital lease obligations permitted
to be incurred pursuant to the provisions of this Agreement if the contract or
other agreement in which such Lien is granted (or the documentation providing
for such purchase money Indebtedness or capital lease obligations) validly
prohibits the creation of any other Lien on such Equipment or such other asset,
(d) Excluded Accounts, or (e) more than 65% of the presently existing and
hereafter arising issued and outstanding shares of capital stock owned by
Borrower of any Excluded Foreign Subsidiary which shares entitle the holder
thereof to vote for directors or any other matter; provided that with respect to
clauses (a), (b) and (c), upon termination of such prohibition, such interest
shall immediately become Collateral without any action by Borrower, Agent or
Lender.
  
SECTION 4. CONDITIONS PRECEDENT TO LOAN
 
The obligations of Lender to make the Loan hereunder are subject to the
satisfaction by Borrower of the following conditions:
 
4.1 Initial Advance. On or prior to the Closing Date, Borrower shall have
delivered to Agent the following:
 
(a) executed copies of the Loan Documents (including the Warrant; provided that
an original of the Warrant shall be delivered to Agent within three (3) Business
Days of the Closing Date), Account Control Agreements, all other documents and
instruments reasonably required by Agent to effectuate the transactions
contemplated hereby or to create and perfect the Liens of Agent with respect to
all Collateral, in all cases in form and substance reasonably acceptable to
Agent;
 
(b) a legal opinion of Borrower’s counsel, in form and substance reasonably
acceptable to Agent;
 
(c) certified copy of resolutions of Borrower’s board of directors evidencing
approval of (i) the Loan and other transactions evidenced by the Loan Documents;
and (ii) the Warrant and transactions evidenced thereby;
 
(d) certified copies of the Certificate of Incorporation and the Bylaws, as
amended through the Closing Date, of Borrower;
 
(e) a certificate of good standing for Borrower from its state of incorporation
and similar certificates from all other jurisdictions in which it is qualified
to do business and where the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect;
 
(f) payment of the Initial Facility Charge and reimbursement of Agent’s and
Lender’s current expenses reimbursable pursuant to this Agreement, which amounts
may be deducted from the initial Advance;
 
(g) all certificates of insurance and copies of each insurance policy required
pursuant to Section 6.1 and 6.2 hereof;
 
(h) [reserved];
 
(i) evidence that the Phase 3 UNITY-CLL trial (clinical trial protocol
UTX-TGR-304 and ClincalTrials.gov identifier NCT02612311) has passed the interim
progression free survival analysis performed by the DSMB for such trial at the
fifty percent (50%) information time without the DSMB for such trial
recommending the trial be stopped for futility;
 
(j) evidence satisfactory to Agent that the Phase 3 UNITY-CLL trial (clinical
trial protocol UTX-TGR-304 and ClincalTrials.gov identifier NCT02612311) remains
ongoing as of the Closing Date; and
 
(k) such other documents as Agent may reasonably request.
 
 

 
 
4.2 All Advances. On each Advance Date:
 
(a) Agent shall have received (i) an Advance Request for the relevant Advance as
required by Section 2.2(b), each duly executed by Borrower’s Chief Executive
Officer or Chief Financial Officer, and (ii) any other documents Agent may
reasonably request.
 
(b) The representations and warranties set forth in this Agreement shall be true
and correct in all material respects (or, if such representations and warranties
are already qualified by materiality, in all respects) on and as of the Advance
Date with the same effect as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall be true and correct in
all material respects (or, if such representations and warranties are already
qualified by materiality, in all respects) on and as of such earlier date.
 
(c) with respect to any Tranche 2 Advance and Tranche 3 Advance, a Warrant
(provided that an original of the Warrant shall be delivered to Agent within
three (3) Business Days of such Advance Date) covering 2% of any such Advance in
a manner consistent with the Warrant issued on the Closing Date, in form and
substance reasonably acceptable to Agent.
 
(d) with respect to any Tranche 4 Advance, the Loan Parties shall have paid the
Tranche 4 Facility Charge.
 
(e) Each Advance Request shall be deemed to constitute a representation and
warranty by Borrower on the relevant Advance Date as to the matters specified in
paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in
the Advance Request.
 
4.3 No Default. As of the Closing Date and each Advance Date, both before and
after giving effect to the making of the applicable Advance, (i) no Default or
Event of Default shall be continuing and (ii) no event that has had or could
reasonably be expected to have a Material Adverse Effect has occurred and is
continuing.
 
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER
 
Borrower represents and warrants that:
 
5.1 Corporate Status. Each Borrower is a corporation duly organized, legally
existing and in good standing under the laws of the State of Delaware, and is
duly qualified as a foreign corporation in all jurisdictions in which the nature
of its business or location of its properties require such qualifications and
where the failure to be qualified could reasonably be expected to have a
Material Adverse Effect. Each Borrower’s present name, former names (if any),
locations, place of formation, Tax identification number, organizational
identification number and other information are correctly set forth in Exhibit
C, as may be updated by such Borrower in a written notice (including any
Compliance Certificate) provided to Agent after the Closing Date.
 
5.2 Collateral. Each Borrower owns the applicable Collateral and the
Intellectual Property, free of all Liens, except for Permitted Liens. Each
Borrower has the power and authority to grant to Agent a Lien in the Collateral
as security for the Secured Obligations.
 
5.3 Consents. Each Borrower’s execution, delivery and performance of this
Agreement and all other Loan Documents, and Parent’s execution of the Warrant,
(i) have been duly authorized by all necessary corporate action of such Borrower
or the Parent, as applicable, (ii) will not result in the creation or imposition
of any Lien upon the Collateral, other than Permitted Liens and the Liens
created by this Agreement and the other Loan Documents, (iii) do not (x) violate
any provisions of such Borrower’s Certificate or Articles of Incorporation (as
applicable) and bylaws, or (y) any material law, material regulation, material
order, material injunction, material judgment, material decree or material writ
to which such Borrower is subject and (iv) except as described on Schedule 5.3,
do not violate any material contract or material agreement or require the
material consent or material approval of any other Person which has not already
been obtained. The individual or individuals executing the Loan Documents and
the Warrant are duly authorized to do so.
 
5.4 Material Adverse Effect. No event that has had or could reasonably be
expected to have a Material Adverse Effect has occurred and is continuing. No
Borrower is aware of any event likely to occur that is reasonably expected to
result in a Material Adverse Effect.
 
 

 
 
5.5 Actions Before Governmental Authorities. There are no actions, suits or
proceedings at law or in equity or by or before any governmental authority now
pending or, to the knowledge of any Borrower, threatened against or affecting
any Borrower or its property, that is reasonably expected to result in a
Material Adverse Effect.
 
5.6 Laws. No Borrower nor any of its Subsidiaries is in violation of any law,
rule or regulation, or in default with respect to any judgment, writ, injunction
or decree of any governmental authority, where such violation or default is
reasonably expected to result in a Material Adverse Effect. To the knowledge of
Borrower, no Borrower is in default in any manner under any provision of any
agreement or instrument evidencing material Indebtedness, or any other material
agreement to which it is a party or by which it is bound.
 
No Borrower nor any of its Subsidiaries is an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act of
1940, as amended. No Borrower nor any of its Subsidiaries is engaged as one of
its important activities in extending credit for margin stock (under Regulations
X, T and U of the Federal Reserve Board of Governors). Each Borrower and each of
its Subsidiaries has complied in all material respects with the Federal Fair
Labor Standards Act. No Borrower nor any of its Subsidiaries is a “holding
company” or an “affiliate” of a “holding company” or a “subsidiary company” of a
“holding company” as each term is defined and used in the Public Utility Holding
Company Act of 2005. No Borrower’s nor any of its Subsidiaries’ properties or
assets has been used by any Borrower or such Subsidiary or, to any Borrower’s
knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than in material compliance with
applicable laws. Each Borrower and each of its Subsidiaries has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all Governmental Authorities that are necessary
to continue their respective businesses as currently conducted, except as would
not reasonably be expected to have a Material Adverse Effect.
 
No Borrower, nor any of its Subsidiaries, nor, to the knowledge of any Borrower,
any of such Borrower’s or its Subsidiaries’ controlled Affiliates or any of
their respective agents acting or benefiting in any capacity in connection with
the transactions contemplated by this Agreement is (i) in violation of any
Anti-Terrorism Law, (ii) engaging in or conspiring to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law, or (iii)
is a Blocked Person. None of any Borrower, or its Subsidiaries, or to the
knowledge of any Borrower, any of its controlled Affiliates or agents, acting or
benefiting in any capacity in connection with the transactions contemplated by
this Agreement, (x) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Blocked
Person, or (y) deals in, or otherwise engages in any transaction relating to,
any property or interest in property blocked pursuant to Executive Order No.
13224, any similar executive order or other Anti-Terrorism Law. None of the
funds to be provided under this Agreement will be used, directly or, to the
knowledge of any Borrower, indirectly, (a) for any activities in violation of
any applicable anti-money laundering, economic sanctions and anti-bribery laws
and regulations laws and regulations or (b) for any payment to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
 
5.7 Information Correct and Current. No information, report, Advance Request,
financial statement, exhibit or schedule furnished, by or on behalf of Borrower
to Agent in connection with any Loan Document or included therein or delivered
pursuant thereto, when taken as a whole, contained or contains or will contain
any material misstatement of fact or, when taken together with all other such
information or documents, omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not materially misleading at the
time such statement was made or deemed made. Additionally, any and all financial
or business projections provided by Borrower to Agent, whether prior to or after
the Closing Date, shall be (i) provided in good faith and based on the most
current data and information available to Borrower, and (ii) the most current of
such projections provided to Borrower’s Board of Directors; it being understood
by the Agent and the Lender that such projections as to future events (i) are
not to be viewed as facts, (ii)(A) are subject to significant uncertainties and
contingencies, many of which are beyond the control of Borrower, (B) no
assurance is given by Borrower that the results forecast in any such projections
will be realized and (C) the actual results during the period or periods covered
by any such projections may differ from the forecast results set forth in such
projections and such differences may be material and (iii) are not a guarantee
of performance.
 
5.8 Tax Matters. Except as described on Schedule 5.8 and except those Taxes
being contested in good faith with adequate reserves under GAAP, (a) Borrower
has filed all material federal, state and local Tax returns that it is required
to file, (b) Borrower has duly paid or fully reserved for all Taxes or
installments thereof (including any interest or penalties) as and prior to
becoming delinquent, which have or may become due pursuant to such returns, and
(c) Borrower has paid or fully reserved for any material Tax assessment received
by Borrower for the three (3) years preceding the Closing Date, if any
(including any Taxes being contested in good faith and by appropriate
proceedings).
 
5.9 Intellectual Property Claims. Each Borrower is the sole owner of, or
otherwise has the right to use, the Intellectual Property material to such
Borrower’s business. Except as described on Schedule 5.9, (i) each of the
material Copyrights, Trademarks and Patents is valid and enforceable, (ii) no
material part of the Intellectual Property has been judged invalid or
unenforceable by a court of competent jurisdiction, in whole or in part, and
(iii) no claim has been made to any Borrower that any material part of the
Intellectual Property violates the rights of any third party. Exhibit D is a
true, correct and complete list of each Borrower’s Patents, registered
Trademarks, registered Copyrights, and material agreements under which such
Borrower licenses Intellectual Property from third parties (other than
shrink-wrap software licenses), together with application or registration
numbers, as applicable, owned by such Borrower or any Subsidiary, in each case
as of the Closing Date. No Borrower is in material breach of, nor has any
Borrower failed to perform any material obligations under, any of the foregoing
contracts, licenses or agreements and, to such Borrower’s knowledge, no third
party to any such contract, license or agreement is in material breach thereof
or has failed to perform any material obligations thereunder.
 
5.10  Intellectual Property. Except as described on Schedule 5.10, each Borrower
has all material rights with respect to Intellectual Property necessary or
material to the operation or conduct of such Borrower’s business as currently
conducted and proposed to be conducted by such Borrower. Without limiting the
generality of the foregoing, and in the case of Licenses, except for
restrictions that are unenforceable under Division 9 of the UCC, each Borrower
has the right, to the extent required to operate such Borrower’s business, to
freely transfer, license or assign Intellectual Property necessary or material
in the operation or conduct of such Borrower’s business as currently conducted
and proposed to be conducted by such Borrower, without condition, restriction or
payment of any kind (other than license payments in the ordinary course of
business) to any third party, and such Borrower owns or has the right to use,
pursuant to valid licenses, all software development tools, library functions,
compilers and all other third-party software and other items that are material
to such Borrower’s business and used in the design, development, promotion,
sale, license, manufacture, import, export, use or distribution of Borrower
Products except customary covenants in inbound license agreements and equipment
leases where such Borrower is the licensee or lessee. No Borrower is a party to,
nor are they bound by, any Restricted License.
 
 

 
 
5.11 Borrower Products. Except as described on Schedule 5.11, no Intellectual
Property owned by any Borrower or Borrower Product has been or is subject to any
actual or, to the knowledge of such Borrower, threatened litigation, proceeding
(including any proceeding in the United States Patent and Trademark Office or
any corresponding foreign office or agency) or outstanding decree, order,
judgment, settlement agreement or stipulation that restricts in any manner such
Borrower’s use, transfer or licensing thereof or that may affect the validity,
use or enforceability thereof. There is no decree, order, judgment, agreement,
stipulation, arbitral award or other provision entered into in connection with
any litigation or proceeding that obligates any Borrower to grant licenses or
ownership interest in any future Intellectual Property related to the operation
or conduct of the business of such Borrower or Borrower Products. No Borrower
has received any written notice or claim, or, to the knowledge of such Borrower,
oral notice or claim, challenging or questioning such Borrower’s ownership in
any Intellectual Property (or written notice of any claim challenging or
questioning the ownership in any licensed Intellectual Property of the owner
thereof) or suggesting that any third party has any claim of legal or beneficial
ownership with respect thereto nor, to such Borrower’s knowledge is there a
reasonable basis for any such claim. To the knowledge of each Borrower, no
Borrower’s use of its Intellectual Property nor the production and sale of the
Borrower’s Borrower Products infringes the intellectual property or other rights
of others.
 
5.12 Financial Accounts. Exhibit E, as may be updated by the Borrower in a
written notice provided to Agent after the Closing Date, is a true, correct and
complete list of (a) all banks and other financial institutions at which
Borrower or any Subsidiary maintains Deposit Accounts and (b) all institutions
at which Borrower or any Subsidiary maintains an account holding Investment
Property, and such exhibit correctly identifies the name, address and telephone
number of each bank or other institution, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
 
5.13 Employee Loans. No Borrower has, as of the Closing Date, any outstanding
loans to any employee, officer or director of such Borrower nor has any Borrower
guaranteed, as of the Closing Date, the payment of any loan made to an employee,
officer or director of such Borrower by a third party.
 
5.14 Capitalization and Subsidiaries. Borrower’s capitalization as of the
Closing Date is set forth on Schedule 5.14 annexed hereto. Borrower does not own
any stock, partnership interest or other securities of any Person, except for
Permitted Investments. Attached as Schedule 1, as may be updated by Borrower in
a written notice provided after the Closing Date, is a true, correct and
complete list of each Subsidiary.
 
5.15 Ariston Notes.
 
(a) Neither the Borrower nor any Subsidiary (other than Ariston) has any
obligations, in each case under the Ariston Notes, to commercialize or sell any
AST-726 or AST-914 program candidates or otherwise to generate any Product
Proceeds in respect thereof.
 
(b) The holders of the Ariston Notes have no recourse, now or after the filing
of any Insolvency Proceeding or other insolvency event (including under Section
7 of the Ariston Notes or otherwise, including without limitation under
applicable law), to any Borrower or its Subsidiaries (other than Ariston) other
than with respect to equity conversion rights specified in the Ariston Notes.
 
(c) Ariston has been a dormant subsidiary for the last five (5) years and holds
no assets and liabilities other than legacy intercompany receivables and
payables and the Ariston Notes.
 
SECTION 6. INSURANCE; INDEMNIFICATION
 
6.1    Coverage. Borrower shall cause to be carried and maintained commercial
general liability insurance, on an occurrence form, against risks customarily
insured against in Borrower’s line of business. Such risks shall include the
risks of bodily injury, including death, property damage, personal injury,
advertising injury, and contractual liability per the terms of the
indemnification agreement found in Section 6.3. Borrower must maintain a minimum
of $2,000,000 of commercial general liability insurance for each occurrence.
Borrower has and agrees to maintain a minimum of $2,000,000 of directors’ and
officers’ insurance for each occurrence and $5,000,000 in the aggregate. So long
as there are any Secured Obligations outstanding, Borrower shall also cause to
be carried and maintained insurance upon the Collateral, insuring against all
risks of physical loss or damage howsoever caused, in an amount not less than
the full replacement cost of the Collateral, provided that such insurance may be
subject to standard exceptions and deductibles.
 
6.2 Certificates. Borrower shall deliver to Agent certificates of insurance that
evidence Borrower’s compliance with its insurance obligations in Section 6.1 and
the obligations contained in this Section 6.2. Borrower’s insurance certificate
shall state Agent (shown as “Hercules Capital, Inc., as Agent”) is an additional
insured for commercial general liability, a loss payee for all risk property
damage insurance, subject to the insurer’s approval, and a loss payee for
property insurance and additional insured for liability insurance for any future
insurance that Borrower may acquire from such insurer. Attached to the
certificates of insurance will be additional insured endorsements for liability
and lender’s loss payable endorsements for all risk property damage insurance.
All certificates of insurance will provide for a minimum of thirty (30) days
advance written notice to Agent of cancellation (other than cancellation for
non-payment of premiums, for which ten (10) days’ advance written notice shall
be sufficient) or any other change adverse to Agent’s interests. Any failure of
Agent to scrutinize such insurance certificates for compliance is not a waiver
of any of Agent’s rights, all of which are reserved. Borrower shall provide
Agent with copies of each insurance policy, and upon entering or amending any
insurance policy required hereunder, Borrower shall provide Agent with copies of
such policies and shall promptly deliver to Agent updated insurance certificates
with respect to such policies.
 
6.3 Indemnity. Borrower agrees to indemnify and hold Agent, Lender and their
officers, directors, employees, agents, in-house attorneys, representatives and
shareholders (each, an “Indemnified Person”) harmless from and against any and
all claims, costs, expenses, damages and liabilities (including such claims,
costs, expenses, damages and liabilities based on liability in tort, including
strict liability in tort), including reasonable attorneys’ fees and
disbursements and other costs of investigation or defense (including those
incurred upon any appeal) (collectively, “Liabilities”), that may be instituted
or asserted against or incurred by such Indemnified Person as the result of
credit having been extended, suspended or terminated under this Agreement and
the other Loan Documents or the administration of such credit, or in connection
with or arising out of the transactions contemplated hereunder and thereunder,
or any actions or failures to act in connection therewith, or arising out of the
disposition or utilization of the Collateral; provided that, no Indemnified
Person will be indemnified for its (or any of its Related Parties) willful
misconduct, bad faith or gross negligence (to the extent determined in a final
non-appealable order of a court of competent jurisdiction). This Section 6.3
shall not apply with respect to Taxes other than any Taxes that represent
losses, claims, damages, etc. arising from any non-Tax claim. In no event shall
any Indemnified Person be liable on any theory of liability for any special,
indirect, consequential or punitive damages (including any loss of profits,
business or anticipated savings). This Section 6.3 shall survive the repayment
of indebtedness under, and otherwise shall survive the expiration or other
termination of, the Loan Agreement.
 
 

 
 
SECTION 7. COVENANTS OF BORROWER
 
Borrower agrees as follows:
 
7.1 Financial Reports. Borrower shall furnish to Agent the financial statements
and reports listed hereinafter (the “Financial Statements”):
 
(a) as soon as practicable (and in any event within 30 days) after the end of
each month, unaudited interim and year-to-date financial statements as of the
end of such month (prepared on a consolidated basis), including balance sheet
and related statements of income and cash flows accompanied by a report
detailing any material contingencies (including the commencement of any material
litigation by or against Borrower) or any other occurrence that could reasonably
be expected to have a Material Adverse Effect, all certified by Borrower’s Chief
Executive Officer or Chief Financial Officer to the effect that they have been
prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii)
that they are subject to normal year-end adjustments, and (iii) they do not
contain certain non-cash items that are customarily included in quarterly and
annual financial statements;
 
(b) as soon as practicable (and in any event within 45 days) after the end of
each calendar quarter, unaudited interim and year-to-date financial statements
as of the end of such calendar quarter (prepared on a consolidated basis),
including balance sheet and related statements of income and cash flows
accompanied by a report detailing any material contingencies (including the
commencement of any material litigation by or against Borrower) or any other
occurrence that could reasonably be expected to have a Material Adverse Effect,
certified by Borrower’s Chief Executive Officer or Chief Financial Officer to
the effect that they have been prepared in accordance with GAAP, except (i) for
the absence of footnotes, and (ii) that they are subject to normal year-end
adjustments;
 
(c) as soon as practicable (and in any event within ninety (90) days) after the
end of each fiscal year, unqualified audited financial statements as of the end
of such year (prepared on a consolidated basis), including balance sheet and
related statements of income and cash flows, and setting forth in comparative
form the corresponding figures for the preceding fiscal year, certified by a
firm of independent certified public accountants selected by Borrower and
reasonably acceptable to Agent;
 
(d) as soon as practicable (and in any event within 30 days) after the end of
each month, a Compliance Certificate in the form of Exhibit F;
 
(e) as soon as practicable (and in any event within 30 days) after the end of
each month, a report showing agings of accounts receivable and accounts payable,
as of the end of such month;
 
(f) promptly after the sending or filing thereof, copies of any regular,
periodic and special reports or registration statements that Borrower files with
the Securities and Exchange Commission or any governmental authority that may be
substituted therefor, or any national securities exchange;
 
(g) promptly following each meeting of any Borrower’s board of directors, the
following shall be made available for inspection by the Agent at Borrower’s
premises at reasonable times and upon reasonable notice: copies of all
presentation materials and minutes relating to research, clinical development,
regulatory activities, and commercial timelines that Borrower provides to its
directors in connection with meetings of such board of directors, provided that
all in all cases Borrower may exclude any information or materials related to
executive compensation, confidential information, any attorney-client privileged
information and any information that would raise a conflict of interest with
Agent or Lenders, and minutes and other materials prepared exclusively for
executive sessions of the independent directors and committees of such board of
directors;
 
(h) financial and business projections promptly following their approval by
Borrower’s Board of Directors, and in any event, within 45 days after the end of
Borrower’s fiscal year, as well as budgets, operating plans and other financial
information reasonably requested by Agent; and
 
(i) immediate notice if Borrower or any Subsidiary has knowledge that Borrower,
or any Subsidiary or any controlled Affiliate of Borrower, is listed on the OFAC
Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on,
or (d) is arraigned and held over on charges involving money laundering or
predicate crimes to money laundering.
 
Borrower shall not make any change in its (a) accounting policies or reporting
practices, except to the extent permitted or required by GAAP, or (b) fiscal
years or fiscal quarters. The fiscal year of Borrower shall end on December 31.
 
The executed Compliance Certificate and all Financial Statements required to be
delivered pursuant to clauses (a), (b) and (c) shall be sent via e-mail to Agent
at financialstatements@herculestech.com with a copy to mdutra@htgc.com,
bjadot@htgc.com, and legal@herculestech.com provided, that if e-mail is not
available or sending such Financial Statements via e-mail is not possible, they
shall be faxed to Agent at: (650) 473-9194, attention Account Manager: TG
Therapeutics, Inc.
 
Notwithstanding the foregoing, documents required to be delivered under Sections
7.1(a), (b), (c) or (f) (to the extent any such documents are included in
materials otherwise filed with the SEC) may be delivered electronically and if
so delivered, shall be deemed to have been delivered on the date on which
Borrower emails a link thereto to Agent; provided that Borrower shall directly
provide Agent all Financial Statements required to be delivered pursuant to
Section 7.1(b) and (c) hereunder.
 
 

 
 
7.2 Management Rights. Borrower shall permit any representative that Agent or
Lender authorizes, including its attorneys and accountants, to inspect the
Collateral and examine and make copies and abstracts of the books of account and
records of Borrower at reasonable times and upon reasonable notice during normal
business hours; and any such representative shall have the right to meet with
management and officers of Borrower to discuss such books of account and
records; provided that (i) only the Agent on behalf of Lender may exercise
rights under this Section 7.2 and (ii) other than during the continuance of an
Event of Default, the Agent shall not exercise such rights more often than one
time during any fiscal year; and provided, further, that when an Event of
Default has occurred and is continuing the Agent or any Lender (or any of their
designated representatives) may do any of the foregoing at the expense of the
Borrower at any time during normal business hours and upon reasonable advance
notice. The Agent and Lender shall provide the Borrower with the opportunity to
participate in any discussion with any independent accountants. In addition,
Agent or Lender shall be entitled at reasonable times and intervals to consult
with and advise the management and officers of Borrower concerning significant
business issues affecting Borrower. Such consultations shall not unreasonably
interfere with Borrower’s business operations. The parties intend that the
rights granted Agent and Lender shall constitute “management rights” within the
meaning of 29 C.F.R. Section 2510.3-101(d)(3)(ii), but that any advice,
recommendations or participation by Agent or Lender with respect to any business
issues shall not be deemed to give Agent or Lender, nor be deemed an exercise by
Agent or Lender of, control over Borrower’s management or policies.
 
7.3 Further Assurances. Borrower shall from time to time execute, deliver and
file, alone or with Agent, any financing statements, security agreements,
collateral assignments, notices, control agreements, or other documents to
perfect or give the highest priority to Agent’s Lien on the Collateral. Borrower
shall from time to time procure any instruments or documents as may be
reasonably requested by Agent, and take all further action that may be
necessary, or that Agent may reasonably request, to perfect and protect the
Liens granted hereby and thereby. In addition, and for such purposes only,
Borrower hereby authorizes Agent to execute and deliver on behalf of Borrower
and to file such financing statements (including an indication that the
financing statement covers “all assets or all personal property” of Borrower in
accordance with Section 9-504 of the UCC), collateral assignments, notices,
control agreements, security agreements and other documents without the
signature of Borrower either in Agent’s name or in the name of Agent as agent
and attorney-in-fact for Borrower. Borrower shall protect and defend Borrower’s
title to the Collateral and Agent’s Lien thereon against all Persons claiming
any interest adverse to Borrower or Agent other than Permitted Liens.
 
7.4 Indebtedness. Borrower shall not create, incur, assume, guarantee or be or
remain liable with respect to any Indebtedness, or permit any Subsidiary so to
do, other than Permitted Indebtedness, or prepay any Indebtedness for borrowed
money or take any actions which impose on Borrower an obligation to prepay any
Indebtedness for borrowed money, except for (a) the conversion of Indebtedness
into equity securities and the payment of cash in lieu of fractional shares in
connection with such conversion, (b) purchase money Indebtedness pursuant to its
then applicable payment schedule, (c) prepayment by any Subsidiary of (i)
intercompany Indebtedness owed by such Subsidiary to any Borrower, or (ii) if
such Subsidiary is not a Borrower, intercompany Indebtedness owed by such
Subsidiary to another Subsidiary that is not a Borrower, (d) payment of
regularly scheduled interest and principal payments (and fees, indemnities and
expenses payable) as, and when due in respect of any such Indebtedness to the
extent permitted by any subordination or intercreditor provisions in respect
thereof, (e) any extension, refinancing or renewal constitutes Permitted
Indebtedness or (f) as otherwise permitted hereunder or approved in writing by
Agent.
 
7.5 Collateral. Borrower shall at all times keep the Collateral, the
Intellectual Property and all other property and assets used in Borrower’s
business or in which Borrower now or hereafter holds any interest free and clear
from any legal process reasonably likely to result in liability in excess of Two
Hundred Fifty Thousand Dollars ($250,000) or Liens that materially affect the
operation of such Borrower’s business as currently conducted and proposed to be
conducted by such Borrower (except for Permitted Liens and except as to legal
process, to the extent contested in good faith), and shall give Agent prompt
written notice of any legal process affecting the Collateral or the Intellectual
Property or any Liens thereon, provided however, that the Collateral may be
subject to Permitted Liens, except that there shall be no Liens whatsoever on
Intellectual Property, other than any Liens referred to in clauses (vii), (xv)
and (xviii) of the definition of Permitted Liens. Borrower shall not agree with
any Person other than Agent or Lender not to encumber its property except in
accordance with the provisions of this Section 7.5. Borrower shall not enter
into or suffer to exist or become effective any agreement that prohibits or
limits the ability of any Borrower to create, incur, assume or suffer to exist
any Lien upon any of its Collateral or Intellectual Property, whether now owned
or hereafter acquired, to secure its obligations under the Loan Documents to
which it is a party other than (a) this Agreement and the other Loan Documents,
(b) any agreements governing any purchase money Liens or capital lease
obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby), (c)
customary restrictions on the assignment of leases, licenses and other
agreements, and (d) restrictions and conditions imposed by (A) law or (B) any
agreements evidencing Indebtedness permitted by this Agreement. Borrower shall
cause its Subsidiaries (other than a Borrower) to protect and defend such
Subsidiary’s title to its assets from and against all Persons claiming any
interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries
at all times to keep such Subsidiary’s property and assets free and clear from
any legal process reasonably likely to result in liability in excess of Two
Hundred Fifty Thousand Dollars ($250,000) or Liens whatsoever (except for
Permitted Liens and except as to legal process, to the extent contested in good
faith, provided however, that there shall be no Liens whatsoever on Intellectual
Property, other than any Liens referred to in clauses (vii), (xv) and (xviii) of
the definition of Permitted Liens), and shall give Agent prompt written notice
of any legal process affecting such Subsidiary’s assets.
 
7.6 Investments. Borrower shall not directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so to
do, other than Permitted Investments.
 
7.7 Distributions. Borrower shall not, and shall not allow any Subsidiary to,
(a) repurchase or redeem any class of its stock or other Equity Interest other
than (i) pursuant to employee, director or consultant repurchase plans or other
similar agreements, provided, however, in each case the repurchase or redemption
price does not exceed the original consideration paid for such stock or Equity
Interest, (ii) repurchases of stock or Equity Interests from existing or former
employees, directors, or consultants of Borrower or any Subsidiary (or their
estates, descendants, family, spouses or former spouses) under the terms of
applicable repurchase agreements in an aggregate amount not to exceed $250,000
in any fiscal year, provided that no Event of Default has occurred, is
continuing or could exist after giving effect to the repurchases, (iii)
repurchases of Equity Interests deemed to occur upon the cashless exercise of
stock options when such Equity Interests represents a portion of the exercise
price thereof, and (iv) to the extent constituting a repurchase, to the extent
contemplated by Section 7.7(b)(ii) or (iii) below, or (b) declare or pay any
cash dividend or make a cash distribution on any class of its stock or other
Equity Interest, except (i) that a Subsidiary may pay dividends or make
distributions to Borrower, (ii) to pay cash in lieu of fractional Equity
Interests in connection with any dividend, split or combination thereof or (iii)
to honor any conversion request by a holder of convertible Indebtedness
permitted pursuant to clause (ii) or (x) of the definition of Permitted
Indebtedness (to the extent such conversion request is paid solely in shares of
Equity Interests of Parent not subject to redemption or repurchase) and make
cash payments in lieu of fractional shares in connection with any such
conversion and may make payments on convertible Indebtedness in accordance with
its terms, or (c) lend money to any employees, officers or directors or
guarantee the payment of any such loans granted by a third party in excess of
$100,000 at any time outstanding or (d) waive, release or forgive any
Indebtedness owed by any employees, officers or directors in excess of $100,000
in the aggregate.
 
 

 
 
7.8 Transfers. Except for Permitted Transfers, Borrower shall not, and shall not
allow any Subsidiary to, voluntarily or involuntarily transfer, sell, lease,
license, lend or in any other manner convey any equitable, beneficial or legal
interest in any material portion of its assets.
 
7.9 Mergers or Acquisitions. Borrower shall not merge or consolidate, or permit
any of its Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations of (a) a Subsidiary which is
not a Borrower into another Subsidiary or into Borrower or (b) a Borrower into
another Borrower), or acquire, or permit any of its Subsidiaries to acquire, in
each case including for the avoidance of doubt through a merger, purchase,
in-licensing arrangement or any similar transaction, all or substantially all of
the capital stock or any property of another Person, except for (i) Permitted
Acquisitions, and (ii) in-licensing transactions permitted pursuant to clause
(xviii) of the definition of Permitted Investments.
 
7.10 Taxes. Borrower and its Subsidiaries shall pay prior to becoming delinquent
all material Taxes, now or hereafter imposed or assessed against Borrower or the
Collateral or upon Borrower’s ownership, possession, use, operation or
disposition thereof or upon Borrower’s rents, receipts or earnings arising
therefrom. Borrower shall file on or before the due date therefor all personal
property Tax returns in respect of the Collateral. Notwithstanding the
foregoing, Borrower may contest, in good faith and by appropriate proceedings,
Taxes for which Borrower maintains adequate reserves therefor in accordance with
GAAP.
 
7.11 Corporate Changes. Neither Borrower nor any Subsidiary shall change its
corporate name, legal form or jurisdiction of formation without ten (10) days’
prior written notice to Agent. Neither Borrower nor any Subsidiary shall suffer
a Change in Control. Neither Borrower nor any Domestic Subsidiary shall relocate
its chief executive office or its principal place of business unless: (i) it has
provided prior written notice to Agent; and (ii) such relocation shall be within
the continental United States of America. Neither Borrower nor any Subsidiary
shall relocate any item of Collateral (other than (w) Collateral in transit in
the ordinary course of business, (x) sales of Inventory in the ordinary course
of business, (y) relocations of Equipment having an aggregate value of up to
$150,000 in any fiscal year, and (z) relocations of Collateral from a location
described on Exhibit C to another location described on Exhibit C) unless (i) it
has provided prompt written notice to Agent, (ii) such relocation is within the
continental United States of America, and (iii) if such relocation is to a third
party bailee, it has delivered a bailee agreement in form and substance
reasonably acceptable to Agent.
 
7.12 Deposit Accounts. Neither Borrower nor any Subsidiary shall maintain any
Deposit Accounts, or accounts holding Investment Property, except with respect
to which Agent has an Account Control Agreement and except for any Excluded
Accounts.
 
7.13 Borrower shall notify Agent of each Subsidiary formed subsequent to the
Closing Date and, within 15 days of formation, shall cause any such Subsidiary
to execute and deliver to Agent a Joinder Agreement and any other documents and
filings requested by Agent pursuant to Section 7.3.
 
7.14 Non-Borrower Subsidiaries. Borrower shall not permit Subsidiaries that are
not Borrowers (including, for the avoidance of doubt, TG Australia and Ariston)
to: (a) have assets and liabilities in excess of Two Hundred Fifty Thousand
Dollars ($250,000) in the aggregate at any time, or (b) own any Intellectual
Property; provided that notwithstanding the foregoing, (A) TG Australia shall be
permitted to have liabilities in the form of accounts payable in connection with
clinical trial expenses incurred in the ordinary course of business and
intercompany Indebtedness permitted pursuant to clause (ix) of the definition of
Permitted Indebtedness, and (B) Ariston shall be permitted to have liabilities
in the form of convertible Indebtedness and intercompany Indebtedness pursuant
to clause (ix) of the definition of Permitted Indebtedness, and assets as
contemplated by clause (v) of the definition of Excluded Accounts.
 
7.15 Notification of Event of Default. Borrower shall notify Agent promptly but
in any case within three (3) Business Days of the occurrence of any Event of
Default.
 
7.16 SBIC. Agent and Lender have received a license from the U.S. Small Business
Administration (“SBA”) to extend loans as a small business investment company
(“SBIC”) pursuant to the Small Business Investment Act of 1958, as amended, and
the associated regulations (collectively, the “SBIC Act”). Portions of the loan
to Borrower will be made under the SBA license and the SBIC Act. Addendum 1 to
this Agreement outlines various responsibilities of Agent, Lender and Borrower
associated with an SBA loan, and such Addendum 1 is hereby incorporated in this
Agreement.
 
7.17 Use of Proceeds. Borrower agrees that the proceeds of the Loans shall be
used solely to pay related fees and expenses in connection with this Agreement
and for working capital and general corporate purposes. The proceeds of the Loan
will not be used in violation of Anti-Corruption Laws or applicable Sanctions.
 
7.18 Equity Event. On or before March 7, 2019, Borrower shall provide evidence
that Parent has raised at least an amount equal to the sum of (i) Fifteen
Million Dollars ($15,000,000.00) in unrestricted (including, not subject to any
redemption, clawback, escrow or similar encumbrance or restriction other than in
the case the Permitted Convertible Debt Financing) net cash proceeds from one or
more bona fide equity financings, Subordinated Indebtedness (which, for the
avoidance of doubt, may include the net proceeds received from any Permitted
Convertible Debt Financing (other than any amounts used to purchase equity
derivatives in connection with such Permitted Convertible Debt Financing)),
and/or upfront proceeds from business development transactions permitted under
this Agreement, in each case after February 7, 2019, and prior to March 7, 2019,
subject to reasonable verification by Agent based upon reasonable supporting
documentation.
 
7.19 Notwithstanding anything herein to the contrary, no assets or liabilities
of the Borrower or its Subsidiaries (other than Ariston) shall be transferred to
Ariston.
 
 

 
 
7.20 Compliance with Laws. Borrower (i) shall maintain, and shall cause its
Subsidiaries to maintain, compliance in all material respect with all applicable
laws, rules or regulations (including any such law, rule or regulation with
respect to the making or brokering of loans or financial accommodations), and
(ii) shall, or cause its Subsidiaries to, obtain and maintain all required
governmental authorizations, approvals, licenses, franchises, permits or
registrations reasonably necessary in connection with the conduct of Borrower’s
business.
 
Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of
its Subsidiaries permit any controlled Affiliate to, directly or indirectly,
knowingly enter into any documents, instruments, agreements or contracts with
any Person listed on the OFAC Lists. Neither Borrower nor any of its
Subsidiaries shall, nor shall Borrower or any of its Subsidiaries, permit any
controlled Affiliate to, directly or indirectly (i) conduct any business or
engage in any transaction or dealing with any Blocked Person, including, without
limitation, the making or receiving of any contribution of funds, goods or
services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise
engage in any transaction relating to, any property or interests in property
blocked pursuant to Executive Order No. 13224 or any similar executive order or
other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in Executive Order No.
13224 or other Anti-Terrorism Law.
 

Borrower has implemented and maintains in effect policies and procedures
designed to ensure compliance by the Borrower, its Subsidiaries and their
respective directors, officers, employees and agents with Anti-Corruption Laws
and applicable Sanctions, and Borrower, its Subsidiaries and their respective
officers and employees and to the knowledge of Borrower its directors and
agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in
all material respects.
 
None of Borrower, any of its Subsidiaries or any of their respective directors,
officers or employees, or to the knowledge of Borrower, any agent for Borrower
or its Subsidiaries that will act in any capacity in connection with or benefit
from the credit facility established hereby, is a Sanctioned Person. No Loan,
use of proceeds or other transaction contemplated by this Agreement will violate
Anti-Corruption Laws or applicable Sanctions.
 
7.21 Financial Covenant (Minimum Cash). In the event Borrower fails to achieve
Performance Milestone I on or before July 31, 2019, beginning on August 1, 2019,
Borrower shall, at all times prior to Borrower’s achievement of both Performance
Milestone II and Performance Milestone IV, maintain Unrestricted Cash in an
amount greater than or equal to Ten Million Dollars ($10,000,000) plus the
amount of Borrower’s accounts payable under GAAP not paid after the 90th day
following the due date for such accounts payable, and not contested, challenged
or discussed in good faith. Borrower shall provide Agent evidence of compliance
with this Section 7.21 in each Compliance Certificate and upon request in form
and substance reasonably acceptable to Agent, along with supporting
documentation reasonably requested by Agent.
 
7.22 Post-Closing Obligations. Notwithstanding any provision herein or in any
other Loan Document to the contrary, to the extent not actually delivered on or
prior to the Closing Date, Borrower shall:
 
(a) within 30 days of the Closing Date, deliver to Agent all insurance
endorsements required hereunder which shall be in form and substance reasonably
satisfactory to Agent in its reasonable discretion;
 
(b) within 3 Business Days of the Closing Date (or such later date as Agent may
agree to in its sole discretion), fully-executed copies of Account Control
Agreements with respect to Borrower’s accounts maintained at Wells Fargo
Clearing Services, LLC and Pershing Advisor Solutions LLC, in form and substance
reasonably satisfactory to Agent;
 
(c) within 30 days of the Closing Date (or such later date as Agent may agree to
in its sole discretion), a fully-executed landlord waiver, in form and substance
reasonably satisfactory to Agent, for Borrower’s location at: 2 Gansevoort
Street, 9th Floor, New York, NY 10014; and
 
(d) within 5 Business Days of the Closing Date (or such later date as Agent may
agree to in its sole discretion), a fully-executed Intercompany Subordination
Agreement, in form and substance reasonably satisfactory to Agent.
 
7.23 Transactions with Affiliates. Borrower shall not and shall not permit any
Subsidiary to, directly or indirectly, enter into or permit to exist any
transaction of any kind with any Affiliate of Borrower or such Subsidiary on
terms that are materially less favorable to Borrower or such Subsidiary, as the
case may be, than those that might be obtained in an arm’s length transaction
from a Person who is not an Affiliate of Borrower or such Subsidiary, except:
(i) transactions between or among Borrowers (or any entity that becomes a
Borrower as a result of such transaction) not involving any other Affiliate;
(ii) loans or advances to employees, officers and directors otherwise
constituting a Permitted Investment and (iii) transactions set forth on Schedule
7.23, as those agreements and instruments may be amended, modified,
supplemented, extended, renewed or refinanced from time to time in accordance
with the other terms of this covenant or to the extent not more disadvantageous
to the Agent and Lender in any material respect.
 
SECTION 8. RIGHT TO INVEST
 
8.1  Lender or its assignee or nominee shall have the right, in its discretion,
to participate in any Subsequent Financing in an amount of up to $2,000,000 on
the same terms, conditions and pricing afforded to others participating in any
such Subsequent Financing. This Section 8.1, and all rights and obligations
hereunder, shall terminate upon the later of (a) the repayment in full of all
Secured Obligations (other than any inchoate indemnity obligations and any other
obligations which, by their terms, are to survive the termination of this
Agreement) and (b) termination or exercise in full of the Warrant.
 
 

 
 
SECTION 9. EVENTS OF DEFAULT
 
The occurrence of any one or more of the following events shall be an Event of
Default:
 
9.1 Payments. Borrower fails to pay any amount due under this Agreement or any
of the other Loan Documents on the due date; provided, however, that an Event of
Default shall not occur on account of a failure to pay due solely to an
administrative or operational error of Agent or Lender or Borrower’s bank if
Borrower had the funds to make the payment when due and makes the payment within
three (3) Business Days following Borrower’s knowledge of such failure to pay;
or
 
9.2 Covenants. Borrower breaches or defaults in the performance of any covenant
or Secured Obligation under this Agreement, or any of the other Loan Documents,
and (a) with respect to a default under any covenant under this Agreement (other
than under Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15, 7.16, 7.17,
7.18, 7.19, 7.20, 7.21 and 7.22), and any other Loan Document, such default
continues for more than ten (10) Business Days after the earlier of the date on
which (i) Agent or Lender has given notice of such default to Borrower and (ii)
Borrower has actual knowledge of such default or (b) with respect to a default
under any of Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15, 7.16, 7.17,
7.18, 7.19, 7.20, 7.21 and 7.22 the occurrence of such default; or
 
9.3 Material Adverse Effect. A circumstance has occurred that could reasonably
be expected to have a Material Adverse Effect; or
 
9.4 Representations. Any representation or warranty made by Borrower in any Loan
Document shall have been false or misleading in any material respect when made
or when deemed made; or
 

9.5 Insolvency. Borrower (A) (i) shall make an assignment for the benefit of
creditors; or (ii) shall be generally unable to pay its debts as they become
due, or shall become insolvent; or (iii) shall file a voluntary petition in
bankruptcy; or (iv) shall file any petition, answer, or document seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation pertinent to such circumstances; or (v) shall seek or consent to or
acquiesce in the appointment of any trustee, receiver, or liquidator of Borrower
or of all or any substantial part (i.e., 33-1/3% or more) of the assets or
property of Borrower; or (vi) shall cease operations of its business as its
business has normally been conducted, or terminate substantially all of its
employees; or (vii) Borrower or its directors or majority shareholders shall
take any action initiating any of the foregoing actions described in clauses (i)
through (vi); or (B) either (i) forty-five (45) days shall have expired after
the commencement of an involuntary action against Borrower seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation,
without such action being dismissed or all orders or proceedings thereunder
affecting the operations or the business of Borrower being stayed; or (ii) a
stay of any such order or proceedings shall thereafter be set aside and the
action setting it aside shall not be timely appealed; or (iii) Borrower shall
file any answer admitting or not contesting the material allegations of a
petition filed against Borrower in any such proceedings; or (iv) the court in
which such proceedings are pending shall enter a decree or order granting the
relief sought in any such proceedings; or (v) forty-five (45) days shall have
expired after the appointment, without the consent or acquiescence of Borrower,
of any trustee, receiver or liquidator of Borrower or of all or any substantial
part of the properties of Borrower without such appointment being vacated; or
 
9.6 Attachments; Judgments. Any portion of Borrower’s assets is attached or
seized, or a levy is filed against any such assets, or a final judgment or
judgments is/are entered for the payment of money (not covered by independent
third party insurance as to which liability has not been rejected by such
insurance carrier), individually or in the aggregate, of at least $750,000, or
Borrower is enjoined or in any way prevented by court order from conducting any
part of its business for a period of more than 30 consecutive days; or
 
9.7 Other Indebtedness. The occurrence of any default under any agreement of
Borrower evidencing any Indebtedness in excess of $750,000 and such default
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness, if the effect of such
default is to accelerate, or to permit the acceleration of, the maturity of such
Indebtedness or otherwise to cause, or to permit the holder thereof to cause,
such Indebtedness to mature, in each case whether or not exercised.
 
SECTION 10.  REMEDIES
 
10.1  General. Upon and during the continuance of any one or more Events of
Default, (i) Agent may, and at the direction of the Required Lenders shall,
accelerate and demand payment of all or any part of the Secured Obligations
together with a Prepayment Charge (if any) and declare them to be immediately
due and payable (provided, that upon the occurrence of an Event of Default of
the type described in Section 9.5, all of the Secured Obligations (including,
without limitation, the Prepayment Charge (if any) and the End of Term Charge)
shall automatically be accelerated and made due and payable, in each case
without any further notice or act), (ii) Agent may, at its option, sign and file
in Borrower’s name any and all collateral assignments, notices, control
agreements, security agreements and other documents it deems necessary or
appropriate to perfect or protect the repayment of the Secured Obligations, and
in furtherance thereof, Borrower hereby grants Agent an irrevocable power of
attorney coupled with an interest, and (iii) Agent may notify any of Borrower’s
account debtors to make payment directly to Agent, compromise the amount of any
such account on Borrower’s behalf and endorse Agent’s name without recourse on
any such payment for deposit directly to Agent’s account. Agent may, and at the
direction of the Required Lenders shall, exercise all rights and remedies with
respect to the Collateral under the Loan Documents or otherwise available to it
under the UCC and other applicable law, including the right to release, hold,
sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or
any part of the Collateral and the right to occupy, utilize, process and
commingle the Collateral. All Agent’s rights and remedies shall be cumulative
and not exclusive.
 
10.2 Collection; Foreclosure. Upon the occurrence and during the continuance of
any Event of Default, Agent may, and at the direction of the Required Lenders
shall, at any time or from time to time, apply, collect, liquidate, sell in one
or more sales, lease or otherwise dispose of, any or all of the Collateral, in
its then condition or following any commercially reasonable preparation or
processing, in such order as Agent may elect. Any such sale may be made either
at public or private sale at its place of business or elsewhere. Borrower agrees
that any such public or private sale may occur upon ten (10) calendar days’
prior written notice to Borrower. Agent may require Borrower to assemble the
Collateral and make it available to Agent at a place designated by Agent that is
reasonably convenient to Agent and Borrower. The proceeds of any sale,
disposition or other realization upon all or any part of the Collateral shall be
applied by Agent in the following order of priorities:
 
First, to Agent and Lender in an amount sufficient to pay in full Agent’s and
Lender’s reasonable costs and professionals’ and advisors’ fees and expenses as
described in Section 11.11;
 
 

 
 
Second, to Lender in an amount equal to the then unpaid amount of the Secured
Obligations (including principal, interest, and the Default Rate interest), in
such order and priority as Agent may choose in its sole discretion; and
 
Finally, after the full and final payment in Cash of all of the Secured
Obligations (other than inchoate obligations), to any creditor holding a junior
Lien on the Collateral, or to Borrower or its representatives or as a court of
competent jurisdiction may direct.
 
Agent shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under the UCC.
 
10.3 No Waiver. Agent shall be under no obligation to marshal any of the
Collateral for the benefit of Borrower or any other Person, and Borrower
expressly waives all rights, if any, to require Agent to marshal any Collateral.
 
10.4 Cumulative Remedies. The rights, powers and remedies of Agent hereunder
shall be in addition to all rights, powers and remedies given by statute or rule
of law and are cumulative. The exercise of any one or more of the rights, powers
and remedies provided herein shall not be construed as a waiver of or election
of remedies with respect to any other rights, powers and remedies of Agent.
 
SECTION 11. MISCELLANEOUS
 
11.1     Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
 
11.2 Notice. Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated,
or permitted under the Loan Documents or with respect to the subject matter
hereof shall be in writing, and shall be deemed to have been validly served,
given, delivered, and received upon the earlier of: (i) the day of transmission
by electronic mail or hand delivery or delivery by an overnight express service
or overnight mail delivery service; or (ii) the third (3rd) calendar day after
deposit in the United States of America mails, with proper first class postage
prepaid, in each case addressed to the party to be notified as follows:
 
(a) If to Agent:
HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer and Michael Dutra and Bryan Jadot
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: legal@herculestech.com; mdutra@htgc.com; bjadot@htgc.com
Telephone: 650-289-3060
 
(b) If to Lender:
HERCULES CAPITAL, INC., HERCULES TECHNOLOGY III, L.P
Legal Department
Attention: Chief Legal Officer and Michael Dutra and Bryan Jadot
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: legal@herculestech.com; mdutra@htgc.com; bjadot@htgc.com
Telephone: 650-289-3060
 
(c) If to Borrower:
TG THERAPEUTICS, INC.
Attention: Sean Power, Chief Financial Officer
2 Gansevoort St., 9th Floor
New York, NY 10014
email: sp@tgtxinc.com
Telephone: 212-554-4484
 
with a copy (which shall not constitute notice) to:
ALSTON & BIRD LLP
Attention: Paul W. Hespel
 90 Park Avenue
 New York, NY 10016
 email: paul.hespel@alston.com
 Telephone: 212-210-9492
 
or to such other address as each party may designate for itself by like notice.
 
 

 
 
11.3 Entire Agreement; Amendments.
 
(a) This Agreement and the other Loan Documents constitute the entire agreement
and understanding of the parties hereto in respect of the subject matter hereof
and thereof, and supersede and replace in their entirety any prior proposals,
term sheets, non-disclosure or confidentiality agreements, letters, negotiations
or other documents or agreements, whether written or oral, with respect to the
subject matter hereof or thereof (including, without limitation, Agent’s revised
proposal letter dated February 7, 2019 and the Non-Disclosure Agreement).
 
(b) Neither this Agreement, any other Loan Document, nor any terms hereof or
thereof may be amended, restated, amended and restated, supplemented or modified
except in accordance with the provisions of this Section 11.3(b). The Required
Lenders and Borrower party to the relevant Loan Document may, or, with the
written consent of the Required Lenders, the Agent and the Borrower party to the
relevant Loan Document may, from time to time, (i) enter into written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (ii) waive, on such terms and conditions as the
Required Lenders or the Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (A) forgive the principal amount or extend the final scheduled date of
maturity of any Loan, extend the scheduled date of any amortization payment in
respect of any Term Loan, reduce the stated rate of any interest or fee payable
hereunder or extend the scheduled date of any payment thereof, in each case
without the written consent of each Lender directly affected thereby; (B)
eliminate or reduce the voting rights of any Lender under this Section 11.3(b)
without the written consent of such Lender; (C) reduce any percentage specified
in the definition of Required Lenders, consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement and the
other Loan Documents, release all or substantially all of the Collateral or
release a Borrower from its obligations under the Loan Documents, in each case
without the written consent of all Lenders; or (D) amend, modify or waive any
provision of Section 11.17 without the written consent of the Agent. Any such
waiver and any such amendment, supplement or modification shall apply equally to
each Lender and shall be binding upon Borrower, the Lender, the Agent and all
future holders of the Loans.
 
11.4 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
 
11.5 No Waiver. The powers conferred upon Agent and Lender by this Agreement are
solely to protect its rights hereunder and under the other Loan Documents and
its interest in the Collateral and shall not impose any duty upon Agent or
Lender to exercise any such powers. No omission or delay by Agent or Lender at
any time to enforce any right or remedy reserved to it, or to require
performance of any of the terms, covenants or provisions hereof by Borrower at
any time designated, shall be a waiver of any such right or remedy to which
Agent or Lender is entitled, nor shall it in any way affect the right of Agent
or Lender to enforce such provisions thereafter.
 
11.6 Survival. All agreements, representations and warranties contained in this
Agreement and the other Loan Documents or in any document delivered pursuant
hereto or thereto shall be for the benefit of Agent and Lender and shall survive
the execution and delivery of this Agreement. Sections 6.3 and 8.1 shall survive
the termination of this Agreement (except as otherwise specified in Section
8.1).
 
11.7 Successors and Assigns. The provisions of this Agreement and the other Loan
Documents shall inure to the benefit of and be binding on Borrower and its
permitted assigns (if any). Borrower shall not assign its obligations under this
Agreement or any of the other Loan Documents without Agent’s express prior
written consent, and any such attempted assignment shall be void and of no
effect. Agent and Lender may assign, transfer, or endorse its rights hereunder
and under the other Loan Documents without prior notice to Borrower, and all of
such rights shall inure to the benefit of Agent’s and Lender’s successors and
assigns; provided that as long as no Event of Default has occurred and is
continuing, neither Agent nor any Lender may assign, transfer or endorse its
rights hereunder or under the Loan Documents to any party that is a Disqualified
Lender, it being acknowledged that in all cases, any transfer to an Affiliate of
any Lender or Agent shall be allowed. Notwithstanding the foregoing, (x) in
connection with any assignment by a Lender as a result of a forced divestiture
at the request of any regulatory agency, the restrictions set forth herein shall
not apply and Agent and Lender may assign, transfer or indorse its rights
hereunder and under the other Loan Documents to any Person or party and (y) in
connection with a Lender’s own financing or securitization transactions, the
restrictions set forth herein shall not apply and Agent and Lender may assign,
transfer or indorse its rights hereunder and under the other Loan Documents to
any Person or party providing such financing or formed to undertake such
securitization transaction and any transferee of such Person or party upon the
occurrence of a default, event of default or similar occurrence with respect to
such financing or securitization transaction; provided that no such sale,
transfer, pledge or assignment under this clause (y) shall release such Lender
from any of its obligations hereunder or substitute any such Person or party for
such Lender as a party hereto until Agent shall have received and accepted an
effective assignment agreement from such Person or party in form satisfactory to
Agent executed, delivered and fully completed by the applicable parties thereto,
and shall have received such other information regarding such assignee as Agent
reasonably shall require.
 
11.8 Governing Law. This Agreement and the other Loan Documents have been
negotiated and delivered to Agent and Lender in the State of California, and
shall have been accepted by Agent and Lender in the State of California. Payment
to Agent and Lender by Borrower of the Secured Obligations is due in the State
of California. This Agreement and the other Loan Documents shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California, excluding conflict of laws principles that would cause the
application of laws of any other jurisdiction.
 
11.9 Consent to Jurisdiction and Venue. All judicial proceedings (to the extent
that the reference requirement of Section 11.10 is not applicable) arising in or
under or related to this Agreement or any of the other Loan Documents may be
brought in any state or federal court located in the State of California. By
execution and delivery of this Agreement, each party hereto generally and
unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa
Clara County, State of California; (b) waives any objection as to jurisdiction
or venue in Santa Clara County, State of California; (c) agrees not to assert
any defense based on lack of jurisdiction or venue in the aforesaid courts; and
(d) irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement or the other Loan Documents. Service of process
on any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set
forth in Section 11.2, and shall be deemed effective and received as set forth
in Section 11.2. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.
 
 

 
 
11.10 Mutual Waiver of Jury Trial / Judicial Reference.
 
(a) Because disputes arising in connection with complex financial transactions
are most quickly and economically resolved by an experienced and expert Person
and the parties wish applicable state and federal laws to apply (rather than
arbitration rules), the parties desire that their disputes be resolved by a
judge applying such applicable laws. EACH OF BORROWER, AGENT AND LENDER
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF
ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM
(COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, LENDER OR THEIR
RESPECTIVE ASSIGNEE OR BY AGENT, LENDER OR THEIR RESPECTIVE ASSIGNEE AGAINST
BORROWER. This waiver extends to all such Claims, including Claims that involve
Persons other than Agent, Borrower and Lender; Claims that arise out of or are
in any way connected to the relationship among Borrower, Agent and Lender; and
any Claims for damages, breach of contract, tort, specific performance, or any
equitable or legal relief of any kind, arising out of this Agreement, any other
Loan Document.
 
(b) If the waiver of jury trial set forth in Section 11.10(a) is ineffective or
unenforceable, the parties agree that all Claims shall be resolved by reference
to a private judge sitting without a jury, pursuant to Code of Civil Procedure
Section 638, before a mutually acceptable referee or, if the parties cannot
agree, a referee selected by the Presiding Judge of the Santa Clara County,
California. Such proceeding shall be conducted in Santa Clara County,
California, with California rules of evidence and discovery applicable to such
proceeding.
 
(c) In the event Claims are to be resolved by judicial reference, either party
may seek from a court identified in Section 11.9, any prejudgment order, writ or
other relief and have such prejudgment order, writ or other relief enforced to
the fullest extent permitted by law notwithstanding that all Claims are
otherwise subject to resolution by judicial reference.
 
11.11 Professional Fees. Borrower promises to pay Agent’s and Lender’s fees and
expenses necessary to finalize the loan documentation, including but not limited
to reasonable and invoiced attorneys’ fees, UCC searches, filing costs, and
other miscellaneous expenses. In addition, Borrower promises to pay any and all
reasonable and invoiced attorneys’ and other professionals’ fees and expenses
incurred by Agent and Lender after the Closing Date in connection with or
related to: (a) the Loan; (b) the administration, collection, or enforcement of
the Loan; (c) the amendment or modification of the Loan Documents; (d) any
waiver, consent, release, or termination under the Loan Documents; (e) the
protection, preservation, audit, field exam, sale, lease, liquidation, or
disposition of Collateral or the exercise of remedies with respect to the
Collateral; (f) any legal, litigation, administrative, arbitration, or out of
court proceeding in connection with or related to Borrower or the Collateral,
and any appeal or review thereof; and (g) any bankruptcy, restructuring,
reorganization, assignment for the benefit of creditors, workout, foreclosure,
or other action related to Borrower, the Collateral, the Loan Documents,
including representing Agent or Lender in any adversary proceeding or contested
matter commenced or continued by or on behalf of Borrower’s estate, and any
appeal or review thereof.
 
11.12 Confidentiality. Agent and Lender acknowledge that certain items of
Collateral and information provided to Agent and Lender by Borrower are
confidential and proprietary information of Borrower, if and to the extent such
information either (x) is marked as confidential by Borrower at the time of
disclosure, or (y) should reasonably be understood to be confidential (the
“Confidential Information”). Accordingly, Agent and Lender agree that any
Confidential Information it may obtain in the course of acquiring,
administering, or perfecting Agent’s security interest in the Collateral shall
not be disclosed to any other Person or entity in any manner whatsoever, in
whole or in part, without the prior written consent of Borrower, except that
Agent and Lender may disclose any such information: (a) to its own directors,
officers, employees, accountants, counsel and other professional advisors and to
its Affiliates if Agent or Lender in their sole discretion determines that any
such party should have access to such information in connection with such
party’s responsibilities in connection with the Loan or this Agreement and,
provided that such recipient of such Confidential Information either (i) agrees
to be bound by the confidentiality provisions of this paragraph or (ii) is
otherwise subject to confidentiality restrictions that reasonably protect
against the disclosure of Confidential Information; (b) if such information is
generally available to the public; (c) if required or appropriate in any report,
statement or testimony submitted to any governmental authority having or
claiming to have jurisdiction over Agent or Lender; (d) if required or
appropriate in response to any summons or subpoena or in connection with any
litigation, to the extent permitted or deemed advisable by Agent’s or Lender’s
counsel; (e) to comply with any legal requirement or law applicable to Agent or
Lender; (f) to the extent reasonably necessary in connection with the exercise
of any right or remedy under any Loan Document, including Agent’s sale, lease,
or other disposition of Collateral after default; (g) to any participant or
assignee of Agent or Lender or any prospective participant or assignee;
provided, that such participant or assignee or prospective participant or
assignee agrees in writing to be bound by this Section prior to disclosure; or
(h) otherwise with the prior consent of Borrower; provided, that any disclosure
made in violation of this Agreement shall not affect the obligations of Borrower
or any of its Affiliates or any guarantor under this Agreement or the other Loan
Documents. Agent’s and Lender’s obligations under this Section 11.12 shall
supersede all of their respective obligations under the Non-Disclosure
Agreement.
 
11.13  Assignment of Rights. Borrower acknowledges and understands that Agent or
Lender may, subject to Section 11.7, sell and assign all or part of its interest
hereunder and under the Loan Documents to any Person or entity (an “Assignee”).
After such assignment the term “Agent” or “Lender” as used in the Loan Documents
shall mean and include such Assignee, and such Assignee shall be vested with all
rights, powers and remedies of Agent and Lender hereunder with respect to the
interest so assigned; but with respect to any such interest not so transferred,
Agent and Lender shall retain all rights, powers and remedies hereby given. No
such assignment by Agent or Lender shall relieve Borrower of any of its
obligations hereunder. Lender agrees that in the event of any transfer by it of
the Note(s)(if any), it will endorse thereon a notation as to the portion of the
principal of the Note(s), which shall have been paid at the time of such
transfer and as to the date to which interest shall have been last paid thereon.
 
11.14 Revival of Secured Obligations. This Agreement and the Loan Documents
shall remain in full force and effect and continue to be effective if any
petition is filed by or against Borrower for liquidation or reorganization, if
Borrower becomes insolvent or makes an assignment for the benefit of creditors,
if a receiver or trustee is appointed for all or any significant part of
Borrower’s assets, or if any payment or transfer of Collateral is recovered from
Agent or Lender. The Loan Documents and the Secured Obligations and Collateral
security shall continue to be effective, or shall be revived or reinstated, as
the case may be, if at any time payment and performance of the Secured
Obligations or any transfer of Collateral to Agent, or any part thereof is
rescinded, avoided or avoidable, reduced in amount, or must otherwise be
restored or returned by, or is recovered from, Agent, Lender or by any obligee
of the Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment, performance, or transfer
of Collateral had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or
recovered, the Loan Documents and the Secured Obligations shall be deemed,
without any further action or documentation, to have been revived and reinstated
except to the extent of the full, final, and indefeasible payment to Agent or
Lender in Cash.
 
11.15 Counterparts. This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.
 
 

 
 
11.16 No Third Party Beneficiaries. No provisions of the Loan Documents are
intended, nor will be interpreted, to provide or create any third-party
beneficiary rights or any other rights of any kind in any Person other than
Agent, Lender and Borrower unless specifically provided otherwise herein, and,
except as otherwise so provided, all provisions of the Loan Documents will be
personal and solely among Agent, the Lender and the Borrower.
 
11.17 Agency.
 
(a) Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its
behalf as the Agent hereunder and under the other Loan Documents and authorizes
the Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto.
 
(b) Lender agrees to indemnify the Agent in its capacity as such (to the extent
not reimbursed by Borrower and without limiting the obligation of Borrower to do
so), according to its respective Term Commitment percentages (based upon the
total outstanding Term Loan Commitments) in effect on the date on which
indemnification is sought under this Section 11.17, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.
 
(c) Agent in Its Individual Capacity. The Person serving as the Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Agent and the term
“Lender” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include each such Person serving as Agent hereunder in its
individual capacity.
 
(d) Exculpatory Provisions. The Agent shall have no duties or obligations except
those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, the Agent shall not:
 
(i) be subject to any fiduciary or other implied duties, regardless of whether
any default or any Event of Default has occurred and is continuing;
 
(ii) have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Agent is required to
exercise as directed in writing by the Lender, provided that the Agent shall not
be required to take any action that, in its opinion or the opinion of its
counsel, may expose the Agent to liability or that is contrary to any Loan
Document or applicable law; and
 
(iii) except as expressly set forth herein and in the other Loan Documents, have
any duty to disclose, and the Agent shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Affiliates that
is communicated to or obtained by any Person serving as the Agent or any of its
Affiliates in any capacity.
 
(e) The Agent shall not be liable for any action taken or not taken by it (i)
with the consent or at the request of the Lender or as the Agent shall believe
in good faith shall be necessary, under the circumstances or (ii) in the absence
of its own gross negligence or willful misconduct.
 
(f) The 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 this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any default or Event of Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Section 4 or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the Agent.
 
(g) Reliance by Agent. Agent may rely, and shall be fully protected in acting,
or refraining to act, upon, any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, bond or other paper or
document that it has no reason to believe to be other than genuine and to have
been signed or presented by the proper party or parties or, in the case of
cables, telecopies and telexes, to have been sent by the proper party or
parties. In the absence of its gross negligence or willful misconduct, Agent may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to Agent
and conforming to the requirements of the Loan Agreement or any of the other
Loan Documents. Agent may consult with counsel, and any opinion or legal advice
of such counsel shall be full and complete authorization and protection in
respect of any action taken, not taken or suffered by Agent hereunder or under
any Loan Documents in accordance therewith. Agent shall have the right at any
time to seek instructions concerning the administration of the Collateral from
any court of competent jurisdiction. Agent shall not be under any obligation to
exercise any of the rights or powers granted to Agent by this Agreement, the
Loan Agreement and the other Loan Documents at the request or direction of
Lenders unless Agent shall have been provided by Lender with adequate security
and indemnity against the costs, expenses and liabilities that may be incurred
by it in compliance with such request or direction.
 
 

 
 
11.18 Publicity. None of the parties hereto nor any of its respective member
businesses and Affiliates shall, without the other parties’ prior written
consent (which shall not be unreasonably withheld or delayed), publicize or use
(a) the other party’s name (including a brief description of the relationship
among the parties hereto), logo or hyperlink to such other parties’ web site,
separately or together, in written and oral presentations, advertising,
promotional and marketing materials, client lists, public relations materials or
on its web site (together, the “Publicity Materials”); (b) the names of officers
of such other parties in the Publicity Materials; and (c) such other parties’
name, trademarks, servicemarks in any news or press release concerning such
party; provided however, notwithstanding anything to the contrary herein, no
such consent shall be required (i) to the extent necessary to comply with the
requests of any regulators, legal requirements or laws applicable to such party,
pursuant to any listing agreement with any national securities exchange (so long
as such party provides prior notice to the other party hereto to the extent
reasonably practicable) and (ii) to comply with Section 11.12.
 
11.19 Multiple Borrowers.
 
(a) Borrower’s Agent. Each of the Borrowers hereby irrevocably appoints Parent
as its agent, attorney-in-fact and legal representative for all purposes,
including requesting disbursement of the Term Loan and receiving account
statements and other notices and communications to Borrowers (or any of them)
from the Agent or any Lender. The Agent may rely, and shall be fully protected
in relying, on any request for the Term Loan, disbursement instruction, report,
information or any other notice or communication made or given by Parent,
whether in its own name or on behalf of one or more of the other Borrowers, and
the Agent shall not have any obligation to make any inquiry or request any
confirmation from or on behalf of any other Borrower as to the binding effect on
it of any such request, instruction, report, information, other notice or
communication, nor shall the joint and several character of the Borrowers’
obligations hereunder be affected thereby.
 
(b) Waivers. Each Borrower hereby waives: (i) any right to require the Agent to
institute suit against, or to exhaust its rights and remedies against, any other
Borrower or any other person, or to proceed against any property of any kind
which secures all or any part of the Secured Obligations, or to exercise any
right of offset or other right with respect to any reserves, credits or deposit
accounts held by or maintained with the Agent or any Indebtedness of the Agent
or any Lender to any other Borrower, or to exercise any other right or power, or
pursue any other remedy the Agent or any Lender may have; (ii) any defense
arising by reason of any disability or other defense of any other Borrower or
any guarantor or any endorser, co-maker or other person, or by reason of the
cessation from any cause whatsoever of any liability of any other Borrower or
any guarantor or any endorser, co-maker or other person, with respect to all or
any part of the Secured Obligations, or by reason of any act or omission of the
Agent or others which directly or indirectly results in the discharge or release
of any other Borrower or any guarantor or any other person or any Secured
Obligations or any security therefor, whether by operation of law or otherwise;
(iii) any defense arising by reason of any failure of the Agent to obtain,
perfect, maintain or keep in force any Lien on, any property of any Borrower or
any other person; (iv) any defense based upon or arising out of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any other Borrower or any
guarantor or any endorser, co-maker or other person, including without
limitation any discharge of, or bar against collecting, any of the Secured
Obligations (including without limitation any interest thereon), in or as a
result of any such proceeding. Until all of the Secured Obligations have been
paid, performed, and discharged in full, nothing shall discharge or satisfy the
liability of any Borrower hereunder except the full performance and payment of
all of the Secured Obligations. If any claim is ever made upon the Agent for
repayment or recovery of any amount or amounts received by the Agent in payment
of or on account of any of the Secured Obligations, because of any claim that
any such payment constituted a preferential transfer or fraudulent conveyance,
or for any other reason whatsoever, and the Agent repays all or part of said
amount by reason of any judgment, decree or order of any court or administrative
body having jurisdiction over the Agent or any of its property, or by reason of
any settlement or compromise of any such claim effected by the Agent with any
such claimant (including without limitation the any other Borrower), then and in
any such event, each Borrower agrees that any such judgment, decree, order,
settlement and compromise shall be binding upon such Borrower, notwithstanding
any revocation or release of this Agreement or the cancellation of any note or
other instrument evidencing any of the Secured Obligations, or any release of
any of the Secured Obligations, and each Borrower shall be and remain liable to
the Agent and the Lenders under this Agreement for the amount so repaid or
recovered, to the same extent as if such amount had never originally been
received by the Agent or any Lender, and the provisions of this sentence shall
survive, and continue in effect, notwithstanding any revocation or release of
this Agreement. Each Borrower hereby expressly and unconditionally waives all
rights of subrogation, reimbursement and indemnity of every kind against any
other Borrower, and all rights of recourse to any assets or property of any
other Borrower, and all rights to any collateral or security held for the
payment and performance of any Secured Obligations, including (but not limited
to) any of the foregoing rights which Borrower may have under any present or
future document or agreement with any other Borrower or other person, and
including (but not limited to) any of the foregoing rights which any Borrower
may have under any equitable doctrine of subrogation, implied contract, or
unjust enrichment, or any other equitable or legal doctrine.
 
(c) Consents. Each Borrower hereby consents and agrees that, without notice to
or by Borrower and without affecting or impairing in any way the obligations or
liability of Borrower hereunder, the Agent may, from time to time before or
after revocation of this Agreement, do any one or more of the following in its
sole and absolute discretion: (i) accept partial payments of, compromise or
settle, renew, extend the time for the payment, discharge, or performance of,
refuse to enforce, and release all or any parties to, any or all of the Secured
Obligations; (ii) grant any other indulgence to any Borrower or any other Person
in respect of any or all of the Secured Obligations or any other matter; (iii)
accept, release, waive, surrender, enforce, exchange, modify, impair, or extend
the time for the performance, discharge, or payment of, any and all property of
any kind securing any or all of the Secured Obligations or any guaranty of any
or all of the Secured Obligations, or on which the Agent at any time may have a
Lien, or refuse to enforce its rights or make any compromise or settlement or
agreement therefor in respect of any or all of such property; (iv) substitute or
add, or take any action or omit to take any action which results in the release
of, any one or more other Borrowers or any endorsers or guarantors of all or any
part of the Secured Obligations, including, without limitation one or more
parties to this Agreement, regardless of any destruction or impairment of any
right of contribution or other right of Borrower; (v) apply any sums received
from any other Borrower, any guarantor, endorser, or co-signer, or from the
disposition of any Collateral or security, to any Indebtedness whatsoever owing
from such person or secured by such Collateral or security, in such manner and
order as the Agent determines in its sole discretion, and regardless of whether
such Indebtedness is part of the Secured Obligations, is secured, or is due and
payable. Each Borrower consents and agrees that the Agent shall be under no
obligation to marshal any assets in favor of Borrower, or against or in payment
of any or all of the Secured Obligations. Each Borrower further consents and
agrees that the Agent shall have no duties or responsibilities whatsoever with
respect to any property securing any or all of the Secured Obligations. Without
limiting the generality of the foregoing, the Agent shall have no obligation to
monitor, verify, audit, examine, or obtain or maintain any insurance with
respect to, any property securing any or all of the Secured Obligations.
 
 

 
 
(d) Independent Liability. Each Borrower hereby agrees that one or more
successive or concurrent actions may be brought hereon against such Borrower, in
the same action in which any other Borrower may be sued or in separate actions,
as often as deemed advisable by Agent. Each Borrower is fully aware of the
financial condition of each other Borrower and is executing and delivering this
Agreement based solely upon its own independent investigation of all matters
pertinent hereto, and such Borrower is not relying in any manner upon any
representation or statement of the Agent or any Lender with respect thereto.
Each Borrower represents and warrants that it is in a position to obtain, and
each Borrower hereby assumes full responsibility for obtaining, any additional
information concerning any other Borrower’s financial condition and any other
matter pertinent hereto as such Borrower may desire, and such Borrower is not
relying upon or expecting the Agent to furnish to it any information now or
hereafter in the Agent’s possession concerning the same or any other matter.
 
(e) Subordination. All Indebtedness of a Borrower now or hereafter arising held
by another Borrower is subordinated to the Secured Obligations and the Borrower
holding the Indebtedness shall take all actions reasonably requested by Agent to
effect, to enforce and to give notice of such subordination.
 
(SIGNATURES TO FOLLOW)
 
 
 

 

 
IN WITNESS WHEREOF, Borrower, Agent and Lender have duly executed and delivered
this Loan and Security Agreement as of the day and year first above written.
 
BORROWER:
 
TG THERAPEUTICS, INC.
 
Signature:                            

_______________________
Print Name:                

_______________________
Title:                                 
_______________________
 
 
 
TG BIOLOGICS, INC.
 
Signature:                            

_______________________
Print Name:   

_______________________
Title:              

_______________________
 
 

 

 
 
 
Accepted in Palo Alto, California:
 
AGENT:
 
HERCULES CAPITAL, INC.
 
Signature:             

_______________________
 
Print Name:                

_______________________
 
Title:              

_______________________
 
LENDER:
 
HERCULES CAPITAL, INC.
 
HERCULES TECHNOLOGY III, L.P.,
 
a Delaware limited partnership
 
By:            
Hercules Technology SBICManagement, LLC, its GeneralPartner
 
By:            
Hercules Capital, Inc., its Manager
 
By:]
 
Signature:              

_______________________
 
Print Name:         

_______________________
 
Title:              

_______________________
 

 

 

 
Table of Addenda, Exhibits and Schedules
 

Addendum 1: BA Provisions
 
Exhibit A: Advance Request
                  Attachment to Advance Request
 
Exhibit B: Term Note
 
Exhibit C: Name, Locations, and Other Information for Borrower
 
Exhibit D: Borrower’s Patents, Trademarks, Copyrights and Licenses
 
Exhibit E: Borrower’s Deposit Accounts and Investment Accounts
 
Exhibit F: Compliance Certificate
 
Exhibit G: Joinder Agreement
 
Exhibit I: ACH Debit Authorization Agreement
 
 
 
 
Schedule 1 Subsidiaries
Schedule 1.1 Commitments
Schedule 1A Existing Permitted Indebtedness
Schedule 1B Existing Permitted Investments
Schedule 1C Existing Permitted Liens
Schedule 5.3 Consents, Etc.
Schedule 5.8 Tax Matters
Schedule 5.9 Intellectual Property Claims
Schedule 5.10 Intellectual Property
Schedule 5.11 Borrower Products
Schedule 5.14 Capitalization
 
 

 

 
ADDENDUM 1 to LOAN AND SECURITY AGREEMENT
 
  (a) Borrower’s Business.  For purposes of this Addendum 1, Borrower shall be
deemed to include its “affiliates” as defined in Title 13 Code of Federal
Regulations Section 121.103.  Borrower represents and warrants to Agent and
Lender as of the Closing Date and covenants to Agent and Lender for a period of
one year after the Closing Date with respect to subsections 2, 3, 4, 5, 6 and 7
below, as follows:
 
1. Size Status.  Borrower’s primary NAICS code is 541700 and has less than 110
employees in the aggregate;
 
2. No Relender.  Borrower’s primary business activity does not involve, directly
or indirectly, providing funds to others, purchasing debt obligations,
factoring, or long-term leasing of equipment with no provision for maintenance
or repair;
 
3. No Passive Business.  Borrower is engaged in a regular and continuous
business operation (excluding the mere receipt of payments such as dividends,
rents, lease payments, or royalties).  Borrower’s employees are carrying on the
majority of day to day operations.  Borrower will not pass through substantially
all of the proceeds of the Loan to another entity;
 
4. No Real Estate Business.  Borrower is not classified under Major Group 65
(Real Estate) or Industry No. 1531 (Operative Builders) of the SIC Manual.  The
proceeds of the Loan will not be used to acquire or refinance real property
unless Borrower (x) is acquiring an existing property and will use at least 51
percent of the usable square footage for its business purposes; (y) is building
or renovating a building and will use at least 67 percent of the usable square
footage for its business purposes; or (z) occupies the subject property and uses
at least 67 percent of the usable square footage for its business purposes.
 
5. No Project Finance.  Borrower’s assets are not intended to be reduced or
consumed, generally without replacement, as the life of its business progresses,
and the nature of Borrower’s business does not require that a stream of cash
payments be made to the business’s financing sources, on a basis associated with
the continuing sale of assets (e.g., real estate development projects and oil
and gas wells).  The primary purpose of the Loan is not to fund production of a
single item or defined limited number of items, generally over a defined
production period, where such production will constitute the majority of the
activities of Borrower (e.g., motion pictures and electric generating plants).
 
6. No Farm Land Purchases.  Borrower will not use the proceeds of the Loan to
acquire farm land which is or is intended to be used for agricultural or
forestry purposes, such as the production of food, fiber, or wood, or is so
taxed or zoned.
 
7. No Foreign Investment.  The proceeds of the Loan will not be used
substantially for a foreign operation.  At the time of the Loan, Borrower will
not have more than 49 percent of its employees or tangible assets located
outside the United States of America.  The representation in this subsection (7)
is made only as of the date hereof and shall not continue for one year as
contemplated in the first sentence of this Section 1.
 
(b) Small Business Administration Documentation.  Agent and Lender acknowledge
that Borrower completed, executed and delivered to Agent SBA Forms 480, 652 and
1031 (Parts A and B) together with a business plan showing Borrower’s financial
projections (including balance sheets and income and cash flows statements) for
the period described therein and a written statement (whether included in the
purchase agreement or pursuant to a separate statement) from Agent regarding its
intended use of proceeds from the sale of securities to Lender (the “Use of
Proceeds Statement”).  Borrower represents and warrants to Agent and Lender that
the information regarding Borrower and its affiliates set forth in the SBA
Form 480, Form 652 and Form 1031 and the Use of Proceeds Statement delivered as
of the Closing Date is accurate and complete.
 
(c) Inspection.  The following covenants contained in this Section (c) are
intended to supplement and not to restrict the related provisions of the Loan
Documents.  Subject to the preceding sentence, Borrower will permit, for so long
as Lender holds any debt or equity securities of Borrower, Agent, Lender or
their representative, at Agent’s or Lenders’ expense, and examiners of the SBA
to visit and inspect the properties and assets of Borrower, to examine its books
of account and records, and to discuss Borrower’s affairs, finances and accounts
with Borrower’s officers, senior management and accountants, all at such
reasonable times as may be requested by Agent or Lender or the SBA.
 
 

 
 
(d) Annual Assessment.  Promptly after the end of each calendar year (but in any
event prior to February 28 of each year) and at such other times as may be
reasonably requested by Agent or Lender, Borrower will deliver to Agent a
written assessment of the economic impact of Lender’s investment in Borrower,
specifying the full-time equivalent jobs created or retained in connection with
the investment, the impact of the investment on the businesses of Borrower in
terms of expanded revenue and taxes, other economic benefits resulting from the
investment (such as technology development or commercialization, minority
business development, or expansion of exports) and such other information as may
be required regarding Borrower in connection with the filing of Lender’s SBA
Form 468.   Lender will assist Borrower with preparing such assessment.  In
addition to any other rights granted hereunder, Borrower will grant Agent and
Lender and the SBA access to Borrower’s books and records for the purpose of
verifying the use of such proceeds.  Borrower also will furnish or cause to be
furnished to Agent and Lender such other information regarding the business,
affairs and condition of Borrower as Agent or Lender may from time to time
reasonably request.
 
(e) Use of Proceeds.  Borrower will use the proceeds from the Loan only for
purposes set forth in Section 7.17.  Borrower will deliver to Agent from time to
time promptly following Agent’s request, a written report, certified as correct
by Borrower’s Chief Financial Officer, verifying the purposes and amounts for
which proceeds from the Loan have been disbursed.  Borrower will supply to Agent
such additional information and documents as Agent reasonably requests with
respect to its use of proceeds and will permit Agent and Lender and the SBA to
have access to any and all Borrower records and information and personnel as
Agent deems necessary to verify how such proceeds have been or are being used,
and to assure that the proceeds have been used for the purposes specified in
Section 7.17.
 
(f) Activities and Proceeds.  Neither Borrower nor any of its affiliates (if
any) will engage in any activities or use directly or indirectly the proceeds
from the Loan for any purpose for which a small business investment company is
prohibited from providing funds by the SBIC Act, including 13 C.F.R. §107.720. 
Without obtaining the prior written approval of Agent, Borrower will not change
within 1 year of the date hereof, Borrower’s current business activity to a
business activity which a licensee under the SBIC Act is prohibited from
providing funds by the SBIC Act.
 
(g) Redemption Provisions. Notwithstanding any provision to the contrary
contained in the Certificate of Incorporation of Borrower, as amended from time
to time (the “Charter”), if, pursuant to the redemption provisions contained in
the Charter, Lender is entitled to a redemption of its Warrant, such redemption
(in the case of Lender) will be at a price equal to the redemption price set
forth in the Charter (the “Existing Redemption Price”). If, however, Lender
delivers written notice to Borrower that the then current regulations
promulgated under the SBIC Act prohibit payment of the Existing Redemption Price
in the case of an SBIC (or, if applied, the Existing Redemption Price would
cause the applicable stock to lose its classification as an “equity security”
and Lender has determined that such classification is unadvisable), the amount
Lender will be entitled to receive shall be the greater of (i) fair market value
of the securities being redeemed taking into account the rights and preferences
of such securities plus any costs and expenses of the Lender incurred in making
or maintaining the Warrant, and (ii) the Existing Redemption Price where the
amount of accrued but unpaid dividends payable to the Lender is limited to
Borrower’s earnings plus any costs and expenses of the Lender incurred in making
or maintaining the Warrant; provided, however, the amount calculated in
subsections (i) or (ii) above shall not exceed the Existing Redemption Price.
 
(h) Compliance and Resolution.   Borrower agrees that a failure to comply with
Borrower’s obligations under this Addendum, or any other set of facts or
circumstances where it has been asserted by any governmental regulatory agency
(or Agent or Lender believes that there is a substantial risk of such assertion)
that Agent, Lender and their affiliates are not entitled to hold, or exercise
any significant right with respect to, any securities issued to Lender by
Borrower, will constitute a breach of the obligations of Borrower under the
financing agreements among Borrower, Agent and Lender.  In the event of (i) a
failure to comply with Borrower’s obligations under this Addendum; or (ii) an
assertion by any governmental regulatory agency (or Agent or Lender believes
that there is a substantial risk of such assertion) of a failure to comply with
Borrower’s obligations under this Addendum, then (i) Agent, Lender and Borrower
will meet and resolve any such issue in good faith to the satisfaction of
Borrower, Agent, Lender, and any governmental regulatory agency, and (ii) upon
request of Lender or Agent, Borrower will cooperate and assist with any
assignment of the financing agreements among Hercules Technology III, L.P. and
Hercules Capital, Inc.
 
 

 

 
 

EXHIBIT A
 
ADVANCE REQUEST
 
To:            
Agent:            

Date:__________, 20__
 
Hercules Capital, Inc. (the “Agent”)
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: legal@herculestech.com
Attn:
 
TG Therapeutics, Inc., a Delaware corporation (the “Parent”) and TG Biologics,
Inc. a Delaware corporation (“TG Bio”; together with Parent, individually and
collectively, jointly and severally, the “Borrower”) hereby requests from
Hercules Capital, Inc., and Hercules Technology III, L.P. (collectively
“Lender”) an Advance in the amount of _____________________ Dollars
($________________) on ______________, _____ (the “Advance Date”) pursuant to
the Loan and Security Agreement among Borrower, Agent and Lender (the
“Agreement”). Capitalized words and other terms used but not otherwise defined
herein are used with the same meanings as defined in the Agreement.
 
Please:
 
(a)            
Issue a check payable to Borrower                     

________
 
or
 
(b)            
Wire Funds to Borrower’s account                           

________ [LAST 3 DIGITS]
 
Bank: _____________________________
Address: _____________________________
                                  _____________________________
ABA Number: _____________________________
Account Number: _____________________________
Account Name: _____________________________
Contact Person: _____________________________
Phone Number
To Verify Wire Info: _____________________________
Email address: _____________________________
 

Borrower hereby represents that Borrower’s corporate status and locations have
not changed since the date of the Agreement or, if the Attachment to this
Advance Request is completed, are as set forth in the Attachment to this Advance
Request.
 
Borrower agrees to notify Agent promptly before the funding of the Loan if any
of the matters which have been represented above shall not be true and correct
on the Borrowing Date and if Agent has received no such notice before the
Advance Date then the statements set forth above shall be deemed to have been
made and shall be deemed to be true and correct as of the Advance Date.
 
Executed as of [ ], 20[ ].
 
BORROWER:
 
TG THERAPEUTICS, INC.
 
SIGNATURE:________________________
 
TITLE:_____________________________
 
PRINT NAME:______________________
 
 
TG BIOLOGICS, INC.
 
SIGNATURE:________________________
 
TITLE:_____________________________
 
PRINT NAME:______________________
 
 
 
 

 

 
ATTACHMENT TO ADVANCE REQUEST
 
Dated: _______________________
 
Borrower hereby represents and warrants to Agent that Borrower’s current name
and organizational status is as follows:
 
Name: 
TG Therapeutics, Inc.
 
Type of organization: 
Corporation
 
State of organization: 
Delaware
 
Organization file number: 
[ 
]
 
Name: 
TG Biologics, Inc.
 
Type of organization: 
Corporation
 
State of organization: 
Delaware
 
Organization file number: 
[ 
]
 
Borrower hereby represents and warrants to Agent that the street addresses,
cities, states and postal codes of its current locations are as follows:
 
 

 

 
EXHIBIT B
 
SECURED TERM PROMISSORY NOTE
 
$[ ],000,000
 
Advance Date: ___ __, 20[ ]
 
 
Maturity Date: _____ ___, 20[ ]
 

FOR VALUE RECEIVED, TG Therapeutics, Inc., a Delaware corporation and TG
Biologics, Inc., a Delaware corporation, for themselves and each of their
Subsidiaries (individually and severally, jointly and collectively, the
“Borrower”) hereby promises to pay to Hercules Capital, Inc., a Maryland
corporation, and Hercules Technology III, L.P., a Delaware limited partnership
or its registered assigns (the “Lender”) at 400 Hamilton Avenue, Suite 310, Palo
Alto, CA 94301 or such other place of payment as the Lender may specify from
time to time in writing, in lawful money of the United States of America, the
principal amount of [ ] Million Dollars ($[ ],000,000) or such other principal
amount as Lender has advanced to Borrower, together with interest at a rate as
set forth in Section 2.2(c) of the Loan Agreement based upon a year consisting
of 360 days, with interest computed daily based on the actual number of days in
each month.
 
This Secured Term Promissory Note (this “Promissory Note”) is the Note referred
to in, and is executed and delivered in connection with, that certain Loan and
Security Agreement dated February 28, 2019, by and among Borrower, Hercules
Capital, Inc., a Maryland corporation (the “Agent”) and the several banks and
other financial institutions or entities from time to time party thereto as
lender (as the same may from time to time be amended, restated, amended and
restated, supplemented or otherwise modified in accordance with its terms, the
“Loan Agreement”), and is entitled to the benefit and security of the Loan
Agreement and the other Loan Documents (as defined in the Loan Agreement), to
which reference is made for a statement of all of the terms and conditions
thereof. All payments shall be made in accordance with the Loan Agreement. All
terms defined in the Loan Agreement shall have the same definitions when used
herein, unless otherwise defined herein. An Event of Default under the Loan
Agreement shall constitute a default under this Promissory Note.
 
Borrower waives presentment and demand for payment, notice of dishonor, protest
and notice of protest under the UCC or any applicable law. Borrower agrees to
make all payments under this Promissory Note without setoff, recoupment or
deduction and regardless of any counterclaim or defense. This Promissory Note
has been negotiated and delivered to Lender and is payable in the State of
California. This Promissory Note shall be governed by and construed and enforced
in accordance with, the laws of the State of California, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.
 
 

 

 
BORROWER FOR ITSELF AND
 
ON BEHALF OF ITS SUBSIDIARIES:
 
 
 
TG THERAPEUTICS, INC.
 
SIGNATURE:________________________
 
TITLE:_____________________________
 
PRINT NAME:______________________
 
 
 
 
 
TG BIOLOGICS, INC.
 
SIGNATURE:________________________
 
TITLE:_____________________________
 
PRINT NAME:______________________
 
 
 
 

 

 
EXHIBIT C
 
NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER
 
1. Borrower represents and warrants to Agent that Borrower’s current name and
organizational status as of the Closing Date is as follows:
 
Name: 
TG Therapeutics, Inc.
 
Type of organization: 
Corporation
 
State of organization: 
Delaware
 
Organization file number: 
2336756
 
Name: 
TG Biologics, Inc.
 
Type of organization: 
Corporation
 
State of organization: 
Delaware
 
 
Organization file number:

4897192
 
2. Borrower represents and warrants to Agent that for five (5) years prior to
the Closing Date, Borrower did not do business under any other name or
organization or form except the following:
 
Name: TG Therapeutics, Inc.
 
Used during dates of: 4/26/2012 – present
 
Type of Organization: Corporation
 
State of organization: Delaware
 
Organization file Number: 2336756
 
Parent’s fiscal year ends on December 31
 
Parent’s federal employer tax identification number is: 36-3898269
 
Name: TG Biologics, Inc.
 
Used during dates of: 11/12/2010 – present
 
Type of Organization: Corporation
 
State of organization: Delaware
 
Organization file Number: 4897192
 
TG Bio’s fiscal year ends on December 31
 
TG Bio’s federal employer tax identification number is: 45-2224118
 
       3. Borrower represents and warrants to Agent that its chief executive
office is located at 2 Gansevoort Street, 9th Floor, New York, NY 10014.
 
 
 
 

 

 
EXHIBIT D
 
BORROWER’S PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
 
 
 

 

 
EXHIBIT E
 
BORROWER’S DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS
 
 

 
Bank Name

 Account Number

Company/Subsidiary
Purpose of Account

 Avg. Balance

Chase Bank

 904807479, 2947694366, 974934895

Company & Subsidiaries
Checking, Savings

 $22,000,000
Israel Discount Bank

 03-0516-7
Company & Subsidiaries
Restricted Cash – Letter of Credit with landlord and corresponding cash held as
collateral at IDB for office space.
 $1,241,375
Wells Fargo

 7861-0134
Company & Subsidiaries
Money Market

 $503,309
Treasury Partners

 TRP-TG Therapeutics, Inc. (39184)

Company & Subsidiaries
Short-term securities

 $29,000,000

 
 
  

 

EXHIBIT F
 
COMPLIANCE CERTIFICATE
 
Hercules Capital, Inc. (as “Agent”)
 
400 Hamilton Avenue, Suite 310
 
Palo Alto, CA 94301
 
Reference is made to that certain Loan and Security Agreement dated as of
February 28, 2019 and the Loan Documents (as defined therein) entered into in
connection with such Loan and Security Agreement all as may be amended,
restated, amended and restated, supplemented or otherwise modified from time to
time (hereinafter referred to collectively as the “Loan Agreement”) by and among
Hercules Capital, Inc. (the “Agent”), the several banks and other financial
institutions or entities from time to time party thereto (collectively, the
“Lender”) and Hercules Capital, Inc., as agent for the Lender (the “Agent”) and
TG Therapeutics, Inc., a Delaware corporation, and TG Biologics, Inc., a
Delaware corporation, as Borrower. All capitalized terms not defined herein
shall have the same meaning as defined in the Loan Agreement.
 
The undersigned is an Officer of the Company, knowledgeable of all Company
financial matters, and is authorized to provide certification of information
regarding the Company; hereby certifies, in such capacity (and not in any
individual capacity), that in accordance with the terms and conditions of the
Loan Agreement, the Company is in compliance for the period ending ___________
of all covenants, conditions and terms and hereby reaffirms that all
representations and warranties contained therein are true and correct in all
material respects (or, if qualified by materiality, in all respects) on and as
of the date of this Compliance Certificate with the same effect as though made
on and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall have been true and correct in all material respects (or, if
qualified by materiality, in all respects) as of such earlier date. Attached are
the required documents supporting the above certification. The undersigned
further certifies that these are prepared in accordance with GAAP (except for
the absence of footnotes with respect to unaudited financial statement and
subject to normal year-end adjustments) and are consistent from one period to
the next except as explained below.
 
REPORTING REQUIREMENT
 
REQUIRED
 
CHECK IF ATTACHED
 
Interim Financial Statements (Section 7.1(a))
 
Monthly within 30 days
 
 
Interim Financial Statements (Section 7.1(b))
 
Quarterly within 45 days
 
 
Audited Financial Statements (Section 7.1(c))
 
FYE within 90 days
 
 

To the extent applicable, the undersigned hereby confirms that the Borrower is
in compliance with Section 7.21 of the Loan Agreement (as applicable, attached
as Schedule A hereto are the required calculations supporting this
certification(s)), as of the date first set forth above.
 
The aggregate assets and liabilities of Subsidiaries that are not Borrowers
(including TG Australia and Ariston) (other than accounts payable and
intercompany Indebtedness permitted pursuant to Section 7.14) equals: $_________
(must be less than or equal to $250,000 to be in compliance).
 
The undersigned hereby also confirms the below disclosed accounts represent all
depository accounts and securities accounts presently open in the name of each
Borrower or Borrower Subsidiary/Affiliate, as applicable.
 
 
 
Depository AC #
Financial Institution
Account Type (Depository / Securities)
Last Month Ending Account Balance
Purpose of Account
BORROWER Name/Address:
 
 
1
 
 
 
 
 
 
2
 
 
 
 
 
 
3
 
 
 
 
 
 
4
 
 
 
 
 
 
5
 
 
 
 
 
 
6
 
 
 
 
 
 
 
BORROWER SUBSIDIARY / AFFILIATE COMPANY Name/Address
 
 
1
 
 
 
 
 
 
2
 
 
 
 
 
 
3
 
 
 
 
 
 
4
 
 
 
 
 
 
5
 
 
 
 
 
 
6
 
 
 
 
 
 
 

 
Were any accounts above opened since the last Compliance Certificate? Yes _____
/ No ______
  
 

 
Very Truly Yours,
 
 
 
TG THERAPEUTICS, INC.
 
 
 
By: ____________________________
Name: _____________________________
Its: ____________________________
 
 
 
TG BIOLOGICS, INC.
 

By: ____________________________
Name: _____________________________
Its: ____________________________
 
 

 
 

 

 
 

 Schedule A to Compliance Certificate

 
If
 

A. Performance Milestone I has not been achieved on or before July 31, 2019, and
 
B. Both Performance Milestone II and Performance Milestone IV have not yet been
achieved; then
 
 
 
  1)
Unrestricted Cash:
$____________________
  2)
Sum of the Borrower’s accounts payable under GAAP not paid after the 90th day
following the due date for such account payable:
$____________________
  3)
Is the amount in line (1) greater than or equal to the sum of (i) $10,000,000
plus (ii) line (2)?
YES – In compliance
NO – Not in compliance

 
 
 

 

 
EXHIBIT G
 
FORM OF JOINDER AGREEMENT
 
This Joinder Agreement (the “Joinder Agreement”) is made and dated as of [ ],
20[ ], and is entered into by and between__________________, a ___________
corporation (“Subsidiary”), and HERCULES CAPITAL, INC., a Maryland corporation
(as “Agent”).
 
RECITALS
 
A. Subsidiary’s Affiliate, [ ] (“Company”) [has entered/desires to enter] into
that certain Loan and Security Agreement dated as of February 28, 2019, with the
several banks and other financial institutions or entities from time to time
party thereto as lender (collectively, the “Lender”) and the Agent, as such
agreement may be amended, restated, amended and restated, supplemented or
otherwise modified (the “Loan Agreement”), together with the other agreements
executed and delivered in connection therewith;
 
B. Subsidiary acknowledges and agrees that it will benefit both directly and
indirectly from Company’s execution of the Loan Agreement and the other
agreements executed and delivered in connection therewith;
 
AGREEMENT
 
NOW THEREFORE, Subsidiary and Agent agree as follows:
 
1. The recitals set forth above are incorporated into and made part of this
Joinder Agreement. Capitalized terms not defined herein shall have the meaning
provided in the Loan Agreement.
 
2.  By signing this Joinder Agreement, Subsidiary shall be bound by the terms
and conditions of the Loan Agreement the same as if it were the Borrower (as
defined in the Loan Agreement) under the Loan Agreement, mutatis mutandis,
provided however, that (a) with respect to (i) Section 5.1 of the Loan
Agreement, Subsidiary represents that it is an entity duly organized, legally
existing and in good standing under the laws of [ ], (b) neither Agent nor
Lender shall have any duties, responsibilities or obligations to Subsidiary
arising under or related to the Loan Agreement or the other Loan Documents, (c)
that if Subsidiary is covered by Company’s insurance, Subsidiary shall not be
required to maintain separate insurance or comply with the provisions of
Sections 6.1 and 6.2 of the Loan Agreement, and (d) that as long as Company
satisfies the requirements of Section 7.1 of the Loan Agreement, Subsidiary
shall not have to provide Agent separate Financial Statements. To the extent
that Agent or Lender has any duties, responsibilities or obligations arising
under or related to the Loan Agreement or the other Loan Documents, those
duties, responsibilities or obligations shall flow only to Company and not to
Subsidiary or any other Person or entity. By way of example (and not an
exclusive list): (i) Agent’s providing notice to Company in accordance with the
Loan Agreement or as otherwise agreed among Company, Agent and Lender shall be
deemed provided to Subsidiary; (ii) a Lender’s providing an Advance to Company
shall be deemed an Advance to Subsidiary; and (iii) Subsidiary shall have no
right to request an Advance or make any other demand on Lender.
 
3. Subsidiary agrees not to certificate its equity securities without Agent’s
prior written consent, which consent may be conditioned on the delivery of such
equity securities to Agent in order to perfect Agent’s security interest in such
equity securities.
 
4. Subsidiary acknowledges that it benefits, both directly and indirectly, from
the Loan Agreement, and hereby waives, for itself and on behalf on any and all
successors in interest (including without limitation any assignee for the
benefit of creditors, receiver, bankruptcy trustee or itself as
debtor-in-possession under any bankruptcy proceeding) to the fullest extent
provided by law, any and all claims, rights or defenses to the enforcement of
this Joinder Agreement on the basis that (a) it failed to receive adequate
consideration for the execution and delivery of this Joinder Agreement or (b)
its obligations under this Joinder Agreement are avoidable as a fraudulent
conveyance.
 
5. As security for the prompt, complete and indefeasible payment when due
(whether on the payment dates or otherwise) of all the Secured Obligations,
Subsidiary grants to Agent a security interest in all of Subsidiary’s right,
title, and interest in and to the Collateral.
 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
 

 

 
[SIGNATURE PAGE TO JOINDER AGREEMENT]
 
SUBSIDIARY:
 
_________________________________.
 
 
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
 
Address: ____________________________________
 
 
Telephone:  ____________________________________
email:  ____________________________________
 
AGENT:
 
HERCULES CAPITAL, INC.
 
By:____________________________________
 
Name:__________________________________
 
Title: ___________________________________
 
 
 
Address:
 
400 Hamilton Ave., Suite 310
Palo Alto, CA 94301
email: legal@herculestech.com
Telephone: 650-289-3060
 
 
 
 

 

 
EXHIBIT H
 
[Reserved]
 
 
 
 

 

 
EXHIBIT I
 
ACH DEBIT AUTHORIZATION AGREEMENT
 
Hercules Capital, Inc.
 
400 Hamilton Avenue, Suite 310
 
Palo Alto, CA 94301
 
Re: Loan and Security Agreement dated as of February 28, 2019 (the “Agreement”)
by and among TG Therapeutics, Inc., a Delaware corporation (“Parent”), and TG
Biologics, Inc., a Delaware corporation (“TG Bio”; together with Parent,
individually and collectively, jointly and severally, the “Borrower”) and
Hercules Capital, Inc., as agent (“Company”) and the lenders party thereto
(collectively, the “Lender”)
 
In connection with the above referenced Agreement, the Borrower hereby
authorizes the Company to initiate debit entries for (i) the periodic payments
due under the Agreement and (ii) out-of-pocket legal fees and costs incurred by
Agent or Lender pursuant to Section 11.11 of the Agreement to the Parent’s
account indicated below. The Borrower authorizes the depository institution
named below to debit to such account.
 
 

[IF FILED PUBLICLY, ACCOUNT INFO REDACTED FOR SECURITY PURPOSES]
 
DEPOSITORY NAME
 
BRANCH
 
CITY
 
STATE AND ZIP CODE
 
TRANSIT/ABA NUMBER
 
ACCOUNT NUMBER
 

 
 
 

 

 
 
 
This authority will remain in full force and effect so long as any amounts are
due under the Agreement.
 
TG THERAPEUTICS, INC.
 
 
By:                                            
Name:                                                       
Title:                                                       
 
 
TG BIOLOGICS, INC.
 
 
By:                                            
Name:                                                       
Title:                                                       
 
 
 
 

 

 
EXHIBIT J
 
[Reserved]
 
 
 
 

 

 
EXHIBIT K-1
 
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
 
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)
 
Reference is hereby made to Loan and Security Agreement dated as of February 28,
2019 (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, the “Loan Agreement”) by and between TG
Therapeutics, Inc., a Delaware corporation, TG Biologics, Inc., a Delaware
corporation and each of their Subsidiaries (as defined in the Loan Agreement)
(hereinafter collectively referred to as the “Borrower”), the several banks and
other financial institutions or entities from time to time parties to the Loan
Agreement (collectively, referred to as “Lender”), and HERCULES CAPITAL, INC., a
Maryland corporation, in its capacity as administrative agent and collateral
agent for itself and the Lender (in such capacity, the “Agent”).
 
Pursuant to the provisions of Section 2.9 of the Loan Agreement, the undersigned
hereby certifies that (i) it is the sole record and beneficial owner of the
Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it
is providing this certificate, (ii) it is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, (iii) it is not a “ten percent shareholder” of
the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it
is not a “controlled foreign corporation” related to the Borrower as described
in Section 881(c)(3)(C) of the Code.
 
The undersigned has furnished the Agent and the Borrower with a certificate of
its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing
this certificate, the undersigned agrees that (1) if the information provided in
this certificate changes, the undersigned shall promptly so inform the Borrower
and the Agent, and (2) the undersigned shall have at all times furnished the
Borrower and the Agent with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
 
Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.
 
 
 
Date: _____________ ___, 20___                                    [NAME OF
LENDER]
 
By: ____________________________
Name: __________________________
Title: ___________________________
 
 
 
 
 

 

 
EXHIBIT K-2
 
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
 
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)
 
Reference is hereby made to Loan and Security Agreement dated as of February 28,
2019 (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, the “Loan Agreement”) by and between TG
Therapeutics, Inc., a Delaware corporation, TG Biologics, Inc., a Delaware
corporation and each of their Subsidiaries (as defined in the Loan Agreement)
(hereinafter collectively referred to as the “Borrower”), the several banks and
other financial institutions or entities from time to time parties to the Loan
Agreement (collectively, referred to as “Lender”), and HERCULES CAPITAL, INC., a
Maryland corporation, in its capacity as administrative agent and collateral
agent for itself and the Lender (in such capacity, the “Agent”).
 
Pursuant to the provisions of Section 2.9 of the Loan Agreement, the undersigned
hereby certifies that (i) it is the sole record and beneficial owner of the
participation in respect of which it is providing this certificate, (ii) it is
not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is
not a “ten percent shareholder” of the Borrower within the meaning of Section
871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation”
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
 
The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing
this certificate, the undersigned agrees that (1) if the information provided in
this certificate changes, the undersigned shall promptly so inform such Lender
in writing, and (2) the undersigned shall have at all times furnished such
Lender with a properly completed and currently effective certificate in either
the calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.
 
Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.
 
 
 
Date: _____________ ___, 20___                                  [NAME OF
PARTICIPANT]
 
By: ____________________________
Name: __________________________
Title: ___________________________
 
 
 
 
 

 

 
EXHIBIT K-3
 
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
 
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)
 
Reference is hereby made to Loan and Security Agreement dated as of February 28,
2019 (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, the “Loan Agreement”) by and between TG
Therapeutics, Inc., a Delaware corporation, TG Biologics, Inc., a Delaware
corporation and each of their Subsidiaries (as defined in the Loan Agreement)
(hereinafter collectively referred to as the “Borrower”), the several banks and
other financial institutions or entities from time to time parties to the Loan
Agreement (collectively, referred to as “Lender”), and HERCULES CAPITAL, INC., a
Maryland corporation, in its capacity as administrative agent and collateral
agent for itself and the Lender (in such capacity, the “Agent”).
 
Pursuant to the provisions of Section 2.9 of the Loan Agreement, the undersigned
hereby certifies that (i) it is the sole record owner of the participation in
respect of which it is providing this certificate, (ii) its direct or indirect
partners/members are the sole beneficial owners of such participation, (iii)
with respect such participation, neither the undersigned nor any of its direct
or indirect partners/members is a “bank” extending credit pursuant to a loan
agreement entered into in the ordinary course of its trade or business within
the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or
indirect partners/members is a “ten percent shareholder” of the Borrower within
the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or
indirect partners/members is a “controlled foreign corporation” related to the
Borrower as described in Section 881(c)(3)(C) of the Code.
 
The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form
W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS
Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is
claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided in this certificate
changes, the undersigned shall promptly so inform such Lender and (2) the
undersigned shall have at all times furnished such Lender with a properly
completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.
 
Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.
 
 
Date: _____________ ___, 20___                                    [NAME OF
PARTICIPANT]
 
By: ____________________________
Name: __________________________
Title: ___________________________
 
 
 
 
 

 

 
EXHIBIT K-4
 
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
 
(For Foreign lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
 
Reference is hereby made to Loan and Security Agreement dated as of February 28,
2019 (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, the “Loan Agreement”) by and between TG
Therapeutics, Inc., a Delaware corporation, TG Biologics, Inc., a Delaware
corporation and each of their Subsidiaries (as defined in the Loan Agreement)
(hereinafter collectively referred to as the “Borrower”), the several banks and
other financial institutions or entities from time to time parties to the Loan
Agreement (collectively, referred to as “Lender”), and HERCULES CAPITAL, INC., a
Maryland corporation, in its capacity as administrative agent and collateral
agent for itself and the Lender (in such capacity, the “Agent”).
 
Pursuant to the provisions of Section 2.9 of the Loan Agreement, the undersigned
hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as
any Note(s) evidencing such Loan(s)) in respect of which it is providing this
certificate, (ii) its direct or indirect partners/members are the sole
beneficial owners of such Loan(s) (as well as any Note(s) evidencing such
Loan(s)), (iii) with respect to the extension of credit pursuant to this Loan
Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members is a “bank” extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a “ten percent shareholder” of the Borrower
within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its
direct or indirect partners/members is a “controlled foreign corporation”
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
 
The undersigned has furnished the Agent and the Borrower with IRS Form W- 8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form
W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS
Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is
claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided in this certificate
changes, the undersigned shall promptly so inform the Borrower and the Agent,
and (2) the undersigned shall have at all times furnished the Borrower and the
Agent with a properly completed and currently effective certificate in either
the calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.
 
Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.
 
 
Date: _____________ ___, 20___                                    [NAME OF
LENDER]
 
By: ____________________________
Name: __________________________
Title: ____________________________
 
 
 
 
 

 

 
SCHEDULE 1
 
SUBSIDIARIES
 
 
1.
Ariston Pharmaceuticals, Inc.
 
2.
TG Biologics, Inc.
 
3.
TG Therapeutics AUS Pty Ltd
 
 
 
 
 
 

 

 
 
 
SCHEDULE 1.1
 COMMITMENTS
 
LENDER
TRANCHE
 
TERM COMMITMENT
Hercules Capital, Inc.
 
Tranche 1 Advance
 
 $15,000,000 
Hercules Technology III, L.P.
 
Tranche 1 Advance
 
 $15,000,000 
Hercules Capital, Inc.
 
Tranche 2 Advance
 
 $10,000,000 
Hercules Capital, Inc.
 
Tranche 3 Advance
 
 $10,000,000 
Hercules Capital, Inc.
 
Tranche 4 Advance
 
 $10,000,000*
TOTAL COMMITMENTS
 
 
 $60,000,000*

 
 
* Funding of Tranche 4 is subject to approval by Lender’s investment committee
in its sole discretion.
 
 
 
 
 
 
 
 
 

 

 
SCHEDULE 1A
 
EXISTING PERMITTED INDEBTEDNESS
 
 
 
 
 
1.
The Ariston Notes.
 
 

 

 
SCHEDULE 1B
 
EXISTING PERMITTED INVESTMENTS
 
 
1.
Capital Stock of Subsidiaries listed in Schedule 1.
2.
Intercompany advancements to Ariston existing as of the Closing Date, which
Indebtedness shall be subject to the Intercompany Subordination Agreement within
5 Business Days following the Closing Date (or such later date as Agent may
agree to in its sole discretion).
 
 

 

 
SCHEDULE 1C
 
EXISTING PERMITTED LIENS
 
 
 
None.
 
 
 

 

 
SCHEDULE 5.3
 
CONSENTS, ETC.
 
 
 
None.
 
 
 

 

 
SCHEDULE 5.8
 
TAX MATTERS

 
 
None.
 
 
 

 

 
SCHEDULE 5.9
 
 INTELLECTUAL PROPERTY CLAIMS

 
 
None.
 
 
 

 

 
SCHEDULE 5.10
 
INTELLECTUAL PROPERTY

 
 
None.
 
 
 

 

 
SCHEDULE 5.11
 
BORROWER PRODUCTS

 
 
None.
 
 
 

 

 
SCHEDULE 5.14
 
CAPITALIZATION

 
 
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