Execution Version

STOCKHOLDERS’ AGREEMENT

by and among

DOUBLE BLACK DIAMOND OFFSHORE LTD.,

BLACK DIAMOND OFFSHORE LTD.,

and

SWK HOLDINGS CORPORATION

DATED AS OF AUGUST 18, 2014

 

 

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS 1 Section 1.1   Definitions 1 Section 1.2   Other
Definitional Provisions 6 ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE
COMPANY 6 Section 2.1   Organization 7 Section 2.2   Authorization 7 Section
2.3   Non-Contravention 7 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDER 7 Section 3.1   Organization and Authority 7 Section
3.2   Authorization 7 Section 3.3   Non-Contravention; Governmental
Authorization 8 ARTICLE IV RIGHTS OFFERINGS 8 Section 4.1   Follow On Rights
Offerings 8 Section 4.2   Additional Rights Offerings 8 Section 4.3   Procedures
for Additional Rights Offerings 9 ARTICLE V INVESTOR SUPPORT 9 Section
5.1   Investor Support 9 Section 5.2   Stockholder Support Services 10 Section
5.3   NOLs 11 ARTICLE VI STOCKHOLDER APPROVAL RIGHTS 11 Section
6.1   Stockholder Approval Rights 11 ARTICLE VII MINORITY PROTECTIONS 12 Section
7.1   Minority Protections 12 Section 7.2   Stockholder Purchase Offer 13
Section 7.3   Acquiror Purchase Offer 13 ARTICLE VIII REGISTRATION RIGHTS 14
Section 8.1   Registration Rights 14 ARTICLE IX RIGHT OF FIRST OFFER ON
SUBSEQUENT  ISSUANCES 14 Section 9.1   General 14 Section 9.2   Procedures 14
ARTICLE X MISCELLANEOUS 15 Section 10.1   Injunctive Relief 15 Section
10.2   Assignment 16 Section 10.3   Amendments; Waiver 16 Section
10.4   After-Acquired Shares 16 Section 10.5   Recapitalization, Etc. 16 Section
10.6   Further Action 16 Section 10.7   Notices 17 Section 10.8   Governing Law;
Jurisdiction; Forum; Waiver of Trial by Jury 17 Section 10.9   Interpretation 18
Section 10.10   Entire Agreement; No Other Representations 18 Section 10.11   No
Third-Party Beneficiaries 18 Section 10.12   Severability 18 Section
10.13   Counterparts 18

i

 

STOCKHOLDERS’ AGREEMENT, dated as of August 18, 2014 (this “Agreement”), by and
among DOUBLE BLACK DIAMOND OFFSHORE LTD., a Cayman Islands exempted company,
BLACK DIAMOND OFFSHORE LTD, a Cayman Islands exempted company (collectively, the
“Stockholder”), and SWK HOLDINGS CORPORATION, a Delaware corporation (the
“Company”).

W I T N E S S E T H:

WHEREAS, the Company and the Stockholder desire to establish in this Agreement
certain rights and obligations in respect of the shares of common stock, par
value $0.001 per share, of the Company (the “Common Stock”) owned by the
Stockholder, and related matters concerning the Stockholder’s relationship with
and investment in the Company; and

WHEREAS, the Company and the Stockholder are party to a Securities Purchase
Agreement, dated as of the date hereof (the “Securities Purchase Agreement”),
pursuant to which the Company will offer and sell shares of Common Stock to the
Stockholder.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1            Definitions. As used in this Agreement, the following
terms shall have the meanings indicated below:

“Acquiror Purchase Offer” shall have the meaning set forth in Section 7.3.

“Additional Purchase Transaction” shall mean a Purchase Transaction, a Buyback
Transaction or a Rule 13e-3 Transaction.

“Affiliate” shall mean with respect to any Person, (a) a Person that directly or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under common Control with such Person or (b) any officer, director, general
partner, managing member or trustee of any such Person or any Person described
in clause (a), provided that the Stockholder shall not be deemed to be an
Affiliate of the Company and vice versa.

“Affiliated Directors” shall mean Directors who are also (i) officers,
directors, general partners, managing members or trustees of the Stockholder or
its Affiliates or (ii) the Company or its Affiliates.

“Agreement” shall have the meaning set forth in the Preamble.

“Backstop Agent” shall mean any Person that is engaged to purchase the
unsubscribed portion of any rights offered in any Rights Offering.

 

 

“Beneficially Own” shall have the meaning attributed it in Rules 13d-3 and 13d-5
under the Exchange Act as in effect on the date of this Agreement; provided that
any Person shall be deemed to Beneficially Own any securities that such Person
has the right to acquire, whether or not such right is exercisable immediately.

“Board” shall mean, as of any date, the Board of Directors of the Company in
office on that date.

“Business Day” shall mean any day other than a Saturday, Sunday or one on which
banks are authorized or required to close in Dallas, Texas.

“Buyback Transaction” shall have the meaning set forth in Section 7.1.

“Cash Flows” shall mean the difference of (a) the sum of (i) all cash payments
to be received by the Company and its Subsidiaries related to activities that
are consistent with the Investment Policy and are contractually required to be
paid to the Company and its Subsidiaries in the four succeeding full fiscal
quarters after the date of determination in amounts that are fixed or
determinable as of the date of determination, including scheduled interest
payments and mandatory amortization payments, fixed royalty payments, fixed
revenue sharing and fixed revenue based amortization, plus (ii) 75% of estimated
cash payments to be received by the Company and its Subsidiaries in the four
succeeding fiscal quarters after the date of determination that are
contractually required to be paid to the Company and its Subsidiaries but that
are not fixed or determinable as of the date of determination, minus (b) all
cash amounts that the Company and its Subsidiaries are contractually obligated
to pay to third parties, including cash amounts due as employee compensation and
for administrative or other services, other than cash amounts payable with
respect to service of Indebtedness.

“Closing Date” shall mean the date of this Agreement.

“Common Stock” shall have the meaning set forth in the Recitals.

“Company” shall have the meaning set forth in the Preamble.

“Company Organizational Documents” shall mean (i) the Company’s second amended
and restated certificate of incorporation, as amended, and (ii) the Company’s
amended and restated bylaws, each as in effect as of the date of this Agreement.

“Company SEC Documents” shall mean the reports, registrations, documents,
filings, statements and submissions filed with the SEC by the Company pursuant
to the Securities Act or the Exchange Act.

“Control” shall mean the possession, direct or indirect, of the power to direct,
or cause the direction of, the management and policies of a Person, whether
through the ownership of voting securities, voting equity, limited liability
company interests, general partner interests, or voting interests, by contract
or otherwise.

“Director” shall mean any member of the Board.

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“Encumbrance” shall mean any lien, pledge, charge, claim, encumbrance,
hypothecation, security interest, option, lease, license, mortgage, easement or
other restriction or third-party right of any kind, including any right of first
refusal, tag-along or drag-along rights or restriction on voting, transferring,
lending, disposing or assigning, in each case other than pursuant to this
Agreement.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

“Follow On Rights Offering” shall have the meaning set forth in Section 4.1.

“GAAP” shall mean generally accepted accounting principles in the United States.

“Governmental Entity” shall mean any domestic or foreign governmental or
regulatory authority, agency, commission, body, court or other legislative,
executive or judicial governmental entity.

“Indebtedness” shall mean (a) all funded indebtedness for borrowed money,
including notes, bonds, debentures or similar instruments and all prepayment
premiums or penalties and other amounts with respect to such Indebtedness, and
any unpaid interest and bank fees owing on the Indebtedness, (b) any deferred
purchase price payment obligations, (c) liabilities for any underfunded pension
or retiree medical plans and any accrued and unpaid severance obligations, (d)
obligations in respect of banker’s acceptances or letters of credit, (e)
obligations under swaps and other derivatives, (f) all indebtedness secured by
any lien on property owned subject to such lien, (g) all capital leases,
including, without limitation, all amounts representing the capitalization of
rentals in accordance with GAAP or (h) all guarantees with respect to
liabilities of a type described in any of clauses (a) through (g) above. For the
avoidance of doubt, as used in clause (a) above, funded indebtedness shall be
limited to actual amounts drawn under any credit facility.

“Indebtedness to Cash Flow Ratio” shall mean, as of any date of determination,
the ratio of (a) all Indebtedness of the Company and its Subsidiaries on a
consolidated basis to (b) all Cash Flows of the Company and its Subsidiaries on
a consolidated basis.

“Initial Rights Offering” shall mean the Rights Offering, substantially on the
terms set forth in the registration statement on Form S-1 filed by the Company
with the SEC on February 13, 2014, as the same has been (and as it may be)
amended and supplemented (including each amendment and supplement thereto).

“Investment Policy” shall mean the Company’s investment objectives, policies,
restrictions and limitations as described on Exhibit A hereto, as the same may
be amended, restated, supplemented or otherwise modified from time to time by
the Board.

“Law” shall mean any federal, state, local or foreign law, statute or ordinance,
common law, or any rule, regulation, judgment, order, writ, injunction, decree,
arbitration award, license or permit of any Governmental Entity.

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“Material Adverse Effect” shall mean any event, state of facts, circumstance,
development, change, effect or occurrence that (a) is materially adverse to the
financial condition, business, properties, assets, liabilities or results of
operations of the Company and its Subsidiaries taken as a whole or (b) is
materially adverse to the ability of the Company to consummate the transactions
contemplated by this Agreement.

“New Securities” shall mean shall mean any equity (or equity-based) securities
of the Company or any of its Subsidiaries, whether or not now authorized, and
rights, options or warrants to purchase such securities, and securities of any
type whatsoever that are, or may become, convertible or exchangeable into such
securities; provided, that the term “New Securities” does not include: (i)
 shares of Common Stock issued pursuant to the Warrant Agreement; (ii) shares of
Common Stock (as such number of shares is equitably adjusted for subsequent
stock splits, stock combinations, stock dividends and recapitalizations) issued
directly or upon the exercise of options to directors, officers, employees, or
consultants of the Company or any of its Subsidiaries in connection with their
service as directors of the Company or any of its Subsidiaries, their employment
by the Company or any of its Subsidiaries or their retention as consultants by
the Company or any of its Subsidiaries, in each case authorized by the Board
and, if applicable, the stockholders of the Company, including, without
limitation, pursuant to any of the Company’s stock compensation plans as
described in the Company SEC Documents; (iii) shares of the Company’s Common
Stock issued in connection with any stock split or stock dividend; and (iv)
securities issued to the Company or any of its wholly owned Subsidiaries.

“Non-Affiliated Directors” shall mean any Directors who are not Affiliated
Directors.

“NOLs” shall mean the Company’s net operating loss carryforwards for federal
income tax purposes.

“Ownership Reduction Event” shall have the meaning set forth in Section 5.1.

“Person” shall mean any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, Governmental Entity or other entity of
any kind or nature.

“Pro Rata Share” shall have the meaning set forth in Section 9.1(b).

“Proposed Acquiror” shall have the meaning set forth in Section 7.1.

“Related Party Transactions” shall mean any transaction between the Company or
any Subsidiary of the Company, on one hand, and the Stockholder and any one or
more of its Affiliates, on the other hand, other than (a) compensation of
Affiliated Directors, so long as such compensation does not exceed the
compensation provided to Directors who are not Affiliated Directors, (b)
reimbursement of Affiliated Directors for reasonable out-of-pocket expenses
incurred by Affiliated Directors in connection with traveling to and from and
attending meetings of the Board and while conducting business at the request of
the Company and (c) any transaction or series of related transactions involving
aggregate payments to or from the Company or any Subsidiary of the Company that
do not exceed $100,000.

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“Rights Agreement” shall mean the Second Amended and Restated Rights Agreement,
dated as of February 2, 2012, by and between the Company and Computershare Trust
Company, N.A., as Rights Agent, as amended, modified or supplemented from time
to time.

“Rights Offering” shall mean any issuance of rights offered to the Company’s
stockholders that entitles them to purchase New Securities in proportion to
their existing holdings, or any other similar issuance to the Company’s
stockholders (excluding any rights or securities issued pursuant to the Rights
Agreement or any “poison pill” or similar stockholder rights plan now or
hereafter in effect).

“Rights Offering Notice” shall have the meaning set forth in Section 4.3(a).

“ROFO Notice” shall have the meaning set forth in Section 9.2(a).

“Rule 13e-3 Transaction” shall have the meaning set forth in Section 7.1.

“Sale Transaction” shall have the meaning set forth in Section 7.1.

“SEC” shall mean the United States Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

“Securities Purchase Agreement” shall have the meaning set forth in the
Recitals.

“Sponsored Fund” shall have the meaning set forth in Section 5.1(f).

“Stockholder” shall have the meaning set forth in the Preamble.

“Stockholder Purchase Offer” shall have the meaning set forth in Section 7.2.

“Stockholder Support Services” shall have the meaning set forth in Section 5.2.

“Subsidiary” shall mean, with respect to any Person, any Person (whether or not
incorporated) directly or indirectly owned by such first Person or in respect of
which such first Person has the power to vote or control 50% or more of any
class or series of capital shares or other equity interests of such second
Person.

“Tangible Assets to Book Equity Ratio” shall mean, as of any date of
determination, the ratio of (a) the assets (as defined under GAAP) (not
including deferred tax assets as defined under GAAP) of the Company and its
Subsidiaries on a consolidated basis to (b) the book value of the total
stockholders’ equity of the Company and its Subsidiaries on a consolidated basis
(as determined under GAAP).

“Votes” shall mean the number of votes entitled to be cast generally in the
election of Directors.

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“Voting Percentage” of a Person shall mean, as of the date of determination, the
ratio, expressed as a percentage, of (i) the Votes entitled to be cast by the
holders of the Voting Securities Beneficially Owned by such Person to (ii) the
aggregate Votes entitled to be cast by all holders of the then-outstanding
Voting Securities.

“Voting Securities” shall mean, together, (i) the Common Stock, (ii) any class
of capital stock or other securities of the Company other than the Common Stock
that are entitled to vote generally in the election of Directors and (iii) any
of the securities described in clauses (i) and (ii) of this definition that a
Person has the right to acquire, whether or not such right is exercisable
immediately.

“Warrant Agreement” shall mean that certain Warrant Agreement, dated as of
September 6, 2013, by the Company in favor of the Stockholder.

Section 1.2            Other Definitional Provisions. Unless the express context
otherwise requires:

(a)                the words “hereof”, “herein”, and “hereunder” and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement;

(b)               the words “date hereof”, when used in this Agreement, shall
refer to the date set forth in the Preamble;

(c)                the terms defined in the singular have a comparable meaning
when used in the plural, and vice versa;

(d)               the terms defined in the present tense have a comparable
meaning when used in the past tense, and vice versa;

(e)                any references herein to “Dollars” and “$” are to United
States Dollars;

(f)                any references herein to a specific Section shall refer to
Sections of this Agreement;

(g)               wherever the word “include”, “includes”, or “including” is
used in this Agreement, it shall be deemed to be followed by the words “without
limitation”;

(h)               references herein to any gender includes each other gender;
and

(i)                 the word “or” shall not be exclusive.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Stockholder that:

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Section 2.1            Organization. The Company and each of its Subsidiaries is
(a) duly organized, validly existing and in good standing as a corporation or
other entity under the Laws of its jurisdiction of organization, (b) has
requisite corporate or other entity power and authority to own, lease and
operate its properties and assets and conduct its business as currently
conducted and (c) is duly qualified as a foreign entity for the transaction of
business, and is in good standing, under the Laws of each other jurisdiction in
which it owns or leases properties, or conducts any business, so as to require
such qualification except, in the case of clause (c), where the failure to be so
qualified or in good standing would not reasonably be expected to have a
Material Adverse Effect.

Section 2.2            Authorization. The Company has requisite corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by the Company of
this Agreement have been duly authorized by all necessary corporate action on
the part of the Company, and no further approval or authorization is required on
the part of the Company. This Agreement constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization or other similar Laws affecting creditors’ rights
generally and by general equitable principles and except as may be limited by
applicable Law and public policy.

Section 2.3            Non-Contravention. The execution, delivery and
performance by the Company of this Agreement will not: (i) conflict with or
violate any provision of the Company’s certificate of incorporation or the
amended and restated bylaws of the Company, (ii) conflict with or result in any
breach of, or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give rise to any right to
termination, acceleration or cancellation under any contract, agreement,
license, note, bond, mortgage, indenture, commitment, lease or other instrument
or obligation, whether written or oral, to which the Company or any of its
Subsidiaries is a party or by which their respective properties may be bound or
affected, or (iii) conflict with or violate any Law applicable to the Company,
except in the case of clause (ii) and (iii), as would not, individually or in
the aggregate, reasonably be likely to impair in any material respect the
ability of the Company to perform its obligations under this Agreement.

ARTICLE III
Representations and Warranties of the Stockholder

The Stockholder represents and warrants to the Company that:

Section 3.1            Organization and Authority. Each Stockholder (i) is duly
organized, validly existing and in good standing under the laws its jurisdiction
of organization, (ii) has all limited partnership power and authority to own its
property and assets and conduct its business in all material respects as
currently conducted, (iii) has been duly qualified as a foreign limited
partnership for the transaction of business, and (iv) is in good standing under
the laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification.

Section 3.2            Authorization. Each Stockholder has all power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement. The execution, delivery and performance by each
Stockholder of this Agreement have been duly authorized by such Stockholder’s
governing authority, and no further approval or authorization by any of its
partners or other equity owners is required. This Agreement constitutes the
valid and binding obligation of each Stockholder, enforceable against such
Stockholder in accordance with its terms, except as such may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization or other similar
Laws affecting creditors’ rights generally and by general equitable principles
and except as may be limited by applicable Law and public policy.

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Section 3.3            Non-Contravention; Governmental Authorization. The
execution, delivery and performance by the Stockholder of this Agreement will
not: (i) conflict with or violate any provision of its certificate of formation,
limited partnership agreement or similar governing documents; (ii) conflict with
or result in any breach of, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give rise to
any right to termination, acceleration or cancellation under any contract,
agreement, license, note, bond, mortgage, indenture, commitment, lease or other
instrument or obligation, whether written or oral, to which the Stockholder is a
party or by which its properties may be bound or affected; or (iii) conflict
with or violate any Law applicable to the Stockholder, except in the case of
clause (ii) and (iii), as would not, individually or in the aggregate,
reasonably be likely to impair in any material respect the ability of the
Stockholder to perform its obligations under this Agreement.

ARTICLE IV
RIGHTS OFFERINGS

Section 4.1            Follow On Rights Offerings. Except for the Initial Rights
Offering and the transactions contemplated by the Securities Purchase Agreement,
until the second anniversary of the Closing Date, but in any case subject to
approval of the terms thereof by a special committee of the Non-Affiliated
Directors or a subset thereof as a Related Party Transaction pursuant to Section
7.1(b)(ii), the Company shall not seek, negotiate or consummate any sale of New
Securities, except through one or more Rights Offerings (each, a “Follow On
Rights Offering”) substantially on the same structural terms as the Initial
Rights Offering. The Stockholder shall serve as the exclusive Backstop Agent for
each Follow On Rights Offering on substantially the same structural terms as the
backstop in connection with the Initial Rights Offering. The procedures for
taking subscriptions and allocating shares in any Follow On Rights Offering
shall be substantially the same as the procedures used in the Initial Rights
Offering; provided that if it would be commercially unreasonable to use such
procedures in such Follow On Rights Offering, such procedures need not be
followed; and provided further that if any such procedures, including the
Stockholder’s role as Backstop Agent for the Follow On Rights Offering, would be
reasonably likely to jeopardize the Company’s ability to retain the benefit of
the NOLs, such procedures need not be followed.

Section 4.2            Additional Rights Offerings. Except for the Initial
Rights Offering and any Follow On Rights Offerings (which are not the subject of
this Section 4.2 or Section 4.3), until September 6, 2016, the Stockholder (or
its designee) shall have the right, in its sole discretion, to serve as the
exclusive Backstop Agent for any Rights Offering.

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Section 4.3            Procedures for Additional Rights Offerings.

(a)                If the Company proposes to undertake a Rights Offering with
one or more Backstop Agents, it shall give written notice to the Stockholder of
its intention to undertake the Rights Offering (the “Rights Offering Notice”),
describing the price and the terms upon which the Company proposes to offer New
Securities in the Rights Offering and the terms on which the Company proposes to
engage a Backstop Agent(s) for the Rights Offering. The Stockholder (or its
designee) shall have 15 days from receipt of any such Rights Offering Notice to
agree to serve as the Backstop Agent for the Rights Offering upon the terms
specified in the Rights Offering Notice by giving written notice to the Company
and stating in such notice the portion of the Rights Offering for which the
Stockholder will serve as Backstop Agent.

(b)                If the Stockholder (or its designee) fails to provide such
written notice within such 15 day period or provides written notice that it
elects not to serve as Backstop Agent for all or any portion of the Rights
Offering, then the Company shall have 90 days from the expiration of the period
set forth above to engage other Backstop Agents as to any portion of the Rights
Offering to which the Stockholder has not agreed to serve as Backstop Agent and
to consummate the Rights Offering, in each case, upon terms not materially more
favorable to the other Backstop Agents and the stockholders of the Company than
specified in the Rights Offering Notice. If the Company has not consummated the
Rights Offering within such period, then after such period the Company shall not
commence any Rights Offering without again first complying with this  ARTICLE
IV.

(c)                If the Stockholder (or its designee) provides written notice
within such 15 day period that it elects to serve as Backstop Agent for all or
any portion of the Rights Offering, then the Company and the Stockholder (or its
designee) shall promptly thereafter execute and deliver a customary engagement
letter providing for the terms on which the Stockholder (or its designee) will
serve as Backstop Agent. The Company and the Board shall also take all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under the Rights
Agreement or any other rights agreement) or other similar anti-takeover
provision under the Company’s charter, bylaws or similar charter documents or
the laws of its state of incorporation that is or could become applicable to the
Company as a result of the Company and the Stockholder (or its designee)
consummating any such Rights Offering (including the issuance of any New
Securities by the Company to the Stockholder (or its designee) in connection
with any such Rights Offering). Any such engagement shall be subject to
compliance with applicable federal and state securities laws.

ARTICLE V
INVESTOR SUPPORT

Section 5.1            Investor Support. Until the earlier of (a) such time as
the Stockholder’s and its Affiliates’ Voting Percentage is less than 40% (the
“Ownership Reduction Event”) and (b) the fifth anniversary of the Closing Date,
the Stockholder will:

(a)                   grant the Company (or any Sponsored Fund) a right of first
refusal with respect to any opportunity of the Stockholder to provide capital to
companies, institutions or investors in the biotechnology, medical device,
medical diagnostics and related tools, animal health and pharmaceutical
industries consistent with the Investment Policy;

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(b)               inform the Company (or any Sponsored Fund) of investment
opportunities presented by third parties to the Stockholder that, in the
Stockholder’s sole determination, meet the Company’s investment guidelines;

(c)                make the Stockholder’s and its Affiliates’ network of
financial industry contacts and counterparties available to assist the Company
in securing debt funding on attractive terms, attracting equity research
coverage and engaging in other matters of similar nature;

(d)               support the Company’s syndication efforts to the extent
commercially reasonable, and in any event, make referrals to other investors on
behalf of the Company and grant supporting references to the Company and its
management;

(e)                be available as a syndication partner to the Company, if (i)
the Company has had priority with respect to any allocation relating to such
syndication, (ii) the Stockholder participates on terms (x) no worse than those
of the Company’s participation and (y) no better than those of any other
syndication partner, (iii) the Stockholder determines in its sole discretion
that the syndication is attractive and within the Stockholder’s investment
mandate and (iv) to the extent not inconsistent with the requirements in clauses
(i) – (iii), such syndication is subject to the investment management agreement
by and between the Stockholder and SWK Advisors LLC; and

(f)                explore the establishment of an equal joint venture between
an Affiliate of the Stockholder and the Company pursuant to which the Company
would become the asset manager of a new fund under the “Black Diamond” brand (a
“Sponsored Fund”). The ultimate determination to participate in any such joint
venture would be made in the Stockholder’s sole discretion. Any joint venture
would be subject to the Company (i) fully investing its available financial
resources, including prudent leverage, and (ii) establishing a track record
sufficient to attract outside investors in a fund format. The Stockholder’s
responsibility would include fundraising, regulatory compliance, establishment
of entity structuring, fund documentation and a “seed” investment. The Company
would be responsible for sourcing, closing and monitoring transactions.

Section 5.2            Stockholder Support Services. The obligations set forth
in Section 5.1 are collectively referred to as the “Stockholder Support
Services.” For the avoidance of doubt, any Stockholder Support Service that
constitutes or results in a Related Party Transaction shall be subject to
approval by a special committee of the Non-Affiliated Directors or a subset
thereof as a Related Party Transaction pursuant to Section 7.1(b)(ii). In
addition, the terms of any Stockholder Support Service that constitutes or
results in a Related Party Transaction shall be disclosed to the holders of the
Common Stock. Disclosure in a public filing with the SEC, such as a Current
Report on Form 8-K, Quarterly Report on Form 10-Q or Annual Report on Form 10-K,
shall satisfy such disclosure requirement.

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Section 5.3            NOLs. For so long as the Company holds any material NOLs,
the Stockholder shall not cause the Company to issue any shares of Common Stock
or other equity securities of the Company or otherwise engage in any material
transaction unless the Stockholder reasonably believes that such issuance or
transaction would not jeopardize the Company’s ability to retain the benefit of
the NOLs.

ARTICLE VI
STOCKHOLDER APPROVAL RIGHTS

Section 6.1            Stockholder Approval Rights. Until the Ownership
Reduction Event, without the prior written approval of the Stockholder (which
approval shall be separate and apart from the voting rights of the Stockholder’s
designees on the Board), the Company shall not, and shall cause its Subsidiaries
not to, and shall not, and shall cause its Subsidiaries not to, enter into any
commitment to:

(a)                create, incur, issue, assume or otherwise become liable for
(including through a merger, acquisition or otherwise) or refinance or guarantee
any Indebtedness that would result in the Company and its Subsidiaries, on a
consolidated basis, having or being liable for Indebtedness in an aggregate
principal amount that would result in (x) the Indebtedness to Cash Flow Ratio
for the succeeding four full fiscal quarters following the date of determination
to be greater than 4.5 to 1.0 on a pro forma basis as if both the additional
Indebtedness and the funding of any prospective investment for which such
Indebtedness is being incurred had been incurred or consummated, as applicable,
at the beginning of such four-quarter period or (y) the Tangible Assets to Book
Equity Ratio to be greater than 2.0 to 1.0 on a pro forma basis as if the
additional Indebtedness had been incurred as of the date of such determination;

(b)               offer, issue or sell New Securities to any Person;

(c)                enter into or effect any transaction or series of related
transactions involving the repurchase, redemption or other acquisition of equity
(or equity-based) securities of the Company or any of its non-wholly owned
Subsidiaries from any Person;

(d)               enter into or effect any transaction or series of related
transactions involving the sale, lease, license, exchange, disposition or
Encumbrance (including by merger, consolidation, sale of stock or sale of
assets) by the Company or its Subsidiaries of any material portion of the
Company’s and its Subsidiaries’ assets that (i) taken as a whole, constitute
greater than 25% of their total consolidated assets (with total consolidated
assets being measured by reference to, and as of the date of, the most recent
consolidated balance sheet included in the most recently filed Company SEC
Document that includes the Company’s financial statements) or (ii) is not
consistent with the Investment Policy;

(e)                enter into or effect any transaction or series of related
transactions involving the purchase, lease, license, exchange or other
acquisition (including by merger, consolidation, acquisition of stock or
acquisition of assets) by the Company or any of its Subsidiaries of any assets
and/or equity interests of any Person (i) that involves aggregate consideration
in excess of an amount equal to 25% of the Company’s and its Subsidiaries’ total
consolidated assets (with total consolidated assets being measured by reference
to, and as of the date of, the most recent consolidated balance sheet included
in the most recently filed Company SEC Document that includes the Company’s
financial statements) or (ii) is not consistent with the Investment Policy;

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(f)                declare or pay any dividend on the Common Stock or any other
equity securities of the Company or any of its non-wholly owned Subsidiaries;

(g)               make any loan, advance, capital contribution to or investment
in any transaction or series of related transactions in any Person (i) in excess
of an amount equal to 25% of the Company’s and its Subsidiaries’ total
consolidated assets (with total consolidated assets being measured by reference
to, and as of the date of, the most recent consolidated balance sheet included
in the most recently filed Company SEC Document that includes the Company’s
financial statements) or (ii) that is not consistent with the Investment Policy;

(h)               make any change in the size of the Board; or

(i)                 terminate or hire a replacement for the Company’s chief
executive officer.

ARTICLE VII
MINORITY PROTECTIONS

Section 7.1            Minority Protections.

(a)             Until the earlier of (i) the Ownership Reduction Event and (ii)
the fifth anniversary of the Closing Date:

                                                                         
(i)                The Stockholder shall not, and shall cause each of its
Affiliates not to, directly or indirectly, alone or in concert with any other
Person, except, in each case, in accordance with the provisions of Section 7.2:

(A)             acquire, offer to acquire or agree to acquire (including from
the Company) Beneficial Ownership of any Common Stock that would cause the
Stockholder’s and its Affiliates’ Voting Percentage to exceed 76% unless such
acquisition has been accepted or approved by a majority of the Non-Affiliated
Directors (a “Purchase Transaction”); provided, however, that the Stockholder
shall not be permitted to acquire, offer to acquire or agree to acquire
(including from the Company) Beneficial Ownership of any Common Stock if such
acquisition or contemplated acquisition would be reasonably likely to jeopardize
the Company’s ability to retain the benefit of the NOLs; or

(B)              cause the Company to engage in stock buybacks of its Common
Stock that exceed 3% of the Voting Securities outstanding on the day any such
buyback is executed (a “Buyback Transaction”); or

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(ii)                The Stockholder shall not sell shares of Common Stock to any
Person (a “Proposed Acquiror”) that would result in such Person having a Voting
Percentage in excess of 40% (and with neither the Stockholder and its Affiliates
nor any other holder of Common Stock and its Affiliates holding a Voting
Percentage in excess of 40%) (a “Sale Transaction”), except in accordance with
Section 7.3;

(b)               Until the earlier of (i) the Ownership Reduction Event and
(ii) the eighth anniversary of the Closing Date:

                                                                         
(i)                The Stockholder shall not, and shall cause each of its
Affiliates not to, directly or indirectly, alone or in concert with any other
Person, engage in a transaction as described in Rule 13e-3 under the Exchange
Act (a “Rule 13e-3 Transaction”) except in accordance with the provisions of
Section 7.2;

                                                                       
(ii)                Any (A) Related Party Transaction and (B) the voluntarily
de-registration of the Common Stock from registration under the Exchange Act,
shall be subject to review, evaluation and approval by a special committee of
the Non-Affiliated Directors or a subset thereof; and

                                                                     
(iii)                The Company shall maintain at least two (2) Directors who
are Non-Affiliated Directors.

Section 7.2            Stockholder Purchase Offer. If the Stockholder or its
Affiliates proposes to engage in an Additional Purchase Transaction, the
Stockholder or its Affiliates shall offer to acquire all of the then-outstanding
Common Stock at the same price and on the same terms and conditions as the
Additional Purchase Transaction (the “Stockholder Purchase Offer”). For the
avoidance of doubt, the Stockholder Purchase Offer may contemplate a merger or
other consolidation, a tender offer, or any other transaction that could permit
the acquisition of all of the then-outstanding Common Stock. The Stockholder
shall not, and shall cause its Affiliates not to, consummate, in whole or in
part, any Additional Purchase Transaction or Stockholder Purchase Offer unless
such Stockholder Purchase Offer is (i) accepted and approved by a special
committee of the Non-Affiliated Directors or a subset thereof, and (ii), in the
case of a Rule 13e-3 Transaction, accepted and approved by holders of a majority
of the Common Stock held by stockholders of the Company other than the
Stockholder and its Affiliates. The Stockholder may, in its sole discretion,
withdraw any Stockholder Purchase Offer and terminate any Additional Purchase
Transaction at any time. For the avoidance of doubt, any withdrawal of a
Stockholder Purchase Offer shall require the termination of the Additional
Purchase Transaction giving rise to such Stockholder Purchase Offer.

Section 7.3            Acquiror Purchase Offer. No Sale Transaction shall be
consummated unless the Proposed Acquiror shall contemporaneously make a binding
offer to acquire all of the then-outstanding Common Stock of the Company, at the
same price and on the same terms and conditions as the Sale Transaction (the
“Acquiror Purchase Offer”). For the avoidance of doubt, the Acquiror Purchase
Offer may contemplate a merger or other consolidation, a tender offer, or any
other transaction that permits the acquisition of all of the then-outstanding
Common Stock.

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ARTICLE VIII
REGISTRATION RIGHTS

Section 8.1            Registration Rights. Each of the Company and the
Stockholder acknowledges and agrees that all shares of Common Stock Beneficially
Owned by the Stockholder, including shares purchased by the Stockholder pursuant
to the Securities Purchase Agreement and in any Rights Offering (including the
Initial Rights Offering), and any other securities issued in respect thereof or
into which such shares of Common Stock shall be converted or exchanged in
connection with stock dividends or distributions, combinations or any similar
recapitalizations, shall be deemed to be “Registrable Securities” as defined in,
and entitled to the rights and benefits of, and subject to the terms and
conditions of, the Registration Rights Agreement between the Company and the
Stockholder dated as of September 6, 2013.

ARTICLE IX
RIGHT OF FIRST OFFER ON SUBSEQUENT
ISSUANCES

Section 9.1            General.

(a)                Except for the Initial Rights Offering, the transactions
contemplated by the Securities Purchase Agreement and any Follow On Rights
Offerings (which are not the subject of this ARTICLE IX, until September 6,
2016, the Stockholder (or its designees) shall have the right, in its sole
discretion, to purchase its Pro Rata Share (as of immediately prior to the
issuance of any New Securities) of all or any part of any New Securities that
the Company may from time to time issue or sell during such period.

(b)                For purposes of this Agreement, the Stockholder’s “Pro Rata
Share” shall mean, as of any time, the ratio of (i) the number of fully-diluted
shares of Common Stock directly or indirectly owned by the Stockholder and its
Affiliates as of such time to (ii) the number of fully-diluted shares of Common
Stock actually outstanding as of such time (excluding any shares of Common Stock
owned or held by or for the account of the Company or any of its Subsidiaries as
of such time); provided that for purposes of this definition, “fully-diluted
shares of Common Stock” shall only include shares of Common Stock underlying
rights, options or warrants to purchase such Common Stock, and securities of any
type whatsoever that are, or may become, convertible into Common Stock, to the
extent that (x) all applicable vesting requirements have been satisfied and (y)
the per share value of the Common Stock as of such time (which shall be deemed
to be the closing price of a share of Common Stock on any stock exchange or
automated quotation system on which the Common Stock is then listed or quoted)
exceeds the exercise or conversion price per share of Common Stock for such
rights, options or warrants to purchase such Common Stock, or securities of any
type whatsoever that are, or may become, convertible into Common Stock, in each
case, as of such time.

Section 9.2            Procedures.

(a)                If the Company proposes to undertake an issuance of New
Securities (other than the Initial Rights Offering, the transactions
contemplated by the Securities Purchase Agreement or any Follow On Rights
Offering), it shall give written notice to the Stockholder of its intention to
issue New Securities (the “ROFO Notice”), describing the type of New Securities
and the price and the terms upon which the Company proposes to issue such New
Securities. The Stockholder (or its designee) shall have 15 days from receipt of
any such ROFO Notice to agree to purchase up to the Stockholder’s Pro Rata Share
of such New Securities for the price and upon the terms specified in the ROFO
Notice by giving written notice to the Company and stating in such notice the
quantity of New Securities to be purchased (not to exceed the Stockholder’s Pro
Rata Share).

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(b)                If the Stockholder (or its designee) fails to provide such
written notice within such 15 day period or provides written notice that it
elects not to purchase all or any portion of the New Securities, then the
Company shall have 90 days from the expiration of the periods set forth above to
sell all or any New Securities that were not agreed to be purchased by the
Stockholder, at a price not less than, and upon terms not materially more
favorable to the purchasers of such New Securities than, specified in the ROFO
Notice. If the Company has not issued and sold such New Securities within such
period, then after such period the Company shall not issue or sell any New
Securities without again first complying with this ARTICLE IX.

(c)                If the Stockholder (or its designee) provides written notice
within such 15 day period that it elects to purchase any or all of the New
Securities, then the Company and the Stockholder (or its designee) shall
promptly thereafter proceed to consummate the sale or issuance of New Securities
by the Company to the Stockholder (or its designee) on the terms set forth in
the ROFO Notice. The Company and its board of directors shall also take all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
the Rights Agreement or any other rights agreement) or other similar
anti-takeover provision under the Company’s charter, bylaws or similar charter
documents or the laws of its state of incorporation that is or could become
applicable to the Company as a result of the Company and the Stockholder (or its
designee) consummating any such sale or issuance of New Securities by the
Company to the Stockholder (or its designee). Any such sale or issuance to the
Stockholder (or its designee) shall be subject to compliance with applicable
federal and state securities laws.

ARTICLE X
MISCELLANEOUS

Section 10.1        Injunctive Relief. Each party hereto acknowledges that it
would be impossible to determine the amount of damages that would result from
any breach of any of the provisions of this Agreement and that the remedy at law
for any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, agrees that the other party shall, in addition to
any other rights or remedies which it may have, be entitled to such equitable
and injunctive relief as may be available from any court of competent
jurisdiction to compel specific performance of, or restrain any party from
violating, any of such provisions. In connection with any action or proceeding
for injunctive relief, each party hereto hereby waives the claim or defense that
a remedy at law alone is adequate and agrees, to the maximum extent permitted by
Law, to have each provision of this Agreement specifically enforced against it,
without the necessity of posting bond or other security against it, and consents
to the entry of injunctive relief against it enjoining or restraining any breach
or threatened breach of such provisions of this Agreement.

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Section 10.2        Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors, heirs,
legal representatives and permitted assigns. Neither party may directly or
indirectly assign any of its rights or delegate any of its obligations under
this Agreement, by operation of law or otherwise, without the prior written
consent of the other party other than (a) in connection with a change in control
of the Stockholder or to any successor of the Company or (b) by the Stockholder
in whole or in part, to one or more of its Affiliates so long as the Stockholder
remains liable for its obligations as contained herein. Any purported direct or
indirect assignment in violation of this Section 10.2 shall be null and void ab
initio.

Section 10.3        Amendments; Waiver. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, and no extension of time for the
performance of any of the obligations hereunder, shall be valid or binding
unless set forth in writing and duly executed by (a) the Company where
enforcement of the amendment, modification, discharge, waiver or extension is
sought against the Company or (b) the Stockholder where enforcement of the
amendment, modification, discharge, waiver or extension is sought against the
Stockholder. Any such waiver shall constitute a waiver only with respect to the
specific matter described in such writing and shall in no way impair the rights
of the party granting such waiver in any other respect or at any other time. The
waiver by the Company or the Stockholder of a breach of, or a default under, any
of the provisions hereof, or to exercise any right or privilege hereunder, shall
not be construed as a waiver of any other breach or default of a similar nature,
or as a waiver of any of such provisions, rights or privileges hereunder. Except
as expressly provided in this Agreement, the rights and remedies herein provided
are cumulative and none is exclusive of any other, or of any rights or remedies
that any party may otherwise have at law or in equity.

Section 10.4        After-Acquired Shares. This Agreement shall apply to all
shares of Common Stock Beneficially Owned by the Stockholder and its Affiliates
at all times, whether such shares are acquired prior to or after the date
hereof.

Section 10.5        Recapitalization, Etc. In the event that any capital stock
or other securities are issued in respect of, in exchange for, or in
substitution of, shares of capital stock of the Company by reason of any
reorganization, recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, stock dividend, split-up, sale of
assets, distribution to stockholders or combination of shares or any other
change in the Company’s capital structure, appropriate adjustments shall be made
to the provisions of this Agreement so as to fairly and equitably preserve, as
far as practicable, the original rights and obligations of the parties hereto
under this Agreement.

Section 10.6        Further Action. From time to time after the Closing Date,
without additional consideration, each party hereto will (or, if appropriate,
will cause its Subsidiaries to) execute and deliver such further instruments and
take such other action as may be necessary or reasonably requested by another
party hereto to make effective the transactions contemplated hereby. Without
limiting the foregoing, the Company will, in order to permit the Stockholder and
its Affiliates to acquire additional shares of Common Stock to increase their
Voting Percentage to 76%, cause the Rights Agreement to be amended to allow the
Stockholder and its Affiliates to increase their Voting Percentage to such
amount. Notwithstanding the foregoing, in no event shall the Company or its
Subsidiaries be required to take any action that would be reasonably likely to
jeopardize the Company’s ability to retain the benefit of the NOLs.

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Section 10.7        Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given (a) on the date of delivery, if delivered
personally, (b) on the date of delivery, if delivered by facsimile during
business hours, or on the next Business Day, if delivered by facsimile outside
of business hours, in each case upon confirmation of receipt, (c) on the first
Business Day following the date of dispatch if delivered by a recognized
next-day courier services, or (d) on the third Business Day following the date
of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid, to the parties to this Agreement at the following
address or to such other address either party to this Agreement shall specify by
notice to the other party:

if to the Company, to:

SWK Holdings Corporation
15770 North Dallas Parkway, Suite 1290
Dallas, Texas 75248
Attention: Chief Executive Officer
Facsimile: (972) 687-7255

 

if to the Stockholder, to:

Carlson Capital, L.P.
2100 McKinney Avenue
Dallas, Texas 75201
Attention: Christopher W. Haga
Fax: (214) 932-9601

with a copy to (which shall not constitute notice):

Gibson, Dunn & Crutcher LLP
2100 McKinney Avenue, Suite 1100
Dallas, Texas 75201
Attention: Jeffrey A. Chapman
                  Robert B. Little
Fax: (214) 571-2900

or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above.

Section 10.8        Governing Law; Jurisdiction; Forum; Waiver of Trial by Jury.

(a)                This Agreement and all disputes or controversies arising out
of or relating to this Agreement or the transactions contemplated hereby shall
be governed by, and construed in accordance with, the internal laws of the State
of Delaware, without regard to the laws of any other jurisdiction that might be
applied because of the conflicts of laws principles of the State of Delaware.

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(b)               The parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may only
be brought in any state or federal court located in the State of Delaware, and
each of the parties hereby consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by Law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Each of the parties agrees not to commence any action, suit
or proceeding relating thereto except in the courts described above in Delaware,
other than actions in any court of competent jurisdiction to enforce any
judgment, decree or award rendered by any such court in Delaware as described
herein.

Section 10.9        Interpretation. The table of contents and headings herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof. The parties hereto have participated jointly in the negotiation and
drafting of this Agreement and, in the event that an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted 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 provision
of this Agreement.

Section 10.10    Entire Agreement; No Other Representations. This Agreement
constitutes the entire agreement, and supersedes all other prior and
contemporaneous agreements, understandings, undertakings, arrangements,
representations and warranties, both written and oral, among the parties with
respect to the subject matter hereof.

Section 10.11    No Third-Party Beneficiaries. This Agreement is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.

Section 10.12    Severability. If any provision or portion of any provision of
this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable Law, such invalidity, illegality or unenforceability shall
not affect any other provision hereof.

Section 10.13    Counterparts; facsimile or.pdf signature. This Agreement may be
executed in counterparts, all of which shall be considered one and the same
instrument and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party. This Agreement
may be executed by facsimile or .pdf signature and a facsimile or .pdf signature
shall constitute an original for all purposes.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their respective authorized officers as of the date first written above.

 

  SWK HOLDINGS CORPORATION           By: /s/ Brett Pope     Name:   Brett Pope  
Title: Chief Executive Officer                   DOUBLE BLACK DIAMOND OFFSHORE
LTD.           BLACK DIAMOND OFFSHORE LTD.           By: Carlson Capital, L.P.,
their investment manager                     By: /s/ Christopher W. Haga    
Name:   Christopher W. Haga     Title: Portfolio Manager

 

Signature Page to Stockholders’ Agreement