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Exhibit 10.1

 
PURCHASE AGREEMENT
 
dated July 15, 2019
 
between
 
AQUESTIVE THERAPEUTICS, INC.
 
and
 
THE PURCHASER NAMED HEREIN
 
$70,000,000 12.5% SENIOR SECURED NOTES DUE 2025
AND
WARRANTS FOR 2,000,000 SHARES OF COMMON STOCK
 

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Table of Contents
 

   
Page
ARTICLE I
INTRODUCTORY
     
Section 1.1
Introductory
1
     
ARTICLE II
RULES OF CONSTRUCTION AND DEFINED TERMS
     
Section 2.1
Rules of Construction and Defined Terms
1
     
ARTICLE III
SALE AND PURCHASE OF NOTES AND WARRANTS; CLOSING; ALLOCATION OF PURCHASE PRICE
     
Section 3.1
Sale and Purchase of Notes and Warrants; Closing
1
Section 3.2
Allocation of Purchase Price
3
     
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PURCHASER
     
Section 4.1
Purchase for Investment and Restrictions on Resales
3
Section 4.2
Purchaser Status
4
Section 4.3
Source of Funds; ERISA Matters
4
Section 4.4
Due Diligence
6
Section 4.5
Enforceability of this Purchase Agreement
6
Section 4.6
Tax Matters
6
Section 4.7
Reliance for Opinions
7
     
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
     
Section 5.1
Securities Laws
7
Section 5.2
Investment Company Act Matters
8
Section 5.3
Use of Proceeds; Margin Regulations
8
Section 5.4
Exchange Act Documents
8
Section 5.5
Financial Statements
8
Section 5.6
Organization; Power; Authorization; Enforceability
8
Section 5.7
Organizational Information and Equity Interests
9
Section 5.8
Common Stock
9
Section 5.9
Dilutive Securities
9
Section 5.10
Governmental and Third Party Authorizations
9
Section 5.11
No Conflicts
10
Section 5.12
No Violation or Default
10
Section 5.13
No Material Adverse Change
10

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Section 5.14
Compliance with ERISA
11
Section 5.15
Tax Matters
11
Section 5.16
Legal Proceedings
11
Section 5.17
Solvency
12
Section 5.18
Existing Indebtedness
12
Section 5.19
Material Contracts
12
Section 5.20
Properties
12
Section 5.21
Intellectual Property
13
Section 5.22
Environmental Matters
14
Section 5.23
Labor Matters
15
Section 5.24
Insurance
15
Section 5.25
No Unlawful Payments
15
Section 5.26
Compliance with Anti-Money Laundering Laws
16
Section 5.27
Sanctions
16
Section 5.28
Disclosure Controls
16
Section 5.29
Accounting Controls
17
Section 5.30
Licenses and Permits
17
Section 5.31
Clinical Trials
18
Section 5.32
Regulatory Filings
18
Section 5.33
Compliance with Certain Regulatory Matters
18
Section 5.34
Absence of Certain Regulatory Actions
19
Section 5.35
Collateral Agreement
19
     
ARTICLE VI
CONDITIONS TO CLOSING
     
Section 6.1
Issuer’s Counsel Opinion
20
Section 6.2
Purchasers’ Counsel Opinion
20
Section 6.3
Certification as to Purchase Agreement
20
Section 6.4
Authorizations
20
Section 6.5
Offering of Notes and Warrants
20
Section 6.6
CUSIP Numbers
21
Section 6.7
Further Information
21
Section 6.8
Consummation of Transactions
21
Section 6.9
No Actions
21
Section 6.10
Consents
21
Section 6.11
Notes Collateral Requirements
21
Section 6.12
Insurance
22
Section 6.13
Warrants
22
     
ARTICLE VII
ADDITIONAL COVENANTS
     
Section 7.1
DTC
22
Section 7.2
Expenses
22
Section 7.3
Confidentiality; Public Announcement
23
Section 7.4
Right of First Offer
24

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ARTICLE VIII
SURVIVAL OF CERTAIN PROVISIONS
     
Section 8.1
Survival of Certain Provisions
24
     
ARTICLE IX
NOTICES
     
Section 9.1
Notices
24
     
ARTICLE X
SUCCESSORS AND ASSIGNS
     
Section 10.1
Successors and Assigns
25
     
ARTICLE XI
SEVERABILITY
     
Section 11.1
Severability
25
     
ARTICLE XII
WAIVER OF JURY TRIAL
     
Section 12.1
WAIVER OF JURY TRIAL
25
     
ARTICLE XIII
GOVERNING LAW; CONSENT TO JURISDICTION
     
Section 13.1
Governing Law; Consent to Jurisdiction
25
     
ARTICLE XIV
COUNTERPARTS
     
Section 14.1
Counterparts
25
     
ARTICLE XV
TABLE OF CONTENTS AND HEADINGS
     
Section 15.1
Table of Contents and Headings
26
     
ARTICLE XVI
TAX DISCLOSURE
     
Section 16.1
Tax Disclosure
26

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Annex A
Rules of Construction and Defined Terms
Exhibit A
Form of Warrant
Schedule 1
Purchaser
Schedule 5.9
Dilutive Securities
Schedule 5.10
Governmental and Third Party Authorizations
Schedule 5.21
Intellectual Property
Schedule 5.30
Permits

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PURCHASE AGREEMENT
 
July 15, 2019
 
To the Purchaser named in Schedule 1
 
Ladies and Gentlemen:
 
Aquestive Therapeutics, Inc., a Delaware corporation (the “Issuer”), hereby
covenants and agrees with you as follows:
 
ARTICLE I
INTRODUCTORY
 
Section 1.1         Introductory. The Issuer proposes, subject to the terms and
conditions stated herein, to issue and sell to the purchaser named in Schedule 1
(the “Purchaser”) and to the Other Purchasers $70,000,000 in aggregate principal
amount of the Issuer’s 12.5% Senior Secured Notes due 2025 and the Warrants. The
principal amount of Notes to be purchased by the Purchaser pursuant to this
Purchase Agreement, and the number of shares of the Issuer’s Common Stock that
may be purchased pursuant to the related Warrants, are set forth opposite the
Purchaser’s name in Schedule 1. The Notes to be sold to the Purchaser and the
Other Purchasers are to be issued on the Closing Date pursuant to, and subject
to the terms and conditions of, the Indenture.
 
The Notes and the Warrants will be offered and sold to the Purchaser and the
Other Purchasers (collectively, the “Purchasers”) in transactions exempt from
the registration requirements of the Securities Act.
 
ARTICLE II
RULES OF CONSTRUCTION AND DEFINED TERMS
 
Section 2.1          Rules of Construction and Defined Terms. The rules of
construction set forth in Annex A shall apply to this Purchase Agreement and are
hereby incorporated by reference into this Purchase Agreement as if set forth
fully in this Purchase Agreement. Capitalized terms used but not otherwise
defined in this Purchase Agreement shall have the respective meanings given to
such terms in Annex A, which is hereby incorporated by reference into this
Purchase Agreement as if set forth fully in this Purchase Agreement.
 
ARTICLE III
SALE AND PURCHASE OF NOTES AND WARRANTS; CLOSING; ALLOCATION OF PURCHASE PRICE
 
Section 3.1          Sale and Purchase of Notes and Warrants; Closing.
 
(a)        On the basis of the representations and warranties contained in, and
subject to the terms and conditions of, this Purchase Agreement and the
Indenture, the Issuer will issue and sell to the Purchaser, and the Purchaser
will purchase, on the Closing Date, the principal amount of Notes, and a Warrant
to purchase the number of shares of Common Stock of the Issuer, set forth
opposite the Purchaser’s name in Schedule 1.
 
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(b)          The Purchaser will purchase the principal amount of Notes, and a
Warrant to purchase the number of shares of Common Stock of the Issuer, set
forth in Schedule 1 on the Closing Date at a purchase price equal to 100% of the
principal amount of such Notes (the “Price”). Contemporaneously with entering
into this Purchase Agreement, the Issuer is entering into separate purchase
agreements (the “Other Agreements”) substantially identical to this Purchase
Agreement with other purchasers (the “Other Purchasers”), providing for the sale
on the Closing Date to each of the Other Purchasers of the Notes in the
principal amount specified opposite its name in Schedule 1 to such Other
Agreement, and Warrants to purchase the number of shares of Common Stock of the
Issuer specified opposite its name in Schedule 1 to such Other Agreement, at a
purchase price equal to 100% of the principal amount of such Notes (the purchase
prices to be paid pursuant to such Other Agreements are collectively referred
to, together with the Price, as the “Purchase Price”). The Issuer shall not be
obligated to deliver, and the Purchaser shall not be required to purchase, any
of the Notes or the Warrants except upon delivery of and payment for all the
Notes and the Warrants to be purchased by the Other Purchasers under the
Purchase Agreements on the Closing Date and subject to the satisfaction or
waiver of the respective terms and conditions hereunder and thereunder.
 
(c)          On the Closing Date, the Issuer will deliver one or more Global
Securities for the account of DTC, as well as any Definitive Securities to the
relevant Purchasers, evidencing the aggregate principal amount of Notes to be
acquired by all Purchasers pursuant to the Purchase Agreements on the Closing
Date against payment by each such Purchaser of its respective portion of the
aggregate Purchase Price for its beneficial interest therein by wire transfer of
immediately available funds to the Trustee Closing Account. On the Closing Date,
the Issuer will deliver to each Purchaser a Warrant dated the Closing Date and
registered in the name of such Purchaser, evidencing the right of such Purchaser
to purchase the number of shares of the Issuer’s Common Stock set forth opposite
such Purchaser’s name in Schedule 1. The Issuer shall cause the Trustee to hold
all such funds received in the Trustee Closing Account in trust for the
Purchasers pending completion of the closing of the transactions contemplated by
the Purchase Agreements. Upon receipt by the Trustee of the Purchase Price and
the satisfaction of the conditions to closing set forth in Article VI, the
Issuer shall cause the Trustee to disburse the Purchase Price in accordance with
written instructions provided by the Issuer to the Trustee.
 
(d)        If the aggregate Purchase Price shall not have been received by the
Trustee by 3:30 p.m. (New York City time) on the Closing Date, or if the closing
of the transactions contemplated by the Purchase Agreements shall not otherwise
be capable of being consummated by 3:30 p.m. (New York City time) on the Closing
Date, then each Purchaser that has paid its respective portion of the aggregate
Purchase Price shall have the right to instruct the Trustee in writing at or
after 3:30 p.m. (New York City time) on the Closing Date to return, and the
Issuer shall cause the Trustee to return, such portion of the Purchase Price to
the Purchaser prior to the close of business on the Closing Date or as soon
thereafter as reasonably practicable, in which case the Purchaser shall, at its
election, be relieved of all obligations (other than confidentiality
obligations) under this Purchase Agreement.
 
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Section 3.2          Allocation of Purchase Price. The Issuer and the Purchaser
hereby acknowledge and agree that the Notes and the Warrant to be issued by the
Issuer to the Purchaser on the Closing Date will constitute an “investment unit”
for purposes of Section 1273(c)(2) of the Code. In accordance with Section
1273(b)(2) of the Code and Section 1273(c)(2)(A) of the Code, the issue price of
the investment unit will be 100% of the principal amount of such Notes.
Allocating that issue price among such Notes and such Warrant based on their
relative fair market values, as required by Section 1273(c)(2)(B) of the Code
and U.S. Treasury Regulations Section 1.1273-2(h)(1), results in (a) such Notes
having an issue price of 90.56% of the principal amount of such Notes and (b)
such Warrant having an issue price of 9.44% of the principal amount of such
Notes. The Issuer and the Purchaser agree to prepare their respective U.S.
federal income tax returns, including statements and reports related thereto, as
the case may be, in a manner consistent with the foregoing agreement, to the
extent such returns, statements and reports are required to be filed.
 
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PURCHASER
 
The Purchaser agrees and acknowledges that (a) the Issuer and counsel to the
Issuer may rely upon the accuracy of and performance of obligations under the
representations, warranties and agreements of the Purchaser contained in this
Article IV and (b) the Placement Agent may rely upon the accuracy of and
performance of obligations under the representations, warranties and agreements
of the Purchaser contained in Sections 4.1, 4.2 and 4.4.
 
Section 4.1          Purchase for Investment and Restrictions on Resales. The
Purchaser:
 
(a)          acknowledges that (i) none of the Notes or the Warrant have been or
will be registered under the Securities Act or the Laws of any U.S. state or
other jurisdiction relating to securities matters and (ii) neither the Notes nor
the Warrant may be offered, sold, pledged or otherwise transferred except as set
forth in the Transaction Documents and the legend regarding transfers on the
Notes;
 
(b)         agrees that, if it should resell or otherwise transfer the Notes or
the Warrant, in whole or in part, it will do so only pursuant to an exemption
from, or in a transaction not subject to, registration under the Securities Act,
the Laws of any applicable state or other jurisdiction relating to securities
matters and in accordance with the restrictions and requirements of the
provisions of the Transaction Documents and the legend regarding transfers on
the Notes and only to a Person whom it reasonably believes, at the time any buy
order for such Notes or Warrant is originated, is (i) the Issuer or a Subsidiary
of the Issuer, (ii) for so long as such Notes or Warrant are eligible for resale
pursuant to Rule 144A, a QIB that purchases for its own account or for the
account of a QIB, to which notice is given that the transfer is being made in
reliance on Rule 144A, (iii) a Person outside the United States in an offshore
transaction in compliance with Rule 903 or 904 of Regulation S (if available) or
(iv) an Accredited Investor that is purchasing such Notes or Warrant for its own
account or for the account of such an Accredited Investor for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act, in each case unless consented
to by the Issuer in writing;
 
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(c)          acknowledges and agrees that, as a condition to the transfer of any
Notes or the Warrant, each transferee of such Notes or Warrant shall be deemed
to have given, and may be required expressly to give, the assurances set forth
in Section 4.3 as to itself;
 
(d)        acknowledges the restrictions and requirements contained in the
Transaction Documents applicable to transfers of the Notes and the Warrant and
the legend regarding transfers on the Notes and agrees that it will only offer
or sell the Notes and the Warrant in accordance with such restrictions and
requirements; and
 
(e)         represents that it is purchasing the Notes and the Warrant for
investment purposes and not with a view toward resale or distribution thereof in
contravention of the requirements of the Securities Act; provided, however, that
the Purchaser reserves the right to resell or otherwise transfer the Notes and
the Warrant at any time in compliance with this Section 4.1 and in accordance
with its investment objectives.
 
Section 4.2         Purchaser Status. The Purchaser represents and warrants
that, as of the date hereof, (a) if it is purchasing a Rule 144A Global Security
or would purchase a Rule 144A Global Security except that it cannot or opts not
to hold a beneficial interest in a Global Security, it is a QIB and is
purchasing the Notes and the Warrant for its own account or for the account of a
QIB, (b) if it is purchasing a Regulation S Global Security or would purchase a
Regulation S Global Security except that it cannot or opts not to hold a
beneficial interest in a Global Security, it is a Person outside the United
States purchasing the Notes and the Warrant in an offshore transaction in
compliance with Regulation S or (c) if neither clause (a) nor clause (b) is
applicable, it is an Accredited Investor.
 
Section 4.3          Source of Funds; ERISA Matters.
 
(a)         The Purchaser represents, warrants and covenants that at least one
of the following statements is an accurate representation as to each source of
funds (a “Source”) to be used by the Purchaser to pay the purchase price of any
Note or Warrant to be purchased by the Purchaser under the Transaction Documents
and with respect to its holding of such Note or such Warrant:
 
(i)          the Source either (A) does not and will not include Plan Assets of
any employee benefit plan, other than a plan exempt from the coverage of ERISA,
or (B) includes and will include only assets that are not considered Plan Assets
by reason of being held in a separate account of an insurance company that is
maintained solely in connection with fixed contractual obligations of the
insurance company under which the amounts payable, or credited, to the plan and
to any participant or beneficiary of the plan (including an annuitant) are not
affected in any manner by the investment performance of the separate account;
 
(ii)         the Source is a governmental plan; or
 
(iii)        the Source does include Plan Assets of an employee benefit plan
subject to ERISA, but the use of such Plan Assets to purchase and hold one or
more Notes or Warrants will not constitute a non-exempt prohibited transaction
within the meaning of Section 406 or 407 of ERISA or Section 4975 of the Code,
and one of the following applies:
 
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(w)          (A) the Source is an “insurance company general account” within the
meaning of PTE 95-60 (issued July 12, 1995, as subsequently amended), (B) there
is no employee benefit plan, treating as a single plan all plans maintained by
the same employer or employee organization, with respect to which the amount of
the general account reserves and liabilities for all contracts held by or on
behalf of such plan exceeds ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account liabilities)
plus surplus, as set forth in the NAIC Annual Statement filed with the
Purchaser’s state of domicile, and (C) the purchase and holding of Notes or
Warrants is exempt under the provisions of PTE 95-60;
 
(x)          (A) the Source is either (1) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (2) a bank
collective investment fund, within the meaning of PTE 91-38 (issued July 12,
1991, as subsequently amended), (B) no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially owns more
than ten percent (10%) of all assets allocated to such pooled separate account
or collective investment fund and (C) the purchase and holding of Notes or
Warrants is covered by either PTE 90-1 or PTE 91-38, as applicable;
 
(y)           the Source constitutes assets of an “investment fund” (within the
meaning of Part VI of the QPAM Exemption) managed by a “qualified professional
asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption),
and the conditions of Part I of the QPAM Exemption are satisfied; or
 
(z)          the Source constitutes assets of a “plan(s)” (within the meaning of
Part IV of PTE 96-23) managed by an “in-house asset manager” or “INHAM” (within
the meaning of Part IV of PTE 96-23), and the conditions of Part I of PTE 96-23
are satisfied.
 
As used in this Section 4.3(a), the terms “employee benefit plan”, “governmental
plan” and “separate account” shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
 
(b)         The Purchaser represents, warrants and covenants that, if any Source
to be used by the Purchaser to pay the purchase price of any Note or Warrant
under the Transaction Documents consists of assets of a benefit plan that is not
subject to ERISA, either (i) such benefit plan is not a governmental plan,
non-U.S. plan (as described in Section 4(b) of ERISA), church plan or other plan
subject to Law that is substantially similar to Section 406 or 407 of ERISA or
Section 4975 of the Code (“Similar Law”) or (ii) its purchase and holding of
Notes and the Warrant do not and will not constitute a violation of Similar Law.
 
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Section 4.4          Due Diligence. The Purchaser acknowledges that, prior to
the date of this Purchase Agreement, (a) it has made, either alone or together
with its advisors, such separate and independent investigation of the Issuer and
its business, financial condition, prospects and management as the Purchaser
deems to be, or such advisors have advised to be, necessary or advisable in
connection with the purchase of the Notes and the Warrant pursuant to the
transactions contemplated by this Purchase Agreement, (b) it and its advisors
have received all information and data that it and such advisors believe to be
necessary in order to reach an informed decision as to the advisability of the
purchase of the Notes and the Warrant pursuant to the transactions contemplated
by this Purchase Agreement, (c) it understands the nature of the potential risks
and potential rewards of the purchase of the Notes and the Warrant, (d) it is a
sophisticated investor with investment experience and has the ability to bear
complete loss of its investment, whether as a result of an Event of Default on
the Notes or any insolvency, liquidation or winding up of the Issuer or
otherwise, and (e) it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
purchasing the Notes and the Warrant and can bear the economic risks of
investing in the Notes and the Warrant for an indefinite period of time,
including the complete loss of its investment. The Purchaser acknowledges that
it has obtained its own attorneys, business advisors and tax advisors as to
legal, business and tax advice (or has decided not to obtain such advice) and
has not relied in any respect on the Issuer or the Placement Agent for such
advice. The Purchaser has had a reasonable time prior to the date of this
Purchase Agreement to ask questions and receive answers concerning the Issuer
and its business and the terms and conditions of the offering of the Notes and
the Warrant and the transactions contemplated hereby and to obtain any
additional information that the Issuer possesses or could acquire without
unreasonable effort or expense, and has generally such knowledge and experience
in business and financial matters and with respect to investments in securities
as to enable the Purchaser to understand and evaluate the risks of such
investment and form an investment decision with respect thereto. Except for (i)
the representations, warranties and covenants made by the Issuer in the
Transaction Documents and (ii) the legal opinions provided to the Purchaser in
connection with the transactions contemplated by the Transaction Documents, the
Purchaser is relying on its own investigation and analysis in entering into the
transactions contemplated hereby.
 
Section 4.5          Enforceability of this Purchase Agreement. This Purchase
Agreement has been duly authorized, executed and delivered by the Purchaser and
constitutes the valid, legally binding and enforceable obligation of the
Purchaser, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors’
rights generally and by general principles of equity.
 
Section 4.6          Tax Matters.
 
(a)          Except as otherwise required by Law, the Purchaser agrees to treat,
and shall treat, the Notes as indebtedness of the Issuer for U.S. federal income
tax purposes.
 
(b)         The Purchaser understands and acknowledges that, if Definitive
Securities are issued, the Purchaser must provide the Issuer, the Trustee or any
Paying Agent with the applicable U.S. federal income tax certifications
(generally, on IRS Form W-9 (or successor applicable form) in the case of a
Person that is a United States person (for purposes of this Section 4.6(b),
within the meaning of Section 7701(a)(30) of the Code) or on an appropriate IRS
Form W-8 (or successor applicable form) in the case of a Person that is not a
United States person).
 
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(c)         The Purchaser represents and warrants that (i) it has not relied
upon the Issuer or the Placement Agent for any tax advice or disclosure of tax
consequences arising from the purchase, ownership or disposition of the Notes
and the Warrant and (ii) it has relied upon its own tax counsel or advisors with
respect to any tax consequences arising from the purchase, ownership or
disposition of the Notes and the Warrant.
 
Section 4.7          Reliance for Opinions. The Purchaser acknowledges and
agrees that the Issuer and, for purposes of the opinions to be delivered to the
Purchaser pursuant to Sections 6.1 and 6.2, counsel for the Issuer and counsel
for the Purchasers, respectively, may rely, without any independent verification
thereof, upon the accuracy of the representations and warranties of the
Purchaser, and compliance by the Purchaser with its agreements, contained in
Sections 4.1, 4.2 and 4.3, and the Purchaser hereby consents to such reliance.
 
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
 
The Issuer represents and warrants to the Purchaser as of the date hereof as
follows:
 
Section 5.1          Securities Laws.
 
(a)          No securities of the same class (within the meaning of Rule
144A(d)(3)(i) under the Securities Act) as the Notes or the Warrants have been
issued and sold by the Issuer within the six-month period immediately prior to
the date hereof.
 
(b)         Assuming the accuracy of the representations and warranties of the
Purchasers in each of the Purchase Agreements and assuming the accuracy of the
statements in the certificate to be delivered by the Placement Agent pursuant to
Section 6.5, neither the Issuer nor any affiliate (as defined in Rule 144 under
the Securities Act) of the Issuer has directly, or through any agent, (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of
any security (as defined in the Securities Act) that is or will be integrated
with the sale of the Notes or the Warrants in a manner that would require the
registration under the Securities Act of the Notes or the Warrants, (ii) engaged
in any form of general solicitation or general advertising in connection with
the offering of the Notes or the Warrants (as those terms are used in Regulation
D under the Securities Act), or in any manner involving a public offering within
the meaning of Section 4(a)(2) of the Securities Act, including publication or
release of articles, notices or other communications published in any newspaper,
magazine or similar medium or broadcast over television, radio or internet, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising, or (iii) engaged in any directed selling
efforts within the meaning of Rule 902(c) of Regulation S.
 
(c)          Assuming the accuracy of the representations and warranties of the
Purchasers in each of the Purchase Agreements and assuming the accuracy of the
statements in the certificate to be delivered by the Placement Agent pursuant to
Section 6.5, (i) the Indenture is not required to be qualified under the U.S.
Trust Indenture Act of 1939, as amended, and (ii) no registration under the
Securities Act of the Notes or the Warrants is required in connection with the
sale thereof to the Purchasers as contemplated by the Transaction Documents.
 
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Section 5.2         Investment Company Act Matters. After giving effect to the
offering and sale of the Notes and the Warrants, the Issuer will not be required
to register as an “investment company” or “controlled” by an “investment
company” within the meaning of the U.S. Investment Company Act of 1940, as
amended.
 
Section 5.3         Use of Proceeds; Margin Regulations. No part of the proceeds
from the sale of the Notes or the Warrants under the Transaction Documents will
be used, directly or indirectly, for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of purchasing or
carrying or trading in any securities under such circumstances as to involve the
Issuer in a violation of Regulation X of said Board (12 CFR 224) or to involve
any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).
The Issuer is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 CFR 221). As used in this
Section 5.3, the terms “margin stock” and “purpose of purchasing or carrying”
shall have the meanings ascribed to them in said Regulation U.
 
Section 5.4          Exchange Act Documents. The documents filed by the Issuer
with the Commission pursuant to the Exchange Act since December 31, 2018
(excluding any documents or portions thereof furnished to, rather than filed
with, the Commission) (such documents, the “Exchange Act Documents”), when they
were filed with the Commission, conformed as to form in all material respects
with the requirements of the Exchange Act, and none of such documents contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
 
Section 5.5          Financial Statements. The financial statements included in
the Exchange Act Documents, together with the related notes and schedules,
present fairly in all material respects the consolidated financial position of
the Issuer as of the respective dates indicated and the consolidated results of
operations, cash flows and changes in shareholders’ equity of the Issuer for the
respective periods specified and have been prepared in all material respects in
compliance with the requirements of the Exchange Act and in conformity with GAAP
applied on a consistent basis during the periods covered thereby, except as may
be expressly stated in the related notes thereto and, in the case of unaudited
financial statements, subject to normal and recurring year-end adjustments that,
if presented, would not differ materially from that included in the audited
financial statements. The other financial and accounting data of the Issuer
contained in the Exchange Act Documents are accurately and fairly presented and
prepared on a basis consistent with the financial statements or the books and
records of the Issuer in all material respects.
 
Section 5.6          Organization; Power; Authorization; Enforceability. The
Issuer has been duly organized, is legally existing and is in good standing
under the Laws of the State of Delaware. The Issuer does not have any
Subsidiaries except the following Immaterial Subsidiaries: Midasol Therapeutics,
GP; and Midasol Therapeutics, LP. MSRX US, LLC has had its existence as a
Delaware limited liability company canceled, and such entity did not at any
point have any material assets, liabilities or operations. The Issuer is duly
qualified as a foreign corporation (or other equivalent entity) in all
jurisdictions in which the nature of its business or location of its properties
require such qualifications, except where the failure to be so qualified would
not reasonably be expected to have a Material Adverse Effect. The Issuer has the
requisite corporate power and authority to own, lease or operate the properties
and assets it purports to own, lease or operate, to carry on its business as
presently conducted and to execute, deliver and perform its obligations under
each Transaction Document except where the failure to have such power and
authority to own, lease or operate such properties and assets and carry on such
business would not reasonably be expected to have a Material Adverse Effect.
Each Transaction Document entered into as of the date hereof has been duly
authorized, executed and delivered by the Issuer and constitutes the valid,
legally binding and, assuming due authorization, execution and delivery by all
other parties thereto, enforceable obligation of the Issuer (subject, in each
case, to general equitable principles, insolvency, liquidation, reorganization
and other Laws of general application relating to creditors’ rights). Each
Transaction Document to be entered into after the date hereof will be duly
authorized, executed and delivered by the Issuer and will constitute the valid,
legally binding and, assuming due authorization, execution and delivery by all
other parties thereto, enforceable obligation of the Issuer (subject, in each
case, to general equitable principles, insolvency, liquidation, reorganization
and other Laws of general application relating to creditors’ rights).
 
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Section 5.7          Organizational Information and Equity Interests. The
Issuer’s principal place of business is Warren, New Jersey. The Issuer’s U.S.
taxpayer identification number is 82-3827296. All of the outstanding Equity
Interests in the Issuer have been duly authorized and validly issued and, to the
extent applicable, are fully paid and non-assessable, free and clear of all
Liens except Permitted Liens and the Liens created by the Security Documents.
 
Section 5.8          Common Stock. The shares of Common Stock of the Issuer to
be issued upon the exercise of the Warrants have been reserved by the Issuer
and, upon exercise of the Warrants in accordance with their terms, will be
validly issued, fully paid and non-assessable.
 
Section 5.9         Dilutive Securities. Except as set forth in Schedule 5.9,
(i) there are no outstanding rights (including pre-emptive rights), warrants or
options to acquire, or instruments convertible into or exchangeable for, any
shares of Capital Stock in the Issuer or any of its Subsidiaries and (ii) there
is no contract, commitment, agreement, understanding or arrangement of any kind
relating to the issuance of (A) any Capital Stock of the Issuer or any such
Subsidiary, (B) any such convertible or exchangeable securities or (C) any such
rights, warrants or options.
 
Section 5.10       Governmental and Third Party Authorizations. No consent,
approval, authorization, license, registration, qualification or order of, or
filing or declaration with, any Governmental Authority, any self-regulatory
organization or any other non-governmental regulatory authority (including the
Nasdaq Stock Market LLC) or approval of the shareholders of the Issuer or any
other Person is required in connection with (a) the execution or delivery by the
Issuer of any Transaction Document or the performance of obligations by the
Issuer under any Transaction Document (including the issuance and sale of the
Notes and the Warrants), (b) the transactions contemplated by the Transaction
Documents, (c) the grant by the Issuer of the Liens granted or purported to be
granted by it pursuant to the Security Documents or (d) the perfection of the
Liens created under the Security Documents, other than (i) such consents,
approvals, authorizations, licenses, registrations, qualifications, orders,
filings, declarations and other actions as shall have been taken, given, made or
obtained and are in full force and effect as of the Closing Date, in each case,
as set forth in Schedule 5.10, (ii) any necessary filings under the securities
or blue sky Laws of the various jurisdictions in which the Notes and the
Warrants are being offered, (iii) the filing of financing statements under the
UCC and recordings with the PTO and the filing of any other recordings
(including in any applicable non-U.S. jurisdiction) required to perfect a
security interest in the Notes Collateral and (iv) such consents, approvals,
authorizations, licenses, registrations, qualifications, orders, filings,
declarations and other actions, the failure of which to take, give, make or
obtain would not reasonably be expected to have a Material Adverse Effect.
 
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Section 5.11         No Conflicts. The execution, delivery and performance of
each Transaction Document by the Issuer, the issuance and sale of the Notes and
the Warrants and the consummation of the transactions contemplated by the
Transaction Documents will not conflict with, result in any breach or violation
of or constitute a default under (nor constitute any event that, with notice,
lapse of time or both, would result in any breach or violation of, constitute a
default under or give the holder of any indebtedness (or a Person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of
all or a part of such indebtedness under) (or result in the creation or
imposition of a Lien on any property or assets of the Issuer pursuant to) (a)
the certificate of incorporation or bylaws of the Issuer, (b) any indenture,
mortgage, deed of trust, bank loan, credit agreement, other evidence of
indebtedness, license, lease, contract or other agreement or instrument to which
the Issuer is a party or by which it or its properties may be bound or affected,
(c) any Law or (d) any rule or regulation of any self-regulatory organization or
other non-governmental regulatory authority (including the rules and regulations
of the Nasdaq Stock Market LLC), except, in the case of clause (b), (c) or (d),
where such conflict, breach, violation, default, event, right or Lien would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
 
Section 5.12        No Violation or Default. The Issuer is not in breach or
violation of or in default under (nor has any event occurred that, with notice,
lapse of time or both, would result in any breach or violation of, constitute a
default under or give the holder of any indebtedness (or a Person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of
all or a part of such indebtedness under) (a) its certificate of incorporation
or bylaws, (b) any indenture, mortgage, deed of trust, bank loan, credit
agreement, other evidence of indebtedness, license, lease, contract or other
agreement or instrument to which it is a party or by which it or any of its
properties may be bound or affected, (c) any Law or (d) any rule or regulation
of any self-regulatory organization or other non-governmental regulatory
authority (including the rules and regulations of the Nasdaq Stock Market LLC),
except, in the case of clause (b), (c) or (d), where such breach, violation,
default, event or right would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. On the Closing Date, no Event of
Default on the Notes exists.
 
Section 5.13        No Material Adverse Change. Except as disclosed in the
Exchange Act Documents, subsequent to the respective dates as of which
information is given in the Exchange Act Documents, (a) there has not been any
material change in the Capital Stock or long-term debt of the Issuer or any
material adverse change, or any development that would be expected to result in
a material adverse change, in or affecting the business, condition (financial or
otherwise), results of operations, earnings, properties or prospects of the
Issuer and its Subsidiaries taken as a whole, (b) the Issuer has not incurred
any material liabilities or obligations, direct or contingent, nor has it
entered into any material transactions not in the ordinary course of business,
other than pursuant to the Transaction Documents and the transactions referred
to herein and therein, (c) the Issuer has not and will not have paid or declared
any dividends or other distributions of any kind on any class of its Capital
Stock, (d) the Issuer has not sustained any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor disturbance or dispute or any action,
order or decree of any Governmental Authority and (e) the Issuer has not altered
its method of accounting.
 
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Section 5.14       Compliance with ERISA. The Issuer has not maintained or
contributed to a defined benefit plan as defined in Section 3(35) of ERISA. No
plan maintained or contributed to by the Issuer that is subject to ERISA (an
“ERISA Plan”) (or any trust created thereunder) has engaged in a “prohibited
transaction” within the meaning of Section 406 of ERISA or Section 4975 of the
Code that could subject the Issuer to any material tax penalty on prohibited
transactions and that has not adequately been corrected. Each ERISA Plan is in
compliance in all material respects with all reporting, disclosure and other
requirements of the Code and ERISA as they relate to such ERISA Plan, except for
any noncompliance that would not result in the imposition of a material tax or
monetary penalty. With respect to each ERISA Plan that is intended to be
“qualified” within the meaning of Section 401(a) of the Code, either (a) a
determination letter has been issued by the IRS stating that such ERISA Plan and
the attendant trust are qualified thereunder or (b) the remedial amendment
period under Section 401(b) of the Code with respect to the establishment of
such ERISA Plan has not ended and a determination letter application will be
filed with respect to such ERISA Plan prior to the end of such remedial
amendment period. The Issuer has never completely or partially withdrawn from a
“multiemployer plan”, as defined in Section 3(37) of ERISA.
 
Section 5.15        Tax Matters. The Issuer has filed all income and franchise
tax returns and all other material tax returns required to be filed by it and
has paid all taxes required to be paid by it and, if due and payable, any
related or similar assessment, fine or penalty levied against it (except for any
such taxes, assessments, fines or penalties currently being contested in good
faith and for which adequate reserves in accordance with GAAP are being
maintained or in any case in which the failure to file or pay, individually or
collectively, would not reasonably be expected to have a Material Adverse
Effect). The Issuer has made adequate charges, accruals and reserves in the
applicable financial statements referred to in Section 5.5 in respect of all
material federal, state and foreign income and franchise taxes for all periods
as to which the tax liability of the Issuer has not been finally determined. The
Issuer is not aware of any material claims against it by any taxing authority in
relation to the filing of tax returns or the payment of required taxes,
assessments, fines or penalties.
 
Section 5.16       Legal Proceedings. Except as disclosed in the Exchange Act
Documents, there are no actions, suits or proceedings pending or, to the
Issuer’s knowledge, threatened against or affecting, the Issuer or any of its
officers in their capacity as such before or by any Governmental Authority or
the Financial Industry Regulatory Authority, Inc. or the Nasdaq Stock Market
LLC, wherein an unfavorable ruling, decision or finding could reasonably be
expected to result in a Material Adverse Effect. Except as set forth in the
Exchange Act Documents, the Issuer has not received any written notice of
proceedings relating to the revocation or modification of any authorization,
approval, order, license, certificate, franchise or permit, where such
revocation or modification would reasonably be expected to result in a Material
Adverse Effect. There are no pending investigations known to the Issuer
involving the Issuer by any Governmental Authority having jurisdiction over the
Issuer or its business or operations that would reasonably be expected to result
in a Material Adverse Effect.
 
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Section 5.17        Solvency. No step has been taken or is currently intended by
the Issuer or, to the knowledge of the Issuer, any other Person for the
winding-up, liquidation, dissolution or administration or for the appointment of
a receiver or administrator of the Issuer for all or any of its properties or
assets. Immediately after the issuance and sale of the Notes and the Warrants
and the consummation of the other transactions contemplated by the Transaction
Documents on the Closing Date, the Issuer will not be rendered insolvent within
the meaning of 11 U.S.C. 101(32) or any other applicable insolvency Laws or,
taken as a whole, be unable to pay its debts as they mature.
 
Section 5.18        Existing Indebtedness. The Exchange Act Documents disclose
all of the following types of material third-party outstanding indebtedness of
the Issuer as of the Closing Date: (a) indebtedness in respect of borrowed
money; (b) any other obligation of the Issuer to be liable for, or to pay, as
obligor, guarantor or otherwise, on the indebtedness for borrowed money of
another Person (other than by endorsement of negotiable instruments for
collection in the ordinary course of business); and (c) to the extent not
otherwise included, indebtedness for borrowed money of another Person secured by
a Lien on any asset owned by such Person (whether or not such indebtedness for
borrowed money is assumed by such Person).
 
Section 5.19        Material Contracts. There is no document or agreement of a
character required to be described in the Exchange Act Documents or to be filed
as an exhibit to the Exchange Act Documents that is not described or filed as
required. All Material Contracts are in full force and effect and constitute the
valid, legally binding and (subject to general equitable principles and
insolvency, liquidation, reorganization and other Laws of general application
relating to creditors’ rights) enforceable obligation of the Issuer and, to the
knowledge of the Issuer, all other parties thereto, except in each case as would
not reasonably be expected to have a Material Adverse Effect. To the knowledge
of the Issuer, there are no oral waivers or modifications (or pending requests
therefor) in respect of any Material Contract except as would not reasonably be
expected to have a Material Adverse Effect. The Issuer is not in breach or
default under or with respect to any Material Contract binding on it except
where such breaches or defaults would not reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Issuer, no other Person party
to any Material Contract is in default thereunder except where such default
would not reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Issuer, no party to any Material Contract has given any notice
of termination or breach of any Material Contract.
 
Section 5.20        Properties. The Issuer has good and marketable title to all
properties and assets described in the Exchange Act Documents as being owned by
it, free and clear of all Liens or restrictions other than Permitted Liens and
the Liens created by the Security Documents, except as set forth in the Exchange
Act Documents or those where the failure to have such title would not,
individually or in the aggregate, have a Material Adverse Effect. To the
knowledge of the Issuer, the Issuer has valid, subsisting and (subject to
general equitable principles and insolvency, liquidation, reorganization and
other Laws of general application relating to creditors’ rights) enforceable
leases for the properties described in the Exchange Act Documents as leased by
it, with such exceptions as are not material and do not materially interfere
with the use made and proposed to be made of such properties by the Issuer.
 
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Section 5.21         Intellectual Property.
 
(a)        Except as disclosed in the Exchange Act Documents, the Issuer owns,
has valid and enforceable licenses for or otherwise has adequate rights to use
all technology (including patented, patentable and unpatented inventions and
unpatentable proprietary or confidential information, systems or procedures),
designs, processes, patents, trademarks, service marks, trade secrets, trade
names, know how, copyrights and other works of authorship, computer programs,
technical data and information and all similar intellectual property or
proprietary rights (including all registrations and applications for
registration of, and all goodwill associated with, any of the foregoing, as
applicable) (collectively, “Intellectual Property”) that are material to its
business as currently conducted or as proposed to be conducted, including the
development, manufacture, operation and sale of any of the Issuer’s products or
product candidates, as described in the Exchange Act Documents, except where the
failure to own, license or otherwise have rights to such Intellectual Property
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the Exchange Act Documents, the
Intellectual Property of the Issuer has not been adjudged by a Governmental
Authority of competent jurisdiction invalid or unenforceable in whole or in
part, except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as disclosed in the Exchange
Act Documents: (i) to the knowledge of the Issuer, there are no third parties
who have, or will be able to establish, rights to any Intellectual Property
owned by or licensed to the Issuer, except for, and to the extent of, the rights
of any third parties that are licensors or licensees of such Intellectual
Property as set forth in Schedule 5.21; (ii) to the Issuer’s knowledge, there is
no infringement, misappropriation or other violation by third parties of any
Intellectual Property owned by, or licensed to, the Issuer; (iii) there is no
pending or, to the knowledge of the Issuer, threatened action, suit, proceeding
or claim by others against the Issuer challenging the Issuer’s rights in or to
any Intellectual Property owned by, or licensed to, the Issuer, and the Issuer
is unaware of any facts that could form a reasonable basis for any such action,
suit, proceeding or claim; (iv) there is no pending or, to the knowledge of the
Issuer, threatened action, suit, proceeding or claim by others against the
Issuer challenging the validity, enforceability or scope of any Intellectual
Property owned by, or licensed to, the Issuer, and the Issuer is unaware of any
facts that could form a reasonable basis for any such action, suit, proceeding
or claim; (v) there is no pending or, to the knowledge of the Issuer, threatened
action, suit, proceeding or claim by others against the Issuer that (nor has the
Issuer received any written claim from a third party that) the Issuer infringed,
misappropriated or otherwise violated, or is infringing, misappropriating or
otherwise violating, any intellectual property rights of others, and the Issuer
is unaware of any facts that could form a reasonable basis for any such action,
suit, proceeding or claim; and (vi) the Issuer has complied with and there has
been no breach or default by the Issuer under the terms of each agreement
pursuant to which Intellectual Property has been licensed to the Issuer, and all
such agreements are in full force and effect, except, in each case of clauses
(i) through (vi), as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth in the Exchange
Act Documents, the Issuer is not obligated or under any liability whatsoever to
make any material payment by way of royalties, fees or otherwise to any owner or
licensee of, or other claimant to, any Intellectual Property, with respect to
the use thereof in connection with the conduct of its business or otherwise. No
Immaterial Subsidiary owns or licenses any material Intellectual Property.
 
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(b)         The Issuer owns, licenses or otherwise has the full exclusive right
to use all material trademarks and trade names that are used in or reasonably
necessary for the conduct of its business as described in the Exchange Act
Documents, except where the failure to own, license or otherwise have rights to
such trademarks and tradenames would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Issuer has not
received any written notice of infringement of or conflict with asserted rights
of others with respect to any such trademarks or trade names or challenging or
questioning the validity or effectiveness of any such trademark or trade name.
To the Issuer’s knowledge, the use of such trademarks and trade names in
connection with the business and operations of the Issuer does not materially
infringe on the rights of any Person. Except as set forth in the Exchange Act
Documents, the Issuer is not obligated or under any liability whatsoever to make
any material payment by way of royalties, fees or otherwise to any owner or
licensee of, or other claimant to, any trademark, service mark or trade name
with respect to the use thereof in connection with the conduct of its business
or otherwise.
 
(c)          The Issuer has taken reasonable security measures to protect the
secrecy, confidentiality and value of all its Intellectual Property in all
material aspects, including complying with all material duty of disclosure
requirements before the PTO and any other non-U.S. patent offices, as
appropriate.
 
(d)         Schedule 5.21 contains a complete list of (i) all registered
trademarks, copyrights and Patents that are owned by the Issuer, in each case
that are reasonably necessary for the operation of the business of the Issuer as
presently conducted, and (ii) all Patent license agreements granting exclusive
rights to the Issuer to such licensed Patents.
 
(e)         The Issuer is the owner or holder of each new drug application or
abbreviated new drug application set forth opposite its name in Schedule 5.21.
Except as set forth in Schedule 5.21, the Issuer has not granted, assigned or
licensed to any Person, directly or indirectly, any rights under any such new
drug application or abbreviated new drug application. Schedule 5.21 sets forth
the product that pertains to each such new drug application and abbreviated new
drug application (and whether or not approval of any such drug application has
been granted in any jurisdiction, and, if so, in which jurisdictions such
approvals have been granted).
 
Section 5.22        Environmental Matters. Except in each case as would not
individually or in the aggregate reasonably be expected to result in a Material
Adverse Effect, (a) the Issuer is and has been in compliance with, and is not
subject to any pending or, to the knowledge of the Issuer, threatened costs or
liability under, any and all applicable Laws (including common law), and
applicable and binding judicial or administrative decisions or orders, relating
to pollution, the generation, use, handling, transportation, treatment, storage,
discharge, disposal or release of Hazardous Substances, the protection or
restoration of the environment, human health and safety, noise or the protection
of natural resources, including wildlife, migratory birds, eagles or endangered
or threatened species or habitats (collectively, “Environmental Laws”) and, to
the knowledge of the Issuer, no facts or circumstances currently exist that
would reasonably be expected to result in such non-compliance, cost or
liability, (b) to the knowledge of the Issuer, the Issuer does not own, occupy,
operate, lease or use any real property contaminated with Hazardous Substances
in violation of Environmental Laws and that would reasonably be expected to
result in the Issuer incurring any liability, (c) the Issuer is not conducting
or funding any investigation, remediation, remedial action or monitoring of
actual or suspected Hazardous Substances in the environment, (d) to the
knowledge of the Issuer, the Issuer is not subject to any pending or threatened
liability for any release or threatened release of Hazardous Substances,
including at any off-site treatment, storage or disposal site, (e) the Issuer is
not subject to any written claim, action, suit, order, demand or notice by any
Governmental Authority or Person alleging liability or violation relating to
Environmental Laws or Hazardous Substances, (f) the Issuer has received and is
in compliance with all, and has received no written claim of liability under
any, permits, licenses, authorizations, identification numbers or other
approvals required under applicable Environmental Laws to conduct its business,
as currently conducted, and (g) to the knowledge of the Issuer, there are no new
requirements applicable to the conduct of the Issuer’s business, as currently
conducted, proposed for adoption or implementation under any Environmental Law.
Except as set forth in the Exchange Act Documents, there are no judicial or
administrative proceedings that are pending, or known to be contemplated,
against the Issuer pursuant to any Environmental Laws by a Governmental
Authority, other than such proceedings for which it is reasonably believed no
monetary sanctions of $100,000 or more will be imposed. Except as set forth in
the Exchange Act Documents, the Issuer has not incurred, and does not currently
anticipate incurring, any costs or expenditures (including capital expenditures)
required under or pursuant to Environmental Laws that would reasonably be
expected to have a material effect on the capital expenditures, earnings or
competitive position of the Issuer.
 
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Section 5.23       Labor Matters. The Issuer is not involved in any labor
dispute except where the dispute would not, individually or in the aggregate,
have a Material Adverse Effect, nor, to the knowledge of the Issuer, is any such
dispute threatened. The Issuer is currently in compliance with all applicable
Laws relating to employment and labor, including those related to wages, hours,
collective bargaining and the payment and withholding of Taxes.
 
Section 5.24        Insurance. The Issuer carries, or is covered by, insurance
in such amounts and covering such risks as the Issuer believes are adequate for
the conduct of its business and the value of its properties and is customary for
companies engaged in similar industries, and all such insurance is in full force
and effect. The Issuer has no reason to believe that it will not be able to (a)
renew its existing insurance coverage as and when such policies expire or (b)
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as currently conducted or proposed to be
conducted and at a cost that would not, individually or in the aggregate, result
in a Material Adverse Effect. The Issuer has not been denied any insurance
coverage that it has sought or for which it has applied.
 
Section 5.25        No Unlawful Payments. None of the Issuer, any of its
directors or officers or, to the Issuer’s knowledge, any agent, employee or
representative of the Issuer or its Affiliates or other Person associated with
or acting on behalf of the Issuer has (a) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity, (b) made or taken an act in furtherance of an offer, promise
or authorization of any direct or indirect unlawful payment of corporate funds
or benefit to any government or regulatory official or employee, including of
any government-owned or controlled entity or of a public international
organization, or any Person acting in an official capacity for or on behalf of
any of the foregoing, or any political party or party official or candidate for
political office, (c) taken any action, directly or indirectly, that would
result in a violation of any provision of the FCPA, the U.K. Bribery Act 2010,
or any applicable Law implementing the OECD Convention on Combating Bribery of
Foreign Public Officials in International Business Transactions, or committed an
offense under any other applicable anti-bribery or anti-corruption Laws, or (d)
made, offered, agreed to, requested or taken an act in furtherance of any
unlawful bribe or other unlawful benefit, including any rebate, payoff,
influence payment, kickback or other unlawful or improper payment or benefit.
The Issuer and, to the knowledge of the Issuer, its Affiliates have conducted
their businesses in compliance with the FCPA and have instituted, maintained and
enforced, and will continue to maintain and enforce, policies and procedures
designed to promote and ensure compliance with all applicable anti-bribery and
anti-corruption Laws.
 
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Section 5.26        Compliance with Anti-Money Laundering Laws. The operations
of the Issuer are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements, including those
of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
those of the Bank Secrecy Act, as amended by Title III of the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money
laundering Laws of all jurisdictions in which the Issuer conducts business
(collectively, the “Anti-Money Laundering Laws”), and no action, suit or
proceeding by or before any Governmental Authority involving the Issuer with
respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the
Issuer, threatened.
 
Section 5.27        Sanctions. None of the Issuer or any director or officer of
the Issuer or, to the knowledge of the Issuer, any agent, employee or
representative of the Issuer or any Affiliate or other Person associated with or
acting on behalf of the Issuer is currently the subject or target of any
sanctions administered or enforced by the U.S. government (including the Office
of Foreign Assets Control of the U.S. Treasury Department or the U.S. Department
of State and including the designation as a “specially designated national” or
“blocked person”), the United Nations Security Council, the European Union, Her
Majesty’s Treasury or other relevant sanctions authority (collectively,
“Sanctions”), nor is the Issuer located, organized or resident in a country or
territory that is the subject or the target of Sanctions, including Cuba, Iran,
North Korea, the Crimean region and Syria (each, a “Sanctioned Country”). The
Issuer will not directly or indirectly use the proceeds of the offering of the
Notes and the Warrants, or lend, contribute or otherwise make available such
proceeds to any Subsidiary, joint venture partner or other Person, (a) to fund
or facilitate any activities of or business with any Person that, at the time of
such funding or facilitation, is the subject or the target of Sanctions, (b) to
fund or facilitate any activities of or business in any Sanctioned Country or
(c) in any other manner that will result in a violation by any Person (including
any Person participating in the transaction contemplated hereby, whether as
underwriter, advisor, investor or otherwise) of Sanctions. For the past five
years, the Issuer has not knowingly engaged in, is not now knowingly engaged in,
and will not engage in, any dealings or transactions with any Person that at the
time of the dealing or transaction is or was the subject or the target of
Sanctions or with any Sanctioned Country.
 
Section 5.28         Disclosure Controls. The Issuer has established and
maintains disclosure controls and procedures (as such term is defined in Rules
13a-15 and 15d-15 under the Exchange Act) that (a) are designed to ensure that
material information relating to the Issuer is made known to the Issuer’s
principal executive officer and principal financial officer by others within the
Issuer, particularly during the periods in which the periodic reports required
under the Exchange Act are being prepared, (b) provide for the periodic
evaluation of the effectiveness of such disclosure controls and procedures as of
the end of the period covered by the Issuer’s most recent annual or quarterly
report filed with the Commission and (c) are effective in all material respects
to perform the functions for which they were established.
 
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Section 5.29         Accounting Controls.
 
(a)         The Issuer maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
 
(b)         Since the end of the Issuer’s most recent audited fiscal year, there
has been (i) no material weakness (as defined in Rule 1-02 of Regulation S-X of
the Commission) in the Issuer’s internal control over financial reporting
(whether or not remediated) and (ii) no change in the Issuer’s internal control
over financial reporting that has materially affected, or is reasonably likely
to materially affect, the Issuer’s internal control over financial reporting.
The Issuer is not aware of (x) any significant deficiency in the design or
operation of its internal control over financial reporting that is reasonably
likely to adversely affect the Issuer’s ability to record, process, summarize
and report financial data or any material weaknesses in its internal controls,
except as disclosed in the Exchange Act Documents, since the end of the Issuer’s
most recent audited fiscal year or (y) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Issuer’s internal controls.
 
Section 5.30       Licenses and Permits. Except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, (a) the
Issuer holds, and is operating in compliance with, such permits, licenses,
franchises, registrations, exemptions, approvals, authorizations and clearances
of any Governmental Authorities (including the FDA) required for the conduct of
its business as currently conducted (collectively, the “Permits”), and all such
Permits are in full force and effect, and (b) the Issuer has fulfilled and
performed all of its obligations with respect to the Permits, and, to the
Issuer’s knowledge, no event has occurred that allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in any other
impairment of the rights of the holder of any Permit, other than, in each case,
the Permits set forth in Schedule 5.30. All applications, notifications,
submissions, information, claims, reports and statistics, and other data and
conclusions derived therefrom, utilized as the basis for any and all requests
for a Permit from the FDA or other Governmental Authority relating to the
Issuer, its business and its products, when submitted to the FDA or other
Governmental Authority by or on behalf of the Issuer, were true, complete and
correct in all material respects. Any necessary or required updates, changes,
corrections or modifications to such applications, notifications, submissions,
information, claims, reports and statistics and other data have been submitted
to the FDA or other Governmental Authority, other than, in each case, the
Permits set forth in Schedule 5.30. The Issuer has not received any written
notification, correspondence or other written communication, including
notification of any pending or, to the Issuer’s knowledge, threatened claim,
suit, proceeding, hearing, enforcement, investigation, arbitration or other
action, from any Governmental Authority, including the FDA or the DEA, of
potential or actual non-compliance by, or liability of, the Issuer under any
Permits except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. To the Issuer’s knowledge, no facts
or circumstances currently exist that would reasonably be expected to give rise
to any liability of the Issuer under any Permits except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
 
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Section 5.31        Clinical Trials. The pre-clinical studies and clinical
trials conducted by or, to the knowledge of the Issuer, on behalf of or
sponsored by the Issuer, or in which the Issuer has participated, that are
described in, or the results of which are referred to in, the Exchange Act
Documents were and, if still pending, are being conducted in accordance with
protocols filed with the appropriate regulatory authorities for each such study
or trial, as the case may be, and with standard medical and scientific research
standards and procedures, all applicable Laws (including those of the FDA and
comparable regulatory agencies outside of the United States) to which they are
subject and Good Clinical Practices and Good Laboratory Practices, except to the
extent where failure to conduct such pre-clinical studies and clinical trials in
such manner would not have a Material Adverse Effect. Each description of the
results of such studies and trials contained in the Exchange Act Documents is
accurate and complete in all material respects and fairly presents the data
derived from such studies and trials, and the Issuer has no knowledge of any
other studies or trials the results of which are inconsistent with, or otherwise
call into question, the results described or referred to in the Exchange Act
Documents. The Issuer has not received any written notices, correspondence or
other written communications from the FDA or any committee thereof or from any
other U.S. or non-U.S. government or drug or medical device regulatory agency
(collectively, the “Regulatory Agencies”) requiring or, to the Issuer’s
knowledge, threatening the termination, suspension or modification of any
clinical trials that are described or referred to in the Exchange Act Documents.
The Issuer has operated at all times and currently is in compliance with all
applicable Laws of the Regulatory Agencies except where such failure to operate
or non-compliance would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
 
Section 5.32       Regulatory Filings. The Issuer has not failed to file with
the Regulatory Agencies any required material filing, declaration, listing,
registration, report or submission with respect to any products or product
candidates that are described or referred to in the Exchange Act Documents or
any other material filing required by any other applicable Regulatory Agency or
other Governmental Authority. All such filings, declarations, listings,
registrations, reports or submissions were in material compliance with
applicable Laws when filed. All such filings, declarations, listings,
registrations, reports or submissions were timely, complete, accurate and not
misleading on the date filed in all material respects (or were corrected or
supplemented by subsequent submission). No material deficiencies regarding
compliance with applicable Law have been asserted in writing by any applicable
regulatory authority with respect to any such filings, declarations, listings,
registrations, reports or submissions.
 
Section 5.33        Compliance with Certain Regulatory Matters. The Issuer, its
directors and officers and, to the Issuer’s knowledge, its employees and agents
have operated and currently are in compliance in all material respects with
applicable Laws administered or enforced by the FDA, the DEA or any other
Governmental Authority, including the Food, Drug and Cosmetic Act (21 U.S.C. §
301 et seq.), the Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil
False Claims Act (31 U.S.C. §3729 et seq.), the False Statements Law (42 U.S.C.
§ 1320a-7b(a)), the Civil Monetary Penalties Law (42 U.S.C. §1320a-7a), all
criminal Laws relating to health care fraud and abuse, including 18 U.S.C. §§
286 and 287, the exclusions law (42 U.S.C. § 1320a-7), the Laws of Medicare
(Title XVIII of the Social Security Act), Medicaid (Title XIX of the Social
Security Act) and all other government funded or sponsored healthcare programs,
and the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. §
1320d et seq.), as amended by the Health Information Technology for Economic and
Clinical Health Act of 2009 (42 U.S.C. §17921 et seq.). The Issuer is not a
party to, and does not have any ongoing reporting obligations pursuant to, any
corporate integrity agreement, deferred prosecution agreement, monitoring
agreement, consent decree, settlement order, plan of correction or similar
agreement imposed by any Governmental Authority. Neither the Issuer nor, to the
knowledge of the Issuer, any of its directors, officers, employees or agents has
been debarred, excluded or suspended from participation in or receiving payment
from any U.S. federal, state or local government health care program or is
subject to an audit, investigation, proceeding or other similar action by any
Governmental Authority that could reasonably be expected to result in debarment,
suspension or exclusion.
 
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Section 5.34         Absence of Certain Regulatory Actions. Except as described
in the Exchange Act Documents or as would not, individually or in the aggregate,
have a Material Adverse Effect, the Issuer has not (a) had any product or
manufacturing site (whether Issuer-owned or that of a contract manufacturer for
Issuer products or product candidates) subject to a Governmental Authority
(including the FDA) shutdown or import or export prohibition or (b) received any
FDA Form 483 or other Governmental Authority notice of inspectional
observations, “warning letters”, “untitled letters”, requests to make changes to
the Issuer products, processes or operations, or similar written correspondence
or notice from the FDA or other Governmental Authority alleging or asserting
material noncompliance with any applicable Laws. To the Issuer’s knowledge,
neither the FDA nor any other Governmental Authority has threatened such action.
The Issuer has not received written notice of any claim, action, suit,
proceeding, hearing, enforcement, investigation, arbitration or other action
from any Regulatory Agency or other Governmental Authority alleging that any
product operation or activity is in violation of any health care Laws, and, to
the Issuer’s knowledge, no such claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action is threatened, except
where such claim, action, suit, proceeding, hearing, enforcement, investigation,
arbitration or other action would not reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect.
 
Section 5.35       Collateral Agreement. The representations and warranties of
the Issuer in Article III of that certain collateral agreement, dated as of the
Closing Date, among the Issuer, the other subsidiary parties from time to time
party thereto, the Trustee and the Collateral Agent are true and correct in all
material respects (except to the extent qualified by materiality, in which case
such representation or warranty shall be true and correct in all respects).
 
ARTICLE VI
CONDITIONS TO CLOSING
 
The obligations of the Purchaser hereunder on the Closing Date are subject to
the accuracy in all material respects (except for such representations qualified
by materiality or Material Adverse Effect, which shall be accurate in all
respects) of the representations and warranties of the Issuer contained herein
as of the Closing Date, to the accuracy of the statements of the Issuer and its
officers made in any certificates delivered pursuant hereto on the Closing Date,
to the performance by the Issuer of its obligations hereunder as of the Closing
Date and to the satisfaction or waiver by the Purchaser of each of the following
additional terms and conditions applicable on the Closing Date:
 
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Section 6.1          Issuer’s Counsel Opinion. Dechert LLP, counsel to the
Issuer, shall have furnished to the Purchasers their opinion, addressed to the
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Purchasers.
 
Section 6.2          Purchasers’ Counsel Opinion. Pillsbury Winthrop Shaw
Pittman LLP, special counsel to the Purchasers, shall have furnished to the
Purchasers their opinion, addressed to the Purchasers and dated the Closing
Date, in form and substance reasonably satisfactory to the Purchasers.
 
Section 6.3         Certification as to Purchase Agreement. The Issuer shall
have furnished to the Purchasers a certificate, dated the Closing Date, of a
Responsible Officer, stating that, as of the Closing Date, the representations
and warranties of the Issuer in this Purchase Agreement are true and correct in
all material respects (except for such representations qualified by materiality
or Material Adverse Effect, which are true and correct in all respects) and the
Issuer has complied in all material respects with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
 
Section 6.4          Authorizations. The Issuer shall have furnished to the
Purchasers (a) a copy of the resolutions, consents or other documents, certified
by a Responsible Officer of the Issuer, as of the Closing Date, duly authorizing
the execution and delivery of, and performance of obligations under, the
Transaction Documents and any other documents to be executed on or prior to the
Closing Date by or on behalf of the Issuer in connection with the transactions
contemplated hereby and thereby and the issuance and sale of the Notes and
Warrants, and a certification that such resolutions, consents or other documents
have not been modified, rescinded or amended and are in full force and effect,
(b) certified copies of its organizational documents, (c) a certification by a
Responsible Officer, as of the Closing Date, as to the incumbency and specimen
signatures of each officer executing any Transaction Document or any other
document delivered in connection herewith or therewith on behalf of the Issuer
(together with a certification of another Responsible Officer as to incumbency
and specimen signature of the first-mentioned Responsible Officer) and (d) a
certificate of good standing of the Issuer as of a recent date from the
Secretary of State of the State of Delaware.
 
Section 6.5          Offering of Notes and Warrants. The Placement Agent shall
have delivered to the Issuer a certificate, dated on or about the Closing Date,
as to the manner of the offering of the Notes and the Warrants and the number
and character of the offerees contacted, which certificate shall state that the
Placement Agent (a) did not solicit offers for, or offer, the Notes or the
Warrants by means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(a)(2) of the
Securities Act, including publication or release of articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television, radio or internet, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising,
and did not engage in any directed selling efforts within the meaning of Rule
902(c) of Regulation S and (b) solicited offers for the Notes and the Warrants
only from, and offered the Notes and the Warrants only to, (i) Persons that it
reasonably believed were QIBs or, if any such Person was buying for one or more
institutional accounts for which such Person was acting as fiduciary or agent,
only when such Person reasonably believed that each such account was a QIB, (ii)
to Persons that are not U.S. persons (as defined in Regulation S) in accordance
with Rule 903 of Regulation S if such offers were outside the United States and
(iii) Accredited Investors, and shall further state that counsel to the Issuer
and to the Purchasers may rely thereon in rendering their respective opinions to
be delivered hereunder.
 
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Section 6.6          CUSIP Numbers. S&P Global Market Intelligence’s CUSIP
Global Services, as agent for the National Association of Insurance
Commissioners, shall have issued CUSIP numbers and ISIN numbers for the Notes.
 
Section 6.7         Further Information. On or prior to the Closing Date, the
Issuer shall have furnished to the Purchaser such further information,
certificates and documents as the Purchaser may reasonably request in connection
with this Purchase Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby (including written evidence of the
repayment in full of all indebtedness and any other obligations under that
certain Credit Agreement and Guaranty dated as of August 16, 2016, as amended to
date, between the Issuer (formerly MonoSol Rx, LLC), the subsidiary guarantors
from time to time party thereto, the lenders from time to time party thereto and
Perceptive Credit Holdings, LP, as administrative agent and collateral agent,
the termination of any guarantees of such indebtedness and other obligations and
the release of all Liens securing such indebtedness and other obligations, as
applicable).
 
Section 6.8          Consummation of Transactions. All of the transactions
contemplated by the Transaction Documents to be completed on or before the
Closing Date shall have been consummated or shall be consummated concurrently
with the transactions contemplated hereby, and the Purchaser shall have received
executed copies of the Transaction Documents (which shall be in full force and
effect).
 
Section 6.9          No Actions. No action shall have been taken and no Law
shall have been enacted, adopted or issued by any Governmental Authority that
would, as of the Closing Date, prevent the issuance or sale of the Notes or the
Warrants, and no injunction, restraining order or order of any other nature by
any Governmental Authority of competent jurisdiction shall have been issued as
of the Closing Date that would prevent the issuance or sale of the Notes or the
Warrants.
 
Section 6.10         Consents. The Purchasers shall have received copies of all
consents, approvals, authorizations, orders, registrations and qualifications
set forth in Schedule 5.10.
 
Section 6.11         Notes Collateral Requirements. The Collateral Agent shall
have received:
 
(a)          to the extent required to be delivered under the Security
Documents, all certificates, agreements or instruments representing or
evidencing the Equity Interests of the Subsidiaries of the Issuer referred to in
the Security Documents accompanied by instruments of transfer and stock powers
undated and endorsed in blank;
 
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(b)          all other certificates, agreements or instruments necessary to
perfect the Collateral Agent’s security interest in all chattel paper, all
instruments, all deposit accounts and all investment property of the Issuer (to
the extent required by any Transaction Document);
 
(c)          evidence of the filing of financing statements under the UCC,
recordings with the PTO and other recordings (including in any applicable
non-U.S. jurisdiction) required, necessary, appropriate or reasonably requested
to be made to perfect a security interest in the Notes Collateral, including
those specified in the Security Documents; and
 
(d)        certified copies of UCC, PTO, United States Copyright Office, tax,
judgment lien, bankruptcy and pending lawsuit searches or equivalent reports or
searches, each as of a recent date and listing all effective financing
statements, lien notices or comparable documents that name the Issuer as debtor
and that are filed in the jurisdiction in which the Issuer is organized or
maintains its principal place of business and such other searches deemed
necessary or appropriate, none of which encumber the Notes Collateral covered or
intended to be covered in the Security Documents (except to the extent
contemplated by the Security Documents).
 
Section 6.12        Insurance. The Collateral Agent shall have received evidence
that all insurance required to be maintained pursuant to the Transaction
Documents by the Issuer has been obtained and is in effect together with the
certificates of insurance, naming the Collateral Agent, on behalf of the
Noteholders, as an additional insured, loss payee and/or mortgagee, as the case
may be, under all insurance policies maintained with respect to the properties
and assets that constitute Notes Collateral.
 
Section 6.13         Warrants. On the Closing Date, the Issuer shall issue a
Warrant to the Purchaser in the form attached as Exhibit A in respect of the
number of shares of Common Stock of the Issuer set forth opposite the
Purchaser’s name in Schedule 1.
 
ARTICLE VII
ADDITIONAL COVENANTS
 
Section 7.1          DTC. The Issuer will use reasonable best efforts to comply
with the agreements set forth in the representation letter of the Issuer to DTC
relating to the approval of the Notes by DTC for “book-entry” transfer.
 
Section 7.2         Expenses. The Issuer agrees to pay or cause to be paid from
the proceeds of the issuance of the Notes and the Warrants all reasonable,
documented fees and expenses of Pillsbury Winthrop Shaw Pittman LLP, acting as
special counsel to the Purchasers (the amount of any such payment of the
reasonable, documented fees and expenses of Pillsbury Winthrop Shaw Pittman LLP
(excluding such fees and expenses related to intellectual property work and
opinions) not to exceed in the aggregate the amount set forth in paragraph 2 of
the letter agreement dated February 25, 2019 between the Issuer and the
Placement Agent (unless otherwise agreed to by the Issuer)), as well as up to
$100,000 of the lead Purchaser’s expenses in respect of work performed by its
outside legal counsel and in respect of intellectual property work performed by
Pillsbury Winthrop Shaw Pittman LLP, acting as special counsel to the
Purchasers, it being understood that the Issuer will not reimburse any other
expenses of any Purchasers (including expenses of any other counsel).
 
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Section 7.3          Confidentiality; Public Announcement.
 
(a)        Except as otherwise required by Law or judicial or administrative
proceedings (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigation demand or similar process) or the rules
and regulations of any securities exchange or trading system or any Governmental
Authority or pursuant to requests from regulatory agencies having oversight over
the Issuer and except as otherwise set forth in this Section 7.3, the Issuer
will, and will cause each of its Affiliates, directors, officers, employees,
agents, representatives and similarly situated Persons who receive such
information to, treat and hold as confidential and not disclose to any Person
any and all Confidential Information furnished to it by the Purchaser, as well
as the information in Schedule 1, and to use any such Confidential Information
and other information only in connection with this Purchase Agreement and any
other Transaction Document and the transactions contemplated hereby and thereby.
Notwithstanding the foregoing, the Issuer may disclose such information solely
on a need-to-know basis and solely to its directors, employees, officers,
agents, brokers, advisors, lawyers, bankers, trustees, representatives,
investors, co-investors, insurers, insurance brokers, underwriters and financing
parties; provided, however, that such Persons shall be informed of the
confidential nature of such information and shall be obligated to keep such
Confidential Information and other information confidential pursuant to
obligations of confidentiality no less onerous than those set forth herein.
 
(b)          The Purchaser acknowledges that it will not, after the execution of
this Purchase Agreement, make a public announcement or filing with respect to
the transactions contemplated by the Transaction Documents or reference or
describe such transactions in a public announcement or filing, without the
Issuer’s prior written consent (such consent not to be unreasonably withheld,
delayed or conditioned). Except as required by applicable Law or judicial or
administrative proceedings (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigation demand or similar
process) or the rules and regulations of any securities exchange or trading
system or any Governmental Authority or pursuant to requests from regulatory
agencies having oversight over the Issuer, in no event shall the Purchaser’s
name (in any variation) be used in any public announcement or filing, or in any
type of mail or electronic distribution intended for an audience that is not
solely limited to the Affiliates of the Issuer, without the Purchaser’s written
consent.
 
(c)        Except as required by applicable Law or judicial or administrative
proceedings (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigation demand or similar process) or the rules
and regulations of any securities exchange or trading system or any Governmental
Authority or pursuant to requests from regulatory agencies having oversight over
the Issuer, neither the Issuer nor any of its Affiliates shall disclose to any
Person, or use or include in any public announcement or any public filing, the
identity of any shareholders, members, directors or Affiliates of the Purchaser,
without the prior written consent of such shareholder, member, director or
Affiliate.
 
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Section 7.4          Right of First Offer. Upon each proposed issuance, if any,
of Additional Securities, the Issuer will grant to the Purchaser the right to
purchase an aggregate amount of such Additional Securities in an amount equal to
the same proportion that the principal amount of Notes the Purchaser has
purchased as set forth opposite its name in Schedule 1 bears to the aggregate
principal amount of Notes issued on the Closing Date to the Purchaser and the
Other Purchasers and at a purchase price specified by the Issuer (which purchase
price shall not be more than the purchase price per Note being offered to other
investors), with such right to purchase being exercised by the Purchaser by
written notice to the Issuer no later than 15 days after being notified of such
proposed issuance by the Issuer. To the extent that the Other Purchasers decline
to exercise their right to purchase any Additional Securities (in whole or in
part) pursuant to the Other Agreements, the Issuer will promptly notify the
Purchaser (only if the Purchaser previously exercised its right to purchase
previously available Additional Securities in full pursuant to the preceding
sentence), in which case the Purchaser will have the right to purchase such
remaining Additional Securities (subject to proportional reduction to the extent
of the relative initial principal amount of Additional Securities purchased by
Other Purchasers exercising the same right pursuant to the Other Agreements) on
the same terms as any Additional Securities it previously exercised the right to
purchase pursuant to the preceding sentence, with such right to purchase being
exercised by the Purchaser by written notice to the Issuer no later than two
days after being notified of the opportunity to purchase such remaining
Additional Securities by the Issuer.
 
ARTICLE VIII
SURVIVAL OF CERTAIN PROVISIONS
 
Section 8.1          Survival of Certain Provisions. The representations,
warranties, covenants and agreements contained in this Purchase Agreement shall
survive (a) the execution and delivery of this Purchase Agreement, the Notes and
the Warrant and (b) the sale or transfer by any Purchaser of any Note or any
Warrant or portion thereof or interest therein. All such provisions are binding
upon and may be relied upon by any subsequent holder or beneficial owner of a
Note or a Warrant, regardless of any investigation made at any time by or on
behalf of any Purchaser or any other holder or beneficial owner of a Note or a
Warrant. All statements contained in any certificate or other instrument
delivered by or on behalf of either party hereto pursuant to this Purchase
Agreement shall be deemed to have been relied upon by the other party hereto and
shall survive the consummation of the transactions contemplated hereby
regardless of any investigation made by or on behalf of either such party. The
Transaction Documents embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings relating to
the subject matter hereof. Notwithstanding anything to the contrary elsewhere in
this Purchase Agreement, neither party hereto shall, in any event, be liable to
any other Person for any consequential, incidental, indirect, special or
punitive damages of such other Person, including loss of revenue, income or
profits, diminution of value or loss of business reputation or opportunity
relating to the breach or alleged breach hereof (provided, that such limitation
with respect to lost profits or otherwise shall not limit the Issuer’s right to
recover contract damages in connection with the Purchaser’s failure to close in
violation of this Purchase Agreement).
 
ARTICLE IX
NOTICES
 
Section 9.1           Notices. All statements, requests, notices and agreements
hereunder shall be in writing and delivered by hand, mail, overnight courier or
telefax as follows:
 
(a)          if to the Purchaser, in accordance with Schedule 1; and
 
(b)          if to the Issuer, in accordance with Section 12.01 of the
Indenture.
 
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ARTICLE X
SUCCESSORS AND ASSIGNS
 
Section 10.1        Successors and Assigns. This Purchase Agreement will inure
to the benefit of and be binding upon the parties hereto and their respective
successors, permitted assignees and permitted transferees. So long as any of the
Notes or the Warrant are outstanding, the Issuer may not assign any of its
rights or obligations hereunder or any interest herein without the prior written
consent of the Purchaser except as permitted in accordance with the Indenture
and the Warrant, as applicable.
 
ARTICLE XI
SEVERABILITY
 
Section 11.1        Severability. Any provision of this Purchase Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall (to the full
extent permitted by Law) not invalidate or render unenforceable such provision
in any other jurisdiction.
 
ARTICLE XII
WAIVER OF JURY TRIAL
 
Section 12.1        WAIVER OF JURY TRIAL. THE PURCHASER AND THE ISSUER HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS PURCHASE
AGREEMENT.
 
ARTICLE XIII
GOVERNING LAW; CONSENT TO JURISDICTION
 
Section 13.1      Governing Law; Consent to Jurisdiction. THIS PURCHASE
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF
RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS. The parties hereto hereby submit to the non-exclusive jurisdiction of the
U.S. federal and state courts of competent jurisdiction in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Purchase Agreement or the transactions contemplated hereby.
 
ARTICLE XIV
COUNTERPARTS
 
Section 14.1        Counterparts. This Purchase Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Purchase Agreement.
Any counterpart may be executed by facsimile or other electronic transmission,
and such facsimile or other electronic transmission shall be deemed an original.
 
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ARTICLE XV
TABLE OF CONTENTS AND HEADINGS
 
Section 15.1        Table of Contents and Headings. The Table of Contents and
headings of the Articles and Sections of this Purchase Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
 
ARTICLE XVI
TAX DISCLOSURE
 
Section 16.1       Tax Disclosure. Notwithstanding anything expressed or implied
to the contrary herein, the Purchaser, on the one hand, and the Issuer, on the
other hand, and its respective employees, representatives and agents may
disclose to any and all Persons, without limitation of any kind, the tax
treatment and the tax structure of the transactions contemplated by this
Purchase Agreement and the agreements and instruments referred to herein and all
materials of any kind (including opinions or other tax analyses) that are
provided to such Person relating to such tax treatment and tax structure;
provided, however, that neither such Person nor any employee, representative or
other agent thereof shall disclose any other information that is not relevant to
understanding the tax treatment and tax structure of such transactions
(including the identity of any party and any information that could lead another
to determine the identity of any party) or any other information to the extent
that such disclosure could reasonably result in a violation of any Law relating
to U.S. federal or state securities matters. For these purposes, the tax
treatment of the transactions contemplated by this Purchase Agreement and the
agreements and instruments referred to herein means the purported or claimed
U.S. federal or state tax treatment of such transactions. Moreover, the tax
structure of the transactions contemplated by this Purchase Agreement and the
agreements and instruments referred to herein includes any fact that may be
relevant to understanding the purported or claimed U.S. federal or state tax
treatment of such transactions.
 
{SIGNATURE PAGE FOLLOWS}
 
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If the foregoing is in accordance with your understanding of this Purchase
Agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between us and you in accordance
with its terms.
 

 
Very truly yours,
     
AQUESTIVE THERAPEUTICS, INC.
       
By:
     
Name:
   
Title:

{Signature Page to the Purchase Agreement}

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[PURCHASER SIGNATURE PAGE]
 
{Signature Page to the Purchase Agreement}

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ANNEX A
RULES OF CONSTRUCTION AND DEFINED TERMS
 
Unless the context otherwise requires, in this Annex A and each Transaction
Document (or other document) to which this Annex A is attached:
 

(a)
A term has the meaning assigned to it and an accounting term not otherwise
defined has the meaning assigned to it in accordance with GAAP, unless any
Transaction Document (or other document) otherwise provides.

 

(b)
Where any payment is to be made, any funds are to be applied or any calculation
is to be made under any Transaction Document (or other document) on a day that
is not a Business Day, unless any Transaction Document (or other document)
otherwise provides, such payment shall be made, such funds shall be applied and
such calculation shall be made on the succeeding Business Day, and payments
shall be adjusted accordingly, including interest unless otherwise specified.

 

(c)
Words of the masculine, feminine or neuter gender shall mean and include the
correlative words of other genders.

 

(d)
The definitions of terms shall apply equally to the singular and plural forms of
the terms defined.

 

(e)
The terms “include”, “including” and similar terms shall be construed as if
followed by the phrase “without limitation”.

 

(f)
Unless otherwise specified, references to an agreement or other document include
references to such agreement or document as from time to time amended, restated,
reformed, supplemented or otherwise modified in accordance with the terms
thereof (subject to any restrictions on such amendments, restatements,
reformations, supplements or modifications set forth in this Annex A or any
Transaction Document (or other document)) and include any Annexes, Exhibits and
Schedules attached thereto.

 

(g)
References to any Law shall include such Law as from time to time in effect,
including any amendment, modification, codification, replacement or reenactment
thereof or any substitution therefor.

 

(h)
References to any Person shall be construed to include such Person’s successors
and permitted assigns (subject to any restrictions on assignment, transfer or
delegation set forth in this Annex A or any Transaction Document (or other
document)), and any reference to a Person in a particular capacity excludes such
Person in other capacities.

 

(i)
The word “will” shall be construed to have the same meaning and effect as the
word “shall”.

 

(j)
The words “hereof”, “herein”, “hereunder” and similar terms when used in this
Annex A or any Transaction Document (or other document) shall refer to this
Annex A or such Transaction Document (or other document) as a whole and not to
any particular provision hereof or thereof, and Article, Section, Annex,
Schedule and Exhibit references herein and therein are references to Articles
and Sections of, and Annexes, Schedules and Exhibits to, the relevant
Transaction Document (or other document) unless otherwise specified.

 
Annex A-1

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(k)
In the computation of a period of time from a specified date to a later
specified date, the word “from” means “from and including” and each of the words
“to” and “until” means “to but excluding”.

 

(l)
References to any action, remedy or method of judicial proceeding for the
enforcement of the rights of creditors or of security shall be deemed to
include, in respect of any jurisdiction other than the State of New York,
references to such action, remedy or method of judicial proceeding for the
enforcement of the rights of creditors or of security available or appropriate
in such jurisdiction as shall most nearly approximate such action, remedy or
method of judicial proceeding described or referred to in the relevant
Transaction Document (or other document).

 
Annex A-2

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“$” means lawful money of the United States.
 
“Accredited Investor” means an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3) or (a)(7) under the Securities Act that is not (i) a
QIB or (ii) a Person other than a U.S. person (as defined in Regulation S) that
acquires Notes or Warrants in reliance on Regulation S.
 
“Additional Securities” means the First Additional Securities and the Second
Additional Securities (each as defined in the Indenture as of the date of the
Purchase Agreements).
 
“Affiliate” means, with respect to any specified Person, another Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the specified Person. For purposes
of this definition, “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 the ownership of the Capital Stock of such Person that
is at the time entitled to vote in the election of the board of directors (or
equivalent) of such Person, by contract or otherwise, and “controlled” has a
meaning correlative thereto.
 
“Anti-Money Laundering Laws” has the meaning set forth in Section 5.26 of the
Purchase Agreements.
 
“Business Day” means any day other than a Saturday, a Sunday or any other day on
which banking institutions are authorized or required by Law to close in New
York City or the city in which the Trustee’s corporate trust office is located.
 
“Capital Stock” means (a) in the case of a corporation, corporate stock or
shares, (b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (c) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and membership rights, and (d) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person, in each case to the extent
treated as equity in accordance with GAAP, but excluding from all of the
foregoing any debt securities convertible into or exchangeable for Capital Stock
whether or not such debt securities include any right of participation with
Capital Stock.
 
“Closing Date” means the date hereof.
 
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
 
“Collateral Agent” means U.S. Bank National Association in its capacity as
“Collateral Agent” under the Indenture and under the Security Documents and any
successor thereto in such capacity.
 
“Commission” means the U.S. Securities and Exchange Commission or any successor
thereto.
 
“Common Stock” means (i) the common stock, par value $0.001 per share, of the
Issuer and (ii) any other Capital Stock into which such common stock is
reclassified or reconstituted.
 
Annex A-3

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“Confidential Information” means, as it relates to the Purchaser (or its
Affiliates), all information (whether written or oral, or in electronic or other
form) furnished before or after the date of this Purchase Agreement concerning
the Purchaser or its Affiliates (including any of its equityholders), including
any and all information regarding any aspect of the Purchaser’s business,
including its owners, funds, strategy, market views, structure, investors or
potential investors. Such Confidential Information includes any IRS Form W-9 or
W-8BEN (or any similar type of form) provided by the Purchaser (or its
Affiliates) to the Issuer or its Affiliates. Notwithstanding the foregoing
definition, “Confidential Information” shall not include information that is (v)
independently developed or discovered by the Issuer without use of or access to
any information described in the second preceding sentence, as demonstrated by
documentary evidence, (w) already in the public domain at the time the
information is disclosed or has become part of the public domain after such
disclosure through no breach of this Purchase Agreement, (x) lawfully obtainable
from other sources, (y) required to be disclosed in any document to be filed
with any Governmental Authority or otherwise required to be disclosed under
applicable Law or judicial or administrative proceedings (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigation demand or similar process) or pursuant to requests from regulatory
agencies having oversight over the Issuer or (z) required to be disclosed by
court or administrative order or under securities Laws applicable to any party
to this Purchase Agreement or pursuant to the rules and regulations of any stock
exchange or stock market on which securities of the Issuer or its Affiliates or
the Purchaser or its Affiliates may be listed for trading.
 
“DEA” means the U.S. Drug Enforcement Administration or any successor thereto.
 
“Definitive Security” has the meaning set forth in Appendix A to the Indenture
as of the date of the Purchase Agreements.
 
“DTC” means The Depository Trust Company (including its nominees).
 
“Environmental Laws” has the meaning set forth in Section 5.22 of the Purchase
Agreements.
 
“Equity Interests” means, with respect to any Person, all of the shares of
Capital Stock of (or other ownership, distribution or profit interests or
participations in) such Person, all of the warrants, options or other rights for
the purchase or acquisition from such Person of shares of Capital Stock of (or
other ownership, distribution or profit interests or participations in) such
Person and all of the other ownership, distribution or profit interests or
participations in such Person (including partnership, membership or trust
interests therein), whether voting or non-voting, and whether or not such
shares, warrants, options, rights or other interests or participations are
outstanding on any date of determination.
 
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended.
 
“ERISA Plan” has the meaning set forth in Section 5.14 of the Purchase
Agreements.
 
“Event of Default” has the meaning set forth in the Indenture as of the date of
the Purchase Agreements.
 
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
 
Annex A-4

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“Exchange Act Documents” has the meaning set forth in Section 5.4 of the
Purchase Agreements.
 
“FCPA” means the U.S. Foreign Corrupt Practices Act of 1977, as amended.
 
“FDA” means the U.S. Food and Drug Administration or any successor thereto.
 
“GAAP” means generally accepted accounting principles in effect in the United
States from time to time.
 
“Global Security” has the meaning set forth in Appendix A to the Indenture as of
the date of the Purchase Agreements.
 
“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, arbitrator, central
bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government
(including any supra-national bodies such as the European Union or the European
Central Bank).
 
“Hazardous Substances” means (a) petroleum and petroleum products, by-products
or breakdown products, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls and mold and (b) any other chemical, material or
substance defined as toxic or hazardous or as a pollutant, contaminant or waste
or words of similar import, or regulated or that can form the basis for
liability, under Environmental Laws.
 
“Immaterial Subsidiaries” has the meaning set forth in the Indenture as of the
date of the Purchase Agreements.
 
“Indenture” means that certain indenture for the Notes, dated as of the Closing
Date, by and among the Issuer, the other subsidiary parties from time to time
party thereto, the Trustee and the Collateral Agent.
 
“Intellectual Property” has the meaning set forth in Section 5.21(a) of the
Purchase Agreements.
 
“IRS” means the U.S. Internal Revenue Service.
 
“Issuer” has the meaning set forth in the preamble to the Purchase Agreements.
 
“Laws” means, collectively, all applicable international, foreign, federal,
state and local laws, statutes, treaties, rules, regulations, ordinances,
judgments, orders, writs, injunctions, decrees, codes and administrative or
judicial precedents or authorities, including the binding and enforceable
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, licenses, authorizations and
permits of, and binding and enforceable agreements with, any Governmental
Authority.
 
Annex A-5

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“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable Law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the UCC (or
equivalent Laws) of any jurisdiction); provided, that in no event shall an
operating lease be deemed to constitute a Lien.
 
“Material Adverse Effect” means a material adverse effect (a) in or affecting
the business, condition (financial or otherwise), results of operations,
earnings, properties or prospects of the Issuer and its Subsidiaries taken as a
whole or (b) on the ability of the Issuer to perform its obligations under the
Transaction Documents.
 
“Material Contract” means a contract or other agreement that is required to be
filed by the Issuer with the Commission pursuant to Item 601(b)(4), Item
601(b)(10) or Item 601(b)(99) of Regulation S-K as an exhibit to the Exchange
Act Documents.
 
“Notes” means the 12.5% Senior Secured Notes due 2025 of the Issuer in the
initial outstanding principal balance of $70,000,000 that are issued on the
Closing Date pursuant to Section 2.01(b) of the Indenture and Section 3.1 of the
Purchase Agreements.
 
“Notes Collateral” means all property subject, or purported to be subject from
time to time, to a Lien under any Security Documents.
 
“Other Agreements” has the meaning set forth in Section 3.1(b) of the Purchase
Agreements.
 
“Other Purchasers” has the meaning set forth in Section 3.1(b) of the Purchase
Agreements.
 
“Patents” means (i) an issued patent or a patent application, (ii) all
registrations and recordings thereof, (iii) all continuations and
continuations-in-part to an issued patent or patent application, (iv) all
divisions, patents of addition, reissues, renewals and extensions of any patent,
patent application, continuation or continuation-in-part and (v) all
counterparts of any of the above in any jurisdiction.
 
“Paying Agent” means an office or agency where Notes may be presented for
payment, maintained by the Issuer in accordance with Section 2.04(a) of the
Indenture.
 
“Permits” has the meaning set forth in Section 5.30 of the Purchase Agreements.
 
“Permitted Lien” has the meaning set forth in the Indenture as of the date of
the Purchase Agreements.
 
“Person” means an individual, corporation, partnership, association, limited
liability company, unincorporated organization, trust, joint stock company or
joint venture, a Governmental Authority or any other entity.
 
“Placement Agent” means Morgan Stanley & Co. LLC.
 
Annex A-6

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“Plan Assets” has the meaning given to such term by Section 3(42) of ERISA and
regulations issued by the U.S. Department of Labor.
 
“Price” has the meaning set forth in Section 3.1(b) of the Purchase Agreements.
 
“PTE” means the United States Department of Labor Prohibited Transaction
Exemption.
 
“PTO” means the U.S. Patent and Trademark Office or any successor thereto.
 
“Purchase Agreement” means this purchase agreement.
 
“Purchase Agreements” means, collectively, each Purchase Agreement and the Other
Agreements.
 
“Purchase Price” has the meaning set forth in Section 3.1(b) of the Purchase
Agreements.
 
“Purchaser” has the meaning set forth in Section 1.1 of the Purchase Agreements.
 
“Purchasers” has the meaning set forth in Section 1.1 of the Purchase
Agreements.
 
“QIB” means a qualified institutional buyer within the meaning of Rule 144A.
 
“QPAM Exemption” means PTE 84-14 (issued December 21, 1982, as subsequently
amended).
 
“Regulation S” means Regulation S under the Securities Act.
 
“Regulation S Global Security” has the meaning set forth in Appendix A to the
Indenture as of the date of the Purchase Agreements.
 
“Regulatory Agencies” has the meaning set forth in Section 5.31 of the Purchase
Agreements.
 
“Responsible Officer” means, with respect to the Issuer, any director or officer
of the Issuer.
 
“Rule 144A” means Rule 144A under the Securities Act.
 
“Rule 144A Global Security” has the meaning set forth in Appendix A to the
Indenture as of the date of the Purchase Agreements.
 
“Sanctioned Country” has the meaning set forth in Section 5.27 of the Purchase
Agreements.
 
“Sanctions” has the meaning set forth in Section 5.27 of the Purchase
Agreements.
 
“Securities Act” means the U.S. Securities Act of 1933, as amended.
 
Annex A-7

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“Security Documents” means the security agreements, pledge agreements,
mortgages, collateral assignments and related agreements, as amended,
supplemented, restated, renewed, refunded, replaced, restructured, repaid,
refinanced or otherwise modified from time to time, creating, perfecting or
otherwise evidencing the security interests in the Notes Collateral as
contemplated by the Indenture.
 
“Similar Law” has the meaning set forth in Section 4.3(b) of the Purchase
Agreements.
 
“Source” has the meaning set forth in Section 4.3(a) of the Purchase Agreements.
 
“Subsidiary” means, with respect to any Person, (a) any corporation, association
or other business entity (other than a partnership, joint venture or limited
liability company) of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
of determination owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
and (b) any partnership, joint venture or limited liability company of which (x)
more than 50% of the capital accounts, distribution rights, total equity and
voting interests or general and limited partnership interests, as applicable,
are owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person or a combination thereof, whether in
the form of membership, general, special or limited partnership interests or
otherwise, or (y) such Person or any Subsidiary of such Person is a controlling
general partner or otherwise controls such entity. For purposes of clarity, a
Subsidiary of a Person shall not include any Person that is under common control
with the first Person solely by virtue of having directors, managers or trustees
in common and shall not include any Person that is solely under common control
with the first Person (i.e., a sister company with a common parent).
 
“Taxes” means any present or future tax, fee, duty, levy, tariff, impost,
assessment or other charge imposed by a Governmental Authority (including
penalties, interest and additions to tax applicable thereto).
 
“Transaction Documents” means the Indenture, the Notes, the Warrants, the
Security Documents, the Purchase Agreements, any intercreditor agreement in the
form of Exhibit D to the Indenture, and each other agreement pursuant to which
the Collateral Agent (or its agent) is granted a Lien to secure the obligations
under the Indenture or the Notes.
 
“Trustee” means U.S. Bank National Association, as trustee under the Indenture.
 
“Trustee Closing Account” means the account maintained with the Trustee at U.S.
Bank National Association, ABA No. 091000022, Account No. 1731 0332 1092, Ref.
Aquestive Senior Secured Notes, Attention: Alison D.B. Nadeau.
 
“UCC” means the Uniform Commercial Code as in effect in the State of New York;
provided, that, if perfection, the effect of perfection or non-perfection or the
priority of any security interest in any Notes Collateral is governed by the
Uniform Commercial Code (or equivalent Law) as in effect in a jurisdiction other
than the State of New York, then “UCC” means the Uniform Commercial Code (or
equivalent Law) as in effect from time to time in such other jurisdiction for
purposes of the provisions relating to such perfection, effect of perfection or
non-perfection or priority.
 
Annex A-8

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“U.S.” or “United States” means the United States of America, its 50 states,
each territory thereof and the District of Columbia.
 
“Warrants” means that certain warrant or warrants, dated the Closing Date,
executed by the Issuer and acknowledged by the Purchaser named therein, in the
form attached as Exhibit A.

Annex A-9

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