Exhibit 10.8

 

Execution Version

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT (as the same may be amended, restated,
modified, or supplemented from time to time, this “Agreement”) dated as of May
23, 2017 (the “Effective Date”) among Solar Capital Ltd. (“Solar”), as
collateral agent (in such capacity, together with its successors and assigns in
such capacity, “Collateral Agent”) and the lenders listed on Schedule 1.1 hereof
or otherwise a party hereto from time to time including Solar in its capacity as
a Lender and Silicon Valley Bank (“Bank”) as a Lender each a “Lender” and
collectively, the “Lenders”), and scPharmaceuticals Inc., a Delaware corporation
with offices located at 131 Hartwell Avenue, Suite 215, Lexington, MA 02421
(“Borrower”), provides the terms on which the Lenders shall lend to Borrower and
Borrower shall repay the Lenders. The parties agree as follows:

 

1.

DEFINITIONS AND OTHER TERMS

1.1Terms. Capitalized terms used herein shall have the meanings set forth in
Section 1.3 to the extent defined therein. All other capitalized terms used but
not defined herein shall have the meaning given to such terms in the Code. Any
accounting term used but not defined herein shall be construed in accordance
with GAAP and all calculations shall be made in accordance with GAAP. The term
“financial statements” shall include the accompanying notes and schedules.

 

1.2Section References. Any section, subsection, schedule or exhibit references
are to this Agreement unless otherwise specified.

1.3Definitions. The following terms are defined in the Sections or subsections
referenced opposite such terms:

 

“Agreement”

Preamble

“Borrower”

Preamble

“Claims”

Section 12.2

“Closing Fee”

Section 2.4(a)

“Collateral Agent”

Preamble

“Collateral Agent Report”

Exhibit B, Section 5

“Communications”

Section 10

“Default Rate”

Section 2.3(b)

“Effective Date”

Preamble

“Event of Default”

Section 8

“Indemnified Person”

Section 12.2

“Lender” and “Lenders”

Preamble

“Lender Transfer”

Section 12.1

“Non-Funding Lender”

Exhibit B, Section 10(c)(ii)

“Other Lender”

Exhibit B, Section 10(c)(ii)

“Perfection Certificate”

Section 5.1

“Solar”

Preamble

“Termination Date”

Exhibit B, Section 8

“Term Loan”

Section 2.2(a)

“Transfer”

Section 7.1

 

In addition to the terms defined elsewhere in this Agreement, the following
terms have the following meanings:

“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made under the Code, and includes, without limitation,
all accounts receivable and other sums owing to Borrower.

 

“Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made under the Code.

 

“ACH Letter” is ACH debit authorization in the form of Exhibit F hereto.

“Affiliate” of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person’s managers and members.

 

“Amortization Date” is December 1, 2018.

 

“Anti-Terrorism Laws” are any laws, rules, regulations or orders relating to
terrorism or money laundering, including without limitation Executive Order No.
13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising
or implementing the Bank Secrecy Act, and the laws administered by OFAC.

 

“Approved Fund” is any (i) investment company, fund, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business or (ii) any Person (other than a natural
person) which temporarily warehouses loans for any Lender or any entity
described in the preceding clause (i) and that, with respect to each of the
preceding clauses (i) and (ii), is administered or managed by (a) a Lender, (b)
an Affiliate of a Lender or (c) a Person (other than a natural person) or an
Affiliate of a Person (other than a natural person) that administers or manages
a Lender.

 

“Blocked Person” is any Person: (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order No.
13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti- Terrorism Law, (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.

 

 

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“Borrower’s Books” are Borrower’s or any of its Subsidiaries’ books and records
including ledgers, federal, and state tax returns, records regarding Borrower’s
or its Subsidiaries’ assets or liabilities, the Collateral, business operations
or financial condition, and all computer programs or storage or any equipment
containing such information.

 

“Business Day” is any day that is not a Saturday, Sunday or a day on which
commercial banks in New York, New York are required or authorized to be closed.

 

“Cash Equivalents” are (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc.; (b) commercial paper maturing no more
than one (1) year after its creation and having the highest rating from either
Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (c)
certificates of deposit maturing no more than one (1) year after issue provided
that the account in which any such certificate of deposit is maintained is
subject to a Control Agreement in favor of Collateral Agent, and (d) any money
market or similar funds that exclusively hold any of the foregoing.

 

“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of New York; provided, that, to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, or priority of, or remedies with
respect to, Collateral Agent’s Lien on any Collateral is governed by the Uniform
Commercial Code in effect in a jurisdiction other than the State of New York,
the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority, or remedies and for purposes
of definitions relating to such provisions.

 

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

 

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account, or any other bank account maintained by Borrower or any Subsidiary at
any time.

 

“Collateral Agent” is Solar, not in its individual capacity, but solely in its
capacity as collateral agent on behalf of and for the ratable benefit of the
Secured Parties.

 

“Commitment Percentage” is set forth in Schedule 1.1, as amended from time to
time.

 

“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made under the Code.

 

“Compliance Certificate” is that certain certificate in substantially the form
attached hereto as Exhibit D.

 

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation directly
or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and
(c) all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business. The amount of
a Contingent Obligation is the stated or determined amount of the primary
obligation for which the Contingent Obligation is made or, if not determinable,
the maximum reasonably anticipated liability for it determined by the Person in
good faith in accordance with GAAP; but the amount may not exceed the maximum of
the obligations under any guarantee or other support arrangement.

 

“Control Agreement” is any control agreement entered into among the depository
institution at which Borrower or any of its Subsidiaries maintains a Deposit
Account or the securities intermediary or commodity intermediary at which
Borrower or any of its Subsidiaries maintains a Securities Account or a
Commodity Account, Borrower or such Subsidiary, as applicable, and Collateral
Agent pursuant to which Collateral Agent, for the ratable benefit of the Secured
Parties, obtains “control” (within the meaning of the Code) over such Deposit
Account, Securities Account, or Commodity Account.

 

“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.

 

“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made under the Code.

 

“Designated Deposit Account” is Borrower’s deposit account, account number
3301140431, maintained at Bank.

“Dollars,” “dollars” and “$” each mean lawful money of the United States.

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made under the Code, and includes without
limitation all machinery, fixtures, goods, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing.

 

“ERISA” is the Employee Retirement Income Security Act of 1974, as amended, and
its regulations.

 

“Exigent Circumstance” means any event or circumstance that, in the reasonable
judgment of Collateral Agent, imminently threatens the ability of Collateral
Agent to realize upon all or any material portion of the Collateral, such as,
without limitation, fraudulent removal, concealment, or abscondment thereof,
destruction or material waste thereof, or failure of Borrower or any of its
Subsidiaries after reasonable demand to maintain or reinstate adequate casualty
insurance coverage, or which, in the judgment of Collateral Agent, could
reasonably be expected to result in a material diminution in value of the
Collateral.

 

“Exit Fee Agreement” is that certain Exit Fee Agreement dated as of the
Effective Date, between Borrowers, Solar and Bank.

“FDA” means the U.S. Food and Drug Administration or any successor thereto or
any other comparable Governmental Authority.

“Final Fee” is a payment (in addition to and not a substitution for the regular
monthly payments of principal plus accrued interest or any other fee

 

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payable hereunder) (a) due on the earliest to occur of (i) the Maturity Date,
(ii) the acceleration of any Term Loan pursuant to Section 9.1, and (iii) the
prepayment of a Term Loan by Borrower pursuant to Section 2.2(c) or (d), and (b)
equal to $250,000. The Final Fee shall be fully earned on the date so paid,
non-refundable for any reason and payable to the Lenders in accordance with
their respective Pro Rata Shares.

 

“Foreign Currency” means lawful money of a country other than the United States.

 

“Foreign Subsidiary” is a Subsidiary that is not an entity organized under the
laws of the United States or any state or territory thereof. “Funding Date” is
any date on which a Term Loan is made to or on account of Borrower which shall
be a Business Day.

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession in the
United States, which are applicable to the circumstances as of the date of
determination.

 

“General Intangibles” are all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made under the Code, and includes without limitation, all copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, any trade secret
rights, including any rights to unpatented inventions, payment intangibles,
royalties, contract rights, goodwill, franchise agreements, purchase orders,
customer lists, route lists, telephone numbers, domain names, claims, income and
other tax refunds, security and other deposits, options to purchase or sell real
or personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.

 

“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.

 

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body (including, without limitation, the FDA), court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities exchange
and any self-regulatory organization.

“Guarantor” is any Person providing a Guaranty of the Obligations in favor of
Collateral Agent for the benefit of the Secured Parties. “Guaranty” is any
guarantee of all or any part of the Obligations, as the same may from time to
time be amended, restated, modified or otherwise supplemented.

 

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, (d)
non-contingent obligations of such Person to reimburse any bank or other Person
in respect of amounts paid under a letter of credit, banker’s acceptance or
similar instrument, (e) equity securities of such Person subject to repurchase
or redemption other than at the sole option of such Person, (f) obligations
secured by a Lien on any asset of such Person, whether or not such obligation is
otherwise an obligation of such Person, (g) “earnouts”, purchase price
adjustments, profit sharing arrangements, deferred purchase money amounts and
similar payment obligations or continuing obligations of any nature of such
Person arising out of purchase and sale contracts, (h) all Indebtedness of
others guaranteed by such Person, (i) off-balance sheet liabilities and/or
pension plan or multiemployer plan liabilities of such Person, (j) obligations
arising under non- compete agreements, (k) obligations arising under bonus,
deferred compensation, incentive compensation or similar arrangements, other
than those arising in the ordinary course of business and (l) Contingent
Obligations.

 

“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions or proceedings
seeking reorganization, arrangement, or other relief.

 

“Insolvent” means not Solvent.

 

“Intellectual Property” means all of Borrower’s or any of its Subsidiaries’
right, title and interest in and to the following:

(a)its Copyrights, Trademarks and Patents;

 

(b)any and all trade secrets and trade secret rights, including, without
limitation, any rights to unpatented inventions, know-how, operating manuals;

 

(c)any and all source code;

 

(d)any and all design rights which may be available to Borrower;

 

(e)any and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
Intellectual Property rights identified above; and

 

(f)all amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents.

 

“Inventory” is all “inventory” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made under the Code,
and includes without limitation all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products, including
without limitation such inventory as is temporarily out of any Person’s custody
or possession or in transit and including any returned goods and any documents
of title representing any of the above.

 

“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.

 

“IPO” means the initial public offering and sale of Borrower’s common stock.

 

“Key Person” is each of Borrower’s (i) President and Chief Executive Officer,
who is John Tucker as of the Effective Date and (ii) Chief Financial Officer,
who is Troy Ignelzi as of the Effective Date.

 

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“Knowledge” means to the “best of Borrower’s knowledge, or with a similar
qualification, knowledge or awareness means the actual knowledge, after
reasonable investigation, of the Responsible Officers.

 

“Lender” is any one of the Lenders.

 

“Lenders” are the Persons identified on Schedule 1.1 hereto and each assignee
that becomes a party to this Agreement pursuant to Section 12.1.

 

“Lenders’ Expenses” are (a) all audit fees and expenses, costs, and expenses
(including reasonable documented attorneys’ fees and expenses (whether generated
in house or by outside counsel), as well as appraisal fees, fees incurred on
account of lien searches, inspection fees, and filing fees) for preparing,
amending, negotiating and administering the Loan Documents, and (b) all fees and
expenses (including reasonable documented attorneys’ fees and expenses , as well
as appraisal fees, fees incurred on account of lien searches, inspection fees,
and filing fees) for defending and enforcing the Loan Documents (including,
without limitation, those incurred in connection with appeals or Insolvency
Proceedings) or otherwise incurred by Collateral Agent and/or the Lenders in
connection with the Loan Documents. Borrower agrees that the sufficiency of
documentation of any attorney fees hereunder shall be in Agent’s and Lender’s
sole discretion, and Agent and Lenders have no obligation to provide detailed
invoices of attorney’s fees to Borrower.

 

“LIBOR Rate” means the rate per annum rate published by the Intercontinental
Exchange Benchmark Administration Ltd. (the “Service”) (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service) for a term of one month, which determination by Collateral Agent shall
be conclusive in the absence of manifest error.

 

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest, or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.

 

“Loan Documents” are, collectively, this Agreement, each Control Agreement, the
Perfection Certificates, each Compliance Certificate, the ACH Letter, each Loan
Payment Request Form, any Guarantees, the Exit Fee Agreement, any subordination
agreements, any note, or notes or guaranties executed by Borrower or any other
Person, any agreements creating or perfecting rights in the Collateral
(including all insurance certificates and endorsements, landlord consents and
bailee consents) and any other present or future agreement entered into by
Borrower, any Guarantor or any other Person for the benefit of the Lenders and
Collateral Agent, as applicable, in connection with this Agreement; all as
amended, restated, or otherwise modified.

 

“Loan Payment Request Form” is that certain form attached hereto as Exhibit C.

 

“Material Adverse Change” is (a) a material impairment in the perfection or
priority of Collateral Agent’s Lien in the Collateral or in the value of such
Collateral; (b) a material adverse change in the business, operations or
condition (financial or otherwise) of Borrower or any Subsidiary; or

(c)a material impairment of the prospect of repayment of any portion of the
Obligations when due.

 

“Material Agreement” is (a) any license, agreement or other contractual
arrangement (other than purchase orders in the ordinary course of business)
whereby Borrower or any of its Subsidiaries is reasonably likely to be required
to transfer, either in-kind or in cash, in any period of twelve consecutive
months prior to the Maturity Date, assets or property valued (book or market) at
more than Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate and
(b) each Sensile Agreement.

 

“Maturity Date” is May 1, 2021.

 

“Obligations” are all of Borrower’s obligations to pay when due any debts,
principal, interest, Lenders’ Expenses, the Prepayment Premium, the Final Fee,
and any other amounts Borrower owes the Collateral Agent or the Lenders now or
later, in connection with, related to, following, or arising from, out of or
under, this Agreement or, the other Loan Documents, or otherwise, including
without limitation, all obligations relating to letters of credit, cash
management services and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin (whether or not allowed)
and debts, liabilities, or obligations of Borrower assigned to the Lenders
and/or Collateral Agent in connection with this Agreement and the other Loan
Documents, and the performance of Borrower’s duties under the Loan Documents.

 

“OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

 

“OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed.
Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.

 

 

 

 

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“Operating Documents” are, for any Person, such Person’s formation documents, as
certified by the Secretary of State (or equivalent agency) of such Person’s
jurisdiction of organization on a date that is no earlier than thirty (30) days
prior to the Effective Date, and, (a) if such Person is a corporation, its
bylaws in current form, (b) if such Person is a limited liability company, its
limited liability company agreement (or similar agreement), and (c) if such
Person is a partnership, its partnership agreement (or similar agreement), each
of the foregoing with all current amendments or modifications thereto.

 

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
re-examination certificates, utility models, extensions and
continuations-in-part of the same.

“Payment Date” is the first (1st) calendar day of each calendar month,
commencing on July 1, 2017. “Permitted Indebtedness” is:

(a)Borrower’s Indebtedness to the Lenders and Collateral Agent under this
Agreement and the other Loan Documents;

 

(b)Indebtedness existing on the Effective Date and disclosed on the Perfection
Certificate;

 

(c)Subordinated Debt;

 

(d)unsecured Indebtedness to trade creditors and in connection with credit cards
incurred in the ordinary course of business not to exceed $100,000 in the
aggregate outstanding at any time;

 

(e)Indebtedness consisting of capitalized lease obligations and purchase money
Indebtedness, in each case incurred by Borrower or any of its Subsidiaries to
finance the acquisition, repair, improvement or construction of fixed or capital
assets of such person, provided that (i) the aggregate outstanding principal
amount of all such Indebtedness does not exceed Two Hundred Fifty Thousand
Dollars ($250,000.00) at any time and (ii) the principal amount of such
Indebtedness does not exceed the lower of the cost or fair market value of the
property so acquired or built or of such repairs or improvements financed with
such Indebtedness (each measured at the time of such acquisition, repair,
improvement or construction is made);

 

(f)Indebtedness incurred as a result of endorsing negotiable instruments
received in the ordinary course of Borrower’s business;

 

(g)Subordinated Debt; and

 

(h)extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (g) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose materially more burdensome terms upon Borrower, or its Subsidiary, as
the case may be.

 

“Permitted Investments” are:

(a)Investments disclosed on the Perfection Certificate and existing on the
Effective Date;

 

(b)(i) Investments consisting of cash and Cash Equivalents, and (ii) any
Investments permitted by Borrower’s investment policy, as amended from time to
time, provided that such investment policy (and any such amendment thereto) has
been approved in writing by Collateral Agent;

 

(c)Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
Borrower;

 

(d)Investments consisting of Deposit Accounts in which Collateral Agent has a
perfected Lien (subject to the terms of this Agreement) for the ratable benefit
of the Secured Parties;

 

(e)Investments in connection with Transfers permitted by Section 7.1;

 

(f)Investments consisting of (i) travel advances and employee relocation loans
and other employee loans and advances in the ordinary course of business, and
(ii) loans to employees, officers or directors relating to the purchase of
equity securities of Borrower or its Subsidiaries pursuant to employee stock
purchase plans or agreements approved by Borrower’s board of directors; not to
exceed Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate for (i)
and (ii) in any fiscal year;

 

(g)Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business;

 

(h)Investments consisting of notes receivable of, or prepaid royalties and other
credit extensions, to customers and suppliers who are not Affiliates, in the
ordinary course of business; provided that this paragraph (h) shall not apply to
Investments of Borrower in any Subsidiary; and

 

(i)non-cash Investments in joint ventures or strategic alliances in the ordinary
course of Borrower’s business consisting of the non- exclusive licensing of
technology, the development of technology or the providing of technical support.

 

“Permitted Licenses” are (A) licenses of over-the-counter software that is
commercially available to the public, and (B) non-exclusive licenses for the use
of the Intellectual Property of Borrower or any of its Subsidiaries entered into
in the ordinary course of business, provided, that, with respect to each such
license described in clause (B), the license constitutes an arms-length
transaction, the terms of which, on their face, do not provide for a sale or
assignment of any Intellectual Property and do not restrict the ability of
Borrower or any of its Subsidiaries, as applicable, to pledge, grant a security
interest in or lien on, or assign or otherwise Transfer any Intellectual
Property, and (C) exclusive licenses for the use of the Intellectual Property of
Borrower or any of its Subsidiaries entered into in the ordinary course of
business, provided, that, with respect to each such license described in this
clause (C), the license (i) constitutes an arms-length transaction, the terms of
which, on their face, do not provide for a sale or assignment of any
Intellectual Property and do not restrict the ability of Borrower or any of its
Subsidiaries, as applicable, to pledge, grant a security interest in or lien on,
or assign or otherwise Transfer any Intellectual Property, (ii) is limited in
territory with respect to a specific geographic country or region (i.e., Japan,
Germany, northern China) outside of the United States, and (iii) Borrower has
obtained the consent and acknowledgement of the counterparty to such license for
the collateral assignment of such license to the Collateral Agent for the
benefit of the Lenders.

 

“Permitted Liens” are:

(a)Liens existing on the Effective Date and disclosed on the Perfection
Certificate or arising under this Agreement and the other Loan Documents;

 

(b)Liens for taxes, fees, assessments or other government charges or levies,
either (i) not due and payable or (ii) being contested in good faith and for
which Borrower maintains adequate reserves on its Books, provided that no notice
of any such Lien has been filed or recorded under the Internal Revenue Code of
1986, as amended, and the Treasury Regulations adopted thereunder;

 

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(c)Liens securing Indebtedness permitted under clause (e) of the definition of
“Permitted Indebtedness,” provided that (i) such liens exist prior to the
acquisition of, or attach substantially simultaneous with, or within twenty (20)
days after the, acquisition, lease, repair, improvement or construction of, such
property financed or leased by such Indebtedness and (ii) such liens do not
extend to any property of Borrower other than the property (and proceeds
thereof) acquired, leased or built, or the improvements or repairs, financed by
such Indebtedness;

 

(d)Liens of carriers, warehousemen, suppliers, or other Persons that are
possessory in nature arising in the ordinary course of business so long as such
Liens attach only to Inventory, securing liabilities in the aggregate amount not
to exceed Two Hundred Fifty Thousand Dollars ($250,000.00), and which are not
delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;

 

(e)Liens to secure payment of workers’ compensation, employment insurance,
old-age pensions, social security and other like obligations incurred in the
ordinary course of business (other than Liens imposed by ERISA);

 

(f)Liens incurred in the extension, renewal or refinancing of the indebtedness
secured by Liens described in (a) through (c), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the principal amount of the indebtedness may not increase;

 

(g)leases or subleases of real property granted in the ordinary course of
Borrower’s business (or, if referring to another Person, in the ordinary course
of such Person’s business), and leases, subleases, non-exclusive licenses or
sublicenses of personal property (other than Intellectual Property) granted in
the ordinary course of Borrower’s business (or, if referring to another Person,
in the ordinary course of such Person’s business), if the leases, subleases,
licenses and sublicenses do not prohibit granting Collateral Agent or any Lender
a security interest therein;

 

(h)Liens arising by reason of zoning restrictions, easements, licenses,
reservations, restrictions, covenants, rights-of-way, encroachments, minor
defects or irregularities in title (including leasehold title) and other similar
encumbrances on the use of real property that do not materially (i) impair the
value or marketability of such real property or (ii) interfere with the ordinary
conduct of the business conducted and proposed to be conducted at such real
property;

 

(i)banker’s liens, rights of setoff and Liens in favor of financial institutions
incurred in the ordinary course of business arising in connection with
Borrower’s deposit accounts or securities accounts held at such institutions
solely to secure payment of fees and similar costs and expenses and provided
such accounts are maintained in compliance with Section 6.6(a) hereof;

 

(j)Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Section 8.4 or 8.7; and

 

(k)Permitted Licenses.

 

“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

 

“Prepayment Premium” is, with respect to any Term Loan subject to prepayment
prior to the Maturity Date, whether by mandatory or voluntary prepayment,
acceleration or otherwise, an additional fee payable to the Lenders in amount
equal to:

(i)for a prepayment made on or after the Effective Date through and including
the first anniversary of the Effective Date, three percent (3.00%) of the
principal amount of such Term Loan prepaid; and

 

(ii)for a prepayment made after the date which is after the first anniversary of
the Effective Date and prior to the Maturity Date, one percent (1.00%) of the
principal amount of the Term Loans prepaid.

 

Notwithstanding the foregoing, Collateral Agent and Lender agree to waive the
Prepayment Premium if Collateral Agent and Lender (in its sole and absolute
discretion) agree in writing to refinance the Term Loans prior to the Maturity
Date.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, and whether tangible or intangible.

 

“Pro Rata Share” is, as of any date of determination, with respect to each
Lender, a percentage (expressed as a decimal, rounded to the ninth decimal
place) determined by dividing the outstanding principal amount of Term Loans
held by such Lender by the aggregate outstanding principal amount of all Term
Loans.

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made under the Code.

 

“Registration” means any registration, authorization, approval, license, permit,
clearance, certificate, and exemption issued or allowed by the FDA or state
pharmacy licensing authorities (including, without limitation, new drug
applications, abbreviated new drug applications, biologics license applications,
investigational new drug applications, over-the-counter drug monograph, device
pre-market approval applications, device pre- market notifications,
investigational device exemptions, product recertifications, manufacturing
approvals, registrations and authorizations, CE Marks, pricing and reimbursement
approvals, labeling approvals or their foreign equivalent, controlled substance
registrations, and wholesale distributor permits).

 

“Regulatory Action” means an administrative, regulatory, or judicial enforcement
action, proceeding, investigation or inspection, FDA Form 483 notice of
inspectional observation, warning letter, untitled letter, other notice of
violation letter, recall, seizure, Section 305 notice or other similar written
communication, injunction or consent decree, issued by the FDA or a federal or
state court.

 

“Related Persons” means, with respect to any Person, each Affiliate of such
Person and each director, officer, employee, agent, trustee, representative,
attorney, accountant and each insurance, environmental, legal, financial and
other advisor and other consultants and agents of or to such Person or any of
its Affiliates.

 

“Required Lenders” means (i) for so long as all of the Persons that are Lenders
on the Effective Date (each an “Original Lender”) have not assigned or
transferred any of their interests in their Term Loan other than to an Affiliate
of such Lender, Lenders holding one hundred percent (100%) of the aggregate

 

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outstanding principal balance of the Term Loan, or (ii) at any time from and
after any Original Lender has assigned or transferred any interest in its Term
Loan, Lenders holding at least sixty six percent (66%) of the aggregate
outstanding principal balance of the Term Loan and, in respect of this clause
(ii), (A) each Original Lender that has not assigned or transferred any portion
of its Term Loan, (B) each assignee or transferee of an Original Lender’s
interest in the Term Loan, but only to the extent that such assignee or
transferee is an Affiliate or Approved Fund of such Original Lender, and (C) any
Person providing financing to any Person described in clauses (A) and (B) above;
provided, however, that this clause (C) shall only apply upon the occurrence of
a default, event of default or similar occurrence with respect to such
financing.

 

“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Responsible Officer” is any of the President, Chief Executive Officer, or Chief
Financial Officer of Borrower acting alone.

“Secured Parties” means the Collateral Agent and the Lenders.

“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made under the Code.

 

“Sensile Agreements” are each of the agreements listed in Exhibit H hereto and
each other agreement among Borrower and Sensile Holding AG or its Affiliates, in
each case as may be amended, amended and restated, supplemented or otherwise
modified from time to time.

 

“Solvent” means, with respect to any Person, that (a) the fair salable value of
such Person’s consolidated assets (including goodwill minus disposition costs)
exceeds the fair value of such Person’s liabilities, (b) such Person is not left
with unreasonably small capital giving effect to the transactions contemplated
by this Agreement and the other Loan Documents, and (c) such Person is able to
pay its debts (including trade debts) as they mature in the ordinary course
(without taking into account any forbearance and extensions related thereto).

“Subordinated Debt” is indebtedness incurred by Borrower or any of its
Subsidiaries subordinated to all Indebtedness of Borrower and/or its
Subsidiaries to the Lenders (pursuant to a subordination, intercreditor, or
other similar agreement in form and substance satisfactory to Collateral Agent
and the Required Lenders entered into between Collateral Agent, Borrower, and/or
any of its Subsidiaries, and the other creditor), on terms acceptable to
Collateral Agent and the Required Lenders in their sole discretion.

 

“Subsidiary” is, with respect to any Person, any Person of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations) is owned or controlled, directly or indirectly,
by such Person or through one or more intermediaries.

 

“Term Loan Commitment” is, for any Lender, the obligation of such Lender to make
a Term Loan, up to the principal amount shown on Schedule 1.1. “Term Loan
Commitments” means the aggregate amount of such commitments of all Lenders.

 

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower and each of its
Subsidiaries connected with and symbolized by such trademarks.

 

“Unqualified Opinion” means an opinion on financial statements from an
independent certified public accounting firm acceptable to Collateral Agent in
its reasonable discretion which opinion shall not include any qualifications or
any going concern limitations.

 

2.

LOANS AND TERMS OF PAYMENT

2.1Promise to Pay. Borrower hereby unconditionally promises to pay each Lender,
the outstanding principal amount of all Term Loans advanced to Borrower by such
Lender and accrued and unpaid interest thereon and any other amounts due
hereunder as and when due in accordance with this Agreement.

 

2.2Term Loans.

 

(a)Availability. Subject to the terms and conditions of this Agreement, the
Lenders agree, severally and not jointly, to make term loans to Borrower on the
Effective Date in an aggregate principal amount of Ten Million Dollars
($10,000,000.00) according to each Lender’s Term Loan Commitment as set forth on
Schedule 1.1 hereto (such term loans are hereinafter referred to singly as a
“Term Loan”, and collectively as the “Term Loans”). After repayment, no Term
Loan may be re-borrowed.

(b)Repayment. Borrower shall make monthly payments of interest only commencing
on the first (1st) Payment Date following the Funding Date of each Term Loan,
and continuing on the Payment Date of each successive month thereafter through
and including the Payment Date immediately preceding the Amortization Date.
Borrower agrees to pay, on the Funding Date of each Term Loan, any initial
partial monthly interest payment otherwise due for the period between the
Funding Date of such Term Loan and the first Payment Date after such Funding
Date. Commencing on the Amortization Date, and continuing on the Payment Date of
each month thereafter, Borrower shall (i) make monthly payments of interest,
directly to each Lender in accordance with its Pro Rata Share, as calculated by
Collateral Agent (which calculations shall be deemed correct absent manifest
error) based upon the effective rate of interest applicable to the Term Loan, as
determined in Section 2.3(a) plus (ii) make consecutive equal monthly payments
of principal directly to each Lender in accordance with its Pro Rata Share, as
calculated by Collateral Agent (which calculations shall be deemed correct
absent manifest error) based upon: (A) the respective principal amounts of such
Lender’s Term Loans outstanding, and (B) a repayment schedule equal to thirty
(30) months. All unpaid principal and accrued and unpaid interest with respect
to each such Term Loan is due and payable in full on the Maturity Date. The Term
Loans may only be prepaid in accordance with Sections 2.2(c) and 2.2(d).

(c)Mandatory Prepayments. If the Term Loans are accelerated pursuant to Section
9.1 following the occurrence and during the continuance of an Event of Default,
Borrower shall immediately pay to Lenders, payable to each Lender in accordance
with its respective Pro Rata Share, an amount equal to the sum of: (i) all
outstanding principal of the Term Loans plus accrued and unpaid interest thereon
through the prepayment date, (ii) the Final Fee, (iii) the Prepayment Premium,
plus (iv) all other Obligations that are due and payable, including Lenders’
Expenses and interest at the Default Rate with respect to any past due amounts.
Notwithstanding (but without duplication with) the foregoing, on the Maturity
Date, if the Final Fee had not previously been paid in full in connection with
the prepayment of the Term Loans in full, Borrower shall pay to each Lender in
accordance with its respective Pro Rata Share, the Final Fee in respect of the
Term Loans.

(d)Permitted Prepayment of Term Loans. Borrower shall have the option to prepay
all, but not less than all of the outstanding principal balance of the Term
Loans advanced by the Lenders under this Agreement, provided Borrower (i)
provides written notice to Collateral Agent of its election to prepay the Term
Loans at least five (5) Business Days prior to such prepayment, and (ii) pays to
the Lenders on the date of such prepayment, payable to each Lender in accordance
with its respective Pro Rata Share, an amount equal to the sum of (A) the
outstanding principal of the Term Loans plus accrued and unpaid interest thereon
through the prepayment date, (B) the Final Fee, (C) the Prepayment Premium, plus
(D) all other Obligations that are due and payable on such prepayment date,
including any Lenders’ Expenses and interest at the Default Rate (if any) with

 

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respect to any past due amounts.

 

2.3Payment of Interest on the Term Loans.

 

(a)Interest Rate. Subject to Section 2.3(b), the principal amount outstanding
under the Term Loans shall accrue interest at a floating per annum rate equal to
the LIBOR Rate in effect from time to time plus 8.45%, which aggregate interest
rate shall be determined by Collateral Agent on the third Business Day prior to
the Funding Date of the applicable Term Loan and on the date occurring on the
first Business Day of the month prior to each Payment Date occurring thereafter,
which interest shall be payable monthly in arrears in accordance with Sections
2.2(b) and 2.3(e). Except as set forth in Section 2.2(b), such interest shall
accrue on each Term Loan commencing on, and including, the Funding Date of such
Term Loan, and shall accrue on the principal amount outstanding under such Term
Loan through and including the day on which such Term Loan is paid in full (or
any payment is made hereunder).

 

(b)Default Rate. Immediately upon the occurrence and during the continuance of
an Event of Default, all Obligations shall accrue interest at a fixed per annum
rate equal to the rate that is otherwise applicable thereto plus five percentage
points (5.00%) (the “Default Rate”). Payment or acceptance of the increased
interest rate provided in this Section 2.3(b) is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Collateral Agent.

 

(c)360-Day Year. Interest shall be computed on the basis of a three hundred
sixty (360) day year for the actual number of days elapsed.

 

(d)Debit of Accounts. Collateral Agent and each Lender may debit (or ACH) any
deposit accounts, maintained by Borrower, including the Designated Deposit
Account, for principal and interest payments or any other amounts Borrower owes
the Lenders under the Loan Documents when due. Any such debits (or ACH activity)
shall not constitute a set-off.

 

(e)Payments. Except as otherwise expressly provided herein, all payments by
Borrower under the Loan Documents shall be made to the respective Lender to
which such payments are owed, at such Person’s office in immediately available
funds on the date specified herein. Unless otherwise provided, interest is
payable monthly on the Payment Date of each month. Payments of principal and/or
interest received after 2:00 pm Eastern time are considered received at the
opening of business on the next Business Day. When a payment is due on a day
that is not a Business Day, the payment is due the next Business Day and
additional fees or interest, as applicable, shall continue to accrue until paid.
All payments to be made by Borrower hereunder or under any other Loan Document,
including payments of principal and interest, and all fees, expenses,
indemnities and reimbursements, shall be made without set-off, recoupment or
counterclaim, in lawful money of the United States and in immediately available
funds. Collateral Agent may at its discretion and with prior notice of at least
one (1) Business Day, initiate debit entries to the Borrower’s account as
authorized on the ACH Letter (i) on each payment date of all Obligations then
due and owing, (ii) at any time any payment due and owing with respect to Lender
Expenses, and (iii) upon an Event of Default, any other Obligations outstanding.

2.4Fees. Borrower shall pay to Collateral Agent and/or Lenders (as applicable)
the following fees, which shall be deemed fully earned and non-refundable upon
payment:

(a)Closing Fee. To Solar, a fully-earned, non-refundable closing fee in the
amount of $80,000 (the “Closing Fee”), which shall be due on the Effective Date;

 

(b)Final Fee. The Final Fee, when due hereunder, to be shared between the
Lenders in accordance with their respective Pro Rata Share;

 

(c)Prepayment Premium. The Prepayment Premium, when due hereunder, to be shared
between the Lenders in accordance with their respective Pro Rata Shares;

 

(d)Lenders’ Expenses. All Lenders’ Expenses (including reasonable documented
attorneys’ fees and expenses for documentation and negotiation of this
Agreement) incurred through and after the Effective Date, when due.

 

2.5Withholding. Payments received by the Collateral Agent or the Lenders from
Borrower hereunder will be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any governmental
authority (including any interest, additions to tax or penalties applicable
thereto). Specifically, however, if at any time any Governmental Authority,
applicable law, regulation or international agreement requires Borrower to make
any withholding or deduction from any such payment or other sum payable
hereunder to the Lenders, Borrower hereby covenants and agrees that the amount
due from Borrower with respect to such payment or other sum payable hereunder
will be increased to the extent necessary to ensure that, after the making of
such required withholding or deduction (and including any such withholdings and
deductions applicable to additional sums payable under this Section), each
Lender receives a net sum equal to the sum which it would have received had no
withholding or deduction been required and Borrower shall pay the full amount
withheld or deducted to the relevant Governmental Authority. Borrower will, upon
request, furnish the Lenders with proof reasonably satisfactory to the Lenders
indicating that Borrower has made such withholding payment; provided, however,
that Borrower need not make any withholding payment if the amount or validity of
such withholding payment is contested in good faith by appropriate and timely
proceedings and as to which payment in full is bonded or reserved against by
Borrower. The agreements and obligations of Borrower contained in this Section
2.5 shall survive the termination of this Agreement.

 

2.6Secured Promissory Notes. If requested by a Lender, the Term Loans shall be
evidenced by a Secured Promissory Note or Notes in the form attached as Exhibit
G hereto (each a “Secured Promissory Note”), and shall be repayable as set forth
in this Agreement. Borrower irrevocably authorizes each Lender to make or cause
to be made, on or about the Funding Date of any Term Loan or at the time of
receipt of any payment of principal on such Lender’s Secured Promissory Note, an
appropriate notation on such Lender’s Secured Promissory Note Record reflecting
the making of such Term Loan or (as the case may be) the receipt of such
payment. The outstanding amount of each Term Loan set forth on such Lender’s
Secured Promissory Note Record shall be, absent manifest error, prima facie
evidence of the principal amount thereof owing and unpaid to such Lender, but
the failure to record, or any error in so recording, any such amount on such
Lender’s Secured Promissory Note Record shall not limit or otherwise affect the
obligations of Borrower under any Secured Promissory Note or any other Loan
Document to make payments of principal of or interest on any Secured Promissory
Note when due. Upon receipt of an affidavit (with customary indemnification) of
an officer of a Lender as to the loss, theft, destruction, or mutilation of its
Secured Promissory Note, Borrower shall issue, in lieu thereof, a replacement
Secured Promissory Note in the same principal amount thereof and of like tenor.

 

3.

CONDITIONS OF LOANS

3.1Conditions Precedent to Initial Term Loan. Each Lender’s obligation to make a
Term Loan is subject to the condition precedent that Collateral Agent and each
Lender shall consent to or shall have received, in form and substance
satisfactory to Collateral Agent and each Lender, such documents, and completion
of such other matters, as Collateral Agent and each Lender may have reasonably
requested, including, without limitation:

(a)original Loan Documents, each duly executed by Borrower and each Subsidiary,
as applicable;

 

 

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(b)a completed Perfection Certificate for Borrower and its Subsidiaries;

 

(c)duly executed original Control Agreements with respect to any Collateral
Accounts maintained by Borrower or any of its Subsidiaries;

 

(d)the Operating Documents and good standing certificates of Borrower and its
Subsidiaries certified by the Secretary of State (or equivalent agency) of
Borrower’s and such Subsidiaries’ jurisdiction of organization or formation and
each jurisdiction in which Borrower and each Subsidiary is qualified to conduct
business, each as of a date no earlier than thirty (30) days prior to the
Effective Date;

 

(e)a certificate of Borrower in substantially the form of Exhibit E hereto
executed by the Secretary of Borrower with appropriate insertions and
attachments, including with respect to (i) the Operating Documents of Borrower
(which Certificate of Incorporation of Borrower shall be certified by the
Secretary of State of the State of Delaware) and (ii) the resolutions adopted by
Borrower’s board of directors for the purpose of approving the transactions
contemplated by the Loan Documents;

 

(f)certified copies, dated as of date no earlier than thirty (30) days prior to
the Effective Date, of financing statement searches, as Collateral Agent shall
request, accompanied by written evidence (including any UCC termination
statements) that the Liens indicated in any such financing statements either
constitute Permitted Liens or have been or, in connection with the initial Term
Loan, will be terminated or released;

 

(g)a duly executed legal opinion of counsel to Borrower dated as of the
Effective Date;

 

(h)evidence satisfactory to Collateral Agent and the Lenders that the insurance
policies required by Section 6.5 hereof are in full force and effect; and

 

(i)payment of the Closing Fee and Lenders’ Expenses then due as specified in
Section 2.4 hereof.

 

3.2Conditions Precedent to all Term Loans. The obligation of each Lender to
extend each Term Loan, including the initial Term Loan, is subject to the
following conditions precedent:

(a)receipt by Collateral Agent of an executed Loan Payment Request Form in the
form of Exhibit C attached hereto;

 

(b)the representations and warranties in Section 5 hereof shall be true,
accurate and complete in all material respects on the Funding Date of each Term
Loan; provided, however, that such materiality qualifier shall not be applicable
to any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no
Event of Default shall have occurred and be continuing or result from the
funding of such Term Loan;

 

(c)in such Lender’s reasonable discretion, there has not been any Material
Adverse Change;

 

(d)No Event of Default or an event that with the passage of time could result in
an Event of Default, shall exist; and

 

(e)payment of the fees and Lenders’ Expenses then due as specified in Section
2.4 hereof.

 

3.3Post-Closing Condition. Borrower shall deliver to Collateral Agent within
thirty (30) days after the Effective Date, together with appropriate evidence
showing loss payable and/or additional insured clauses or endorsements in favor
of Collateral Agent, for the ratable benefit of the Secured Parties.

 

3.4Covenant to Deliver. Borrower agrees to deliver to Collateral Agent and the
Lenders each item required to be delivered to Collateral Agent under this
Agreement as a condition precedent to any Term Loan. Borrower expressly agrees
that a Term Loan made prior to the receipt by Collateral Agent or any Lender of
any such item shall not constitute a waiver by Collateral Agent or any Lender of
Borrower’s obligation to deliver such item, and any such Term Loan in the
absence of a required item shall be made in each Lender’s sole discretion.

 

3.5Procedures for Borrowing. Subject to the prior satisfaction of all other
applicable conditions to the making of a Term Loan set forth in this Agreement,
to obtain a Term Loan (other than the Term Loan funded on the Effective Date),
Borrower shall notify the Lenders (which notice shall be irrevocable) by
electronic mail, facsimile, or telephone by 2:00 pm New York City time three (3)
Business Days prior to the date the Term Loan is to be made. Together with any
such electronic, facsimile or telephonic notification, Borrower shall deliver to
Collateral Agent by electronic mail or facsimile a completed Loan Payment
Request Form executed by a Responsible Officer or his or her designee. The
Collateral Agent may rely on any telephone notice given by a person whom
Collateral Agent reasonably believes is a Responsible Officer or designee.

 

4.

CREATION OF SECURITY INTEREST

4.1Grant of Security Interest. Borrower hereby grants Collateral Agent, for the
ratable benefit of the Secured Parties, to secure the payment and performance in
full of all of the Obligations, a continuing first priority security interest
in, and pledges to Collateral Agent, for the ratable benefit of the Secured
Parties, the Collateral, wherever located, whether now owned or hereafter
acquired or arising, and all proceeds and products and supporting obligations
(as defined in the Code) in respect thereof. If Borrower shall acquire any
commercial tort claim (as defined in the Code), Borrower shall grant to
Collateral Agent, for the ratable benefit of the Secured Parties, a first
priority security interest therein and in the proceeds and products and
supporting obligations (as defined in the Code) thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to Collateral Agent.

 

If this Agreement is terminated, Collateral Agent’s Lien in the Collateral shall
continue until the Obligations (other than inchoate indemnity obligations) are
repaid in full in cash. Upon payment in full in cash of the Obligations (other
than inchoate indemnity obligations) and at such time as the Lenders’ obligation
to extend Term Loans has terminated, Collateral Agent shall, at the sole cost
and expense of Borrower, terminate and release its Liens in the Collateral and
all rights therein shall revert to Borrower.

 

4.2Authorization to File Financing Statements. Borrower hereby authorizes
Collateral Agent to file financing statements or take any other action required
to perfect Collateral Agent’s security interests in the Collateral (held for the
ratable benefit of the Secured Parties), without notice to Borrower, with all
appropriate jurisdictions to perfect or protect Collateral Agent’s interest or
rights under the Loan Documents.

 

5.

REPRESENTATIONS AND WARRANTIES

 

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Borrower represents and warrants to Collateral Agent and the Lenders as follows:

5.1Due Organization, Authorization: Power and Authority. Borrower and each of
its Subsidiaries is duly existing and in good standing as a Registered
Organization in its jurisdictions of organization or formation and Borrower and
each of its Subsidiaries is qualified and licensed to do business and is in good
standing in any jurisdiction in which the conduct of its businesses or its
ownership of property requires that it be so qualified except where the failure
to do so could not reasonably be expected to have a Material Adverse Change. In
connection with this Agreement, Borrower and its Subsidiaries have delivered to
Collateral Agent a completed perfection certificate and any updates or
supplements thereto on, before or after the Effective Date (the “Perfection
Certificate”). Borrower represents and warrants that all the information set
forth on the Perfection Certificate (as may be updated pursuant to specific
provisions herein) pertaining to Borrower and its Subsidiaries is accurate and
complete.

 

The execution, delivery and performance by Borrower and each of its Subsidiaries
of the Loan Documents to which it is, or they are, a party have been duly
authorized, and do not (i) conflict with any of Borrower’s or such Subsidiaries’
organizational documents, including its respective Operating Documents, (ii)
contravene, conflict with, constitute a default under or violate any material
Requirement of Law applicable thereto, (iii) contravene, conflict or violate any
applicable order, writ, judgment, injunction, decree, determination or award of
any Governmental Authority by which Borrower or such Subsidiary, or any of their
property or assets may be bound or affected, (iv) require any action by, filing,
registration, or qualification with, or Governmental Approval from, any
Governmental Authority (except such Governmental Approvals which have already
been obtained and are in full force and effect) or are being obtained pursuant
to Section 6.1(b), or (v) constitute an event of default under any material
agreement by which Borrower, any of its Subsidiaries or any of their respective
properties, is bound. Neither Borrower nor any of its Subsidiaries is in default
under any agreement to which it is a party or by which it or any of its assets
is bound in which such default could reasonably be expected to have a Material
Adverse Change.

 

5.2Collateral.

 

(a)Borrower and each its Subsidiaries have good title to, have rights in, and
the power to transfer each item of the Collateral upon which it purports to
grant a Lien under the Loan Documents, free and clear of any and all Liens
except Permitted Liens, and neither Borrower nor any of its Subsidiaries have
any Deposit Accounts, Securities Accounts, Commodity Accounts or other
investment accounts other than the Collateral Accounts or the other investment
accounts, if any, described in the Perfection Certificate delivered to
Collateral Agent in connection herewith in respect of which Borrower or such
Subsidiary has given Collateral Agent notice and taken such actions as are
necessary to give Collateral Agent a perfected security interest therein as
required under this Agreement. The Accounts are bona fide, existing obligations
of the Account Debtors.

 

(b)The security interest granted herein is and shall at all times continue to be
a first priority perfected security interest in the Collateral, subject only to
involuntary Permitted Liens that, under applicable law, have priority over
Collateral Agent’s Lien.

 

(c)On the Effective Date, and except as disclosed on the Perfection Certificate
(i) the Collateral (other than mobile equipment such as laptop computers in the
possession of Borrower’s employees in the ordinary course of business) is not in
the possession of any third party bailee, and (ii) no such third party bailee
possesses components of the Collateral in excess of Two Hundred Fifty Thousand
Dollars ($250,000.00).

 

(d)All Inventory and Equipment is in all material respects of good and
marketable quality, free from material defects.

 

(e)Borrower and each of its Subsidiaries is the sole owner of the Intellectual
Property each respectively purports to own, free and clear of all Liens other
than Permitted Liens. Except as noted on the Perfection Certificate (which, upon
the consummation of a transaction not prohibited by this Agreement, may be
updated to reflect such transaction), neither Borrower nor any of its
Subsidiaries is a party to, nor is bound by, any material license or other
Material Agreement.

 

5.3Litigation. Except as disclosed on the Perfection Certificate or with respect
to which Borrower has provided notice as required hereunder, there are no
actions, suits, investigations, or proceedings pending or, to the Knowledge of
the Responsible Officers, threatened in writing by or against Borrower or any of
its Subsidiaries involving more than Two Hundred Fifty Thousand Dollars
($250,000.00).

 

5.4No Material Adverse Change; Financial Statements. All consolidated financial
statements for Borrower and its consolidated Subsidiaries, delivered to
Collateral Agent fairly present, in conformity with GAAP, and in all material
respects the consolidated financial condition of Borrower and its consolidated
Subsidiaries, and the consolidated results of operations of Borrower and its
consolidated Subsidiaries, as of the date thereof, except that unaudited
financial statements may be subject to normal adjustments and need not contain
adjustments for items such as stock compensation or depreciation, or footnotes.
Since December 31, 2016, there has not been a Material Adverse Change.

 

5.5Solvency. Borrower is Solvent. Borrower and each of its Subsidiaries, when
taken as a whole, is Solvent.

 

5.6Regulatory Compliance. Neither Borrower nor any of its Subsidiaries is an
“investment company” or a company “controlled” by an “investment company” under
the Investment Company Act of 1940, as amended. Neither Borrower nor any of its
Subsidiaries is engaged as one of its important activities in extending credit
for margin stock (under Regulations X, T and U of the Federal Reserve Board of
Governors). Borrower and each of its Subsidiaries has complied in all material
respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of
its Subsidiaries is a “holding company” or an “affiliate” of a “holding company”
or a “subsidiary company” of a “holding company” as each term is defined and
used in the Public Utility Holding Company Act of 2005. Neither Borrower nor any
of its Subsidiaries has violated any laws, ordinances or rules, the violation of
which could reasonably be expected to have a Material Adverse Change. Neither
Borrower’s nor any of its Subsidiaries’ properties or assets has been used by
Borrower or such Subsidiary or, to Borrower’s Knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than in material compliance with applicable laws. Borrower and each of its
Subsidiaries has obtained all material consents, approvals and authorizations
of, made all declarations or filings with, and given all notices to, all
Governmental Authorities that are necessary to continue their respective
businesses as currently conducted.

 

None of Borrower, any of its Subsidiaries, or any of Borrower’s or its
Subsidiaries’ Affiliates or any of their respective agents acting or benefiting
in any capacity in connection with the transactions contemplated by this
Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or
conspiring to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. None of
Borrower, any of its Subsidiaries, or to the Knowledge of Borrower and any of
their Affiliates or agents, acting or benefiting in any capacity in connection
with the transactions contemplated by this Agreement, (x) conducts any business
or engages in making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person, or (y) deals in, or otherwise
engages in any transaction relating to, any property or interest in property
blocked pursuant to Executive Order No. 13224, any similar executive order or
other Anti-Terrorism Law.

 

5.7Investments. Neither Borrower nor any of its Subsidiaries owns any stock,
shares, partnership interests or other equity securities except for

 

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Permitted Investments.

 

5.8Tax Returns and Payments; Pension Contributions. Borrower and each of its
Subsidiaries has timely filed all required tax returns and reports, and Borrower
and each of its Subsidiaries, has timely paid all foreign, federal, state, and
local taxes, assessments, deposits and contributions owed by Borrower and such
Subsidiaries in an amount greater than Ten Thousand Dollars ($10,000), in all
jurisdictions in which Borrower or any such Subsidiary is subject to taxes,
including the United States, unless such taxes are being contested in accordance
with the next sentence. Borrower and each of its Subsidiaries, may defer payment
of any contested taxes, provided that Borrower or such Subsidiary, (a) in good
faith contests its obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted; (b) notifies Collateral Agent
of the commencement of, and any material development in, the proceeding; and (c)
adequate reserves or other appropriate provisions are maintained on the books of
such Borrower or Subsidiary, as applicable, in accordance with GAAP and which do
not involve, in the reasonable judgment of the Collateral Agent, any risk of the
sale, forfeiture or loss of any material portion of the Collateral. Neither
Borrower nor any of its Subsidiaries is aware of any claims or adjustments
proposed for any of Borrower’s or such Subsidiaries’, prior tax years which
could result in additional taxes in an amount greater than Ten Thousand Dollars
($10,000) becoming due and payable by Borrower or its Subsidiaries. Borrower and
each of its Subsidiaries have paid all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in accordance with their
terms, and neither Borrower nor any of its Subsidiaries have, withdrawn from
participation in, and have not permitted partial or complete termination of, or
permitted the occurrence of any other event with respect to, any such plan which
could reasonably be expected to result in any liability of Borrower or its
Subsidiaries, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other Governmental Authority.

 

5.9Use of Proceeds. Borrower shall use the proceeds of the Term Loans, as
working capital and to fund its general business requirements, and not for
personal, family, household or agricultural purposes.

 

5.10Full Disclosure. No written representation, warranty or other statement of
Borrower or any of its Subsidiaries in any certificate or written statement,
when taken as a whole, given to Collateral Agent or any Lender in connection
with the Loan Documents or the transactions contemplated thereby, as of the date
such representation, warranty, or other statement was made, taken together with
all such written certificates and written statements given to Collateral Agent
or any Lender, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained in the
certificates or statements not misleading in light of the circumstances under
which they were made (it being recognized that projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected or forecasted
results).

 

5.11Intellectual Property. Borrower and each of its Subsidiaries have sufficient
title and ownership of or licenses to all patents, trademarks, service marks,
trade names, domain names, copyrights, trade secrets, information, proprietary
rights and processes necessary for the business of Borrower and each of its
Subsidiaries as now conducted and presently proposed to be conducted without any
known violation or infringement of the rights of others, and has no reason to
believe that any Patents included in such Intellectual Property is not or, once
issued will not be, valid and enforceable in any material manner. To Borrower’s
knowledge, there is no material prior art that would likely render the claims in
any such Patents unpatentable, invalid, or unenforceable in whole or in part, or
would preclude the issuance of claims covering Borrower’s products and product
candidates. To Borrower’s knowledge, no third party is infringing or
misappropriating any of the Intellectual Property or has challenged the
ownership, scope, duration, validity, enforceability, priority or right to use
any of the Intellectual Property (including, by way of example, through the
institution of or written threat of institution of inter partes review,
interference, reexamination, protest, opposition, nullity or similar invalidity
proceeding before the United States Patent and Trademark Office or any analogous
foreign entity) that is material to the business of Borrower and each of its
Subsidiaries as now conducted and presently proposed to be conducted. Except for
the Sensile Agreements, to Borrower’s knowledge there are no options, licenses,
agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs, decrees,  claims, encumbrances or shared ownership of
interests of any kind relating to anything referred to above in this Section
5.11 that is to any extent owned by or exclusively licensed to Borrower or any
of its Subsidiaries or that may involve any material license of any patent,
copyright, trade secret or other proprietary right to or from Borrower or any of
its Subsidiaries, in all cases that is material to the business of Borrower and
each of its Subsidiaries as now conducted and proposed to be conducted. Except
with respect to the Intellectual Property licensed under the Sensile Agreements,
neither Borrower nor any of its Subsidiaries is bound by or a party to any
options, licenses, agreements, understandings, instruments, or contracts of any
kind with respect to the patents, trademarks, service marks, trade names, domain
names, copyrights, trade secrets, licenses, information, proprietary rights
and/or processes of any other person or entity, except, in either case, for
standard end-user, object code, internal-use software license and
support/maintenance agreements or customary research or commercial contracts in
the ordinary course of the Borrower’s business. Neither Borrower nor any of its
Subsidiaries has received any written communications alleging, and Borrower is
not aware of any facts that could give rise to any allegation, that Borrower or
any of its Subsidiaries has infringed, misappropriated, or violated or would
infringe, misappropriate, or violate, or offering to grant rights with respect
to, any of the patents, trademarks, service marks, domain names, trade names,
copyrights or trade secrets or other proprietary rights of any other person or
entity. Borrower is not aware that any employees of Borrower or any of its
Subsidiaries is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of his or her reasonable efforts to promote the interests of Borrower
and its Subsidiaries or that would conflict with the business of Borrower or its
Subsidiaries. Neither the execution nor delivery of this Agreement, nor the
carrying on of the business of Borrower or its Subsidiaries by the employees of
Borrower or its Subsidiaries, will, to Borrower’s knowledge, conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any of such
employees is now obligated. Borrower does not presently believe it is or will be
necessary to utilize any inventions of any of the employees of Borrower or its
Subsidiaries made prior to or outside the scope of their employment by Borrower
or its Subsidiaries.

 

6.

AFFIRMATIVE COVENANTS

Borrower shall, and shall cause each of its Subsidiaries to, do all of the
following:

6.1Government Compliance.

 

(a)Other than specifically permitted hereunder, maintain its and all its
Subsidiaries’ legal existence and good standing in their respective
jurisdictions of organization and maintain qualification in each jurisdiction in
which the failure to so qualify could reasonably be expected to have a Material
Adverse Change. Comply with all laws, ordinances and regulations to which
Borrower or any of its Subsidiaries is subject, the noncompliance with which
could reasonably be expected to have a Material Adverse Change.

 

(b)Obtain and keep in full force and effect, all of the material Governmental
Approvals necessary for the performance by Borrower and its Subsidiaries of
their respective businesses and obligations under the Loan Documents and the
grant of a security interest to Collateral Agent for the ratable benefit of the
Secured Parties, in all of the Collateral.

 

6.2Financial Statements, Reports, Certificates; Notices.

 

(a)Deliver to each Lender:

(i)as soon as available, but no later than thirty (30) days after the last day
of each month, a company prepared consolidated and, if prepared by Borrower or
if reasonably requested by the Lenders, consolidating balance sheet, income
statement and cash flow statement covering the consolidated operations of
Borrower and its consolidated Subsidiaries for such month certified by a
Responsible Officer and in a form

 

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reasonably acceptable to the Collateral Agent;

 

(ii)as soon as available, but no later than one hundred eighty (180) days after
the last day of Borrower’s fiscal year or within five (5) days of filing of the
same with the SEC, audited consolidated financial statements covering the
consolidated operations of Borrower and its consolidated Subsidiaries for such
fiscal year, prepared under GAAP, consistently applied, together with an
Unqualified Opinion on the financial statements;

 

(iii)as soon as available after approval thereof by Borrower’s board of
directors, but no later than the earlier of (x) ten (10) days’ after such
approval and (y) February 28 of such year, Borrower’s annual budget and
financial projections for the entire current fiscal year as approved by
Borrower’s board of directors; provided that, any material revisions to such
projections approved by Borrower’s board of directors shall be delivered to
Collateral Agent and the Lenders no later than seven (7) days after such
approval);

 

(iv)within five (5) days of delivery, copies of all non-ministerial statements,
reports and notices made available to Borrower’s security holders generally or
holders of Subordinated Debt (other than materials provided to members of the
Borrower’s board of directors solely in their capacities as security holder or
holders of Subordinated Debt);

 

(v)in the event that Borrower becomes subject to the reporting requirements
under the Securities Exchange Act of 1934, as amended, within five (5) days of
filing, all reports on Form 10-K, 10-Q and 8-K filed with the Securities and
Exchange Commission;

 

(vi)as soon as available, but no later than thirty (30) days after the last day
of each month, copies of the month-end account statements for each Collateral
Account maintained by Borrower or its Subsidiaries, which statements may be
provided to Collateral Agent and each Lender by Borrower or directly from the
applicable institution(s);

 

(vii)prompt delivery of (and in any event within five (5) days after the same
are sent or received) copies of all material correspondence, reports, documents
and other filings with any Governmental Authority that could reasonably be
expected to have a material adverse effect on any of the Governmental Approvals
material to Borrower’s business or that otherwise could reasonably be expected
to have a Material Adverse Change;

 

(viii)prompt notice of any event that (A) could reasonably be expected to
materially and adversely affect the value of the Intellectual Property or (B)
could reasonably be expected to result in a Material Adverse Change;

 

(ix)written notice delivered at least (30) days’ prior to Borrower’s (A) adding
any new offices or business locations, including warehouses (unless such new
offices or business locations contain less than Two Hundred Fifty Thousand
Dollars ($250,000.00) in assets or property of Borrower or any of its
Subsidiaries), (B) changing its respective jurisdiction of organization, (C)
changing its organizational structure or type, (D) changing its respective legal
name, or (E) changing any organizational number(s) (if any) assigned by its
respective jurisdiction of organization;

 

(x)upon Borrower becoming aware of the existence of any Event of Default or
event which, with the giving of notice or passage of time, or both, would
constitute an Event of Default, prompt (and in any event within three (3)
Business Days) written notice of such occurrence, which such notice shall
include a reasonably detailed description of such Event of Default or event
which, with the giving of notice or passage of time, or both, would constitute
an Event of Default, and Borrower’s proposal regarding how to cure such Event of
Default or event;

 

(xi)immediate notice if Borrower or such Subsidiary has Knowledge that Borrower,
or any Subsidiary or Affiliate of Borrower, is listed on the OFAC Lists or (a)
is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is
arraigned and held over on charges involving money laundering or predicate
crimes to money laundering;

 

(xii)notice of any commercial tort claim (as defined in the Code) or letter of
credit rights (as defined in the Code) held by Borrower or any Guarantor, in
each case in an amount greater than One Hundred Thousand Dollars ($100,000.00)
and of the general details thereof;

 

(xiii)if Borrower or any of its Subsidiaries is not now a Registered
Organization but later becomes one, written notice of such occurrence and
information regarding such Person’s organizational identification number within
seven (7) Business Days of receiving such organizational identification number;
and

 

(xiv)other information as reasonably requested by Collateral Agent or any
Lender.

 

(b)Concurrently with the delivery of the financial statements specified in
Section 6.2(a)(i) above but no later than thirty (30) days after the last day of
each month, deliver to each Lender:

(i)a duly completed Compliance Certificate signed by a Responsible Officer;

 

(ii)an updated Perfection Certificate to reflect any amendments, modifications
and updates, if any, to certain information in the Perfection Certificate after
the Effective Date to the extent such amendments, modifications and updates are
permitted by one or more specific provisions in this agreement;

 

(iii)copies of any material Governmental Approvals obtained by Borrower or any
of its Subsidiaries;

 

(iv)written notice of the commencement of, and any material development in, the
proceedings contemplated by Section 5.8

hereof;

 

(v)prompt written notice of any litigation or governmental proceedings pending
or threatened (in writing) against Borrower or any of its Subsidiaries, which
could reasonably be expected to result in damages or costs to Borrower or any of
its Subsidiaries of Two Hundred Fifty Thousand Dollars ($250,000.00); and

 

(vi)written notice of all returns, recoveries, disputes and claims regarding
Inventory that involve more than Two Hundred Fifty Thousand Dollars
($250,000.00) individually or in the aggregate in any calendar year.

 

(c)Keep proper, complete and true books of record and account in accordance with
GAAP in all material respects. Borrower shall, and shall cause each of its
Subsidiaries to, allow, at the sole cost of Borrower, Collateral Agent or any
Lender, during regular business hours upon reasonable prior notice (provided
that no notice shall be required when an Event of Default has occurred and is
continuing), to visit and inspect any of its properties, to examine and make
abstracts or copies from any of its books and records, and to conduct a
collateral audit and analysis of its operations and the Collateral. Such audits
shall be conducted no more often than twice every year unless (and more
frequently if) an Event of Default has occurred and is continuing.

 

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6.3Inventory; Returns. Keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower, or any of its
Subsidiaries, as applicable, and their respective Account Debtors shall follow
Borrower’s, or such Subsidiary’s, customary practices as they exist as of the
Effective Date. Borrower must promptly notify Collateral Agent and the Lenders
of all returns, recoveries, disputes and claims that involve more than Two
Hundred Fifty Thousand Dollars ($250,000.00) individually or in the aggregate in
any calendar year.

 

6.4Taxes; Pensions. Timely file and require each of its Subsidiaries to timely
file, all required tax returns and reports and timely pay, and require each of
its Subsidiaries to timely file, all foreign, federal, state, and local taxes,
assessments, deposits and contributions owed by Borrower or its Subsidiaries,
except as otherwise permitted pursuant to the terms of Section 5.8 hereof, and
shall deliver to the Lenders, on demand, appropriate certificates attesting to
such payments, and pay all amounts necessary to fund all present pension, profit
sharing and deferred compensation plans in accordance with the terms of such
plans.

 

6.5Insurance. Keep Borrower’s and its Subsidiaries’ business and the Collateral
insured for risks and in amounts standard for companies in Borrower’s and its
Subsidiaries’ industry and location and as Collateral Agent may reasonably
request. Insurance policies shall be in a form, with companies, and in amounts
that are reasonably satisfactory to Collateral Agent and Lenders. All property
policies shall have a lender’s loss payable endorsement showing Collateral Agent
as lender loss payee and shall waive subrogation against Collateral Agent, and
all liability policies shall show, or have endorsements showing, Collateral
Agent (for the ratable benefit of the Secured Parties), as additional insured.
The Collateral Agent shall be named as lender loss payee and/or additional
insured with respect to any such insurance providing coverage in respect of any
Collateral, and each provider of any such insurance shall agree, by endorsement
upon the policy or policies issued by it or by independent instruments furnished
to the Collateral Agent, that it will give the Collateral Agent thirty (30) days
prior written notice before any such policy or policies shall be materially
altered or canceled. At Collateral Agent’s request, Borrower shall deliver to
the Collateral Agent certified copies of policies and evidence of all premium
payments. Proceeds payable under any policy shall, at Collateral Agent’s option,
be payable to Collateral Agent, for the ratable benefit of the Secured Parties,
on account of the then-outstanding Obligations. Notwithstanding the foregoing,
(a) so long as no Event of Default has occurred and is continuing, Borrower
shall have the option of applying the proceeds of any casualty policy within one
hundred eighty (180) days of receipt thereof up to Two Hundred Fifty Thousand
Dollars ($250,000), in the aggregate for all losses under all casualty policies
in any one year, toward the replacement or repair of destroyed or damaged
property; provided that any such replaced or repaired property (i) shall be of
equal or like value as the replaced or repaired Collateral and (ii) shall be
deemed Collateral in which Collateral Agent has been granted a first priority
security interest (subject only to Permitted Liens that are permitted by the
terms of this Agreement to have priority over Collateral Agent’s Lien), and (b)
after the occurrence and during the continuance of an Event of Default, all
proceeds payable under such casualty policy shall, at the option of Collateral
Agent, be payable to Collateral Agent, for the ratable benefit of the Lenders,
on account of the Obligations. If Borrower or any of its Subsidiaries fails to
obtain insurance as required under this Section 6.5 or to pay any amount or
furnish any required proof of payment to third persons, Collateral Agent and/or
any Lender may make (but has no obligation to do so), at Borrower’s expense, all
or part of such payment or obtain such insurance policies required in this
Section 6.5, and take any action under the policies Collateral Agent or such
Lender deems prudent.

 

6.6Operating Accounts.

 

(a)All of the Borrower’s and its Subsidiaries’ Collateral Accounts must be
maintained in Collateral Accounts with Bank or its Affiliates, each of which are
subject to a Control Agreement in favor of Collateral Agent for the ratable
benefit of the Secured Parties.

 

(b)Borrower shall provide Collateral Agent ten (10) days’ prior written notice
before Borrower or any Guarantor establishes any Collateral Account. In
addition, for each Collateral Account that Borrower or any Guarantor, at any
time maintains, Borrower or such Guarantor shall cause the applicable bank or
financial institution at or with which such Collateral Account is maintained to
execute and deliver a Control Agreement or other appropriate instrument with
respect to such Collateral Account to perfect Collateral Agent’s Lien in such
Collateral Account (held for the ratable benefit of the Secured Parties) in
accordance with the terms hereunder prior to the establishment of such
Collateral Account. The provisions of the previous sentence shall not apply to
Deposit Accounts exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of Borrower’s, or any of its
Subsidiaries’, employees and identified to Collateral Agent by Borrower as such
in the Perfection Certificate, provided that the amount deposited therein shall
not exceed the amount reasonably expected to be due and payable for the next
succeeding pay period.

 

(c)Neither Borrower nor any Guarantor shall maintain any Collateral Accounts
except Collateral Accounts maintained in accordance with this Section 6.6.

 

6.7Protection of Intellectual Property Rights. Borrower and each of its
Subsidiaries shall: (a) protect, defend and maintain the validity and
enforceability of its respective Intellectual Property that is material to its
business; (b) promptly advise Collateral Agent in writing of material
infringement by a third party of its respective Intellectual Property material
to its business; and (c) not allow any of its respective Intellectual Property
material to its respective business to be abandoned, forfeited or dedicated to
the public without Collateral Agent’s prior written consent.

 

6.8Litigation Cooperation. Commencing on the Effective Date and continuing
through the termination of this Agreement, make available to Collateral Agent
and the Lenders, without expense to Collateral Agent or the Lenders and upon
reasonable prior notice, Borrower and each of Borrower’s officers, employees and
agents and Borrower’s Books, to the extent that Collateral Agent or any Lender
may reasonably request to prosecute or defend any third-party suit or proceeding
instituted by or against Collateral Agent or any Lender with respect to any
Collateral or relating to Borrower.

 

6.9Landlord Waivers; Bailee Waivers. In the event that Borrower or any of its
Subsidiaries, after the Effective Date, intends to add any new offices or
business locations, including warehouses, or otherwise store any portion of the
Collateral with, or deliver any portion of the Collateral to, a bailee, in each
case pursuant to Section 7.2, then, in the event that the Collateral at any new
location is valued (based on book value) in excess of Two Hundred Fifty Thousand
Dollars ($250,000.00) in the aggregate, at Collateral Agent’s election, such
bailee or landlord, as applicable, must execute and deliver a bailee waiver or
landlord waiver, as applicable, in form and substance reasonably satisfactory to
Collateral Agent prior to the addition of any new offices or business locations,
or any such storage with or delivery to any such bailee, as the case may be.

 

6.10Further Assurances. Execute any further instruments and take further action
as Collateral Agent or any Lender reasonably requests to perfect or continue
Collateral Agent’s Lien in the Collateral or to effect the purposes of this
Agreement.

 

7.

NEGATIVE COVENANTS

Borrower shall not, and shall not permit any of its Subsidiaries to, do any of
the following without the prior written consent of the Required Lenders:

7.1Dispositions. Convey, sell, lease, transfer, assign, dispose of, license
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, except for Transfers (a) of Inventory
in the ordinary course of business; (b) of worn-out, obsolete or surplus
Equipment; (c) in connection with Permitted Liens, Permitted Investments or
Permitted Licenses; (d) sale or issuance of any stock permitted under Section
7.2; (e) pursuant to the Sensile Agreements (as may be amended in accordance
with Section 7.13); or (f) cash or Cash Equivalents pursuant to transactions not
prohibited by this Agreement.

 

7.2Changes in Business, Management, Ownership, or Business Locations. (a) Engage
in or permit any of its Subsidiaries to engage in any

 

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business other than the businesses engaged in by Borrower or such Subsidiary, as
applicable, as of the Effective Date or reasonably related thereto; (b)
liquidate or dissolve; or (c) (i) permit any Key Person to cease being actively
engaged in the management of Borrower unless written notice thereof is provided
to each Lender within ten (10) days of such cessation, or (ii) enter into any
transaction or series of related transactions in which (A) the stockholders of
Borrower who were not stockholders immediately prior to the first such
transaction own more than 40% of the voting stock of Borrower immediately after
giving effect to such transaction or related series of such transactions (other
than by the sale of Borrower’s equity securities in a public offering, a private
placement of public equity or to venture capital or private equity investors so
long as Borrower identifies to Collateral Agent the investors prior to the
closing of the transaction) and (B) except as permitted by Section 7.3, Borrower
ceases to own, directly or indirectly, 100% of the ownership interests in each
Subsidiary of Borrower. Borrower shall not, and shall not permit any of its
Subsidiaries to, without at least thirty (30) days’ prior written notice to
Collateral Agent: (A) add any new offices or business locations, including
warehouses (unless such new offices or business locations contain less than Two
Hundred Fifty Thousand Dollars ($250,000.00) in assets or property of Borrower
or any of its Subsidiaries, as applicable); (B) change its respective
jurisdiction of organization, (C) except as permitted by Section 7.3, change its
respective organizational structure or type, (D) change its respective legal
name, or (E) change any organizational number(s) (if any) assigned by its
respective jurisdiction of organization.

 

7.3Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock, shares or property of another Person. A Subsidiary may merge or
consolidate into another Subsidiary (provided if one of the Subsidiaries is a
“co-Borrower” or guarantor hereunder, such surviving Subsidiary is a
“co-Borrower” hereunder or has provided a secured Guaranty of Borrower’s
Obligations hereunder) or with (or into) Borrower provided Borrower is the
surviving legal entity, and as long as no Event of Default is occurring prior
thereto or arises as a result therefrom.

 

7.4Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or
permit any Subsidiary to do so, other than Permitted Indebtedness.

 

7.5Encumbrance. Create, incur, allow, or suffer any Lien on any of its property,
or assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein (except for Permitted Liens), or enter into any
agreement, document, instrument or other arrangement (except with or in favor of
Collateral Agent, for the ratable benefit of the Secured Parties) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
Borrower, or any of its Subsidiaries, from assigning, mortgaging, pledging,
granting a security interest in or upon, or encumbering any of Borrower’s or
such Subsidiary’s Intellectual Property, except as is otherwise permitted in
Section 7.1 hereof and the definition of “Permitted Liens”.

 

7.6Maintenance of Collateral Accounts. With respect to Borrower any Guarantors,
maintain any Collateral Account except pursuant to the terms of Section 6.6
hereof.

 

7.7Restricted Payments. (a) Declare or pay any dividends (other than dividends
payable solely in capital stock) or make any other distribution or payment in
respect of or redeem, retire or purchase any capital stock (other than (i) the
declaration or payment of dividends to Borrower, (ii) so long as no Event of
Default or event that with the passage of time would result in an Event of
Default exists or would result therefrom, the declaration or payment of any
dividends solely in the form of equity securities, and (iii) repurchases
pursuant to the terms of employee stock purchase plans, employee restricted
stock agreements, stockholder rights plans, director or consultant stock option
plans, or similar plans, provided such repurchases do not exceed Two Hundred
Fifty Thousand Dollars ($250,000.00) in the aggregate per fiscal year), (b)
other than the Obligations in accordance with the terms hereof, purchase,
redeem, defease or prepay any principal of, premium, if any, interest or other
amount payable in respect of any Indebtedness prior to its scheduled maturity
unless being replaced with Indebtedness of at least the same principal amount
and such new Indebtedness is Permitted Indebtedness, or (c) be a party to or
bound by an agreement that restricts a Subsidiary from paying dividends or
otherwise distributing property to Borrower.

 

7.8Investments. Directly or indirectly make any Investment other than Permitted
Investments, or permit any of its Subsidiaries to do so other than Permitted
Investments.

 

7.9Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower or any of its
Subsidiaries, except for (a) transactions that are in the ordinary course of
Borrower’s or such Subsidiary’s business, upon fair and reasonable terms that
are no less favorable to Borrower or such Subsidiary than would be obtained in
an arm’s length transaction with a non- affiliated Person, (b) Subordinated Debt
or equity investments by Borrower’s investors in Borrower or its Subsidiaries
and (c) transactions permitted pursuant to the terms of Section 7.2.

 

7.10Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any provision
in any document relating to the Subordinated Debt which would increase the
amount thereof or adversely affect the subordination thereof to Obligations owed
to the Lenders.

 

7.11Compliance. (a) Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended, or
undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Term Loan for that purpose;
(b) fail to meet the minimum funding requirements of ERISA; (c) permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; (d)
fail to comply with the Federal Fair Labor Standards Act or violate any other
law or regulation, if the violation could reasonably be expected to have a
Material Adverse Change, or permit any of its Subsidiaries to do so; or (e)
withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower
or any of its Subsidiaries, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other Governmental Authority.

 

7.12Compliance with Anti-Terrorism Laws. Neither Borrower nor any of its
Subsidiaries shall, nor shall Borrower or any of its Subsidiaries permit any
Affiliate to, directly or indirectly, knowingly enter into any documents,
instruments, agreements or contracts with any Person listed on the OFAC Lists.
Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of
its Subsidiaries, permit any Affiliate to, directly or indirectly, (a) conduct
any business or engage in any transaction or dealing with any Blocked Person,
including, without limitation, the making or receiving of any contribution of
funds, goods or services to or for the benefit of any Blocked Person, (b) deal
in, or otherwise engage in any transaction relating to, any property or
interests in property blocked pursuant to Executive Order No. 13224 or any
similar executive order or other Anti-Terrorism Law, or (c) engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in Executive Order No. 13224 or other Anti-Terrorism Law.

 

7.13Sensile Agreements. Neither Borrower nor any of its Subsidiaries shall,
without the consent of Collateral Agent, (a) enter into a Sensile Agreement, (b)
materially amend a Sensile Agreement or (c) terminate any Sensile Agreement.

 

8.

EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

8.1Payment Default. Borrower fails to (a) make any payment of principal or
interest on any Term Loan on its due date, or (b) pay any other Obligations
within three (3) Business Days after such Obligations are due and payable (which
three (3) Business Day grace period shall not apply to payments due on the
Maturity Date or the date of acceleration pursuant to Section 9.1 (a) hereof);

 

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8.2Covenant Default.

 

(a)Borrower or any of its Subsidiaries fails or neglects to perform any
obligation in Sections 6.2 (Financial Statements, Reports, Certificates), 6.4
(Taxes), 6.5 (Insurance), 6.6 (Operating Accounts), 6.7 (Protection of
Intellectual Property Rights), 6.9 (Landlord Waivers; Bailee Waivers) or
Borrower violates any provision in Section 7; or

 

(b)Borrower, or any of its Subsidiaries, fails or neglects to perform, keep, or
observe any other term, provision, condition, covenant or agreement contained in
this Agreement or any other Loan Document to which such person is a party, and
as to any default (other than those specified in this Section 8) under such
other term, provision, condition, covenant or agreement that can be cured, has
failed to cure the default within ten (10) days after the occurrence thereof;
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower or such
Subsidiary, as applicable, be cured within such ten (10) day period, and such
default is likely to be cured within a reasonable time, then Borrower shall have
an additional period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and within such reasonable time period the failure
to cure the default shall not be deemed an Event of Default (but no Term Loans
shall be made during such cure period).

 

8.3Material Adverse Change. A Material Adverse Change has occurred;

 

8.4Attachment; Levy; Restraint on Business.

 

(a)(i) The service of process seeking to attach, by trustee or similar process,
any funds of Borrower or any of its Subsidiaries or of any entity under control
of Borrower or its Subsidiaries on deposit with any institution at which
Borrower or any of its Subsidiaries maintains a Collateral Account, or (ii) a
notice of lien, levy, or assessment is filed against Borrower or any of its
Subsidiaries or their respective assets by any government agency, and the same
under subclauses (i) and (ii) of this clause (a) are not, within ten (10) days
after the occurrence thereof, discharged or stayed (whether through the posting
of a bond or otherwise); and

 

(b) (i) any material portion of Borrower’s or any of its Subsidiaries’ assets is
attached, seized, levied on, or comes into possession of a trustee or receiver,
or (ii) any court order enjoins, restrains, or prevents Borrower or any of its
Subsidiaries from conducting any part of its business;

 

8.5Insolvency. (a) Borrower or any of its Subsidiaries is or becomes Insolvent;
(b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or (c)
an Insolvency Proceeding is begun against Borrower or any of its Subsidiaries
and not dismissed or stayed within forty-five (45) days (but no Term Loans shall
be extended while Borrower or any Subsidiary is Insolvent and/or until any
Insolvency Proceeding is dismissed);

 

8.6Other Agreements. There is a default in (a) any agreement to which Borrower
or any of its Subsidiaries is a party with a third party or parties resulting in
a right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000.00) or that could reasonably be expected to have a Material
Adverse Change or (b) there is any default under a Material Agreement that
permits the counterparty thereto to accelerate the payments owed thereunder;

 

8.7Judgments. One or more judgments, orders, or decrees for the payment of money
in an amount, individually or in the aggregate, of at least One Hundred Thousand
Dollars ($100,000.00) (not covered by independent third-party insurance as to
which (a) Borrower reasonably believes such insurance carrier will accept
liability, (b) Borrower or the applicable Subsidiary has submitted such claim to
such insurance carrier and

(c)liability has not been rejected by such insurance carrier) shall be rendered
against Borrower or any of its Subsidiaries and shall remain unsatisfied,
unvacated, or unstayed for a period of ten (10) days after the entry thereof;

 

8.8Misrepresentations. Borrower or any of its Subsidiaries or any Person acting
for Borrower or any of its Subsidiaries makes any representation, warranty, or
other statement now or later in this Agreement, any Loan Document or in any
writing delivered to Collateral Agent and/or the Lenders or to induce Collateral
Agent and/or the Lenders to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement, when taken as a whole, is
incorrect in any material respect when made;

 

8.9Subordinated Debt. A default or breach occurs under any subordination
agreement, or any creditor that has signed such an agreement with Collateral
Agent or the Lenders breaches any terms of such agreement;

 

8.10Guaranty. (a) Any Guaranty terminates or ceases for any reason to be in full
force and effect other than pursuant to the terms of such Guaranty; (b) any
Guarantor does not perform any obligation or covenant under any Guaranty; (c)
any circumstance described in Section 8 occurs with respect to any Guarantor.

 

8.11Governmental Approvals; FDA Action. (a) Any Governmental Approval shall have
been revoked, rescinded, suspended, modified in an adverse manner, or not
renewed in the ordinary course for a full term and such revocation, rescission,
suspension, modification or non-renewal has resulted in or could reasonably be
expected to result in a Material Adverse Change; or (b) (i) the FDA, DOJ or
other Governmental Authority initiates a Regulatory Action or any other
enforcement action against Borrower or any of its Subsidiaries or any supplier
of Borrower or any of its Subsidiaries that causes Borrower or any of its
Subsidiaries to recall, withdraw, remove or discontinue manufacturing,
distributing, and/or marketing any of its products, even if such action is based
on previously disclosed conduct; (ii) the FDA issues a warning letter to
Borrower or any of its Subsidiaries with respect to any of its activities or
products which could reasonably be expected to result in a Material Adverse
Change; (iii) Borrower or any of its Subsidiaries conducts a mandatory or
voluntary recall which could reasonably be expected to result in liability and
expense to Borrower or any of its Subsidiaries of Two Hundred Fifty Thousand
Dollars ($250,000.00) or more; (iv) Borrower or any of its Subsidiaries enters
into a settlement agreement with the FDA, DOJ or other Governmental Authority
that results in aggregate liability as to any single or related series of
transactions, incidents or conditions, of Two Hundred Fifty Thousand Dollars
($250,000.00) or more, or that could reasonably be expected to result in a
Material Adverse Change, even if such settlement agreement is based on
previously disclosed conduct; or (v) the FDA revokes any authorization or
permission granted under any Registration, or Borrower or any of its
Subsidiaries withdraws any Registration, that could reasonably be expected to
result in a Material Adverse Change.

 

8.12Lien Priority. Except as the result of the action or inaction of the
Collateral Agent or the Lenders, any Lien created hereunder or by any other Loan
Document shall at any time fail to constitute a valid and perfected Lien on any
of the Collateral purported to be secured thereby, subject to no prior or equal
Lien, other than Permitted Liens arising as a matter of applicable law.

 

9.

RIGHTS AND REMEDIES

9.1Rights and Remedies.

 

(a)Upon the occurrence and during the continuance of an Event of Default,
Collateral Agent may, and at the written direction of Required Lenders shall,
without notice or demand, do any or all of the following: (i) deliver notice of
the Event of Default to Borrower, (ii) by notice to Borrower declare all
Obligations immediately due and payable (but if an Event of Default described in
Section 8.5 occurs all Obligations shall be

 

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immediately due and payable without any action by Collateral Agent or the
Lenders) or (iii) by notice to Borrower suspend or terminate the obligations, if
any, of the Lenders to advance money or extend credit for Borrower’s benefit
under this Agreement or under any other agreement between Borrower and
Collateral Agent and/or the Lenders (but if an Event of Default described in
Section 8.5 occurs all obligations, if any, of the Lenders to advance money or
extend credit for Borrower’s benefit under this Agreement or under any other
agreement between Borrower and Collateral Agent and/or the Lenders shall be
immediately terminated without any action by Collateral Agent or the Lenders).

 

(b)Without limiting the rights of Collateral Agent and the Lenders set forth in
Section 9.1(a) above, upon the occurrence and during the continuance of an Event
of Default, Collateral Agent shall have the right and at the written direction
of Required Lenders shall, without notice or demand, to do any or all of the
following:

(i)foreclose upon and/or sell or otherwise liquidate, the Collateral;

 

(ii)make a demand for payment upon any Guarantor pursuant to the Guaranty
delivered by such Guarantor;

 

(iii)apply to the Obligations then due any (A) balances and deposits of Borrower
that Collateral Agent or any Lender holds or controls, (B) any amount held or
controlled by Collateral Agent or any Lender owing to or for the credit or the
account of Borrower, or (C) amounts received from any Guarantors in accordance
with the respective Guaranty delivered by such Guarantor; and/or (iv) commence
and prosecute an Insolvency Proceeding or consent to Borrower commencing any
Insolvency Proceeding.

 

(c)Without limiting the rights of Collateral Agent and the Lenders set forth in
Sections 9.1(a) and (b) above, upon the occurrence and during the continuance of
an Event of Default, Collateral Agent shall have the right, without notice or
demand, to do any or all of the following:

(i)settle or adjust disputes and claims directly with Account Debtors for
amounts on terms and in any order that Collateral Agent considers advisable,
notify any Person owing Borrower money of Collateral Agent’s security interest
in such funds, and verify the amount of such account;

 

(ii)make any payments and do any acts it considers necessary or reasonable to
protect the Collateral and/or its Liens in the Collateral (held for the ratable
benefit of the Secured Parties). Borrower shall assemble the Collateral if
Collateral Agent requests and make it available at such location as Collateral
Agent reasonably designates. Collateral Agent may enter premises where the
Collateral is located, take and maintain possession of any part of the
Collateral, and pay, purchase, contest, or compromise any Lien which appears to
be prior or superior to its security interest and pay all expenses incurred.
Borrower grants Collateral Agent a license to enter and occupy any of its
premises, without charge by Borrower, to exercise any of Collateral Agent’s
rights or remedies;

 

(iii)ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
and/or advertise for sale, any of the Collateral. Collateral Agent is hereby
granted a non-exclusive, royalty-free license or other right to use, without
charge, Borrower’s and each of its Subsidiaries’ labels, patents, copyrights,
mask works, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any

 

similar property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with
Collateral Agent’s exercise of its rights under this Section 9.1, Borrower’s and
each of its Subsidiaries’ rights under all licenses and all franchise agreements
inure to Collateral Agent, for the benefit of the Lenders;

 

(iv)place a “hold” on any Collateral Account maintained with Collateral Agent or
any Lender or otherwise in respect of which a Control Agreement has been
delivered in favor of Collateral Agent (for the ratable benefit of the Secured
Parties) and/or deliver a notice of exclusive control, any entitlement order, or
other directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral;

 

(v)demand and receive possession of Borrower’s Books;

 

(vi)appoint a receiver to seize, manage and realize any of the Collateral, and
such receiver shall have any right and authority as any competent court will
grant or authorize in accordance with any applicable law, including any power or
authority to manage the business of Borrower or any of its Subsidiaries; and
(vii) subject to clauses 9.1(a) and (b), exercise all rights and remedies
available to Collateral Agent and each Lender under the Loan Documents or at law
or equity, including all remedies provided under the Code (including disposal of
the Collateral pursuant to the terms thereof).

 

Notwithstanding any provision of this Section 9.1 to the contrary, upon the
occurrence of any Event of Default, Collateral Agent shall have the right to
exercise any and all remedies referenced in this Section 9.1 without the written
consent of Required Lenders following the occurrence of an Exigent Circumstance.

 

9.2Power of Attorney. Borrower hereby irrevocably appoints Collateral Agent as
its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower’s or any of its
Subsidiaries’ name on any checks or other forms of payment or security; (b) sign
Borrower’s or any of its Subsidiaries’ name on any invoice or bill of lading for
any Account or drafts against Account Debtors; (c) settle and adjust disputes
and claims about the Accounts of Borrower directly with the applicable Account
Debtors, for amounts and on terms Collateral Agent determines reasonable; (d)
make, settle, and adjust all claims under Borrower’s insurance policies; (e)
pay, contest or settle any Lien, charge, encumbrance, security interest, and
adverse claim in or to the Collateral, or any judgment based thereon, or
otherwise take any action to terminate or discharge the same; and (f) transfer
the Collateral into the name of Collateral Agent or a third party as the Code or
any applicable law permits. Borrower hereby appoints Collateral Agent as its
lawful attorney-in-fact to sign Borrower’s or any of its Subsidiaries’ name on
any documents necessary to perfect or continue the perfection of Collateral
Agent’s security interest in the Collateral regardless of whether an Event of
Default has occurred until all Obligations (other than inchoate indemnity
obligations) have been satisfied in full and Collateral Agent and the Lenders
are under no further obligation to make extend Term Loans hereunder. Collateral
Agent’s foregoing appointment as Borrower’s or any of its Subsidiaries’ attorney
in fact, and all of Collateral Agent’s rights and powers, coupled with an
interest, are irrevocable until all Obligations (other than inchoate indemnity
obligations) have been fully repaid and performed and Collateral Agent’s and the
Lenders’ obligation to provide Term Loans terminates.

 

9.3Protective Payments. If Borrower or any of its Subsidiaries fail to obtain
the insurance called for by Section 6.5 or fails to pay any premium thereon or
fails to pay any other amount which Borrower or any of its Subsidiaries is
obligated to pay under this Agreement or any other Loan Document, Collateral
Agent may obtain such insurance or make such payment, and all amounts so paid by
Collateral Agent are Lenders’ Expenses and immediately due and payable, bearing
interest at the Default Rate, and secured by the Collateral. Collateral Agent
will make reasonable efforts to provide Borrower with notice

 

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of Collateral Agent obtaining such insurance or making such payment at the time
it is obtained or paid or within a reasonable time thereafter. No such payments
by Collateral Agent are deemed an agreement to make similar payments in the
future or Collateral Agent’s waiver of any Event of Default.

 

9.4Application of Payments and Proceeds. Notwithstanding anything to the
contrary contained in this Agreement, upon the occurrence and during the
continuance of an Event of Default, (a) Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times thereafter
received by Collateral Agent from or on behalf of Borrower or any of its
Subsidiaries of all or any part of the Obligations, and, as between Borrower on
the one hand and Collateral Agent and Lenders on the other, Collateral Agent
shall have the continuing and exclusive right to apply and to reapply any and
all payments received against the Obligations in such manner as Collateral Agent
may deem advisable notwithstanding any previous application by Collateral Agent,
and (b) the proceeds of any sale of, or other realization upon all or any part
of the Collateral shall be applied: first, to the Lenders’ Expenses (in
proportion to such costs and expenses theretofore incurred by each); second, to
the Lenders ratably, in an amount up to the sum of all accrued and unpaid
interest on the Obligations (including any interest which, but for the
provisions of the United States Bankruptcy Code, would have accrued on such
amounts); third, to the Lenders ratably, in an amount up to the outstanding
principal amount of the Obligations outstanding; and fourth, the Collateral
Agent and Lenders ratably (in proportion to all remaining Obligations owing to
each), in an amount of up to the sum of all other indebtedness or obligations of
Borrower owing to Collateral Agent or any Lender under the Loan Documents. Any
balance remaining shall be delivered to Borrower or to whoever may be lawfully
entitled to receive such balance or as a court of competent jurisdiction may
direct. In carrying out the foregoing, (x) amounts received shall be applied in
the numerical order provided until exhausted prior to the application to the
next succeeding category, and (y) each of the Persons entitled to receive a
payment in any particular category shall receive an amount equal to its pro rata
share of amounts available to be applied pursuant thereto for such category. Any
reference in this Agreement to an allocation between or sharing by the Lenders
of any right, interest or obligation “ratably,” “proportionally” or in similar
terms shall refer to the Lenders’ Pro Rata Shares unless expressly provided
otherwise. Collateral Agent, or if applicable, each Lender, shall promptly remit
to the other Lenders such sums as may be necessary to ensure the ratable
repayment of each Lender’s Pro Rata Share of any Term Loan and the ratable
distribution of interest, fees and reimbursements paid or made by Borrower.
Notwithstanding the foregoing, a Lender receiving a scheduled payment shall not
be responsible for determining whether the other Lenders also received their
scheduled payment on such date; provided, however, if it is later determined
that a Lender received more than its Pro Rata Share of scheduled payments made
on any date or dates, then such Lender shall remit to Collateral Agent or other
the Lenders such sums as may be necessary to ensure the ratable payment of such
scheduled payments, as instructed by Collateral Agent. If any payment or
distribution of any kind or character, whether in cash, properties or
securities, shall be received by a Lender in excess of its Pro Rata Share, then
the portion of such payment or distribution in excess of such Lender’s Pro Rata
Share shall be received and held by such Lender in trust for and shall be
promptly paid over to the other Lenders (in accordance with their respective Pro
Rata Shares) for application to the payments of amounts due on such other
Lenders’ claims. To the extent any payment for the account of Borrower is
required to be returned as a voidable transfer or otherwise, the Lenders shall
contribute to one another as is necessary to ensure that such return of payment
is on a pro rata basis. If any Lender shall obtain possession of any Collateral,
it shall hold such Collateral for itself and as agent and bailee for the Secured
Parties for purposes of perfecting Collateral Agent’s security interest therein
(held for the ratable benefit of the Secured Parties).

 

9.5Liability for Collateral. So long as Collateral Agent and the Lenders comply
with reasonable banking practices regarding the safekeeping of the Collateral in
the possession or under the control of Collateral Agent and the Lenders,
Collateral Agent and the Lenders shall not be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss,
damage or destruction of the Collateral.

 

9.6No Waiver; Remedies Cumulative. Failure by Collateral Agent or any Lender, at
any time or times, to require strict performance by Borrower of any provision of
this Agreement or by Borrower or any other Loan Document shall not waive,
affect, or diminish any right of Collateral Agent or any Lender thereafter to
demand strict performance and compliance herewith or therewith. No waiver
hereunder shall be effective unless signed by Collateral Agent and the Required
Lenders and then is only effective for the specific instance and purpose for
which it is given. The rights and remedies of Collateral Agent and the Lenders
under this Agreement and the other Loan Documents are cumulative. Collateral
Agent and the Lenders have all rights and remedies provided under the Code, any
applicable law, by law, or in equity. The exercise by Collateral Agent or any
Lender of one right or remedy is not an election, and Collateral Agent’s or any
Lender’s waiver of any Event of Default is not a continuing waiver. Collateral
Agent’s or any Lender’s delay in exercising any remedy is not a waiver,
election, or acquiescence.

 

9.7Demand Waiver. Borrower waives, to the fullest extent permitted by law,
demand, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees held by Collateral Agent or any Lender on which Borrower or any
Subsidiary is liable.

 

10.

NOTICES

Other than as specifically provided herein, all notices, consents, requests,
approvals, demands, or other communication (collectively, “Communications”) by
any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by facsimile
transmission; (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid; or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address, facsimile number, or email address indicated below. Any of
Collateral Agent, Lender or Borrower may change its mailing address or facsimile
number by giving the other party written notice thereof in accordance with the
terms of this Section 10.

 

If to Borrower:SCPHARMACEUTICALS  INC.

131 Hartwell Avenue, Suite 215

Lexington, MA 02421 Attn: Troy Ignelzi

Email: tignelzi@scpharma.com

 

 

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

100 Northern Avenue

Boston, MA 02210

Attn: Mark D. Smith

Fax: (617) 801-8825

Email: marksmith@goodwinlaw.com

 

 

If to Collateral Agent:SOLAR CAPITAL LTD.

 

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500 Park Avenue, 3rd Floor New York, NY 10022 Attention: Anthony Storino Fax:
(212) 993-1698

Email: storino@Solarltd.com

 

 

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

505 Montgomery Street, Suite 2000

San Francisco, CA 94111

Attention: Haim Zaltzman

Facsimile: (415) 395-8095

Email: haim.zaltzman@lw.com

 

 

with a copy (which shall not constitute notice) to:LATHAM & WATKINS LLP

100 Northern Avenue

Boston, MA 02210

Attn: Mark D. Smith

Fax: (617) 801-8825

Email: marksmith@goodwinlaw.com

 

 

with a copy to:SILICON VALLEY BANK, as lender

275 Grove Street, Suite 2-200

Newton, Massachusetts 02466 Attn: Kate Walsh

Fax: (617) 527-0177

Email: KWalsh@svb.com

 

11.

NOTICES

 

12.

CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

12.1Waiver of Jury Trial. EACH OF BORROWER, COLLATERAL AGENT AND LENDERS
UNCONDITIONALLY WAIVES ANY AND ALL RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS AMONGBORROWER,
COLLATERAL AGENT AND/OR LENDERS RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING
ESTABLISHED AMONG BORROWER, COLLATERAL AGENT AND/OR LENDERS. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER
LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

 

12.2Governing Law and Jurisdiction. THIS AGREEMENT, THE OTHER LOAN DOCUMENTS
(EXCLUDING THOSE LOAN DOCUMENTS THAT BY THEIR OWN TERMS ARE EXPRESSLY GOVERNED
BY THE LAWS OF ANOTHER JURISDICTION) AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THAT WOULD RESULT IN THE
APPLICATION OF ANY LAW OTHER THAN THE LAW OF SUCH STATE), INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
COLLATERAL, PROVIDED, HOWEVER, THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN
NEW YORK SHALL GOVERN IN REGARD TO THE VALIDITY, PERFECTION OR EFFECT OF
PERFECTION OF ANY LIEN OR IN REGARD TO PROCEDURAL MATTERS AFFECTING ENFORCEMENT
OF ANY LIENS IN COLLATERAL, SUCH LAWS OF SUCH OTHER JURISDICTIONS SHALL CONTINUE
TO APPLY TO THAT EXTENT.

 

12.3Submission to Jurisdiction. Any legal action or proceeding with respect to
the Loan Documents shall be brought exclusively in the courts of the State of
New York located in the City of New York, Borough of Manhattan, or of the United
States of America for the Southern District of New York and, by execution and
delivery of this Agreement, Borrower hereby accepts for itself and in respect of
its Property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Notwithstanding the foregoing, Collateral Agent and Lenders shall have
the right to bring any action or proceeding against Borrower (or any property of
Borrower) in the court of any other jurisdiction Collateral Agent or Lenders
deem necessary or appropriate in order to realize on the Collateral or other
security for the Obligations. The parties hereto hereby irrevocably waive any
objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, that any of them may now or hereafter have to
the bringing of any such action or proceeding in such jurisdictions.

 

12.4Service of Process. Borrower irrevocably waives personal service of any and
all legal process, summons, notices and other documents and other service of
process of any kind and consents to such service in any suit, action or
proceeding brought in the United States of America with respect to or otherwise
arising out of or in connection with any Loan Document by any means permitted by
applicable requirements of law, including by the mailing thereof (by registered
or certified mail, postage prepaid) to the address of Borrower specified herein
(and shall be effective when such mailing shall be effective, as provided
therein). Borrower agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

 

12.5Non-exclusive Jurisdiction. Nothing contained in this Article 11 shall
affect the right of Collateral Agent or Lenders to serve process in any other
manner permitted by applicable requirements of law or commence legal proceedings
or otherwise proceed against Borrower in any other jurisdiction.

 

13.

GENERAL PROVISIONS

 

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13.1Successors and Assigns. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not transfer,
pledge or assign this Agreement or any rights or obligations under it without
Collateral Agent’s prior written consent (which may be granted or withheld in
Collateral Agent’s discretion, subject to Section 12.5). The Lenders have the
right, without the consent of or notice to Borrower, to sell, transfer, assign,
pledge, negotiate, or grant participation in (any such sale, transfer,
assignment, negotiation, or grant of a participation, a “Lender Transfer”) all
or any part of, or any interest in, the Lenders’ obligations, rights, and
benefits under this Agreement and the other Loan Documents. Borrower and
Collateral Agent shall be entitled to continue to deal solely and directly with
such Lender in connection with the interests so assigned until Collateral Agent
shall have received and accepted an effective assignment agreement in form
satisfactory to Collateral Agent executed, delivered and fully completed by the
applicable parties thereto, and shall have received such other information
regarding such assignee as Collateral Agent reasonably shall require.

 

13.2Indemnification. Borrower agrees to indemnify, defend and hold each Secured
Party and their respective directors, officers, employees, consultants, agents,
attorneys, or any other Person affiliated with or representing such Secured
Party (each, an “Indemnified Person”) harmless against: (a) all obligations,
demands, claims, and liabilities (collectively, “Claims”) asserted by any other
party in connection with; related to; following; or arising from, out of or
under, the transactions contemplated by the Loan Documents; and (b) all losses
and Lenders’ Expenses incurred, or paid by Indemnified Person in connection
with; related to; following; or arising from, out of or under, the transactions
contemplated by the Loan Documents (including reasonable attorneys’ fees and
expenses), except, in each case, for Claims and/or losses directly caused by
such Indemnified Person’s gross negligence or willful misconduct. Borrower
hereby further agrees to indemnify, defend and hold each Indemnified Person
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including the fees and disbursements of
counsel for such Indemnified Person) in connection with any investigative,
response, remedial, administrative or judicial matter or proceeding, whether or
not such Indemnified Person shall be designated a party thereto and including
any such proceeding initiated by or on behalf of Borrower, and the reasonable
expenses of investigation by engineers, environmental consultants and similar
technical personnel and any commission, fee or compensation claimed by any
broker (other than any broker retained by Collateral Agent or Lenders) asserting
any right to payment for the transactions contemplated hereby which may be
imposed on, incurred by or asserted against such Indemnified Person as a result
of or in connection with the transactions contemplated hereby and the use or
intended use of the proceeds of the loan proceeds except for liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements directly caused by such Indemnified Person’s
gross negligence or willful misconduct.

 

13.3Severability of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

 

13.4Correction of Loan Documents. Collateral Agent may correct patent errors and
fill in any blanks in this Agreement and the other Loan Documents consistent
with the agreement of the parties.

 

13.5Amendments in Writing; Integration. (a) No amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan
Document, no approval or consent thereunder, or any consent to any departure by
Borrower or any of its Subsidiaries therefrom, shall in any event be effective
unless the same shall be in writing and signed by Borrower, Collateral Agent and
the Required Lenders provided that:

 

(i)no such amendment, waiver or other modification that would have the effect of
increasing or reducing a Lender’s Term Loan Commitment or Commitment Percentage
shall be effective as to such Lender without such Lender’s written consent;

 

(ii)no such amendment, waiver or modification that would affect the rights and
duties of Collateral Agent shall be effective without Collateral Agent’s written
consent or signature; and

 

(iii)no such amendment, waiver or other modification shall, unless signed by all
the Lenders directly affected thereby, (A) reduce the principal of, rate of
interest on or any fees with respect to any Term Loan or forgive any principal,
interest (other than default interest) or fees (other than late charges) with
respect to any Term Loan (B) postpone the date fixed for, or waive, any payment
of principal of any Term Loan or of interest on any Term Loan (other than
default interest) or any fees provided for hereunder (other than late charges or
for any termination of any commitment); (C) change the definition of the term
“Required Lenders” or the percentage of Lenders which shall be required for the
Lenders to take any action hereunder; (D) release all or substantially all of
any material portion of the Collateral, authorize Borrower to sell or otherwise
dispose of all or substantially all or any material portion of the Collateral or
release any Guarantor of all or any portion of the Obligations or its Guaranty
obligations with respect thereto, except, in each case with respect to this
clause (D), as otherwise may be expressly permitted under this Agreement or the
other Loan Documents (including in connection with any disposition permitted
hereunder); (E) amend, waive or otherwise modify this Section 12.5 or the
definitions of the terms used in this Section 12.5 insofar as the definitions
affect the substance of this Section 12.5; (F) consent to the assignment,
delegation or other transfer by Borrower of any of its rights and obligations
under any Loan Document or release Borrower of its payment obligations under any
Loan Document, except, in each case with respect to this clause (F), pursuant to
a merger or consolidation permitted pursuant to this Agreement; (G) amend any of
the provisions of Section 9.4 or amend any of the definitions of Pro Rata Share,
Term Loan Commitment, Commitment Percentage or that provide for the Lenders to
receive their Pro Rata Shares of any fees, payments, setoffs or proceeds of
Collateral hereunder; (H) subordinate the Liens granted in favor of Collateral
Agent securing the Obligations; or (I) amend any of the provisions of Section
12.9. It is hereby understood and agreed that all Lenders shall be deemed
directly affected by an amendment, waiver or other modification of the type
described in the preceding clauses (C), (D), (E), (F), (G) and (H) of the
immediately preceding sentence.

 

(b)Other than as expressly provided for in Section 12.5(a)(i)-(iii), Collateral
Agent may, at its discretion, or if requested by the Required Lenders, from time
to time designate covenants in this Agreement less restrictive by notification
to a representative of Borrower.

 

(c)This Agreement and the Loan Documents represent the entire agreement about
this subject matter and supersede prior negotiations or agreements with respect
to such subject matter. All prior agreements, understandings, representations,
warranties, and negotiations between the parties about the subject matter of
this Agreement and the Loan Documents merge into this Agreement and the Loan
Documents.

 

13.6Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Agreement.
Delivery of an executed counterpart of a signature page of this Agreement by
facsimile, portable document format (.pdf) or other electronic transmission will
be as effective as delivery of a manually executed counterpart hereof.

 

13.7Survival. All covenants, representations and warranties made in this
Agreement continue in full force and effect until this Agreement has terminated
pursuant to its terms and all Obligations (other than inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the
termination of this Agreement) have been satisfied. The obligation of Borrower
in Section 12.2 to indemnify each Lender and Collateral Agent, as well as the
withholding provision in Section 2.5 hereof and the confidentiality provisions
in Section 12.8 below, shall survive until the statute of limitations with
respect to such claim or cause of action shall have run.

 

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

 

 

13.8Confidentiality. In handling any confidential information of Borrower, each
of the Lenders and Collateral Agent shall exercise the same degree of care that
it exercises for their own proprietary information, but disclosure of
information may be made: (a) subject to the terms and conditions of this
Agreement, to the Lenders’ and Collateral Agent’s Subsidiaries or Affiliates, or
in connection with a Lender’s own financing or securitization transactions; (b)
to prospective transferees (other than those identified in (a) above) or
purchasers of any interest in the Term Loans (provided, however, the Lenders and
Collateral Agent shall, except upon the occurrence and during the continuance of
an Event of Default, obtain such prospective transferee’s or purchaser’s
agreement to the terms of this provision or to similar confidentiality terms);
(c) as required by law, rule, regulation, regulatory or self-regulatory
authority, subpoena, or other order; (d) to Lenders’ or Collateral Agent’s
regulators or as otherwise required in connection with an examination or audit;
(e) as Collateral Agent reasonably considers appropriate in exercising remedies
under the Loan Documents; and (f) to third party service providers of the
Lenders and/or Collateral Agent so long as such service providers have executed
a confidentiality agreement or have agreed to similar confidentiality terms with
the Lenders and/or Collateral Agent, as applicable, with terms no less
restrictive than those contained herein. Confidential information does not
include information that either: (i) is in the public domain or in the Lenders’
and/or Collateral Agent’s possession when disclosed to the Lenders and/or
Collateral Agent, or becomes part of the public domain after disclosure to the
Lenders and/or Collateral Agent through no breach of this provision by the
Lenders or the Collateral Agent; or (ii) is disclosed to the Lenders and/or
Collateral Agent by a third party, if the Lenders and/or Collateral Agent does
not know that the third party is prohibited from disclosing the information.
Collateral Agent and the Lenders may use confidential information for any
purpose, including, without limitation, for the development of client databases,
reporting purposes, and market analysis. The provisions of the immediately
preceding sentence shall survive the termination of this Agreement. The
agreements provided under this Section 12.9 supersede all prior agreements,
understanding, representations, warranties, and negotiations between the parties
about the subject matter of this Section 12.8.

 

13.9Right of Set Off. Borrower hereby grants to Collateral Agent and to each
Lender, a Lien, security interest and right of set off as security for all
Obligations to Secured Parties hereunder, whether now existing or hereafter
arising upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of any Secured
Party or any entity under the control of such Security Party (including a
Collateral Agent Affiliate) or in transit to any of them. At any time after the
occurrence and during the continuance of an Event of Default, without demand or
notice, any Secured Party may set off the same or any part thereof and apply the
same to any liability or obligation of Borrower even though unmatured and
regardless of the adequacy of any other collateral securing the Obligations. ANY
AND ALL RIGHTS TO REQUIRE COLLATERAL AGENT TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY
BORROWER.

 

13.10Cooperation of Borrower. If necessary, Borrower agrees to (i) execute any
documents reasonably required to effectuate and acknowledge each assignment of a
Term Loan Commitment (or portion thereof) or Term Loan (or portion thereof) to
an assignee in accordance with Section 12.1, (ii) make Borrower’s management
personnel available to meet with Collateral Agent and prospective participants
and assignees of Term Loan Commitments, the Term Loans or portions thereof
(which meetings shall be conducted no more often than twice every twelve months
unless an Event of Default has occurred and is continuing), and (iii) assist
Collateral Agent and the Lenders in the preparation of information relating to
the financial affairs of Borrower as any prospective participant or assignee of
a Term Loan Commitment (or portions thereof) or Term Loan (or portions thereof)
reasonably may request. Subject to the provisions of Section 12.8, Borrower
authorizes each Lender to disclose to any prospective participant or assignee of
a Term Loan Commitment (or portions thereof), any and all information in such
Lender’s possession concerning Borrower and its financial affairs which has been
delivered to such Lender by or on behalf of Borrower pursuant to this Agreement,
or which has been delivered to such Lender by or on behalf of Borrower in
connection with such Lender’s credit evaluation of Borrower prior to entering
into this Agreement.

 

13.11Public Announcement. Borrower hereby agrees that Collateral Agent and each
Lender may make a public announcement of the transactions contemplated by this
Agreement, and may publicize the same in marketing materials, newspapers and
other publications, and otherwise, and in connection therewith may use
Borrower’s name, tradenames and logos. Collateral Agent and the Lenders may also
make disclosures to the Securities and Exchange Commission or other governmental
agency and any other public disclosure with investors, other governmental
agencies or other related persons.

 

13.12Collateral Agent and Lender Agreement. Collateral Agent and the Lenders
hereby agree to the terms and conditions set forth on Exhibit B attached hereto.
Borrower acknowledges and agrees to the terms and conditions set forth on
Exhibit B attached hereto.

 

13.13Time of Essence. Time is of the essence for the performance of Obligations
under this Agreement.

 

13.14Termination Prior to Maturity Date; Survival. All covenants,
representations and warranties made in this Agreement continue in full force
until this Agreement has terminated pursuant to its terms and all Obligations
have been satisfied. So long as Borrower has satisfied the Obligations (other
than inchoate indemnity obligations and any other obligations which, by their
terms, are to survive the termination of this Agreement and for which no claim
has been made) in accordance with the terms of this Agreement, this Agreement
may be terminated prior to the Maturity Date by Borrower, effective five (5)
Business Days after written notice of termination is given to the Collateral
Agent and the Lenders.

 

[Balance of Page Intentionally Left Blank]

 

 

 

 

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

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Effective Date.

 

BORROWER:

 

SCPHARMACEUTICALS INC.

 

 

 

By

 

/s/ John Tucker

Name:

 

John Tucker

Title:

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Loan and Security Agreement (scPharma/Solar)]

 

 

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COLLATERAL AGENT AND LENDER:

 

SOLAR CAPITAL LTD.

 

 

 

By

 

/s/ Anthony J. Storino

Name:

 

Anthony J. Storino

Title:

 

Authorized Signatory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Loan and Security Agreement (scPharma/Solar)]

 

 

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LENDER:

 

SILICON VALLEY BANK

 

 

 

By

 

/s/ Kate Walsh

Name:

 

Kate Walsh

Title:

 

Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Loan and Security Agreement (scPharma/Solar)]

 

 

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SCHEDULE 1.1

Lenders and Commitments

 

 

Lender

Term Loan

Commitment

Commitment

Percentage

Solar Capital Ltd.

5,000,000

50.00%

Silicon Valley Bank

5,000,000

50.00%

TOTAL

$10,000,000

100.00%

 

 

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EXHIBIT A

Description of Collateral

 

The Collateral consists of all of Borrower’s right, title and interest in and to
the following property:

 

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as noted below), commercial
tort claims, documents, instruments (including any promissory notes), chattel
paper (whether tangible or electronic), cash, deposit accounts and other
Collateral Accounts, all certificates of deposit, fixtures, letters of credit
rights (whether or not the letter of credit is evidenced by a writing),
securities, and all other investment property, supporting obligations, and
financial assets, whether now owned or hereafter acquired, wherever located; and

 

All Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

 

Notwithstanding the foregoing, the Collateral does not include any Intellectual
Property; provided, however, the Collateral shall include all Accounts and all
proceeds of Intellectual Property. If a judicial authority (including a U.S.
Bankruptcy Court) would hold that a security interest in the underlying
Intellectual Property is necessary to have a security interest in such Accounts
and such property that are proceeds of Intellectual Property, then the
Collateral shall automatically, and effective as of the Effective Date, include
the Intellectual Property to the extent necessary to permit perfection of
Collateral Agent’s security interest in such Accounts and such other property of
Borrower that are proceeds of the Intellectual Property.

 

 

 

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EXHIBIT B

Collateral Agent and Lender Terms

1.Appointment of Collateral Agent.

 

(a)Each Lender hereby appoints Solar (together with any successor Collateral
Agent pursuant to Section 1.7 of this Exhibit B) as Collateral Agent under the
Loan Documents and authorizes Collateral Agent to (i) execute and deliver the
Loan Documents and accept delivery thereof on its behalf from Borrower, (ii)
take such action on its behalf and to exercise all rights, powers and remedies
and perform the duties as are expressly delegated to Collateral Agent under such
Loan Documents and (iii) exercise such powers as are reasonably incidental
thereto.

 

(b)Without limiting the generality of clause (a) above, Collateral Agent shall
have the sole and exclusive right and authority (to the exclusion of the
Lenders), and is hereby authorized, to (i) act as the disbursing and collecting
agent for the Lenders with respect to all payments and collections arising in
connection with the Loan Documents (including in any other bankruptcy,
insolvency or similar proceeding), and each Person making any payment in
connection with any Loan Document to any Lender is hereby authorized to make
such payment to Collateral Agent except to the extent the Loan Documents
specifically require a payment to be made directly to a Lender, (ii) file and
prove claims and file other documents necessary or desirable to allow the claims
of Collateral Agent and Lenders with respect to any Obligation in any
bankruptcy, insolvency or similar proceeding (but not to vote, consent or
otherwise act on behalf of such Lender), (iii) act as collateral agent for
Collateral Agent and each Lender for purposes of the perfection of all Liens
created by the Loan Documents and all other purposes stated therein, (iv)
manage, supervise and otherwise deal with the Collateral, (v) take such other
action as is necessary or desirable to maintain the perfection and priority of
the Liens created or purported to be created by the Loan Documents, (vi) except
as may be otherwise specified in any Loan Document, and subject to clause (d)
below, exercise all remedies given to Collateral Agent and the other Lenders
with respect to the Borrower and/or the Collateral, whether under the Loan
Documents, applicable Requirements of Law or otherwise and (vii) execute any
amendment, consent or waiver under the Loan Documents on behalf of any Lender
that has consented in writing to such amendment, consent or waiver all of the
foregoing actions to be taken in Collateral Agent’s reasonable business
discretion; provided, however, that Collateral Agent hereby appoints, authorizes
and directs each Lender to act as collateral sub-agent for Collateral Agent and
the Lenders for purposes of the perfection of all Liens with respect to the
Collateral, including any Deposit Account maintained by Borrower with, and cash
and Cash Equivalents held by, such Lender, and may further authorize and direct
the Lenders to take further actions as collateral sub-agents for purposes of
enforcing such Liens or otherwise to transfer the Collateral subject thereto to
Collateral Agent, and each Lender hereby agrees to take such further actions to
the extent, and only to the extent, so authorized and directed. Collateral Agent
may, upon any term or condition it specifies, delegate or exercise any of its
rights, powers and remedies under, and delegate or perform any of its duties or
any other action with respect to, any Loan Document by or through any trustee,
co-agent, employee, attorney-in-fact and any other Person (including any
Lender).

 

(c)Under the Loan Documents, Collateral Agent (i) is acting solely on behalf of
the Lenders, with duties that are entirely administrative in nature,
notwithstanding the use of the defined term “Collateral Agent”, the terms
“agent”, “Collateral Agent” and “collateral agent” and similar terms in any Loan
Document to refer to Collateral Agent, which terms are used for title purposes
only, (ii) is not assuming any obligation under any Loan Document other than as
expressly set forth therein or any role as agent, fiduciary or trustee of or for
any Lender or any other Person and (iii) shall have no implied functions,
responsibilities, duties, obligations or other liabilities under any Loan
Document, and each Lender, by accepting the benefits of the Loan Documents,
hereby waives and agrees not to assert any claim against Collateral Agent based
on the roles, duties and legal relationships expressly disclaimed in clauses (i)
through (iii) above. Except as expressly set forth in the Loan Documents,
Collateral Agent shall not have any duty to disclose, and shall not be liable
for failure to disclose, any information relating to Borrower or any of its
Subsidiaries that is communicated to or obtained by Solar or any of its
Affiliates in any capacity.

 

(d)Upon the occurrence of an Event of Default, Collateral Agent, at the request
of Lenders, shall take such actions and only such actions as Lenders mutually
agree to take to enforce Collateral Agent’s and their rights and remedies under
the Loan Agreement, provided, that, notwithstanding anything to the contrary
contained in the foregoing or anything else in this Agreement, unless Collateral
Agent shall have received an objection or contrary instructions from the other
Lender, Collateral Agent may take such actions (not to include acceleration of
the Loan Agreement, the institution of foreclosure proceedings or secured
creditors’ sales or the giving of notice to any account debtors) as Collateral
Agent shall deem reasonably necessary to preserve and protect the rights of
Collateral Agent and Lenders under the Loan Agreement and the other Loan
Documents and with respect to the Collateral, including without limitation
satisfaction of other security interests, liens or encumbrances on the
Collateral not permitted under the Loan Documents, payment of taxes on behalf of
Borrower, payments to landlords, warehouseman, bailees and other persons in
possession of the Collateral and other actions to protect and safeguard the
Collateral, and actions with respect to insurance claims for casualty events
affecting Borrower and/or the Collateral. If, after consultation, Lenders cannot
mutually agree on what action to take or direct Collateral Agent to take, then
the other Lender shall have the right upon prior written notice to the other to
cause the acceleration of the Loan Agreement on behalf of both Lenders. Upon
such acceleration, the Lenders shall mutually agree as to what Enforcement
Action to take; provided, however, that if after consultation, Lenders cannot
mutually agree on what action to take, then the Lender wishing to take the
stronger Enforcement Action (the “Enforcing Lender”) shall have the right to
determine and shall control the timing, order and type of Enforcement Actions
which will be taken and all other matters in connection with any such
Enforcement Actions. To facilitate these rights to control Enforcement Actions,
upon either Lender becoming the Enforcing Lender, if the Enforcing Lender is not
already the Collateral Agent, then automatically and without the necessity of
any further action being taken by any party, (x) the original Collateral Agent
shall be deemed to have resigned as Collateral Agent and (y) the Lenders shall
be deemed to have unanimously appointed the Enforcing Lender as successor
Collateral Agent under this Agreement and the Loan Documents (and the Enforcing
Lender shall be deemed to have accepted such appointment) in accordance with
Section 7 of this Agreement, provided, that, once the Enforcing Lender shall
have been appointed as the Collateral Agent under the provisions of this
sentence, the Enforcing Lender as such successor Collateral Agent shall no
longer be bound by the restrictions of the first sentence of this paragraph, but
instead shall  have the right to determine and control all Enforcement Actions
as provided for in the immediately preceding sentence (subject to the provisions
of the following sentence). In taking such Enforcement Actions pursuant to the
previous sentence, the Enforcing Lender as such successor Collateral Agent shall
act reasonably and in good faith and shall consult with and keep the other
Lender informed thereof at reasonable intervals; provided, however, that
notwithstanding any such consultations and provision of information to the other
Lender, the Enforcing Lender as such successor Collateral Agent shall retain the
right to make all determinations in the event of disagreements between the
Enforcing Lender and the other Lender. In all cases with respect to Enforcement
Actions, the Enforcing Lender shall have the right to act both on its own behalf
and as agent for the other Lender with respect thereto. In addition, the other
Lender shall take such actions and execute such documents and instruments as the
Enforcing Lender may reasonably request in connection with and to facilitate any
such Enforcement Actions. As used herein, “Enforcement Action” means, with
respect to any Lender and with respect to any Claim of such Lender or any item
of Collateral in which such Lender has or claims a security interest, lien or
right of offset, any action, whether judicial or nonjudicial, to repossess,
collect, accelerate, offset, recoup, give notification to third parties with
respect to, sell, dispose of, foreclose upon, give notice of sale, disposition,
or foreclosure with respect to, or obtain equitable or injunctive relief with
respect to, such Claim or Collateral. The filing by any Lender of, or the
joining in the filing by any Lender of, an involuntary bankruptcy or insolvency
proceeding against Borrower also is an Enforcement Action. Notwithstanding
anything herein to the contrary, this clause (d) only applies and only grants
rights to Bank and Solar.

 

2.Binding Effect; Use of Discretion; E-Systems.

 

(a)Each Lender, by accepting the benefits of the Loan Documents, agrees that (i)
any action taken by Collateral Agent or Required

 

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Lenders (or, if expressly required in any Loan Document, a greater proportion of
the Lenders) in accordance with the provisions of the Loan Documents, (ii) any
action taken by Collateral Agent in reliance upon the instructions of Required
Lenders (or, where so required, such greater proportion) and (iii) the exercise
by Collateral Agent or Required Lenders (or, where so required, such greater
proportion) of the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and binding
upon all of Lenders.

 

(b)If Collateral Agent shall request instructions from Required Lenders or all
affected Lenders with respect to any act or action (including failure to act) in
connection with any Loan Document, then Collateral Agent shall be entitled to
refrain from such act or taking such action unless and until Collateral Agent
shall have received instructions from Required Lenders or all affected Lenders,
as the case may be, and Collateral Agent shall not incur liability to any Person
by reason of so refraining. Collateral Agent shall be fully justified in failing
or refusing to take any action under any Loan Document (i) if such action would,
in the opinion of Collateral Agent, be contrary to any Requirement of Law or any
Loan Document, (ii) if such action would, in the opinion of Collateral Agent,
expose Collateral Agent to any potential liability under any Requirement of Law
or (iii) if Collateral Agent shall not first be indemnified to its satisfaction
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Without limiting the foregoing,
no Lender shall have any right of action whatsoever against Collateral Agent as
a result of Collateral Agent acting or refraining from acting under any Loan
Document in accordance with the instructions of Required Lenders or all affected
Lenders, as applicable.

 

(c)Collateral Agent is hereby authorized by Borrower and each Lender to
establish procedures (and to amend such procedures from time to time) to
facilitate administration and servicing of the Term Loans and other matters
incidental thereto. Without limiting the generality of the foregoing, Collateral
Agent is hereby authorized to establish procedures to make available or deliver,
or to accept, notices, documents (including, without limitation, borrowing base
certificates) and similar items on, by posting to or submitting and/or
completion, on E-Systems. Borrower and each Lender acknowledges and agrees that
the use of transmissions via an E-System or electronic mail is not necessarily
secure and that there are risks associated with such use, including risks of
interception, disclosure and abuse, and Borrower and each Lender assumes and
accepts such  risks by hereby authorizing the transmission via E-Systems or
electronic mail. Each “e-signature” on any such posting shall be deemed
sufficient to satisfy any requirement for a “signature”, and each such posting
shall be deemed sufficient to satisfy any requirement for a “writing”, in each
case including pursuant to any Loan Document, any applicable provision of any
Code, the federal Uniform Electronic Transactions Act, the Electronic Signatures
in Global and National Commerce Act and any substantive or procedural
Requirement of Law governing such subject matter. All uses of an E-System shall
be governed by and subject to, in addition to this Section, the separate terms,
conditions and privacy policy posted or referenced in such E-System (or such
terms, conditions and privacy policy as may be updated from time to time,
including on such E-System) and related contractual obligations executed by
Collateral Agent, Borrower and/or Lenders in connection with the use of such
E-System. ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONS SHALL BE PROVIDED “AS IS”
AND “AS AVAILABLE”. NO REPRESENTATION OR WARRANTY OF ANY KIND IS MADE BY AGENT,
ANY LENDER OR ANY OF THEIR RELATED PERSONS IN CONNECTION WITH ANY E-SYSTEMS.

 

3.Collateral Agent’s Reliance, Etc. Collateral Agent may, without incurring any
liability hereunder, (a) consult with any of its Related Persons and, whether or
not selected by it, any other advisors, accountants and other experts (including
advisors to, and accountants and experts engaged by, Borrower) and (b) rely and
act upon any document and information (including those transmitted by electronic
transmission) and any telephone message or conversation, in each case believed
by it to be genuine and transmitted, signed or otherwise authenticated by the  
appropriate parties. None of Collateral Agent and its Related Persons shall be
liable for any action taken or omitted to be taken by any of them in connection
with the duties of Collateral Agent under or in connection with any Loan
Document, and each Lender and Borrower hereby waives and shall not assert (and
Borrower shall cause its Subsidiaries to waive and agree not to assert) any
right, claim or cause of action based thereon, except to the extent of
liabilities resulting from the gross negligence or willful misconduct of
Collateral Agent or, as the case may be, such Related Person (each as determined
in a final, non-appealable judgment of a court of competent jurisdiction) in
connection with the duties of Collateral Agent expressly set forth herein.
Without limiting the foregoing, Collateral Agent: (i) shall not be responsible
or otherwise incur liability for any action or omission taken in reliance upon
the instructions of the Required Lenders or for the actions or omissions of any
of its Related Persons, except to the extent that a court of competent
jurisdiction determines in a final non-appealable judgment that Collateral Agent
acted with gross negligence or willful misconduct in the selection of such
Related Person; (ii) shall not be responsible to any Lender or other Person for
the due execution, legality, validity, enforceability, effectiveness,
genuineness, sufficiency or value of, or the attachment, perfection or priority
of any Lien created or purported to be created under or in connection with, any
Loan Document; (iii) makes no warranty or representation, and shall not be
responsible, to any Lender or other Person for any statement, document,
information, representation or warranty made or furnished by or on behalf of
Borrower or any Related Person of Borrower in connection with any Loan Document
or any transaction contemplated therein or any other document or information
with respect to Borrower, whether or not transmitted or (except for documents
expressly required under any Loan Document to be transmitted to the Lenders)
omitted to be transmitted by Collateral Agent, including as to completeness,
accuracy, scope or adequacy thereof, or for the scope, nature or results of any
due diligence performed by Collateral Agent in connection with the Loan
Documents; and (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any provision of any Loan Document, whether any
condition set forth in any Loan Document is satisfied or waived, as to the
financial condition of Borrower or as to the existence or continuation or
possible occurrence or continuation of any Event of Default, and shall not be
deemed to have notice or Knowledge of such occurrence or continuation unless it
has received a notice from Borrower or any Lender describing such Event of
Default that is clearly labeled “notice of default” (in which case Collateral
Agent shall promptly give notice of such receipt to all Lenders, provided that
Collateral Agent shall not be liable to any Lender for any failure to do so,
except to the extent that such failure is attributable to Collateral Agent’s
gross negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction); and, for each of the items set
forth in clauses (i) through (iv) above, each Lender and Borrower hereby waives
and agrees not to assert (and Borrower shall cause its Subsidiaries to waive and
agree not to assert) any right, claim or cause of action it might have against
Collateral Agent based thereon.

 

4.Collateral Agent Individually. Collateral Agent and its Affiliates may make
loans and other extensions of credit to, acquire stock and stock equivalents of,
engage in any kind of business with, Borrower or any Affiliate of Borrower as
though it were not acting as Collateral Agent and may receive separate fees and
other payments therefor. To the extent Collateral Agent or any of its Affiliates
makes any Term Loans or otherwise becomes a Lender hereunder, it shall have and
may exercise the same rights and powers hereunder and shall be subject to the
same obligations and liabilities as any other Lender and the terms “Lender”,
“Required Lender” and any similar terms shall, except where otherwise expressly
provided in any Loan Document, include, without limitation, Collateral Agent or
such Affiliate, as the case may be, in its individual capacity as Lender, or as
one of the Required Lenders.

 

5.Lender Credit Decision; Collateral Agent Report. Each Lender acknowledges that
it shall, independently and without reliance upon Collateral Agent, any Lender
or any of their Related Persons or upon any document solely or in part because
such document was transmitted by Collateral Agent or any of its Related Persons,
conduct its own independent investigation of the financial condition and affairs
of Borrower and make and continue to make its own credit decisions in connection
with entering into, and taking or not taking any action under, any Loan Document
or with respect to any transaction contemplated in any Loan Document, in each
case based on such documents and information as it shall deem appropriate.
Except for documents expressly required by any Loan Document to be transmitted
by Collateral Agent to the Lenders, Collateral Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, Property, financial and other
condition or creditworthiness of Borrower or any Affiliate of Borrower that may
come in to the possession of Collateral Agent or any of its Related Persons.
Each Lender agrees that is shall not rely on any field examination, audit or
other report provided by Collateral Agent or its Related Persons (a “Collateral
Agent Report”). Each Lender further acknowledges that any Collateral Agent
Report (a) is provided to the Lenders solely as a courtesy, without
consideration, and based upon the understanding that such Lender will not rely
on such Collateral Agent Report, (b) was prepared by Collateral Agent or its
Related Persons based upon

 

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information provided by Borrower solely for Collateral Agent’s own internal use,
and (c) may not be complete and may not reflect all information and findings
obtained by Collateral Agent or its Related Persons regarding the operations and
condition of Borrower. Neither Collateral Agent nor any of its Related Persons
makes any representations or warranties of any kind with respect to (i) any
existing or proposed financing, (ii) the accuracy or completeness of the
information contained in any Collateral Agent Report or in any related
documentation, (iii) the scope or adequacy of Collateral Agent’s and its Related
Persons’ due diligence, or the presence or absence of any errors or omissions
contained in any Collateral Agent Report or in any related documentation, and
(iv) any work performed by Collateral Agent or Collateral Agent’s Related
Persons in connection with or using any Collateral Agent Report or any related
documentation. Neither Collateral Agent nor any of its Related Persons shall
have any duties or obligations in connection with or as a result of any Lender
receiving a copy of any Collateral Agent Report. Without limiting the generality
of the forgoing, neither Collateral Agent nor any of its Related Persons shall
have any responsibility for the accuracy or completeness of any Collateral Agent
Report, or the appropriateness of any Collateral Agent Report for any Lender’s
purposes, and shall have no duty or responsibility to correct or update any
Collateral Agent Report or disclose to any Lender any other information not
embodied in any Collateral Agent Report, including any supplemental information
obtained after the date of any Collateral Agent Report. Each Lender releases,
and agrees that it will not assert, any claim against Collateral Agent or its
Related Persons that in any way relates to any Collateral Agent Report or arises
out of any Lender having access to any Collateral Agent Report or any discussion
of its contents, and agrees to indemnify and hold harmless Collateral Agent and
its Related Persons from all claims, liabilities and expenses relating to a
breach by any Lender arising out of such Lender’s access to any Collateral Agent
Report or any discussion of its contents.

6.Indemnification. Each Lender agrees to reimburse Collateral Agent and each of
its Related Persons (to the extent not reimbursed by Borrower as required under
the Loan Documents) promptly upon demand for its Pro Rata Share of any
reasonable out-of-pocket costs and expenses (including, without limitation,
reasonable fees, charges and disbursements of financial, legal and other
advisors and any taxes or insurance paid in the name of, or on behalf of,
Borrower) incurred by Collateral Agent or any of its Related Persons in
connection with the preparation, syndication, execution, delivery,
administration, modification, amendment, consent, waiver or enforcement of, or
the taking of any other action (whether through negotiations, through any
work-out, bankruptcy, restructuring or other legal or other proceeding
(including, without limitation, preparation for and/or response to any subpoena
or request for document production relating thereto) or otherwise) in respect
of, or legal advice with respect to, its rights or responsibilities under, any
Loan Document. Each Lender further agrees to indemnify Collateral Agent and each
of its Related Persons (to the extent not reimbursed by Borrower as required
under the Loan Documents), ratably according to its Pro Rata Share, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including, to the extent not indemnified by the applicable
Lender, taxes, interests and penalties imposed for not properly withholding or
backup withholding on payments made to or for the account of any Lender) that
may be imposed on, incurred by, or asserted against Collateral Agent or any of
its Related Persons in any matter relating to or arising out of, in connection
with or as a result of any Loan Document or any other act, event or transaction
related, contemplated in or attendant to any such document, or, in each case,
any action taken or omitted to be taken by Collateral Agent or any of its
Related Persons under or with respect to the foregoing; provided that no Lender
shall be liable to Collateral Agent or any of its Related Persons under this
Section 6 of this Exhibit B to the extent such liability has resulted from the
gross negligence or willful misconduct of Collateral Agent or, as the case may
be, such Related Person, as determined by a final non-appealable judgment of a
court of competent jurisdiction. To the extent required by any applicable
Requirement of Law, Collateral Agent and Lenders may withhold from any payment
to any Lender under a Loan Document an amount equal to any applicable
withholding tax. If the Internal Revenue Service or any other Governmental
Authority asserts a claim that Collateral Agent did not properly withhold tax
from amounts paid to or for the account of any Lender for any reason, or if
Collateral Agent reasonably determines that it was required to withhold taxes
from a prior payment to or for the account of any Lender but failed to do so,
such Lender shall promptly indemnify Collateral Agent fully for all amounts
paid, directly or indirectly, by Collateral Agent as tax or otherwise, including
penalties and interest, and together with all expenses incurred by Collateral
Agent. Collateral Agent may offset against any payment to any Lender under a
Loan Document, any applicable withholding tax that was required to be withheld
from any prior payment to such Lender but which was not so withheld, as well as
any other amounts for which Collateral Agent is entitled to indemnification from
such Lender under the immediately preceding sentence of this Section 6 of this
Exhibit B.

 

7.Successor Collateral Agent. Collateral Agent may resign at any time by
delivering notice of such resignation to the Lenders and Borrower, effective on
the date set forth in such notice or, if no such date is set forth therein, upon
the date such notice shall be effective, in accordance with the terms of this
Section 7 of this Exhibit B. If Collateral Agent delivers any such notice, the
Required Lenders shall have the right to appoint a successor Collateral Agent.
If, after 30 days after the date of the retiring Collateral Agent’s notice of
resignation, no successor Collateral Agent has been appointed by the Required
Lenders that has accepted such appointment, then the retiring Collateral Agent
may, on behalf of the Lenders, appoint a successor Collateral Agent from among
the Lenders. Effective immediately upon its resignation, (a) the retiring
Collateral Agent shall be discharged from its duties and obligations under the
Loan Documents, (b) the Lenders shall assume and perform all of the duties of
Collateral Agent until a successor Collateral Agent shall have accepted a valid
appointment hereunder, (c) the retiring Collateral Agent and its Related Persons
shall no longer have the benefit of any provision of any Loan Document other
than with respect to any actions taken or omitted to be taken while such
retiring Collateral Agent was, or because such Collateral Agent had been,
validly acting as Collateral Agent under the Loan Documents, and (iv) subject to
its rights under Section 2(b) of this Exhibit B, the retiring Collateral Agent
shall take such action as may be reasonably necessary to assign to the successor
Collateral Agent its rights as Collateral Agent under the Loan Documents.
Effective immediately upon its acceptance of a valid appointment as Collateral
Agent, a successor Collateral Agent shall succeed to, and become vested with,
all the rights, powers, privileges and duties of the retiring Collateral Agent
under the Loan Documents.

 

8.Release of Collateral. Each Lender hereby consents to the release and hereby
directs Collateral Agent to release (or in the case of clause (b)(ii) below,
release or subordinate) the following:

(a)any Guarantor if all of the stock of such Subsidiary owned by Borrower is
sold or transferred in a transaction permitted under the Loan Documents
(including pursuant to a valid waiver or consent), to the extent that, after
giving effect to such transaction, such Subsidiary would not be required to
guaranty any Obligations pursuant to any Loan Document; and

 

(b)any Lien held by Collateral Agent for the benefit of itself and the Lenders
against (i) any Collateral that is sold or otherwise disposed of by Borrower in
a transaction permitted by the Loan Documents (including pursuant to a valid
waiver or consent), (ii) any Collateral subject to a Lien that is expressly
permitted under clause (c) of the definition of the term “Permitted Lien” and
(iii) all of the Collateral and Borrower, upon (A) termination of all of the
Commitments, (B) payment in full in cash of all of the Obligations (other than
inchoate indemnity Obligations) that Collateral Agent has theretofore been
notified in writing by the holder of such Obligation are then due and payable,
and (C) to the extent requested by Collateral Agent, receipt by Collateral Agent
and Lenders of liability releases from Borrower in form and substance acceptable
to Collateral Agent (the satisfaction of the conditions in this clause (iii),
the “Termination Date”).

 

9.Setoff and Sharing of Payments. In addition to any rights now or hereafter
granted under any applicable requirement of law and not by way of limitation of
any such rights, upon the occurrence and during the continuance of any Event of
Default and subject to Section 10(d) of this Exhibit B, each Lender is hereby
authorized at any time or from time to time upon the direction of Collateral
Agent, without notice to Borrower or any other Person, any such notice being
hereby expressly waived, to setoff and to appropriate and to apply any and all
balances held by it at any of its offices for the account of Borrower
(regardless of whether such balances are then due to Borrower) and any other
properties or assets at any time held or owing by that Lender or that holder to
or for the credit or for the account of Borrower against and on account of any
of the Obligations that are not paid when due. Any Lender exercising a right of
setoff or otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders

 

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or holders shall sell) such participations in each such other Lender’s or
holder’s Pro Rata Share of the Obligations as would be necessary to cause such
Lender to share the amount so offset or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares of the
Obligations. Borrower agrees, to the fullest extent permitted by law, that (a)
any Lender may exercise its right to offset with respect to amounts in excess of
its Pro Rata Share of the Obligations and may purchase participations in
accordance with the preceding sentence and (b) any Lender so purchasing a
participation in the Term Loans made or other Obligations held by other Lenders
or holders may exercise all rights of offset, bankers’ lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender or
holder were a direct holder of the Term Loans and the other Obligations in the
amount of such participation. Notwithstanding the foregoing, if all or any
portion of the offset amount or payment otherwise received is thereafter
recovered from the Lender that has exercised the right of offset, the purchase
of participations by that Lender shall be rescinded and the purchase price
restored without interest.

 

10.Advances; Payments; Non-Funding Lenders; Actions in Concert.

 

(a)Advances; Payments. If Collateral Agent receives any payment with respect to
a Term Loan for the account of Lenders on or prior to 2:00 p.m. (New York time)
on any Business Day, Collateral Agent shall pay to each applicable Lender such
Lender’s Pro Rata Share of such payment on such Business Day. If Collateral
Agent receives any payment with respect to a Term Loan for the account of
Lenders after 2:00 p.m. (New York time) on any Business Day, Collateral Agent
shall pay to each applicable Lender such Lender’s Pro Rata Share of such payment
on the next Business Day.

 

(b)Return of Payments.

 

(i)If Collateral Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Collateral Agent from Borrower and such related payment is not received by
Collateral Agent, then Collateral Agent will be entitled to recover such amount
(including interest accruing on such amount at the rate otherwise applicable to
such Obligation) from such Lender on demand without setoff, counterclaim or
deduction of any kind.

(ii)If Collateral Agent determines at any time that any amount received by
Collateral Agent under any Loan Document must be returned to Borrower or paid to
any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of any Loan Document, Collateral
Agent will not be required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to Collateral Agent on demand any portion of
such amount that Collateral Agent has distributed to such Lender, together with
interest at such rate, if any, as Collateral Agent is required to pay to
Borrower or such other Person, without setoff, counterclaim or deduction of any
kind and Collateral Agent will be entitled to set off against future
distributions to such Lender any such amounts (with interest) that are not
repaid on demand.

 

(c)Non-Funding Lenders.

 

(i)Unless Collateral Agent shall have received notice from a Lender prior to the
date of any Term Loan that such Lender will not make available to Collateral
Agent such Lender’s Pro Rata Share of such Term Loan, Collateral Agent may
assume that such Lender will make such amount available to it on the date of
such Term Loan in accordance with Section 2(b) of this Exhibit B, and Collateral
Agent may (but shall not be obligated to), in reliance upon such assumption,
make available a corresponding amount for the account of Borrower on such date.
If and to the extent that such Lender shall not have made such amount available
to Collateral Agent, such Lender and Borrower severally agree to repay to
Collateral Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the day such amount is made available to
Borrower until the day such amount is repaid to Collateral Agent, at a rate per
annum equal to the interest rate applicable to the Obligation that would have
been created when Collateral Agent made available such amount to Borrower had
such Lender made a corresponding payment available. If such Lender shall repay
such corresponding amount to Collateral Agent, the amount so repaid shall
constitute such Lender’s portion of such Term Loan for purposes of this
Agreement.

 

(ii)To the extent that any Lender has failed to fund any Term Loan or any other
payments required to be made by it under the Loan Documents after any such Term
Loan is required to be made or such payment is due (a “Non-Funding Lender”),
Collateral Agent shall be entitled to set off the funding short-fall against
that Non-Funding Lender’s Pro Rata Share of all payments received from Borrower.
The failure of any Non-Funding Lender to make any Term Loan or any payment
required by it hereunder shall not relieve any other Lender (each such other
Lender, an “Other Lender”) of its obligations to make such Term Loan, but
neither any Other Lender nor Collateral Agent shall be responsible for the
failure of any Non-Funding Lender to make such Term Loan or make any other
payment required hereunder. Notwithstanding anything set forth herein to the
contrary, a Non-Funding Lender shall not have any voting or consent rights under
or with respect to any Loan Document or  constitute a “Lender” (or be included
in the calculation of “Required Lender” hereunder) for any voting or consent
rights under or with respect to any Loan Document. At Borrower’s request,
Collateral Agent or a Person reasonably acceptable to Collateral Agent shall
have the right with Collateral Agent’s consent and in Collateral Agent’s sole
discretion (but Collateral Agent or any such Person shall have no obligation) to
purchase from any Non-Funding Lender, and each Lender agrees that if it becomes
a Non-Funding Lender it shall, at Collateral Agent’s request, sell and assign to
Collateral Agent or such Person, all of the Term Loan Commitment (if any), and
all of the outstanding Term Loan of that Non-Funding Lender for an amount equal
to the aggregate outstanding principal balance of the Term Loan held by such
Non-Funding Lender and all accrued interest with respect thereto through the
date of sale, such purchase and sale to be consummated pursuant to an executed
assignment agreement in form and substance reasonably satisfactory to, and
acknowledged by, Collateral Agent.

 

(d)Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of any Loan
Document (including exercising any rights of setoff) without first obtaining the
prior written consent of Collateral Agent or Required Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under any
Loan Document shall be taken in concert and at the direction or with the consent
of Collateral Agent or Required Lenders.

 

 

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EXHIBIT C

Loan Payment Request Form

 

Fax To: (212) 993-1698

Date:

 

LOAN PAYMENT:

 

SCPHARMACEUTICALS INC.

 

 

 

 

From Account #

 

To Account #

 

 

(Deposit Account #)

 

(Loan Account #)

 

 

 

 

Principal $

 

and/or Interest $

 

 

 

 

 

Authorized Signature:

 

Phone Number:

 

Print Name/Title:

 

 

 

 

 

 

LOAN ADVANCE:

Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.

 

From Account #

 

To Account #

 

 

(Loan Account #)

 

(Deposit Account #)

 

 

 

 

Amount of Advance $

 

 

 

 

All Borrower’s representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
request for an advance; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date:

 

Authorized Signature:

Phone Number:

Print Name/Title:

 

 

 

OUTGOING WIRE REQUEST:

 

 

Complete only if all or a portion of funds from the loan advance above is to be
wired.

 

Beneficiary Name:

Amount of Wire: $

Beneficiary Bank:

Account Number:

City and State:

 

 

 

 

 

Beneficiary Bank Transit (ABA) #:

Beneficiary Bank Code (Swift, Sort, Chip, etc.):

 

(For International Wire Only)

Intermediary Bank:

Transit (ABA) #:

For Further Credit to:

 

 

 

Special Instruction:

By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).

 

Authorized Signature:

2nd Signature (if required):

Print Name/Title:

Print Name/Title:

Telephone #:

Telephone #: ]

 

 

 

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

 

EXHIBIT D

Compliance Certificate

 

TO:

SOLAR CAPITAL LTD., as Collateral Agent and Lender SILICON VALLEY BANK, as
Lender

FROM:

SCPHARMACEUTICALS INC.

 

The undersigned authorized officer (“Officer”) of SCPHARMACEUTICALS INC.
(“Borrower”), hereby certifies that in accordance with the terms and conditions
of the Loan and Security Agreement dated as of May 23, 2017, by and among
Borrower, Collateral Agent, and the Lenders from time to time party thereto (the
“Loan Agreement;” capitalized terms used but not otherwise defined herein shall
have the meanings given them in the Loan Agreement), with all required

 

(a)Borrower is in complete compliance for the period ending covenants except as
noted below;

 

(b)There are no defaults or Events of Default, except as noted below;

 

(c)Except as noted below, all representations and warranties of Borrower stated
in the Loan Documents are true and correct in all material respects on this date
and for the period described in (a), above; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date.

 

(d)Borrower, and each of Borrower’s Subsidiaries, has timely filed all required
tax returns and reports, Borrower, and each of Borrower’s Subsidiaries, has
timely paid all foreign, federal, state, and local taxes, assessments, deposits
and contributions owed by Borrower, or Subsidiary, except as otherwise permitted
pursuant to the terms of Section 5.8 of the Loan Agreement;

 

(e)No Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Collateral Agent and the
Lenders.

 

Attached are the required documents, if any, supporting our certification(s).
The Officer, on behalf of Borrower, further certifies that the attached
financial statements are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next except as explained in an accompanying letter or footnotes and except, in
the case of unaudited financial statements, for the absence of footnotes and
subject to year-end audit adjustments as to the interim financial statements.

 

Please indicate compliance status since the last Compliance Certificate by
circling Yes, No, or N/A under “Complies” column.

 

Reporting Covenant

 

Requirement

Actual

 

Complies

 

 

 

 

 

 

 

1)

Financial statements

 

Monthly within 30 days

 

 

Yes     No   N/A

2)

Annual (CPA Audited) statements

 

within 180 days after FYE

 

 

Yes     No   N/A

3)

Annual Financial Projections/Budget (prepared on a monthly basis)

 

Annually (within earlier 30 days of approval or 60 days of FYE), and when
revised

 

 

Yes     No   N/A

4)

A/R & A/P agings

 

If applicable

 

 

Yes     No   N/A

5)

8-K 10-K and 10-Q Filings

 

If applicable, within 5 days of filing

 

 

Yes     No   N/A

6)

Compliance Certificate

 

Monthly within 30 days

 

 

Yes     No   N/A

7)

IP Report

 

When required

 

 

Yes     No   N/A

8)

Total amount of Borrower’s cash and cash equivalents at the last day of the
measurement period

 

 

$          _

 

Yes     No   N/A

9)

Total amount of Borrower’s Subsidiaries’ cash and cash equivalents at the last
day of the measurement period

 

 

$          _

 

Yes     No   N/A

 

 

 

 

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

 

Deposit and Securities Accounts

(Please list all accounts; attach separate sheet if additional space needed)

 

Institution Name

Account Number

New Account?

 

Account Control Agreement in place?

 

 

 

 

 

 

1)

 

 

Yes     No

 

Yes     No

2)

 

 

Yes     No

 

Yes     No

3)

 

 

Yes     No

 

Yes     No

4)

 

 

Yes     No

 

Yes     No

 

 

Other Matters

 

1)

Have there been any changes in Key Persons since the last Compliance
Certificate?

 

Yes

No

2)

Have there been any transfers/sales/disposals/retirement of Collateral or IP
prohibited by the Loan Agreement?

 

Yes

No

3)

Have there been any new or pending claims or causes of action against Borrower
that involve more than Two Hundred Fifty Thousand Dollars ($250,000.00)?

 

Yes

No

4)

Have there been any amendments of or other changes to the capitalization table
of Borrower and to the Operating Documents of Borrower or any of its
Subsidiaries? If yes, provide copies of any such amendments or changes with this
Compliance Certificate.

 

Yes

No

5)

Has Borrower or any Subsidiary entered into or amended any Material Agreement?
If yes, please explain and provide a copy of the Material Agreement(s) and/or
amendment(s).

 

Yes

No

6)

Has Borrower provided the Collateral Agent with all notices required to be
delivered under Sections 6.2(a) and 6.2(b) of the Loan Agreement?

 

Yes

No

 

 

 

 

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

 

Exceptions

Please explain any exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions.” Attach separate sheet if additional
space needed.)

 

SCPHARMACEUTICALS INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Date:

 

 

 

 

COLLATERAL AGENT USE ONLY

 

 

Received by:

Date:

Verified by:

Date:

 

 

Compliance Status:

Yes No

 

 

 

 

 

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

Exhibit E

CORPORATE BORROWING CERTIFICATE

 

BORROWER:

SCPHARMACEUTICALS INC.

DATE: [ ], 2017

LENDERS:

SOLAR CAPITAL LTD., as Collateral Agent and Lender SILICON VALLEY BANK, as
Lender

 

 

I hereby certify as follows, as of the date set forth above:

1.I am the Secretary, Assistant Secretary or other officer of Borrower. My title
is as set forth below.

 

2.Borrower’s exact legal name is set forth above. Borrower is a corporation
existing under the laws of the State of Delaware.

 

3.Attached hereto as Exhibit A and Exhibit B, respectively, are true, correct
and complete copies of (i) Borrower’s Certificate of Incorporation (including
amendments), as filed with the Secretary of State of the state in which Borrower
is incorporated as set forth in paragraph 2 above; and (ii) Borrower’s Bylaws.
Neither such Certificate of Incorporation nor such Bylaws have been amended,
annulled, rescinded, revoked or supplemented, and such Certificate of
Incorporation and such Bylaws remain in full force and effect as of the date
hereof.

 

4.The following resolutions were duly and validly adopted by Borrower’s board of
directors at a duly held meeting of such directors (or pursuant to a unanimous
written consent or other authorized corporate action). Such resolutions are in
full force and effect as of the date hereof and have  not been in any way
modified, repealed, rescinded, amended or revoked, and the Lenders may rely on
them until each Lender receives written notice of revocation from Borrower.

 

[Balance of Page Intentionally Left Blank]

 

 

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

 

RESOLVED, that any one of the following officers or employees of Borrower, whose
names, titles and signatures are below, may act on behalf of Borrower:

 

Name

 

Title

 

Signature

 

Authorized to

Add or

Remove

Signatories

 

 

 

 

 

 

 

 

 

 

 

 

 

☐

 

 

 

 

 

 

☐

 

 

 

 

 

 

☐

 

 

 

 

 

 

☐

 

 

RESOLVED FURTHER, that any one of the persons designated above with a checked
box beside his or her name may, from time to time, add or remove any individuals
to and from the above list of persons authorized to act on behalf of Borrower.

RESOLVED FURTHER, that such individuals may, on behalf of Borrower:

Borrow Money. Borrow money from the Lenders.

Execute Loan Documents. Execute any loan documents any Lender requires.

Grant Security. Grant Collateral Agent a security interest in any of Borrower’s
assets.

Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory
notes, or other indebtedness in which Borrower has an interest and receive cash
or otherwise use the proceeds.

Pay Fees. Pay fees under the Loan Agreement or any other Loan Document.

Further Acts. Designate other individuals to request advances, pay fees and
costs and execute other documents or agreements (including documents or
agreement that waive Borrower’s right to a jury trial) they believe to be
necessary to effectuate such resolutions.

RESOLVED FURTHER, that all acts authorized by the above resolutions and any
prior acts relating thereto are ratified.

 

[Balance of Page Intentionally Left Blank]

 

 

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

 

 

5.

The persons listed above are Borrower’s officers or employees with their titles
and signatures shown next to their names.

 

By:

 

 

Name:

 

 

Title:

 

 

 

*** If the Secretary, Assistant Secretary or other certifying officer executing
above is designated by the resolutions set forth in paragraph 4 as one of the
authorized signing officers, this Certificate must also be signed by a second
authorized officer or director of Borrower.

 

I, the of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the
date set forth above. [print title]

 

By:

 

 

Name:

 

 

Title:

 

 

 

[Signature Page to Corporate Borrowing Certificate]

 

 

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

 

EXHIBIT A

Certificate of Incorporation (including amendments)

 

[see attached]

 

 

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

 

EXHIBIT B

Bylaws

 

[see attached]

 

 

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

 

EXHIBIT F

ACH LETTER

SOLAR CAPITAL LTD.

500 Park Avenue, 3rd Floor

New York, NY 10022

Attention: Neil Bonanno

Fax: (212) 993-1698

Email: bonanno@solarcapltd.com

Re: Loan and Security Agreement dated as of May 23, 2017 (the “Agreement”) by
and among SCPHARMACEUTICALS INC. (“Borrower”), Solar Capital Ltd. (“Solar”), as
collateral agent (in such capacity, “Collateral Agent”) and the Lenders listed
on Schedule 1.1 thereof or otherwise a party thereto from time to time,
including Solar in its capacity as a Lender and Silicon Valley Bank (each a
“Lender” and collectively, the “Lenders”). Capitalized terms used but not
otherwise defined herein shall have the meanings given them under the Agreement.

 

In connection with the above referenced Agreement, the Borrower hereby
authorizes the Collateral Agent to, at its discretion and with prior notice of
at least one (1) Business Day, initiate debit entries to the Borrower’s account
indicated below (i) on each payment date of all Obligations then due and owing,
(ii) at any time any payment due and owing with respect to Lender Expenses, and
(iii) upon an Event of Default, any other Obligations outstanding, in each case
pursuant to Section 2.3(e) of the Agreement. The Borrower authorizes the
depository institution named below to debit to such account.

 

DEPOSITORY NAME

BRANCH

CITY

STATE AND ZIP CODE

TRANSIT/ABA NUMBER

ACCOUNT NUMBER

 

This authority will remain in full force and effect so long as any amounts are
due under the Agreement.

 

[Signature page to follow]

 

 

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

 

 

SCPHARMACEUTICALS INC.

 

 

 

By:

 

 

Title:

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to ACH Letter]

 

 

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

Exhibit G

Form of Secured Promissory Note

SECURED  PROMISSORY NOTE

(Term Loan)

 

$    

Dated: [DATE]

 

FOR VALUE RECEIVED, the undersigned, SCPHARMACEUTICALS INC., a Delaware
corporation with offices located at [ ] (“Borrower”) HEREBY PROMISES TO PAY to
the order of [ ] (“Lender”) the principal amount of [ ] DOLLARS ($ ) or such
lesser amount as shall equal the outstanding principal balance of the Term Loan
made to Borrower by Lender, plus interest on the aggregate unpaid principal
amount of such Term Loan, at the rates and in accordance with the terms of the
Loan and Security Agreement dated [ ], 2017 by and among Borrower, Lender, Solar
Capital Ltd., as Collateral Agent, and the other Lenders from time to time party
thereto (as amended, restated, supplemented or otherwise modified from time to
time, the “Loan Agreement”). If not sooner paid, the entire principal amount and
all accrued and unpaid interest hereunder shall be due and payable on the
Maturity Date as set forth in the Loan Agreement. Any capitalized term not
otherwise defined herein shall have the meaning attributed to such term in the
Loan Agreement.

 

Principal, interest and all other amounts due with respect to the Term Loan, are
payable in lawful money of the United States of America to Lender as set forth
in the Loan Agreement and this Secured Promissory Note (this “Note”). The
principal amount of this Note and the interest rate applicable thereto, and all
payments made with respect thereto, shall be recorded by Lender and, prior to
any transfer hereof, endorsed on the grid attached hereto which is part of this
Note.

 

The Loan Agreement, among other things, (a) provides for the making of a secured
Term Loan by Lender to Borrower, and (b) contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events.

 

This Note may not be prepaid except as set forth in Section 2.2 (c) and Section
2.2(d) of the Loan Agreement.

 

This Note and the obligation of Borrower to repay the unpaid principal amount of
the Term Loan, interest on the Term Loan and all other amounts due Lender under
the Loan Agreement is secured under the Loan Agreement.

 

Presentment for payment, demand, notice of protest and all other demands and
notices of any kind in connection with the execution, delivery, performance and
enforcement of this Note are hereby waived.

 

Borrower shall pay all Lenders’ Expenses incurred by Lender in the enforcement
or attempt to enforce any of Borrower’s obligations hereunder not performed when
due subject to the terms of the Loan Agreement.

 

This Note shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of New York.

 

The ownership of an interest in this Note shall be registered on a record of
ownership maintained by Lender or its agent. Notwithstanding anything else in
this Note to the contrary, the right to the principal of, and stated interest
on, this Note may be transferred only if the transfer is registered on such
record of ownership and the transferee is identified as the owner of an interest
in the obligation. Borrower shall be entitled to treat the registered holder of
this Note (as recorded on such record of ownership) as the owner in fact thereof
for all purposes and shall not be bound to recognize any equitable or other
claim to or interest in this Note on the part of any other person or entity.

 

[Balance of Page Intentionally Left Blank]

 

 

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

 

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of
its officers thereunto duly authorized on the date hereof.

 

BORROWER:

 

SCPHARMACEUTICALS INC.

 

 

 

By

 

 

Name:

 

 

Title:

 

 

 

 

 

 

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

 

LOAN AND PAYMENTS OF PRINCIPAL

 

Date

 

Interest

Rate

 

Principal

Amount

 

Scheduled

Payment

Amount

 

Notation

By

 

 

 

 

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

 

Exhibit H

Sensile Agreements

 

 

•

Device Development Agreement between Borrower and Sensile Holding AG dated as of
March 22, 2013, as amended as of July 29, 2013 and February 17, 2014

 

•

Strategic Partnership Agreement between Borrower and Sensile Holding AG dated as
of March 18, 2013, as amended as of January 31, 2014

 

•

Development Option Agreement between Borrower and Sensile Holding AG dated as of
June 24, 2013

 

•

Notice of Exercise of Option to Develop and Commercialize between Borrower and
Sensile Holding AG dated as of October 31, 2013

 

•

Omnibus Amendment to Strategic Partnership Agreement, Device Development
Agreement and Development Option Agreement by and among Borrower, Sensile
Medical AG, Sensile Holding AG and Sensile Patent AG dated as of February 28,
2014, as amended as of September 5, 2014

 

•

License Agreement between the Company and Sensile Medical AG, Sensile Holding AG
and Sensile Patent AG dated as of June 29, 2015, as amended as of June 29, 2016,
August 5, 2016, November 22, 2017 and February 25, 2017

 

 

 

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

 

 

Execution Version

 

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as
of November 21, 2018 (the “Amendment Effective Date”), is made among
scPharmaceuticals Inc., a Delaware corporation (“Borrower”), Solar Capital Ltd.,
a Maryland corporation (“Solar”), in its capacity as collateral agent (in such
capacity, together with its successors and assigns in such capacity, “Collateral
Agent”) and the Lenders listed on Schedule 1.1 of the Loan and Security
Agreement (as defined below) or otherwise a party hereto from time to time
including Solar in its capacity as a Lender and Silicon Valley Bank (“Bank”) as
a Lender (each a “Lender” and collectively, the “Lenders”).

The Borrower, the Lenders and Collateral Agent are parties to a Loan and
Security Agreement dated as of May 23, 2017 (as amended, restated or modified
from time to time, the “Loan and Security Agreement”). The Borrower has
requested that the Lenders agree to certain amendments to the Loan and Security
Agreement. The Lenders have agreed to such request, subject to the terms and
conditions hereof.

Accordingly, the parties hereto agree as follows:

SECTION1 Definitions; Interpretation.

(a)Terms Defined in Loan and Security Agreement. All capitalized terms used in
this Amendment (including in the recitals hereof) and not otherwise defined
herein shall have the meanings assigned to them in the Loan and Security
Agreement.

(b)Interpretation. The rules of interpretation set forth in Section 1.1 of the
Loan and Security Agreement shall be applicable to this Amendment and are
incorporated herein by this reference.

SECTION2 Amendments to the Loan and Security Agreement.

(a)The Loan and Security Agreement shall be amended as follows effective as of
the Amendment Effective Date:

(i)New Definitions. The following definitions are added to Section 1.3 in their
proper alphabetical order:

“First Interest Only Extension Conditions” shall mean satisfaction of each of
the following: (a) no Event of Default shall have occurred and be continuing and
(b) the Borrower shall have maintained compliance with Section 7.14 at all
times, subject to verification by Collateral Agent and each Lender (including
supporting documentation reasonably requested by Collateral Agent or any
Lender).

“Qualified Cash” means the amount of Borrower’s cash and Cash Equivalents held
in accounts subject to a Control Agreement in favor of Collateral Agent.

“Qualified Cash A/P Amount” means the amount of Borrower’s accounts payable that
have not been paid within ninety (90) days from the invoice date of the relevant
account payable (other than accounts that are subject to good faith disputes as
permitted herein and for which Borrower maintains adequate reserves in
accordance with GAAP).

“Second Interest Only Extension Conditions” shall mean satisfaction of each of
the following: (a) no Event of Default shall have occurred and be continuing;
(b) the Borrower shall have maintained compliance with Section 7.14 at all
times, subject to verification by Collateral Agent and each Lender (including
supporting documentation reasonably requested by Collateral Agent or any
Lender);

(c) on or before May 15, 2019, Borrower has furnished Collateral Agent and each
Lender with (i) FDA minutes of Borrower’s Type C meetings with the FDA
evidencing agreement regarding protocols for a dose delivery validation study,
(ii) written response from the FDA evidencing agreement regarding protocols for
the human factors studies (collectively, the “Dose Delivery Validation and Human
Factors Studies”) required for FUROSCIX® and (iii) evidence that the FDA does
not require additional clinical trials prior to resubmission of the new drug
application for FUROSCIX®, in each case, in form and substance satisfactory to
Collateral Agent and each Lender; (d) as of May 31, 2019, Qualified Cash is at
least Seventy-Two Million Dollars ($72,000,000.00) plus the Qualified Cash A/P
Amount; and

(e) achievement of the First Interest Only Extension Conditions.

“Third Interest Only Extension Conditions” shall mean satisfaction of each of
the following: (a) no Event of Default shall have occurred and be continuing;
(b) the Borrower shall have maintained compliance with Section 7.14 at all
times, subject to verification by Collateral Agent and each Lender (including
supporting documentation reasonably requested by Collateral Agent or any
Lender);

(c) on or before August 31, 2019, Borrower has furnished Collateral Agent and
each Lender with evidence satisfactory to Collateral Agent and each Lender of
completion of enrollment of the Dose Delivery Validation and Human Factors
Studies; (d) as of August 31, 2019, Qualified Cash is at least Sixty-Three
Million Dollars ($63,000,000.00) plus the Qualified Cash A/P Amount; and (e)
achievement of the Second Interest Only Extension Conditions.

(ii)Amended Definition. The definition of “Final Fee” is hereby amended by
replacing “$250,000” appearing therein with “$325,000” therein.

(iii)Amended and Restated Definition. The following definitions are hereby
amended and restated as follows:

“Amortization Date” is December 1, 2018; provided that, (i) if the First
Interest Only Extension Conditions are satisfied and the Borrower so elects,
then June 1, 2019; (ii) if the Second Interest Only Extension Conditions are
satisfied and the Borrower so elects, then September 1, 2019; and (iii) if the
Third Interest Only Extension Conditions are satisfied and Borrower so elects,
then December 1, 2019.

(iv)Section 2.2(b) is hereby amended by replacing “thirty (30) months” appearing
therein with “the number of Payment Dates from the Amortization Date through the
Maturity Date”.

(v)Section 7 is hereby amended by inserting a new Section 7.14 at the end
thereof as follows:

7.14 Minimum Liquidity Requirement. Permit, at any time, Qualified Cash to be
less than Ten Million Dollars

 

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

 

($10,000,000.00) plus the Qualified Cash A/P Amount.

(vi)Exhibit D to the Loan and Security Agreement is hereby amended and restated
in its entirety in the form attached hereto as Exhibit A.

(b)References Within Loan and Security Agreement. Each reference in the Loan and
Security Agreement to “this Agreement” and the words “hereof,” “herein,”
“hereunder,” or words of like import, shall mean and be a reference to the Loan
and Security Agreement as amended by this Amendment.

SECTION 3 Conditions of Effectiveness. The effectiveness of Section 2 of this
Amendment shall be subject to the satisfaction of each of the following
conditions precedent:

(a)Fees and Expenses. The Borrower shall have paid (i) an amendment fee of
Thirty-Five Thousand Dollars ($35,000), which shall be deemed fully earned and
non-refundable upon payment, (ii) all invoiced costs and expenses then due in
accordance with Section 5(e), and (iii) all other fees, costs and expenses, if
any, due and payable as of the Amendment Effective Date under the Loan and
Security Agreement.

(b)This Amendment. Collateral Agent shall have received this Amendment, executed
by the Borrower.

(c)Officer’s Certificate. Collateral Agent shall have received a certificate of
an officer of the Borrower with respect to incumbency and resolutions
authorizing the execution and delivery of this Agreement, in form acceptable to
Collateral Agent and the Lenders.

(d)Representations and Warranties; No Default. On the Amendment Effective Date,
after giving effect to the amendment of the Loan and Security Agreement
contemplated hereby:

(i)The representations and warranties contained in Section 4 shall be true and
correct on and as of the Amendment Effective Date as though made on and as of
such date; and

(ii)There exist no Events of Default or events that with the passage of time
would result in an Event of Default.

SECTION 4 Representations and Warranties. To induce the Lenders to enter into
this Amendment, the Borrower hereby confirms, as of the date hereof,

(a)that the representations and warranties made by it in Section 5 of the Loan
and Security Agreement and in the other Loan Documents are true and correct in
all material respects; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; (b) that there has not
been and there does not exist a Material Adverse Change; and (c) that the
information included in the Perfection Certificate delivered to Collateral Agent
on the Effective Date remains true and correct in all material respects. For the
purposes of this Section 4, (i) each reference in Section 5 of the Loan and
Security Agreement to “this Agreement,” and the words “hereof,” “herein,”
“hereunder,” or words of like import in such Section, shall mean and be a
reference to the Loan and Security Agreement as amended by this Amendment, and
(ii) any representations and warranties which relate solely to an earlier date
shall not be deemed confirmed and restated as of the date hereof    (provided
that such representations and warranties shall be true, correct and complete in
all material respects as of such earlier date).

SECTION 5 Miscellaneous.

(a)Loan Documents Otherwise Not Affected; Reaffirmation. Except as expressly
amended pursuant hereto or referenced herein, the Loan and Security Agreement
and the other Loan Documents shall remain unchanged and in full force and effect
and are hereby ratified and confirmed in all respects. The Lenders’ and
Collateral Agent’s execution and delivery of, or acceptance of, this Amendment
shall not be deemed to create a course of dealing or otherwise create any
express or implied duty by any of them to provide any other or further
amendments, consents or waivers in the future.  The Borrower hereby reaffirms
the grant of security under Section 4.1 of the Loan and Security Agreement and
hereby reaffirms that such grant of security in the Collateral secures all
Obligations under the Loan and Security Agreement, including without limitation
any Term Loans funded on or after the Amendment Effective Date, as of the date
hereof.

(b)Conditions. For purposes of determining compliance with the conditions
specified in Section 3, each Lender that has signed this Amendment shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented    to or approved
by or acceptable or satisfactory to a Lender unless Collateral Agent shall have
received notice from such Lender prior to the Amendment Effective Date
specifying its objection thereto.

(c)Release. In consideration of the agreements of Collateral Agent and each
Lender contained herein and for other good and valuable    consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrower, on behalf of
itself and its successors, assigns, and other legal representatives, hereby
fully, absolutely, unconditionally and irrevocably releases, remises and forever
discharges Collateral Agent and each Lender, and  its successors and assigns,
and its present and former shareholders, affiliates, subsidiaries, divisions,
predecessors, directors, officers, attorneys,   employees, agents and other
representatives (Agent, Lenders and all such other persons being hereinafter
referred to collectively as the “Releasees” and individually as a “Releasee”),
of and from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums    of money, accounts, bills,
reckonings, damages and any and all other claims, counterclaims, defenses,
rights of set-off, demands and liabilities whatsoever of every name and nature,
known or unknown, suspected or unsuspected, both at law and in equity, which
Borrower, or any of its successors, assigns, or other   legal representatives
may now or hereafter own, hold, have or claim to have against the Releasees or
any of them for, upon, or by reason of any circumstance, action, cause or thing
whatsoever which arises at any time on or prior to the day and date of this
Amendment, including, without limitation, for or on account of, or in relation
to, or in any way in connection with the Loan Agreement, or any of the other
Loan Documents or transactions thereunder or related thereto. Borrower
understands, acknowledges and agrees that the release set forth above may be
pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in  breach of the provisions of such release. Borrower
agrees that no fact, event, circumstance, evidence or transaction which could
now be asserted or     which may hereafter be discovered shall affect in any
manner the final, absolute and unconditional nature of the release set forth
above.

(d)No Reliance. The Borrower hereby acknowledges and confirms to Collateral
Agent and the Lenders that the Borrower is executing this Amendment on the basis
of its own investigation and for its own reasons without reliance upon any
agreement, representation, understanding or communication by or on behalf of any
other Person.

(e)Costs and Expenses. The Borrower agrees to pay to Collateral Agent within ten
(10) days of its receipt of an invoice (or on the Amendment Effective Date to
the extent invoiced on or prior to the Amendment Effective Date), the reasonable
documented out-of-pocket costs and expenses of Collateral Agent and the Lenders
party hereto, and the reasonable documented fees and disbursements of counsel to
Collateral Agent and the Lenders party hereto (including allocated costs of
internal counsel), in connection with the negotiation, preparation, execution
and delivery of this Amendment and any other documents to be delivered in
connection herewith on the Amendment Effective Date or after such date.

(f)Binding Effect. This Amendment binds and is for the benefit of the successors
and permitted assigns of each party.

 

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

 

(g)Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER THAN THE
LAWS OF THE STATE OF NEW YORK), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL.

(h)Complete Agreement; Amendments; Exit Fee Agreement. This Amendment and the
Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements with respect to such subject matter.
All prior agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of this Amendment and
the Loan Documents merge into this Amendment and    the Loan Documents. For the
avoidance of doubt and notwithstanding anything to the contrary in this
Amendment, Borrower (a) reaffirms its obligations under the Exit Fee Agreement,
including without limitation its obligation to pay the Exit Fee (as defined in
the Exit Fee Agreement) if and when due thereunder, and (b) agrees that the
defined term “Loan Agreement” as defined in the Exit Fee Agreement shall on and
after the Amendment Effective Date mean the Loan and Security Agreement as
amended by this Amendment and as may be amended, restated or modified from time
to time on or after the Amendment Effective Date.

(i)Severability of Provisions. Each provision of this Amendment is severable
from every other provision in determining the enforceability of any provision.

(j)Counterparts. This Amendment may be executed in any number of counterparts
and by different parties on separate counterparts, each of  which, when executed
and delivered, is an original, and all taken together, constitute one Amendment.
Delivery of an executed counterpart of a signature page of this Amendment by
facsimile, portable document format (.pdf) or other electronic transmission will
be as effective as delivery of a manually executed counterpart hereof.

(k)Loan Documents. This Amendment and the documents related thereto shall
constitute Loan Documents.

 

[Balance of Page Intentionally Left Blank; Signature Pages Follow]  

 

 

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

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment, as of
the date first above written.

 

BORROWER:

SCPHARMACEUTICALS INC.,

as Borrower

 

 

 

 

 

 

By:

 

/s/ John Tucker

Name:

 

John Tucker

Title:

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to First Amendment to Loan and Security Agreement
(scPharma/Solar)]

 

 

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

 

 

COLLATERAL AGENT AND LENDER:

SOLAR CAPITAL LTD.,

as Collateral Agent and a Lender

 

 

 

 

 

 

By:

 

/s/ Anthony J. Storino

Name:

 

Anthony J. Storino

Title:

 

Authorized Signatory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to First Amendment to Loan and Security Agreement
(scPharma/Solar)]

 

 

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

 

LENDER:

SILICON VALLEY BANK,

as a Lender

 

 

 

 

 

 

By:

 

/s/ Lauren Cole

Name:

 

Lauren Cole

Title:

 

Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to First Amendment to Loan and Security Agreement
(scPharma/Solar)]

 

 

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

 

EXHIBIT A

 

EXHIBIT D

 

Compliance Certificate

TO:

SOLAR CAPITAL LTD., as Collateral Agent and Lender SILICON VALLEY BANK, as
Lender

 

FROM:

SCPHARMACEUTICALS INC.

 

 

The undersigned authorized officer (“Officer”) of SCPHARMACEUTICALS INC.
(“Borrower”), hereby certifies that in accordance with the terms and conditions
of the Loan and Security Agreement dated as of May 23, 2017, by and among
Borrower, Collateral Agent, and the Lenders from time to time party thereto (the
“Loan Agreement;” capitalized terms used but not otherwise defined herein shall
have the meanings given them in the Loan Agreement),

 

 

(a)

Borrower is in complete compliance for the period ending with all required
covenants except as noted below;

 

 

(b)

There are no defaults or Events of Default, except as noted below;

 

(c)Except as noted below, all representations and warranties of Borrower stated
in the Loan Documents are true and correct in all material respects on this date
and for the period described in (a), above; provided, however, that such
materiality qualifier shall not be applicable to any representations   and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date.

 

(d)Borrower, and each of Borrower’s Subsidiaries, has timely filed all required
tax returns and reports, Borrower, and each of Borrower’s Subsidiaries, has
timely paid all foreign, federal, state, and local taxes, assessments, deposits
and contributions owed by Borrower, or Subsidiary, except as otherwise permitted
pursuant to the terms of Section 5.8 of the Loan Agreement;

 

(e)No Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Collateral Agent and the
Lenders.

 

Attached are the required documents, if any, supporting our certification(s).
The Officer, on behalf of Borrower, further certifies that the attached
financial statements are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next except as explained in an accompanying letter or footnotes and except, in
the case of unaudited financial statements, for the absence of footnotes and
subject to year-end audit adjustments as to the interim financial statements.

 

Please indicate compliance status since the last Compliance Certificate by
circling Yes, No, or N/A under “Complies” column.

 

Reporting Covenant

 

Requirement

Actual

 

Complies

 

 

 

 

 

 

 

1)

Financial statements

 

Monthly within 30 days

 

 

Yes     No   N/A

2)

Annual (CPA Audited) statements

 

Within 180 days after FYE

 

 

Yes     No   N/A

3)

Annual Financial Projections/Budget (prepared on a monthly basis)

 

Annually (within earlier 30 days of approval or 60 days of FYE), and when
revised

 

 

Yes     No   N/A

4)

A/R & A/P agings

 

If applicable

 

 

Yes     No   N/A

5)

8-K, 10-K and 10-Q Filings

 

If applicable, within 5 days of filing

 

 

Yes     No   N/A

6)

Compliance Certificate

 

Monthly within 30 days

 

 

Yes     No   N/A

7)

IP Report

 

When required

 

 

Yes     No   N/A

8)

Total amount of Borrower’s cash and cash equivalents at the last day of the
measurement period

 

 

$          

 

Yes     No   N/A

9)

Total amount of Borrower’s Subsidiaries’ cash and cash equivalents at the last
day of the measurement period

 

 

$          

 

Yes     No   N/A

 

 

 

 

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

 

Deposit and Securities Accounts

(Please list all accounts; attach separate sheet if additional space needed)

 

Institution Name

Account Number

New Account?

 

Account Control Agreement in place?

 

 

 

 

 

 

1)

 

 

Yes     No

 

Yes     No

2)

 

 

Yes     No

 

Yes     No

3)

 

 

Yes     No

 

Yes     No

4)

 

 

Yes     No

 

Yes     No

 

 

 

 

 

 

Financial Covenants

 

 

Minimum Liquidity Requirement

(A) Qualified Cash

(B) A/P not paid within 90 days from invoice date

 

Complies with Minimum Liquidity Requirement (Is (B) plus $10,000,000 less than
(A))?

 

 

 

 

 

 

 

 

 

 

 

Yes     No     N/A

 

 

 

 

 

 

 

 

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

 

 

Other Matters

 

1)

Have there been any changes in Key Persons since the last Compliance
Certificate?

 

Yes

No

2)

Have there been any transfers/sales/disposals/retirement of Collateral or IP
prohibited by the Loan Agreement?

 

Yes

No

3)

Have there been any new or pending claims or causes of action against Borrower
that involve more than Two Hundred Fifty Thousand Dollars ($250,000.00)?

 

Yes

No

4)

Have there been any amendments of or other changes to the capitalization table
of Borrower and to the Operating Documents of Borrower or any of its
Subsidiaries? If yes, provide copies of any such amendments or changes with this
Compliance Certificate.

 

Yes

No

5)

Has Borrower or any Subsidiary entered into or amended any Material Agreement?
If yes, please explain and provide a copy of the Material Agreement(s) and/or
amendment(s).

 

Yes

No

6)

Has Borrower provided the Collateral Agent with all notices required to be
delivered under Sections 6.2(a) and 6.2(b) of the Loan Agreement?

 

Yes

No

 

 

 

 

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

 

Exceptions

Please explain any exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions.” Attach separate sheet if additional
space needed.)

 

SCPHARMACEUTICALS INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Date:

 

 

 

 

 

 

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

 

 

COLLATERAL AGENT USE ONLY

 

Received by:

 

Date:

 

Verified by:

 

Date:

 

Compliance Status:

Yes

No

 

 

US-DOCS\104482907.4

 

 

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

 

Execution Version

 

CONSENT AND SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS CONSENT AND SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
“Amendment”), dated as of December 12, 2018 (the “Amendment Effective Date”), is
made among scPharmaceuticals Inc., a Delaware corporation (“Borrower”), Solar
Capital Ltd., a Maryland corporation (“Solar”), in its capacity as collateral
agent (in such capacity, together with its successors and assigns in such
capacity, “Collateral Agent”) and the Lenders listed on Schedule 1.1 of the Loan
and Security Agreement (as defined below) or otherwise a party hereto from time
to time including Solar in its capacity as a Lender and Silicon Valley Bank
(“Bank”) as a Lender (each a “Lender” and collectively, the “Lenders”).

The Borrower, the Lenders and Collateral Agent are parties to a Loan and
Security Agreement dated as of May 23, 2017 (as amended by that certain First
Amendment to Loan and Security Agreement dated as of November 21, 2018, and as
further amended, restated or modified from time to time, the “Loan and Security
Agreement”).

The Borrower intends to form a wholly-owned subsidiary incorporated in the
Commonwealth of Massachusetts named scPharmaceuticals Securities Corporation
(“Securities Corp”) for the purpose of making investments as a Massachusetts
security corporation under 830 CMR 63.38B.1 of the Massachusetts tax code (the
“MSC Subsidiary Formation”).

The Borrower has requested that the Lenders (a) provide their consent to the MSC
Subsidiary Formation and (b) agree to certain amendments to the Loan and
Security Agreement. Subject to the terms and conditions hereof, the Lenders have
agreed to (a) provide such consent and (b) such amendments to the Loan and
Security Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1                Definitions; Interpretation.

(a)Terms Defined in Loan and Security Agreement. All capitalized terms used in
this Amendment (including in the recitals hereof) and not otherwise defined
herein shall have the meanings assigned to them in the Loan and Security
Agreement.

(b)Interpretation. The rules of interpretation set forth in Section 1.1 of the
Loan and Security Agreement shall be applicable to this Amendment and are
incorporated herein by this reference.

SECTION 2               Limited Consent.  Subject to the terms of Section 4
below, the Lenders hereby consent to the MSC Subsidiary Formation and to
Borrower’s ownership of the stock of Securities Corp, and agrees that (a)
Borrower’s ownership of the stock of Securities Corp shall be deemed “Permitted
Investments” under the Loan and Security Agreement; and (b) the MSC Subsidiary
Formation and Borrower’s ownership of the stock of Securities Corp shall not be
deemed a breach of the negative covenant regarding investments pursuant to
Section 7.8 of the Loan and Security Agreement; and (c) neither the MSC
Subsidiary Formation nor Borrower’s ownership of the stock of Securities Corp
shall constitute, in and of itself, an “Event of Default” under the Loan and
Security Agreement.

SECTION 3               Amendments to the Loan and Security Agreement.

(a)The Loan and Security Agreement shall be amended as follows effective as of
the Amendment Effective Date:

(i)New Definitions.   The following definitions are added to Section 1.3 in
their proper alphabetical order:

“MSC Subsidiary” means a wholly owned Subsidiary incorporated in the
Commonwealth of Massachusetts or the State of Delaware for the purpose of
holding Investments as a Massachusetts security corporation under 830 CMR
63.38B.1 of the Massachusetts tax code and applicable regulations (as the same
may be amended, modified or replaced from time to time).

“Pledge Agreement” means that certain Pledge Agreement dated as of the Second
Amendment Effective Date, between Borrower and Solar, as amended, amended and
restated, supplemented or otherwise modified from time to time.

“Second Amendment Effective Date” means December 12, 2018.

(ii)Amended and Restated Definition.   The following definitions are hereby
amended and restated as follows:

“Guarantor” is any Person (including all direct or indirect Subsidiaries of
Borrower other than MSC Subsidiary; provided that Borrower shall have maintained
compliance with Section 7.15 at all times) providing a Guaranty of the
Obligations in favor of Collateral Agent for the benefit of the Secured Parties.

“Loan Documents” are, collectively, this Agreement, each Control Agreement, the
Perfection Certificates, each Compliance Certificate, the ACH Letter, each Loan
Payment Request Form, any Guarantees, the Exit Fee Agreement, the Pledge
Agreement, any subordination agreements, any note, or notes or guaranties
executed by Borrower or any other Person, any agreements creating or perfecting
rights in the Collateral (including all insurance certificates and endorsements,
landlord consents and bailee consents) and any other present or future agreement
entered into by Borrower, any Guarantor or any other Person for the benefit of
the Lenders and Collateral Agent, as applicable, in connection with this
Agreement; all as amended, restated, or otherwise modified.

(iii)Section 7 is hereby amended by inserting a new Section 7.15 at the end
thereof as follows:

US-DOCS\104482907.4

 

 

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

 

7.15      MSC Investment Covenant.       Permit, at any time that MSC Subsidiary
has any assets or liabilities, Qualified Cash to be less than 110% of the then
aggregate outstanding Obligations.

(iv)Exhibit D to the Loan and Security Agreement is hereby amended and restated
in its entirety in the form attached hereto as Exhibit A.

(b)References Within Loan and Security Agreement. Each reference in the Loan and
Security Agreement to “this Agreement” and the words “hereof,” “herein,”
“hereunder,” or words of like import, shall mean and be a reference to the Loan
and Security Agreement as amended by this Amendment.

SECTION 4               Conditions of Effectiveness. The
effectiveness  of  this  Amendment  shall  be  subject  to  the satisfaction of
each of the following conditions precedent:

(a)Fees and Expenses. The Borrower shall have paid (i) all invoiced costs and
expenses then due in accordance with Section 6(e), and (ii) all other fees,
costs and expenses, if any, due and payable as of the Amendment Effective Date
under the Loan and Security Agreement.

(b)This Amendment. Collateral Agent shall have received this Amendment, executed
by the Borrower.

(c)Pledge Agreement. Collateral Agent shall have received that certain Pledge
Agreement dated as of the date hereof, between Borrower and Solar, executed by
the Borrower.

(d)Officer’s Certificate. Collateral Agent shall have received a certificate of
an officer of the Borrower with respect to incumbency and resolutions
authorizing the execution and delivery of this Agreement, in form acceptable to
Collateral Agent and the Lenders.

(e)Representations and Warranties; No Default. On the Amendment Effective Date,
after giving effect to the amendment of the Loan and Security Agreement
contemplated hereby:

(i)The representations and warranties contained in Section 5 shall be true and
correct on and as of the Amendment Effective Date as though made on and as of
such date; and

(ii)There exist no Events of Default or events that with the passage of time
would result in an Event of Default.

SECTION 5 Representations and Warranties. To induce the Lenders to enter into
this Amendment, the Borrower hereby confirms, as of the date hereof, (a) that
the representations and warranties made by it in Section 5 of the Loan and
Security Agreement and in the other Loan Documents are true and correct in all
material respects; provided, however, that such materiality qualifier shall not
be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof; (b) that there has not been and
there does not exist a Material Adverse Change; and (c) that the information
included in the Perfection Certificate delivered to Collateral Agent on the
Effective Date remains true and correct in all material respects. For the
purposes of this Section 5, (i) each reference in Section 5 of the Loan and
Security Agreement to “this Agreement,” and the words “hereof,” “herein,”
“hereunder,” or words of like import in such Section, shall mean and be a
reference to the Loan and Security Agreement as amended by this Amendment, and
(ii) any representations and warranties which relate solely to an earlier date
shall not be deemed confirmed and restated as of the date hereof (provided that
such representations and warranties shall be true, correct and complete in all
material respects as of such earlier date).

SECTION 6       Miscellaneous.

(a)Loan Documents Otherwise Not Affected; Reaffirmation. Except as expressly
amended pursuant hereto or referenced herein, the Loan and Security Agreement
and the other Loan Documents shall remain unchanged and in full force and effect
and are hereby ratified and confirmed in all respects. The Lenders’ and
Collateral Agent’s execution and delivery of, or acceptance of, this Amendment
shall not be deemed to create a course of dealing or otherwise create any
express or implied duty by any of them to provide any other or further
amendments, consents or waivers in the future.  The Borrower hereby reaffirms
the grant of security under Section 4.1 of the Loan and Security Agreement and
hereby reaffirms that such grant of security in the Collateral secures all
Obligations under the Loan and Security Agreement, including without limitation
any Term Loans funded on or after the Amendment Effective Date, as of the date
hereof.

(b)Conditions. For purposes of determining compliance with the conditions
specified in Section 4, each Lender that has signed this Amendment shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless Collateral Agent shall have
received notice from such Lender prior to the Amendment Effective Date
specifying its objection thereto.

(c)Release. In consideration of the agreements of Collateral Agent and each
Lender contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrower, on behalf of
itself and its successors, assigns, and other legal representatives, hereby
fully, absolutely, unconditionally and irrevocably releases, remises and forever
discharges Collateral Agent and each Lender, and its successors and assigns, and
its present and former shareholders, affiliates, subsidiaries, divisions,
predecessors, directors, officers, attorneys, employees, agents and other
representatives (Agent, Lenders and all such other persons being hereinafter
referred to collectively as the “Releasees” and individually as a “Releasee”),
of and from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings,
damages and any and all other claims, counterclaims,
defenses,  rights  of  set-off, demands and liabilities whatsoever of every name
and nature, known or unknown, suspected or unsuspected, both at law and in
equity, which Borrower, or any of its successors, assigns, or other legal
representatives may now or hereafter own, hold, have or claim to have against
the Releasees or any of them for, upon, or by reason of any circumstance,
action, cause or thing whatsoever which arises at any time on or prior to the
day and date of this Amendment, including, without limitation, for or on account
of, or in relation to, or in any way in connection with the Loan Agreement, or
any of the other Loan Documents or transactions thereunder or related thereto.
Borrower understands, acknowledges and agrees that

US-DOCS\104482907.4

 

 

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

 

the release set forth above may be pleaded as a full and complete defense and
may be used as a basis for an injunction against any action, suit or other
proceeding which may be instituted, prosecuted or attempted in breach of the
provisions of such release. Borrower agrees that no fact, event, circumstance,
evidence or transaction which could now be asserted or which may hereafter be
discovered shall affect in any manner the final, absolute and unconditional
nature of the release set forth above.

(d)No Reliance. The Borrower hereby acknowledges and confirms to Collateral
Agent and the Lenders that the Borrower is executing this Amendment on the basis
of its own investigation and for its own reasons without reliance upon any
agreement, representation, understanding or communication by or on behalf of any
other Person.

(e)Costs and Expenses. The Borrower agrees to pay to Collateral Agent within ten
(10) days of its receipt of an invoice (or on the Amendment Effective Date to
the extent invoiced on or prior to the Amendment Effective Date), the reasonable
documented out-of-pocket costs and expenses of Collateral Agent and the Lenders
party hereto, and the reasonable documented fees and disbursements of counsel to
Collateral Agent and the Lenders party hereto (including allocated costs of
internal counsel), in connection with the  negotiation,  preparation, execution
and delivery of this Amendment and any other documents to be delivered in
connection herewith on the Amendment Effective Date or after such date.

(f)Binding Effect. This Amendment binds and is for the benefit of the successors
and permitted assigns of each party.

(g)Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER THAN THE
LAWS OF THE STATE OF NEW YORK), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL.

(h)Complete Agreement; Amendments; Exit Fee Agreement. This Amendment and the
Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements with respect to such subject matter.
All prior agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of this Amendment and
the Loan Documents merge into this Amendment and the Loan Documents.  For the
avoidance of doubt and notwithstanding anything to the contrary in this
Amendment, Borrower (a) reaffirms its obligations under the Exit Fee Agreement,
including  without limitation its obligation to pay the Exit Fee (as defined in
the Exit Fee Agreement) if and when due thereunder, and (b) agrees that the
defined term “Loan Agreement” as defined in the Exit Fee Agreement shall on and
after the Amendment Effective Date mean the Loan and Security Agreement as
amended by this Amendment and as may be amended, restated or modified from time
to time on or after the Amendment Effective Date.

(i)Severability of Provisions. Each provision of this Amendment is severable
from every other provision in determining the enforceability of any provision.

(j)Counterparts. This Amendment may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Amendment.
Delivery of an executed counterpart of a signature page of this Amendment by
facsimile, portable document format (.pdf) or other electronic transmission will
be as effective as delivery of a manually executed counterpart hereof.

(k)Loan Documents. This Amendment and the documents related thereto shall
constitute Loan Documents.

 

 

US-DOCS\104482907.4

 

 

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

 

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment, as of
the date first above written.

 

 

BORROWER:

 

 

 

SCPHARMACEUTICALS INC.,

as Borrower

 

 

 

 

 

 

By:

 

/s/ John Tucker

Name:

 

John Tucker

Title:

 

Chief Executive Officer and President

 

 

[Signature Page to Second Amendment to Loan and Security Agreement
(scPharma/Solar)]

 

 

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

 

 

COLLATERAL AGENT AND LENDER:

 

 

 

SOLAR CAPITAL LTD.,

as Collateral Agent and a Lender

 

 

 

 

 

 

By:

 

/s/ Anthony J. Storino

Name:

 

Anthony J. Storino

Title:

 

Vice President

 

 

 

 

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

 

 

LENDER:

 

 

 

SILICON VALLEY BANK,

as a Lender

 

 

 

 

 

 

By:

 

/s/ Lauren Cole

Name:

 

Lauren Cole

Title:

 

Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Second Amendment to Loan and Security Agreement
(scPharma/Solar)]

 

EXHIBIT A

 

EXHIBIT D

 

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

 

 

Compliance Certificate

 

TO:

SOLAR CAPITAL LTD., as Collateral Agent and Lender SILICON VALLEY BANK, as
Lender

 

FROM:

SCPHARMACEUTICALS INC.

 

The undersigned authorized officer (“Officer”) of SCPHARMACEUTICALS INC.
(“Borrower”), hereby certifies that in accordance with the terms and conditions
of the Loan and Security Agreement dated as of May 23, 2017, by and among
Borrower, Collateral Agent, and the Lenders from time to time party thereto (the
“Loan Agreement;” capitalized terms used but not otherwise defined herein shall
have the meanings given them in the Loan Agreement),

(a)Borrower is in complete compliance for the period ending   covenants with all
required except as noted below;

(b)There are no defaults or Events of Default, except as noted below;

(c)Except as noted below, all representations and warranties of Borrower stated
in the Loan Documents are true and correct in all material respects on this date
and for the period described in (a), above; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date.

(d)Borrower, and each of Borrower’s Subsidiaries, has timely filed all required
tax returns and reports, Borrower, and each of Borrower’s Subsidiaries, has
timely paid all foreign, federal, state, and local taxes, assessments, deposits
and contributions owed by Borrower, or Subsidiary, except as otherwise permitted
pursuant to the terms of Section 5.8 of the Loan Agreement;

(e)No Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification  to Collateral Agent and the
Lenders.

Attached are the required documents, if any, supporting our certification(s).
The Officer, on behalf of Borrower, further certifies that the attached
financial statements are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next except as explained in an accompanying letter or footnotes and except, in
the case of unaudited financial statements, for the absence of footnotes and
subject to year-end audit adjustments as to the interim financial statements.

 

Please indicate compliance status since the last Compliance Certificate by
circling Yes, No, or N/A under “Complies” column.

 

 

Reporting Covenant

 

Requirement

Actual

 

Complies

 

 

 

 

 

 

 

1)

Financial statements

 

Monthly within 30 days

 

 

Yes     No   N/A

2)

Annual (CPA Audited) statements

 

Within 180 days after FYE

 

 

Yes     No   N/A

3)

Annual Financial Projections/Budget (prepared on a monthly basis)

 

Annually (within earlier 30 days of approval or 60 days of FYE), and when
revised

 

 

Yes     No   N/A

4)

A/R & A/P agings

 

If applicable

 

 

Yes     No   N/A

5)

8-K, 10-K and 10-Q Filings

 

If applicable, within 5 days of filing

 

 

Yes     No   N/A

6)

Compliance Certificate

 

Monthly within 30 days

 

 

Yes     No   N/A

7)

IP Report

 

When required

 

 

Yes     No   N/A

8)

Total amount of Borrower’s cash and cash equivalents at the last day of the
measurement period

 

 

$          _

 

Yes     No   N/A

9)

Total amount of Borrower’s Subsidiaries’ cash and cash equivalents at the last
day of the measurement period

 

 

$          _

 

Yes     No   N/A

 

Deposit and Securities Accounts

(Please list all accounts; attach separate sheet if additional space needed)

 

Institution Name

Account Number

New Account?

 

Account Control Agreement in place?

 

 

 

 

 

 

1)

 

 

Yes     No

 

Yes     No

2)

 

 

Yes     No

 

Yes     No

3)

 

 

Yes     No

 

Yes     No

4)

 

 

Yes     No

 

Yes     No

 

 

 

 

 

 

 

US-DOCS\104036867.4

 

 

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

 

 

Financial Covenants

 

 

Minimum Liquidity Requirement

(A) Qualified Cash

(B) A/P not paid within 90 days from invoice date

 

Complies with Minimum Liquidity Requirement (Is (B) plus $10,000,000 less than
(A))?

 

 

 

 

 

 

 

 

 

 

 

Yes     No     N/A

 

 

 

 

 

 

 

MSC Investment Covenant

(A) Qualified Cash

(B) Aggregate outstanding Obligations

 

Complies with MSC Investment Covenant (Is (A) at least 110% of (B))1?

 

 

 

 

 

 

 

 

 

 

 

Yes     No     N/A

 

 

1 MSC Investment Covenant only applicable at any time that MSC Subsidiary has
any assets or liabilities.

 

Other Matters

 

1)

Have there been any changes in Key Persons since the last Compliance
Certificate?

 

Yes

No

2)

Have there been any transfers/sales/disposals/retirement of Collateral or IP
prohibited by the Loan Agreement?

 

Yes

No

3)

Have there been any new or pending claims or causes of action against Borrower
that involve more than Two Hundred Fifty Thousand Dollars ($250,000.00)?

 

Yes

No

4)

Have there been any amendments of or other changes to the capitalization table
of Borrower and to the Operating Documents of Borrower or any of its
Subsidiaries? If yes, provide copies of any such amendments or changes with this
Compliance Certificate.

 

Yes

No

5)

Has Borrower or any Subsidiary entered into or amended any Material Agreement?
If yes, please explain and provide a copy of the Material Agreement(s) and/or
amendment(s).

 

Yes

No

6)

Has Borrower provided the Collateral Agent with all notices required to be
delivered under Sections 6.2(a) and 6.2(b) of the Loan Agreement?

 

Yes

No

 

 

US-DOCS\104036867.4

 

 

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

 

Exceptions

 

Please explain any exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions.” Attach separate sheet if additional
space needed.)

 

SCPHARMACEUTICALS INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Date:

 

 

 

 

COLLATERAL AGENT USE ONLY

 

 

Received by:

Date:

Verified by:

Date:

 

 

Compliance Status:

Yes No

 

US-DOCS\104036867.4