Exhibit 10.2

Execution Version

SECURITY AGREEMENT

This SECURITY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this “Agreement”), dated as of May 29, 2020, is made
by and among Baudax Bio, Inc., a Pennsylvania corporation; Baudax Bio N.A. LLC,
a Delaware limited liability company; Baudax Bio Limited, an Irish private
company limited by shares having company number 562027 (the “Irish Guarantor”)
(each a “Grantor” and, collectively, the “Grantors”); and Wilmington Trust,
National Association, solely in its capacity as Agent for the benefit of the
Lenders (together with its successors and assigns in such capacity, the “Secured
Party”).

RECITALS:

WHEREAS, Baudax Bio, Inc. will enter into a Credit Agreement dated as of the
date hereof (as amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”) with Agent and the lenders party thereto from
time to time (collectively, with their permitted successors and assignees, the
“Lenders”) pursuant to which the Lenders will extend to Baudax Bio, Inc. a
credit facility in an aggregate amount of up to $50,000,000;

WHEREAS, each Grantor will derive substantial benefit and advantage from the
financial accommodations to Baudax Bio, Inc. set forth in the Credit Agreement;

WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
Agent for its benefit and the benefit of the Lenders.

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

SECTION 1. Definitions. Capitalized terms used herein without definition and
defined in the Credit Agreement are used herein as defined therein. In addition,
as used herein:

“Accounts” means any “account,” as such term is defined in the UCC, and, in any
event, shall include, without limitation, “supporting obligations” as defined in
the UCC.

“Chattel Paper” means any “chattel paper,” as such term is defined in the
UCC.“Collateral” shall have the meaning ascribed thereto in Section 3 hereof.

“Commercial Tort Claims” means “commercial tort claims”, as such term is defined
in the UCC.

“Contracts” means all contracts, undertakings, or other agreements (other than
rights evidenced by Chattel Paper, Documents or Instruments) in or under which a
Grantor may now or hereafter have any right, title or interest, including,
without limitation, with respect to an Account, any agreement relating to the
terms of payment or the terms of performance thereof.

“Control Agreement” has the meaning set forth in Section 4.5 hereof.

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“Copyrights” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any Applicable Law in copyrights and all mask work,
database and design rights, whether or not registered or published, all
registrations and recordations thereof and all applications in connection
therewith, including, without limitation, the copyright registrations and
copyright applications listed on Schedule III attached hereto (if any), and all
renewals of any of the foregoing.

“Deposit Accounts” means all “deposit accounts” as such term is defined in the
UCC, now or hereafter held in the name of a Grantor.

“Documents” means any “documents,” as such term is defined in the UCC, and shall
include, without limitation, all documents of title (as defined in the UCC),
bills of lading or other receipts evidencing or representing Inventory or
Equipment.

“Equipment” means any “equipment,” as such term is defined in the UCC and, in
any event, shall include, Motor Vehicles.

“General Intangibles” means any “general intangibles,” as such term is defined
in the UCC, and, in any event, shall include, without limitation, payment
intangibles, contract rights, rights to payment, rights arising under common
law, statutes, or regulations, choses or things in action, goodwill (including
the goodwill associated with any Trademark), Patents, Trademarks, Copyrights,
URLs and domain names, industrial designs and other Intellectual Property or
rights therein or applications therefor, whether under license or otherwise,
programs, programming materials, blueprints, drawings, purchase orders, customer
lists, monies due or recoverable from pension funds, rights to payment and other
rights under any royalty or licensing agreements, including Intellectual
Property Licenses, infringement claims, computer programs, information contained
on computer disks or tapes, software, literature, reports, catalogs, pension
plan refunds, pension plan refund claims, insurance premium rebates, tax
refunds, and tax refund claims, interests in a partnership or limited liability
company which do not constitute a security under Article 8 of the UCC.

“Goods” means any “goods”, as such term is defined in the UCC, including,
without limitation, fixtures and embedded Software to the extent included in
“goods” as defined in the UCC.

“Instruments” means any “instrument,” as such term is defined in the UCC, and
shall include, without limitation, promissory notes, drafts, bills of exchange,
trade acceptances, letters of credit, letter of credit rights (as defined in the
UCC), and Chattel Paper.

“Intellectual Property” means all rights, title and interests in intellectual
property arising under any Applicable Law and all IP Ancillary Rights relating
thereto, including all Copyrights, Patents, Trademarks, Internet Domain Names,
Trade Secrets, industrial designs, integrated circuit topographies, confidential
proprietary information and rights under Intellectual Property Licenses.

“Intellectual Property Licenses” means all contractual obligations (and all
related IP Ancillary Rights), whether written or oral, granting any right, title
and interest (other than ownership) in any Intellectual Property, whether a
Grantor is a licensee or licensor under any such license agreement, including
the license agreements listed on Schedule IV attached hereto.

 

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“Internet Domain Name” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Applicable Law in internet domain names.

“Inventory” means any “inventory,” as such term is defined in the UCC.

“Investment Property” means any “investment property”, as such term is defined
in the UCC.

“IP Ancillary Rights” means, with respect to an item of intellectual property
all foreign counterparts to, and all divisionals, reversions, continuations,
continuations-in-part, reissues, reexaminations, renewals and extensions of,
such Intellectual Property and all income, royalties, proceeds and liabilities
at any time due or payable or asserted under or with respect to any of the
foregoing or otherwise with respect to such Intellectual Property, including all
rights to sue or recover at law or in equity for any past, present or future
infringement, misappropriation, dilution, violation or other impairment thereof,
and, in each case, all rights to obtain any other such right.

“Letter-of-Credit Right” means any “letter-of-credit right”, as such term is
defined in the UCC.

“Motor Vehicles” shall mean motor vehicles, tractors, trailers and other like
property, whether or not the title thereto is governed by a certificate of title
or ownership.

“Patents” means all (i) all patents and certificates of invention, or similar
property rights, and applications for any of the foregoing, of the United
States, any other country or any political subdivision thereof and those patents
and patent applications listed on Schedule V attached hereto (if any), (ii) all
reissues, divisions, continuations, continuations-in-part, extensions, renewals,
and reexaminations thereof, (iii) all rights corresponding thereto throughout
the world, (iv) all inventions and improvements described therein, (v) all
rights to sue for past, present and future infringements thereof, (vi) all
licenses, claims, damages, and proceeds of suit arising therefrom, (vii) all
proceeds of the foregoing, including, without limitation, licenses, royalties,
and income, and (viii) without duplication, all IP Ancillary Rights in respect
of the foregoing and the reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any of the foregoing, all rights
corresponding thereto throughout the world, and all IP Ancillary Rights in
respect of any of the foregoing.

“Proceeds” means “proceeds,” as such term is defined in the UCC and, in any
event, includes, without limitation, (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable with respect to any of the Collateral,
(b) any and all payments (in any form whatsoever) made or due and payable from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any person acting under color of Governmental Authority), and
(c) any and all other amounts from time to time paid or payable under, in
respect of or in connection with any of the Collateral.

 

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“Representative” means any Person acting as agent, representative or trustee on
behalf of the Secured Party from time to time.

“Software” means all “software” as such term is defined in the UCC, now owned or
hereafter acquired by a Grantor, other than software embedded in any category of
Goods, including, without limitation, all computer programs and all supporting
information provided in connection with a transaction related to any program.

“Supporting Obligation” means any “supporting obligation”, as such term is
defined in the UCC.

“Trade Secrets” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Applicable Law in or relating to trade
secrets.

“Trademarks” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any Applicable Law in any trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, and other source or business identifiers and, in
each case, all goodwill associated therewith, all registrations and recordings
thereof and all applications in connection therewith, including, without
limitation, the trademarks, trademark applications listed in Schedule VI
attached hereto (if any) and renewals thereof, and all related IP Ancillary
Rights with respect to any of the foregoing.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York; provided, that to the extent that the Uniform Commercial
Code is used to define any term herein and such term is defined differently in
different Articles of the Uniform Commercial Code, the definition of such term
contained in Article 9 shall govern.

SECTION 2. Representations, Warranties and Covenants of Grantors. Each Grantor
represents and warrants to, and covenants with, the Secured Party as follows:

(a) Such Grantor has or will have rights in and the power to transfer the
Collateral in which it purports to grant a security interest pursuant to
Section 3 hereof (subject, with respect to after acquired Collateral, to such
Grantor acquiring the same) and no Lien other than Permitted Liens exists or
will exist upon such Collateral at any time.

(b) This Agreement is effective to create in favor of the Secured Party a valid
security interest in and Lien upon all of such Grantor’s right, title and
interest in and to the Collateral, and upon (i) the filing of appropriate UCC
financing statements in the jurisdictions listed on Schedule I attached hereto,
(ii) each Deposit Account being subject to a Control Agreement (as hereinafter
defined) among the applicable Grantor, depository institution and the Secured
Party on behalf of the Lenders, (iii) filings in the United States Patent and
Trademark Office or United States Copyright Office with respect to Collateral
that is Patents, Trademarks or Copyrights, as the case may be, (iv) the filing
of the Mortgages in the jurisdictions listed on Schedule I hereto, (v) the
filing of a Form C1 in the Companies Registration Office of Ireland in respect
of this Agreement, (vi) a filing with the Revenue Commissioners of Ireland in
respect of this Agreement pursuant to section 1001 of the Taxes Consolidation
Act 1997 (vii) the delivery to the Secured Party of the Pledged Collateral
together with assignments in blank, (viii) the security

 

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interest created hereby being noted on each certificate of title evidencing the
ownership of any Motor Vehicle in accordance with Section 4.1(d) hereof and
(ix) delivery to the Secured Party or its Representative of Instruments duly
endorsed by such Grantor or accompanied by appropriate instruments of transfer
duly executed by such Grantor with respect to Instruments not constituting
Chattel Paper, such security interest will be a duly perfected first priority
perfected security interest (subject only to Permitted Liens) in all of the
Collateral.

(c) All of the Equipment, Inventory and Goods owned by such Grantor is located
at the places as specified on Schedule I attached hereto other than locations
where such Equipment, Inventory and Goods is temporarily located for maintenance
or repair and locations in transit. Except as disclosed on Schedule I, none of
the Collateral is in the possession of any bailee, warehousemen, processor or
consignee. Schedule I discloses such Grantor’s name as of the date hereof as it
appears in official filings in the state or province, as applicable, of its
incorporation, formation or organization, the type of entity of such Grantor
(including corporation, partnership, limited partnership or limited liability
company), organizational identification number issued by such Grantor’s state of
incorporation, formation or organization (or a statement that no such number has
been issued), such Grantor’s state or province, as applicable, of incorporation,
formation or organization and the chief place of business, chief executive
office and the office where such Grantor keeps its books and records and the
states in which such Grantor conducts its business. Such Grantor has only one
state or province, as applicable, of incorporation, formation or organization.
Such Grantor does not do business and has not done business during the past five
(5) years under any trade name or fictitious business name except as disclosed
on Schedule II attached hereto.

(d) No Copyrights, Patents, Intellectual Property Licenses or Trademarks listed
on Schedules III, IV and V, respectively, if any, have been adjudged invalid or
unenforceable or have been canceled, in whole or in part, or are not presently
subsisting. Each of such Copyrights, Patents, Intellectual Property Licenses and
Trademarks (if any) is valid and enforceable. Such Grantor is the sole and
exclusive owner of the entire and unencumbered right, title and interest in and
to each of such Copyrights, Patents, Intellectual Property Licenses and
Trademarks, identified on Schedules III, IV and V, as applicable, as being owned
by such Grantor, free and clear of any Liens, including without limitation
licenses, shop rights and covenants by such Grantor not to sue third persons,
other than Permitted Liens. Such Grantor has adopted, used and is currently
using, or has a current bona fide intention to use, all of such Trademarks and
Copyrights. Such Grantor has not received written notice of any suits or actions
commenced or threatened with reference to the Copyrights, Patents or Trademarks
owned by it.

(e) Without duplication of any information required to be delivered by such
Grantor to the Secured Party under and in accordance with the terms of the
Credit Agreement, each Grantor agrees to deliver to the Secured Party an updated
Schedule I, II, III, IV, V, VI, VII, and VIII within thirty (30) days of any
change thereto.

(f) All depositary and other accounts including, without limitation, Deposit
Accounts, securities accounts, brokerage accounts and other similar accounts,
maintained by each Grantor (other than Excluded Accounts) are described on
Schedule VII hereto, which description includes for each such account the name
of the Grantor maintaining such account, the name and address of the financial
institution at which such account is maintained and the account number of

 

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such account. Each Grantor shall comply with Section 7.12 of the Credit
Agreement. Each Grantor shall deliver to Secured Party a revised version of
Schedule VII showing any changes thereto promptly following, but in any event
within five (5) Business Days of, any such change. Each Grantor hereby
authorizes the financial institutions at which such Grantor maintains an account
to provide Secured Party with such information with respect to such account as
Secured Party from time to time reasonably may request, and each Grantor hereby
consents to such information being provided to Secured Party. In addition, all
of such Grantor’s depositary, security, brokerage and other accounts including,
without limitation, Deposit Accounts (other than Excluded Accounts) shall be
subject to the provisions of Section 4.5 hereof.

(g) Such Grantor does not own any Commercial Tort Claim having a value in excess
of $50,000 except for those disclosed on Schedule VIII hereto (if any).

(h) Such Grantor does not have any interest in real property except as disclosed
on Schedule IX (if any). Each Grantor shall deliver to Secured Party a revised
version of Schedule IX showing any changes thereto within thirty (30) days of
any such change. Except as otherwise agreed to by the Required Lenders, all such
interests in real property with respect to such real property are subject to a
Mortgage in favor of Secured Party.

(i) Each Grantor shall duly and properly record each interest in real property
held by such Grantor that is required to be subject to a Mortgage, except with
respect to easements, rights of way, access agreements, surface damage
agreements, surface use agreements or similar agreements that such Grantor, in
good faith, using prudent customs and practices in the industry in which it
operates, does not believe are of material value or material to the operation of
such Grantor’s business or, with respect to state and federal rights of way, are
not capable of being recorded as a matter of state and federal law.

(j) All Equipment (including, without limitation, Motor Vehicles) owned by a
Grantor and subject to a certificate of title or ownership statute is described
on Schedule X hereto.

SECTION 3. Collateral.

(a) As collateral security for the prompt payment in full when due (whether at
stated maturity, by acceleration or otherwise) of the Obligations, each Grantor
hereby pledges and grants to the Secured Party, for the benefit of the Lenders,
a Lien on and security interest in and to all of such Grantor’s right, title and
interest in the following properties and assets of such Grantor, whether now
owned by such Grantor or hereafter acquired and whether now existing or
hereafter coming into existence and wherever located (all being collectively
referred to herein as “Collateral”):

i) all Instruments, together with all payments thereon or thereunder, and
Letter-of-Credit Rights;

ii) all Accounts and Supporting Obligations;

iii) all Inventory;

iv) all General Intangibles (including Software);

 

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v) all Equipment;

vi) all Documents;

vii) all Contracts;

viii) all Goods;

ix) all Investment Property, including without limitation all equity interests
now owned or hereafter acquired by such Grantor;

x) all Deposit Accounts, including, without limitation, the Liquidity Account
and the balance from time to time in all bank accounts maintained by such
Grantor;

xi) all Commercial Tort Claims specified on Schedule VIII;

xii) all Trademarks, Patents and Copyrights;

xiii) all Chattel Paper, all amounts payable thereunder, all rights and remedies
of such Grantor thereunder including but limited to the right to amend, grant
waivers and declare defaults, any and all accounts evidenced thereby, any
guarantee thereof, and all collections and monies due or to become due or
received by any Person in payment of any of the foregoing;

xiv) all books and records pertaining to the Collateral; and

xv) all other tangible and intangible property of such Grantor, including,
without limitation, all interests in real property, Proceeds, tort claims,
products, accessions, rents, profits, income, benefits, substitutions, additions
and replacements of and to any of the property of such Grantor described in the
preceding clauses of this Section 3 (including, without limitation, any proceeds
of insurance thereon, insurance claims and all rights, claims and benefits
against any Person relating thereto), other rights to payments not otherwise
included in the foregoing, and all books, correspondence, files, records,
invoices and other papers, including without limitation all tapes, cards,
computer runs, computer programs, computer files and other papers, documents and
records in the possession or under the control of such Grantor, any computer
bureau or service company from time to time acting for such Grantor.

Notwithstanding anything to the contrary in this Agreement, the term
“Collateral” shall be deemed to exclude, all of the following property: (A) any
intent-to-use trademark applications filed pursuant to Section 1(b) of the
Lanham Act, 15 U.S.C. §1051, to the extent that, and solely during the period in
which, the grant of a security interest therein otherwise invalidate such
Grantor’s right, title or interest therein, (B) any property owned by a Grantor
that is subject to a purchase money Lien or a Finance Lease permitted hereunder
and under the Credit Agreement if the contractual obligation pursuant to which
such Lien is granted (or the document providing for such Finance Lease)
prohibits the creation of a Lien thereon or expressly requires the consent of
any person other than a Loan Party, unless such consent has been obtained or
such prohibitions otherwise cease to exist, in which case such Collateral shall
automatically become subject to the security interest granted hereunder, (C) any
General Intangibles or other rights, in each case arising under any contracts,
instruments, licenses or other documents as to which the grant of a security

 

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interest would violate or invalidate any such contract, instrument, license or
other document or give any other party to such contract, instrument, license or
other document the right to terminate its obligations thereunder, (D) any asset,
the granting of a security interest in which would be void or illegal under any
applicable governmental law, rule or regulation, or pursuant thereto would
result in, or permit the termination of, such asset, and (E) the Excluded
Accounts, (F) the Assigned Reversion IP Assets (as such term is defined in
Exhibit E to the Meloxicam Acquisition Agreement as in effect on the Closing
Date); provided, that, the Assigned Reversion IP Assets (as such term is defined
in Exhibit E to the Meloxicam Acquisition Agreement as in effect on the Closing
Date) shall cease to be excluded from the term “Collateral” on the date that all
prohibitions and material restrictions on the provision of a Lien with respect
thereto under the Meloxicam Acquisition Agreement cease to exist or are waived
in accordance with the terms of the Meloxicam Acquisition Agreement; provided,
that the property described in clauses (C), (D) and (F) above shall only be
excluded from the term “Collateral” to the extent the conditions stated therein
are not rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409
of the UCC or any other Applicable Law. No Lien or security interest is hereby
granted on any of the property excluded from the definition of “Collateral”
pursuant to this paragraph and such excluded property shall not be deemed to
constitute “Collateral,” except that if any property of any Grantor shall cease
to be so excluded, a Lien on and security interest shall be deemed immediately
granted thereon under this Security Agreement in favor of the Administrative
Agent for the benefit of the Secured Parties and such property shall constitute
“Collateral” hereunder.

(b) The security interest grant under this Section does not constitute and is
not intended to result in a creation or an assumption by the Secured Party or
any Lender of any obligation of any Grantor or any other Person in connection
with any or all of the Collateral or under any agreement or instrument relating
thereto. Anything herein to the contrary notwithstanding, (i) the exercise by
the Secured Party of any of its rights in the Collateral shall not release any
Grantor from any of its duties or obligations in respect of the Collateral and
(ii) neither the Secured Party nor any Lender shall have any obligations or
liability in respect of the Collateral by reason of this Agreement, nor shall
the Secured Party or any Lender be obligated to perform any of the obligations
or duties of any Grantor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.

SECTION 4. Covenants; Remedies. In furtherance of the grant of the pledge and
security interest pursuant to Section 3 hereof, each Grantor hereby agrees with
the Secured Party as follows:

4.1 Delivery and Other Perfection; Maintenance, etc.

(a) Delivery of Instruments, Documents, Etc. Each Grantor shall deliver and
pledge to the Secured Party or its Representative any and all Instruments,
negotiable Documents and Chattel Paper evidencing amounts greater than $50,000
individually or in the aggregate for all such items, and certificated securities
accompanied by stock/membership interest powers executed in blank, which
stock/membership interest powers may be filled in and completed at any time upon
and following the occurrence and during the continuation of any Event of Default
duly endorsed or accompanied by such instruments of assignment and transfer
executed by such Grantor in such form and substance as the Secured Party or its
Representative (at the direction of the Required Lenders) may request; provided,
that so long as no Event of Default shall have occurred and be continuing, each
Grantor may retain for collection in the ordinary course of business any

 

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Instruments, negotiable Documents and Chattel Paper received by such Grantor in
the ordinary course of business, and the Secured Party or its Representative
shall, promptly upon request of a Grantor, make appropriate arrangements for
making any other Instruments, negotiable Documents and Chattel Paper pledged by
such Grantor available to such Grantor for purposes of presentation, collection
or renewal (any such arrangement to be effected, to the extent deemed
appropriate by the Secured Party or its Representative (at the direction of the
Required Lenders), against a trust receipt or like document). If a Grantor
retains possession of any Chattel Paper, negotiable Documents or Instruments
evidencing amounts greater than $50,000 individually or in the aggregate for all
such items pursuant to the terms hereof, such Chattel Paper, negotiable
Documents and Instruments shall be marked with the following legend: “This
writing and the obligations evidenced or secured hereby are subject to the
security interest of Wilmington Trust, National Association, in its capacity as
agent for one or more creditors, as Secured Party.”

(b) Other Documents and Actions. Each Grantor shall give, execute, deliver, file
and record, as applicable, any financing statement, registration, notice,
instrument, document, agreement, Mortgage or other papers as the Required
Lenders or Agent may reasonably require from time to time to create, preserve,
perfect or validate the security interest granted pursuant hereto (or any
security interest or mortgage contemplated or required hereunder, including with
respect to Section 2(h) of this Agreement) or to enable the Secured Party or its
Representative to exercise and enforce the rights of the Secured Party or its
designee hereunder with respect to such pledge and security interest, provided
that notices to account debtors in respect of any Accounts or Instruments shall
be subject to the provisions of clause (e) below. Notwithstanding the foregoing
each Grantor hereby irrevocably authorizes the Secured Party or its designee at
any time and from time to time to file in any filing office in any jurisdiction
any initial financing statements (and other similar filings or registrations
under any Applicable Law pertaining to the creation, attachment, or perfection
of security interests) and amendments thereto that (a) indicate the Collateral
(i) as all assets of such Grantor or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within the scope
of Article 9 of the UCC, or (ii) as being of an equal or lesser scope or with
greater detail, and (b) contain any other information required by part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether such Grantor is an
organization, the type of organization and any organization identification
number issued to such Grantor, and (ii) in the case of a financing statement
filed as a fixture filing, a sufficient description of real property to which
the Collateral relates. Each Grantor agrees to furnish any such information to
the Secured Party promptly upon request. Each Grantor also ratifies its
authorization for the Secured Party or its designee to have filed in any
jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof.

(c) Books and Records. Each Grantor shall maintain at its own cost and expense,
in all material respects, books and records of the Collateral, including,
without limitation, a record of all payments received and all credits granted
with respect to the Collateral and all other dealings with the Collateral. Upon
the occurrence and during the continuation of any Event of Default, each Grantor
shall deliver and turn over any such books and records (or true and correct
copies thereof) to the Secured Party or its Representative at any time on
demand. Each Grantor shall permit any Representative of the Secured Party, in
accordance with Section 6.2 of the Credit Agreement, to inspect such books and
records at any time during reasonable business hours and will provide
photocopies thereof at such Grantor’s expense to the Secured Party upon request
of the Secured Party.

 

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(d) Motor Vehicles. Each Grantor shall, promptly upon acquiring same, cause the
Secured Party to be listed as the lienholder on each certificate of title or
ownership covering any items of Equipment, including Motor Vehicles, having a
value in excess of $50,000 individually, or otherwise comply with the
certificate of title or ownership laws of the relevant jurisdiction issuing such
certificate of title or ownership in order to properly evidence and perfect
Secured Party’s security interest in the assets represented by such certificate
of title or ownership.

(e) Notice to Account Debtors; Verification. (i) Upon the occurrence and during
the continuance of any Event of Default (or if any material rights of set-off
(other than set-offs against an Account arising under the Contract giving rise
to the same Account) or contra accounts may be asserted), upon request of the
Secured Party or its Representative (at the direction of the Required Lenders),
each Grantor shall promptly notify (and each Grantor hereby authorizes the
Secured Party and its Representative so to notify) each account debtor in
respect of any Accounts or Instruments or other Persons obligated on the
Collateral that such Collateral has been assigned to the Secured Party
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Secured Party, and (ii) the Secured
Party and its Representative shall have the right at any time or times to make
direct verification with the account debtors or other Persons obligated on the
Collateral of any and all of the Accounts or other such Collateral.

(f) Intellectual Property. Each Grantor represents and warrants that the
Copyrights, Patents, Intellectual Property Licenses and Trademarks listed on
Schedules III, IV, V and VI, respectively (if any), constitute all of the
registered Copyrights and all of the Patents, Intellectual Property Licenses and
Trademarks now owned by such Grantor. If such Grantor shall (i) obtain rights to
any new patentable inventions, any registered Copyrights or any Patents,
Intellectual Property Licenses or Trademarks, or (ii) become entitled to the
benefit of any registered Copyrights or any Patents, Intellectual Property
Licenses or Trademarks or any improvement on any Patent, the provisions of this
Agreement above shall automatically apply thereto and such Grantor shall give to
Secured Party notice thereof in accordance with Section 6.8(d) of the Credit
Agreement. Each Grantor hereby authorizes Secured Party to modify this Agreement
by amending Schedules III, IV, V and VI, as applicable, to include any such
registered Copyrights or any such Patents, Intellectual Property Licenses and
Trademarks. Each Grantor shall (i) prosecute diligently any patent, trademark,
or service mark applications pending as of the date hereof or hereafter,
(ii) preserve and maintain all rights in the Copyrights, Patents, Intellectual
Property Licenses and Trademarks, to the extent material to the operations of
the business of such Grantor and (iii) ensure that the Copyrights, Patents,
Intellectual Property Licenses and Trademarks are and remain enforceable, to the
extent material to the operations of the business of such Grantor. Any expenses
incurred in connection with such Grantor’s obligations under this Section 4.1(f)
shall be borne by such Grantor. Except for any such items that a Grantor
reasonably believes in good faith (using prudent industry customs and practices)
are no longer necessary for the on-going operations of its business, no Grantor
shall abandon any material right to file a patent, trademark or service mark
application, or abandon any pending patent, trademark or service mark
application or any other Copyright, Patent, Intellectual Property License or
Trademark without the prior written consent of Secured Party (at the direction
of the Required Lenders), which consent shall not be unreasonably withheld,
except where the abandonment would not reasonably be expected to be material to
the operations of the business of such Grantor.

 

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(g) Further Identification of Collateral. Each Grantor will, when and as often
as requested by the Secured Party or its Representative (at the direction of the
Required Lenders) (but, absent the occurrence and continuance of an Event of
Default, in no event more frequently than quarterly), furnish to the Secured
Party or such Representative, statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Secured Party or its Representative may reasonably request,
all in reasonable detail.

(h) Investment Property. Each Grantor will take any and all actions required or
requested by the Secured Party (at the direction of the Required Lenders), from
time to time, to cause the Secured Party to obtain exclusive control of any
Investment Property owned by such Grantor in a manner acceptable to the Secured
Party and the Required Lenders. For purposes of this Section 4.1(h), the Secured
Party shall have exclusive control of Investment Property if (i) such Investment
Property consists of certificated securities and a Grantor delivers such
certificated securities to the Secured Party (with assignments in blank or
appropriate endorsements if such certificated securities are in registered
form); (ii) such Investment Property consists of uncertificated securities and
the issuer thereof agrees, pursuant to documentation in form and substance
reasonably satisfactory to the Secured Party and the Required Lenders, that it
will comply with instructions originated by the Secured Party without further
consent by such Grantor, and (iii) such Investment Property consists of security
entitlements and either (x) the Secured Party becomes the entitlement holder
thereof or (y) the appropriate securities intermediary agrees, pursuant to the
documentation in form and substance satisfactory to the Secured Party and the
Required Lenders, that it will comply with entitlement orders originated by the
Secured Party without further consent by any Grantor.

(i) Commercial Tort Claims. Each Grantor shall promptly notify Secured Party in
writing of any Commercial Tort Claim acquired by it that concerns a claim in
excess of $50,000 and unless otherwise consented to by Secured Party or the
Required Lenders, such Grantor shall enter into a supplement to this Agreement
granting to Secured Party a Lien on and security interest in such Commercial
Tort Claim.

4.2 Preservation of Rights. Whether or not any Event of Default has occurred or
is continuing, the Secured Party and its Representative shall have the right, at
the direction of the Required Lenders, to take any steps the Secured Party or
its Representative (at the direction of the Required Lenders) deems necessary or
appropriate to preserve any Collateral or any rights against third parties to
any of the Collateral, including obtaining insurance for the Collateral at any
time when such Grantor has failed to do so, and Grantors shall promptly pay, or
reimburse the Secured Party and the Lenders for, all reasonable and customary
expenses incurred in connection therewith.

4.3 Name Change; Location; Bailees.

(a) No Grantor shall form or acquire any subsidiary other than in accordance
with the express terms of the Credit Agreement.

 

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(b) Each Grantor shall provide the Secured Party at least ten (10) Business Days
prior written notice of (i) any reincorporation or reorganization of itself
under the laws of any jurisdiction other than the jurisdiction in which it is
incorporated or organized as of the date hereof, and (ii) any change of its
name, identity or corporate structure. Each Grantor will notify Secured Party
promptly, in writing (but in any event at least ten (10) Business Days) prior to
any such change in the proposed use by such Grantor of any tradename or
fictitious business name other than any such name set forth on Schedule II
attached hereto.

(c) Except for the sale of Inventory in the ordinary course of business, other
sales of assets expressly permitted by the terms of the Credit Agreement and
except for Collateral temporarily located for maintenance or repair (so long as
the applicable Grantor shall have provided Secured Party written notice of such
temporary location) or any Collateral in transit under a valid purchase order or
contract for sale, each Grantor will keep the Collateral with a value in excess
of $50,000 individually or in the aggregate at the locations specified in
Schedule I. Each Grantor will give Secured Party ten (10) Business Days prior
written notice before any change in such Grantor’s chief place of business or of
any new location for any of the Collateral with a value in excess of $50,000
individually or in the aggregate at all such locations.

4.4 Other Liens. Grantors will not create, permit or suffer to exist, and will
defend the Collateral against and take such other action as is necessary to
remove, any Lien on the Collateral except Permitted Liens, and will defend the
right, title and interest of the Secured Party in and to the Collateral and in
and to all Proceeds thereof against the claims and demands of all Persons
whatsoever.

(a) If any Collateral is at any time in the possession or control of any
warehousemen, bailee, consignee or processor, such Grantor shall promptly notify
Secured Party in writing of such fact and, upon the request of Secured Party or
its Representative (at the direction of the Required Lenders), notify such
warehousemen, bailee, consignee or processor of the Lien and security interest
created hereby and shall instruct such Person to hold all such Collateral for
Secured Party’s account subject to Secured Party’s instructions.

(b) Each Grantor acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any financing
statement without the prior written consent of Secured Party (at the direction
of the Required Lenders) and agrees that it will not do so without the prior
written consent of Secured Party , subject to such Grantor’s rights under
Section 9-509(d)(2) to the UCC.

4.5 Bank Accounts and Securities Accounts. On or prior to the date hereof, the
Secured Party and each Grantor, as applicable, shall enter into an account
control agreement or securities account control agreement, as applicable (each a
“Control Agreement”), in a form reasonably acceptable to the Secured Party and
the Lenders, with each financial institution with which such Grantor maintains
from time to time any Deposit Accounts (general or special), securities
accounts, brokerage accounts or other similar accounts (other than Excluded
Accounts), which financial institutions are set forth on Schedule VII attached
hereto. Pursuant to this Agreement, each such Grantor grants and shall grant to
the Secured Party a continuing lien upon, and security interest in, all such
accounts and all funds at any time paid, deposited, credited or held in such
accounts (whether for collection, provisionally or otherwise) or otherwise in
the possession

 

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of such financial institutions. Following the Closing Date, no Grantor shall
establish any Deposit Account, securities account, brokerage account or other
similar account (other than Excluded Accounts) with any financial institution
unless prior thereto the Secured Party and such Grantor shall have entered into
a Control Agreement with such financial institution which purports to cover such
account. Each Grantor shall deposit and keep on deposit all of its funds into a
Deposit Account (other than funds permitted to be deposited in Excluded
Accounts) which is subject to a Control Agreement.

4.6 Events of Default, Etc. During the period during which an Event of Default
shall have occurred and be continuing:

(a) each Grantor shall, at the request of the Secured Party or its
Representative or the Required Lenders, within 10 days (or within such longer
number of days as the Required Lenders may approve in their sole discretion),
assemble the Collateral and make it available to Secured Party or its
Representative or the Required Lenders at a place or places designated by the
Secured Party or its Representative which are reasonably convenient to Secured
Party or its Representative, as applicable, the Required Lenders and such
Grantor;

(b) the Secured Party or its Representative (each at the direction of the
Required Lenders) or the Required Lenders may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral and may extend
the time of payment, arrange for payment in installments, or otherwise modify
the terms of, any of the Collateral;

(c) the Secured Party shall have all of the rights and remedies with respect to
the Collateral of a secured party under the UCC (whether or not said UCC is in
effect in the jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted, including, without limitation, the right, to the maximum extent
permitted by law, to: (i) exercise all voting, consensual and other powers of
ownership pertaining to the Collateral as if the Secured Party were the sole and
absolute owner thereof (and each Grantor agrees to take all such action as may
be appropriate to give effect to such right) and (ii) appoint a receiver or
receivers for all or any part of the Collateral or business of a Grantor,
whether such receivership be incident to a proposed sale or sales of such
Collateral or otherwise and without regard to the value of the Collateral or the
solvency of any Person or Persons liable for the payment of the Obligations
secured by such Collateral. Effective following the occurrence and during the
continuance of an Event of Default, each Grantor hereby consents to the
appointment of such receiver or receivers, waives any and all defenses to such
appointment and agrees that such appointment shall in no manner impair,
prejudice or otherwise affect the rights of Secured Party under this Agreement.
Each Grantor hereby expressly waives notice of a hearing for appointment of a
receiver and the necessity for bond or an accounting by the receiver;

(d) the Secured Party or its Representative shall have the right, at the
direction of the Required Lenders, in the name of the Secured Party or in the
name of a Grantor or otherwise, to demand, sue for, collect or receive any money
or property at any time payable or receivable on account of or in exchange for
any of the Collateral, but shall be under no obligation to do so;

 

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(e) the Secured Party or its Representative shall have the right, at the
direction of the Required Lenders, to take immediate possession and occupancy of
any premises owned, used or leased by a Grantor and exercise all other rights
and remedies which may be available to the Secured Party;

(f) the Secured Party shall have the right, at the direction of the Required
Lenders, upon reasonable notice (such reasonable notice to be determined by
Secured Party in its sole and absolute discretion, which shall not be less than
ten (10) days), with respect to the Collateral or any part thereof (whether or
not the same shall then be or shall thereafter come into the possession, custody
or control of the Secured Party or its Representative), to sell, lease, license,
assign or otherwise dispose of all or any part of such Collateral, at such place
or places as the Secured Party (at the direction of the Required Lenders) deems
best, and for cash or for credit or for future delivery (without thereby
assuming any credit risk), at public or private sale, without demand of
performance or notice of intention to effect any such disposition or of the time
or place thereof (except such notice as is required above or by applicable
statute and cannot be waived), and the Secured Party or any Lender or anyone
else may be the purchaser, lessee, licensee, assignee or recipient of any or all
of the Collateral so disposed of at any public sale (or, to the extent permitted
by law, at any private sale) and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of Grantors, any such demand, notice and
right or equity being hereby expressly waived and released. The Secured Party
(at the direction of the Required Lenders) or the Required Lenders may, to the
fullest extent permitted by Applicable Law, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so adjourned;

(g) the Secured Party may, and at the direction of the Required Lenders shall,
proceed to perform any and all of the obligations of any Grantor contained in
any Contract and exercise any and all rights of a Grantor therein contained as
such Grantor itself could;

(h) the Secured Party shall have the right to use any Grantor’s rights under any
Intellectual Property Licenses in connection with the enforcement of the Secured
Party’s rights hereunder; and

(i) the rights, remedies and powers conferred by this Section 4.6 are in
addition to, and not in substitution for, any other rights, remedies or powers
that the Secured Party may have under any Investment Document, at law, in equity
or by or under the UCC or any other statute or agreement. The Secured Party may
proceed by way of any action, suit or other proceeding at law or in equity and
no right, remedy or power of the Secured Party will be exclusive of or dependent
on any other. The Secured Party may exercise any of its rights, remedies or
powers separately or in combination and at any time.

The proceeds of each collection, sale or other disposition under this
Section 4.6 shall be applied in accordance with Section 4.9 hereof.

 

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4.7 Deficiency. If the proceeds of sale, collection or other realization of or
upon the Collateral are insufficient to cover the costs and expenses of such
realization and the payment in full of the Obligations, Grantors shall remain
jointly and severally liable for any deficiency.

4.8 Private Sale. Each Grantor recognizes that the Secured Party may be unable
to effect a public sale of any or all of the Collateral consisting of securities
by reason of certain prohibitions contained in the Securities Act of 1933, as
amended (the “Act”), and applicable state securities laws, but may be compelled
to resort to one or more private sales thereof to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and each Grantor agrees that it is
not commercially unreasonable for Secured Party to engage in any such private
sales or dispositions under such circumstances. The Secured Party shall be under
no obligation to delay a sale of any of the Collateral to permit a Grantor to
register such Collateral for public sale under the Act, or under applicable
state securities laws, even if Grantors would agree to do so. The Secured Party
shall not incur any liability as a result of the sale of any such Collateral, or
any part thereof, at any private sale provided for in this Agreement and each
Grantor hereby waives any claims against the Secured Party arising by reason of
the fact that the price at which the Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale or was less than the aggregate amount of the Obligations, even if the
Secured Party accepts the first offer received and does not offer the Collateral
to more than one offeree.

Each Grantor further agrees to do or cause to be done all such other acts and
things as may be necessary to make such sale or sales of any portion or all of
any such Collateral valid and binding and in compliance with any and all
Applicable Law and all orders, writs, injunctions, decrees or awards of any and
all courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at such Grantor’s expense.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 4.8 will cause irreparable injury to the Secured Party and the
Lenders, that the Secured Party and the Lenders have no adequate remedy at law
in respect of such breach and, as a consequence, agrees that each and every
covenant contained in this Section 4.8 shall be specifically enforceable against
Grantors, and each Grantor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred and is continuing.

4.9 Application of Proceeds. The proceeds of any collection, sale or other
realization of all or any part of the Collateral following the occurrence and
during the continuance of an Event of Default, and any other cash at the time
held by the Secured Party under this Agreement, shall be applied to the
Obligations in accordance with Section 8.3 of the Credit Agreement.

4.10 Attorney-in-Fact. Each Grantor hereby irrevocably constitutes and appoints
the Secured Party, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, from
time to time in the discretion of the Secured Party, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to
execute

 

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and deliver any and all documents and instruments which may be necessary to
perfect or protect any security interest granted hereunder, to maintain the
perfection or priority of any security interest granted hereunder, or to
otherwise accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, hereby gives the Secured Party the power and right,
on behalf of such Grantor, without notice to or assent by such Grantor (to the
extent permitted by Applicable Law), to do the following:

(a) upon the occurrence and during the continuation of an Event of Default, to
take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary to accomplish the purposes of
this Agreement;

(b) upon the occurrence and during the continuation of an Event of Default, to
ask, demand, collect, receive and give acquittance and receipts for any and all
moneys due and to become due under any Collateral and, in the name of such
Grantor or its own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other Instruments for the
payment of moneys due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Secured Party (at the direction of the Required Lenders) for
the purpose of collecting any and all such moneys due under any Collateral
whenever payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the Secured
Party (at the direction of the Required Lenders) for the purpose of collecting
any and all such moneys due under any Collateral whenever payable;

(c) to pay or discharge charges or liens levied or placed on or threatened
against the Collateral, to effect any insurance called for by the terms of this
Agreement or the Credit Agreement and to pay all or any part of the premiums
therefor;

(d) upon the occurrence and during the continuation of an Event of Default, to
direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due, and to become due thereunder, directly to the
Secured Party or as the Secured Party shall direct (at the direction of the
Required Lenders), and to receive payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at any time, in respect of or
arising out of any Collateral;

(e) upon the occurrence and during the continuation of an Event of Default, to
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against Grantors, assignments,
verifications and notices in connection with accounts and other Documents
constituting or relating to the Collateral;

(f) upon the occurrence and during the continuation of an Event of Default, to
commence and prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or any part
thereof and to enforce any other right in respect of any Collateral;

(g) upon the occurrence and during the continuation of an Event of Default, to
defend any suit, action or proceeding brought against a Grantor with respect to
any Collateral;

 

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(h) upon the occurrence and during the continuation of an Event of Default, to
settle, compromise or adjust any suit, action or proceeding described above and,
in connection therewith, to give such discharges or releases as the Secured
Party may deem appropriate (at the direction of the Required Lenders);

(i) to the extent that a Grantor’s authorization given in Section 4.1(b) of this
Agreement is not sufficient to file such financing statements with respect to
this Agreement, with or without such Grantor’s signature, or to file a photocopy
of this Agreement in substitution for a financing statement, as the Secured
Party may deem appropriate (at the direction of the Required Lenders);

(j) upon the occurrence and during the continuation of an Event of Default,
generally to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Secured Party were the absolute owner thereof for all purposes; and

(k) to do, at the Secured Party’s option (at the direction of the Required
Lenders) and at such Grantor’s expense, at any time, or from time to time, all
acts and things which the Secured Party reasonably deems necessary to protect or
preserve or, upon the occurrence and during the continuation of an Event of
Default, realize upon the Collateral and the Secured Party’s lien therein, in
order to effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.

Each Grantor hereby ratifies, to the extent permitted by law, all that such
attorneys lawfully do or cause to be done by virtue hereof provided the same is
performed in a commercially reasonable manner. The power of attorney granted
hereunder is a power coupled with an interest and shall be irrevocable until the
Obligations are Paid in Full and this Agreement is terminated in accordance with
Section 4.12 hereof.

Each Grantor also authorizes the Secured Party, at any time from and after the
occurrence and during the continuation of any Event of Default, (x) to
communicate in its own name with any party to any Contract with regard to the
assignment of the right, title and interest of such Grantor in and under the
Contracts hereunder and other matters relating thereto and (y) to execute, in
connection with any sale of Collateral provided for in Section 4.6 hereof, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.

4.11 Perfection. Prior to or concurrently with the execution and delivery of
this Agreement, each Grantor shall:

(a) file such financing statements, assignments for security and other documents
in such offices as may be necessary or as the Secured Party, its Representative
or the Required Lenders may request to perfect the security interests granted by
Section 3 of this Agreement;

(b) at Secured Party’s or the Required Lenders’ request, deliver to the Secured
Party or its Representative the originals of all Instruments required to be so
delivered hereunder together with, in the case of Instruments constituting
promissory notes, allonges attached thereto showing such promissory notes to be
payable to the order of a blank payee;

 

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(c) deliver to the Secured Party or its Representative an Account Control
Agreement for each Deposit Account owned by such Grantor, acceptable in all
respects to Secured Party and the Required Lenders, duly executed by the
applicable Grantor and the financial institution at which such Grantor maintains
such Deposit Account; and

(d) deliver to the Secured Party or its Representative the originals of all
Motor Vehicle titles, duly endorsed indicating the Secured Party’s interest
therein as a lienholder, together with such other documents as may be required
consistent with Section 4.1(d) hereof to perfect the security interest granted
by Section 3 in all such Motor Vehicles (if any).

4.12 Termination; Partial Release of Collateral. This Agreement and the Liens
and security interests granted hereunder shall continue in effect until the
Obligations are Paid in Full. When the Obligations are Paid in Full, the
security interest granted hereby shall automatically terminate and all rights to
the Collateral shall revert to the applicable Grantor, and the Secured Party
will at the sole cost and expense of the Grantors, promptly following such
termination deliver possession of all Collateral to the Grantors and execute and
deliver to Grantors such documents as necessary to evidence such termination,
including UCC termination statements and such other documentation as shall be
reasonably requested by Grantors to effect the termination and release of the
Liens and security interests in favor of the Secured Party affecting the
Collateral.

4.13 Further Assurances. At any time and from time to time, upon the written
request of the Secured Party, its Representative (at the direction of the
Required Lenders) or the Required Lenders, and at the sole expense of Grantors,
Grantors will promptly and duly execute and deliver any and all such further
instruments, documents and agreements and take such further actions as the
Secured Party, its Representative or the Required Lenders may reasonably require
in order for the Secured Party to obtain the full benefits of this Agreement and
of the rights and powers herein granted in favor of the Secured Party,
including, without limitation, using Grantors’ best efforts to secure all
consents and approvals necessary or appropriate for the assignment to the
Secured Party of any Collateral held by Grantors or in which a Grantor has any
rights not heretofore assigned, the filing of any financing or continuation
statements under the UCC with respect to the liens and security interests
granted hereby, transferring Collateral to the Secured Party’s possession (if a
security interest in such Collateral can be perfected by possession), placing
the interest of the Secured Party as lienholder on the certificate of title of
any Motor Vehicle, obtaining waivers of liens from landlords and mortgagees and
delivering to Secured Party all such Control Agreements as Secured Party, its
Representative or the Required Lenders shall require duly executed by the
applicable Grantor and the financial institution at which such Grantor maintains
a Deposit Account covered by such Control Agreement; provided, however, that no
Grantor shall be required to take any steps with respect to any Collateral with
respect to which the Required Lenders have determined in their sole discretion
that the cost of obtaining a security interest in such Collateral is excessive
in relation to the value of the security interest to be afforded thereby. Each
Grantor also hereby authorizes the Secured Party and its Representative to file
any such financing or continuation statement without the signature of such
Grantor to the extent permitted by Applicable Law.

 

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4.14 Limitation on Duty of Secured Party. The powers conferred on the Secured
Party under this Agreement are solely to protect the Secured Party’s interest on
behalf of itself and the Lenders in the Collateral and shall not impose any duty
upon it to exercise any such powers. Without in any way limiting the exculpation
and indemnification provisions of the Credit Agreement, the Secured Party shall
be accountable only for amounts that it actually receives and retains for its
own account as a result of the exercise of such powers and neither the Secured
Party nor its Representative nor any of their respective officers, directors,
employees or agents shall be responsible to Grantors for any act or failure to
act, except for gross negligence or willful misconduct as finally determined by
a court of competent jurisdiction. Without limiting the foregoing, the Secured
Party and any Representative shall each be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its respective
possession if such Collateral is accorded treatment substantially similar to
that which the relevant Secured Party or any Representative, in its individual
capacity, accords its own property consisting of the type of Collateral
involved, it being understood and agreed that neither the Secured Party nor any
Representative shall have any responsibility for taking any necessary steps
(other than steps taken in accordance with the standard of care set forth above)
to preserve rights against any Person with respect to any Collateral.

Also without limiting the generality of the foregoing, neither the Secured Party
nor any Representative shall have any obligation or liability under any Contract
or license by reason of or arising out of this Agreement or the granting to the
Secured Party of a security interest therein or assignment thereof or the
receipt by the Secured Party or any Representative of any payment relating to
any Contract or license pursuant hereto, nor shall the Secured Party or any
Representative be required or obligated in any manner to perform or fulfill any
of the obligations of Grantors under or pursuant to any Contract or license, or
to make any payment, or to make any inquiry as to the nature or the sufficiency
of any payment received by it or the sufficiency of any performance by any party
under any Contract or license, or to present or file any claim, or to take any
action to collect or enforce any performance or the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.

SECTION 5. Miscellaneous.

5.1 No Waiver. No failure on the part of the Secured Party or any of its
Representatives to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Secured Party or
any of its Representatives of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law.

5.2 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.

 

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5.3 Notices. All notices, approvals, requests, demands and other communications
hereunder shall be delivered or made in the manner set forth in, and shall be
effective in accordance with the terms of, the Credit Agreement; provided, that,
to the extent any such communication (i) is being made or sent to a Grantor such
communication shall be effective as to such Grantor if made or sent to the
Borrower or in accordance with the foregoing or (ii) is being made or sent to
Agent, such communication shall be made to Agent at the address set forth below
Agent’s signature hereto. Grantors and Agent may change their respective notice
addresses by written notice given to each other party ten (10) days following
the effectiveness of such change.

5.4 Amendments, Etc. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by each Grantor and the
Secured Party. Any such amendment or waiver shall be binding upon the Secured
Party and each Grantor and their respective successors and assigns.

5.5 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of each of the parties
hereto, provided, that no Grantor shall assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Secured Party and
Lenders. Secured Party, in its capacity as Agent, may assign its rights and
obligations hereunder without the consent of Grantors, in which event such
assignee shall be deemed to be Secured Party hereunder with respect to such
assigned rights.

5.6 Counterparts; Headings. This Agreement may be authenticated in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may authenticate this Agreement by
signing any such counterpart. This Agreement may be authenticated by manual
signature or facsimile, .pdf or similar electronic signature, all of which shall
be equally valid. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof.

5.7 Severability. If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (a) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Secured Party and its
Representative in order to carry out the intentions of the parties hereto as
nearly as may be possible and (b) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.

5.8 Submission to Jurisdiction; Waiver of Venue; Service of Process. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
THE AGENT’S OPTION (AT THE DIRECTION OF THE REQUIRED LENDERS), IN THE COURTS OF
ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH
GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE

 

20

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PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH GRANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH
GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. Each Grantor that is not organized under the laws of a state of the
United States or the District of Columbia hereby appoints Baudax Bio, Inc. as
such Grantor’s agent for service of process (without prejudice to the right of
the Agent or the Lenders to serve process in any other manner permitted by
Applicable Law). If for any reason Baudax Bio, Inc. is unable to serve as such,
such Grantor will within 30 days appoint a substitute process agent located in
the State of New York and give notice of such appointment to the Agent.

5.9 Waiver of Right to Trial by Jury. EACH GRANTOR AND SECURED PARTY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GRANTOR AND SECURED PARTY AGREE
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION 5.9
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

5.10 Joint and Several. The obligations, covenants and agreements of Grantors
hereunder shall be the joint and several obligations, covenants and agreements
of each Grantor, whether or not specifically stated herein without preferences
or distinction among them.

5.11 Agent.

(a) The Lenders have, pursuant to Section 9 of the Credit Agreement, designated
and appointed the Agent as the administrative agent and collateral agent of the
Lenders under this Agreement and the other Loan Documents.

(b) Nothing in this Section 5.11 shall be deemed to limit or otherwise affect
the rights of Secured Party to exercise any remedy provided in this Agreement or
any other Investment Document.

(c) If pursuant to any Loan Document, the Agent is given the discretion to
allocate proceeds received by the Agent pursuant to the exercise of remedies
under the Loan

 

21

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Documents or at law or in equity (including without limitation with respect to
any secured creditor remedies exercised against the Collateral and any other
collateral security provided for under any Loan Documents), the Agent shall
apply such proceeds to the then outstanding Obligations in such order as set
forth in Section 8.3 of the Credit Agreement.

(d) The parties hereto agree that the Agent, as the Secured Party, shall be
entitled to benefits of Section 9 of the Credit Agreement, as well as the
reimbursement of its expenses incurred hereunder and indemnity for its actions
in connection herewith as provided in Sections 9.8, 10.3 and 10.4 of the Credit
Agreement.

(e) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Collateral Documents. The provisions
of this Section 5.11 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the resignation, removal or replacement of the Agent, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the Agent.

(f) Notwithstanding anything contained herein to the contrary, it is expressly
understood and agreed by the parties hereto that this Agreement has been signed
by Wilmington Trust, National Association, not in its individual capacity or
personally but solely in its capacity as Agent for the benefit of the Lenders,
in the exercise of the powers and authority conferred and vested in it under the
Credit Agreement, and in no event shall Wilmington Trust, National Association
in its individual capacity, have any liability for the representations,
warranties, covenants, agreements or other obligations of any other Person under
this Agreement, the Credit Agreement and the other Loan Documents or in any of
the certificates, reports, documents, data, notices or agreements delivered
pursuant hereto or thereto. The Agent, as the Secured Party, makes no
representations or warranties as to nor assumes any responsibility for the
correctness of the recitals contained herein, and the Agent, as the Secured
Party shall not be responsible or accountable in any way whatsoever for or with
respect to the validity, execution or sufficiency of this Agreement in respect
of the Grantors and makes no representation with respect thereto. In entering
into this Agreement, the Agent, as the Secured Party shall be entitled to the
benefit of every provision of the Credit Agreement relating to the rights,
exculpations or conduct of, affecting the liability of or otherwise affording
protection to the “Agent” thereunder. Neither the Agent, as the Secured Party
nor any of its respective Affiliates, directors, officers, managers, employees,
advisors, counsel, agents or attorneys-in-fact shall be responsible for or have
any duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with any Loan Document, or any certificate,
financial statement or other document furnished at any time under or in
connection with this Agreement or any other Loan Document, (ii) the performance
or observance of any of the terms, covenants or agreements of the Grantors or
any Person in this Agreement or any other Loan Document (iii) the validity,
effectiveness, genuineness, value, enforceability or sufficiency of this
Agreement, the Collateral or any other Loan Document, or any other instrument or
writing furnished in connection herewith or therewith, in respect of the
Borrower or the Loan Parties other than as set forth herein or therein or
(iv) the attachment, perfection or priority of any security interest created or
purported to be created under or in connection with any Loan Document. Without
limiting the generality of the foregoing, in the absence of its own gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction, none of the Agent,

 

22

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as the Secured Party nor any of its respective Affiliates, directors, officers,
managers, employees, advisors, counsel, agents or attorneys-in-fact shall be
responsible to any Person for any mistake, omission or error of judgment with
respect to any matters determined hereunder or under the other Loan Documents.

(g) The Agent, as the Secured Party shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
solely pursuant to the direction of the Required Lenders, and such instructions
shall be binding upon all Lenders; provided, however, that the Agent, as the
Secured Party shall not be required to take any action that is contrary to this
Agreement, the Loan Documents or applicable law.

(h) The Agent, as the Secured Party, may exercise its rights under this
Agreement through the Representative or other designee.

(i) This Agreement is a Loan Document executed pursuant to the Credit Agreement
and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and provisions thereof.

5.12 No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

5.13 Entire Agreement; Amendment. THIS AGREEMENT, TOGETHER WITH THE OTHER
INVESTMENT DOCUMENTS, SUPERSEDES ALL OTHER PRIOR ORAL OR WRITTEN AGREEMENTS
BETWEEN SECURED PARTY, THE GRANTORS, THEIR AFFILIATES AND PERSONS ACTING ON
THEIR BEHALF WITH RESPECT TO THE MATTERS DISCUSSED HEREIN, AND THIS AGREEMENT,
TOGETHER WITH THE OTHER INVESTMENT DOCUMENTS AND THE OTHER INSTRUMENTS
REFERENCED HEREIN AND THEREIN, CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES
WITH RESPECT TO THE MATTERS COVERED HEREIN AND THEREIN AND, EXCEPT AS
SPECIFICALLY SET FORTH HEREIN OR THEREIN, NEITHER THE SECURED PARTY NOR ANY
GRANTOR MAKES ANY REPRESENTATION, WARRANTY, COVENANT OR UNDERTAKING WITH RESPECT
TO SUCH MATTERS. AS OF THE DATE OF THIS AGREEMENT, THERE ARE NO UNWRITTEN
AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THE MATTERS DISCUSSED HEREIN. NO
PROVISION OF THIS AGREEMENT MAY BE AMENDED, MODIFIED OR SUPPLEMENTED OTHER THAN
BY AN INSTRUMENT IN WRITING SIGNED BY THE GRANTORS AND THE SECURED PARTY.

5.14 Electronic Signatures. The parties to this Agreement consent to the
execution by or on behalf of each other party of this Agreement, and the
witnessing thereof, by electronic signature, provided that such manner of
execution is permitted by law. The parties to this Agreement agree that an
executed copy of this Agreement may be retained in electronic form and
acknowledge that such electronic form shall constitute an original of this
Agreement and may be relied upon as evidence of this Agreement.

 

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5.15 Companies Registration Office of Ireland. By its execution of this
Agreement, the Irish Guarantor irrevocably and unconditionally authorises any
and each solicitor from time to time in the Irish law firm acting for Secured
Party and the Lenders (“Lenders Solicitors”) to:

 

1.

sign or complete (whether electronically or otherwise) on behalf of the Irish
Guarantor all required security related registration forms required to be
delivered to the Companies Registration Office (“CRO”) in connection with this
Agreement,

 

2.

file (whether electronically or otherwise) each such registration form with the
CRO; and

 

3.

include an email address for a solicitor in the Lenders Solicitors in each such
registration form for the purposes of receiving any certificate of registration
of charge electronically from the CRO.

In giving this authorisation, the Irish Guarantor agrees and acknowledges that:

 

4.

no solicitor/client relationship exists between the Lenders Solicitors (or any
solicitor at that law firm) and the Irish Guarantor;

 

5.

it is the Irish Guarantor’s responsibility to comply with the procedures set out
in Sections 409(3) and (4) of the Irish Companies Act (without prejudice to
Section 410(2) thereof); and

 

6.

the Lenders Solicitors have no liability or responsibility to the Irish
Guarantor for any failure to comply with the terms of this authorisation where
the Lenders Solicitors have taken all reasonably practicable steps to comply
with the applicable requirements and such failure is due to anything outside the
reasonable control of the Lenders Solicitors.

[Signature Pages Follow]

 

24

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IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed and delivered as of the day and year first above written.

 

GRANTORS: BAUDAX BIO, INC. By:  

/s/ Ryan D. Lake

Name:   Ryan D. Lake Title:   Chief Financial Officer, Secretary and Treasurer
BAUDAX BIO N.A. LLC By:  

/s/ Ryan D. Lake

Name:   Ryan D. Lake Title:   Secretary and Treasurer BAUDAX BIO LIMITED By:  

/s/ Gerri Henwood

Name:   Gerri Henwood Title:   Director

[Signature Page to Security Agreement]

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

SECURED PARTY:

WILMINGTON TRUST, NATIONAL

ASSOCIATION, as the Agent

By:  

/s/ Andrew Lennon

Name:   Andrew Lennon Title:   AVP Notice Address: Wilmington Trust, National
Association, as the Agent 1100 North Market Street, Wilmington, DE 19890
Attention: Andrew Lennon Telephone: 302-636-6473 Facsimile: 302-636-4145

Email: alennon@wilmingtontrust.com

 

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

 

Ballard Spahr LLP 80 South 8th Street, Suite 2000 Minneapolis, Minnesota 55402
Attention: Mark C. Dietzen Telephone: 612-371-2452 Facsimile: 612-371-3207
Email: dietzenm@ballardspahr.com

[Signature Page to Security Agreement]

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Schedule I

A. Organizational Information

 

Exact Legal Name

   Jurisdiction of
Formation and
Registration      Country /
State /
Provincial
Entity
Registration
/ ID No.      Federal
employer
identification
number      Date of
Formation      Chief executive
offices      Principal
mailing
addresses      Registered
Address                                                                       
                                   

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

B. Location of Equipment, Inventory and Goods

 

Grantor Name

   Location of Equipment, Inventory and Goods                 

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

C. Collateral in Possession of Bailee, Warehousemen, Processor or Consignee.

 

Name

   Complete Street and Mailing Address,
including County and Zip Code      Company/Subsidiary              

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

Schedule II

List of Trade Names/Fictitious Names Used in the Past Five Years

[    ]

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

Schedule III

List of Copyrights

[    ]

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

Schedule IV

List of License Agreements

[                ]

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

Schedule V

List of Patents and Patent Applications

 

Title: [        ]

 

Country

   Application No.      Filing date      Priority
date      Status      Expiry
date                                                              

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

Schedule VI

List of Trademarks

 

Jurisdiction

   Trademark no.    Trademark    Classes    Priority    Status    Renewal due   
                                                                                
                                                                             

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

Schedule VII

Depositary Accounts

For each Grantor, list all depositary and other accounts including, without
limitation, Deposit Accounts, securities accounts, brokerage accounts and other
similar accounts, maintained by each Grantor (other than Excluded Accounts),
which description includes for each such account the name of the Grantor
maintaining such account, the name and address of the financial institution at
which such account is maintained and the account number of such account.

 

Bank

   Curr-
ency    SWIFT
Code    Account No.    Branch    Company / Subsidiary                           
                                

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

Schedule VIII

List of Commercial Tort Claims

[    ]

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

Schedule IX

List of Interests in Real Property

 

Complete Street and Mailing Address,

including County and Zip Code

   Company/Subsidiary              

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

Schedule X

List of Titled Equipment

[    ]