Exhibit 10.1

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
16, 2018 (the “Effective Date”) among Solar Capital Ltd., a Maryland corporation
with an office located at 500 Park Avenue, 3rd Floor, New York, NY 10022
(“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 and Western Alliance Bank, an Arizona corporation (“Western Alliance
Bank”), each in its capacity as a lender (together with any other lenders party
hereto, the “Lenders” and each, a “Lender”), and Ardelyx, Inc., a Delaware
corporation with offices located at 34175 Ardenwood Blvd., Suite 200, Fremont,
California 94555 (“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

1.1          Terms.  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.

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

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

“Aggregate Bank Services Amount”

Exhibit B ,Section 11

“Agreement”

Preamble

“Approved Lender”

Section 12.1

“Bank Services”

Exhibit B ,Section 11

“Borrower”

Preamble

“Cash Collateral”

Exhibit B ,Section 11

“Claims”

Section 12.2

“Closing Fee”

Section 2.4(a)

“Collateral Agent”

Preamble

“Collateral Agent Report”

Exhibit B, Section 5

“Communications”

Section 10

“Costs”

Exhibit B, Section 6

“Default Rate”

Section 2.3(b)

“Deficiency”

Exhibit B ,Section 11

“Effective Date”

Preamble

“Enforcement Action”

Exhibit B, Section 10(d)

“Enforcing Lender”

Exhibit B, Section 10(d)

“Event of Default”

Section 8

“Excluded Domestic Subsidiary”

Section 6.10

“Indemnified Person”

Section 12.2

“Lender” and “Lenders”

Preamble

“Lender Transfer”

Section 12.1

“New Subsidiary”

Section 6.10

“Non-Funding Lender”

Exhibit B, Section 10(c)(ii)

“Other Lender”

Exhibit B, Section 10(c)(ii)

“Perfection Certificate” and “Perfection Certificates”

Section 5.1

 

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“Reimbursement Obligations”

Exhibit B ,Section 11

“Secured Promissory Note”

Section 2.6

“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.

“Acquisition Consideration” shall mean the purchase consideration for a
Permitted Acquisition and all other payments, directly or indirectly, by
Borrower or any of its Subsidiaries in exchange for, or as part of, or in
connection with, a Permitted Acquisition, whether paid in cash or by exchange of
equity interests or of properties or otherwise and whether payable at or prior
to the consummation of a Permitted Acquisition or deferred for payment at any
future time, whether or not any such future payment is subject to the occurrence
of any contingency, and includes any and all payments representing the purchase
price and any assumptions of Indebtedness, “earnouts” and other agreements to
make any payment the amount of which is, or the terms of payment of which are,
in any respect subject to or contingent upon the revenues, income, cash flow or
profits (or the like) of any person or business; provided that any such future
payment that is subject to a contingency shall be considered Acquisition
Consideration only to the extent of the reserve, if any, required under GAAP (as
determined at the time of the consummation of such Permitted Acquisition) to be
established in respect thereof by the Borrower or any of its Subsidiaries.

“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” means:

(a)   December 1, 2020 if, prior to June 1, 2020, Borrower achieves (subject to
evidence reasonably acceptable to the Collateral Agent) its Phase 3 Endpoint; or

(b)   June 1, 2020, otherwise.

“Anti‑Terrorism Laws” are any laws 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.

“Applicable FDA Threshold” means the greater of (a) Five Hundred Thousand
Dollars ($500,000), and (b) as of any date of determination, five percent (5%)
of the Borrower’s and its Subsidiaries’ consolidated revenues for the trailing
twelve months ending as of the last day of the month immediately prior to such
date of determination.

“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

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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.

“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; (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, (d) any money market or similar funds under
Borrower’s investment policy, as approved by Collateral Agent and the Lenders
from time to time, and (e) money market or similar accounts held at Western
Alliance Bank.

“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

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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.

“Convertible Indebtedness” means Indebtedness of the Borrower that is (i) either
(A) Subordinated Debt or (B) unsecured Indebtedness that is not-cross defaulted
to the Obligations and (ii) convertible into equity securities of the Borrower.

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

“Default” is any event that, with the giving of notice or passage of time or
both, would constitute an Event of Default.

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

“Disclosure Schedules” the disclosure schedules to this agreement, as amended or
supplemented from time to time by Borrower with the written consent of the
Required Lenders (or as supplemented by Borrower pursuant to the terms of the
Loan Documents), delivered by Borrower to the Lenders.

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

“Domestic Subsidiary” is any Subsidiary that is not a Foreign Subsidiary.

“Eligible Assignee” is (i) a Lender, (ii) an Affiliate of a Lender, (iii) an
Approved Fund and (iv) any commercial bank, savings and loan association or
savings bank or any other entity which is an “accredited investor” (as defined
in Regulation D under the Securities Act of 1933, as amended) and which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies, in
each case, which either (A) has a rating of BBB or higher from Standard & Poor’s
Rating Group and a rating of Baa2 or higher from Moody’s Investors Service, Inc.
at the date that it becomes a Lender or (B) has total assets in excess of Two
Billion Five Hundred Million Dollars ($2,500,000,000.00), and in each case of
clauses (i) through (iv), which, through its applicable lending office, is
capable of lending to Borrower without the imposition of any withholding or
similar taxes; provided that notwithstanding the foregoing, “Eligible Assignee”
shall not include, unless an Event of Default has occurred and is continuing,
(i) Borrower or any of Borrower’s Affiliates or Subsidiaries or (ii) a direct
competitor of Borrower or a vulture hedge fund, each as determined by Collateral
Agent in its reasonable discretion.  Notwithstanding the foregoing, (x) in
connection with any assignment made by a Lender as a result of a forced
divestiture at the request of any regulatory agency, the restrictions set forth
herein shall not apply and Eligible Assignee shall mean any Person or party and
(y) in connection with a Lender’s own financing or securitization transactions,
the restrictions set forth herein shall not apply and Eligible Assignee shall
mean any Person or party providing such financing or formed to undertake such
securitization transaction and

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any transferee of such Person or party upon the occurrence of a default, event
of default or similar occurrence with respect to such financing or
securitization transaction; provided that no such sale, transfer, pledge or
assignment under this clause (y) shall release such Lender from any of its
obligations hereunder or substitute any such Person or party for such Lender as
a party hereto until Collateral Agent shall have received and accepted an
effective assignment agreement from such Person or party 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
Eligible Assignee as Collateral Agent reasonably shall require.

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, 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.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Term Loan Commitment
pursuant to a law in effect on the date on which (i) such Lender acquires such
interest in the Loan or Term Loan Commitment or (ii) such Lender changes its
lending office, except in each case to the extent that, pursuant to Section 2.5,
amounts with respect to such Taxes were payable either to such Lender's assignor
immediately before such Lender became a party hereto or to such Lender
immediately before it changed its lending office, (c) Taxes attributable to such
Recipient’s failure to comply with Section 2.5(e) and (d) any U.S. federal
withholding Taxes imposed under FATCA.

“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” means that certain Exit Fee agreement, entered into on May
16, 2018 by and between Lenders and Borrower.

“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the IRC, any intergovernmental agreement
entered into in connection with the implementation of such Sections of the IRC
and any fiscal or regulatory legislation, rules or practices adopted pursuant to
such intergovernmental agreement.

“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 payable
hereunder) (a) due on the earliest to occur of (i) the Maturity Date, (ii) the
acceleration of the Term Loan, and (iii) the prepayment of the Term Loan
pursuant to Section 2.2(c) or (d), and (b) equal to three and ninety-five
hundredths of a percent (3.95%) of the aggregate principal amount of the Term
Loan advanced hereunder.  The Final Fee shall be fully earned on the date so
paid, non-refundable for any reason and payable ninety percent (90%) to Solar
and ten percent (10%) to Western Alliance Bank.

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“Financing Proposal” means that certain letter agreement, dated April 19, 2018,
by and between Solar, Western Alliance Bank and the Borrower.

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

“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is
not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that
is resident or organized under the laws of a jurisdiction other than that in
which the Borrower is resident for Tax purposes.

“Foreign Subsidiary” is a Subsidiary that is not an entity organized under the
laws of the United States or any state thereof or the District of Columbia.

“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; provided that for purposes of the defined term “Permitted
Indebtedness,” GAAP shall be GAAP as in effect on the Effective Date.

“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 in favor of Collateral Agent for
the benefit of the Secured Parties (including without limitation pursuant to
Section 6.10).

“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.

“Hyperphosphatemia” means elevated serum phosphorus.

“Immaterial Subsidiary” is any Foreign Subsidiary that holds assets worth less
than One Hundred Thousand Dollars ($100,000) in book value.

“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, and
(d) Contingent Obligations.

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“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of Borrower
under any Loan Document and (b) to the extent not otherwise described in (a),
Other Taxes.

“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.

“IRC” means the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations adopted thereunder.

“Key Person” is each of Borrower’s (i) Chief Executive Officer, who is Mike Raab
as of the Effective Date and (ii) Chief Financial Officer, who is Mark Kaufmann
as of the Effective Date.

“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 reasonable audit fees and expenses, costs, and
expenses (including reasonable attorneys’ fees and expenses, 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

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(b) all fees and expenses (including 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. The Diligence Deposit (as defined in the Financing Proposal)
paid by the Borrower to the Collateral Agent prior to the Effective Date shall
be applied to the Lenders’ Expenses, subject to the conditions set forth in the
Financing Proposal.

“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 (1) 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, the Exit Fee Agreement, the
Perfection Certificates, the Disclosure Schedules, each Compliance Certificate,
each Loan Payment Request Form, any Guarantees, 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 adverse change in the business,
operations or condition (financial or otherwise) of Borrower and its
Subsidiaries, when taken as a whole; or (b) a material impairment of (i) the
prospect of repayment of any portion of the Obligations, (ii) the legality,
validity or enforceability of any Loan Document, (iii) the rights and remedies
of Collateral Agent or Lenders under any Loan Document except as the result of
the action or inaction of the Collateral Agent or Lenders or (iv) the validity,
perfection or priority of any Lien in favor of Collateral Agent for the benefit
of the Secured Parties on any of the Collateral except as the result of the
action or inaction of the Collateral Agent or Lenders.

“Material Agreement” is (i) as long as Borrower is a publicly reporting entity
under the Securities Exchange Act of 1934, any license, agreement or other
contractual arrangement required to be disclosed (including amendments thereto)
under regulations promulgated under the Securities Act of 1933 or Securities
Exchange Act of 1934, as each may be amended, or (ii) if Borrower is not such a
publicly reporting entity, any license, agreement or other contractual
arrangement whereby Borrower or any of its Subsidiaries is reasonably likely to
be required to transfer, either in-kind or in cash, prior to the Maturity Date,
assets or property valued (book or market) at more than One Million Dollars
($1,000,000) per year.

“Maturity Date” is November 1, 2022 .

“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 (other than the Exit Fee
Agreement and any fees payable thereunder), 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
(other than the Exit Fee Agreement), and the performance of Borrower’s duties
under the Loan Documents (other than the Exit Fee Agreement and any fees payable
thereunder).

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

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“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.

“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.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment.

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

“Payment Date” is the first (1st) calendar day of each calendar month,
commencing on June 1, 2018.

“Permitted Acquisition” means any consensual transaction or series of related
transactions for the direct or indirect (a) acquisition of all or substantially
all of the property of any Person, or of any business or division of any Person,
(b) acquisition of greater than ninety percent (90.0%) of the equity interests
of any Person, and otherwise causing such person to become a Subsidiary of such
Person, (c) merger or consolidation or any other combination with any Person or
(d) the acquisition of any Intellectual Property and related ancillary rights or
assets of any person, if each of the following conditions is met:

 

(i) no Default or Event of Default exists immediately prior thereto, and no
Default or Event of Default would immediately result therefrom;

 

(ii) the Person, business or asset to be acquired (other than non-core assets,
if any, with respect to such acquisition) shall be, or shall be engaged in, a
business of the type that the Borrower is then permitted to be engaged in and
the property acquired in connection with any such transaction shall be made
subject to the Lien of the Loan Documents to the extent required in accordance
with Section 6.10 and shall be free and clear of any Liens (other than Permitted
Liens);

 

(iii) the Borrower shall be, after taking into account the payment of the
Acquisition Consideration, in compliance with Section 7.13;

 

(iv) the Board of Directors or other governing body of the Person to be acquired
shall not have indicated its opposition to the consummation of such acquisition
(which opposition has not been publicly withdrawn);

 

(v) the Acquisition Consideration in respect of such acquisition is funded with
cash or Permitted Investments of the Borrower or the proceeds of a cash equity
contribution to any Borrower;

 

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(vi) the Acquisition Consideration shall not exceed Five Million Dollars
($5,000,000) in the aggregate for all such acquisitions, unless, in each case,
funded with the proceeds of an equity contribution or convertible Indebtedness
permitted hereunder received by the Borrower;

 

(vii) on a consolidated basis, the Borrower’s and its Subsidiaries’ rate of
usage of cash and Cash Equivalents shall not increase as a result of such
transaction by more than five percent (5%) over the forecasted rate of usage of
cash and Cash Equivalents approved by the Lenders as of the Effective Date;
provided that the amount of such increase shall be determined net of any
proceeds of equity contributions over the succeeding twenty-four (24) months
raised in connection with such acquisition; and

 

(viii) on or prior to the proposed date of consummation of such transaction, the
Borrower shall have delivered to the Collateral Agent and the Lenders a
certificate of a Responsible Officer of the Borrower certifying that such
transaction complies with this definition.

“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
Disclosure Schedules;

(c)          Subordinated Debt;

(d)          unsecured Indebtedness to trade creditors incurred in the ordinary
course of business;

(e)          unsecured Indebtedness in connection with credit cards incurred in
the ordinary course of business;

(f)           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 Seven
Hundred Fifty Thousand Dollars ($750,000) 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);

(g)          Indebtedness consisting of the obligation to pay rent when due
under real property leases entered into in the ordinary course of Borrower’s
business;

(h)          other unsecured Indebtedness at any time not to exceed Three
Hundred Seventy Five Thousand Dollars ($375,000) in the aggregate;

(i)           reimbursement obligations in respect of letters of credit in the
aggregate amount not to exceed (1) One Million Five Hundred Thousand Dollars
($1,500,000) at any time for any letters of credit with a maturity date of six
(6) months or less, and (2) Five Hundred Thousand Dollars ($500,000) at any time
for any letters of credit with a maturity date of six (6) months or more, in
each case as incurred in the ordinary course of business;

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

(k)          Convertible Indebtedness in the aggregate amount not to exceed Two
Hundred Million Dollars ($200,000,000) at any time;

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(l)           Hedges and similar transactions with respect to currency risk
entered into in the ordinary course of business and not for speculative
purposes;

(m)         Surety bonds and similar Indebtedness entered into in the ordinary
course of business and in an amount not exceeding Two Hundred Fifty Thousand
Dollars ($250,000) outstanding at any time; and

(n)          extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (h) 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 Disclosure Schedules 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 Permitted Indebtedness, Permitted
Liens and 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 Thousand Dollars ($200,000) 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;

(i)           Investments in Subsidiaries that are Guarantors;

(j)           Investments in Subsidiaries that are not Guarantors, the aggregate
of which shall not to exceed One Hundred Thousand Dollars ($100,000) per fiscal
year;

(k)          Permitted Acquisitions; and

(l)           Investments in joint ventures, corporate collaborations, or
strategic alliances in the ordinary course of Borrower’s business consisting of
the licensing of technology (in compliance with the definition of “Permitted
Licenses”), the development of technology or the providing of technical support
and provided that the aggregate amount for cash consideration for all such
Investments cannot exceed Two Hundred Fifty Thousand Dollars ($250,000) per year
and Seven Hundred Fifty Thousand Dollars ($750,000) in the aggregate.

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“Permitted Licenses” are (A) licenses of over-the-counter software that is
commercially available to the public, (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, (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
used commercially reasonable efforts to obtain the consent and acknowledgment of
the counterparty to such license for the collateral assignment of such license
to the Collateral Agent for the benefit of the Lenders, (D) exclusive licenses
for the use of the Intellectual Property of Borrower or any of its Subsidiaries
(excluding such Intellectual Property related to treatment of Hyperphosphatemia)
in the United States entered into in the ordinary course of business, provided,
that, with respect to each such license described in this clause (D), 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) Borrower has used
commercially reasonable efforts to obtain the consent and acknowledgment of the
counterparty to such license for the collateral assignment of such license to
the Collateral Agent for the benefit of the Lenders, (iii) either (x) the
Borrower shall have obtained the prior written consent of the Required Lenders
to enter into such license or (y) the Borrower maintains cash and Cash
Equivalents in an amount equal to or greater than Fifty Million Dollars
($50,000,000) until the Borrower achieves (subject to evidence reasonably
acceptable to the Collateral Agent) its Phase 3 Endpoint, (E) exclusive licenses
for the use in the United States of the Intellectual Property of Borrower or any
of its Subsidiaries related to treatment of Hyperphosphatemia entered into in
the ordinary course of business, provided, that, with respect to each such
license described in this clause (E), the Borrower shall have obtained the prior
written consent of the Required Lenders to enter into such license, and (F)
licenses in connection with the Borrower’s TGR5 and FXR programs.

“Permitted Liens” are:

(a)          Liens existing on the Effective Date and disclosed on the
Disclosure Schedules 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 in accordance with
GAAP, provided that no notice of any such Lien has been filed or recorded in
favor of the United States Treasury in accordance with the applicable provisions
of the IRC;

(c)          Liens securing Indebtedness permitted under clause (f) 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), 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;

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(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)          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;

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

(j)           Liens on cash that stand as security for letter of credit
reimbursement obligations and cash management obligations in the aggregate
amount not to exceed Five Hundred Thousand Dollars ($500,000); 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.

“Phase 3 Endpoint” means the primary endpoint in the Phase 3 study of tenapanor
for the treatment of Hyperphosphatemia in End-Stage Renal Disease Patients on
Dialysis (ESRD-HD), namely the change in serum phosphorus levels during placebo
controlled randomized withdrawal period in the responder population.

“Prepayment Premium” is, with respect to the 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 the Term Loan prepaid;

(ii)          for a prepayment made after the date which is after the first
anniversary of the Effective Date through and including the second anniversary
of the Effective Date, two percent (2.00%) of the principal amount of the Term
Loan prepaid; and

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

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

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“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.

“Recipient” means the Collateral Agent or any Lender, as applicable.

“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 (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 or regulatory 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, or
consent decree, issued by the FDA.

“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
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 and two thirds percent (66.67%) 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.

“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 after giving effect to the transactions
contemplated by this

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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.

“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).

“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.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

“Tenapanor” is an inhibitor of NHE3 with the chemical name
(S)-N,N'-(10,17-dioxo-3,6,21,24-tetraoxa-9,11,16,18-tetraazahexacosane-1,26-diyl)bis(3-((S)-6,8-dichloro-2-methyl-1,2,3,4-tetrahydroisoquinolin-4-yl)benzenesulfonamide)
dihydrochloride.

“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 connected with
and symbolized by such trademarks.

“Withholding Agent” means the Borrower and the Collateral Agent.

2.            LOANS AND TERMS OF PAYMENT

2.1          Promise to Pay.  Borrower hereby unconditionally promises to pay
each Lender, the outstanding principal amount of the Term Loan 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.

2.2          Term 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  Fifty
Million Dollars ($50,000,000) 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.

(i)           Interest-Only Payments.  Borrower shall make monthly payments of
interest only commencing on the first Payment Date following the Effective Date,
and on each Payment Date thereafter prior to the Amortization Date.

(ii)          Commencing on the Amortization Date, and continuing on the Payment
Date of each month thereafter, Borrower shall (i) make monthly payments of
interest to the respective Lender to which such payments are owed in accordance
with their respective Pro Rata Shares, as calculated by Collateral Agent (which
calculations shall be deemed correct absent manifest error) based upon the
effective rate of interest applicable to the

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Term Loan, as determined in Section 2.3(a) plus (ii) make consecutive equal
monthly payments of principal to the respective Lender to which such payments
are owed in accordance with their respective Pro Rata Shares, 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
Loan outstanding, and (B) a repayment schedule equal to (a) if the Amortization
Date shall be determined by reference to clause (a) of the definition thereof,
twenty-four (24) months; and (b) if the Amortization Date shall be determined by
reference to clause (b) of the definition thereof, 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 Loan may only be
prepaid in accordance with Sections 2.2(c) and 2.2(d).

(c)          Mandatory Prepayments.  If the Term Loan is accelerated following
the occurrence 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
Loan plus accrued and unpaid interest thereon through the prepayment date,
(ii) the applicable 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 (if any) 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 Loan in full, Borrower shall pay to the respective
Lender to which such payments are owed, the Final Fee in respect of the Term
Loan.

(d)          Permitted Prepayment of Term Loan.  Borrower shall have the option
to prepay all, but not less than all, of the outstanding principal balance of
the Term Loan advanced by the Lenders under this Agreement, provided Borrower
(i) provides written notice to Collateral Agent of its election to prepay the
Term Loan at least five (5) Business Days prior to such prepayment, and
(ii) pays to the Lenders on the date of such prepayment, payable to the
respective Lender to which such payments are owed in accordance with their
respective Pro Rata Shares, an amount equal to the sum of (A) the outstanding
principal of the Term Loan 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 respect to
any past due amounts.

2.3          Payment of Interest on the Term Loan.

(a)          Interest Rate.  Subject to Section 2.3(b), the principal amount
outstanding under the Term Loan shall accrue interest at a floating per annum
rate equal to the LIBOR Rate in effect from time to time plus 7.45%, which
aggregate interest rate shall be determined by Collateral Agent in accordance
with the definition of “LIBOR Rate” on the third Business Day prior to the
Effective Date 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 the Term Loan commencing
on, and including, the Effective Date, 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
four  percentage points (4%) (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 (if no more
than two Lenders) may debit (or ACH) any deposit accounts, maintained by
Borrower or any of its Subsidiaries 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.

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(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 p.m. 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.

2.4          Fees.  Borrower shall pay to Collateral Agent:

(a)          Closing Fee.  A fully-earned, non-refundable closing fee in the
amount of Five Hundred Thousand Dollars ($500,000) (the “Closing Fee”), which
shall be due on the Effective Date, to be shared between the Lenders ninety
percent (90%) to Solar and ten percent (10%) to Western Alliance Bank;

(b)          Final Fee.  The Final Fee, when due hereunder, ninety percent (90%)
to Solar and ten percent (10%) to Western Alliance Bank;

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

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

2.5          Taxes.

(a)          Payments Free of Taxes.  Any and all payments by or on account of
any obligation of the Borrower under any Loan Document shall be made without
deduction or withholding for any Taxes, except as required by applicable
law.  If any applicable law (as determined in the good faith discretion of an
applicable Withholding Agent) requires the deduction or withholding of any Tax
from any such payment by a Withholding Agent, then the applicable Withholding
Agent shall be entitled to make such deduction or withholding and shall timely
pay the full amount deducted or withheld to the relevant Governmental Authority
in accordance with applicable law and, if such Tax is an Indemnified Tax, then
the sum payable by the Borrower shall be increased as necessary so that after
such deduction or withholding has been made (including such deductions and
withholdings applicable to additional sums payable under this Section) the
applicable Recipient receives an amount equal to the sum it would have received
had no such deduction or withholding been made.

(b)          Payment of Other Taxes by the Borrower.  The Borrower shall timely
pay to the relevant Governmental Authority in accordance with applicable law, or
at the option of the Lender timely reimburse it for the payment of, any Other
Taxes.

(c)          Indemnification by the Borrower.  The Borrower shall indemnify each
Recipient, within 10 days after demand therefor, for the full amount of any
Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section) payable or paid by such
Recipient or required to be withheld or deducted from a payment to such
Recipient and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender (with a copy
to the Collateral Agent), or by the Collateral Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.

(d)          Evidence of Payments.  As soon as practicable after any payment of
Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.5,
the Borrower shall deliver to the Collateral

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Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Collateral
Agent.

(e)          Status of Lenders.

(i)           Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall
deliver to the Borrower, at the time or times reasonably requested by the
Borrower, such properly completed and executed documentation reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate of withholding.  In addition, any Lender, if
reasonably requested by the Borrower, shall deliver such other documentation
prescribed by applicable law or reasonably requested by the Borrower as will
enable the Borrower to determine whether or not such Lender is subject to backup
withholding or information reporting requirements.  Notwithstanding anything to
the contrary in the preceding two sentences, the completion, execution and
submission of such documentation shall not be required if in the Lender’s
reasonable judgment such completion, execution or submission would subject such
Lender to any material unreimbursed cost or expense or would materially
prejudice the legal or commercial position of such Lender.

(ii)          Without limiting the generality of the foregoing, in the event
that the Borrower is a U.S. Borrower,

(1)          any Lender that is a U.S. Person shall deliver to the Borrower on
or prior to the date on which such Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the reasonable request of the Borrower),
executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S.
federal backup withholding tax;

(2)          any Foreign Lender shall, to the extent it is legally entitled to
do so, deliver to the Borrower (in such number of copies as shall be requested
by the recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower), whichever of the following is applicable:

a.            in the case of a Foreign Lender claiming the benefits of an income
tax treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed copies of IRS Form W-8BEN or W-8BEN-E
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “interest” article of such tax treaty and (y) with respect to
any other applicable payments under any Loan Document, IRS Form W-8BEN or
W-8BEN-E establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “business profits” or “other income” article of
such tax treaty.

b.            executed copies of IRS Form W-8ECI;

c.            in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under Section 881(c) of the IRC, (x) a
certificate substantially in the form of Exhibit G-1 to the effect that such
Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the
IRC, a “10 percent shareholder” of the Borrower within the meaning of Section
881(c)(3)(B) of the IRC, or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the IRC (a “U.S. Tax Compliance Certificate”) and (y)
executed copies of IRS Form W-8BEN or W-8BEN-E; or

d.            to the extent a Foreign Lender is not the beneficial owner,
executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form
W-8BEN, W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of
Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification documents
from each beneficial owner, as applicable; provided that if the Foreign Lender
is a partnership and one or more direct or indirect partners of such Foreign
Lender are claiming the portfolio interest exemption, such Foreign Lender may
provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit
G-4 on behalf of each such direct and indirect partner;

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(3)          any Foreign Lender shall, to the extent it is legally entitled to
do so, deliver to the Borrower (in such number of copies as shall be requested
by the recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower), executed copies of any other form
prescribed by applicable law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax, duly completed, together with such
supplementary documentation as may be prescribed by applicable law to permit the
Borrower to determine the withholding or deduction required to be made; and

(4)          if a payment made to a Lender under any Loan Document would be
subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to
fail to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the IRC, as applicable), such
Lender shall deliver to the Borrower at the time or times prescribed by law and
at such time or times reasonably requested by the Borrower such documentation
prescribed by applicable law (including as prescribed by Section
1471(b)(3)(C)(i) of the IRC) and such additional documentation reasonably
requested by the Borrower as may be necessary for the Borrower to comply with
their obligations under FATCA and to determine that such Lender has complied
with such Lender’s obligations under FATCA or to determine the amount to deduct
and withhold from such payment.  Solely for purposes of this clause (D), “FATCA”
shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Borrower in writing of its legal
inability to do so.

(f)           Survival.  Each party’s obligations under this Section 2.5 shall
survive the resignation or replacement of the Collateral Agent or any assignment
of rights by, or the replacement of, a Lender, the termination of the Term Loan
Commitments and the repayment, satisfaction or discharge of all obligations
under any Loan Document.

2.6          Secured 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 F 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 Effective Date of the 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 the 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 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

3.1          Conditions Precedent to the 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 reasonably deem
necessary or appropriate, including, without limitation:

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

(b)          a completed Perfection Certificate and Disclosure Schedules for
Borrower and each of its Subsidiaries;

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(c)          duly executed original Control Agreements with respect to
Collateral Accounts maintained by Borrower or any of its Subsidiaries which in
the aggregate contain at least than Fifty Five Million Dollars ($55,000,000) on
the Effective Date;

(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 such
Person (which Certificate of Incorporation or Certificate of Formation of such
Person shall be certified by the Secretary of State of the State of Delaware)
and (ii) the resolutions adopted by such Person’s board of directors or other
governing body 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 Term Loan, will be terminated or released;

(g)          a duly executed legal opinion of counsel to Borrower dated 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,
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;

(i)           the duly executed Exit Fee Agreement;

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

(k)          a landlord’s consent duly executed in favor of Collateral Agent in
respect of the Borrower’s leased location located at 34175 Ardenwood Blvd,
Fremont, CA 94555; and

(l)           bailee waivers duly executed in favor of Collateral Agent in
respect of each of the following third party bailee locations:

(i)           Patheon, located at 2110 E Galbraith Rd, Cincinnati, OH 45237;

(ii)          Sherpa Clinical Packaging, located at 6166 Nancy Ridge Dr, San
Diego, CA 92121; and

(iii)         Bellwyck Clinical Services Bellwyck Packaging Solutions Inc,
located at 8946 Global Way West Chester Township, OH 45069.

3.2          Conditions Precedent to the Term Loans.  The obligation of each
Lender to extend the Term Loan is subject to the following additional 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 Effective Date;
provided, however, that such materiality qualifier shall not

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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 Default, shall exist; and

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

3.3          Covenant 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 the funding of the 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.

3.4          Procedures 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 p.m. 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. On the Effective Date, each Lender shall credit and/or transfer (as
applicable) to accounts designated by Borrower and agreed to by the Lenders, in
an amount equal to its Term Loan Commitment in respect of such Term Loan.

4.            CREATION OF SECURITY INTEREST

4.1          Grant 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 in full and, until payment in cash
of all Obligations (other than (a) inchoate indemnity obligations and (b) other
obligations that survive termination of this Agreement, in each case, for which
no claim has been made) and the Exit Fee (as defined in the Exit Fee Agreement),
a continuing 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) in an amount greater than Fifty Thousand Dollars ($50,000), Borrower shall
grant to Collateral Agent, for the ratable benefit of the Secured Parties, a
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 (a) inchoate indemnity obligations
and (b) other obligations that survive termination of this Agreement, in each
case, for which no claim has been made) are repaid in full in cash.  Upon
payment in full in cash of the Obligations (other than (a) inchoate indemnity
obligations and (b) other obligations that survive termination of this
Agreement, in each case, for which no claim has been made) 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, release its Liens in the
Collateral (and enter into any documentation reasonably requested by Borrower)
and all rights therein shall revert to Borrower.

4.2          Authorization 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

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jurisdictions to perfect or protect Collateral Agent’s interest or rights under
the Loan Documents; provided, however, that Borrower shall have no obligation to
deliver to Collateral Agent share certificates with respect to its security
interests in any Immaterial Subsidiary unless and until the first to occur of
(a) an Event of Default or (b) the value of such Immaterial Subsidiary, on a
book value, equals or exceeds One Hundred Thousand Dollars ($100,000).

5.            REPRESENTATIONS AND WARRANTIES

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

5.1          Due 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 each of its Subsidiaries has
delivered to Collateral Agent a completed perfection certificate and any updates
or supplements thereto on, before or after the Effective Date (each a
“Perfection Certificate” and collectively, the “Perfection
Certificates”).  Borrower represents and warrants that all the information set
forth on the Perfection Certificates pertaining to Borrower and each of its
Subsidiaries is accurate and complete (other than clerical mistakes in addresses
and other contact information).

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.

5.2          Collateral.

(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 Certificates 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 Permitted Liens that, under applicable law, have priority over
Collateral Agent’s Lien.

(c)          On the Effective Date, and except as disclosed on the Disclosure
Schedules (i) the Collateral 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 Five Hundred Thousand Dollars ($500,000) in book value.

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

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(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 Disclosure Schedules
(which shall be updated within 45 days after the end of each fiscal quarter to
reflect the consummation of any transaction not prohibited by this Agreement) or
to be included in the next-delivered Compliance Certificate, neither Borrower
nor any of its Subsidiaries is a party to, nor is bound by, any material license
or other Material Agreement.

5.3          Litigation.  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).

5.4          No 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.  Since December 31, 2017, there has not been a
Material Adverse Change.

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

5.6          Regulatory 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 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.

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

5.8          Tax Returns and Payments; Pension Contributions.  Borrower and each
of its Subsidiaries has timely filed all required tax returns and reports, each
such tax return is true, correct and complete in all material respects, 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  Fifty Thousand Dollars
($50,000), 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

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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 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.

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

5.10        Full 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, 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 (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).

6.            AFFIRMATIVE COVENANTS

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

6.1          Government 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.

6.2          Financial Statements, Reports, Certificates; Notices.

(a)          Deliver to Collateral Agent:

(i)           commencing with the month ending May 31, 2018, as soon as
available, but no later than thirty (30) days after the last day of each month
(forty-five (45) days after the last day of the final month of each quarter), 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 reasonably acceptable to the Collateral Agent;

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(ii)          as soon as available, but no later than ninety (90) 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 (other than with respect to a going concern limitation based
solely on the amount of cash and Cash Equivalents held by Borrower) on the
financial statements from an independent certified public accounting firm
acceptable to Collateral Agent in its reasonable discretion;

(iii)         no later than sixty (60) days after the last day of Borrower’s
fiscal year, but no later than ten (10) days’ after approval thereof by the
Borrower’s board of directors, Borrower’s annual financial projections for the
entire current fiscal year as approved by Borrower’s board of directors;
provided that, any 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)         together with the delivery of the Compliance Certificate, copies of
all non-ministerial statements, reports and notices made available to Borrower’s
security holders or holders of Subordinated Debt (except as otherwise required
to be delivered hereunder, other than materials provided to members of
Borrower’s board of directors solely in their capacities as board members or
management of Borrower) or holders of Subordinated Debt (except as otherwise
required to be delivered hereunder, other than materials provided to members of
Borrower’s board of directors solely in their capacities as board members or
management of Borrower);

(v)          with each Compliance Certificate, 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);

(vi)         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;

(vii)        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;

(viii)       written notice delivered at least five (5) days’ prior to
Borrower’s creation of a New Subsidiary in accordance with the terms of Section
6.10;

(ix)         written notice delivered at least twenty (20) 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 Five
Hundred Thousand Dollars ($500,000) 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;

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(xii)        together with the delivery of the Compliance Certificate, 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) and of the general
details thereof;

(xiii)       if Borrower has any Subsidiaries any of which is not a Registered
Organization upon formation thereof 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;

(xiv)       no later than 45 days after the end of each fiscal quarter an
updated Perfection Certificate to reflect any amendments, modifications and
updates, if any, to certain information in the Perfection Certificate after the
Effective Date; and

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

Notwithstanding the terms herein, documents and notices required to be delivered
pursuant to the terms hereof (to the extent any such documents and notices are
included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date on which Borrower posts such documents, or provides a link thereto, on
Borrower’s website on the internet at Borrower’s website address.

(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 Collateral Agent:

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

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

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

(iv)         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); and

(v)          written notice of all returns, recoveries, disputes and claims
regarding Inventory that involve more than Five Hundred Thousand Dollars
($500,000) 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.

6.3          Inventory; 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, as applicable, customary
practices.

6.4          Taxes; 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 pay, all foreign, federal, state, and local
taxes, assessments, deposits and contributions owed by Borrower or its
Subsidiaries, as applicable, except as

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otherwise permitted pursuant to the terms of Section 5.8 hereof, and shall
deliver to Collateral Agent, 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.

6.5          Insurance.  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 standard for companies in Borrower’s industry and
location.  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 canceled (except in the case of nonpayment).  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 ninety (90) days
of receipt thereof up to Three Hundred Thousand Dollars ($300,000)  with respect
to any loss, but not exceeding Six Hundred Thousand Dollars ($600,000), 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, 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 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 deems prudent.

6.6          Operating Accounts.

(a)          Within fifteen (15) days after the Effective Date, maintain
Borrower’s and Guarantors Collateral Accounts depositary institutions that have
agreed to execute Control Agreements in favor of Collateral Agent with respect
to such Collateral Accounts.  The provisions of the previous sentence shall not
apply to Deposit Accounts exclusively used for cash collateral for Permitted
Liens under clause (j) of the definition thereof, payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of Borrower’s, or
any Guarantor’s, employees and identified to Collateral Agent by Borrower as
such in the Disclosure Schedules.

(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 cash
collateral for Permitted Liens under clause (j) of the definition thereof,
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of Borrower’s, or any Guarantor’s, employees and identified to
Collateral Agent by Borrower as such in the Disclosure Schedules or otherwise in
writing to the Collateral Agent.

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

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(d)          Beginning on the date that is forty-five (45) days after the
Effective Date, Borrower shall maintain at all times at least Twenty-Five
Million Dollars ($25,000,000) (or, if Borrower’s total cash and Cash Equivalents
is less than Twenty-Five Million Dollars ($25,000,000), such lesser amount) in
cash or Cash Equivalents in one or more demand deposit or money market accounts
held in Borrower’s name at Western Alliance Bank pursuant to account agreements
reasonably satisfactory to Borrower.

6.7          Protection of Intellectual Property Rights.  Borrower and each of
its Subsidiaries shall: (a) use commercially reasonable efforts to 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; 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.

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

6.9          Landlord 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 Five
Hundred Thousand Dollars ($500,000) in the aggregate, at Collateral Agent’s
election, Borrower or such Subsidiary shall use commercially reasonable efforts
to cause such bailee or landlord, as applicable, to 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.

6.10        Creation/Acquisition of Subsidiaries.  In the event any Borrower or
any Subsidiary of any Borrower creates or acquires any Subsidiary after the
Effective Date, Borrower or such Subsidiary shall promptly notify the Collateral
Agent of such creation or acquisition, and Borrower or such Subsidiary shall
take all actions reasonably requested by the Collateral Agent to achieve any of
the following with respect to such “New Subsidiary” (defined as a Subsidiary
formed after the date hereof during the term of this Agreement):  (i) if such
New Subsidiary is a Domestic Subsidiary (except for a Domestic Subsidiary (1)
substantially all of the assets of which consist of the equity interests of one
or more Foreign Subsidiaries or (2) that is a subsidiary of a Foreign Subsidiary
(each,  an “Excluded Domestic Subsidiary”)), to cause such New Subsidiary to
become either a co-Borrower hereunder, or a secured guarantor with respect to
the Obligations; and (ii) with respect to New Subsidiaries owned directly by
Borrower or a Guarantor, to grant and pledge to Collateral Agent a perfected
security interest in (A) 100% of the stock, units or other evidence of ownership
held by Borrower or its Subsidiaries of any such New Subsidiary that is a
Domestic Subsidiary (except if such New Subsidiary is an Excluded Domestic
Subsidiary), or (B) 65% of the stock, units or other evidence of ownership held
by Borrower or a Guarantor of any such New Subsidiary which is a Foreign
Subsidiary or an Excluded Domestic Subsidiary.

6.11        Further 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:

7.1          Dispositions.  Convey, sell, lease, transfer, assign, dispose of
(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 or obsolete Equipment;
(c) in connection with Permitted Liens,

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Permitted Investments and Permitted Licenses; (d) cash or Cash Equivalents
pursuant to transactions not prohibited by this Agreement; or (e) other
Transfers not exceed Two Hundred Fifty Thousand Dollars ($250,000) in any fiscal
year.

7.2          Changes in Business, Management, Ownership, or Business Locations.
 (a) Engage in or permit any of its Subsidiaries to engage in any 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 Collateral
Agent within ten (10) Business 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 49% of the voting stock of Borrower immediately after
giving effect to such transaction or related series of such transactions 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 twenty (20) 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 Five Hundred Thousand
Dollars ($500,000) 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.

7.3          Mergers 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, other than Permitted
Acquisitions. A Subsidiary may merge or consolidate into another Subsidiary
(provided such surviving Subsidiary is a “co‑Borrower” hereunder or has provided
a secured Guaranty of Borrower’s Obligations hereunder in accordance with
Section 6.10) 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.

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

7.5          Encumbrance.  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”.

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

7.7          Restricted Payments. (a) Declare or pay any dividends (other than
dividends payable solely in capital stock) or make any other distribution or
payment on account 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 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, similar plans to any of the foregoing, or payments in
connection with tax withholding obligations in connection with the foregoing,
provided such repurchases do not exceed Three Hundred Fifty Thousand Dollars
($350,000) in the aggregate per fiscal year and One Million Dollars ($1,000,000)
over the term of this Agreement), (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

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party to or bound by an agreement that restricts a Subsidiary from paying
dividends or otherwise distributing property to Borrower other than this
Agreement.

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

7.9          Transactions 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) compensation arrangements for Borrower’s and its Subsidiaries’ officers,
directors and employees that are customary in Borrower’s industry.

7.10        Subordinated 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.

7.11        Compliance.  (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 the 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.

7.12        Compliance 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.

7.13        Minimum Liquidity.

(a)          Borrower shall not allow, at any time, its unrestricted cash and
Cash Equivalents to be an amount less than the sum of (i) the principal payments
due on interest-bearing liabilities for the upcoming seven (7) fiscal months
(using Borrower’s reasonable judgment as to when the Amortization Date will
occur) and (ii) seven times (7x) the cash spent in respect of operations and
capital expenditures by Borrower per month as determined based on the average
taken over the most recently completed seven fiscal months (excluding principal
payments made in respect of interest- bearing liabilities made in such period);
provided, however, this covenant shall no longer apply after the Borrower
provides evidence reasonably satisfactory to the Collateral Agent that Borrower
has received at least Forty Six Million Five Hundred Thousand Dollars
($46,500,000) in aggregate unrestricted net cash proceeds from the sale and
issuance of Borrower’s stock pursuant to one or more bona fide equity financings
on terms reasonably acceptable to the Collateral Agent.

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(b)          Borrower shall not allow, at any time that a Permitted License is
in effect under clause (D)(iii)(y) in the definition thereof, its cash and Cash
Equivalents to be an amount less than Fifty Million Dollars ($50,000,000) until
the Borrower achieves (subject to evidence reasonably acceptable to the
Collateral Agent) its Phase 3 Endpoint.

8.            EVENTS OF DEFAULT

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

8.1          Payment Default.  Borrower fails to (a) make any payment of
principal or interest on the Term Loan on its due date, or (b) pay any other
Obligation 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 or acceleration pursuant to
Section 9.1(a) hereof);

8.2          Covenant 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), 6.10
(Creation/Acquisition of Subsidiaries) 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 fifteen (15) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the fifteen (15) day period or cannot after diligent attempts by
Borrower or such Subsidiary, as applicable, be cured within such fifteen (15)
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.

8.3          Material Adverse Change.  Required Lenders determine that a
Material Adverse Change has occurred;

8.4          Attachment; 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;

8.5          Insolvency.  (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;

8.6          Other Agreements.  There is a default in 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

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exercised, to accelerate the maturity of any Indebtedness in an amount in excess
of Three Hundred Fifty Thousand Dollars ($350,000) or that could reasonably be
expected to have a Material Adverse Change;

8.7          Judgments.  One or more judgments, orders, or decrees for the
payment of money in an amount, individually or in the aggregate, of at least
Three Hundred Fifty Thousand Dollars ($350,000) (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;

8.8          Misrepresentations.  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;

8.9          Subordinated 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;

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

8.11        Governmental 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 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 marketing any of its products; (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 the Applicable
FDA Threshold or more; (iv) Borrower or any of its Subsidiaries enters into a
settlement agreement with the FDA that results in aggregate liability as to any
single or related series of transactions, incidents or conditions, of the
Applicable FDA Threshold or more, or that could reasonably be expected to result
in a Material Adverse Change; 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.

8.12        Lien 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
(to the extent required to be perfected) on any material 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

9.1          Rights and Remedies.

(a)          Upon the occurrence and during the continuance of an Event of
Default, Collateral Agent shall at the written direction of Required Lenders,
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 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

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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 at the written direction of the
Required Lenders, 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 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 at the written
direction of the Required Lenders, 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, 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;

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(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 and during the continuance
of an Exigent Circumstance.

9.2          Power 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 (a) inchoate indemnity
obligations and (b) other obligations that survive termination of this
Agreement, in each case, for which no claim has been made) have been satisfied
in full and Collateral Agent and the Lenders are under no further obligation to
extend the Term Loan 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 (a) inchoate indemnity obligations and (b) other
obligations that survive termination of this Agreement, in each case, for which
no claim has been made) have been fully repaid and performed and Collateral
Agent’s and the Lenders’ obligation to provide the Term Loan terminates.

9.3          Protective Payments.  If Borrower or any of its Subsidiaries fail
to obtain the insurance called for by Section 6.5 or fail to pay any premium
thereon or fail 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 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.

9.4          Application 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; second, to
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 principal amount of the Obligations outstanding;
and fourth, to any other Obligations 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

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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 the 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).

9.5          Liability 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.

9.6          No 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.

9.7          Demand 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

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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:

ARDELYX, INC.

 

34175 Ardenwood Blvd., Suite 200

 

Fremont, California 94555

 

Attn: Mark Kaufmann

 

Email: mkaufmann@ardelyx.com

 

 

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

LATHAM & WATKINS LLP

 

140 Scott Drive

 

Menlo Park, CA 94025

 

Attn: Mark Roeder

 

Email: mark.roeder@lw.com

 

 

If to Collateral Agent:

SOLAR CAPITAL LTD.

 

500 Park Avenue, 3rd Floor

 

New York, NY 10022

 

Attention: Anthony Storino

 

Email: storino@Solarcapltd.com

 

 

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

MORRISON & FOERSTER LLP

 

425 Market St.

 

San Francisco, CA 94105

 

Attn: Jeff Kayes

 

Email: jkayes@mofo.com

 

11.          CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

11.1        Waiver 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 AMONG
BORROWER, 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.

11.2        Governing 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 OF SUCH STATE (OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW)), INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE

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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.

11.3        Submission 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.

11.4        Service 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.

11.5        Non-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.

12.          GENERAL PROVISIONS

12.1        Successors 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;
provided,  however, that any such Lender Transfer (other than  (i) any Transfer
at any time that an Event of Default has occurred and is continuing, or (ii) a
transfer, pledge, sale or assignment to an Eligible Assignee) of its
obligations, rights, and benefits under this Agreement and the other Loan
Documents shall require the prior written consent of the Collateral Agent (such
approved assignee, an “Approved Lender”); and provided, further, that on the
date it becomes a party to this Agreement, an Approved Lender must be capable,
through its applicable lending office, of receiving payments of interest from
Borrower without the imposition of any withholding taxes that would be required
to be borne by Borrower or requiring the payment of any additional amounts by
Borrower pursuant to Section 2.5 hereof.  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 Eligible Assignee
or Approved Lender as Collateral Agent reasonably shall require.  Collateral
Agent shall use commercially reasonable efforts to provide notice to Borrower of
each Lender Transfer promptly following such Lender Transfer.  Notwithstanding
anything to the contrary contained herein, so long as no Event of Default has
occurred and is continuing, no Lender Transfer (other than a Lender Transfer in
connection with (x) assignments by a Lender due to a forced divestiture at the
request of any regulatory agency; or (y) upon the occurrence of a default, event
of default or similar occurrence with respect to a Lender’s own financing or
securitization transactions) shall be permitted,

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without Borrower’s consent, to any Person which is an Affiliate or Subsidiary of
Borrower, a direct competitor of Borrower or a vulture hedge fund, each as
reasonably determined by Collateral Agent at the time of such assignment.

12.2        Indemnification.  Subject to Section 2.5, 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.  Notwithstanding the foregoing, if no direct conflict of
interest is apparent in connection with the defense of any Claim, Collateral
Agent and the Lenders shall first take commercially reasonable efforts to use
the same counsel as Borrower,  or, if a conflict does exist, use only one
counsel among all Indemnified Persons with respect to the defense of any Claim.

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

12.4        Correction 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.

12.5        Amendments 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 the Term Loan or forgive any
principal, interest (other than default interest) or fees (other than late
charges) with respect to the Term Loan (B) postpone the date fixed for, or
waive, any payment of principal of the Term Loan or of interest on the 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

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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 12.5.  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, 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.

12.6        Counterparts.  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.

12.7        Survival.  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 (a) inchoate
indemnity obligations and (b) other obligations that survive termination of this
Agreement, in each case, for which no claim has been made) have been
satisfied.  The obligation of Borrower in Section 12.2 to indemnify each Lender
and Collateral Agent, as well as 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.

12.8        Confidentiality.  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 and upon the occurrence of a default, event of default or similar
occurrence with respect to such financing or securitization transaction; (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 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, regulation, 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 fault of 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

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Section 12.8 supersede all prior agreements, understanding, representations,
warranties, and negotiations between the parties about the subject matter of
this Section 12.8.

12.9        Right 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 Secured 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.

12.10      Cooperation 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 for any prospective
participant or assignee of a Term Loan Commitment (or portions thereof) or Term
Loan (or portions thereof) as Collateral Agent or such Lender may 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, in each case subject to Section 12.8.

12.11      Public Announcement. Collateral Agent and each Lender may, with the
consent of Borrower (which consent may not be unreasonably conditioned, withheld
or delayed), 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.  Notwithstanding the foregoing, such
consent from Borrower shall not be required for any disclosures by Collateral
Agent or the Lenders required by the Securities and Exchange Commission or other
governmental agency and any other public disclosure with investors, other
governmental agencies or other related persons, in each case, subject to
applicable law and regulations.

12.12      Collateral Agent and Lender Agreement. Collateral Agent and each
Lender 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.

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

12.14      Termination 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 (other than (a) inchoate indemnity obligations and (b) other
obligations that survive termination of this Agreement, in each case, for which
no claim has been made).  So long as Borrower has satisfied the Obligations
(other than (a) inchoate indemnity obligations and (b) other obligations that
survive termination of this Agreement, in each case, 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 three (3) Business
Days after written notice of termination is given to the Collateral Agent and
the Lenders.

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[Balance of Page Intentionally Left Blank]

 

 

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

BORROWER:

 

 

 

ARDELYX, INC.

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

 

 

 

 

COLLATERAL AGENT AND LENDER:

 

 

 

SOLAR CAPITAL LTD.

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

 

 

 

 

LENDER:

 

 

 

WESTERN ALLIANCE BANK

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

 

 

[Signature Page to Loan and Security Agreement]

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SCHEDULE 1.1

 

Lenders and Commitments

 

Lender

Term Loan Commitment

Commitment Percentage

Solar Capital Ltd.

$35,000,000

70.00%

Western Alliance Bank

$15,000,000

30.00%

TOTAL

$50,000,000

100.00%

 

 

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EXHIBIT A

 

Description of Collateral

The Collateral consists of all of Borrower’s and Guarantors’ right, title and
interest in and to the following personal 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 (a) (1) more than
65% of the presently existing and hereafter arising issued and outstanding
shares of capital stock owned by Borrower or any Guarantor of any Foreign
Subsidiary or any Excluded Domestic Subsidiary which shares entitle the holder
thereof to vote for directors or any other matter or (2) any of the stock or
other equity interests in any Foreign Subsidiary that is not owned by Borrower
or a Guarantor, (b) any interest of Borrower as a lessee or sublessee under a
real property lease; (c) rights held under a license or other agreement that are
not assignable by their terms without the consent of the counterparty thereof
(but only to the extent such restriction on assignment is effective under
Section 9-406, 9-407, 9-408 or 9-409 of the Code (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law (including
the Bankruptcy Code) or principles of equity); (d) any interest of Borrower or
any Guarantor as a lessee or borrower under an Equipment lease or Equipment
financing if Borrower or such Guarantor, as applicable, is prohibited by the
terms of such agreement from granting a security interest in such lease or
agreement or under which such an assignment or Lien would cause a default to
occur under such lease; provided, however, that upon termination of such
prohibition, such interest shall immediately become Collateral without any
action by Borrower (or such Guarantor, as applicable), Collateral Agent or any
Lender, or (e) any Intellectual Property; provided, however, the Collateral
shall include, all Accounts with respect to Intellectual Property and all
proceeds of Intellectual Property and any sale 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 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, (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 the Secured Parties 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 as
permitted pursuant to the Loan Agreement, (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, exercise all remedies given to
Collateral Agent and the other Lenders with respect to 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; 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 or any Guarantor 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).  Any
such Person shall benefit from this Exhibit B to the extent provided by
Collateral Agent.

(c)          Under the Loan Documents, and except as expressly set forth in this
Exhibit B, 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.

 

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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 the Required 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 the
Required Lenders (or, where so required, such greater proportion) and (iii) the
exercise by Collateral Agent or the 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 the 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 the 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 the 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 in good faith 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 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

 

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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.

4.            Collateral Agent Individually.  To the extent Collateral Agent or
any of its Affiliates 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 (an
“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 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

 

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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 (including pursuant to Section 12.2 of the
Agreement)) promptly upon demand for its Pro Rata Share of any out-of-pocket
costs and expenses (including, without limitation, 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 (collectively, “Costs”); provided, that no Lender shall
be liable for the payment to Collateral Agent of any Costs which 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.  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 (including pursuant to Section
12.2 of the Agreement)), 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.

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 and has accepted such appointment, then the retiring
Collateral Agent may, on behalf of the Lenders, appoint a successor Collateral
Agent from among the Original Lenders, if any, and if none, 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 (d) 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:

 

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(a)          any Guarantor or co-Borrower 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 the Secured
Parties against (i) any Collateral that is sold or otherwise disposed of by
Borrower or any Guarantor 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, Borrower and any
Guarantor, upon (A) termination of all of the Term Loan Commitments, (B) the
payment in full in cash of all of the Obligations  (other than (a) inchoate
indemnity obligations and (b) other obligations that survive termination of this
Agreement, in each case, for which no claim has been made), and (C) to the
extent requested by Collateral Agent or a Lender, receipt by Collateral Agent
and Lenders of liability releases from Borrower in form and substance acceptable
to Collateral Agent and the Lenders (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 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’
liens, counterclaims 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 the Term Loan for the account of the 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 the 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 or on behalf of 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.

 

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(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)      To the extent that any Lender has failed to fund the Term Loan or any
other payments required to be made by it under the Loan Documents after the 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 or on
behalf of Borrower thereunder.  The failure of any Non‑Funding Lender to make
the 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 Lenders” 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 the 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 the Required
Lenders. Notwithstanding the immediately preceding sentence, if an Event of
Default exists for longer than five (5) days and the Required Lenders cannot
agree whether and/or what remedies to exercise, or whether or what actions, if
any, to take under any Loan Document, the Lender (which must be an Original
Lender or an Affiliate thereof) wishing to take the stronger Enforcement Action
(the “Enforcing Lender”) shall have the right to give notice to the other
Lenders and, eighty-five (85) days after receipt of such notice, shall be
entitled 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; provided, however, if during such eighty-five (85)
day period, the Required Lenders and the Enforcing Lender agree on timing, order
and type of Enforcement Action, the notice shall be deemed rescinded. To
facilitate these rights to control Enforcement Actions, upon either Original
Lender (or Affilate thereof) 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, solely with respect to
taking Enforcement Actions, (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 other Loan Documents (and the Enforcing Lender shall be
deemed to have accepted such appointment). As used herein, “Enforcement Action”
means 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 the Collateral or the satisfaction of the Obligations.

 

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11.          Priority of Encumbrances; Cash Collateral. The parties acknowledge
that Borrower may in the future desire to pledge cash and/or securities in
connection with the provision by Bridge Bank to Borrower of certain products
and/or credit services facilities, including, without limitation, any letters of
credit, cash management services (including, without limitation, merchant
services, direct deposit of payroll, business credit cards, and check cashing
services), interest rate swap arrangements, and foreign exchange services (such
products and/or services, collectively, the “Bank Services”) as any such
products or services may be identified in Bridge Bank’s various agreements
related thereto. The parties agree that notwithstanding anything to the contrary
contained in the Loan Documents, Borrower may pledge cash and/or Cash
Equivalents in the aggregate principal amount of up to Five Hundred Thousand
Dollars ($500,000) to Bridge Bank as collateral to secure its actual outstanding
obligations to Bridge Bank relating to Bank Services (such cash and/or Cash
Equivalents and the proceeds thereof (but expressly excluding any other
Collateral) being hereinafter referred to as the “Cash Collateral”). The parties
further agree that notwithstanding anything to the contrary contained in this
Agreement, Bridge Bank’s lien on the Cash Collateral shall be senior in priority
to the liens of the Collateral Agent and the Lenders under the Loan Documents to
the extent of Borrower’s actual reimbursement obligations in respect of Bank
Services up to Two Hundred Fifty Thousand Dollars ($500,000) (collectively, the
“Reimbursement Obligations”), and Bridge Bank may take such action as Bridge
Bank deems necessary in respect of the Cash Collateral only to enforce its
rights and remedies to satisfy the Reimbursement Obligations, all without prior
notice to or the consent of Collateral Agent or the other Lenders. Bridge Bank
agrees to use its best efforts to give immediate notice to Collateral Agent of
such action being taken, and Collateral Agent may not foreclose upon, or force
Bridge Bank to take any actions with respect to, the Cash Collateral
notwithstanding anything in the Loan Documents to the contrary. Bridge Bank may
extend credit to Borrower in connection with the provision of Bank Services (not
to exceed the aggregate amount of Two Hundred Fifty Thousand Dollars ($250,000),
inclusive of the Reimbursement Obligations (collectively, the “Aggregate Bank
Services Amount”)).  Western Alliance Bank (on behalf of Bridge Bank) consents
to Borrower’s grant to Collateral Agent and/or the Lenders of liens and security
interests against the Cash Collateral (and agrees that Bridge Bank shall hold
such Cash Collateral both to perfect Bridge Bank’s own security interests
therein as provided for in this paragraph and also as bailee and agent for
Collateral Agent and Lenders to perfect their security interests therein granted
under the Loan Documents;  however, Bridge Bank may release the Cash Collateral
without the consent of Collateral Agent or the other Lenders), and the parties
agree that (i) the Cash Collateral and proceeds thereof shall be distributed to
Bridge Bank and the other Lenders, after satisfaction of the Reimbursement
Obligations to Bridge Bank, in the manner and order set forth in this Agreement
and the Loan Documents, as applicable, and (ii) to the extent that the Cash
Collateral is insufficient to satisfy the Aggregate Bank Services Amount to
Bridge Bank in full (a “Deficiency”), any such Deficiency cannot be repaid by
Borrower (and Bridge Bank shall not accept or receive any payments as to such
Deficiency), if at all, until all of the Borrower’s other indebtedness to
Collateral Agent and the Lenders under the Loan Documents have first been fully
repaid. In addition to and without limiting the foregoing, Bridge Bank will not,
without the prior written consent of Collateral Agent, which may be granted or
withheld in Collateral Agent’s sole discretion, declare an Event of Default,
accelerate the Indebtedness or exercise any remedies under the Loan Documents
based upon the occurrence of any arrearages, the existence of any Deficiency, or
otherwise with respect to Bank Services.

 

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EXHIBIT C

Loan Payment Request Form

Fax To:  (212) 993-1698

Date:

 

 

 

LOAN PAYMENT:

[___________________________]

 

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 #:

]

 

 

 

 

 

 

 

 

 

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Compliance Certificate

 

 

 

TO:

SOLAR CAPITAL LTD., as Collateral Agent and Lender

 

WESTERN ALLIANCE BANK, as Lender

 

 

 

 

FROM:

ARDELYX, INC.

 

The undersigned authorized officer (“Officer”) of Ardelyx, Inc. (“Borrower”),
hereby certifies solely in his/her capacity as an officer of Borrower and not in
his/her individual capacity, that in accordance with the terms and conditions of
the Loan and Security Agreement dated as of May 16, 2018, 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 (45 days for the last month of each quarter)

 

Yes

No

N/A

2)

Annual (CPA Audited) statements

Within 90 days after FYE or 5 days after filing with SEC

 

Yes

No

N/A

3)

Annual Financial Projections/Budget

Annually (within 60 days after FYE) or 10 days of approval and when received (7
days of approval)

 

Yes

No

N/A

 

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

 

4)

Account statements for each Collateral Account

Monthly within 30 days

 

Yes

No

N/A

5)

Compliance Certificate

Monthly within 30 days

 

Yes

No

N/A

6)

IP notice (events reasonably expected to materially and adversely affect value
of IP or result in MAC)

When required

 

Yes

No

N/A

7)

Total amount of Borrower’s cash and Cash Equivalents held at Western Alliance
Bank at the last day of the measurement period

At all times, beginning 45 days after Effective Date

$________

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

7.13 – Minimum Liquidity:

1.   Unrestricted cash and Cash Equivalents:

 

 

 

 

 

2.   Principal payments due on interest-bearing liabilities for the upcoming
seven (7) fiscal months (clause (i)):

 

 

 

 

 

3.   The cash spent in respect of operations and capital expenditures by
Borrower per month as determined based on the average taken over the most
recently completed seven fiscal months (excluding principal payments made in
respect of interest-bearing liabilities made in such period) (clause (ii)):

 

 

 

 

 

4.   7x Line 3 (clause (ii))

 

 

 

 

 

5.   Line 2 plus Line 4

 

 

 

 

 

6.   Is Line 1 greater than or equal to Line 5?

 

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)

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

 

 

 

 

5)

With respect to each Foreign Subsidiary, do any hold assets worth One Hundred
Thousand Dollars ($100,000) or more in book value?

 

Yes

No

 

 

 

 

6)

If the answer to question 5 is Yes, has the Company provided certificates
representing a pledge of 65% of the stock, units or other evidence of ownership
held by Borrower or Guarantor of such Foreign Subsidiary?

Yes

No

 

 

 

 

7)

Have you entered into a Material Agreement since the last Compliance
Certificate?

Yes

No

 

 

 

 

 

[If yes, provide]

 

 

 

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

 

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.)

 

ARDELYX, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

Date:

 

 

 

COLLATERAL AGENT USE ONLY

 

 

 

Received by:

 

Date:

 

 

 

 

 

 

 

Verified by:

 

Date:

 

 

 

 

Compliance Status:            Yes                       No

 

 

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EXHIBIT E

CORPORATE BORROWING CERTIFICATE

BORROWER:

ARDELYX, INC.

DATE:  May 16, 2018

LENDER:

SOLAR CAPITAL LTD., as Collateral Agent and Lender

 

 

WESTERN ALLIANCE BANK, as Lender

 

 

I hereby certify, solely in my capacity as an officer of Borrower and not in my
individual capacity, as follows, as of the date set forth above:

1.            I am the 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 (or a duly authorized committee thereof) 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]

 

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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 (excluding intellectual property).

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.

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 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 [_________] on the date set forth above.

 

By:

 

 

Name:

 

Title:

 

 

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

 

EXHIBIT A

Certificate of Incorporation (including amendments)

[see attached]

 

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

 

EXHIBIT B

 

Bylaws

[see attached]

 

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

 

Exhibit F

Form of Secured Promissory Note

THIS NOTE WAS ISSUED WITH “ORIGINAL ISSUE DISCOUNT” WITHIN THE MEANING OF
SECTION 1272, ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  UPON
WRITTEN REQUEST, THE BORROWER WILL PROVIDE TO ANY HOLDER OF THE NOTE (1) THE
ISSUE PRICE AND DATE OF THE NOTE, (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON
THE NOTE AND (3) THE ORIGINAL YIELD TO MATURITY OF THE NOTE.  SUCH REQUEST
SHOULD BE SENT TO THE BORROWER AT ARDELYX, INC., 34175 ARDENWOOD BLVD., SUITE
200, FREMONT, CA 94555, ATTN: MARK KAUFMANN, EMAIL: [____________].

SECURED PROMISSORY NOTE

 (Term Loan)

$

 

 

Dated:  [DATE]

 

FOR VALUE RECEIVED, the undersigned, ARDELYX, INC., a Delaware corporation with
offices located at 34175 Ardenwood Blvd., Suite 200, Fremont, CA 94555
(“Borrower”) HEREBY PROMISES TO PAY [___________] (“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 May 16, 2018 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 fees and expenses, including, without limitation,
attorneys’ fees and costs, 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:

 

 

 

[                             ]

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

 

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

 

LOAN AND PAYMENTS OF PRINCIPAL

 

 

 

 

 

 

 

 

 

Date

    

Interest Rate

    

Principal
Amount

    

Scheduled
Payment Amount

    

Notation By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

EXHIBIT G-1

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Loan and Security Agreement (as the same may be
amended, supplemented or otherwise modified from time to time, the “Loan
Agreement”), dated as of May 16, 2018, among Solar Capital Ltd. (“Solar”), as
collateral agent, and the lenders listed on Schedule 1.1 thereof or otherwise a
party thereto from time to time (together with any other lenders party hereto,
the “Lenders” and each a “Lender”), and Ardelyx, Inc. (“Borrower”), and their
successors and assigns.

Pursuant to the provisions of Section 2.5(e) of the Loan Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Term Loan(s) (as well as any secured promissory notes (“Note(s)”)
evidencing such Term Loan(s)) in respect of which it is providing this
certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of
the Code, (iii) it is not a ten percent shareholder of Borrower within the
meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled
foreign corporation related to Borrower as described in Section 881(c)(3)(C) of
the Code.

The undersigned has furnished Borrower with a certificate of its non-U.S. Person
status on IRS Form W-8BEN or W-8BEN-E, as applicable.  By executing this
certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform Borrower, and (2)
the undersigned shall have at all times furnished Borrower with a properly
completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.

[NAME OF LENDER]

 

 

 

 

 

By:

 

 

 

Name: 

 

 

Title:

 

 

 

 

Date:                     , 20[  ]

 

 

 

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

 

EXHIBIT G-2

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Loan and Security Agreement (as the same may be
amended, supplemented or otherwise modified from time to time, the “Loan
Agreement”), dated as of [_____], 2018, among Solar Capital Ltd. (“Solar”), as
collateral agent, and the lenders listed on Schedule 1.1 thereof or otherwise a
party thereto from time to time (together with any other lenders party hereto,
the “Lenders” and each a “Lender”), and Ardelyx, Inc. (“Borrower”), and their
successors and assigns.

Pursuant to the provisions of Section 2.5(e) of the Loan Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate, (ii)
it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii)
it is not a ten percent shareholder of Borrower within the meaning of Section
871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation
related to Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E, as applicable.  By
executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform
such Lender in writing, and (2) the undersigned shall have at all times
furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.

[NAME OF PARTICIPANT]

 

 

 

 

 

By:

 

 

 

Name: 

 

 

Title:

 

 

 

 

Date:                        , 20[  ]

 

 

 

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

 

EXHIBIT G-3

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Loan and Security Agreement (as the same may be
amended, supplemented or otherwise modified from time to time, the “Loan
Agreement”), dated as of May 16, 2018, among Solar Capital Ltd. (“Solar”), as
collateral agent, and the lenders listed on Schedule 1.1 thereof or otherwise a
party thereto from time to time (together with any other lenders party hereto,
the “Lenders” and each a “Lender”), and Ardelyx, Inc. (“Borrower”), and their
successors and assigns.

Pursuant to the provisions of Section 2.5(e) of the Loan Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a ten percent shareholder of the
Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of
its direct or indirect partners/members is a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or
W-8BEN-E, as applicable, or (ii) an IRS Form W-8IMY accompanied by an IRS Form
W-8BEN or W-8BEN-E, as applicable, from each of such partner’s/member’s
beneficial owners that is claiming the portfolio interest exemption.  By
executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform
such Lender and (2) the undersigned shall have at all times furnished such
Lender with a properly completed and currently effective certificate in either
the calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.

 

 

 

[NAME OF PARTICIPANT]

 

 

 

 

 

By:

 

 

 

Name: 

 

 

Title:

 

 

 

 

Date:                        , 20[  ]

 

 

 

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

 

EXHIBIT G-4

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Loan and Security Agreement (as the same may be
amended, supplemented or otherwise modified from time to time, the “Loan
Agreement”), dated as of May 16, 2018, among Solar Capital Ltd. (“Solar”), as
collateral agent, and the lenders listed on Schedule 1.1 thereof or otherwise a
party thereto from time to time (together with any other lenders party hereto,
the “Lenders” and each a “Lender”), and Ardelyx, Inc. (“Borrower”), and their
successors and assigns.

Pursuant to the provisions of Section 2.5(e) of the Loan Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Term
Loan(s) (as well as any secured promissory notes (“Note(s)”) evidencing such
Term Loan(s)) in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such Term
Loan(s) (as well as any Note(s) evidencing such Term Loan(s)), (iii) with
respect to the extension of credit pursuant to this Loan Agreement or any other
Loan Document, neither the undersigned nor any of its direct or indirect
partners/members is a bank extending credit pursuant to a loan agreement entered
into in the ordinary course of its trade or business within the meaning of
Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect
partners/members is a ten percent shareholder of Borrower within the meaning of
Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect
partners/members is a controlled foreign corporation related to Borrower as
described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished Borrower with IRS Form W-8IMY accompanied by one
of the following forms from each of its partners/members that is claiming the
portfolio interest exemption: (i) an IRS Form W-8BEN, or W-8BEN-E, as
applicable, or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or
W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners
that is claiming the portfolio interest exemption.  By executing this
certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform Borrower, and (2)
the undersigned shall have at all times furnished Borrower with a properly
completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.

 

 

 

[NAME OF LENDER]

 

 

 

 

 

By:

 

 

 

Name: 

 

 

Title:

 

 

 

 

Date:                        , 20[  ]

 

 

 

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