Exhibit 10.1

U.S. $ 3,000,000

CREDIT AGREEMENT

Dated as of December 21, 2010

Between

IGI LABORATORIES, INC

as Borrower

and

AMZAK CAPITAL MANAGEMENT, LLC

as Lender

Table of Contents:

 

•

Credit Agreement

 

 

 

 

•

Exhibit A – Form of Assignment and Acceptance

 

 

 

 

•

Exhibit B – Form of Notice of Borrowing

 

 

 

 

•

Exhibit C – Form of Promissory Note

 

 

 

 

•

Exhibit D – Form of Compliance Certificate

 

 

 

 

•

Exhibit E – Form of Pledge and Security Agreement

 

 

 

 

•

Exhibit F – Form of Legal Opinion of Borrowers Counsel

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CREDIT AGREEMENT

This CREDIT AGREEMENT (the “Agreement”) dated as of December 21, 2010, by and
between IGI Laboratories, Inc a corporation organized and existing under the
laws of the State of Delaware (the “Borrower”), and Amzak Capital Management,
LLC, a limited liability company organized and existing under the laws of the
State of Nevada (the “Lender” or “Amzak”). The Borrower and Lender shall
collectively be referred to as, the “Parties.”

W I T N E S S E T H:

WHEREAS, the Borrower has requested that the Lender extend certain credit
facilities to the Borrower on the terms and conditions herein set forth; and

WHEREAS, the Lender has agreed to extend such credit facilities to the Borrower
on the terms and conditions herein set forth.

NOW, THEREFORE, in consideration of the sum of one Dollar (US $1.00) in hand
paid, and other good and valuable considerations, the sufficiency and receipt of
which is hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.01.  Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings, with such meanings to be equally
applicable to both the singular and plural forms of the terms defined:

“Accreted Principal Amount” of any Promissory Note or Advance means, as of any
date, the Initial Advance Amount of such Promissory Note or Advance increased by
the sum of the Accretion Amounts for all prior Interest Payment Dates for which
interest on such Promissory Note or Advance was not paid in cash.

“Accretion Amount” of any Advance or Promissory Note means, as of any Interest
Payment Date for which accrued interest on such Promissory Note or Advance is
not paid in cash to the Lender, the interest on the Accreted Principal Amount of
such Promissory Note or Advance from and including the immediately preceding
Interest Payment Date (or if there is no immediately preceding Interest Payment
Date, from and including the original issue date of such Promissory Note or
Advance) to but excluding such Interest Payment Date.

“Advance” means an advance of dollars by the Lender to the Borrower pursuant to
the terms and conditions of this Agreement. Each advance shall be for no less
than U.S. $500,000.

“Advance Amount” means the principal amount up to U.S. $3,000,000.

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.

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“Appraised Value of the Property” means the value as determined by the Lender,
that will result from a blend of the Forced Liquidation & Orderly Liquidation
values provided by the appraisal.

“Assignment and Acceptance” means an Assignment and Acceptance entered into by
the Lender and an assignee of the Lender in substantially the form of Exhibit A
attached hereto.

“Borrower” has the meaning given to such term in the preamble of this Agreement.

“Borrower’s Business” means the business of developing, manufacturing, filling
and packaging topical, semi-solid and liquid products for cosmetic,
cosmeceutical and pharmaceutical customers and lines of business reasonably
related thereto, as well as filing its own ANDAs and continuing to expand into
the prescription pharmaceutical arena. The products are used for cosmetic,
cosmeceutical and prescription applications for the treatment of symptoms of
dermatitis, acne, psoriasis and eczema.

“Borrowing” means the borrowing consisting of any Advance made by the Lender in
accordance with the terms of this agreement.

“Business Day” means a day of the year on which banks are not required or
authorized by applicable law to close in the City of New York, State of New
York.

“Cash and Cash Equivalents” has the meaning determined under GAAP.

“Collateral” means any and all personal or real property of the Borrower that is
covered by the Pledge and Security Agreement or the Mortgage.

“Commitment” means the obligations of the Lender to make Advances hereunder.

“Compliance Certificate” has the meaning specified in Section 3.02(e).

“Contingent Obligations” means, as to any Person, any guarantee of payment or
performance by such Person of any Indebtedness or other obligation of any other
Person, or any agreement to provide financial assurance with respect to the
financial condition, or the payment of the obligations of, such other Person
(including, without limitation, purchase or repurchase agreements, reimbursement
agreements with respect to letters of credit or acceptances, indemnity
arrangements, grants of security interests to support the obligations of another
Person, keepwell agreements and take-or-pay or through-put arrangements) which
has the effect of assuring or holding harmless any third Person against loss
with respect to one or more obligations of such third Person; provided, however,
that the term “Contingent Obligation” shall not include the Debt created
pursuant to this Agreement or endorsements of instruments for deposit or
collection in the ordinary course of business.

“Control” (including the terms “controlling,” “controlled by,” and “under common
control with”) of a Person means the possession, direct or indirect, of the
power to vote 50% or more of the Stock of such Person or to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Stock, by contract or otherwise.

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“Current Assets” shall mean Cash and Cash Equivalents, Receivables, Finished
Goods Inventory, Raw Material and any other assets classified as current assets
pursuant to GAAP.

“Debt” of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, (b) all obligations of such Person for the deferred
purchase price of or consideration for property or services (other than trade
payables not overdue by more than 60 days incurred in the ordinary course of
such Person’s business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all obligations of such
Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
obligations of such Person as lessee under leases that have been or should be,
in accordance with GAAP, recorded as capital leases, (f) all obligations,
contingent or otherwise, of such Person in respect of acceptances, letters of
credit or similar extensions of credit, (g) all obligations of such Person in
respect of hedge agreements or ISDA agreement, (h) all Debt of others referred
to in clauses (a) through (g) above or clause (i) below and other payment
obligations (collectively, “Guaranteed Debt”) guaranteed directly or indirectly
in any manner by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (1) to pay or purchase such Guaranteed Debt or
to advance or supply funds for the payment or purchase of such Guaranteed Debt,
(2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such Guaranteed Debt or to assure the holder of such Guaranteed Debt against
loss, (3) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of whether
such property is received or such services are rendered) or (4) otherwise to
assure a creditor against loss, and (i) all Debt referred to in clauses (a)
through (h) above (including Guaranteed Debt) secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Debt.

“Default” means any Event of Default or any event that would constitute an Event
of Default but for the requirement that notice be given or time elapse or both.

“Default Interest” has the meaning specified in Section 2.04(b).

“Deposit Account Control Agreement” mean a Deposit Account Control Agreement (as
defined in the Pledge and Security Agreement) covering the Borrower deposit
accounts.

“Documentary Taxes” has the meaning specified in Section 2.07(b).

“Environmental Action” means any administrative, regulatory or judicial action,
suit, demand, demand letter, claim, notice of non-compliance or violation,
investigation, proceeding, consent order or consent agreement relating in any
way to any Environmental Law or any Environmental Permit, including, without
limitation (a) any claim by any governmental or regulatory authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any Environmental Law and (b) any claim by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.

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“Environmental Law” means any United States national, local or municipal law,
rule, regulation, code, order, writ, judgment, injunction, decree or judicial or
agency written interpretation, written policy or written guidance relating to
the protection of the environment, health, safety or Hazardous Materials or
regulating the use, disposal or exposure to substances by reason of their effect
on the health or safety of humans or of the environment.

“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

“Events of Default” has the meaning specified in Section 5.01.

“Finished Goods Inventory” has the meaning determined under GAAP.

“GAAP” has the meaning specified in Section 1.03.

“Guaranteed Debt” has the meaning specified in the definition of “Debt.”

“Hazardous Materials” includes but is not limited to (a) materials defined as
"Hazardous Waste" under the Federal Resource Conservation and Recovery Act and
similar state laws, and (b) "hazardous substances" as identified under the
Federal Comprehensive Environmental Response, Compensation and Liability Act and
especially in CERCLA 101(14) and as set forth in Title 40, Code of Federal
Regulations, Part 302, and (c) those elements or compounds which are contained
in the list of hazardous substances adopted by the United States Environmental
Protection Agency (EPA) and the list of toxic pollutants designated by Congress
or the EPA or defined by any Federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic, polluting,
or dangerous waste, substance or material, as such lists are now or at any time
hereafter in effect, (d) asbestos, radon, polychlorinated biphenyls, petroleum
products, and (e) such other materials, substances or waste which are otherwise
dangerous, hazardous, harmful or deleterious to human, plant or animal health or
wellbeing.

“Initial Advance Amount” of any Promissory Note or Advance means the principal
amount of such Promissory Note or Advance on the date of original issuance of
such Promissory Note or Advance.

“Initial Funding Date” has the meaning specified in Section 3.01.

“Interest Payment Date” mean, during the term of this Agreement, each March 31,
June 30, September 30 and December 31.

“Interest Rate” means 14% per annum payable in accordance with Section 2.04(a).

“Lender” means Amzak Capital Management LLC, a limited liability company
organized and existing under the laws of the State of Nevada, or any Person that
shall become an assignee of Lender pursuant to Section 6.06.

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“Lending Office” means, with respect to the initial Lender, the office of the
initial Lender specified as its “Lending Office” below its name on the signature
pages below, and with respect to any other Lender in the Assignment and
Acceptance pursuant to which such Lender became a Lender, or such other office
of the Lender as the Lender may from time to time specify to the Borrower.

“Lien” means any lien, mortgage, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.

“Liquidity Event” means the liquidation, winding up, change of control, or
merger of the Borrower (other than the merger of a Subsidiary of the Borrower
with and into the Borrower), and/or sale, transfer, conveyance or hypothecation
of all or substantially all of the assets of the Borrower.

“Loan Documents” means this Agreement, the Pledge and Security Agreement, the
Promissory Notes, the Mortgage Agreement, the Warrant, and the Deposit Account
Control Agreement (as defined in the Pledge and Security Agreement), as they may
be amended, restated or modified from time to time, any other document referred
to herein or prepared by the Lender and ancillary to the transactions
contemplated herein.

“Material Adverse Change” means any material adverse change in the business
condition (financial, legal or otherwise), operations, performance or properties
of the Borrower.

“Material Adverse Effect” means a material adverse effect on (a) the business,
condition (financial, legal or otherwise), operations, performance, properties
or prospects of the Borrower; (b) the rights and remedies of the Lender under
this Agreement or any other Loan Document; or (c) the ability of the Borrower to
substantially perform its obligations under this Agreement.

“Maturity Date” means December 31, 2015.

“Mortgage Agreement” means the Mortgage Agreement between the Borrower and the
Lender relating to the Borrower’s real property located in the Township of Buena
Vista, in the State of New Jersey, as it may be amended, restated or modified
from time to time.

“Notice of Borrowing” has the meaning specified in Section 2.02(a)(ii) and shall
be substantially in form as Exhibit B attached hereto.

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Advances, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations and indebtedness (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),
obligations and liabilities of the Borrower to the Lender or any indemnified
party, individually or collectively, existing on the date hereof or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents or in respect of any of
the Advances made hereunder.

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“Party” means the Borrower and/or the Lender, as the context suggests.

“Person” means an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture,
limited liability company or other entity, or a government or any political
subdivision or agency thereof.

“Permitted Liens” means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens for Taxes not yet due or payable; (b) Liens imposed by law, such as
materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other
similar Liens arising in the ordinary course of business, including but not
limited to purchase money Liens, securing obligations that are not overdue for a
period of more than 30 days (unless Borrower has posted a bond for the same);
(c) pledges or deposits to secure obligations under workers’ compensation social
security or similar laws, or under unemployment insurance; (d) pledge or
deposits to secure bids, tenders, contracts (other than contracts for the
payment of money), leases, statutory obligations, surety and appeal bonds and
other obligations of like nature arising in the ordinary course of business; (e)
easements, rights of way, restrictions and other encumbrances on title to real
property that do not render title to the property encumbered thereby
unmarketable or materially adversely affect the use of such property for its
present purposes; (f) Liens on cash deposits and other funds maintained with a
depository institution, in each case arising in the ordinary course of business
by virtue of any statutory or common law provision relating to banker’s liens,
and in favor of a depository institution acting as a matter of law encumbering
deposits (including the right of set-off) and which are within the general
parameters customary in the banking industry; (g) Liens arising by virtue of the
rendition, entry or issuance against the Borrower, or any of its properties, of
any judgment, writ, order, or decree for so long as each such Lien is in
existence for less than thirty (30) consecutive days after it first arises or is
being properly contested; (j) Liens arising from any judgment or award that is
not an Event of Default; (k) Liens in connection with all obligations of the
Borrower as lessee under leases that have been or should be, in accordance with
GAAP, recorded as capital leases that are in existence as of the date of this
Agreement; (l) Liens securing Debt or other obligations outstanding in an
aggregate principal amount not to exceed $5,000,000, so long as, for purposes of
this subclause (l), as of the date the Lien is created the ratio of the
Borrower’s Total Assets to Accreted Principal Amount is greater than 3.0 to 1.0
and the ratio of the Borrower’s Current Assets to Accreted Principal Amount is
at least 1.5 to 1.0.

“Pledge and Security Agreement” means the pledge and security agreement
substantially in the form attached hereto as Exhibit E as it may be amended,
restated or modified from time to time.

“Principal” or “Principal Amount” of any Advance or Promissory Note as of any
date shall mean the Accreted Principal Amount of such Advance or Promissory Note
as of such date.

“Promissory Note” means a promissory note substantially in the form of Exhibit C
hereto issued by the Borrower in favor of the Lender for an Advance as described
in section 2.02(b) as it may be amended, restated or modified from time to time.

“Raw Material” has the meaning determined under GAAP.

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“Restricted Cash” has the meaning determined under GAAP.

“Receivables” means 85% of the value of the accounts receivables from customers
within a 30 day payment term, without taking into consideration customer
accounts for greater than 35% of the total receivables pool of the Borrower.

“Solvent” means, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including, without limitation, Contingent Obligations, of
such Person, (b) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the Debt of such Person or
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay such debts and liabilities as they mature and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities at any time
shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

“Stock” means capital stock issued by a corporation, or similar or equivalent
equity interests in any other Person.

“Subsidiary” of any Person means any corporation, partnership, joint venture,
limited liability company, trust or estate of which (or in which) not less than
50% of (a) the issued and outstanding capital stock having ordinary voting power
to elect a majority of the Board of Directors of such corporation (irrespective
of whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
joint venture or limited liability company; or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person’s other Subsidiaries.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges or liabilities imposed by any
governmental authority (whether national, departmental, local, municipal or
foreign), including without limitation any value-added or withholding taxes, and
any interest, additions to tax or penalties applicable thereto.

“Termination of the Commitment” means the date of termination of the Borrower’s
right to receive an Advance that is June 30, 2012.

“Total Assets” means Current Assets plus any other assets of the Borrower set
forth on the balance sheet of the Borrower, including tangible, intangible,
personal or real property assets.

“United States” or “U.S.” means the United States of America.

“U.S. Dollars”, “U.S. $” and “$” means the lawful currency of the United States.

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Section 1.02.  Computation of Time Periods.

 

With respect to computations of periods of time in this Agreement from a
specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each mean “to but excluding.”

 

Section 1.03.  Accounting Terms.

 

All accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles in the United States
(“GAAP”), consistent with those applied in the preparation of the financial
statements of Borrower.

 

ARTICLE II

AMOUNTS AND TERMS OF ADVANCES

 

Section 2.01.  The Advances.

 

Subject to the terms and conditions herein and in reliance of the
representations and warranties made by the Borrower, the Lender shall make one
or more Advances to the Borrower in amounts denominated in U.S. Dollars in an
aggregate amount not to exceed the Advance Amount. Advances may only be made on
a Business Day during the period of time between the Initial Funding Date and
the Termination of the Commitment. Advances made under this Section 2.01 and
repaid or prepaid may not be re-borrowed.

 

Section 2.02.  Making the Advance.

 

(a)    Notice of Borrowing. Notice of Borrowings shall be made as follows:

 

 

(i)    Borrower may request an Advance by giving a notice (the “Notice of
Borrowing”) to the Lender no later than 11:00 A.M. (Eastern Time) on the tenth
Business Day prior to the date of the proposed Borrowing.

 

 

 

(ii)    The Notice of Borrowing may be made by telephone, but in any event must
be confirmed immediately in writing, by courier or fax, in substantially the
form set forth in Exhibit B, attached hereto, specifying therein the requested
date of the Borrowing and the amount. Upon fulfillment of the applicable
conditions set forth in Article III, the Lender shall make the funds available
to the Borrower.

 

(b)    Promissory Note. The Notice of Borrowing for the Advance shall be
irrevocable and binding on the Borrower and shall be accompanied by a duly
executed and delivered Promissory Note, a form of which is attached hereto as
Exhibit C (“Promissory Note”). The Borrower shall indemnify the Lender against
any loss, cost or expense incurred by the Lender as a result of any failure by
the Borrower to fulfill on or before the date specified in the Notice of
Borrowing the applicable conditions set forth in Article III, including, without
limitation, any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by the Lender to fund the Advance, when as a result of such failure,
the funding by the Borrower is not made on such date.

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Section 2.03.  Mandatory Repayment.

 

(a)    The Borrower shall repay to the Lender the aggregate principal amount of
the outstanding Advances as follows:

 

 

(i) On or before December 31, 2013, 16.7% of the aggregate amount of Initial
Advance Amount of all Advances made hereunder plus any Accreted Principal Amount
of such Advances;

 

 

 

(ii) on or before December 31, 2014, 33.3% of the aggregate amount of Initial
Advance Amount of all Advances made hereunder plus any Accreted Principal Amount
of such Advances; and

 

 

 

(iii) on or before the Maturity Date, the unpaid Accreted Principal Amount of
all outstanding Advances together with accrued and unpaid interest to the date
of payment (each of December 31, 2013, December 31, 2014 and the Maturity are
hereinafter referred to as an “Amortization Dates”).

 

(b)   Notwithstanding the foregoing, upon the occurrence of a Liquidity Event,
all outstanding Advances shall become immediately due and payable in full,
together with accrued and unpaid interest.

 

Section 2.04.  Interest.

 

(a)    Scheduled Interest. Interest shall accrue on the unpaid Accreted
Principal Amount of each Promissory Note at the Interest Rate until such
Promissory Note is repaid in full. Interest shall be due and payable on each
Interest Payment Date, commencing March 30, 2011. To the extend interest is not
paid in cash by the Borrower on any Promissory Note on any Interest Payment
Date, the Accretion Amount with respect to such Interest Payment Date with
respect to such Promissory Note will be added to the Accreted Principal Amount
of such Promissory Note. The Borrower will have the option to pay interest in
cash so long as the Borrower notifies the Lender in writing not less than 15
Business days prior to the applicable Interest Payment Date.

 

(b)    Default Interest. Upon the occurrence and during the continuance of an
Event of Default, the Lender, at its sole option, may require the Borrower to
pay interest (“Default Interest”) to the fullest extent that is permitted by law
on the amount of any principal, interest, fee or other amount payable hereunder
and under the Promissory Notes that is not paid when due, from the date such
amount shall be due, until such time as such amount shall be paid in full,
payable in arrears on the date such amount shall be repaid in full, at a rate
per annum equal at all times to 2% per annum above the applicable Interest Rate,
as the case may be; provided, however, that Default Interest shall accrue and be
payable hereunder irrespective of whether Lender requires or demands the
acceleration of the amounts owing. Upon an Event of Default of the Promissory
Notes, the other Promissory Notes executed and delivered pursuant to this
Agreement shall be automatically deemed to be in Default. Effective upon the
cure of such Event of Default, Default Interest shall no longer apply.

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Section 2.05.  Illegality.

Notwithstanding any other provision of this Agreement, if the Lender reasonably
determines that the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or any central bank or other
governmental authority or any other governmental authority that has jurisdiction
upon the Lender or its Lending Office asserts that it is unlawful, for the
Lender or its Lending Office to perform its obligations hereunder to make the
Advances or to fund or maintain an Advance to be made by it hereunder, the
Lender shall forthwith give notice thereof to the Borrower, whereupon until the
Lender notifies the Borrower that the circumstances giving rise to such
illegality no longer exist, the obligation of the Lender to make the Advance
shall be suspended.

Section 2.06.  Payments and Computations.

(a)    The Borrower shall make each payment hereunder, irrespective of any right
of counterclaim or set-off, not later than noon (Philadelphia, Pennsylvania
time) on the day when due in same day funds and in U.S. dollars to the Lender at
JPMorgan Private Bank – DE, 500 Stanton Christiana Rd, Newark, DE 19713, ABA #
021 000 021, Account Number 2622346003, For Account of: Amzak Capital
Management, LLC.

(b)    All computations of interest shall be made by the Lender on the basis of
a year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest is payable.

(c)    Whenever any payment hereunder shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest or Commitment Fee, as the case may be;
provided, however, that, if such extension would cause payment of interest on or
principal of the Advance to be made in the next following calendar month, such
payment shall be made on the immediate preceding Business Day.

(d)    Any payment hereunder shall be applied in the following order: fees,
expenses, interest, and then to principal.

(e)    The Borrower shall pay the Lender a commitment fee (the “Commitment Fee”)
which shall accrue at an annual rate of 2% from and including the date hereof to
but excluding the Termination of Commitment calculated based on the daily amount
the Advance Amount available for borrowing hereunder. The Commitment Fee shall
be paid in arrears by the Borrower semi-annually, calculated after 6 month from
the date hereof and every six month thereafter until the Termination of the
Commitment. In the event the Lender shall refuse to make an Advance to the
Borrower solely because the condition set forth in Section 3.02(f) shall not
have been met, then (a) the Lender shall refund to the Borrower all Commitment
Fees previously paid by the Borrower to the Lender with respect to the amount of
the Advance refused and (b) so long as the unused amount of the Advance Amount
is more than $1,000,000, the Warrant shall be reduced by 440,665 shares.

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Section 2.07.  Taxes.

(a)    Any and all payments to be made by the Borrower hereunder shall be made
free and clear of and without deduction for any and all Taxes. If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or any other documents to be delivered hereunder to the
Lender, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions the Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.

(b)    In addition, the Borrower shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or any other documents to be
delivered hereunder or from the execution, delivery or registration of,
performing under, or otherwise with respect to, this Agreement or any other
documents to be delivered hereunder (“Documentary Taxes”), expressly excluding
any income or similar taxes assessed against the Lender in connection with this
Agreement.

(c)    The Borrower shall indemnify the Lender, and hold it harmless, against
the full amount of Taxes or Documentary Taxes. Payment by the Borrower under
this indemnification provision shall be made within 30 days from the date the
Lender makes written demand therefore.

(d)    Within 30 days after the date of any payment of Taxes or Documentary
Taxes, the Borrower shall furnish to the Lender, at its address, the original or
a certified copy of a receipt evidencing such payment. In the case of any
payment hereunder or any other documents to be delivered hereunder by or on
behalf of the Borrower, if the Lender disputes whether Taxes or Documentary
Taxes are payable in respect thereof, the Borrower shall, at the Lender’s
request, furnish, or cause to be furnished, to the Lender, an opinion of tax
counsel reasonably acceptable to the Lender stating that such payment or
documentation is exempt from Taxes and Documentary Taxes.

Section 2.08.  Use of Proceeds.

The proceeds of the Advances shall be available, and the Borrower shall use such
proceeds, solely for working capital needs, research and development and general
corporate purposes.

Section 2.09.  Prepayments.

(a)    Following the second anniversary of the date hereof, the Borrower may in
its sole discretion prepay any Advance, in whole or in part, with at least 10
Business Days’ notice to the Lender specifying the aggregate principal amount of
such prepayment and the date of such prepayment. Each prepayment shall be due
and payable on the date specified in the notice, together with accrued and
unpaid interest on such amount to the date of prepayment. Notwithstanding
anything to the contrary herein, the Borrower may prepay any amounts outstanding
hereunder (including any Advance) in connection with the consummation of a
Liquidity Event.

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(b)    Amounts prepaid on account of any Advance may not be re-borrowed.

 

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

 

Section 3.01.  Conditions Precedent to Effectiveness of Section 2.01.

 

The Borrower may request Advances and the Lender shall fund such Advances from
and after the first date (the “Initial Funding Date”) on which all of the
following conditions precedent shall have been satisfied or waived in a signed
writing by both Parties:

 

(a)    There shall exist no default or event of default, or any circumstance
which, with the passage of time would give rise to default or event of default
under material contracts of the Borrower;

 

(b)    The Lender shall have received the following, in form and substance
satisfactory to the Lender:

 

 

(1)    All governmental and third party consents, approvals, authorizations and
licenses necessary in connection with any Loan Document or the transactions
contemplated thereby, if any, shall have been obtained, shall be in full force
and effect; all applicable waiting periods shall have expired without any action
being taken by any competent authority; and no law or regulation shall be
applicable in the judgment of the Lender that restrains, prevents or imposes
materially adverse conditions on the Borrower, any Loan Document or the
transactions contemplated thereby.

 

 

 

(2)    The Lender shall have received on or before the Initial Funding Date the
following, each dated such day (unless otherwise specified), in form and
substance satisfactory to the Lender (unless otherwise specified) and (except
for the Promissory Notes where only one original of each shall be required) in
sufficient copies:

 

 

 

 

(i)    Certified copies of the resolutions of the board of directors of the
Borrower approving the execution and delivery of each Loan Document to which it
is or is to be a party, and the transactions contemplated thereby, and of all
documents evidencing other necessary corporate action and governmental and such
other third party approvals and consents, if any, with respect to such Loan
Document;

 

 

 

 

 

(ii)    Copies of the organizational documents of the Borrower and all
amendments thereto certified by a duly authorized officer of the Borrower as
being a true, correct and complete copy thereof;

 

 

 

 

 

(iii)    A certificate of a secretary of the Borrower certifying the names and
true signatures of the officers of the Borrower authorized to sign each Loan
Document to which it is or is to be a party and the other documents to be
delivered hereunder;

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(iv)    A certificate of the chief financial officer of the Borrower certifying,
as applicable, that the representations and warranties contained in Section 4.01
of this Agreement are true, accurate and correct in all material respects on and
as of the Initial Funding Date; and no Default or Event of Default has occurred
and/or is continuing;

 

 

 

 

 

(v)    A certificate of good standing issued by the Secretary of State of the
State of Delaware (and any other state in which the Borrower is qualified to do
business) attesting as to the good standing of the Borrower; and

 

 

 

 

 

(vi)    A favorable opinion of Pepper Hamilton LLP, counsel for the Borrower,
substantially the form of Exhibit F and as to such matters as the Lender may
reasonably request;

 

(c)    There shall have occurred no Material Adverse Change since September 30,
2010;

 

(d)    The Borrower shall have paid in full all Commitment Fees, other fees,
expenses, and other amounts payable in accordance with the agreement of the
parties; and

 

(e)    All the Loan Documents, other than the Mortgage and the Deposit Account
Control Agreement, shall have been executed and delivered to the Lender
including the Pledge and Security Agreement for the pledge and granting of the
Collateral, in order, among other things, to create a first priority lien in
favor of the Lender over the Collateral, subject to Permitted Liens and subject
to the relief related to real estate set forth in section 3.02(h) below.

 

Section 3.02.  Conditions Precedent to each Borrowing.

 

The obligation of the Lender to make an Advance shall be subject to the
following conditions:

 

(a)    The representations and warranties contained in Section 4.01 are true,
accurate and correct in all material respects on and as of the date of the
Borrowing (except for those representations and warranties expressly referring
to another date, which shall be true, accurate and correct in all material
respects as of such date), before and after giving effect to the Borrowing and
to the application of the proceeds there from, as though made on and as of such
date;

 

(b)    No Default or Events of Default exist hereunder;

 

(c)    The Borrower shall have delivered the Notice of Borrowing in accordance
with the terms of Section 2.02 hereof;

 

(d)    The Lender shall have received a Promissory Note payable to the order of
the Lender for the amount of the borrowing;

 

(e)    The Lender shall have received a duly executed Compliance Certificate
from the Borrower relating to compliance with the Financial Covenants set forth
in Section 4.05 this Agreement;

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(f)    No material adverse change in or material disruption of conditions in the
financial, banking or capital markets, which in the reasonable discretion of the
Lender materially affects the Borrower, shall have occurred;

(g)    The Lenders shall have a valid and perfected first-priority security
interest in the Collateral, subject to Permitted Liens;

(h)    Notwithstanding Section 3.02 (g), the Borrower may request an Advance for
the first US $500,000 from the Advance Amount, even if the Lender does not have
a first-priority security interest in the real estate mortgaged through the
Mortgage Agreement and a first priority security interest in the deposit account
subject to the Deposit Account Control Agreement, if the Borrower is in
compliance with the other Conditions Precedent and all other terms and
conditions of this Agreement, but the Borrower may not request any additional
Advances and the Lender shall be under no obligation to make any additional
Advances until the Mortgage Agreement shall have been filed, the Borrower shall
have complied with the covenant set forth in Section 4.02(l), the Lender shall
have a first priority security interest in the real estate mortgaged through the
Mortgage Agreement and the Deposit Account Control Agreement shall have been
executed;

(i)    The ratio of Borrower’s Total Assets to Accreted Principal Amount shall
exceed 1.75 to 1.0 and its ratio of Current Assets to Accreted Principal Amount
shall exceed 1.0 to 1.0; and

(j)    Signet Healthcare Partners, G.P. shall own and control, in the aggregate,
at least 35% of the outstanding voting rights of the Borrower and the
outstanding common stock of the Borrower, and shall have at least one of its
employees on the Board of Directors of the Borrower.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.01.  Representations and Warranties of the Borrower:

The Borrower represents and warrants as follows:

(a)    The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified and
in good standing in the each of the jurisdictions wherein it conducts its
business, and has all requisite corporate power and authority (including,
without limitation, all governmental licenses, permits and other approvals) to
own, lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted, except where a failure to so qualify
or hold such authority does not have a Material Adverse Effect on the Borrower.

(b)    The execution, delivery and performance by the Borrower of this
Agreement, and any other Loan Document to which Borrower is a party, and the
consummation of the transactions contemplated hereby and thereby, are within the
Borrower’s corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene or conflict with or, in the case of (c)
below, constitute a default or breach of, (a) the Borrower’s charter or bylaws,
(b) any law applicable to or binding upon the Borrower, or (c) any contract.
Agreement, document or instrument to which the Borrower or any of its
Subsidiaries is a party.

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(c)    No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any other third
party is required for the due execution, delivery and performance by the
Borrower of this Agreement or any other Loan Document to which it is a party.

 

(d)    From and after the Initial Funding Date, the grant by the Borrower of the
Liens granted by it pursuant to the Loan Documents, the perfection or
maintenance of the Liens created by the Loan Documents (including the first
priority nature thereof) or the exercise by the Lender of its rights under the
Loan Documents or the remedies in respect of the Collateral pursuant to the Loan
Documents, have been duly obtained, taken, given or made and are in full force
and effect. From and after the Initial Funding Date, the Lender has first
priority Lien over the Collateral, subject to Permitted Liens.

 

(e)    This Agreement and the other Loan Documents to which the Borrower is a
party have been duly executed and delivered by the Borrower. This Agreement is
the legal, valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms.

 

(f)    There is no pending or threatened action, suit, investigation, litigation
or proceeding affecting the Borrower or any of its Subsidiaries before any
court, governmental agency or arbitrator that (i) could be reasonably likely to
have a Material Adverse Effect or (ii) purports to affect the legality, validity
or enforceability of this Agreement or the consummation of the transactions
contemplated hereby.

 

(g)    The Borrower and its Subsidiaries have filed, have caused to be filed, or
have been included in all tax returns required to be filed in respect of all
Taxes applicable to the Borrower or any of its Subsidiaries and have paid all
Taxes due with respect to the periods covered by such returns.

 

(h)    The Borrower is the owner of, and has good and marketable title to or a
valid leasehold interest in, all of the assets used in the Borrower’s Business
and none of such assets is subject to any Lien except Permitted Liens. The
Borrower enjoys peaceful and undisturbed possession under all of its leases and
all such leases are valid and subsisting and in full force and effect.

 

(i)    The Borrower’s audited consolidated balance sheet and consolidated
statements of operations, cash flows and stockholders’ equity at and for the
year ended December 31, 2009, and the Borrower’s unaudited consolidated balance
sheet and consolidated statements of operations, cash flows and stockholders’
equity at and for the nine months ended September 30, 2010:

 

 

(1)    were prepared in accordance with GAAP consistently applied throughout the
periods covered thereby, except as otherwise expressly noted therein;

 

 

 

(2)    fairly present in all material respects the financial condition of the
Borrower as of the date thereof (subject, in the case of the unaudited financial
statements, to normal year-end adjustments) and results of operations for the
periods covered thereby; and

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(3)    reflect in accordance with GAAP all material indebtedness and other
liabilities, direct or contingent, of the Borrower and its Subsidiaries, as of
the date thereof, including liabilities for Taxes, material commitments and
contingent obligations.

 

(j)    The proceeds of the Advances shall be used only in accordance with
Section 2.08.

 

(k)    Neither the Borrower nor any Subsidiary is a party to any indenture, loan
or credit agreement or any lease or other agreement or instrument or subject to
any charter or corporate restriction that could have a Material Adverse Effect
in the absence of a breach thereof.

 

(l)    Neither the business nor the properties of the Borrower are affected by
any fire, flood, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of war, act of God or other
casualty (whether or not covered by insurance) that could have a Material
Adverse Effect.

 

(m)    The Borrower is subject to the laws of the State of New York with respect
to its obligations under this Agreement, the Promissory Notes and the other Loan
Documents and the execution, delivery and performance by the Borrower of this
Agreement constitute and will constitute private and commercial acts rather than
public or governmental acts.

 

(n)    The Borrower is Solvent.

 

(o)    Except as set forth in the Borrower’s filings with the Securities and
Exchange Commission made prior to the date hereof, the operations and properties
of the Borrower and its Subsidiaries comply in all material respects with all
applicable Environmental Laws and Environmental Permits, all past material
non-compliance with such Environmental Laws and Environmental Permits has been
resolved without ongoing obligations or costs, and no circumstances exist that
could (i) form the basis of an Environmental Action against the Borrower, any
Subsidiary or any of their properties that could have a Material Adverse Effect
or (ii) cause any such property to be subject to any material restrictions on
ownership, occupancy, use or transferability under any Environmental Law.

 

(p)    Except for relief in respect of real property and Deposit Account Control
Agreement set forth in section 3.02(h), from and after the Initial Funding Date
the Loan Documents create a valid and perfected first priority security interest
in the Collateral, subject to Permitted Liens, securing the payment of the
Obligations owing to the Lender under the Loan Documents, and all filings and
other actions necessary or desirable to perfect and protect such security
interest set forth therein have been duly taken. The Borrower is the legal and
beneficial owner of the Collateral pledged by it under the Loan Documents free
and clear of any Lien, except for the liens and security interests created or
permitted under the Loan Documents.

 

(q)    The Borrower has obtained insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies of similar size engaged in similar businesses
and owning similar properties in the same general areas in which such Borrower
operates and as otherwise contemplated in the Loan Documents, and the Borrower
shall obtain a loss payee endorsement thereto in favor of the Lender.

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(r)    Neither Borrower, nor any Subsidiary nor any of their respective property
has any immunity from jurisdiction of any court or from set-off or any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) under the laws of the
United States of America.

(s)    The Borrower’s obligations under this Agreement and the Promissory Notes
constitute direct, unconditional, unsubordinated and secured obligations of the
Borrower and shall be senior to all existing and future Debt.

ARTICLE IV

COVENANTS OF THE BORROWER

Section 4.02.  Affirmative Covenants.

So long as any Advance shall remain unpaid or the Lender shall have any
Commitment hereunder, the Borrower shall, and shall cause its Subsidiaries to:

(a)    Compliance with Laws, Etc. Comply in all material respects, with all
applicable laws, rules, regulations and orders.

(b)    Payment of Taxes, Etc. Pay and discharge before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if unpaid,
might by law become a Lien upon its property; provided, however, that the
Borrower shall not be required to pay or discharge any such tax, assessment,
charge or claim that is being contested in good faith and by proper proceedings
and as to which appropriate reserves are being maintained, unless and until any
lien resulting there from attaches to its property and becomes enforceable
against its other creditors.

(c)    Preservation of Corporate Existence, Etc. Preserve and maintain its
corporate existence, rights (charter and statutory), permits, approvals,
licenses, privileges and franchises.

(d)    Keeping of Books. Keep proper books of record and account, in which full
and correct entries shall be made of all financial transactions and the assets
and business of the Borrower and its Subsidiaries in accordance with generally
accepted accounting principles in effect from time to time.

(e)    Maintenance of Properties, Etc. Maintain and preserve all of its
properties that are used or useful in the conduct of its business in good
working order and condition, pay all the taxes fees or other expenses to
maintain the property in this condition, including but not limited to public
utilities such as electricity, water, gas, etc. ordinary wear and tear excepted.

(f)    Maintenance of Insurance. Maintain insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies of similar size engaged in similar
businesses and owning similar properties in the same general areas in which the
Borrower operates and as otherwise contemplated in the Loan Documents, and the
Borrower shall obtain a loss payee endorsement thereto in favor of the Lender.

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(g)    Transactions with Affiliates. Conduct all transactions otherwise
permitted under this Agreement with any of their Affiliates on terms that are
fair and reasonable and no less favorable to the Borrower than it would obtain
in a comparable arm’s-length transaction with a Person not an Affiliate.

(h)    Inspection Rights. During normal business hours, at the expense of the
Borrower (no more than twice during any 12-month period) but at the expense of
the Lender thereafter, with reasonable notice, permit the Lender or any agents
or representatives thereof, to examine the records and books of account of, and
inspect the properties of the Borrower and its Subsidiaries and to discuss the
affairs, finances and accounts of the Borrower and its Subsidiaries with any of
its officers or directors and with its independent certified public accountants
and lawyers.

(i)    Use of Proceeds. Use the proceeds of the Advances solely in the manner
and for the purposes set forth in Section 2.08.

(j)    Further Assurances. From time to time, do and perform any and all acts
and execute any and all documents as may be necessary or as reasonably requested
by the Lender in order to effect the purposes of this Agreement or to protect
the rights or interests of the Lender in the Promissory Note(s) or under the
Loan Documents.

(k)    Compliance with Terms of Real Property Leaseholds. Make all payments and
otherwise perform all obligations in respect of all leases of real property to
which the Borrower or any Subsidiary, as applicable, is a party, keep such
leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or canceled,
notify the Lender of any default by any party with respect to such leases.

(l)    Perfection of Security Interests. Other than the relief related to the
Mortgage Agreement and the Deposit Account Control Agreement contemplated in
Section 3.02(h), immediately following the date hereof, make all filings and
recordings necessary or desirable in the judgment of the Lender in connection
with the security interests created under the Loan Documents and pay all filing
and recording taxes and fees related thereto. Maintain the recording, priority
and perfection of the Liens on the Collateral created by the Loan Documents and
keep all Collateral free and clear of Liens except for the Liens created under
Loan Documents and Permitted Liens. Within 60 days from the date hereof,
Borrower shall file the Mortgage Agreement and provide a lender’s title
commitment policy to the Lender and shall deliver to the Lender a duly executed
Deposit Account Control Agreement.

(m)    Payment of Fees. Pay all fees including the Commitment Fee, in the
amounts and on the dates indicated herein.

(n)    Future Financings. So long as any Advance, in whole or in part, shall
remain unpaid and outstanding or the Borrower has the ability to request an
Advance before the expiration of the Termination of the Commitment, the Borrower
will offer the Lender the first right to participate in any future third-party
debt offering (i.e., not including capital lease financing, purchase money
financing or other non-borrowed money financing) by the Borrower or any of its
Subsidiaries.

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Section 4.03.  Negative Covenants:

So long as any Advance shall remain outstanding or the Lender shall have any
Commitment hereunder, neither the Borrower nor any Subsidiary shall, without the
prior written consent of the Lender:

(a)    Mergers, Etc. Merge or consolidate with or into any other Person, or
convey, transfer, lease, lien, mortgage, hypothecate or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired) to any
Person, other than a merger of a subsidiary into the Borrower; provided,
however, that the Borrower or any Subsidiary may do any of the foregoing without
the consent of Lender if immediately prior to or simultaneous with the
consummation of the Sale all Advances then outstanding hereunder are repaid in
full.

(b)    Change in Nature of Business. Make any material change in the nature of
the Borrowers’ Business as carried on at the date hereof, other than as
disclosed as of the date hereof in the Borrower’s filings with the Securities
and Exchange Commission.

(c)    Liens, Etc. Create, incur, assume or suffer any Lien on or with respect
to any of its properties of any character (including, without limitation,
accounts) whether now owned or hereafter acquired, or assign any right to
receive income, except for:

 

(i)    Liens in favor of the Lender created under the Loan Documents; and

 

 

 

(ii)    Permitted Liens.

(d)    Debt. Create, incur, assume or suffer to exist any Debt, other than:

 

(i)    Debt to the Lender under the Loan Documents;

 

 

 

(ii)    other Debt expressly permitted under this Agreement; and

 

 

 

(iii)    any Debt in connection with or relating to a Permitted Lien.

(e)    Contingent Obligations. Create, incur, assume or suffer to exist any
Contingent Obligation except the Contingent Obligations created pursuant to this
Agreement or those created in the ordinary course of business.

(f)    Accounting Changes. Make or permit any change in accounting policies or
reporting practices, except those which comply with GAAP.

(g)    Partnerships. Become a general partner in any general or limited
partnership, other than through wholly owned limited liability special-purpose
vehicles, without the express written consent of the Lender.

(h)    Investments in Other Persons. Purchase, hold or acquire any equity
interests, evidence of indebtedness or other securities of, or make or permit to
exist any loans or advances to, or any investment or other interest in, or
guaranty any obligations of, any other Person.

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(i)    Subsidiaries. Create or suffer to exist any Subsidiary, other than
Subsidiaries in existence on the date hereof, or operate any of the Business in
or through any Subsidiary other than IGEN, Inc. and ImmunoGenetics, Inc.

(j)    Charter Amendments. Make any amendment or modification of its corporate
organizational documents in a manner that could be materially adverse to the
rights, remedies or interests of the Lender or the ability of the Borrower to
perform under any Loan Documents including but not limited to changes to the
current distribution provisions without the written consent from the Lender. For
the purposes hereof, an amendment to the Company’s organizational documents to
increase the authorized capital stock or designate the rights and preferences of
a class of preferred stock shall not be prohibited by this subparagraph so long
as such preferred stock shall not (i) be mandatorily redeemable prior to the
Maturity Date or (ii) provide for the payment of cash dividends.

(k)    Negative Pledge. Enter into or allow to exist any agreement prohibiting
or conditioning the creation or assumption of any Lien upon any of its property
or assets other than in favor of the Lender or in the case of a Permitted Lien,
without the prior written consent of the Lender, in its sole discretion.

(l)    Create, incur, assume or suffer to exist any obligations as lessee for
the rental or hire of real or personal property of any kind under leases or
agreements to lease (but excluding capitalized leases) having an original term
of one year or more, that would cause the direct and contingent liabilities of
the Borrower or any Subsidiary in respect of all such obligations to exceed US
$250,000 payable in any period of twelve (12) consecutive months.

(m)    Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose of any
Collateral or any part of its assets, or grant any option or other right to
purchase, lease or otherwise acquire any Collateral or any part of its assets,
other than assets no longer used or useful in its operations and sales of
inventory in the ordinary course of the business of the Borrower.

Section 4.04.  Reporting Requirement.

The Borrower shall timely furnish to the Lender the following:

(a)    Default Notice. As soon as possible and in any event no later than five
Business Days after the Chief Financial Officer of the Borrower obtains
knowledge of the occurrence of any Default or Event of Default, a material
default under any other material contract of the Borrower or any event,
development or occurrence reasonably expected to cause a Material Adverse Change
continuing on the date of such statement, a statement of a senior officer the
Borrower setting forth details of such Default, Event of Default, other
“default” or Material Adverse Change and the action that such Borrower has taken
and proposes to take with respect thereto.

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(b)    As soon as available and in any event no later than 45 days after the end
of each of the first three quarters of each fiscal year of the Borrower,
consolidated and consolidating balance sheets of the Borrower as of the end of
such quarter and consolidated and consolidating statements of income and cash
flows of the Borrower for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, duly certified (subject to
year-end audit adjustments) by the Chief Financial Officer of the Borrower as
having been prepared in accordance with GAAP; together with (i) a certificate of
the Chief Financial Officer of the Borrower stating that no Default or Event of
Default has occurred and is continuing or, if a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof and the action
or actions taken and proposed to be taken with respect thereto and (ii) a
certificate of the Chief Financial Officer of the Borrower in the form attached
hereto as Exhibit D of the computations in dollars used in determining
compliance with the covenants contained in Section 4.05(b) and all amounts and
ratios set forth in Section 4.05(b).

(c)    As soon as available and in any event no later than 90 days after the end
of each fiscal year of the Borrower, a copy of the annual audit report for such
year for the Borrower, containing balance sheet of the Borrower as of the end of
such fiscal year and consolidated statements of income and cash flows of the
Borrower for such fiscal year, including a certification of the Chief Financial
Officer attesting that there is no condition or event that constitutes and Event
of Default.

(d)    As soon as available and in any event no later than 30 days after the end
of each fiscal year of the Borrower, forecasts or projections prepared by
management of the Borrower, in form satisfactory to the Lender, of balance
sheets, income statements and cash flow on a monthly basis for the fiscal year
following such fiscal year then ended and on an annual basis for each fiscal
year thereafter until the Maturity Date.

(e)    As soon as available and in any event no later than 10 days after the end
of each fiscal month of the Borrower, the unaudited management’s accounts
reflecting the balance sheet of the Borrower as of the end of such fiscal month
and consolidated statements of income and cash flows of such fiscal month
including all the operating metrics;

(f)    The Lender shall receive on a monthly basis during the term of this
Agreement counted from the date hereof an executed Compliance Certificate in the
form of Exhibit D hereto from the Borrower relating to compliance with the
Financial Covenants set forth in Section 4.05 this Agreement;

(g)    Promptly after the commencement thereof, notice of all actions and
proceedings before any court, governmental agency or arbitrator affecting the
Borrower in an amount in controversy in excess of $50,000; and

(h)    Such other information concerning the Borrower as the Lender may from
time to time reasonably request, including but not limited to all management
letter directed to the auditors.

23

Section 4.05.  Financial Covenants.

So long as any Advance, in whole or in part, shall remain unpaid and outstanding
or the Borrower has the ability to request an Advance before the expiration of
the Termination of the Commitment:

(a)    Dividends, Capital, Etc. Except as otherwise required by the Borrower’s
organizational documents existing on the date hereof (including pursuant to the
rights and preferences of the Borrower’s preferred stock) or pursuant to any
amendment thereto permitted by the second sentence of Section 4.03 (j) hereof,
the Borrower shall not declare, pay or make or agree to declare, pay or make any
dividend or other any distributions (or similar payments) (whether in cash,
securities or other property) with respect to its capital stock, including any
purchase, redemption, retirement or acquisition of any capital stock of the
Borrower, or any option, warrant or other right to acquire capital stock of the
Borrower, nor shall the Borrower effect any capital distribution or capital
reduction, other than dividends payable solely in shares of common stock of the
Borrower.

(b)    Loan to Collateral Ratio. The Borrower shall maintain a ratio of Total
Assets to Accreted Principal Amount in excess of 1.75 to 1.0 and a ratio of
Current Assets to Accreted Principal Amount in excess of 1.0 to 1.0, as measured
at the end of each calendar month.

ARTICLE V

EVENTS OF DEFAULT

Section 5.01.  Events of Default.

If any of the following events (“Events of Default”) shall occur and be
continuing:

(a)  The Borrower shall fail to pay any principal of, or interest either in cash
or accreted on, any Advance when due, and such default shall continue after the
passage of five (5) Business Days following written notice thereof from Lender;
or

(b)  Any representation or warranty made by the Borrower (or any of its
officers) in this Agreement or any Loan Document shall prove to have been
incorrect in any material respect when made; or

(c)  The Borrower shall fail to perform or observe any other term, covenant or
agreement contained in this Agreement or any Loan Document on its part to be
performed; provided, however, if any such failure does not involve the payment
of any money, is not willful or intentional, does not place the Borrower’s
assets or any rights or property of the Borrower in immediate jeopardy, and it
is within the reasonable power of the Borrower to promptly cure, then such
failure shall not constitute an Event of Default hereunder, unless and until the
Lender shall have given the Borrower notice thereof and a period of thirty (30)
days shall have elapsed, during which such period the Borrower may correct or
cure such failure, upon failure of which an Event of Default shall be deemed to
have occurred hereunder without further notice or demand of any kind being
required; or

24

(d)  The Borrower shall fail to pay any principal of or premium or interest on
any Debt that is outstanding in a principal amount of at least U.S. $50,000.00
(or its equivalent in other currencies) in the aggregate (but excluding Debt
outstanding hereunder) of the Borrower (as the case may be), when the same
becomes due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other event of default shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof; or

(e)  The Borrower shall generally not pay its Debts as such Debts become due, or
shall admit in writing its inability to pay its Debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its property and,
in the case of any such proceeding instituted against it (but not instituted by
it), either such proceeding shall remain undismissed or unstayed for a period of
30 days, or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower shall take any
corporate action to authorize any of the actions set forth above in this
subsection (e); or

(f)  Judgments or orders for the payment of money in excess of US$50,000.00 that
are not bonded or stayed (or its equivalent in other currencies) in the
aggregate and which would reasonably be expected to have a Material Adverse
Effect shall be rendered against the Borrower; or

(g)  Any non-monetary judgment that is not bonded or stayed or order shall be
rendered against the Borrower that would be reasonably expected to have a
Material Adverse Effect; or

(h)  Any material provision of this Agreement or any Loan Document shall cease
to be valid and binding on or enforceable against the Borrower, or the Borrower
shall so assert or state in writing, or the obligations of the Borrower under
this Agreement shall in any way become illegal; or

(i)  Any authority asserting or exercising governmental or police powers in the
United States of America or any Person acting under such authority shall have
taken any action to condemn, seize or appropriate, or to assume custody or
control of, all or any substantial part of the property of the Borrower or owned
indirectly by the Borrower; or

25

(j)  Any Loan Document shall for any reason (except as permitted pursuant to the
terms thereof) cease to create a valid and perfected first priority lien on and
security interest in any significant portion of the Collateral purported to be
covered thereby, subject to Permitted Liens; or

then, and in any such event, the Lender, at its sole option, (i) may declare its
obligation to make Advances to be terminated, whereupon the same shall forthwith
terminate, and (ii) may, by notice to the Borrower, declare all principal and
interest and all other amounts payable under the Promissory Notes and this
Agreement to be forthwith due and payable, whereupon all such principal,
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to the
Borrower as indicated in (e) above, (A) the obligation of the Lender to make the
Advance shall automatically be terminated, and (B) all such principal and
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.

ARTICLE VI

MISCELLANEOUS

Section 6.01.  Amendments, Etc.

No amendment or waiver of any provision of this Agreement, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

Section 6.02.  Notices, Etc.

All notices and other communications provided for hereunder shall be in writing
(including telecopier and fax) and mailed, telecopied, or delivered, if to the
Borrower, at its address at 105 Lincoln Avenue, P.O. Box 687, Buena, NJ 08310,
Attn: Charles Moore, President and Chief Executive Officer, phone: (856)
697-1441 (ext. 247); if to the initial Lender, at its Lending Office at its
address set forth below the signature space of the Lender; or if to any other
Lender, at its Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender; or, as to the Borrower or the Lender, at
such other address as shall be designated by such party in a written notice to
the other parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrower and the Lender. All
such notices and communications shall, when mailed, telecopied or delivered, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company respectively. Delivery by telecopier of an executed counterpart of any
amendment or waiver of any provision of this Agreement or of any Exhibit
attached hereto to be executed and delivered hereunder shall be effective as
delivery of a manually executed counterpart thereof.

26

Section 6.03.  No Waiver; Remedies.

No failure on the part of the Lender to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

Section 6.04.  Costs and Expenses.

(a)    The Borrower agrees to pay on demand all costs and expenses of the Lender
in connection with the preparation, execution and delivery of this Agreement and
the other Loan Documents to be delivered hereunder, including, without
limitation the reasonable fees and expenses of counsel for the Lender with
respect thereto (such outside counsel fees not to exceed $_____, and out of
pocket expenses shall be limited to the reasonable costs of travel to Borrower’s
facility for purposes of due diligence investigation and title and Lien searches
on the Collateral). The Borrower further agrees to pay on demand all costs and
expenses of the Lender (including, without limitation, reasonable counsel fees
and expenses), in connection with the modification, amendment, enforcement
(whether through negotiations, legal proceedings or otherwise) of this Agreement
and the other Loan Documents to be delivered hereunder, including, without
limitation, reasonable fees and expenses of counsel for the Lender in connection
with the enforcement of rights under this Section 6.04(a).

(b)    The Borrower agrees to indemnify and hold harmless the Lender and their
officers, directors, employees, agents and advisors (each, an “Indemnified
Party”) from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by or asserted or awarded against any Indemnified Party, in
each case arising out of or in connection with or by reason of (including,
without limitation, in connection with any investigation, litigation or
proceeding or preparation of a defense in connection therewith) (i) this
Agreement, any of the transactions contemplated herein or the actual or proposed
use of the proceeds of the Advance or (ii) the actual or alleged presence of
Hazardous Materials on any property of the Borrower. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 6.04(b) applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, its
directors, equity holders or creditors or an Indemnified Party or any other
Person, whether or not any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated. The
Borrower also agrees not to assert any claim for special, indirect,
consequential or punitive damages against the Lender, or any of their respective
directors, officers, employees, attorneys and agents, on any theory of liability
arising out of or otherwise relating to this Agreement, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of any
Advance. Notwithstanding the foregoing, the indemnification obligations set
forth in this Section 6.04(b) shall not apply to, or shall in any way limit or
impair the right of the Borrower to pursue, any rights, remedies or claims based
on the Lender’s gross negligence or willful misconduct.

(c)    Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in Section
6.04 shall survive the payment in full of principal, interest and all other
amounts payable hereunder.

27

Section 6.05.  Binding Effect.

This Agreement shall become effective (other than Section 2.01, which shall only
become effective upon satisfaction of the conditions precedent set forth in
Section 3.01 and 3.02) when it shall have been executed by the Borrower and the
Lender, and thereafter shall be binding upon and inure to the benefit of the
Borrower and the Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender.

Section 6.06.  Assignment.

(a)    The Lender may assign to one Person all or a portion of its rights and
obligations under this Agreement (including, without limitation, all of the
Commitment and the Advances owing to it); provided, however, that and (i) the
parties to each such assignment shall execute and deliver an Assignment and
Acceptance. The Lender shall be entitled to sub-commit all or any portion of the
Commitment and the rights therein and under this Agreement, but only with the
consent of the Borrower, and only if such sub-commitment (i) does not violate
applicable law or regulation, and (ii) does not relieve or release the Lender
from any of its obligations hereunder.

(b)    Upon the execution and delivery of an Assignment and Acceptance, from and
after the effective date specified therein, (x) the assignee thereunder shall be
a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of the Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it and have been assumed by the assignee, pursuant to such Assignment and
Acceptance, relinquish its rights (other than its rights under Sections 2.08 and
6.04 to the extent any claim thereunder relates to an event arising prior to
such assignment) and be released from its obligations under this Agreement and
such assignor Lender shall cease to be a party hereto.

(c)    By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; and (iv) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as the Lender.

28

Section 6.07.  Governing Law; Attorneys’ Fees and Costs.

This Agreement and the other Loan Documents shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to
conflict of laws principles. In the event that it becomes necessary for either
party to institute legal proceedings against the other Party to interpret or
enforce the provisions of the this Agreement or the Loan Documents, the
prevailing Party shall be entitled to collect attorneys’ fees and costs from the
non-prevailing Party.

Section 6.08.  Execution in Counterparts.

This Agreement may be executed in any number of counterparts and by different
Parties in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

Section 6.09.  Jurisdiction; Waiver of Immunities.

(a)    Each of the Parties hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of the courts of the
State of New York and of the United States, in each case located in the City of
New York, the Borough of Manhattan, in any action or proceeding arising out of
or relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the Parties hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such state court or, to the extent permitted by law, in such
federal court. Each of the Parties hereto 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.

(b)    Each of the Parties irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any state court of the State of
New York or court of the United States, in each case located in the City of New
York, the Borough of Manhattan. Each of the Parties hereby irrevocably and
unconditionally waives, to the fullest extent permitted by law, the defense of
an inconvenient forum to the maintenance of such action or proceeding in any
such court.

(c)    To the extent that the Borrower has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Borrower
hereby irrevocably and unconditionally waives such immunity in respect of its
obligations under this Agreement and, without limiting the generality of the
foregoing, agrees that the waivers set forth in this subsection (c) shall have
the fullest scope permitted under the law and are intended to be irrevocable.

29

(d)    Each of the Parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such Party at its address set
forth below its signature on the signature page hereto shall be effective
service of process for any litigation brought against it in any such court.

Section 6.10.  Waiver of Jury Trial.

EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE LOAN
DOCUMENTS OR THE ACTIONS OF THE LENDER IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.

Section 6.11.  Confidentiality.

The terms and conditions of this Agreement and the other Loan Documents and the
information provided hereunder and thereunder are confidential and shall neither
in whole or in part be disclosed to any Person nor published without the prior
written consent of the Parties, provided that this Section 6.11 shall not
prevent disclosures as required by law or by any regulatory, governmental,
ministerial or judicial or parliamentary authority or, on a confidential basis,
to (i) the Lender and Borrower, and their respective officers, directors,
employees, members, managers, auditors and attorneys, (ii) to banks, financial
institutions, other entities or any Person to whom the Lender is considering
assigning or transferring or sub-participating all or part of its right and/or
obligations herein, or (iii) to any rating agency when required by it.

Section 6.12.  OID.

The Borrower and the Lender hereby acknowledge and agree that the Advances made
hereunder are part of an "investment unit" that includes the Warrant. The
Borrower and the Lender hereby further acknowledge and agree that, for United
States federal income tax purposes (and for purposes of comparable state and
local income tax laws), the aggregate fair market values of the Advances and the
Warrant (including the Conditional Warrants) shall be mutually agreed upon by
Borrower and the Lender and the determination of such aggregate fair market
values shall take into account all reasonable factors customarily used in the
determination of value of similarly situated securities. The "original issue
discount" (as defined by section 1273(a)(1) of the Internal Revenue Code of
1986, as amended) that will accrue on the Advances (taking into account interest
payable on the Advances other than "qualified stated interest" within the
meaning of Treasury Regulations Section 1.1273-1(c)) will be mutually agreed
upon by Borrower and the Lender and will be derived from the fair market value
determination set forth above. Neither of the Parties shall take any position in
its tax returns or other informational statements that is inconsistent with any
of the foregoing.

30

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective duly authorized officers on the day and year first set forth
above.

 

 

BORROWER

 

 

 

IGI LABORATORIES, INC, a Delaware corporation

 

 

 

 

 

By:

/s/ Charles Moore

 

 

Name: Charles Moore

 

 

Title: President and Chief Executive
Officer

 

 

 

 

LENDER

 

 

 

 

AMZAK CAPITAL MANAGEMENT, LLC, a Nevada limited liability company

 

 

 

 

 

 

 

By:

/s/ Michael David Kazma

 

 

Name: Michael David Kazma

 

 

Title: President

 

 

 

 

Lending Office:

 

 

 

 

1 North Federal Highway Ste. 400

 

Boca Raton, Florida 33432

 

Signature Page

Credit Agreement

31

EXHIBIT A

FORM OF

ASSIGNMENT AND ACCEPTANCE

Reference is made to the Credit Agreement dated as of _______________, 2010 (as
amended or modified from time to time, the “Credit Agreement”) between IGI
Laboratories, Inc., a Delaware corporation (the “Borrower”) and the Lender (as
defined in the Credit Agreement). Terms defined in the Credit Agreement are used
herein with the same meaning.

The “Assignor” and the “Assignee” referred to on Schedule 1 hereto agree as
follows:

The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, all of the Assignor’s rights and
obligations under the Credit Agreement as of the date hereof. After giving
effect to such sale and assignment, the Assignee’s Commitment and the amount of
the Advances owing to the Assignee will be as set forth on Schedule 1 hereto.

The Assignor (i) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; (ii) makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto.

The Assignee (i) confirms that it has received a copy of the Credit Agreement,
together with copies of such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Assignor and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) confirms that it
is a sophisticated investor which has the ability to evaluate the merits and
risks of an investment in the Credit Agreement, including, without limitation,
the financial and political conditions in the United States of America as of the
date hereof, and the ability to assume the economic risks involved in such an
investment; and (iv) agrees that it will perform in accordance with their terms
all of the obligations that by the terms of the Credit Agreement are required to
be performed by it as the Lender;

Following the execution of this Assignment and Acceptance, it will be delivered
to the Borrower. The effective date for this Assignment and Acceptance (the
“Effective Date”) shall be the date of delivery hereof to the Borrower, unless
otherwise specified on Schedule 1 hereto.

32

Upon such delivery to the Borrower, as of the Effective Date, (i) the Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of the Lender there
under and (ii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement.

Upon such delivery to the Borrower, from and after the Effective Date, the
Borrower shall make all payments under the Credit Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest and facility fees with respect thereto) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Credit Agreement for periods prior to the Effective Date directly between
themselves.

This Assignment and Acceptance shall be governed by, and construed in accordance
with, the laws of the State of New York.

This Assignment and Acceptance may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of
Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as
delivery of a manually executed counterpart of this Assignment and Acceptance.

33

IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this
Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.

Schedule to Assignment and Acceptance

Percentage interest assigned:

 

100%

 

 

 

Assignee’s Commitment:

$_______________

 

 

 

 

Aggregate outstanding principal amount of Advance assigned:

$_______________

 

 

 

 

Effective Date: _______________, 20__

 

 

 

[NAME OF ASSIGNOR], as Assignor

 

 

 

 

 

By

 

 

 

Title:

 

 

 

Dated: _______________, 20__

 

 

 

 

 

[NAME OF ASSIGNEE], as Assignee

 

 

 

 

 

By

 

 

 

Title:

 

 

Lending Office:

 

 

[Address]

Acknowledged this

___ day of ________, 20__

[NAME OF BORROWER]

By:

 

 

 

 

Title:

 

 

34

EXHIBIT B

FORM OF

NOTICE OF BORROWING

[Date]

Amzak Capital Management, LLC, as Lender under

the Credit Agreement

referred to below

Attention: ____________________

Ladies and Gentlemen:

The undersigned, IGI Laboratories, Inc., a Delaware corporation, refers to the
Credit Agreement, dated as of December 21, 2010 (as amended or modified from
time to time, the “Credit Agreement”, the terms defined therein being used
herein as therein defined), between the undersigned and the Lender, and hereby
gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement
that the undersigned hereby requests the Borrowing under the Credit Agreement,
and in that connection sets forth below the information relating to the
Borrowing (the “Proposed Borrowing”) as required by Section 2.02(a) of the
Credit Agreement:

The Business Day of the Proposed Borrowing is _______________, 20__.

The aggregate amount of the Proposed Borrowing is $_______________. The
undersigned wiring instructions are attached hereto.

The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:

a)

the representations and warranties contained in Section 4.01 of the Credit
Agreement are correct, before and after giving effect to the Proposed Borrowing
and to the application of the proceeds there from, as though made on and as of
such date; and

b)

no event has occurred and is continuing, or would result from such Proposed
Borrowing or from the application of the proceeds there from, that constitutes a
Default.

 

Very truly yours,

 

 

 

IGI LAORATORIES, INC.

 

 

 

By

 

 

 

Title:

35

EXHIBIT C

FORM OF PROMISSORY NOTE

PROMISSORY NOTE

U.S. $______________ Initial Advance Amount

December__, 2010

 

[________________](1)

FOR VALUE RECEIVED, the undersigned, IGI LABORATORIES, INC. (the “Maker”),
promises to pay to the order of Amzak Capital Management LLC, at 1 North Federal
Highway, Ste. 400, Boca Raton, FL 33432, or at such other place as the holder of
this Note (the “Holder”) may from time to time designate, the Accreted Principal
Amount based on the Initial Advance Amount, together with accrued and unpaid
interest on December 31, 2015 (the “Maturity Date”) unless repaid earlier in
accordance with the terms of that certain Credit Agreement dated December
21,2010 between Amzak Capital Management LLC, as the initial Lender, and the
Maker (the “Credit Agreement”). Interest on the Accreted Principal Amount of
this Notes shall accrued at the rate of 14% per annum (compounded quarterly to
the extent not paid in cash and computed on the basis of the actual number of
days elapsed over a 360-day year) until paid in full, commencing on the date
hereof. Interest on this Note shall be due and payable on each Interest Payment
Date, commencing on ________. Capitalized terms not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement. This Note
shall be subject to all of the terms and conditions of the Credit Agreement,
including without limitation Article II thereof. In the event of any conflict
between this Note and the Credit Agreement, the Credit Agreement shall govern.

1.    The Maker agrees that time is of essence and that in the event payment of
principal or interest due under this Note is not made when due, the outstanding
principal amount hereof shall immediately bear interest at a rate of 2% per
annum above the interest rate which is otherwise provided herein, for so long as
such Event of Default continues.

2.    Subject to any grace or cure period provided in the Credit Agreement or
otherwise provided in writing by the Holder, at the option of the Holder
exercised by written notice to the Maker, this Note shall become immediately due
and payable upon the Maker’s failure to pay when due any payment of principal or
interest hereunder, or failure in the performance or observance of any of the
terms or conditions of the Credit Agreement to which this Note is subject.

3.    If this Note or any installment of interest is not paid when due, whether
at maturity or by acceleration, the Maker promises to pay all costs of
collection, including without limitation, all costs and expenses incurred by the
Holder in connection with the enforcement of this Note , the Credit Agreement or
any other Loan Document, whether or not suit is filed hereon or thereon,
including without limitation, all costs, expenses and attorneys fees and
expenses actually incurred by the Holder on account of collection and/or in
connection with the any insolvency, bankruptcy, arrangement or other similar
proceedings involving the Maker, or involving any endorser hereof, which in any
way affects the exercise by the Holder of its rights and remedies under this
Note, the Credit Agreement or any other Loan Document.

____________________

(1)  An out-of-state execution and delivery affidavit will be necessary.

36

4.    No single or partial exercise of any power under this Note, the Credit
Agreement or any other Loan Document shall preclude other or further exercise
thereof or the exercise of any other power. No delay or omission on the part of
the Holder in exercising any right shall operate as a waiver of such right or of
any other right. The acceptance of any amount due and payable hereunder shall
not operate as a waiver with respect to any other amount then owing or unpaid.

5.    Presentment, demand, protest, notice of protest, dishonor and nonpayment
of this Note and all notices of every kind are hereby waived by the Maker,
whether the undersigned, principal, surety or endorser. To the extent permitted
by applicable law, the defense to the statute of limitation is hereby waived by
the undersigned.

6.    Principal and interest evidenced hereby are payable only in lawful money
of the United States. The receipt of a check shall not, in itself, constitute
payment hereunder unless and until paid in good funds.

7.    Whenever any payment on this Note, shall be stated to be due on day which
is not a Business Day, such payment shall be made on next succeeding business
day and such extension of time shall be included in the computation of the
payment of interest in this Note.

8.    This Note is to be governed and construed in accordance with the laws of
the State of New York. In any action brought under or arising out of this Note,
the Maker hereby irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of the courts of the State of New York
and of the United States, in each case located in the City of New York, Borough
of Manhattan, in any action or proceeding arising out of or relating to this
Note, or for recognition or enforcement of any judgment, and the Maker hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such state court or, to
the extent permitted by law, in such federal court. The Maker 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. The Maker irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Note in any state court of the State of New
York or court of the United States, in each case located in city of New York,
Borough of Manhattan. The Maker hereby irrevocably and unconditionally waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.

9.    To the extent that the Maker has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Maker hereby
irrevocably and unconditionally waives such immunity in respect of its
obligations under this Note and, without limiting the generality of the
foregoing, agrees that the waivers set forth herein shall have the fullest scope
permitted under the law and are intended to be irrevocable.

37

10.    The Maker further agrees that service of any process, summons, notice or
document by U.S. registered mail to its address set forth below its signature
hereto shall be effective service of process for any litigation brought against
it in any such court.

11.    THE UNDERSIGNED WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTER CLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS NOTE.

12.    If any provision of this Note shall be held invalid or unenforceable,
such invalidity or unenforceability shall attach only to such provision and
shall not in any manner affect or render invalid or unenforceable any other
severable provision of this Note, and this Note shall be carried out as if any
such invalid or unenforceable provision were not contained herein.

13.    In no contingency or event whatsoever shall interest charged in respect
of the amounts owing hereunder, however such interest may be characterized or
computed, exceed the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
If such a court determines that the Holder has received interest hereunder in
excess of the highest rate applicable hereto, Holder shall, at the Holder’s
election, either (a) promptly refund such excess interest to the Maker, or (b)
credit such excess to the principal balance of the outstanding amounts held by
the Holder.

14.    In the event of any conflict between the terms and conditions of the
Credit Agreement and this Note, the terms of the Credit Agreement shall prevail.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the undersigned has executed and delivered this Note as of
the date first written above.

 

IGI LABORATORIES, INC

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

Address:

 

Signature Page

Promissory Note

39

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

TO:

AMZAK CAPITAL MANAGEMENT, LLC

 

1 North Federal Highway
Suite 400
Boca Raton, FL 33432
Tel: +1 561 953 4164 Fax: +1 561 338 7677

Re: Compliance Certificate dated ________________________

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement dated as of December 21, 2010
(the “Loan Agreement”) between IGI Laboratories, Inc a Delaware corporation
(“Borrower”), and Amzak Capital Management, LLC, a Nevada limited liability
company (“Lender”). Capitalized terms used in this Compliance Certificate have
the meanings set for the in the Credit Agreement unless specifically defined
herein.

Pursuant to Section 4.04 of the Credit Agreement, the undersigned President of
Borrower hereby certifies that:

(a)    The financial statements attached hereto, have been prepared in
accordance with GAAP and fairly present in all material respect the financial
conditions of the relevant Borrower.

(b)    To the Chief Financial Officer’s knowledge, there does not exist any
condition or event that constitutes a Default or Event of Default, except for
such conditions or events listed on Schedule 1 attached hereto, specifying the
nature and period of existence thereof and what action the Borrower has taken,
or proposes to take with respect thereto.

(c)    Without limiting the generality of the foregoing, the Borrower is in
compliance with the covenants contained in Section 4.05 of the Credit Agreement
as demonstrated on Schedule 2 hereto.

(d)    IN WITNESS WHEREOF, this Compliance Certificate is executed by the
undersigned this _____ day of ____________________, 20__.

IGI Laboratories, Inc a Delaware corporation

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

40

SCHEDULE 2

(a)    Dividends, Capital, Etc. The Borrower has not declared, paid or made or
agreed to declare, paid or made any dividend or other any distributions (or
similar payments) (whether in cash, securities or other property) with respect
to its capital stock, including any purchase, redemption, retirement or
acquisition of any capital stock of the Borrower, or any option, warrant or
other right to acquire capital stock of the Borrower, nor has the Borrower
effected any capital distribution or capital reduction.

(b)    Loan to Collateral Ratio: The Borrower shall maintain a ratio of Total
Assets to Accreted Principal Amount in excess of 1.75 to 1.0 and a ratio of
Current Assets to Accreted Principal Amount in excess of 1.0 to 1.0 as measured
at the end of each calendar month.

 

(A) Total Assets:

 

 

 

 

 

(B) Accreted Principal Amount:

 

 

 

 

 

A / B:

 

 

 

 

 

(C) Current Assets:

 

 

 

 

 

(D) Accreted Principal Amount:

 

 

 

 

 

C / D:

 

41