EXECUTION VERSION

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AMENDMENT NO. 2 (TERM LOAN CREDIT AGREEMENT)

AMENDMENT NO. 2 dated as of August 1, 2018 (this “Amendment”) to the Credit
Agreement dated as of July 21, 2017 (the “Credit Agreement”) among PERNIX
IRELAND PAIN DESIGNATED ACTIVITY COMPANY (f/k/a Pernix Ireland Pain Limited), a
designated activity company organized under the laws of the Republic of Ireland
(the “Borrower”), the lenders party thereto and Cantor Fitzgerald Securities, as
administrative agent for the lenders (the “Agent”).

W I T N E S S E T H :

WHEREAS, the Borrower has requested that the Agent and the Lenders amend the
Credit Agreement as set forth herein.

NOW, THEREFORE, the parties hereto agree as follows:

SECTION 1. Defined Terms; References. Unless otherwise specifically defined
herein, each term used herein that is defined in the Credit Agreement has the
meaning assigned to such term in the Credit Agreement. Each reference to
“hereof”, “hereunder”, “herein” and “hereby” and each other similar reference
and each reference to “this Agreement” and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.

“Exchange” means the exchange of a certain portion of Parent’s outstanding 12%
Senior Secured Notes due 2020 (the “Notes”) for shares of common stock in Parent
pursuant to the terms of those certain Exchange Agreements dated as of the date
hereof by and among Parent and, respectively, 1992 MSF International Ltd. and
1992 Tactical Credit Master Fund, L.P., in each case in the form attached hereto
as Exhibit B.

SECTION 2. Amendments to Credit Agreement.  Each of the parties hereto agrees
that, effective on the Amendment Effective Date, the Credit Agreement shall be
amended as follows:

2.1Section 2.6(d)(ii) of the Credit Agreement is hereby amended and restated to
read in its entirety as follows: 

(ii)The Borrower may, at its sole discretion (an “Interest Election”), elect to
pay interest on the Loans in respect of any Interest Payment Date, (A) entirely
in cash (“Cash Interest”) or  (B) partly as Cash Interest and partly by adding
the amount of such interest up to a maximum amount of 2.50% per annum to the
outstanding principal amount of the Loans (“PIK Interest”, and the amount of any
such PIK Interest added to the principal of the Loans on any Interest Payment
Date as required by the relevant Interest Election(s), the “Additional PIK
Principal”) (with Cash Interest and Additional PIK Principal to be allocated pro
rata among the Lenders in proportion to the aggregate principal amount of the
portion of the Loan held by each Lender). 

2.2[Reserved.] 

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2.3Section 6.6(a)(i) of the Credit Agreement is hereby amended by (i) deleting
“or” at the end of sub-clause (F) therein, (ii) replacing “.” with “, and/or” at
the end of clause (G) therein, and (iii) inserting a new sub-clause (H)
immediately following sub-clause (G) as follows: 

(H) with respect to the Treximet Note Purchase Debt, payments of principal on
the Treximet Note Purchase Debt made solely by exchanging such Treximet Note
Purchase Debt for shares of Qualified Equity Interests without any payment of
cash (other than in respect of fractional shares in an amount not to exceed
$50,000).

2.4Schedule 3.2 to the Credit Agreement is hereby amended and restated in its
entirety as set out in Schedule 1 attached hereto.  

2.5Schedule 5.17 to the Credit Agreement is hereby amended and restated in its
entirety as set out in Schedule 2 attached hereto.  

SECTION 3. Representations and Warranties, Covenants and Acknowledgements. To
induce the Agent and Lenders to enter into this Amendment:

(a) the Borrower and each other Loan Party represents and warrants that (i) as
of the date hereof and after giving effect to the amendments hereto, all of the
representations and warranties made or deemed to be made under the Credit
Agreement and the other Loan Documents are true and correct, except to the
extent that such representations and warranties expressly relate to an earlier
date in which case such representations and warranties shall have been true and
correct on and as of such earlier date, (ii) as of the date hereof and after
giving effect to the amendments hereto, there exists no Default or Event of
Default under the Credit Agreement or any of the other Loan Documents, (iii) it
has the power and is duly authorized to enter into, deliver and perform this
Amendment, (iv) this Amendment and each of the other Loan Documents is the
legal, valid and binding obligation of each Loan Party, enforceable against each
Loan Party in accordance with its terms, except to the extent enforcement may be
limited under applicable bankruptcy, insolvency, reorganization, receivership,
moratorium, or similar laws affecting creditors’ rights generally and the
equitable discretion of the court;  

(b)each Loan Party hereby reaffirms each of the agreements, covenants, and
undertakings set forth in the Credit Agreement and each other Loan Document
executed in connection therewith or pursuant to, as amended and modified hereby,
to which it is a party; and 

(c)Each Loan Party acknowledges and agrees that this Amendment shall be deemed a
Loan Document for all purposes under the Credit Agreement. 

SECTION 4 Effectiveness. This Amendment shall become effective on the first date
when each of the following conditions have been satisfied (the “Amendment
Effective Date”) (x) the Agent shall have received from each of the Loan
Parties, the Required Lenders and the Agent (i) an executed counterpart hereof
signed by such party or facsimile or other written confirmation that such party
has signed a counterpart hereof and (ii) the fully executed Amendment No. 3 to
the 2017 ABL Facility, dated as of the date hereof, in the form attached hereto
as Exhibit A and (y) substantially simultaneously therewith, the Exchange shall
have been consummated.

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SECTION 5. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. Delivery of an
executed signature page of this Amendment by facsimile, email or other
electronic transmission shall be effective as delivery of a manually executed
counterpart to this Amendment.

SECTION 6. Amendment, Modification and Waiver. This Amendment may not be
amended, modified or waived except by an instrument or instruments in writing
signed and delivered on behalf of each of the parties hereto.

SECTION 7.  Severability.  If any provision of this Amendment is held to be
illegal, invalid or unenforceable in any jurisdiction, the legality, validity
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, of this Amendment and the
other Loan Documents shall not be affected or impaired thereby.

SECTION 8.  Headings.  Section and Subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.

SECTION 9.  Governing Law; Waiver of Jury Trial.  Section 12 of the Credit
Agreement is hereby incorporated herein by reference mutatis mutandis.

SECTION 10.  Fees and Expenses.  Borrower hereby reconfirm their respective
obligations pursuant to the Credit Agreement to pay and reimburse the Agent and
the Lenders for all reasonable costs and expenses (including, without
limitation, reasonable and documented fees of counsel to the Agent and Lenders)
incurred in connection with the negotiation, preparation, execution and delivery
of this Agreement and all other documents and instruments delivered in
connection herewith.

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

 

 

BORROWER:

PERNIX IRELAND PAIN DESIGNATED ACTIVITY COMPANY

 

By:

/s/ Angus Smith

 

 

Name: Angus Smith   

 

 

Title:Director 

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[SIGNATURE PAGE - DDTL AMENDMENT NO. 2]

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LENDERS:

1992 MSF INTERNATIONAL LTD.

 

 

BY: HIGHBRIDGE CAPITAL MANAGEMENT, LLC, AS TRADING MANAGER,

 

 

By:

/s/ Jonathan Segal

 

 

 

Name:Jonathan Segal 

 

 

 

Title:Managing Director 

 

 

 

 

 

 

By:

/s/ Jason Hempel

 

 

 

Name:Jason Hempel 

 

 

 

Title:Managing Director 

 

 

1992 TACTICAL CREDIT MASTER FUND, L.P.

 

 

BY: HIGHBRIDGE CAPITAL MANAGEMENT, LLC, AS TRADING MANAGER,

 

 

By:

/s/ Jonathan Segal

 

 

 

Name:Jonathan Segal 

 

 

 

Title:Managing Director 

 

 

 

 

 

 

By:

/s/ Jason Hempel

 

 

 

Name:Jason Hempel 

 

 

 

Title:Managing Director 

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[SIGNATURE PAGE - DDTL AMENDMENT NO. 2]

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CANTOR FITZGERALD SECURITIES, as Agent

By:

/s/ James Buccola

 

Name:James Buccola 

 

Title:Head of Fixed Income 

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[SIGNATURE PAGE - DDTL AMENDMENT NO. 2]

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SCHEDULE 1 – AMENDED AND RESTATED SCHEDULE 3.2

Schedule 3.2

The obligation of each Lender to make each Subsequent Loan provided for
hereunder is subject to the fulfillment of each of the following conditions
precedent (the making of such extensions of credit by a Lender being
conclusively deemed to be its satisfaction or waiver of the conditions
precedent):

i.If the proceeds of such Subsequent Loan are being used, directly or
indirectly, to acquire any Equity Interests of any Person or any other assets
(whether pursuant to a Permitted Acquisition or other acquisition permitted by
the Agreement): 

ii.Agent shall have received the results of a search of the Uniform Commercial
Code filings (or equivalent filings) and judgment filings and the results of
federal tax lien searches made with respect to the acquired assets (including
Target and its Subsidiaries) are contemplated to be so acquired) and, if
applicable, the Acquisition Subsidiary in the states (or other jurisdictions) of
formation of such Persons and in which the chief executive office of each such
Person is located, and in such other jurisdictions as may be reasonably required
by Agent or Required Lenders, together with copies of the financing statements
(or similar documents) disclosed by such search, and accompanied by evidence
satisfactory to the Agent and Required Lenders that the Liens indicated in any
such financing statement (or similar document) would constitute Permitted Liens
or have been or will be contemporaneously with the funding of the initial
extension of credit released or terminated. 

iii.Immediately after giving effect to the Borrowing of such Subsequent Loan,
the consummation of such acquisition and the transactions related thereto, the
Target, its Subsidiaries and, if applicable, the Acquisition Subsidiary shall
not be obligated on any Indebtedness other than Permitted Indebtedness. 

iv.Borrower shall have delivered to Agent a copy of the definitive sale and
purchase agreement related to such acquisition (the “Acquisition Agreement”) and
any related documents reasonably requested by Agent or the Required Lenders. 

v.Such acquisition shall be consummated pursuant to the terms of the Acquisition
Agreement in all material respects, substantially concurrently with the funding
of such Subsequent Loan, without giving effect to any amendments, express
consents or express waivers by the Borrower thereto or modifications to the
provisions thereof that are adverse to the interests of Lender Group without the
prior written consent of the Required Lenders. 

vi.Agent shall have received due diligence information relating to the Target,
its Subsidiaries and, if applicable, the Acquisition Subsidiary, to  

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the extent available to the Borrower or required in connection with Section 5.11
of the Agreement.

vii.Agent shall have received each of the following documents, in form and
substance reasonably satisfactory to the Required Lenders, duly executed and
delivered, and each such document shall be in full force and effect: 

viii.supplements to the Security Agreement or other Additional Document(s)
required pursuant to Section 5.11 or 5.12 of the Agreement, executed by the
Acquisition Subsidiary (if applicable), the Target and each of its Subsidiaries
that is required to become a Guarantor pursuant to Section 5.11, ‎5.12 and/or
5.17 of the Agreement, 

ix.duly executed short form security agreements with respect to the Intellectual
Property owned by the Acquisition Subsidiary (if applicable), Target and each of
its Subsidiaries that are required to become a Guarantor pursuant to Section
5.11, 5.12 and/or 5.17 of the Agreement, in appropriate form for filing in the
United States and, upon reasonable request of the Agent, in additional
applicable jurisdictions, and in a format reasonable acceptable to the Agent,  

x.a completed Perfection Certificate for the Acquisition Subsidiary (if
applicable), the Target and its Subsidiaries or otherwise with respect to the
acquired assets, and 

xi.executed counterparts of each other Loan Document required to perfect the
Agent’s security interest in the Collateral duly executed by an Authorized
Person of the Acquisition Subsidiary (if applicable), Target and each of its
Subsidiaries party thereto. 

xii.Agent shall have received proper financing statements (Form UCC-1 or the
equivalent) for filing under the Code or other appropriate filing offices of
each jurisdiction as may be necessary to perfect the security interests granted
by the Acquisition Subsidiary (if applicable), the Target and its Subsidiaries. 

xiii.Agent shall have received a certificate from the Secretary of the
Acquisition Subsidiary (if applicable), the Target and each of its Subsidiaries
that are required to become Loan Parties pursuant to the Agreement (i) attesting
to the resolutions of its Board of Directors authorizing its execution,
delivery, and performance of the Loan Documents to which it is a party, (ii)
authorizing its Authorized Persons to execute the same, and (iii) attesting to
the incumbency and signatures of such Authorized Persons.  

xiv.Agent shall have received copies of the Governing Documents of the
Acquisition Subsidiary (if applicable), the Target and each of its  

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Subsidiary, as amended, modified, or supplemented to the relevant Funding Date,
which Governing Documents shall be certified by the Secretary of such Person and
with respect to Governing Documents of a Person that are charter documents,
certified as of a recent date (not more than 30 days prior to the Funding Date)
by the appropriate government official.

xv.To the extent customary in the relevant jurisdiction of organization, Agent
shall have received a certificate of good standing (or equivalent, to the extent
the concept is applicable) with respect to the Acquisition Subsidiary (if
applicable), the Target and each of its Subsidiaries, such certificate to be
issued by the relevant authority of the jurisdiction of organization of such
Person. 

xvi.Agent shall have received opinions of the Loan Parties’ and/or Target’s
counsel pursuant to Section 5.11 and/or 5.12 of the Agreement with respect to
the Acquisition Subsidiary (if applicable), the Target and each of its
Subsidiaries in form and substance reasonably satisfactory to Agent and the
Required Lenders. 

xvii.Borrower shall have otherwise complied with Section 5.11 and 5.12 of the
Agreement to the extent applicable (without giving effect to the post
acquisition time period for taking such actions following the acquisition). 

xviii.Agent shall have received at least two (2) Business Days prior to the
Funding Date, all documentation and other information with respect to the
Acquisition Subsidiary (if applicable), Target and its Subsidiaries reasonably
requested by Agent in writing at least ten (10) Business Days prior to the
Funding Date, required under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA PATRIOT Act. 

xix.The Acquired Cash Flow Ratio, after giving pro forma effect to such
Permitted Acquisition or other acquisition shall be greater than 1.50 to 1.00. 

1.The proceeds of such Subsequent Loan shall be used in accordance with Section
5.17 of the Agreement, and, if such Subsequent Loan is being incurred for the
purposes set forth in clause (i) of the introductory paragraph of Schedule 5.17,
such proceeds shall be applied substantially concurrently with the funding of
such Subsequent Loan or funded into a blocked account subject to a Control
Agreement over which Agent has a first lien security interest, pending
application of such proceeds in accordance with the terms of the Agreement and,
if applicable, the applicable Acquisition Agreement. 

i.Borrower shall have paid all Lender Group Expenses incurred in connection with
such Subsequent Loan, the Permitted Acquisition (if applicable) and the
transactions related thereto to the extent invoiced at least two (2) Business
Days prior to the Funding Date. 

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ii.Agent shall have received a duly executed Notice of Borrowing with respect to
such Subsequent Loan, executed by an Authorized Person of the Borrower and in
accordance with the requirements of the Agreement, which shall, among other
things, specify in reasonable detail the proposed use of proceeds thereof. 

Agent shall have received a certificate duly signed by an Authorized Person of
the Borrower confirming the satisfaction of the conditions set forth in this
Schedule 3.2.

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SCHEDULE 2 – AMENDED AND RESTATED SCHEDULE 5.17

 

Schedule 5.17

Subsequent Loans – Use of Proceeds

Unless otherwise approved by the Required Lenders prior to the funding of a
Subsequent Loan, the proceeds of each Subsequent Loan made after the Closing
Date shall only be used (i) for the following purposes in connection with a
Permitted Acquisition where the Acquired Cash Flow Ratio of the Target of such
Permitted Acquisition, after giving pro forma effect thereto, is greater than
1.50 to 1.00 or (ii) for working capital or other general corporate purposes not
in contravention of any applicable Law or of any Loan Document, including for
the purposes of making Restricted Payments or Permitted Investments:

 

i.The Purchase Price required to be paid by any Loan Party or Subsidiary
(including any upfront, milestone or royalty payments made to the seller or
licensor) or the refinancing of such Target’s existing indebtedness, in each
case in connection with the consummation of such Permitted Acquisition, and
related reasonable transaction fees and expenses. 

ii.In connection with any new product of any Loan Party or Subsidiary acquired
pursuant to such Permitted Acquisition: 

(a)Marketing expenses associated with such new product, including any
pre-marketing activities such as market research; 

(b)Selling expenses associated with such new product, including all costs
related to any incremental headcount required to support the product(s), the
cost of sales force training and any incremental sales analytics expenses
(including but not limited to sales force automation and data expenses);  

(c)Research and development expenses associated with such new product, including
any post-market requirements;  

(d)Manufacturing expenses associated with such new product, including the cost
of validation and scale-up;  

(e)Costs associated with the supply chain for such new product, including the
cost of third-party logistics providers, audit of any third-party manufacturing
sites, and technology transfer expenses; and/or 

(f)Post-closing capital needs relating to such new product to (i) fund inventory
purchases and (ii) fund other working capital needs; provided, however, that
amounts requested pursuant to this clause (ii) shall not exceed $500,000. 

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iii.Interest expense and any fees pursuant to the Agreement associated with the
Subsequent Loan incurred in connection with such Permitted Acquisition. 

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EXHIBIT A – AMENDMENT NO. 3 TO THE 2017 ABL AGREEMENT

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EXHIBIT B – EXCHANGE AGREEMENTS

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