Exhibit 10.2

Execution Version

FACILITY AGREEMENT

dated as of January 5, 2018

by and among

Melinta Therapeutics, Inc.,

as the Borrower,

the other Loan Parties party hereto from time to time,

the Lenders

and

Cortland Capital Market Services LLC,

as Agent for itself and the Lenders

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Table of Contents

 

ARTICLE 1 DEFINITIONS      1  

Section 1.1

  General Definitions      1  

Section 1.2

  Interpretation      26  

Section 1.3

  Business Day Adjustment      27  

Section 1.4

  Loan Records      27  

Section 1.5

  Accounting Terms and Principles      28  

Section 1.6

  Officers      29   ARTICLE 2 AGREEMENT FOR THE LOAN      29  

Section 2.1

  Use of Proceeds      29  

Section 2.2

  Disbursements      29  

Section 2.3

  Payments; Prepayments; Exit Fee; Prepayment Fee; No Call      30  

Section 2.4

  Payment Details      32  

Section 2.5

  Taxes      33  

Section 2.6

  Costs, Expenses and Losses      34  

Section 2.7

  Interest      35  

Section 2.8

  Interest on Late Payments; Default Interest      35  

Section 2.9

  Agent Fee; Yield Enhancement Fees; Upfront Fees      36  

Section 2.10

  Delivery of Warrants      36   ARTICLE 3 REPRESENTATIONS AND WARRANTIES     
37  

Section 3.1

  Representations and Warranties of the Loan Parties      37  

Section 3.2

  Loan Parties Acknowledgment      52  

Section 3.3

  Representations and Warranties of the Lenders      52   ARTICLE 4 CONDITIONS
OF DISBURSEMENT      53  

Section 4.1

  Conditions to the Initial Disbursement      53  

Section 4.2

  Conditions to the Subsequent Disbursements      55   ARTICLE 5 PARTICULAR
COVENANTS AND EVENTS OF DEFAULT      56  

Section 5.1

  Affirmative Covenants      56  

Section 5.2

  Negative Covenants      63  

Section 5.3

  Major Transaction      68  

Section 5.4

  General Acceleration Provision upon Events of Default      68  

Section 5.5

  Additional Remedies      71  

Section 5.6

  Recovery of Amounts Due      71  

Section 5.7

  Credit Bidding      71   ARTICLE 6 MISCELLANEOUS      72  

Section 6.1

  Notices      72  

Section 6.2

  Waiver of Notice      73  

Section 6.3

  Cost and Expense Reimbursement      73  

Section 6.4

  Governing Law      74  

 

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Section 6.5

  Successors and Assigns      75  

Section 6.6

  Entire Agreement; Amendments      75  

Section 6.7

  Severability      77  

Section 6.8

  Counterparts      77  

Section 6.9

  Survival      77  

Section 6.10

  No Waiver      78  

Section 6.11

  Indemnity      78  

Section 6.12

  No Usury      79  

Section 6.13

  Specific Performance      80  

Section 6.14

  Further Assurances      80  

Section 6.15

  Agent      80  

Section 6.16

  USA Patriot Act      83  

Section 6.17

  Placement Agent      83  

Section 6.18

  Independent Nature of Secured Parties      83  

Section 6.19

  Joint and Several      84  

Section 6.20

  No Third Parties Benefited      84  

Section 6.21

  Binding Effect      84  

Section 6.22

  Marshaling; Payments Set Aside      84  

Section 6.23

  No Waiver; Cumulative Remedies      85  

Section 6.24

  Right of Setoff      85  

Section 6.25

  Sharing of Payments, Etc.      85  

Section 6.26

  Other Services      85   Annexes   

Annex A

  Initial Disbursement Amount, Subsequent Disbursement Commitment and Warrants  
Schedules   

Schedule P-1

  Existing Investments  

Schedule 2.4

  List of Agreement Date Lenders and Such Lenders’ Wire Instructions and
Information for Notices  

Schedule 3.1(d)

  Existing Liens   

Schedule 3.1(f)

  Existing Indebtedness   

Schedule 3.1(m)

  Real Estate   

Schedule 3.1(q)

  Exclusive Rights Related to Services   

Schedule 3.1(w)

  Borrower’s Subsidiaries   

Schedule 3.1(x)

  Dividends   

Schedule 3.1(y)

  Borrower’s Outstanding Shares of Stock, Options and Warrants   

Schedule 3.1(z)

  Margin Stock   

Schedule 3.1(cc)

  Environmental   

Schedule 3.1(ee)

  Labor Relations   

Schedule 3.1(ff)

  Jurisdiction of Organization, Legal Name, Organizational Identification Number
and Chief Executive Office  

Schedule 3.1(gg)

  Deposit Accounts and Other Accounts   

Schedule 3.1(uu)

  Registrations   

Schedule 3.1(aaa)

  Exclusive Rights Related to Products   

Schedule 3.1(ww)

  Regulatory Matters   

Schedule 3.1(xx)

  Inspections and Investigations   

Schedule 3.1(bbb)

  Products   

 

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Schedule 5.1(w)

  Post-Closing Obligations    Exhibits   

Exhibit A-1

  Form of Initial Disbursement Note   

Exhibit A-2

  Form of Subsequent Disbursement Note   

Exhibit B

  Form of Perfection Certificate   

Exhibit C

  Form of Warrant   

Exhibit D

  Closing Checklist   

Exhibit E

  Form of Registration Rights Agreement   

Exhibit F

  Royalty Agreement   

Exhibit G

  Stock Purchase Agreement   

Exhibit H

  Form of Compliance Certificate   

Exhibit I

  Form of Assignment and Assumption   

Exhibit J

  Form of Subsequent Disbursement Certificate   

Exhibit 2.7

  Share Payment Provisions   

 

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FACILITY AGREEMENT

FACILITY AGREEMENT (this “Agreement”), dated as of January 5, 2018, by and among
Melinta Therapeutics, Inc., a Delaware corporation (the “Borrower”), the other
Loan Parties (as defined below) party hereto from time to time, the lenders set
forth on the signature page of this Agreement (together with their successors
and permitted assigns, the “Lenders”), Cortland Capital Market Services LLC, a
Delaware limited liability company (“Cortland”), as agent for the Secured
Parties (in such capacity, together with its successors and assigns in such
capacity, “Agent,” and, together with the Lenders, the Borrower and the other
Loan Parties party hereto, the “Parties”).

W I T N E S S E T H:

WHEREAS, the Borrower desires that the Lenders extend certain term, delayed draw
term and other loans to the Borrower to provide funds necessary (i) to fund a
portion of the purchase price of the Agreement Date Acquisition, (ii) to
refinance certain of the existing Indebtedness of the Loan Parties, (iii) to
fund Permitted Acquisitions, (iv) to provide funds for the Borrower’s working
capital and general corporate purposes, and (v) to pay a portion of the fees,
costs and expenses related to this Agreement;

WHEREAS, Borrower desires to secure all of the Obligations by granting to Agent,
for the benefit of the Secured Parties, a first priority perfected Lien upon the
Collateral; and

WHEREAS, each of the Loan Parties is willing to guaranty all of the Obligations,
and to grant to Agent, for the benefit of the Secured Parties, a first priority
perfected Lien upon the Collateral, including all of the issued and outstanding
Stock of its direct Subsidiaries (other than Excluded Foreign Subsidiaries to
the extent permitted under this Agreement) which are held by a Loan Party.

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the
Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 General Definitions. Wherever used in this Agreement, the Exhibits
or the Schedules attached hereto, unless the context otherwise requires, the
following terms have the following meanings:

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of fifty percent (50%) of the
Stock of any Person or otherwise causing any Person to become a Subsidiary of
the Borrower, or (c) a merger or consolidation or any other combination with
another Person.

“Acquisition Consideration” has the meaning set forth in the definition of
“Permitted Acquisitions.”

“Additional Amounts” has the meaning set forth in Section 2.5(a).

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly:

(a) controls, or is controlled by, or is under common control with, such Person;
or

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(b) is a general partner, manager or managing member of such Person.

Without limiting the foregoing, a Person shall be deemed to be “controlled by”
any other Person if such Person possesses, directly or indirectly, power to vote
ten percent (10%) or more of the securities (on a fully diluted basis) having
ordinary voting power for the election of directors or managers or power to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise. Unless expressly stated otherwise herein, no
Secured Party shall be deemed an Affiliate of the Borrower or any of its
Subsidiaries.

“Agent” has the meaning set forth in the preamble to this Agreement.

“Agent Fee Letter” means that certain fee letter agreement dated as of the
Agreement Date by and between Borrower and Agent.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Agreement Date” means the date of this Agreement.

“Agreement Date Acquired Assets” means the “Acquired Assets” (as defined in the
Agreement Date Acquisition Agreement (without giving effect to any amendments,
restatements, supplements or other modifications thereto)).

“Agreement Date Acquisition” means the acquisition by Borrower of the assets of
the Agreement Date Acquisition Sellers and the Stock of certain of the Agreement
Date Acquisition Sellers on the Acquisition Date pursuant to the terms of the
Agreement Date Acquisition Documents.

“Agreement Date Acquisition Agreement” means that certain Purchase and Sale
Agreement dated as of November 28, 2017, by and among the Borrower and The
Medicines Company, a Delaware corporation, as the same may be amended, restated,
supplemented or otherwise modified from time to time to the extent permitted by
the terms hereof.

“Agreement Date Acquisition Documents” means the Agreement Date Acquisition
Agreement and each other document, instrument and agreement executed in
connection therewith, in each case, as the same may be amended, restated,
supplemented or otherwise modified from time to time to the extent not
prohibited by the terms hereof.

“Agreement Date Acquisition Sellers” means The Medicines Company, a Delaware
corporation, and its Subsidiaries that are either party to any Transfer Document
(as defined in the Agreement Date Acquisition Agreement) or transferring any of
their assets pursuant to any Agreement Date Acquisition Document.

“Agreement Date Acquisition Shares” means, collectively, the shares of Common
Stock to be issued pursuant to the Agreement Date Acquisition Agreement and any
shares of Common Stock issued or issuable in connection with (or otherwise
substantially contemporaneously with the consummation of) the Agreement Date
Acquisition, including for purposes of the financing thereof, excluding the
shares of Common Stock issuable pursuant to the Loan Documents.

“Announcing Form 8-K” has the meaning set forth in Section 5.1(q).

 

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“Annualized Net Sales” means, without duplication, the result of (a) for the two
fiscal quarters of the Borrower for which (y) quarterly financial statements of
the Borrower and its Subsidiaries (or any other statement, report or document
containing the following information or amounts in this clause (a) of this
definition) have been either delivered to Agent and/or the Lenders (subject to
Section 5.1(r), or filed with the SEC, pursuant to Section 5.1(h) (or otherwise)
and(z) solely to the extent such two fiscal quarter period is different from the
one in clause (a)(y) above, such information or amounts below in this clause
(a) are known, available or could be reasonably and readily available to the
Borrower or any of its Affiliates or any of their accountants, auditors, agents
or representatives, in each case of clause (y) and clause (z), that have most
recently occurred prior to the making of the first Subsequent Disbursement, the
sum of (i) the aggregate gross amount for such period invoiced by or on behalf
of the Borrower or any of its Subsidiaries for products sold globally in bona
fide, arm’s length transactions; less, for such period: (ii) (A) deductions for
trade, (B) discounts, rebates, chargebacks and credits, (C) allowances, (D)
taxes, (E) duties, (F) governmental tariffs, (G) freight, shipping and freight
insurance costs and charges, (H) returns and (I) recalls; multiplied by (b) two.
For the avoidance of doubt, the amounts set forth in clause (a) of this
definition shall take into account, on a pro forma basis, such amounts generated
by the Agreement Date Acquired Assets for any fiscal quarter of the Borrower
that is covered in clause (a) of this definition that occurs prior to the
Agreement Date.

“Anti-Corruption Laws” has the meaning set forth in Section 3.1(jj).

“Anti-Money Laundering Laws” has the meaning set forth in Section 3.1(jj).

“Applicable Laws” means, with respect to any Person, the common law and any
federal, state, local, foreign, multinational or international laws, statutes,
codes, treaties, standards, rules and regulations, guidelines, ordinances,
orders, judgments, writs, injunctions, decrees (including administrative or
judicial precedents or authorities) and the interpretation or administration
thereof by, and other determinations, directives, requirements or requests of,
any Governmental Authority, in each case whether or not having the force of law
and that are applicable to or binding upon such Person or any of its property or
Products or to which such Person or any of its property or Products is subject.

“Assignment and Assumption” means, an assignment and assumption agreement
entered into by a Lender and an assignee, substantially in the form of Exhibit I
or any other form reasonably approved by the Agent.

“Authorization” means, with respect to any Person, any permit, approval,
authorization, license, registration, certificate, clearance, concession, grant,
franchise, variance or permission from, and any other contractual obligations
with, any Governmental Authority, in each case whether or not having the force
of law and applicable to or binding upon such Person or any of its property or
Products or to which such Person or any of its property or Products is subject
(including all Registrations), and any supplements or amendments with respect to
the foregoing.

“Authorized Officer” means the chief executive officer, the president or the
chief financial officer of the Borrower or any other officer having
substantially the same authority and responsibility.

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

“Borrower” has the meaning set forth in the preamble to this Agreement.

“Business Day” means a day other than Saturday or Sunday on which banks are open
for business in New York, New York.

 

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“Capital Lease” means, with respect to any Person, any lease of or other
arrangement conveying the right to use, any property by such Person as lessee
that has been or should be accounted for as a capital lease on a balance sheet
of such Person prepared in accordance with GAAP.

“Capital Lease Obligations” means, at any time, with respect to any Capital
Lease, any lease entered into as part of any sale leaseback transaction of any
Person or any synthetic lease, the amount of all obligations of such Person that
is (or that would be, if such synthetic lease or other lease were accounted for
as a Capital Lease) capitalized on a balance sheet of such Person prepared in
accordance with GAAP.

“Cash Equivalents” means (a) any readily-marketable securities (i) issued by, or
directly, unconditionally and fully guaranteed or insured by the United States
federal government or (ii) issued by any agency of the United States federal
government the obligations of which are fully backed by the full faith and
credit of the United States federal government, (b) any readily-marketable
direct obligations issued by any other agency of the United States federal
government, any state of the United States or any political subdivision of any
such state or any public instrumentality thereof, in each case having a rating
of at least “A-1” from S&P or at least “P-1” from Moody’s, (c) any commercial
paper rated at least “A-1” by S&P or “P-1” by Moody’s and issued by any Person
organized under the laws of any state of the United States, (d) any United
States dollar-denominated time deposit, insured certificate of deposit,
overnight bank deposit or bankers’ acceptance issued or accepted by (i) any
Lender or (ii) any commercial bank that is (A) organized under the laws of the
United States, any state thereof or the District of Columbia, (B) “adequately
capitalized” (as defined in the regulations of its primary federal banking
regulators) and (C) has Tier 1 capital (as defined in such regulations) in
excess of $250,000,000 and (e) shares of any United States money market fund
that (i) has substantially all of its assets invested continuously in the types
of investments referred to in clause (a), (b), (c) or (d) above with maturities
as set forth in the proviso below, (ii) has net assets in excess of $500,000,000
and (iii) has obtained from either S&P or Moody’s the highest rating obtainable
for money market funds in the United States; provided, however, that the
maturities of all obligations specified in any of clauses (a), (b), (c) or
(d) above shall not exceed one year.

“Change of Control” means (a) except as otherwise expressly permitted under this
Agreement, at any time at any time the Borrower shall cease to own, directly or
indirectly, one hundred percent (100%) of the issued and outstanding Stock of
any of its Subsidiaries (measured both on a fully diluted basis and not on a
fully diluted basis), (b) any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan), other than Vatera Healthcare Partners LLC and its Affiliates, is or shall
at any time become the “beneficial owner” (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act except that a person or group shall be deemed to
have “beneficial ownership” of all Stock that such person or group has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time (such right, an “Option Right”)), directly or indirectly, of 30%
or more on an issued and outstanding basis of the voting interests in the
Borrower’s Stock (taking into account all such securities that such person or
group has the right to acquire pursuant to any Option Right), (c) Vatera
Healthcare Partners LLC and/or any of its Affiliates, individually or
collectively, shall at any time become the “beneficial owner” (as defined in
Rules 13(d)-3 and 13(d)-5 under the Exchange Act, directly or indirectly, of 50%
or more of the voting interests in the Borrower’s Stock (measured on a fully
diluted basis and taking into account all such securities that Vatera Health
Partners LLC and its Affiliates has the right to acquire pursuant to any Option
Right), (d) a sale of all or substantially all of the assets of the Borrower
(including, for the avoidance of doubt, the sale of all or substantially all of
the assets of the Subsidiaries of the Borrower) or of the Borrower’s Stock shall
occur or be consummated, (e) the consummation of a purchase, tender or exchange
offer made to and accepted by the holders of more than 50% of the outstanding
Stock of the Borrower, or (f) a “change of control” however so defined in any
document, agreement or instrument governing or evidencing any Indebtedness or,
in each case, any term of similar effect, shall occur.

 

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

“Collateral” has the meaning given to it in the Security Agreement.

“Commitment Letter” means that certain commitment letter dated as of November
28, 2017, by and between the Borrower and Deerfield Private Design Fund IV, L.P.

“Common Stock” means the common stock of the Borrower, $0.001 par value per
share.

“Compliance Certificate” means a certificate in substantially the form of
Exhibit H signed by the chief executive officer (or Person with equivalent
duties) of the Borrower that is reasonably satisfactory to Agent and the
Required Lenders.

“Control Agreement” means, with respect to any deposit account, securities
account, commodity account, securities entitlement or commodity contract, an
agreement, in form and substance reasonably satisfactory to Agent and the
Lenders, among Agent, the financial institution or other Person at which such
account is maintained or with which such entitlement or contract is carried and
the Loan Party maintaining such account or owning such entitlement or contract,
effective to grant “control” (within the meaning of Articles 8 and 9 under the
applicable UCC) over such account to Agent (for the benefit of the Secured
Parties).

“Convertible Securities” means any Stock or securities (other than Options)
directly or indirectly convertible into or exchangeable or exercisable for
shares of Common Stock.

“Default” means any event which, with the giving of notice, lapse of time or
fulfillment of any other applicable condition (or any combination of the
foregoing), would constitute an Event of Default.

“Disbursement” means the Initial Disbursement and/or any Subsequent
Disbursement.

“Disbursement Date” means the date that any Disbursement is funded by the
applicable Lenders.

“Dispose” and “Disposition” mean (a) the sale, lease, conveyance or other
disposition of any assets or property and (b) the sale or transfer by the
Borrower or any Subsidiary of the Borrower of any Stock issued by any Subsidiary
of the Borrower.

“Disqualified Stock” means any Stock which, by its terms (or by the terms of any
security or other Stock into which it is convertible or for which it is
exchangeable), or upon the happening of any event or condition, (a) matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the date that is one year and one day following the Maturity Date
(excluding any provisions requiring redemption upon a “change of control” or
similar event; provided that such “change of control” or similar event results
in the occurrence of the Facility Termination Date), (b) is convertible into or
exchangeable for (i) debt securities or (ii) any Stock referred to in (a) above,
in each case, at any time on or prior to the date that is one year and one day
following the Maturity Date at the time such Stock was issued, or (c) is
entitled to receive scheduled dividends or distributions in cash prior to the
date that is one year and one day following the Maturity Date.

 

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“Dollars” and the “$” sign mean the lawful currency of the United States of
America.

“Domestic Subsidiary” means any Subsidiary of the Borrower incorporated,
organized or otherwise formed under the laws of the United States, any state
thereof or the District of Columbia.

“DTC” has the meaning set forth in Section 3.1(qq).

“EBITDA” means, for any period, net income (or loss) for the applicable period
of measurement of any Person and any applicable Subsidiaries (together with the
other Persons whose income or loss is taken into account as provided below in
determining EBITDA) (such Person, such Subsidiaries and such other Persons,
collectively, the “Subject Persons”) on a consolidated basis, determined in
accordance with GAAP, without duplication of any item described below (and the
term “duplication” shall include any cash reimbursement for any loss or expense
or other item for which an add-back is provided below), to the extent taken into
account in the calculation of net income (or loss) for such period:

(a) less the income (or plus the loss) of any Person which is not a Subsidiary
of a Subject Person, except to the extent of the amount of dividends or other
distributions actually paid to the Subject Persons in cash or Cash Equivalents
by such Person, provided the payment of dividends or similar distributions by
that Person was not at the time subject to the consent of a third party or
prohibited by operation of the terms of that Person’s charter or of any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Person,

(b) except in connection with determining whether a Target’s EBITDA will be
accretive to, and will not have a negative impact on, the EBITDA of the Borrower
and its Subsidiaries pursuant to clause (h) of the definition of “Permitted
Acquisition”, less the income (or plus the loss) of any Person accrued prior to
the date it becomes a Subsidiary of a Subject Person or is merged into or
consolidated with a Subject Person or that Person’s assets are acquired by a
Subject Person,

(c) less the proceeds of any insurance,

(d) less gains (or plus losses) from the Disposition of assets or property not
in the ordinary course of business of such Subject Persons, and related tax
effects in accordance with GAAP,

(e) less any other extraordinary gains (or plus any other extraordinary losses)
of such Subject Persons, and related tax effects, in accordance with GAAP (as
defined in GAAP prior to the effectiveness of FASB ASU 2015-01),

(f) less income tax refunds received in excess of income tax liabilities,

(g) less income (or plus the loss) from the early extinguishment of
Indebtedness, net of related tax effects,

(h) Plus, without duplication, solely to the extent already taken into account
in the calculation of net income (or loss) for such period:

(1) depreciation and amortization,

(2) Net Interest Expense,

(3) all Taxes on or measured by income (excluding income tax refunds), and

 

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(4) all non-cash losses or charges (or minus non-cash income or gain), including
non-cash adjustments resulting from the application of purchase accounting,
non-cash expenses arising from grants of Stock appreciation rights, Stock
options or restricted Stock, non-cash impairment of good will and other long
term intangible assets, unrealized non-cash losses (or minus unrealized non-
cash gains) under Swap Contracts, unrealized non-cash losses (or minus
unrealized non-cash gains) in such period due solely to fluctuations in currency
values, but excluding any non-cash loss or non-cash charge (A) where there were
cash losses or charges with respect to such losses or charges in past periods
(B) that is an accrual of a reserve for a cash loss, charge, expenditure or
payment to be made, or anticipated to be made, in a future period or there is a
reasonable expectation that there will be cash losses or charges with respect to
such losses or charges in future periods or (C) relating to a write-down, write
off or reserve with respect to accounts receivable, Inventory or current assets.

Notwithstanding anything to the contrary in the Loan Documents, EBITDA shall be
calculated to give effect to any asset sales, divestitures or other dispositions
at any time on or after the first day of the measurement period and prior to the
date of determination, as if such asset sales, divestitures or other
dispositions had been effected on the first day of such measurement period.

“EDGAR” has the meaning set forth in Section 3.1(s).

“Eligible Market” means the New York Stock Exchange, Inc., the NYSE American,
the NASDAQ Capital Market, the NASDAQ Global Market (“NASDAQ GM”) or the NASDAQ
Global Select Market or, in each case, any successor thereto.

“Employee” means any employee of any Loan Party, any Subsidiary of any Loan
Party or any Target.

“Employee Benefit Plan” means any “employee benefit plan” within the meaning of
Section 3(3) of ERISA (other than a Multiemployer Plan), which any Loan Party
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any Loan Party (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be an
employee benefit plan of such Loan Party) or for which it has or could
reasonably be expected to have liability (including as an ERISA Affiliate).

“Environmental Laws” means all Applicable Laws, Authorizations and permits
imposing liability or standards of conduct for or relating to the regulation and
protection of human health, safety, the workplace, the environment and natural
resources, and including public notification requirements and environmental
transfer of ownership, notification or approval statutes.

“Environmental Liabilities” means all Liabilities (including costs of removal
and remedial actions, natural resource damages and costs and expenses of
investigation and feasibility studies, including the cost of environmental
consultants and attorneys’ costs) that may be imposed on, incurred by or
asserted against any Loan Party or any Subsidiary of any Loan Party as a result
of, or related to, any claim, suit, action, investigation, proceeding or demand
by any Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute or common law or otherwise, arising
under any Environmental Law resulting from the ownership, lease, sublease or
other operation or occupation of property by any Loan Party or any Subsidiary of
any Loan Party, whether on, prior or after the date hereof.

“Equity Financing Agreements” means any agreements or instruments pursuant to
which any of the Agreement Date Acquisition Shares are issued or issuable (other
than the Agreement Date Acquisition Agreement).

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
and applicable published guidance thereunder.

“ERISA Affiliate” means with respect to any Loan Party, any Loan Party and any
trade or business which, together with such Loan Party, is treated as a single
employer within the meaning of Code Section 414 (b) or (c) or Section 4001 of
ERISA or, solely for purposes of Sections 302 and 303 of ERISA or Code
Section 412 or Section 430, is treated as a single employer within the meaning
of Code Section 414(b), (c), (m) or (o).

“ERISA Event” means any of the following: (a) a reportable event described in
Section 4043(c) of ERISA (unless the 30-day notice requirement has been duly
waived under the applicable regulations) with respect to a Title IV Plan;
(b) the withdrawal of any ERISA Affiliate from a Title IV Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer,
as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial
withdrawal of any ERISA Affiliate, within the meaning of Section 4201 of ERISA,
from any Multiemployer Plan; (d) with respect to any Multiemployer Plan, the
filing of a notice of insolvency or termination, or treatment of a plan
amendment as termination, under Section 4041A of ERISA; (e) the filing of a
notice of intent to terminate a Title IV Plan, or treatment of a plan amendment
as termination, under Section 4041 of ERISA; (f) the institution of proceedings
to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (g) the failure
by any ERISA Affiliate to make any required contribution to any Title IV Plan or
Multiemployer Plan when due; (h) the imposition of a Lien under Section 412 or
430(k) of the Code or Section 303 or 4068 of ERISA on any property (or rights to
property, whether real or personal) of any ERISA Affiliate; (i) the failure of
an Employee Benefit Plan or any trust thereunder intended to qualify for tax
exempt status under Section 401 or 501 of the Code or other Applicable Law to
qualify thereunder; (j) a Title IV plan is in “at risk” status within the
meaning of Code Section 430(i); (k) a Multiemployer Plan is in “endangered
status” or “critical status” within the meaning of Section 432(b) of the Code;
and (l) any other event or condition that constitutes grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Title IV Plan or Multiemployer Plan or for the imposition of any Liability
upon any ERISA Affiliate under Title IV of ERISA other than for contributions to
Title IV Plans and Multiemployer Plans in the ordinary course and PBGC premiums
due but not delinquent.

“Exercise Price” has the meaning provided therefor in the Warrants.

“Event of Default” has the meaning set forth in Section 5.4.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, including
the rules and regulations promulgated thereunder.

“Excluded Accounts” has the meaning set forth in Section 5.1(k).

“Excluded Foreign Subsidiary” means (a) any Foreign Subsidiary which is a
controlled foreign corporation (as defined in the Code) that has not guaranteed
or pledged any of its assets to secure, or with respect to which there shall not
have been pledged two-thirds or more of the voting Stock to secure, any
Indebtedness (other than the Obligations) of a Loan Party, or (b) a Foreign
Subsidiary owned by a Foreign Subsidiary described in clause (a).

“Excluded Taxes” means with respect to any Lender, (a) Taxes imposed on (or
measured by) such Lender’s net income, franchise Taxes and branch profits Taxes,
in each case (i) imposed as a result of such Lender being organized under the
laws of, or having its principal office, or applicable lending office located in
the jurisdiction imposing such Tax (or any political subdivision thereof), or
(ii) that are Other Connection Taxes, (b) any United States federal withholding
Tax imposed on amounts payable to

 

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such Lender under the laws in effect at the time such Lender becomes a party to
this Agreement or such Lender changes its lending office, except to the extent
such Lender acquired its interest in the Loan from a transferor that was
entitled, immediately before such transfer, to receive Additional Amounts with
respect to such withholding Tax pursuant to Section 2.5(a) or was itself so
entitled immediately before changing its lending office, (c) any United States
federal withholding Tax imposed on amounts payable to such Lender directly as a
result of such Lender’s failure to comply with Section 2.5(d) other than as a
result of a change in law occurring subsequent to the date such Lender became a
party to this Agreement, or (d) any United States federal withholding Tax
imposed on amounts payable to such Lender under FATCA.

“Exit Fee” has the meaning set forth in Section 2.3(c).

“Facility Termination Date” has the meaning set forth in Section 2.3(a).

“FATCA” means Sections 1471 through 1474 of the Code as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any regulations or official
interpretations thereof and any agreements entered into pursuant to
Section 1471(b)(1) of the Code and any applicable intergovernmental agreements
entered into with respect to the foregoing.

“FCPA” has the meaning set forth in Section 3.1(jj).

“FDA” means the United States Food and Drug Administration and any successor
thereto.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System or any entity succeeding to any of its principal functions.

“Final Payment” means such amount as may be necessary to repay the outstanding
principal amount of the Loans and any other amounts (including the Obligations)
owing by the Borrower and the other Loan Parties to the Secured Parties pursuant
to the Loan Documents.

“Foreign Benefit Plan” means any Employee Benefit Plan that is subject to the
laws or a jurisdiction outside the United States, including those mandated by a
government other than the United States of America.

“Foreign Lender” has the meaning set forth in Section 2.5(d).

“Foreign Subsidiary” means, with respect to any Person, a Subsidiary of such
Person that is not a Domestic Subsidiary.

“Form 10-K” means an annual report on Form 10-K (or successor form thereto), as
required to be filed pursuant to the Exchange Act.

“Form 10-Q” means a quarterly report on Form 10-Q (or successor form thereto),
as required to be filed pursuant to the Exchange Act.

“GAAP” means generally accepted accounting principles consistently applied, as
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), in each case, subject to the provisions of Section 1.5.

 

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“Governmental Authority” means any nation, sovereign, government,
quasi-governmental agency, governmental department, ministry, cabinet,
commission, board, bureau, agency, court, tribunal, regulatory authority,
instrumentality, judicial, legislative, fiscal or administrative or public body
or entity, whether domestic or foreign, federal, state, local or other political
subdivision thereof, having jurisdiction over the matter or matters and Person
or Persons in question or having the authority to exercise executive,
legislative, taxing, judicial, regulatory or administrative functions of or
pertaining to government, including any central bank, securities exchange,
regulatory body, arbitrator, public sector entity, supra-national entity and any
self-regulatory organization. The term “Governmental Authority” shall further
include any institutional review board, ethics committee, data monitoring
committee or other committee or Person with defined authority to oversee
Regulatory Matters.

“Guarantor” means each Subsidiary of the Borrower (other than any Excluded
Foreign Subsidiary) or other Person who provides a guaranty of the Obligations
under the Security Agreement or other Loan Document.

“Hazardous Material” means any substance, material or waste that is classified,
regulated or otherwise characterized under any Environmental Law as hazardous,
toxic, a contaminant or a pollutant or by other words of similar meaning or
regulatory effect, including petroleum or any fraction thereof, asbestos,
polychlorinated biphenyls and radioactive substances.

“HSR Act” means the Hart-Scott Rodino Antitrust Improvements Act of 1976, as
amended, including the rules and regulations promulgated thereunder.

“Indebtedness” means the following with respect to any Person:

(i) all indebtedness for borrowed money of such Person;

(ii) the deferred purchase price of assets or services (other than trade
payables entered into in the ordinary course of business and which are not more
than 90 days past due) of such Person, including earn-outs, which in accordance
with GAAP should be shown to be a liability on the balance sheet and have not
been paid on or prior to the date due;

(iii) all guarantees of Indebtedness by such Person;

(iv) the face amount of all letters of credit issued or acceptance facilities
established for the account of such Person (or for which such Person is liable),
including without duplication, all drafts drawn thereunder;

(v) all Capital Lease Obligations of such Person;

(vi) all indebtedness (including Indebtedness of other types covered by the
other clauses of this definition) of such Person or another Person secured by
any Lien on any assets or property of such Person, whether or not such
indebtedness has been assumed or is recourse (with the amount thereof, in the
case of any such indebtedness that has not been assumed by such Person, being
measured as the lower of (y) fair market value of such property and (z) the
amount of the indebtedness secured);

(vii) indebtedness created or arising under any conditional sale or title
retention agreement, or incurred as financing, in either case with respect to
assets or property acquired by such Person (even if 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 assets or property);

 

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(viii) all obligations of such Persons evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses;

(ix) all obligations of such Person, whether or not contingent, in respect of
Disqualified Stock, valued at, in the case of redeemable preferred Stock, the
greater of the voluntary liquidation preference and the involuntary liquidation
preference of such Stock plus accrued and unpaid dividends;

(x) all direct or indirect liability, contingent or otherwise, of such Person
with respect to any Indebtedness of another Person if the primary purpose or
intent of the Person incurring such liability, or the primary effect thereof, is
to provide assurance to the obligee of such Indebtedness that such Indebtedness
will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such Indebtedness will be protected (in
whole or in part) against loss with respect thereto;

(xi) all direct or indirect liability, contingent or otherwise, of such Person
under Swap Contracts (to the extent such amount can actually be calculated or
determined with certainty at the time of any such determination, calculated on a
net basis);

(xii) all direct or indirect liability, contingent or otherwise, of such Person
to make take-or-pay or similar payments if required regardless of nonperformance
by any other party or parties to an agreement; and

(xiii) all direct or indirect liability, contingent or otherwise, of such Person
for the Indebtedness of another Person through any agreement to purchase,
repurchase or otherwise acquire such Indebtedness or any assets or property
constituting security therefor, to provide funds for the payment or discharge of
such Indebtedness or to maintain the solvency, financial condition or any
balance sheet item or level of income of another Person.

“Indemnified Person” has the meaning set forth in Section 6.11(a).

“Indemnified Taxes” means (a) any Tax imposed on or with respect to any payments
made by or on account of any Obligation of any Loan Party under any Loan
Document, other than an Excluded Tax, and (b) to the extent not otherwise
described in clause (a) above in this definition, Other Taxes.

“Indemnity” has the meaning set forth in Section 6.11(a).

“Initial Disbursement” has the meaning set forth in Section 2.2(a).

“Initial Disbursement Date” means the Distribution Date of the Initial
Disbursement.

“Initial Disbursement Request” means that certain disbursement request dated as
of the Agreement Date, including the funds flow documentation attached thereto,
delivered by the Borrower to the Agent and the Lenders on the Agreement Date.

 

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“Intellectual Property” has the meaning set forth in Section 3.1(n).

“Interest Payment Date” has the meaning set forth in Section 2.7.

“Interest Payment Shares” means any shares of Common Stock issued or issuable
pursuant to Section 2.7 and Exhibit 2.7.

“Interest Rate” means (a) 11.75% per annum for the principal amount of the
Initial Disbursement and any overdue interest thereon and (b) 14.75% per annum
for the principal amount of the Subsequent Disbursements and any overdue
interest thereon.

“Internal Controls” has the meaning set forth in Section 3.1(u).

“Investment” has the meaning set forth in Section 5.2(e).

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“IP” has the meaning set forth in Section 3.1(n).

“IRS” means the United States Internal Revenue Service.

“Latest Balance Sheet” has the meaning set forth in Section 3.1(t).

“Lenders” has the meaning set forth in the preamble to this Agreement.

“Liabilities” means all claims, actions, suits, judgments, damages, losses,
liabilities, obligations, responsibilities, fines, penalties, sanctions, costs,
fees, Taxes, commissions, charges, disbursements and expenses (including those
incurred upon any appeal or in connection with the preparation for and/or
response to any subpoena or request for document production relating thereto),
in each case of any kind or nature (including interest accrued thereon or as a
result thereto and fees, charges and disbursements of financial, legal and other
advisors and consultants), whether joint or several, whether or not indirect,
contingent, consequential, actual, punitive, treble or otherwise.

“Lien” means any lien, pledge, preferential arrangement, mortgage, security
interest, deed of trust, charge, assignment, hypothecation, title retention or
other encumbrance on or with respect to property or interest in property having
the practical effect of constituting a security interest, in each case with
respect to the payment of any obligation with, or from the proceeds of, any
asset or revenue of any kind.

“Loan” means any loan made available from time to time by the Lenders to the
Borrower pursuant to this Agreement or any other Loan Document or, as the
context may require, the principal amount thereof from time to time outstanding.
“Loan” shall include any funded Disbursement.

“Loan Documents” means this Agreement, the Notes, the Security Agreement, the
Initial Disbursement Request, each Perfection Certificate, each Compliance
Certificate, any Revolving Credit Facility Intercreditor Agreement (and any
other subordination or intercreditor agreement entered into by any Secured Party
with respect to any Indebtedness permitted under the Loan Documents), the Stock
Purchase Agreement, the Warrants, the Registration Rights Agreement, the Royalty
Agreement, the Agent Fee Letter, any solvency certificate and other documents,
agreements and instruments delivered in connection with any of the foregoing and
dated the Agreement Date or subsequent thereto, whether or not specifically
mentioned herein or therein, in each case, as amended, restated, supplemented or
otherwise modified from time to time.

 

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“Loan Notes” means any Loan Note issued to any of the Lenders evidencing any
Initial Disbursement funded by such Lenders in the form attached hereto as
Exhibit A-1, in each case, as amended, restated, supplemented or otherwise
modified from time to time.

“Loan Parties” means the collective reference to the Borrower and all of the
Guarantors.

“Loss” has the meaning set forth in Section 6.11(a).

“LTM Net Sales” means, without duplication, for the trailing four fiscal quarter
period ending as of the end of each fiscal year of the Borrower, the sum of
(a) the aggregate gross amount invoiced by or on behalf of the Borrower or any
of its Subsidiaries for products sold globally in bona fide, arm’s length
transactions; less: (b) (i) deductions for trade, (ii) discounts, rebates,
chargebacks and credits, (iii) allowances, (iv) taxes, (v) duties, (vi)
governmental tariffs, (vii) freight, shipping and freight insurance costs and
charges, (viii) returns and (ix) recalls.

“Margin Stock” means “margin stock” as such term is defined in Regulation T, U
or X of the Federal Reserve Board.

“Material Adverse Effect” means a material adverse effect on (a) the business,
results of operations, financial condition or assets of the Loan Parties and
their Subsidiaries, taken as a whole, (b) the validity or enforceability of any
material provision of this Agreement, the Notes, the Security Agreement, the
Stock Purchase Agreement, the Warrants, the Registration Rights Agreement, the
Royalty Agreement, the Agent Fee Letter, any Revolving Credit Facility
Intercreditor Agreement, any other subordination or intercreditor agreement that
is a Loan Document or any other material Loan Document, (c) the ability of the
Loan Parties to timely perform the Obligations, (d) the creation, perfection or,
subject to Permitted Liens (solely to the extent any such Permitted Liens are
expressly permitted under this Agreement to have priority over the Liens granted
under the Loan Documents), priority of any of the Liens granted under the Loan
Documents (other than as a result of the failure of Agent to take any action
within its control), or (e) any of the rights and remedies of the Secured
Parties under the Loan Documents.

“Material Environmental Liabilities” means Environmental Liabilities exceeding
$500,000 in the aggregate.

“Maturity Date” means (a) with respect to the Initial Disbursement, January 5,
2024 and (b) with respect to any Subsequent Disbursement, the sixth anniversary
of the date the first Subsequent Disbursement is made by any Lender.

“Multiemployer Plan” means any multiemployer plan, as defined in Section 3(37)
or 4001(a)(3) of ERISA, as to which any ERISA Affiliate incurs or otherwise has,
or could reasonably be expected to have, any obligation or Liabilities
(including under Section 4212 of ERISA).

“Necessary Documents” has the meaning set forth in Section 3.1(l).

“Net Interest Expense” means for the Subject Persons for any period:

(a) gross interest expense (including that attributable to Capital Lease
Obligations) for such period paid or required to be paid in cash (including all
commissions, discounts, fees and other charges in connection with letters of
credit and similar instruments and net amounts paid or payable and/or received
or receivable under permitted Swap Contracts in respect of interest rates) for
the Borrower and its Subsidiaries on a consolidated basis, less

 

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(b) interest income for such period.

“Notes” means the Loan Notes and the Subsequent Disbursement Notes.

“Obligations” means all Loans and Disbursements, interests, fees (including any
Prepayment Fees), expenses, costs, liabilities, indebtedness and other
obligations (monetary (including post-petition interest, costs, fees, expenses
and other amounts, whether allowed or not) or otherwise) of (or owed by) the
Borrower and the other Loan Parties under or in connection with the Loan
Documents, in each case howsoever created, arising or evidenced, whether direct
or indirect (including those acquired by assignment), absolute or contingent,
now or hereafter existing, or due or to become due.

“OFAC” has the meaning set forth in Section 3.1(jj).

“OID” means original issue discount.

“Option Right” has the meaning set forth in the definition of “Change of
Control”.

“Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.

“Organizational Documents” means (a) for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
and any shareholder rights agreement, (b) for any partnership, the partnership
agreement and, if applicable, certificate of limited partnership, (c) for any
limited liability company, the operating agreement and articles or certificate
of formation or (d) for any other entity, any other document setting forth the
manner of election or duties of the officers, directors, managers or other
similar or equivalent persons or Persons, or the designation, amount or relative
rights, limitations and preference of the Stock of such entity.

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

“Other Taxes” means any and all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes arising from any payment made
hereunder or from the execution, delivery, registration, transfer or enforcement
of, or otherwise with respect to, any Loan Document.

“Parties” has the meaning set forth in the preamble to this Agreement.

“PBGC” means the United States Pension Benefit Guaranty Corporation or any
successor thereto.

“Perfection Certificate” means each perfection certificate executed or delivered
by any Loan Party or any of its Subsidiaries to any Secured Party in
substantially the form of Exhibit B.

 

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“Permitted Acquisition” means any Acquisition (other than the Agreement Date
Acquisition) by a Loan Party of all of the Stock of a Target (subject to any
local law requirements regarding qualifying shares) or all or substantially all
of the assets of a Target, in each case, to the extent that each of the
following conditions shall have been satisfied:

(a) the Borrower shall have delivered each of the following to Agent (and the
Agent will deliver to the Lenders on the same date):

(i) subject to Section 5.1(r), (A) as soon as available, executed copies of the
Acquisition agreement and all material agreements and documents pursuant to
which such Acquisition is to be consummated; provided that, no later than the
third (3rd) Business Day following the date of such Acquisition documents, the
Borrower shall file a current report on Form 8-K with the SEC describing the
terms of the transaction contemplated by such Acquisition documents, including
such Acquisition documents as exhibits thereto and disclosing any other material
non-public information provided to any of the Secured Parties in connection with
such Acquisition (or otherwise); and

(ii) to the extent required to be delivered to (and permitted to be shared by) a
Loan Party pursuant to the applicable Acquisition agreement, all required
material regulatory and third party approvals;

(b) such Acquisition shall not be hostile and shall have been approved by the
board of directors (or other similar body) and/or the holders of Stock of the
Target;

(c) no Default or Event of Default shall exist at the time of the consummation
of such Acquisition or after giving effect to such Acquisition and all other
transactions contemplated by the applicable Acquisition documents;

(d) the total consideration paid or payable (including all transaction costs,
Indebtedness incurred, assumed and/or reflected on a consolidated balance sheet
of the Loan Parties and their Subsidiaries after giving effect to such
Acquisition and the maximum amount of all deferred payments, including
earn-outs) (such amounts, collectively, the “Acquisition Consideration”) for all
Acquisitions consummated during the term of this Agreement shall not exceed
$50,000,000 in the aggregate for all such Acquisitions;

(e) (i) the Target, the Target’s Subsidiaries and their respective assets and
properties and the Stock of the Target and the Target’s Subsidiaries shall be in
compliance with Section 5.1(l) and the provision of the Security Agreement and
the other Loan Documents and all actions in connection therewith shall have been
taken and completed in a manner reasonably acceptable to Agent and the Required
Lenders, (ii) to the extent required by the Loan Documents, the Target and its
Subsidiaries shall have become Guarantors under the Loan Documents and have
executed and delivered such documents reasonably requested by Agent or the
Required Lenders in connection therewith and (iii) all other actions shall have
been taken that are necessary or reasonably requested by Agent or the Required
Lenders to (A) to the extent required by the Loan Documents, provide a first
priority Lien to Agent (for the benefit of the Secured Parties) in the assets
and properties of the Target and its Subsidiaries and the Stock of the Target
and its Subsidiaries and (B) effectuate the foregoing in this clause (e);

(f) all transactions in connection with such Acquisition shall be consummated,
in all material respects, in accordance with all Applicable Laws and all
applicable Authorizations shall have been obtained;

 

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(g) the Target shall be in the same business or lines of business in which the
Borrower and its Subsidiaries are engaged as of the Agreement Date or a business
or line of business substantially related thereto or reasonably complementary
thereof;

(h) immediately prior to, at the time of, and after giving effect to, such
Acquisition and all other transactions contemplated by the applicable
Acquisition documents, the Target and its Subsidiaries that are being acquired
in such Acquisition have (i) positive EBITDA for the most recent twelve month
period ending prior to the date of the consummation of such Acquisition for the
later of (A) the period for which financial statements are available to the Loan
Parties and their Affiliates or the Secured Parties and (B) the period that
ended at least one year prior to the consummation of such Acquisition of the
Target, (ii) such Acquisition is, on a pro forma basis, accretive to the EBITDA
of the Borrower and its Subsidiaries and (iii) EBITDA that will not have a
negative impact on the EBITDA of the Borrower and its Subsidiaries;

(i) at the time of, and after giving effect to, such Acquisition and all other
transactions contemplated by the applicable Acquisition documents, all
representations and warranties in the Loan Documents and in the applicable
Acquisition documents shall be true, correct and complete in all material
respects (without duplication of any materiality qualifier contained therein);

(j) after giving effect to such Acquisition and all other transactions
contemplated by the applicable Acquisition documents, the Borrower and its
Subsidiaries shall be in pro forma compliance with the financial covenants set
forth in Section 5.1(v); and

(k) a certificate, in form reasonably satisfactory to Agent and the Required
Lenders, that (i) has an Authorized Officer certify that all the conditions set
forth in this definition of “Permitted Acquisition” have been satisfied and
(ii) includes financial statements and documentation evidencing and supporting
that clauses (h) and (j) of this definition of “Permitted Acquisition” have been
satisfied.

“Permitted Dispositions” means each of the following:

(a) Dispositions of inventory, goods or services or of worn-out obsolete,
damaged or surplus equipment, all in the ordinary course of business;

(b) (i) Dispositions of Cash Equivalents in the ordinary course of business made
to a Person that is not an Affiliate of any Loan Party and (ii) conversions of
Cash Equivalents into cash or other Cash Equivalents;

(c) transactions permitted under clause (i)(ii) of the definition of “Permitted
Liens;”

(d) Permitted Investments, to the extent any such Investment constitutes a
Disposition;

(e) the sale or issuance of the Stock in the Borrower to any direct equity
holder of the Borrower in the ordinary course of business;

(f) the transfer of any assets or property (i) by a Loan Party (other than the
Borrower) to another Loan Party or (ii) by a Subsidiary that is not a Loan Party
to (A) a Loan Party for no more than fair market value or (B) any other
Subsidiary that is not a Loan Party that has its Stock pledged at least of the
same amount and percentage as the transferring Subsidiary does;

 

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(g) the issuance by any Foreign Subsidiary of Stock to qualified directors where
required by or to satisfy any Applicable Law, including any Applicable Law with
respect to ownership of Stock in Foreign Subsidiaries;

(h) transactions permitted by Section 5.2(a);

(i) Dispositions of past due accounts receivable in the ordinary course of
business (including any discount and/or forgiveness thereof) or, in the case of
accounts receivable in default, in connection with the collection or compromise
thereof and, in any event, not involving any securitization thereof;

(j) (i) any termination of any lease in the ordinary course of business,
(ii) any expiration of any option agreement in respect of real or personal
property and (iii) any surrender or waiver of contractual rights or the
settlement, release or surrender of contractual rights or litigation claims
(including in tort) in the ordinary course of business;

(k) Dispositions of any assets or property subject to foreclosure, casualty,
eminent domain or condemnation proceedings (including in lieu thereof or any
similar proceeding); and

(l) other Dispositions for fair market value of assets for aggregate
consideration not to exceed $500,000 in any fiscal year; provided that such
Dispositions do not (i) involve assets material to the conduct of the business
of the Loan Party and its Subsidiaries, (ii) have a material adverse effect on
the value of the remaining (or, before giving effect to such Disposition, the
overall) Collateral (including the ability of the Secured Parties to recover all
of the Obligations from the value of the remaining Collateral) or (iii) cause a
Material Adverse Effect to occur or exist.

“Permitted Indebtedness” means each of the following:

(a) Indebtedness existing as of the Agreement Date and set forth on Schedule
3.1(f) attached hereto;

(b) the Obligations;

(c) Indebtedness not to exceed $50,000 in the aggregate at any time outstanding,
consisting of Capital Lease Obligations or secured by Liens permitted by clauses
(k) and (l) of the definition of “Permitted Liens;”

(d) Indebtedness in respect of netting services, overdraft protections and other
similar and customary services in connection with deposit accounts incurred in
the ordinary course of business;

(e) Indebtedness to employees in respect of benefit plans and employment and
severance arrangements;

(f) Indebtedness arising under guaranties made in the ordinary course of
business of obligations of any Loan Party that are otherwise permitted
hereunder; provided that if such obligation is subordinated to the Obligations,
such guaranty shall be subordinated to the same extent;

(g) Indebtedness owed by (i) any Loan Party to another Loan Party, (ii) any Loan
Party to one of its Subsidiaries that is not a Loan Party so long as such
Indebtedness is unsecured and subordinated to the Obligations in a manner
reasonably satisfactory to Agent and the Required Lenders;

 

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(h) unsecured obligations of any Loan Party under any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
alter the risks of that Person arising from fluctuations in the value of certain
currencies entered into in the ordinary course of business; provided that any
such agreement or arrangement shall be entered into for bona fide hedging
purposes and not for speculation; and

(i) [reserved];

(j) Indebtedness arising with respect to customary indemnification obligations
and purchase price adjustments in favor of sellers in connection with Permitted
Acquisitions;

(k) endorsements for collection or deposit in the ordinary course of business;

(l) Indebtedness consisting of the financing of insurance premiums in the
ordinary course of business;

(m) Indebtedness in respect of a revolving credit facility in an aggregate
principal amount not to exceed $20,000,000 (the “Revolving Credit Facility”), so
long as (i) no Subsidiary of the Borrower that is not a Loan Party shall be the
borrower, a guarantor, obligor or otherwise obligated, or provide any Lien with
respect to any of its assets or property in favor of the agent or holder of the
Revolving Credit Facility, (ii) the lenders providing the Revolving Credit
Facility are third parties that are not Affiliates of (A) any Loan Party or
(B) any Subsidiary of any Loan Party, (iii) the lenders providing the Revolving
Credit Facility (and any agent of such lenders) shall have entered into an
intercreditor agreement with the Agent and the Lenders that is in form and
substance reasonably satisfactory to the Agent and the Lenders, which may
provide that the Liens securing the Revolving Credit Facility (up to the
$20,000,000 cap) shall be senior (solely with respect to Lien priority) to those
securing the Obligations and that the lenders providing the Revolving Credit
Facility (or the agent of such lenders), and the Secured Parties, shall have
customary rights in the Collateral (the “Revolving Credit Facility Intercreditor
Agreement”), and (iv) the Obligations are not payment subordinated to the
Revolving Credit Facility and the Revolving Credit Facility Intercreditor
Agreement does not contain any payment subordination, (v) only one Revolving
Credit Facility can be in effect or exist at any time; and

(n) other unsecured Indebtedness not exceeding in the aggregate at any time
outstanding $200,000,000, which Indebtedness shall (i) bear interest not in
excess of then applicable market rates, (ii) have a maturity no earlier than one
year and one day after the earlier of (A) the payment in full of the Obligations
and (B) the latest Maturity Date, (iii) shall not provide for any cash payments
of any type before one year and one day after the earlier of (A) the payment in
full of the Obligations and (B) the latest Maturity Date and (iii) be payment
subordinated in a manner reasonably acceptable to Agent and the Required
Lenders.

“Permitted Investments” means each of the following:

(a) Investments in cash and Cash Equivalents;

(b) Investments consisting of (i) extensions of credit or capital contributions
by any Loan Party to or in any other then existing Loan Party; provided, if the
Investments described in foregoing clause (i) are evidenced by promissory notes,
such promissory notes shall be pledged to Agent, for the benefit of the Secured
Parties, and have such terms as Agent and the Required Lenders may reasonably
require, and (ii) extensions of credit or capital contributions by a Subsidiary
of the Borrower which is not a Loan Party to or in another then existing
Subsidiary of the Borrower which is not a Loan Party that has at least the same
amount and percentage of its Stock pledged to Agent (for the benefit of the
Secured Parties) as the party lending such credit amounts or extending such
capital contribution;

 

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(c) travel advances to employees, officers and directors of the Loan Parties in
the ordinary course of business not to exceed $25,000 in the aggregate at any
time outstanding;

(d) Investments acquired in connection with the settlement of delinquent
accounts receivable in the ordinary course of business or in connection with the
bankruptcy or reorganization of suppliers or customers;

(e) Investments consisting of non-cash loans made by the Borrower to officers,
directors and employees of a Loan Party which are used by such Persons to
simultaneously purchase Stock of the Borrower in accordance with the Borrower’s
Organizational Documents;

(f) Investments existing on the Agreement Date and set forth on Schedule P-1;

(g) Investments comprised of guarantees of Indebtedness permitted in the
definition of “Permitted Indebtedness;”

(h) Subsidiaries of the Borrower established or created, so long as the Loan
Parties and any such Subsidiary comply with the applicable provisions of
Section 5.1(l);

(i) the Agreement Date Acquisition;

(j) Permitted Acquisitions; and

(k) other Investments not to exceed $600,000 in the aggregate at any time
outstanding; provided that immediately before, at the time of and after giving
effect to such Investment, no Default or Event of Default has occurred and is
continuing.

“Permitted Liens” means each of the following:

(a) Liens existing on the Agreement Date and set forth on Schedule 3.1(d);

(b) Liens in favor of the Secured Parties under the Loan Documents;

(c) carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s,
repairmen’s or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the assets or property
subject thereto and for which adequate reserves in accordance with GAAP are
being maintained;

(d) Liens for Taxes, assessments or governmental charges or levies not past due
or payable or that are being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP are being maintained;

(e) (A) Liens arising from judgments, decrees or attachments in circumstances
not constituting an Event of Default and (B) pledges or cash deposits made in
lieu of, or to secure the performance of, judgment or appeal bonds in respect to
such judgments and proceedings mentioned in clause (e)(A) above;

 

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(f) Liens in favor of financial institutions arising in connection with the
Borrower’s or its Subsidiaries’ deposit accounts maintained in the ordinary
course held at such institutions to secure standard fees for services charged
by, but not financing made available by, such institutions;

(g) Liens (other than any Lien imposed by ERISA) consisting of pledges or
deposits required in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation or to
secure the performance of tenders, statutory obligations, surety, stay, customs
and appeals bonds, bids, leases, governmental contract, trade contracts,
performance and return of money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money or other funded Indebtedness)
or to secure liability to insurance carriers;

(h) easements, rights of way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
do not affect the value or marketability of such real property and which do not
in any case materially interfere with the conduct of the business of any Loan
Party or its Subsidiaries;

(i) (i) any interest or title of a lessor or sublessor under any lease not
prohibited by this Agreement or (ii) non-exclusive licenses and sublicenses
granted by a Loan Party or any Subsidiary of a Loan Party and leases and
subleases (by a Loan Party or any Subsidiary of a Loan Party as lessor or
sublessor) to third parties in the ordinary course of business not interfering
with the business of the Loan Parties or any of their Subsidiaries;

(j) Liens of a collection bank arising under Section 4-210 of the UCC (or
equivalent in foreign jurisdictions) on items in the course of collection;

(k) Liens on any assets or property acquired or held by any Loan Party or any
Subsidiary of any Loan Party securing Indebtedness incurred or assumed for the
purpose of financing (or refinancing) all or any part of the cost of acquiring
such assets or property and permitted under clause (c) of the definition of
“Permitted Indebtedness,” provided that (i) such Lien attaches solely to the
assets or property so acquired in such transaction and the proceeds thereof and
(ii) the principal amount of the Indebtedness secured thereby does not exceed
100% of the cost of such assets or property;

(l) Liens securing Capital Lease Obligations permitted under clause (c) of the
definition of “Permitted Indebtedness;”

(m) Liens arising from the filing of precautionary uniform commercial code
financing statements with respect to any lease not prohibited by this Agreement;

(n) Liens arising out of consignment or similar arrangements for the sale of
goods entered into by the Borrower or any Subsidiary of the Borrower in the
ordinary course of business;

(o) Liens in favor of customs and revenue authorities arising as a matter of law
which secure payment of customs duties in connection with the importation of
goods in the ordinary course of business;

(p) Liens on unearned insurance premiums securing the financing thereof to the
extent permitted under clause (l) of the definition of “Permitted Indebtedness”;

(q) Liens solely on cash earnest money deposits made by the Borrower or any of
its Subsidiaries in connection with any letter of intent or purchase agreement
for a Permitted Acquisition; and

 

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(r) Liens securing the Revolving Credit Facility, solely to the extent permitted
under clause (m) of the definition of “Permitted Indebtedness”.

“Person” means and includes any natural person, individual, partnership, joint
venture, corporation, trust, limited liability company, limited company, joint
stock company, unincorporated organization, government entity or any political
subdivision or agency thereof, or any other entity.

“Portfolio Interest Certificate” has the meaning set forth in Section 2.5(d).

“Post-Closing Control Agreement Period” has the meaning set forth in
Section 5.1(k).

“Prepayment Fee” has the meaning set forth in Section 2.3(c).

“Principal Market” means the NASDAQ Global Market (or any successor to the
foregoing) , or if after the funding of the Initial Disbursement the Common
Stock is listed on another Eligible Market, such other Eligible Market.

“Pro Rata Loan Share” means, with respect to any Lender, the applicable amount
(as adjusted from time to time in accordance with the terms hereof and the
actual principal amount outstanding related thereto) specified opposite such
Lender’s name on Annex A under the column “Initial Disbursement Amounts” and the
applicable amount (as adjusted from time to time in accordance with the terms
hereof and the actual principal amount outstanding related thereto) of Loans
funded by such Lender pursuant to its Subsequent Disbursement Commitment.

“Pro Rata Share” means, with respect to any Lender, the applicable percentage
(as adjusted from time to time in accordance with the terms hereof) obtained by
dividing (a) the sum of (i) such Lender’s Pro Rata Subsequent Disbursement Share
of the Subsequent Disbursement Commitment (to the extent not terminated or used
in its entirety), and (ii) such Lender’s Pro Rata Loan Share of the outstanding
Loans, by (b) the sum of (i) the total amount of remaining Subsequent
Disbursement Commitments held by all Lenders, and (ii) the total outstanding
amount of Loans held by all Lenders.

“Pro Rata Subsequent Disbursement Share” means, with respect to any Lender, in
respect of unfunded Subsequent Disbursement Commitments, the applicable
percentage (as adjusted from time to time in accordance with the terms hereof
and as decreased as such Subsequent Disbursement Commitments are funded)
specified opposite such Lender’s name on Annex A under the column “Subsequent
Disbursement Commitment.”

“Products” means any item or any service that is designed, created,
manufactured, managed, performed or otherwise used, offered or handled by or on
behalf of the Loan Parties or any of their Subsidiaries.

“Public Health Laws” means all Applicable Laws relating to the procurement,
development, manufacture, production, analysis, distribution, dispensing,
importation, exportation, use, handling, quality, sale or promotion of any drug,
medical device, food, dietary supplement or other product (including any
ingredient or component of the foregoing products) subject to regulation under
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. et seq.) and similar state
laws, controlled substances laws, pharmacy laws or consumer product safety laws.

“Purchased Shares” means the shares of Common Stock issuable to the Lenders
pursuant to the Stock Purchase Agreement, subject to the terms and conditions
thereof.

 

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“Put Notice” has the meaning set forth in Section 5.3.

“Real Estate” means any real property owned, leased, subleased or otherwise
operated or occupied by any Loan Party or any Subsidiary of any Loan Party.

“Register” has the meaning set forth in Section 1.4(b).

“Registration Rights Agreement” means that certain Registration Rights
Agreement, dated as of the Agreement Date, entered into by the Borrower and the
Lenders and substantially in the form of Exhibit E.

“Registrations” means all Authorizations and exemptions issued or allowed by any
Governmental Authority (including new drug applications, abbreviated new drug
applications, biologics license applications, investigational new drug
applications, over-the-counter drug monograph, device pre-market approval
applications, device pre-market notifications, investigational device
exemptions, product recertifications, manufacturing approvals and
authorizations, CE Marks, pricing and reimbursement approvals, labeling
approvals or their foreign equivalent, controlled substance registrations, and
wholesale distributor permits) held by, or applied by contract to, any Loan
Party or any of its Subsidiaries, that are required for the research,
development, manufacture, distribution, marketing, storage, transportation, use
and sale of the Products of any Loan Party or any of its Subsidiaries.

“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System as in effect from time to time and any successor to all or a
portion thereof establishing reserve requirements.

“Regulatory Matters” means, collectively, activities and Products that are
subject to Public Health Laws.

“Release” means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material into
or through the environment.

“Remaining Subsequent Disbursement Commitment Termination Date” has the meaning
set forth in Section 2.2(b).

“Reporting Period” has the meaning set forth in Section 5.1(h).

“Required Lenders” means, at any time, Lenders having Pro Rata Shares of which
the aggregate Dollar equivalent amount exceeds 50% of the outstanding Loans and
the unfunded Subsequent Disbursement Commitments, collectively.

“Restricted Payments” means, with respect to any Person, (i) the declaration or
making of any dividend payment or other distribution of assets, properties,
cash, rights, obligations or securities, in each case on account of any of its
Stock, (ii) the purchasing, redemption or other acquisition for value of any of
its Stock now or hereafter outstanding or (iii) the making of any payment or
prepayment of principal of, premium, if any, interest, fees, redemption,
exchange, purchase, retirement, defeasance, sinking fund or similar payment with
respect to, any Indebtedness subordinated to the Obligations as to right and
time of payment or as to other rights and remedies thereunder.

“Revolving Credit Facility” has the meaning set forth in clause (m) of the
definition of “Permitted Indebtedness.”

 

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“Revolving Credit Facility Documents” means the agreements, instruments and
documents evidencing the Revolving Credit Facility permited by clause (m) of the
definition of “Permitted Indebtedness.”

“Revolving Credit Facility Intercreditor Agreement” has the meaning set forth in
clause (m) of the definition of “Permitted Indebtedness.”

“Royalty” has the meaning given to such term in the Royalty Agreement.

“Royalty Agreement” means that certain Royalty Agreement, dated as of the
Agreement Date, entered into by the Borrower and the Lenders and substantially
in the form of Exhibit F, as amended, restated, supplemented or otherwise
modified from time to time.

“Sanctioned Country” has the meaning set forth in Section 3.1(jj).

“Sanctions” has the meaning set forth in Section 3.1(jj).

“Sarbanes-Oxley” has the meaning set forth in Section 3.1(kk).

“SDN List” has the meaning set forth in Section 3.1(jj).

“SEC” means the United States Securities and Exchange Commission.

“SEC Documents” means all reports, schedules, forms, statements and other
documents filed by any Loan Party or any of its Subsidiaries with the SEC
pursuant to the Securities Act or the Exchange Act after December 31, 2015,
including the Borrower’s definitive proxy statement for its special meeting of
stockholders held on December 27, 2017 (including, in each case, all financial
statements and schedules and pro forma financial information included therein,
all exhibits thereto and all documents incorporated by reference therein).

“Secured Parties” means Agent, the Lenders and all Indemnified Persons.

“Securities” means the Loans, the Subsequent Disbursement Commitments, the
Notes, the related guaranties set forth in the Security Agreement of the
Guarantors, the Interest Payment Shares, the Purchased Shares, the Warrants, the
Warrant Shares and the right to receive the Royalty pursuant to the Royalty
Agreement.

“Securities Act” means the Securities Act of 1933, as amended, including the
rules and regulations promulgated thereunder.

“Security Agreement” mean the Guaranty and Security Agreement executed and
delivered on the Agreement Date pursuant to which, among other things, the Loan
Parties party thereto grant to Agent (for the benefit of the Secured Parties) a
security interest and Lien in all of their Collateral to secure the Obligations
and the Guarantors party thereto provide guaranties to Agent (for the benefit of
the Secured Parties), as amended, restated, supplemented or otherwise modified
from time to time.

“Social Security Act” means the Social Security Act of 1965 as set forth in
Title 42 of the United States Code, as amended, and any successor statute
thereto, as interpreted by the rules and regulations issued thereunder, in each
case as in effect from time to time.

 

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“Specified Acquisition Agreement Representations” means the representations and
warranties made with respect to the Agreement Date Acquisition, by the Agreement
Date Acquisition Sellers and/or their Affiliates with respect to the Agreement
Date Acquisition Sellers, their Affiliates, the assets and Stock being acquired
in the Agreement Date Acquisition or the related businesses, financials or
entities in the Agreement Date Acquisition Agreement as are material to the
interests of the Secured Parties.

“Specified Representations” means the representations and warranties set forth
in Section 3.1(c), (d), (f), (h) (with respect to the first sentence therein and
clause (i)(D) and clause (i)(E) of the second sentence therein), (j), (k), (y),
(z), (bb), (dd), (ii) and (kk) in this Agreement and Section 4.2 of the Security
Agreement.

“Stock” means (a) all shares of capital stock (whether denominated as common
stock or preferred stock), equity interests, beneficial, partnership or
membership interests, joint venture interests, participations or other ownership
or profit interests in or equivalents (regardless of how designated) of or in a
Person (other than an individual), whether voting or non-voting; and (b) all
securities convertible into or exchangeable for any other Stock and all
warrants, options or other rights to purchase, subscribe for or otherwise
acquire any other Stock, whether or not presently convertible, exchangeable or
exercisable.

“Stock Purchase Agreement” means that certain Securities Purchase Agreement,
dated as of the Agreement Date, entered into by the Borrower and the Lenders and
substantially in the form of Exhibit G, as amended, restated, supplemented or
otherwise modified from time to time.

“Subject Foreign Subsidiaries” means Rib-X Ltd., Rempex London Limited and
Rempex Australia Pty Limited.

“Subject Persons” has the meaning set forth in the definition of “EBITDA.”

“Subsequent Disbursement” and “Subsequent Disbursements” have the respective
meanings set forth in Section 2.2(b).

“Subsequent Disbursement Commitments” means the commitments of the Lenders to
provide Subsequent Disbursements under this Agreement.

“Subsequent Disbursement Conditions” means each of the following: (i) the
Borrower shall have achieved Annualized Net Sales of at least $75,000,000 for
the applicable period covered in the definition of “Annualized Net Sales”; (ii)
after giving effect to such Subsequent Disbursement and the use of proceeds
thereof, the Borrower shall be in pro forma compliance with the financial
covenants set forth in Section 5.1(v); and (iii) subject to Section 5.1(r), the
Borrower shall have delivered to Agent (and Agent shall promptly (but, in any
event, within two (2) Business Days after (i) receipt thereof by (A) Agent’s
main operations contact or (B) any other Person designated by Agent to receive
notices for (or on behalf of) Agent pursuant to the notices provisions of the
Loan Documents (including Section 6.1 of this Agreement) or (ii) knowledge of
receipt of an item from the Borrower by Agent’s main operations contact or such
other Person designated by Agent to receive notices for (or on behalf of) Agent
pursuant to the notices provisions of the Loan Documents (including Section 6.1
of this Agreement)) deliver to each Lender), a certificate in the form of
Exhibit J attached hereto (a “Subsequent Disbursement Certificate”) signed by
the chief executive officer (or Person with equivalent duties) of the Borrower
which shall certify as to the satisfaction of each of the conditions in clauses
(i) and (ii) above in this definition and providing detailed calculations in
such certificate (or an attachment or exhibit to such certificate) of the
amounts set forth in the definition of “Annualized Net Sales” and certifying as
to the truthfulness, correctness and completeness of such calculations and
amounts.

 

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“Subsequent Disbursement Notes” means the Subsequent Disbursement Notes issued
to any of the Lenders evidencing the Subsequent Disbursement Commitments and/or
the Subsequent Disbursements provided by such Lenders in the form attached
hereto as Exhibit A-2, in each case, as amended, restated, supplemented or
otherwise modified from time to time.

“Subsidiary” or “Subsidiaries” means, as to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person. Unless the context
otherwise requires, each reference to Subsidiaries herein shall be a reference
to Subsidiaries of the Borrower.

“Suchard Refinancing” has the meaning set forth in Section 2.1(a).

“Swap Contract” means any agreement, contract or transaction that constitutes a
“swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

“Target” means any other Person incorporated or organized under the laws of any
state in the United States or the District of Columbia or a business unit,
product line, division or asset group of any such Person acquired or proposed to
be acquired in an Acquisition.

“Tax Affiliate” means (a) the Borrower and its Subsidiaries and (b) any
Affiliate of the Borrower with which the Borrower files or is required to file
consolidated, combined or unitary tax returns.

“Taxes” means all present or future taxes, levies, imposts, stamp or other
duties, deductions, charges or withholdings imposed by an Governmental
Authority, together with any interest, additions to tax, penalties or other
Liabilities with respect thereto.

“Tax Returns” has the meaning set forth in Section 3.1(p).

“Title IV Plan” means an Employee Benefit Plan subject to Title IV of ERISA,
other than a Multiemployer Plan, to which any ERISA Affiliate incurs or
otherwise has or could reasonably be expected to have any obligation or
Liabilities (including under Section 4069 of ERISA).

“Trading Day” means any day on which the Common Stock is traded for at least six
hours on the Principal Market.

“Transactions” means (a) the consummation of the Agreement Date Acquisition,
(b) the providing of the Subsequent Disbursement Commitments, (c) the issuance
of the Warrants, (d) the purchase of the shares of the Borrower’s Stock pursuant
to the Stock Purchase Agreement, (e) the Suchard Refinancing, (f) the funding of
the Initial Disbursement, (g) the execution and delivery of the Loan Documents
and (h) the payment of fees, commissions, costs and expenses in connection with
each of the foregoing.

“UCC” means the Uniform Commercial Code of any applicable jurisdiction and, if
the applicable jurisdiction shall not have any Uniform Commercial Code, the
Uniform Commercial Code as in effect from time to time in the State of New York.

“United States” and “U.S.” each means the United States of America.

 

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“USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L.
107-56, as amended from time to time.

“Warrant Distributions” has the meaning set forth in Section 3.1(y).

“Warrants” has the meaning set forth in Section 2.10(a).

“Warrant Shares” has the meaning set forth in Section 3.1(y).

“Wholly-Owned Subsidiary” of a Person means any Subsidiary of such Person, all
of the Stock of which (other than directors’ (or other equivalent persons’ or
Persons’) qualifying shares required by law) are owned by such Person, either
directly or through one or more Wholly-Owned Subsidiaries of such Person.

Section 1.2 Interpretation. In this Agreement and the other Loan Documents,
unless the context otherwise requires, all words and personal pronouns relating
thereto shall be read and construed as the number and gender of the party or
parties requires and the verb shall be read and construed as agreeing with the
required word and pronoun. The division of this Agreement and the other Loan
Documents into Articles and Sections and the use of headings and captions is for
convenience of reference only and shall not modify or affect the interpretation
or construction of this Agreement or any of its provisions. The words “herein,”
“hereof,” “hereunder,” “hereinafter” and “hereto” and words of similar import
refer to this Agreement (or other applicable Loan Document) as a whole and not
to any particular Article or Section hereof (or thereof). The term “or” has,
except where otherwise indicated, the inclusive meaning represented by the
phrase “and/or.” The term “documents” and “agreements” include any and all
instruments, documents, agreements, certificates, indentures, notices and other
writings, however evidenced. The use in any of the Loan Documents of the word
“include” or “including,” when following any general statement, term or matter,
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not non-limiting language (such as “without limitation”
or “but not limited to” or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that
fall within the broadest possible scope of such general statement, term or
matter. References to a specified Article, Exhibit, Section or Schedule shall be
construed as a reference to that specified Article, Exhibit, Section or Schedule
of this Agreement (or other applicable Loan Document). Unless specifically
stated otherwise, any reference to any of the Loan Documents means such document
as the same shall be amended, restated, supplemented or otherwise modified and
from time to time in effect. The references to “asset” (or “assets”) and
“property” (or “properties”) in the Loan Documents are meant to be mean the same
and are used throughout the Loan Documents interchangeably, and such words shall
be deemed to refer to any and all tangible and intangible assets and properties,
including cash, securities, Stock, accounts and contract rights. Unless
otherwise specified herein or therein, all terms defined in any Loan Document
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto or thereto. The meanings of defined terms
shall be equally applicable to the singular and plural forms of the defined
terms. Terms (including uncapitalized terms) not otherwise defined herein and
that are defined in the UCC shall have the meanings therein described. In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including;” the words “to” and “until” each mean
“to but excluding,” and the word “through” means “to and including.” If any
provision of this Agreement or any other Loan Document refers to any action
taken or to be taken by any Person, or which such Person is prohibited from
taking, unless otherwise expressly stated, such provision shall be interpreted
to encompass any and all means, direct or indirect, of taking, or not taking,
such action. References to any statute or regulation may be made by using either
the common or public name thereof or a specific cite reference and, except as

 

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otherwise provided with respect to FATCA, are to be construed as including all
statutory and regulatory provisions related thereto or consolidating, amending,
replacing, supplementing or interpreting the statute or regulation, and any
reference to any law or regulation, shall, unless otherwise specified, refer to
such law or regulation as amended, modified or supplemented from time to time.
Whenever any reference is made in any Loan Document to any Person such reference
shall be construed to include such Person’s permitted successors and permitted
assigns. Any financial ratios required to be satisfied in order for a specific
action to be permitted under any Loan Document shall be calculated by dividing
the appropriate component by the other component, carrying the result to one
place more than the number of places by which such ratio is expressed herein or
therein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number). Unless otherwise specified, all
references in any Loan Document to times of day shall be references to New York
City time. Notwithstanding anything to the contrary in any Loan Document, any
reference to “Organizational Document” or “Organizational Documents” of any Loan
Party or any of its Subsidiaries in any Loan Document shall mean such written
documents, agreements and arrangements that are in effect on the Agreement Date
after giving effect to the Transactions occurring on the Agreement Date that
have been approved by Agent and the Required Lenders, without giving effect to
any amendment, restatement, change, supplement, waiver or other modification
thereto or thereof that is not expressly permitted by Section 5.2(j). Any
reference to “payment in full”, “paid in full”, “repaid in full”, “prepaid in
full”, “redeemed in full” or any other term or word of similar effect used in
this Agreement or any other Loan Document with respect to the Loans or the
Obligations shall mean all Obligations (including any Prepayment Fees or any
other amount required by Section 5.3) (excluding contingent claims for
indemnification to the extent no claim giving rise thereto has been asserted)
have been repaid in full in cash and have been fully performed. For the
avoidance of doubt and notwithstanding anything to the contrary in any of the
Loan Documents, the reference to “any other Subsidiary of Borrower that is not a
Loan Party that has its Stock pledged at least of the same amount and percentage
as the transferring Subsidiary does” (or words of similar context) means, with
respect to any Subsidiary that is not a Wholly-Owned Subsidiary, regardless of
the percentage of ownership by the Borrower or the Borrower’s other Subsidiaries
thereof, the amount and percentage of Stock pledged shall be taken in totality,
and in the aggregate, of all holders and owners of Stock of such
non-Wholly-Owned Subsidiary and shall not just consider the amount or percentage
of ownership of the Borrower and the Borrower’s other Subsidiaries.

Section 1.3 Business Day Adjustment. Except as otherwise expressly stated herein
or in any other Loan Document (and except on the Maturity Date or any date of
acceleration of any of the Obligations, which in each such case, such payment or
performance shall be due and payable or performed on or prior to such day
regardless of whether such day is a Business Day), if the day by which any
payment or other performance is due to be made is not a Business Day, that
payment or performance shall be made by the next succeeding Business Day unless
that next succeeding Business Day falls in a different calendar month, in which
case that payment or other performance shall be made by the Business Day
immediately preceding the day by which such payment or other performance is due
to be made; provided that interest will continue to accrue each additional day
in connection therewith.

Section 1.4 Loan Records.

(a) The Agent will record on its books and records the amount of the Loans, the
unfunded amount of the Subsequent Disbursement Commitments, the interest rate
applicable thereto, all payments of principal and interest thereon and the
principal balance thereof from time to time outstanding.

(b) The Agent shall establish and maintain at its address referred to in
Section 6.1, a record of ownership (the “Register”) of the interests (including
any rights to receive payment hereunder) of each Lender in the Loan and the
unfunded Subsequent Disbursement Commitments, and any

 

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assignment of any such interest or interests, and (ii) accounts in the Register
in accordance with its usual practice in which it shall record (1) the names and
addresses of the Lenders (and any change thereto pursuant to this Agreement),
(2) the amount of the Loan and the unfunded Subsequent Disbursement Commitments
and each funding of any participation therein, (3) the amount of any principal,
interest, fee or other amount due and payable or paid, and (4) any other payment
received by the Lenders from the Borrower and its application to the Loan and
the unfunded Subsequent Disbursement Commitments. The Register of the Agent
shall be absolute, binding and conclusive absent manifest error.

(c) The Loans made by each Lender are evidenced by this Agreement. Additionally,
the Borrower shall execute and deliver to each Lender (and/or, if applicable and
if so requested by any assignee Lender pursuant to the assignment provisions of
Section 6.5) on the Agreement Date (or, if such assignment is made after the
Agreement Date, promptly after such Lender’s request) a Loan Note (with respect
to the Initial Disbursement) or a Subsequent Disbursement Note (with respect to
any Subsequent Disbursement Commitment or Subsequent Disbursement) payable to
such Lender in an amount equal to the unpaid principal amount of the Loans or
the Subsequent Disbursement Commitment held by such Lender (which, at the
request of such Lender, may provide separate Notes for separate or different
parts of the Loans and Subsequent Disbursement Commitments held by such Lender).
Notwithstanding anything to the contrary contained in this Agreement, the Loan
and the unfunded Subsequent Disbursement Commitments (including any Notes
evidencing the Loan or the Subsequent Disbursement Commitments) are registered
obligations, the right, title and interest of the Lenders and their successors
and assignees in and to the Loan and any Subsequent Disbursement Commitments
shall be transferable only upon notation of such transfer in the Register and no
assignment thereof shall be effective until recorded therein. This Section 1.4
shall be construed so that the Loan is at all times maintained in “registered
form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the
Code.

(d) The Borrower, Agent and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender for all purposes of this Agreement.
Information contained in the Register with respect to any Lender shall be
available for access by the Borrower, Agent or such Lender at any reasonable
time and from time to time upon reasonable prior written notice.

Section 1.5 Accounting Terms and Principles. All accounting determinations
required to be made pursuant hereto shall, unless expressly otherwise provided
herein, be made in accordance with GAAP. No change in the accounting principles
used in the preparation of any financial statement hereafter adopted by the
Borrower or its Subsidiaries (including, with respect to GAAP, any change in
GAAP that would require leases that would be classified as operating leases
under GAAP on the Agreement Date to be reclassified as Capital Leases) shall be
given effect for purposes of measuring compliance with any provision of this
Agreement or otherwise determining any relevant ratios and baskets which govern
whether any action is permitted hereunder unless the Borrower, Agent and the
Required Lenders agree to modify such provisions to reflect such changes in
GAAP, and unless such provisions are modified, all financial statements and
similar documents provided hereunder shall be provided together with a
reconciliation between the calculations and amounts set forth therein before and
after giving effect to such change in GAAP. Notwithstanding any other provision
contained herein or in any other Loan Document, all terms of an accounting or
financial nature used herein and in the other Loan Documents shall be construed,
and all computations of amounts and ratios referred to herein and in the other
Loan Documents shall be made, without giving effect to any election under
Statement of Financial Accounting Standards No. 159 (Codification of Accounting
Standards 825-10) to value any Indebtedness or other liabilities of any Loan
Party or any Subsidiary at “fair value,” as defined therein. A breach of a
financial covenant contained in Section 5.1(v) shall be deemed to have occurred
as of the last day of any specified measurement period, regardless of when the
financial statements reflecting such breach are delivered to Agent or any
Lender.

 

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Section 1.6 Officers. Any document, agreement or instrument delivered under the
Loan Documents that is signed by an Authorized Officer or another officer of a
Loan Party shall be conclusively presumed to have been authorized by all
necessary corporate, partnership and/or other action on the part of such Loan
Party and such Authorized Officer or other officer shall be conclusively
presumed to have acted on behalf of such Loan Party in such person’s capacity as
an officer of such Loan Party and not in any individual capacity.

ARTICLE 2

AGREEMENT FOR THE LOAN

Section 2.1 Use of Proceeds. The proceeds of the Initial Disbursement will be
used to pay (a) in full all amounts owed under that certain Loan and Security
Agreement dated as of May 7, 2017, as amended prior to the Agreement Date, among
the Borrower, the lenders party thereto and Suchard SA LLC (the “Suchard
Refinancing”), (b) a portion of the purchase price of the Agreement Date
Acquisition pursuant to the terms and conditions of the Agreement Date
Acquisition Agreement, (c) fees, commissions, costs and expenses in connection
with the Transactions and (d) ongoing working capital requirements and other
general corporate purposes. The proceeds of any Subsequent Disbursement will be
used for working capital and for general corporate purposes of the Borrower,
including Permitted Acquisitions.

Section 2.2 Disbursements.

(a) Initial Disbursement. Subject to the satisfaction of the conditions set
forth in Section 4.1 and this Section 2.2(a) on the Agreement Date and subject
to the terms in this Agreement and in reliance on the representations and
warranties in the Loan Documents, to the extent the Borrower provides a written
notice to Agent and Lenders in form and substance reasonably satisfactory to
Agent and each such Lender at least fifteen (15) days in advance of the proposed
date of the funding of such amounts by the Lenders (or such shorter period
agreed to by all the Lenders in their sole discretion) with the proposed date of
funding being required to be a Business Day, each Lender on the Agreement Date
(or such later date required pursuant to when the written notice regarding the
Initial Disbursement was delivered to Agent and each Lender) severally but not
jointly agrees to lend to the Borrower on such date, the principal amount set
forth opposite such Lender’s name in Annex A under the heading “Initial
Disbursement Amount” by making such amounts available to the Borrower by
promptly wiring such amounts to an account or accounts designated in the Initial
Disbursement Request by the Borrower on the proposed date of funding. Amounts
borrowed under this Section 2.2(a) are referred to as the “Initial
Disbursement.”

(b) Subsequent Disbursements. Subject to the satisfaction of the conditions set
forth in Section 4.1, Section 4.2 and this Section 2.2(b) and in reliance on the
representations and warranties in the Loan Documents, to the extent the Borrower
provides a written notice to the Agent and each Lender in form and substance
reasonably satisfactory to Agent and each such Lender from an Authorized Officer
of the Borrower (and with such written notice certifying that all such
aforementioned conditions in this Section 2.2(b) are satisfied and with such
written notice being in form and substance reasonably satisfactory to Agent and
each such Lender) requesting each Lender holding a Subsequent Disbursement
Commitment to fund its Pro Rata Subsequent Disbursement Share of the Subsequent
Disbursement at least fifteen (15) Business Days in advance of the proposed date
of the funding of such Subsequent Disbursement amount by such Lender (or such
shorter period agreed to by all such Lenders in their sole discretion) with the
proposed date of funding being required to be a Business Day, from the Business
Day after the Agreement Date until (but not including) January 5, 2020 (or such
earlier date set forth in the proviso of the first sentence of Section 2.3(a) or
caused by the Facility Termination Date

 

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occurring or any earlier date of termination based on remedies available upon
(or at the time of) the occurrence of an Event of Default) (such end date of the
Subsequent Disbursement Commitment, the “Remaining Subsequent Disbursement
Commitment Termination Date”), each Lender holding a Subsequent Disbursement
Commitment severally but not jointly agrees to lend to the Borrower on the
proposed date of funding, up to the principal amount set forth opposite such
Lender’s name in Annex A under the heading “Subsequent Disbursement Commitment;”
provided that each request for any such Disbursement or Loan shall be in an
amount not less than $10,000,000. Following receipt of such written notice from
Borrower pursuant to the above terms in this Section 2.2(b), each Lender holding
a Subsequent Disbursement Commitment shall make its Pro Rata Subsequent
Disbursement Share of such Subsequent Disbursement requested by the Borrower
pursuant to such written notice available to the Borrower on the proposed date
of funding of such Subsequent Disbursement covered by such written notice to the
extent such Lender has received prior reasonably satisfactory evidence that the
conditions set forth in Section 4.1, Section 4.2 and this Section 2.2(b) have
been satisfied for such Subsequent Disbursement; provided that, unless otherwise
agreed by the Agent, such Lender shall provide the Agent on the funding date
with the federal reference number(s) with respect to the wire payment(s) of such
Subsequent Disbursement made by such Lender. Amounts borrowed under this
Section 2.2(b) are referred to as a “Subsequent Disbursement.” Upon the funding
of any Subsequent Disbursement by any Lender, the Subsequent Disbursement
Commitment amount of such Lender shall be automatically and simultaneously
reduced by the amount of such Subsequent Disbursement funded by such Lender and
the amount in Annex A shall be automatically reduced by such amount, and the
Agent shall provide notation thereof in the Register of the reduction in the
Subsequent Disbursement Commitment amount of such Lender and the holding of the
Subsequent Disbursement by such Lender. Any remaining Subsequent Disbursement
Commitments that are still available as of the Remaining Subsequent Disbursement
Commitment Termination Date shall immediately and automatically terminate
without any action or notice by any Person.

(c) No Re-Borrowing of Disbursements or Loans. Amounts borrowed as an Initial
Disbursement or a Subsequent Disbursement which are paid, repaid, redeemed
and/or prepaid may not be re-borrowed under any circumstances.

Section 2.3 Payments; Prepayments; Exit Fee; Prepayment Fee; No Call.

(a) The Borrower shall pay in cash to the Agent on behalf of the Lenders (and
the Agent shall promptly pay in cash to the Lenders (and, in any event, within
one (1) Business Day) each of the Lenders’ Pro Rata Share of the outstanding
principal amount of the Obligations and all other Obligations on the earliest
(such earliest date, the “Facility Termination Date”) of (i) the Maturity Date,

(ii) the date the principal amount of the Obligations are declared to be or
automatically become due and payable upon (or at the time of) the occurrence of
an Event of Default and (iii) the date provided for in Section 5.3; provided
that, notwithstanding anything to the contrary in the Loan Documents, to the
extent the Remaining Subsequent Disbursement Commitment Termination Date would
occur after such earliest date of clauses (i) – (iii) above in this sentence,
then the Remaining Subsequent Disbursement Commitment Termination Date shall
automatically be moved to the same earliest date without any action or notice of
any Person. The aggregate principal amount of the Loans shall be repaid in cash
in equal monthly cash payments (calculated based on the aggregate principal
amount of such Loans outstanding as of the date immediately prior to the due
date of the first required installment of such Loans) between the fourth
anniversary and the sixth anniversary of (i) in respect of the Initial
Disbursement, the Agreement Date, and (ii) in respect of any Subsequent
Disbursement, the date that the first Subsequent Disbursement is made.

 

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(b) Any Lender which is also a holder of Warrants may, at such Lender’s sole
option, in accordance with Section 3(a)(iii) of the applicable Warrant, pay the
Exercise Price (as defined in the applicable Warrant) by reducing the principal
amount of such Lender’s Loans in an amount equal to such Exercise Price;
provided that such Lender shall provide written notice to the Agent promptly
after such election. In connection with any such reduction, interest shall cease
to accrue on such Loans for any day after the date such Exercise Price has been
paid and Common Stock has been issued to such Lender for the portion of such
Warrant that was exercised (or cash has been received by such Lender for the
portion of such Warrant that is subject to Redemption (as defined in such
Warrant), and the accrued and unpaid interest on such Loans shall be paid by the
Borrower on the next succeeding Interest Payment Date.

(c) The Loans may be prepaid, in whole or in part, in cash at the option of the
Borrower at any time after the third anniversary of the Agreement Date (but not
before) upon three (3) Business Days’ prior written notice to the Agent (and
Agent shall promptly (but, in any event, within two (2) Business Days after
(i) receipt thereof by (A) Agent’s main operations contact or (B) any other
Person designated by Agent to receive notices for (or on behalf of) Agent
pursuant to the notices provisions of the Loan Documents (including Section 6.1
of this Agreement) or (ii) knowledge of receipt of an item from the Borrower by
Agent’s main operations contact or such other Person designated by Agent to
receive notices for (or on behalf of) Agent pursuant to the notices provisions
of the Loan Documents (including Section 6.1 of this Agreement)) provide such
written notice to the Lenders) subject to the payment by the Borrower to the
Agent for the sole benefit of the Lenders (based on their Pro Rata Share of such
Loans) (with the Agent making such payment promptly (and, in any event within
one (1) Business Day of the receipt thereof) to such Lenders based on their Pro
Rata Share of such Loans) in accordance with Section 2.3(d) and Section 2.4 of
(i) the Exit Fee set forth in the last paragraph of this Section 2.3(c), and
(ii) the fees outlined below (any such fee, a “Prepayment Fee”) to be paid in
cash, if paid, repaid, redeemed or prepaid:

(i) after (but not including) the third anniversary, and on or before the fourth
anniversary, of (A) the Agreement Date (with respect to the Initial
Disbursement) or (B) the date that the first Subsequent Disbursement is made
(with respect to the Subsequent Disbursements), as applicable, in each case,
upon cash payment of a premium equal to 75% of the total annual interest payment
amount on all principal of the applicable Loans being paid, repaid, redeemed or
prepaid (without giving effect to the principal payment, repayment, redemption
or prepayment when calculating the 75%), which, by way of example, (i) for the
Initial Disbursement, the principal thereof that was outstanding immediately
prior to any such payment, repayment or prepayment would be multiplied by 11.75%
and then multiplied by 75% and (ii) for the Subsequent Disbursements, the
principal thereof that was outstanding immediately prior to any such payment,
repayment, redemption or prepayment would be multiplied by 14.75% and then
multiplied by 75%;

(ii) after (but not including) the fourth anniversary, and on or before the
fifth anniversary, of (A) the Agreement Date (with respect to the Initial
Disbursement) or (B) the date that the first Subsequent Disbursement is made
(with respect to the Subsequent Disbursements), as applicable, in each case,
upon cash payment of a premium equal to 50% of the total annual interest payment
amount on all principal of the applicable Loans being paid, repaid, redeemed or
prepaid (without giving effect to the principal payment, repayment, redemption
or prepayment when calculating the 50%); and

(iii) after (but not including) the fifth anniversary of (A) the Agreement Date
(with respect to the Initial Disbursement) or (B) the date that the first
Subsequent Disbursement is made (with respect to the Subsequent Disbursements),
as applicable, in each case, upon cash payment of a premium equal to 25% of the
total annual interest payment amount on all principal of the applicable Loans
being paid, repaid, redeemed or prepaid (without giving effect to the principal
payment, repayment, redemption or prepayment when calculating the 25%).

 

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The Parties acknowledge and agree that, in light of the impracticality and
extreme difficulty of ascertaining actual damages, the Prepayment Fee set forth
in this Section 2.3(c) is intended to be a reasonable calculation of the actual
damages that would be suffered by the Secured Parties as a result of any such
payment, repayment, redemption or prepayment. The parties hereto further
acknowledge and agree that the Prepayment Fee set forth in this Section 2.3(c)
is not intended to act as a penalty or to punish the Borrower or any other Loan
Party for any such payment, repayment, redemption or prepayment.

Notwithstanding anything to the contrary in the Loan Documents and for the
avoidance of doubt, the principal amount of the Loans shall not be permitted to
be (and shall not be) paid, repaid, redeemed or prepaid on or prior to the third
anniversary of the Agreement Date (with respect to the Initial Disbursement) or
the date that the first Subsequent Disbursement is made (with respect to the
Subsequent Disbursements).

Notwithstanding anything to the contrary in the Loan Documents, at the time any
of the Loans are paid, repaid, redeemed or prepaid (whether before, at the time
of or after the Maturity Date or any acceleration, bankruptcy or otherwise), the
Borrower pay to the Agent for the sole benefit of the Lenders (based on their
Pro Rata Share of such Loans) (with the Agent making such payment on the same
day to the Lenders) a non-refundable exit fee (the “Exit Fee”) equal to 2% of
the amount of Loans paid, repaid, redeemed or prepaid, which shall be due and
payable in cash upon each such payment, repayment, redemption or prepayment of
the applicable tranche of Loans.

(d) Each payment, repayment, redemption and prepayment by the Borrower or any
other Loan Party shall be applied (i) first, to all fees, costs and expenses
(including any attorneys’ fees) owed to Agent under the Loan Documents,
(ii) second, ratably to all fees, costs and expenses (including any attorneys’
fees) owed to any Lender under the Loan Documents, (iii) third, ratably to
accrued and unpaid interest owed to the Lenders under the Loan Documents,
(iv) fourth, ratably to the principal amount of the Loans owed to the Lenders
(including any Prepayment Fee), and, (v) fifth, to all other Obligations owing
to Agent or any Lender; provided that voluntary prepayments shall be applied
(A) (y) first, ratably to the outstanding principal amount of the Initial
Disbursement and (z) second, ratably to any outstanding amount of any Subsequent
Disbursement, in each case of this clause (a), and (B) otherwise, to the Loans
(within the applicable class of such Loans (subject to clause (a)(y) above) in
this proviso) mentioned in clause (iv) above of this Section 2.3(d) as directed
by the Borrower, and notwithstanding the foregoing or anything else to the
contrary in the Loan Documents, (1) any acceleration payments, repayments,
redemptions or prepayments shall be applied as determined by the Required
Lenders (in consultation with the Agent) in their sole discretion and, with
respect to any such Obligations owed to the Lenders, shall be allocated among
the Lenders in accordance with and in proportion to their respective Pro Rata
Shares and (2) the Borrower shall not be able to direct the application of any
payments during the continuance of a Default or an Event of Default, in which
case such payments shall be applied as determined by the Required Lenders (in
consultation with the Agent) in their sole discretion.

Section 2.4 Payment Details. All payments of the Obligations by the Borrower or
any other Loan Party hereunder and under any of the other Loan Documents shall
be made without setoff or counterclaim and shall be paid in cash in Dollars and
applied in accordance with Section 2.3(d). Payments of any amounts and other
Obligations due to Agent or the Lenders under this Agreement or the other Loan
Documents shall be made in Dollars in immediately available funds prior to 11:00
a.m. (New

 

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York City time) on such date that any such payment is due, using such wire
information or address for Agent or such applicable Lender that is set forth on
Schedule 2.4 or at such other bank or place as Agent or such applicable Lenders
shall from time to time designate in writing at least prior to the date such
payment is due. Any payment received by the Agent or any Lender after 11:00 a.m.
(New York City time) may in the Agent’s or such Lender’s discretion be deemed to
have been made on the following Business Day. Any payment of the Obligations
received by Agent on behalf, or for the benefit, of any other Secured Party
shall be promptly (and, in any event, within one (1) Business Day) paid to such
Secured Party in the same type as received by Agent. The Borrower shall pay all
and any fees, costs and expenses (administrative or otherwise) imposed by banks,
clearing houses or any other financial institutions in connection with making
any payments under any of the Loan Documents.

Section 2.5 Taxes.

(a) Any and all payments hereunder or under any other Loan Document shall be
made, in accordance with this Section 2.5, free and clear of and without
deduction for any and all present or future Taxes except as required by
Applicable Law. If any Loan Party shall be required by Applicable Law to deduct
any Taxes from or in respect of any sum payable hereunder or under any other
Loan Document, (i) such Loan Party shall make such deductions, (ii) such Loan
Party shall pay the full amount deducted to the relevant Governmental Authority
in accordance with Applicable Law, and (iii) to the extent that the deduction is
made on account of Indemnified Taxes, the sum payable shall be increased by as
much as shall be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.5), each Lender shall receive an amount equal to the sum it would have
received had no such deductions been made (any and all such additional amounts
payable shall hereafter be referred to as the “Additional Amounts”). Within
thirty (30) days after the date of any payment of such Taxes, the Borrower shall
furnish to the applicable Lender the original or a certified copy of a receipt
evidencing payment thereof or other evidence of such payment reasonably
satisfactory to such Lender.

(b) In addition, the Loan Parties agree to pay and authorize each Lender to pay
in their name, all Other Taxes. Within 30 days after the date of any payment of
Other Taxes by any Loan Party, the Borrower shall furnish to the applicable
Lender the original or a certified copy of a receipt evidencing payment thereof
or other evidence of such payment reasonably satisfactory to such Lender.

(c) (i) The Borrower shall reimburse and indemnify, within ten (10) days after
receipt of demand therefor, Agent and each Lender for all Indemnified Taxes
(including all Indemnified Taxes imposed on amounts payable under this
Section 2.5(c)(i)) paid or payable by Agent or such Lender, and any Liabilities
arising therefrom or relating thereto, whether or not such Indemnified Taxes
were correctly or legally asserted. A certificate of Agent or the applicable
Lender(s) setting forth the amounts to be paid thereunder and delivered to the
Borrower shall be absolute, conclusive and binding, absent manifest error.

(ii) Each Lender shall severally (but not jointly) reimburse and indemnify,
within ten (10) days after receipt of demand therefor, Agent for any Indemnified
Taxes attributable to such Lender (but only to the extent that (i) the Borrower
has not already indemnified the Agent for such Indemnified Taxes (including all
Indemnified Taxes imposed on amounts payable under this Section 2.5(c)(ii)) paid
or payable by Agent) and without limiting the obligation of the Borrower to do
so and (ii) the Agent has used commercially reasonable efforts to collect such
amounts from the Borrower for at least sixty (60) days after sending the initial
invoice to the Borrower therefor).

 

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(d) Each Lender that is a United States person (as such term is defined in
Section 7701(a)(30) of the Code) shall, on or before the date on which the
Lender becomes a party to this Agreement, provide to Borrower and Agent a
properly completed and executed IRS Form W-9 certifying that such Lender is not
subject to backup withholding tax. Each Lender that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) (a “Foreign
Lender”) and is entitled to an exemption from or reduction of U.S. federal
withholding tax with respect to payments under this Agreement shall, on or
before the date on which such Lender becomes a party to this Agreement, provide
Borrower and Agent with a properly completed and executed IRS Form W-8ECI,
W-8BEN-E, W-8IMY or other applicable forms (together with any required
supporting documentation), or any other applicable certificate or document
reasonably requested by the Borrower or Agent, and, if such Foreign Lender is
relying on the portfolio interest exception of Section 871(h) or Section 881(c)
of the Code (or any successor provision thereto), shall also provide the
Borrower and Agent with a certificate (the “Portfolio Interest Certificate”)
representing that such Foreign Lender is not a “bank” for purposes of
Section 881(c) of the Code (or any successor provision thereto), is not a 10%
holder of the Borrower described in Section 871(h)(3)(B) of the Code (or any
successor provision thereto), and is not a controlled foreign corporation
receiving interest from a related person (within the meaning of Sections
881(c)(3)(C) and 864(d)(4) of the Code or any successor provisions thereto). If
the Foreign Lender is a partnership and one or more direct or indirect partners
of such Foreign Lender are claiming the portfolio interest exemption, such
Foreign Lender may provide a Portfolio Interest Certificate on behalf of such
partners. Each Lender shall provide new forms (or successor forms) as reasonably
requested by the Borrower and Agent from time to time and shall notify the
Borrower and Agent in writing within a reasonable time after becoming aware of
any event requiring a change in the most recent forms previously delivered by
such Lender to the Borrower and Agent.

(e) If a payment to a Lender under this Agreement would be subject to U.S.
federal withholding tax imposed by FATCA if such Lender were to fail to comply
with the applicable reporting requirements of FATCA, such Lender shall deliver
to the Borrower and Agent, at the times prescribed by law or as reasonably
requested by Borrower and Agent, such documentation as is required in order for
the Borrower and Agent to comply with its obligations under FATCA, to determine
that such Lender has or has not complied with its obligations under FATCA or to
determine the amount to deduct and withhold from such payment. Solely for
purposes of this Section 2.5(e), “FATCA” shall include any amendments made to
FATCA after the date of this Agreement.

(f) If Agent or a Lender determines, in its sole discretion exercised in good
faith, that it has received a refund of any Indemnified Taxes as to which it has
been indemnified pursuant to this Section 2.5, Agent or such Lender shall
promptly pay such refund (but only to the extent of indemnity payments made
under this Section 2.5 with respect to the Taxes refund) to the Borrower, net of
all out-of-pocket expense (including any Taxes imposed thereon) of such Lender
incurred in obtaining such refund or making such payment, provided that the
Borrower, upon the request of Agent or such Lender, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to Agent or such Lender if Agent or such
Lender is required to repay such refund to such Governmental Authority.
Notwithstanding anything to the contrary in this Section 2.5(f), in no event
shall Agent or a Lender be required to pay any amount to the Borrower pursuant
to this Section 2.5(f), the payment of which would place such Lender in a less
favorable net after-Tax position than Agent or such Lender would have been in if
the Tax subject to indemnification and giving rise to such refund had not been
deducted or otherwise imposed and the indemnification payments with respect to
such Tax had never been paid. Nothing in this Section 2.5(f) shall require Agent
or any Lender to disclose any information it deems confidential (including its
tax returns) to any Person, including the Borrower.

Section 2.6 Costs, Expenses and Losses. If, as a result of any failure by the
Borrower or any other Loan Party to pay any sums or Obligations due under this
Agreement or any other Loan Document on the due date therefor (after the
expiration of any applicable grace periods, but without

 

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giving effect to any grace period after the occurrence of an Event of Default of
the type set forth in Section 5.4(d)), Agent or any Lender shall incur costs,
expenses and/or losses, by reason of the liquidation or redeployment of deposits
from third parties or in connection with obtaining funds to make or maintain any
Disbursement or Loan or provide the Subsequent Disbursement Commitments, the
Borrower shall pay to Agent or such Lender upon request by the Lenders, the
amount of such costs, expenses and/or losses within fifteen (15) days after
receipt by it of a certificate from the Lenders setting forth in reasonable
detail such costs, expenses and/or losses, along with supporting documentation.
For the purposes of the preceding sentence, “costs, expenses and/or losses”
shall include any interest paid or payable to carry any unpaid amount and any
loss, premium, penalty or expense which may be incurred in obtaining,
liquidating or employing deposits of or borrowings from third parties in order
to make, maintain or fund any Disbursement or Loan (or provide the Subsequent
Disbursement Commitments) or any portion thereof.

Section 2.7 Interest. From and after the Agreement Date, the outstanding
principal amount of the Loans and any overdue interest shall bear interest at
the Interest Rate (calculated on the basis of the actual number of days elapsed
in each month based on a year of 360 days). Interest shall be paid in cash
quarterly in arrears commencing on March 31, 2018 and on the first Business Day
of each calendar quarter thereafter (each, an “Interest Payment Date”);
provided, however, that in lieu of making any payment of interest in cash
pursuant to this Section 2.7 (but not interest payable pursuant to Section 2.8)
and subject to the conditions set forth in Exhibit 2.7, the Borrower may elect
to satisfy all or any such payment by the issuance to the Lenders of shares of
Freely Tradable Common Shares (as defined in Exhibit 2.7) in accordance with the
provisions of Exhibit 2.7; provided that the Borrower provides written notice to
the Agent of such election five (5) Business Days prior to the Interest Payment
Date (and Agent shall promptly (but, in any event, within two (2) Business Days
after (i) receipt thereof by (A) Agent’s main operations contact or (B) any
other Person designated by Agent to receive notices for (or on behalf of) Agent
pursuant to the notices provisions of the Loan Documents (including Section 6.1
of this Agreement) or (ii) knowledge of receipt of an item from the Borrower by
Agent’s main operations contact or such other Person designated by Agent to
receive notices for (or on behalf of) Agent pursuant to the notices provisions
of the Loan Documents (including Section 6.1 of this Agreement)) provide such
written notice to the Lenders). The Parties mutually agree that the value of
each Warrant being issued on the Agreement Date is $7.48 per share of Common
Stock underlying such Warrant and the value of the Royalty Agreement is
$10,400,000.

Section 2.8 Interest on Late Payments; Default Interest.

(a) Without limiting the remedies available to the Secured Parties under the
Loan Documents or otherwise, to the maximum extent permitted by Applicable Law,
if the Borrower or any other Loan Party fails to make a required payment of
principal or interest with respect to the Loan or any other Obligations when
due, other than to than to the extent arising from an acceleration (except for
an acceleration due (completely or partially) to an Event of Default under
Section 5.4(a) that is not caused by an automatic acceleration from an Event of
Default under Section 5.4(d)) or bankruptcy, the Borrower shall pay, in respect
of such principal, interest and other Obligations at the rate per annum equal to
the Interest Rate plus ten percent (10%) for so long as such payment remains
outstanding. Such interest shall be payable in cash on demand.

(b) At the election of Agent or the Required Lenders, while any Event of Default
exists (or automatically, in the case of any Event of Default under
Section 5.4(a) or Section 5.4(d)), the Borrower shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by Applicable
Law) on the Obligations and past due interest thereon, if any, from and after
the date of occurrence of such Event of Default, at a rate per annum equal to
the Interest Rate then in effect for the Loans plus two percent (2%). To the
extent permitted by Applicable Law, such additional interest rate shall
retroactively apply to the first day of existence of such Event of Default. Such
interest shall be payable in cash on demand.

 

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Section 2.9 Agent Fee; Yield Enhancement Fees; Upfront Fees.

(a) The Borrower shall pay to the Agent, for its own account, an annual,
non-refundable agency fee and all such other amounts to be paid in accordance
with the Agent Fee Letter. The Borrower agrees that such agency fees once paid,
will not be refundable under any circumstances. All such agency fees will be
paid in cash in U.S. dollars and shall not be subject to any reduction by way of
setoff, counterclaim or otherwise.

(b) On each Disbursement Date, the Borrower shall pay in cash in Dollars to such
Lender as the applicable Lender funding such Disbursement shall direct a yield
enhancement fee in the amount of two percent (2%) of the principal amount of
such Disbursement provided by such Lender (which, for the avoidance of doubt,
such yield enhancement fee shall be paid on any amounts of such Disbursement
that are not actually funded by such Lender that are instead used to pay any
fees, costs or expenses set forth in the Loan Documents) on such Disbursement
Date as consideration for providing such Disbursement and such yield enhancement
fee, at the sole option of the applicable Lender, shall be deducted from such
Disbursement for which such yield enhancement fee is due. Such yield enhancement
fee shall be fully earned when paid (or when deducted from such Disbursement)
and shall not be refundable for any reason whatsoever. Such yield enhancement
fee will be paid in cash in U.S. dollars and shall not be subject to any
reduction by way of setoff, counterclaim or otherwise.

(c) On each Disbursement Date, the Borrower shall pay in cash in Dollars to such
Lender as the applicable Lender funding such Disbursement shall direct an
upfront fee in the amount of two percent (2%) of the principal amount of such
Disbursement funded by such Lender (which, for the avoidance of doubt, such
upfront fee shall be paid on any amounts of such Disbursement that are not
actually funded by such Lender that are instead used to pay any fees, costs or
expenses set forth in the Loan Documents) on such Disbursement Date as
consideration for providing such Disbursement and such upfront fee, at the sole
option of the applicable Lender, shall be deducted from such Disbursement for
which such upfront fee is due. Such upfront fee shall be fully earned when paid
(or when deducted from such Disbursement) and shall not be refundable for any
reason whatsoever.

Section 2.10 Delivery of Warrants.

(a) On the Agreement Date, the Borrower shall issue to the Lenders, based on
such Lenders’ respective Pro Rata Shares, warrants to purchase an aggregate of
3,792,868 shares of Common Stock at an Exercise Price (as defined in the
Warrants) of $16.50 per share (each as subject to any adjustments provided for
therein), each in substantially in the form of Exhibit C attached hereto (as
amended, restated, supplemented or otherwise modified from time to time, the
“Warrants”) with an expiration date of January 5, 2025.

(b) The Warrants issued pursuant to this Section 2.10 shall be allocated among
the Lenders as set forth on Annex A.

 

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES

Section 3.1 Representations and Warranties of the Loan Parties. In order to
induce the Lenders to make the Loans pursuant to this Agreement and to induce
the Agent and the Lenders to enter into this Agreement, the Loan Parties,
jointly and severally, represent and warrant as of the Agreement Date and on
each Disbursement Date that:

(a) Each Loan Party is (i) conducting its business in all material respects in
compliance with its Organizational Documents and (ii) not in violation in any
material respect of its Organizational Documents. Each Loan Party’s
Organizational Documents are in full force and effect.

(b) No Default or Event of Default has occurred or will result from the
transactions contemplated by the Loan Documents.

(c) On the Agreement Date (both before and after giving effect to the
Transactions) and on each Disbursement Date (both before and after giving effect
to such Disbursement and the use of the proceeds thereof), the following is true
with respect to the Loan Parties and their Subsidiaries, taken as a whole, as of
the date hereof: (i) the present fair salable value of the assets of the Loan
Parties and their Subsidiaries, taken as a whole (determined on a going concern
basis), is greater than (A) the total amount of debts and liabilities (including
subordinated, contingent and un-liquidated liabilities) of the Loan Parties and
their Subsidiaries, taken as a whole, and (B) the amount that will be required
to pay the probable liability, on a consolidated basis, of the Loan Parties’ and
their Subsidiaries’ debts and other liabilities as such debts and liabilities
become absolute and matured; (ii) the Loan Parties and their Subsidiaries, taken
as a whole, are able to pay all debts and liabilities (including subordinated,
contingent and un-liquidated liabilities) as such debts and liabilities become
absolute and matured; and (iii) the Loan Parties and their Subsidiaries, taken
as a whole, do not have unreasonably small capital with which to conduct the
business in which they are engaged as business is now conducted and is proposed
to be conducted following the date hereof. In computing the amount of contingent
or unliquidated liabilities at any time, such liabilities shall be computed at
the amount that, in 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.

(d) Except as otherwise expressly permitted by this Agreement, no Loan Party has
taken any action, and no such action has been taken by a third party, for its
winding up, dissolution or liquidation or similar executory or judicial
proceeding or for the appointment of a liquidator, custodian, receiver, trustee,
administrator or other similar officer for any Loan Party or any or all of its
assets or revenues.

(e) No Lien exists on any Loan Party’s assets, except for Permitted Liens.

(f) This Agreement and each other Loan Document constitutes, a legal, valid and
binding obligation of such Loan Party, enforceable against each Loan Party that
is party thereto in accordance with its terms, except as the enforcement hereof
or thereof may be limited by insolvency, bankruptcy, reorganization, moratorium
or other similar Laws affecting creditors rights generally.

(g) No Indebtedness of any Loan Party exists other than Permitted Indebtedness.

(h) Each Loan Party is validly existing as a corporation, limited liability
company or limited partnership, as applicable, and is in good standing under the
laws of the jurisdiction of its incorporation, organization or formation, as
applicable. Each Loan Party (i) has full power and authority to (B) own its
properties, (B) conduct its business, (C) issue the Securities in accordance
with the Loan Documents, (D) enter into, and perform its obligations under, the
Loan Documents, including the issuance of the Securities and the reservation for
issuance of the Warrant Shares and (E) consummate the transactions contemplated
under the Loan Documents, and (ii) is duly qualified as a foreign corporation,
limited liability company or limited partnership, as applicable, and licensed
and in good standing, under

 

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the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification or license,
in each case of this clause (ii), where the failure to be so qualified, licensed
or in good standing would reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.

(i) There is not any pending or, to the knowledge of the Loan Parties,
threatened in writing, action, suit or other proceeding before any Governmental
Authority (A) to which any Loan Party is a party (1) as of the Agreement Date or
(2) at any time such representation and warranty is made, that would reasonably
be expected to result in, individually or in the aggregate, at Material Adverse
Effect, (B) which purports to affect or pertain to the Loan Documents, the
Transactions or the other transaction contemplated hereby or thereby or
(C) except as set forth in the SEC Documents of the Borrower filed after
December 31, 2016 and prior to the Agreement Date, which has as the subject
thereof any assets owned by any Loan Party or any of its Subsidiaries, in each
case which would reasonably be expected to result in monetary judgments or
relief, individually or in the aggregate, in excess of $250,000. There are no
current or, to the knowledge of the Loan Parties, pending, legal actions, suits
or other proceedings, in each case which would reasonably be expected to result
in (A) except as set forth in the SEC Documents of the Borrower filed after
December 31, 2016 and prior to the Agreement Date, as of the Agreement Date,
monetary judgments or relief, individually or in the aggregate, in excess of
$250,000 or (B) at any time that such representation or warranty is made,
individually or in the aggregate, a Material Adverse Effect, in each case of
clauses (A) and (B) of this sentence, to which any Loan Party or any of its
Subsidiaries or any of their respective assets is subject. No injunction, writ,
temporary restraining order or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.

(j) Each of this Agreement and the other Loan Documents and the issuance of the
Securities hereunder and thereunder, has been duly authorized, executed and
delivered by each Loan Party and, to the extent applicable, the holders of the
Borrower’s Stock and no further consent or authorization is required by the
Borrower, the Borrower’s board of directors (or other equivalent governing body)
or the holders of the Borrower’s Stock, and this Agreement and the other Loan
Documents constitute valid, legal and binding obligations of each Loan Party,
enforceable in accordance with their terms, except as such enforceability may be
limited by applicable insolvency, bankruptcy, reorganization, moratorium or
other similar laws affecting creditors’ rights generally. The stockholders of
the Company duly approved the issuance of the Purchased Shares, the Interest
Payment Shares, the Warrant Shares and the shares of Common Stock issuable
pursuant to the Agreement Date Acquisition Agreement on December 27, 2017 at a
duly called and held special meeting of stockholders of the Borrower in
accordance with applicable requirements of the NASDAQ Stock Market (“NASDAQ”),
and no further authorization or approval is required to satisfy the requirements
of NASDAQ in connection with the performance by the Borrower of its obligations
under the Loan Documents, including the issuance of the Securities. The
Purchased Shares, the Interest Payment Shares and the Warrant Shares have been
approved for listing on the Principal Market, subject to official notice of
issuance. The execution, delivery and performance of the Loan Documents by each
Loan Party party thereto and the consummation of the transactions (including the
issuance of the Securities hereunder and thereunder) contemplated herein and
therein will not (A) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any Lien (other than pursuant to the Loan Documents)
upon any assets of any such Loan Party pursuant to, any agreement, document or
instrument to which such Loan Party is a party or by which any Loan Party is
bound or to which any of the assets or property of any Loan Party is subject,
except, with respect to this clause (A), as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, (B) result
in any violation of or conflict with the provisions of the Organizational

 

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Documents or (C) result in the violation of any Applicable Law, or of any
judgment, order, rule, regulation or decree of any Governmental Authority,
except, with respect to this clause (C), as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

(k) No consent, approval, Authorization or order of, or registration or filing
with any Governmental Authority or any other Person is required for (i) the
execution, delivery and performance of this Agreement or any of the other Loan
Documents, and the issuance of the Securities hereunder and thereunder, and
(ii) the consummation by any Loan Party of the Transactions or the other
transactions contemplated hereby or thereby, except for (w) registrations and
filings expressly contemplated by the Registration Rights Agreement, (x) filings
of reports under the Exchange Act expressly contemplated by this Agreement and
the other Loan Documents, (y) filings expressly contemplated by the Security
Agreement, and (z) such other consents, authorizations and filings that have
been obtained or made, or, with respect to clause (ii) only, which, if not
obtained or made would not have a Material Adverse Effect.

(l) Except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect (i) (A) each Loan Party holds, and
is operating in compliance in all material respects with, all franchises,
grants, Authorizations, licenses, permits, easements, consents, certificates and
orders of any Governmental Authority (collectively, “Necessary Documents”)
required for the conduct of its business and (B) all Necessary Documents are
valid and in full force and effect;

(ii) no Loan Party has received written notice of any revocation, non-renewal,
amendment or other modification of any of the Necessary Documents; and
(iii) each Loan Party is in compliance in all respects with all applicable
federal, state, local and foreign laws, regulations, orders and decrees
applicable to the conduct of its business.

(m) As of the Agreement Date, the Real Estate listed in Schedule 3.1(m)
constitutes all of the Real Estate of each Loan Party and each of its
Subsidiaries. Each Loan Party has good and marketable title to all of its assets
and property free and clear of all Liens, except Permitted Liens. Except as
could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, the property held under lease by each Loan Party is
held under valid, subsisting and enforceable leases with only such exceptions
with respect to any particular lease as do not interfere in any material respect
with the conduct of the business of such Loan Party.

(n) Each Loan Party owns, or has the right to use pursuant to a valid and
enforceable license, free and clear of any Liens other than Permitted Liens, all
Intellectual Property (as defined below) that is necessary for the conduct of
its business as currently conducted (the “IP”). All IP that is owned by a Loan
Party and registered with or issued by a Governmental Authority is currently in
the name of such Loan Party, valid and, to the knowledge of the Loan Parties,
enforceable. There is no pending or, to the knowledge of the Loan Parties,
threatened action, suit, other proceeding or claim by any Person challenging or
contesting the validity, ownership, or enforceability of any IP or the use
thereof by any Loan Party, and no Loan Party has received any written notice
regarding any such pending or threatened action, suit, other proceeding or claim
except as could not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. As of the Agreement Date, to the knowledge of
the Loan Parties, neither the conduct of the business of any Loan Party, nor any
Loan Party has infringed, misappropriated or otherwise violated in the last five
years, or is infringing, misappropriating or otherwise violating, any
Intellectual Property of any Person. As of the Agreement Date, there is no
pending or, to the knowledge of the Loan Parties threatened, action, suit, other
proceeding or claim by any Person alleging that any Loan Party is infringing,
misappropriating or violating, or otherwise using without authorization, any
Intellectual Property of any Person, and no Loan Party has received any written
notice regarding, any such pending or threatened action, suit, other proceeding
or claim. The term “Intellectual Property” as used herein means all
(i) trademarks, service marks, trade dress, slogans, logos, trade names,
corporate names, Internet domain names, and any other indicia of source,
together with all goodwill

 

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associated with each of the foregoing, (ii) copyrights (whether or not
registered or published) and works of authorship, (iii) registrations and
applications for registration for any of the foregoing, (iv) patents (including
all reissuances, divisionals, provisionals, continuations and
continuations-in-part, re-examinations, renewals, substitutions and extensions
thereof), patent applications, patent disclosures and inventions (whether or not
patentable or reduced to practice), (v) computer software (including but not
limited to source code and object code), data, databases, and documentation
thereof, (vi) trade secrets and other confidential information, know-how,
protocols, processes, methodologies, techniques, strategies, and processes,
(vii) other intellectual property and all rights associated with any of the
foregoing, including without limitation the right to prosecute and recover
monetary damages for any past, present and future infringements and other
violations thereof, and (viii) copies and tangible embodiments of the foregoing
(in whatever form and medium).

(o) No Loan Party is, except as could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect, in breach of or
otherwise in default under, and no event has occurred which, with notice or
lapse of time or both, would constitute such breach or other default in the
performance of any agreement or condition contained in any agreement under which
it may be bound, or to which any of its assets is subject.

(p) All U.S. federal, state and local income and franchise and other material
Tax returns, reports and statements (collectively, the “Tax Returns”) required
to be filed by any Tax Affiliates have been filed with the appropriate
Governmental Authorities, all such Tax Returns are true and correct in all
material respects, and all Taxes, assessments and other governmental charges and
impositions reflected therein or otherwise due and payable have been paid prior
to the date on which any material Liability may be added thereto for non-payment
thereof except for those contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves are maintained on the books
of the appropriate Tax Affiliate in accordance with GAAP. As of the Agreement
Date, no material Tax Return is under audit or examination by any Governmental
Authority, and no Tax Affiliate has received written notice from any
Governmental Authority of any audit or examination or any assertion of any claim
for material Taxes. To the extent material, proper and accurate amounts have
been withheld by each Tax Affiliate from their respective employees for all
periods in full and complete compliance with the Tax, social security and
unemployment withholding provisions of Applicable Law and such withholdings have
been timely paid to the respective Governmental Authorities. No Tax Affiliate
has participated in a “listed transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b)(2) or has been a member of an affiliated,
combined or unitary group other than the group of which a Tax Affiliate is the
common parent.

(q) Except as set forth on Schedule 3.1(q), no Loan Party is bound by any
agreement that affects the exclusive right of each Loan Party to develop,
license, market or sell its services.

(r) Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect after the Agreement Date, each Loan
Party: (A) at all times has complied with all Applicable Laws; (B) has not
received any warning letter or other correspondence or notice from the any
Governmental Authority alleging or asserting noncompliance with any Applicable
Laws or any Authorizations; (C) possesses and complies with the Authorizations,
which are valid and in full force and effect; (D) has not received written
notice that any Governmental Authority has taken, is taking or intends to take
action to limit, suspend, modify or revoke any Authorization and has no
knowledge that any Governmental Authority is considering such action; and
(E) has filed, obtained, maintained or submitted all reports, documents, forms,
notices, applications, records, claims, submissions and supplements or
amendments as required by any Applicable Laws or Authorizations.

 

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(s) The Borrower has filed all of the SEC Documents within the time frames
prescribed by the SEC (including any available grace periods and extensions
authorized by the SEC) for the filing of such SEC Documents such that each
filing was timely filed with the SEC. The Borrower filed and made publicly
available on the SEC’s Electronic Data Gathering, Analysis, and Retrieval system
(including any successor thereto, “EDGAR”) on or prior to the date this
representation is made, true, correct and complete copies of the SEC Documents.
As of their respective dates, each of the SEC Documents complied in all material
respects with the requirements of the Securities Act and/or the Exchange Act (as
applicable) applicable thereto. None of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Since the filing of the SEC Documents, no event has
occurred that would require an amendment or supplement to any of the SEC
Documents and as to which such an amendment or a supplement has not been filed
and made publicly available on EDGAR prior to the date this representation is
made. The Borrower has not received any written comments from the SEC staff that
have not been resolved, to the knowledge of the Borrower, to the satisfaction of
the SEC staff.

(t) As of their respective dates, the financial statements (consolidated, as
applicable) of the Borrower and its Subsidiaries, any predecessor of the
Borrower and any Person acquired by the Borrower or any of its Subsidiaries
included in the SEC Documents (including by way of incorporation by reference)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with GAAP
except as otherwise expressly noted therein, consistently applied (subject, in
the case of unaudited quarterly financial statements, to normal year-end
adjustments and lack of footnote disclosures), and fairly present in all
material respects the financial position (on a consolidated basis, as
applicable) of the Borrower and its Subsidiaries (or other acquired Persons, as
applicable) as of the dates thereof and the consolidated results of their (or
its) operations, cash flows and changes in stockholders equity (in each case, on
a consolidated basis, as applicable) for the periods then ended (subject, in the
case of unaudited quarterly financial statements, to normal year-end audit
adjustments and lack of footnote disclosures). The accounting firm that
expressed its opinion with respect to the consolidated financial statements
included in the Borrower’s most recently filed annual report on Form 10-K, and
reviewed the consolidated financial statements included in the Borrower’s most
recently filed quarterly report on Form 10-Q, was independent of the Borrower
pursuant to the standards set forth in Rule 2-01 of Regulation S-X promulgated
by the SEC to the extent required by the applicable rules and guidance from the
Public Company Accounting Oversight Board (United States). There is no
transaction, arrangement or other relationship between the Borrower (or any of
its Subsidiaries) and an unconsolidated or other off-balance-sheet Person that
is required to be disclosed by the Borrower in the SEC Documents that has not
been so disclosed in the SEC Documents. Neither the Borrower nor any of its
Subsidiaries is required to file any agreement, note, lease, mortgage, deed or
other instrument entered into prior to the date this representation is made and
to which the Borrower or any of its Subsidiaries is a party that has not been
previously filed as an exhibit (including by way of incorporation by reference)
to the Borrower’s reports filed or made with the SEC under the Exchange Act.
Other than (i) the liabilities assumed or created pursuant to this Agreement and
the other Loan Documents, (ii) liabilities accrued for in the latest balance
sheet included in the Borrower’s most recent periodic report (on Form 10-Q or
Form 10-K) filed prior to the date this representation is made (the date of such
balance sheet, the “Latest Balance Sheet Date”) and (iii) liabilities incurred
in the ordinary course of business since the Latest Balance Sheet Date, the
Borrower and its Subsidiaries do not have any other liabilities (whether fixed
or unfixed, known or unknown, absolute or contingent, asserted or unasserted,
choate or inchoate, liquidated or unliquidated, or secured or unsecured, and
regardless of when any action, claim, suit or proceeding with respect thereto is
instituted). The pro forma financial statements included in the SEC Documents
(including by way of incorporation by reference) comply, in all material
respects, with the applicable requirements of Regulation S X promulgated by the
SEC, the assumptions used in preparing such pro forma financial

 

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statements provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein, the
related pro forma adjustments give appropriate effect to those assumptions, and
the pro forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement amounts. Since
December 31, 2016, there has been no Material Adverse Effect or any event or
circumstance which would reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect. All financial performance
projections delivered to any Secured Party, including the financial performance
projections delivered on or prior to the Agreement Date, represent the
Borrower’s and its Subsidiaries’ good faith estimate of future financial
performance and are based on assumptions believed by the Borrower and its
Subsidiaries to be fair and reasonable in light of current market conditions, it
being acknowledged and agreed by Agent and the Lenders that projections as to
future events are not to be viewed as facts and that the actual results during
the period or periods covered by such projections may differ from the projected
results and such differences may be material.

(u) The Borrower and its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP in all material respects and to maintain
asset and liability accountability, (iii) access to assets or incurrence of
liability is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets and liabilities is
compared with the existing assets and liabilities at reasonable intervals and
appropriate action is taken with respect to any differences (such internal
accounting controls (including clauses (i) – (iv) above), collectively,
“Internal Controls”). The Borrower and its Subsidiaries have (A) timely filed
and made publicly available on EDGAR all certifications, statements and
documents required by Rule 13a-14 or Rule 15d-14 under the Exchange Act. The
Borrower and its Subsidiaries maintain disclosure controls and procedures
required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and
procedures are effective to ensure that the information required to be disclosed
by the Borrower and its Subsidiaries in the reports that they file with or
submit to the SEC (A) is recorded, processed, summarized and reported accurately
within the time periods specified in the SEC’s rules and forms and (B) is
accumulated and communicated to the Borrower’s (and, to the extent applicable,
its Subsidiaries’) management, including its or their principal executive
officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure. The Borrower and its Subsidiaries
maintain internal control (including Internal Controls) over financial reporting
required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; to the knowledge
of the Loan Parties, such internal control (including Internal Controls) over
financial reporting is effective and does not contain any material weaknesses.

(v) Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, (i) no Loan Party has engaged, and
no other Person has engaged in any “prohibited transaction” as defined under
Section 406 of ERISA or Section 4975 of the Code that is not exempt under ERISA
Section 408 or Section 4975 of the Code, under any applicable regulations and
published interpretations thereunder or under any applicable prohibited
transaction, individual or class exemption issued by the Department of Labor,
with respect to any Employee Benefit Plan, (ii) (A) at no time within the last
seven years has the Borrower or any ERISA Affiliate maintained, sponsored,
participated in, contributed to or had any Liability with respect to, and (B) no
Loan Party or any ERISA Affiliate has any Liability or obligation in respect of,
any Title IV Plan, Multiemployer Plan or any multiple employer plan for which
the Borrower or any ERISA Affiliate has incurred or could incur Liability under
Section 4063 or 4064 of ERISA, (iii) no Loan Party has any obligation or
Liability with respect to post-termination or retiree health, life insurance or
other retiree or post-termination welfare benefits except as may be required by
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or
similar state law or for which premiums therefor are paid solely by participants
or their

 

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designated beneficiaries, (iv) each Employee Benefit Plan is and has been
operated in compliance with its terms and all Applicable Laws, including ERISA
and the Code, (v) (A) no ERISA Event has occurred and (B) no event or condition
exists or existed that would reasonably be expected to subject the Borrower or
any ERISA Affiliate to any tax, fine, lien, penalty or Liability imposed by
ERISA, the Code or other Applicable Law, except for any such ERISA Event or tax,
fine, lien, penalty or liability that would not be expected, individually or in
the aggregate, to have a Material Adverse Effect and (vi) no Loan Party
maintains or has any obligation or Liability with respect to any Foreign Benefit
Plan.

(w) The Borrower’s Subsidiaries are set forth in Schedule 3.1(w) (as such
Schedule 3.1(w) may be updated from time to time in connection and accordance
with Section 5.1(k).

(x) Subsequent to December 31, 2016, the Borrower has not declared or paid any
dividends or made any distribution of any kind with respect to its Stock other
than those set forth on Schedule 3.1(x).

(y) All of the issued and outstanding shares of Stock of the Borrower are duly
authorized and validly issued, fully paid and non-assessable, have been issued
in compliance with all federal and state and foreign securities laws, and were
not issued in violation of or subject to any preemptive rights or other rights
to subscribe for or purchase securities that have not been waived in writing.
All of the Agreement Date Acquisition Shares are duly authorized and, upon
issuance in accordance with the Agreement Date Acquisition Agreement and the
Equity Financing Agreements (as applicable), will be validly issued, fully paid
and non-assessable and will have been issued in compliance with all federal and
state and foreign securities laws and will not have been issued in violation of
or subject to any preemptive rights or other rights to subscribe for or purchase
securities that have not been waived in writing. The Borrower has provided a
copy of each of the Equity Financing Agreements to the Lenders, and the
Agreement Date Acquisition Shares, other than shares being issued pursuant to
the Agreement Date Acquisition Agreement, will be issued pursuant to the terms
and conditions of the applicable Equity Financing Agreements (without material
amendment or modification thereof). The Borrower has reserved for issuance a
number of shares of Common Stock sufficient to cover all shares issuable upon
the exercise of the Warrants (such shares, together with any shares of Common
Stock otherwise issuable pursuant to the Warrants, the “Warrant Shares”)
(computed without regard to any limitations on the number of shares that may be
issued on exercise). The Purchased Shares, the Interest Payment Shares, the
Warrants, the Warrant Shares and the other distributions required to be made
pursuant to the Warrants (the “Warrant Distributions”) have been duly
authorized. Upon issuance in accordance with the terms of the Stock Purchase
Agreement, the Purchased Shares will be validly issued, fully paid and
non-assessable and free from all taxes and Liens with respect to the issue
thereof, with the holders thereof being entitled to all rights accorded to a
holder of Common Stock. The Purchased Shares will represent 9.985% of the
outstanding shares of Common Stock immediately following the issuance thereof
and the issuance of all of the Agreement Date Acquisition Shares (the
calculation of the number of Purchased Shares being set forth on Schedule
3.1(y)). Upon issuance in accordance with the terms of this Agreement (including
Exhibit 2.7), the Interest Payment Shares will be validly issued, fully paid and
non-assessable and free from all taxes and Liens with respect to the issue
thereof, with the holders thereof being entitled to all rights accorded to a
holder of Common Stock. Upon issuance in accordance with the terms of this
Agreement, the holders of the Warrants will be entitled to the rights set forth
in the Warrants. Upon issuance in accordance with the Warrants, the Warrant
Shares will be validly issued, fully paid and non-assessable and free from all
taxes and Liens with respect to the issue thereof, with the holders thereof
being entitled to all rights accorded to a holder of Common Stock. The issuance
by the Borrower of the Securities is exempt from registration under the
Securities Act and applicable state securities laws. All of the Borrower’s
authorized, issued and outstanding shares of Stock of the Borrower and each of
its Subsidiaries and the Agreement Date Acquisition Shares are set forth in
Schedule 3.1(y), and, except as set forth in Schedule 3.1(y), there are no
(i) Stock options or other Stock incentive plans,

 

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employee Stock purchase plans or other plans, programs or arrangements of the
Borrower or any of its Subsidiaries under which Stock options, Stock or other
Stock-based or Stock-linked awards are issued or issuable to officers,
directors, employees, consultants or other Persons, (ii) outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
or exercisable for, any Stock of the Borrower or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Borrower or
any of its Subsidiaries is or may become bound to issue additional Stock of the
Borrower or any of its Subsidiaries, or options, warrants or scrip for rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of Stock of the Borrower or any of its Subsidiaries, (iii) agreements or
arrangements under which the Borrower or any of its Subsidiaries is obligated to
register the sale of any of their securities or Stock under the Securities Act
(except the Registration Rights Agreement), (iv) outstanding Stock, securities
or instruments of the Borrower or any of its Subsidiaries that contain any
redemption or similar provisions, or contracts, commitments, understandings or
arrangements by which the Borrower or any of its Subsidiaries is or may become
bound to redeem a security of the Borrower, (v) Stock or other securities or
instruments containing anti-dilution or similar provisions that may be triggered
by the issuance of securities of the Borrower or any of its Subsidiaries or
(vii) stock appreciation rights or “phantom stock” plans or agreements or any
similar plans or agreements to which Borrower or any of its Subsidiaries is a
party or by which the Borrower or any of its Subsidiaries is otherwise subject
or bound. There are no (X) stockholders’ agreements, voting agreements or
similar agreements to which Borrower or any of its Subsidiaries is a party or by
which the Borrower or any of its Subsidiaries is otherwise subject or bound, (Y)
preemptive rights or any other similar rights to which any Stock of the Borrower
or any of its Subsidiaries is subject or (Z) any restrictions upon the voting or
transfer of any Stock of the Borrower or any of its Subsidiaries (other than
restrictions on transfer imposed by U.S. federal and state securities laws). The
issuance and delivery of the Purchased Shares, the Interest Payment Shares, the
Warrants and the Warrant Shares does not and will not: (i) require approval from
any Governmental Authority; (ii) obligate the Borrower to issue shares of Common
Stock or other securities to any Person (other than the Lenders); and (iii) will
not result in a right of any holder of the Borrower’s securities to adjust the
exercise, conversion, exchange or reset price under and will not result in any
other adjustments (automatic or otherwise) under, any securities of the
Borrower. The Borrower has furnished to Agent and each Lender true, correct and
complete copies of each Loan Parties’ Organizational Documents and any
amendments, restatements, supplements or modifications thereto, and all
documents, agreements and instruments containing the terms of all securities and
Stock convertible into, or exercisable or exchangeable for, Common Stock or
other Stock of any Loan Party or its Subsidiaries, and the material rights of
the holders thereof in respect thereto.

(z) No Loan Party and no Subsidiary of any Loan Party is engaged in the business
of purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock. As of the Agreement Date, except as set
forth on Schedule 3.1(z), no Loan Party and no Subsidiary of any Loan Party owns
any Margin Stock.

(aa) To the extent any Revolving Credit Facility is outstanding or otherwise in
existence, (i) the Borrower has delivered to the Agent and the Lenders a true,
complete and correct copy of all of the Revolving Credit Facility Documents (in
each case, including all schedules, exhibits, amendments, restatements,
supplements, modifications, assignments and all other agreements, instruments
and documents delivered pursuant thereto or in connection therewith), and
(ii) all Obligations (A) constitute permitted Indebtedness under the Revolving
Credit Facility Documents and (B) are entitled to the benefits of the Lien
subordination and other intercreditor provisions contained in the Revolving
Credit Facility Intercreditor Agreement.

 

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(bb) The proceeds of the Loans are intended to be and shall be used solely for
the purposes set forth in and permitted by Section 2.1.

(cc) Except as set forth in Schedule 3.1(cc) and except where any failures to
comply could not reasonably be expected to result in, either individually or in
the aggregate, Material Environmental Liabilities to the Loan Parties and their
Subsidiaries, each Loan Party and each Subsidiary of each Loan Party (a) are,
and for the past five years have been in compliance with all applicable
Environmental Laws, including obtaining and maintaining all Permits required by
any applicable Environmental Law, (b) is not party to, and no Real Estate
currently (or to the knowledge of any Loan Party previously) owned, leased,
subleased, operated or otherwise occupied by or for any such Person is subject
to or the subject of, any contractual obligation or any pending or, to the
knowledge of any Loan Party, threatened, order, action, investigation, suit,
proceeding, audit, Lien, claim, demand, dispute or notice of violation or of
potential liability or similar notice relating in any manner to any
Environmental Law, (c) has not caused or suffered to occur a Release of
Hazardous Materials at, to or from any Real Estate, (d) currently (or to the
knowledge of any Loan Party, previously) own, lease, sublease, operate or
otherwise occupy no Real Estate that is contaminated by any Hazardous Materials
and (e) is not, and has not been, engaged in, and has not permitted any current
or former tenant to engage in, operations in violation of any Environmental Law
and knows of no facts, circumstances or conditions reasonably constituting
notice of a violation of any Environmental Law, including receipt of any
information request or notice of potential responsibility under the
Comprehensive Environmental Response, Compensation and Liability Act or similar
Environmental Laws.

(dd) None of any Loan Party, any Person controlling any Loan Party or any
Subsidiary of any Loan Party is (a) an “investment company,” or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act, or otherwise registered or required to be registered under, or
subject to the restrictions imposed by, the Investment Company Act, or

(b) subject to regulation under the Federal Power Act, the Interstate Commerce
Act, any state public utilities code, or any other federal or state statute,
rule or regulation limiting its ability to incur Indebtedness, pledge its assets
or perform its obligations under the Loan Documents.

(ee) There are no strikes, boycotts, grievances, work stoppages, slowdowns,
lockouts or other job actions existing, pending (or, to the knowledge of any
Loan Party, threatened) against or involving any Loan Party or any Subsidiary of
any Loan Party or any Target, except for those that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
Except as set forth on Schedule 3.1(ee), as of the Agreement Date, (a) there is
no memorandum of understanding, collective bargaining or similar agreement, and
there is no ongoing negotiation or duty to negotiate, with any union, labor
organization, works council or similar representative covering any Employee or
otherwise binding any Loan Party or any Subsidiary of any Loan Party or any
Target, (b) no petition for certification or election of any such representative
is existing or pending with respect to any Employee, (c) to the knowledge of any
Loan Party, no such representative has sought certification or recognition with
respect to any Employee, and (d) to the knowledge of any Loan Party, no Employee
or his or her representative is engaged in any organizing efforts. All current
and former Employees are or were correctly classified as exempt or non-exempt
under, and are and have been paid in accordance with, all applicable federal,
state, and local wage and hour laws, except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. Further,
all individuals who perform or have performed services for any Loan Party, any
Subsidiary of any Loan Party, or any Target are or were correctly classified
under each Employee Benefit Plan, ERISA, the Internal Revenue Code and other
Applicable Law as common law employees, independent contractors or other
non-employee basis, or leased employees, except as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
Each Loan Party, Subsidiary of any Loan Party, and Target are in material
compliance with all Applicable Laws concerning employment, including without
limitation hiring,

 

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background checks, compensation, benefits, wages (including payment of
overtime), wage deductions and withholdings, classification, immigration, work
authorization, employment eligibility verification, reporting, taxation,
occupational health and safety, equal rights, labor relations, accommodations,
breaks, notices, employment policies, paid or unpaid time off work,
accessibility, privacy, and workers’ compensation, except for those that would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

(ff) Schedule 3.1(ff) lists each Loan Party’s jurisdiction of organization,
legal name and organizational identification number, if any, and the location of
such Loan Party’s chief executive office or sole place of business, in each case
as of the date hereof.

(gg) Schedule 3.1(gg) lists all banks and other financial institutions
securities intermediary or commodity intermediary at which any Loan Party
maintains deposit, securities, commodities or similar accounts as of the
Agreement Date, and such Schedule 3.1(gg) correctly identifies the name, address
and any other relevant contact information reasonably requested by Agent or the
Required Lenders with respect to each depository or intermediary, the name in
which the account is held, a description of the purpose of the account, and the
complete account number therefor.

(hh) None of the statements contained in each exhibit, report, statement or
certificate furnished by or on behalf of any Loan Party or any of their
Subsidiaries in connection with the Loan Documents and the Transactions
(including the offering and disclosure materials, if any, delivered by or on
behalf of any Loan Party to any Secured Party prior to the Agreement Date, but
excluding any financial performance projections), when taken as a whole,
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not materially
misleading as of the time when made or delivered.

(ii) Each Loan Party and each Subsidiary of each Loan Party is in compliance in
all material respects with all U.S. economic sanctions laws, executive orders
and implementing regulations (“Sanctions”) as administered by the U.S. Treasury
Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. State
Department. No Loan Party and no Subsidiary of a Loan Party (i) is a Person on
the list of the Specially Designated Nationals and Blocked Persons (the “SDN
List”), (ii) is a Person who is otherwise the target of U.S. economic sanctions
laws such that a U.S. Person cannot deal or otherwise engage in business
transactions with such Person, (iii) is a Person organized or resident in a
country or territory subject to comprehensive Sanctions (a “Sanctioned
Country”), or (iv) is owned or controlled by (including by virtue of such Person
being a director or owning voting shares or interests), or acts, directly or
indirectly, for or on behalf of, any Person on the SDN List or a government of a
Sanctioned Country such that the entry into, or performance under, this
Agreement or any other Loan Document would be prohibited by U.S. law. Each Loan
Party and each Subsidiary of each Loan Party is in compliance with all laws
related to terrorism or money laundering (“Anti-Money Laundering Laws”)
including: (i) all applicable requirements of the Currency and Foreign
Transactions Reporting Act of 1970 (31 U.S.C. 5311 et. seq., (the Bank Secrecy
Act)), as amended by Title III of the USA Patriot Act, (ii) the Trading with the
Enemy Act, (iii) Executive Order No. 13224 on Terrorist Financing, effective
September 24, 2001 (66 Fed. Reg. 49079), and any other enabling legislation,
executive order or regulations issued pursuant or relating thereto and
(iv) other applicable federal or state laws relating to (A) anti-money
laundering rules and regulations or (B) in all material respects, “know your
customer” rules and regulations. No action, suit or proceeding by or before any
court or Governmental Authority with respect to compliance with such Anti-Money
Laundering Laws is pending or threatened to the knowledge of each Loan Party and
each Subsidiary of each Loan Party. Each Loan Party and each Subsidiary of each
Loan Party is in compliance in all material respects with all applicable
anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977
(“FCPA”) and the U.K. Bribery Act 2010 (“Anti-Corruption

 

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Laws”). None of any Loan Party or any Subsidiary of a Loan Party, nor to the
knowledge of any Loan Party or any Subsidiary thereof, any director, officer,
agent, employee or other Person acting on behalf of the Loan Party or any
Subsidiary of a Loan Party, has taken any action, directly or indirectly, that
would result in a violation of applicable Anti-Corruption Laws. The Loan Party
and each Subsidiary of a Loan Party maintains and implements policies and
procedures designed to ensure compliance by the Loan Parties, their Subsidiaries
and their respective directors, officers, employees and agents with Sanctions,
Anti-Money Laundering Laws and Anti-Corruption Laws.

(jj) The Borrower and its Subsidiaries are in all material respects in
compliance with applicable provisions of the Sarbanes-Oxley Act of 2002, as
amended, and the rules and regulations thereunder (collectively,
“Sarbanes-Oxley”).

(kk) All Obligations, constitute senior secured Indebtedness entitled to the
benefits of the subordination and/or intercreditor provisions contained in the
applicable subordination and/or intercreditor agreements governing any
subordinated Indebtedness.

(ll) The Borrower is not, and never has been, a “shell company” (as defined in
Rule 12b-2 under the Exchange Act). The Borrower is eligible to register the
Purchased Shares, the Interest Payment Shares and the Warrant Shares for resale
by the holders thereof on a registration statement on Form S-3 under the
Securities Act.

(mm) Neither the Borrower, nor any of its Affiliates, nor any Person acting on
its or their behalf, has engaged or will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer, sale or issuance of the
Securities.

(nn) Neither the Borrower, nor any of its Affiliates, nor any Person acting on
its or their behalf has, directly or indirectly, made, or will make, any offers
or sales of any security or Stock or solicited any offers to buy any security or
Stock, under circumstances that would require registration of any of the
Securities under the Securities Act or cause this offering of the Securities to
be integrated with prior offerings by the Borrower for purposes of the
Securities Act or any applicable holder of Stock approval provisions of the
Principal Market or any other authority.

(oo) The Common Stock is registered pursuant to Section 12(b) of the Exchange
Act, and neither the Borrower nor any of its Subsidiaries has taken, or will
take, any action designed to terminate, or which to the knowledge of the
Borrower and its Subsidiaries is likely to have the effect of terminating, the
registration of the Common Stock under the Exchange Act, nor has the Borrower or
any of its Subsidiaries received any notification that the SEC is contemplating
terminating such registration. Neither the Borrower nor any of its Subsidiaries
is in violation of any of the rules, regulations or requirements of the
Principal Market, and, to the knowledge of the Borrower and its Subsidiaries,
there are no facts or circumstances that would reasonably be expected to lead to
suspension or termination of trading of the Common Stock on the Principal
Market. Since February 3, 2012, (i) the Common Stock has been listed or
designated for quotation, as applicable, on the Principal Market, (ii) trading
in the Common Stock has not been suspended or deregistered by the SEC or the
Principal Market, and (iii) neither the Borrower nor any of its Subsidiaries has
received any communication, written or oral, from the SEC or the Principal
Market regarding the suspension or termination of trading of the Common Stock on
the Principal Market.

(pp) The Common Stock is eligible for clearing through The Depository Trust
Company (“DTC”), through its Deposit/Withdrawal at Custodian (DWAC) system, and
the Borrower is eligible for and participating in the Direct Registration System
(DRS) of DTC with respect to the

 

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Common Stock. The transfer agent for the Common Stock is a participant in, and
the Common Stock is eligible for transfer pursuant to, DTC’s Fast Automated
Securities Transfer Program. The Common Stock is not, and has not at any time
been, subject to any DTC “chill,” “freeze” or similar restriction with respect
to any DTC services, including the clearing of transactions in shares of Common
Stock through DTC.

(qq) The Borrower and the Borrower’s board of directors (or equivalent governing
body) have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination or other similar
anti-takeover provision under the Borrower’s Organizational Documents or the
laws of the State of Delaware that is or could become applicable to any of the
Secured Parties as a result of the transactions contemplated by the Loan
Documents and the Borrower’s fulfilling its obligations with respect thereto,
including the Borrower’s issuance of the Securities and any Secured Party’s
ownership of the Securities. The Borrower has not adopted a stockholders rights
plan (or “poison pill”) or similar arrangement relating to accumulations of
beneficial ownership of Common Stock or a change in control of the Borrower.

(rr) It is understood and acknowledged by the Borrower that none of the Secured
Parties nor holders of the Securities has been asked to agree, nor has any
Secured Party agreed, to desist from purchasing or selling, long and/or short,
Stock or other securities of the Borrower, or “derivative” securities or Stock
based on Stock or other securities issued by the Borrower or to hold the
Securities for any specified term; and no Secured Party nor holder of Securities
shall be deemed to have any affiliation with or control over any arm’s length
counterparty in any “derivative” transaction. The Borrower further understands
and acknowledges that (i) one or more Secured Parties or holders of Securities
may engage in hedging and/or trading activities at various times during the
period that the Securities are outstanding, and

(ii) such hedging and/or trading activities, if any, can reduce the value of the
Stock held by the existing holders of Stock of the Borrower, both at and after
the time the hedging and/or trading activities are being conducted. The Borrower
acknowledges that any such hedging and/or trading activities do not constitute a
breach of any Loan Document or affect the rights of any Secured Party or holder
of Securities under any Loan Document. The Borrower acknowledges that the
issuance of any Interest Payment Shares or Warrant Shares may result in dilution
of the outstanding shares of Common Stock, which dilution may be substantial
under certain market conditions. The Borrower further acknowledges that its
obligations under the Loan Documents, including its obligation to issue the
Warrant Shares upon exercise of the Warrants, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim any Loan Party may
have against any of the Secured Parties and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the
Borrower.

(ss) The Borrower and the other Loan Parties are solely responsible for the
payment of any fees, costs, expenses and commissions of any placement agent,
broker or financial adviser relating to or arising out of the transactions
contemplated by the Loan Documents. The Borrower and the other Loan Parties will
pay, and hold each of the Secured Parties harmless against, any liability, loss
or expense (including attorneys’ fees, costs and expenses) arising in connection
with any claim for any such payment.

(tt) The Borrower has furnished Agent and the Lenders with a true, correct and
complete copy of the Agreement Date Acquisition Documents. Each of the Loan
Parties and their Subsidiaries and, to the Loan Parties’ and their Subsidiaries’
knowledge, each other party to the Agreement Date Acquisition Documents, has
duly taken all necessary organizational action to authorize the execution,
delivery and performance of the Agreement Date Acquisition Documents and the
consummation of transactions contemplated thereby. As of the Agreement Date, the
Agreement Date Acquisition and the other Transactions have been consummated (or
are being consummated substantially

 

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contemporaneously with the Initial Disbursement hereunder) in accordance with
the terms of the Agreement Date Acquisition Documents. Except both (I) as would
not reasonably be expected to have a Material Adverse Effect and (II) to the
extent that any such breach, violation or failure to comply with such legal
requirements or any failure to obtain and maintain in full force and effect such
consents, approvals and exemptions would not (Y) provide any Loan Party or any
other Person the right to terminate the Agreement Date Acquisition Documents or
fail to consummate the Agreement Date Acquisition or (Z) cause any breach or
default under the Agreement Date Acquisition Documents, in all other cases, the
Agreement Date Acquisition and the other Transactions do not breach, violate or
cause noncompliance with any applicable legal requirements and all necessary
governmental, regulatory, creditor, shareholder, partner and other material
consents, approvals and exemptions required to be obtained by a Loan Party or
any of its Subsidiaries and, to Loan Parties’ and their Subsidiaries’ knowledge,
each other party to the Agreement Date Acquisition Documents have been, prior to
consummation of the Agreement Date Acquisition and other Transactions, duly
obtained and are in full force and effect. As of the date of the Agreement Date
Acquisition Agreement, to the extent required under the Agreement Date
Acquisition Agreement or Applicable Law, all applicable waiting periods with
respect to the Agreement Date Acquisition and the other Transactions have
expired without any action being taken by any competent Governmental Authority
which restrains, prevents or imposes material adverse conditions upon the
consummation of the Agreement Date Acquisition or the other Transactions. Except
both (I) as would not result in a Material Adverse Effect and (II) would not
(Y) provide any Loan Party or any other Person the right to terminate the
Agreement Date Acquisition Documents or fail to consummate the Agreement Date
Acquisition or (Z) cause any breach or default under the Agreement Date
Acquisition Documents, the execution and delivery of the Agreement Date
Acquisition Documents and the consummation of the Agreement Date Acquisition and
the other Transactions did not, violate any statute or regulation of the United
States (including any securities law) or of any state or other applicable
jurisdiction, or any order, judgment or decree of any court or governmental body
binding on any Loan Party or any Loan Party’s Subsidiaries or, to the Loan
Parties’ and their Subsidiaries’ knowledge, any other party to the Agreement
Date Acquisition Documents, or result in a breach of, or constitute a default
under, any material agreement, indenture, instrument or other document, or any
judgment, order or decree, to which any Loan Party or any Loan Party’s
Subsidiary is a party or by which any Loan Party or any Loan Party’s Subsidiary
is bound or, to the Loan Parties’ and their Subsidiaries’ knowledge, to which
any other party to the Agreement Date Acquisition Documents is a party or by
which any such party is bound. No statement or representation made in the
Agreement Date Acquisition Documents by any Loan Party or any Loan Party’s
Subsidiary or, to the Loan Parties’ and their Subsidiaries’ knowledge, any other
Person, contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not materially misleading as of the time that such statement or
representation is made. (i) Each of the representations and warranties contained
in the Agreement Date Acquisition Documents made by a Loan Party or any Loan
Party’s Subsidiary is true, correct and complete in all material respects
(without duplication of any materiality qualifier contained therein) and (ii) to
the Loan Parties’ and their Subsidiaries’ knowledge, each of the representations
and warranties contained in the Agreement Date Acquisition Documents made by any
Person other than a Loan Party or any Loan Party’s Subsidiary is true, correct
and complete in all material respects (without duplication of any materiality
qualifier contained therein), in each case, other than to the extent that any
failure of such representation or warranty to be true, correct or complete would
not (A) provide any Loan Party or any other Person the right to terminate the
Agreement Date Acquisition Documents or fail to consummate he Agreement Date
Acquisition or (B) cause any breach or default under the Agreement Date
Acquisition Documents.

(uu) Schedule 3.1(uu) sets forth, as of the Agreement Date, a complete and
correct list of all Registrations held by each Loan Party and its Subsidiaries.
Such listed Registrations are the only Registrations that are required for the
Loan Parties and their Subsidiaries to conduct their respective businesses as
presently conducted or as proposed to be conducted. Each Loan Party and its
Subsidiaries

 

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has, and it and its Products are in conformance with, all Registrations required
to conduct its respective businesses as now or currently proposed to be
conducted except where the failure to have such Registrations could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. To the knowledge of each Loan Party and its Subsidiaries,
neither the FDA nor other Governmental Authority is considering limiting,
suspending or revoking such Registrations or changing the marketing
classification or labeling or other significant parameter affecting the Products
of the Loan Parties or any of their respective Subsidiaries. To the knowledge of
each Loan Party and its Subsidiaries, there is no false or misleading
information or significant omission in any product application or other
submission to the FDA or other Governmental Authority administering Public
Health Laws. The Loan Parties and their respective Subsidiaries have fulfilled
and performed their obligations under each Registration, and no event has
occurred or condition or state of facts exists which would constitute a breach
or default, or would cause revocation or termination of any such Registration.
To the knowledge of each Loan Party and its Subsidiaries, no event has occurred
or condition or state of facts exists which could present potential product
liability related, in whole or in part, to Regulatory Matters. To the knowledge
of each Loan Party and its Subsidiaries, any third party that is a manufacturer
or contractor for the Loan Parties or any of their respective Subsidiaries is in
compliance with all Registrations required by the FDA or comparable Governmental
Authority and all Public Health Laws insofar as they reasonably pertain to the
Products of the Loan Parties and their respective Subsidiaries.

(vv) All Products designed, developed, investigated, manufactured, prepared,
assembled, packaged, tested, labeled, distributed, sold or marketed by or on
behalf of the Loan Parties or their respective Subsidiaries that are subject to
Public Health Laws have been and are being designed, developed, investigated,
manufactured, prepared, assembled, packaged, tested, labeled, distributed, sold
and marketed in material compliance with the Public Health Laws and each other
Applicable Law, including clinical and non-clinical evaluation, product approval
or clearance, premarketing notification, good manufacturing practices, labeling,
advertising and promotion, record-keeping, establishment registration and device
listing, reporting of recalls and adverse event reporting.

(ww) Except as set forth on Schedule 3.1(ww), no Loan Party nor its Subsidiaries
is subject to any obligation arising under an administrative or regulatory
action, proceeding, investigation or inspection by or on behalf of a
Governmental Authority, warning letter, notice of violation letter, consent
decree, request for information or other notice, response or commitment made to
or with a Governmental Authority with respect to Regulatory Matters, and, to the
knowledge of each Loan Party and its Subsidiaries, no such obligation has been
threatened. Each Loan Party and its Subsidiaries has made all notifications,
submissions, and reports required by any such obligation, and all such
notifications, submissions and reports were true, complete, and correct in all
material respects as of the date of submission to FDA or any other Governmental
Authority. There is no, and there is no act, omission, event, or circumstance of
which any Loan Party or any of its Subsidiaries has knowledge that could
reasonably be expected, individually or in the aggregate, to give rise to or
lead to, any material civil, criminal or administrative action, suit, demand,
claim, complaint, hearing, investigation, demand letter, warning letter,
proceeding or request for information against any Loan Party or its
Subsidiaries, and, to each Loan Party’s and its Subsidiary’s knowledge, no Loan
Party nor its Subsidiaries has any material liability (whether actual or
contingent) for failure to comply with any Public Health Laws. There has not
been any violation of any Public Health Laws by any Loan Party or its
Subsidiaries in its product development efforts, submissions, record keeping and
reports to the FDA or any other Governmental Authority that could reasonably be
expected to require or lead to investigation, corrective action or enforcement,
regulatory or administrative action that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. To the
knowledge of each Loan Party and each of its Subsidiaries, there are no civil or
criminal proceedings relating to any Loan Party or any of its Subsidiaries or
any officer, director or employee of any Loan Party or Subsidiary of any Loan
Party that involve a matter within or related to the FDA’s or any other
Governmental Authority’s jurisdiction. No Loan Party nor any Affiliate thereof
has received any material adverse notice (written or oral) from the FDA or any
other Governmental Authority regarding the approvability or approval of any
Product.

 

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(xx) As of the Agreement Date, except as set forth on Schedule 3.1(xx), no Loan
Party nor its Subsidiaries is undergoing any inspection related to Regulatory
Matters or any other Governmental Authority investigation.

(yy) During the period of three calendar years immediately preceding the
Agreement Date, no Loan Party nor any Subsidiary of any Loan Party has
introduced into commercial distribution any Products manufactured by or on
behalf of any Loan Party or any Subsidiary of a Loan Party or distributed any
products on behalf of another manufacturer that were upon their shipment by any
Loan Party or any of its Subsidiaries adulterated or misbranded in violation of
21 U.S.C. § 331. No Loan Party nor any Subsidiary of any Loan Party has received
any notice of communication from any Governmental Authority alleging material
noncompliance with any Applicable Law. No Product has been seized, withdrawn,
recalled, detained, or subject to a suspension (other than in the ordinary
course of business) of research, manufacturing, distribution or
commercialization activity, and there are no facts or circumstances reasonably
likely to cause (i) the seizure, denial, withdrawal, recall, detention, public
health notification, safety alert or suspension of manufacturing or other
activity relating to any Product; (ii) a change in the labeling of any Product
suggesting a compliance issue or risk; or (iii) a termination, seizure or
suspension of manufacturing, researching, distributing or marketing of any
Product. No proceedings in the United States or any other jurisdiction seeking
the withdrawal, recall, revocation, suspension, import detention or seizure of
any Product are pending or threatened against any Loan Party or any of its
Subsidiaries.

(zz) No Loan Party nor any Subsidiary of any Loan Party nor any of its officers,
directors, employees, agents or contractors (i) have been excluded or debarred
from any federal healthcare program (including Medicare or Medicaid) or any
other federal program or (ii) have received notice from the FDA or any other
Governmental Authority with respect to debarment or disqualification of any
Person that could reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. No Loan Party nor any Subsidiary of any Loan
Party nor any of its officers, directors, employees, agents or contractors have
been convicted of any crime or engaged in any conduct for which (y) debarment is
mandated or permitted by 21 U.S.C. § 335a or (z) such Person could be excluded
from participating in the federal health care programs under Section 1128 of the
Social Security Act or any similar law. No officer and to the knowledge of each
Loan Party and its Subsidiaries, no employee or agent of any Loan Party or its
Subsidiaries, has (A) made any untrue statement of material fact or fraudulent
statement to the FDA or any other Governmental Authority; (B) failed to disclose
a material fact required to be disclosed to the FDA or any other Governmental
Authority; or (C) committed an act, made a statement or failed to make a
statement that could reasonably be expected, individually or in the aggregate,
to provide the basis for the FDA or any other Governmental Authority to invoke
its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities,” as set forth in 56 Fed. Reg. 46191 (September 10, 1991).

(aaa) Except as set forth on Schedule 3.1(aaa), no Loan Party nor any Subsidiary
of any Loan Party has granted rights to design, develop, manufacture, produce,
assemble, distribute, license, prepare, package, label, market or sell its
Products to any other Person nor is any Loan Party or any of its Subsidiaries
bound by any agreement that affects any Loan Party’s exclusive right to design,
develop, manufacture, produce, assemble, distribute, license, prepare, package,
label, market or sell its Products.

(bbb) Except as set forth on Schedule 3.1(bbb): (i) each Loan Party and its
Subsidiaries and, to their knowledge, their respective contract manufacturers
are, and have been for the past three calendar years, in compliance with, and
each Product in current commercial distribution is designed,

 

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manufactured, processed, prepared, assembled, packaged, labeled, stored,
installed, serviced and held in compliance with, the current Good Manufacturing
Practice regulations set forth in 21 C.F.R. Parts 210 and 211, as applicable,
(ii) each Loan Party and its Subsidiaries is in compliance with the written
procedures, record-keeping and reporting requirements required by the FDA or any
comparable Governmental Authority pertaining to the reporting of adverse events
and recalls involving the Products, (iii) all Products are and have been
labeled, promoted, and advertised in accordance with their Registration and
approved labeling or within the scope of an exemption from obtaining such
Registration, and (iv) each Loan Party and its Subsidiaries’ establishments are
registered with the FDA, as applicable, and each Product is listed with the FDA
under the applicable FDA registration and adverse event reporting regulations
for pharmaceuticals.

(ccc) Each of the Subject Foreign Subsidiaries (i) have (A) no more than $50,000
in net income, revenue or operations for the most recent twelve month period for
which financial statements have been provided or filed (or are required to be
provided or filed) pursuant to Section 5.1(h) (or that are otherwise available
prior to the Agreement Date) or (B) no assets or property with an aggregate fair
market value (when taken together) in excess of $50,000 and (ii) do not own any
assets or property that are material to the operation of the business (or the
business) of the Loan Parties.

Section 3.2 Loan Parties Acknowledgment. The Loan Parties (on their behalf and
on their Subsidiaries’ behalf) acknowledge that they have made the
representations and warranties referred to in Section 3.1 with the intention of
persuading Agent and the Lenders to enter into the Loan Documents and that Agent
and the Lenders have entered into the Loan Documents on the basis of, and in
full reliance on, each of such representations and warranties, each of which
shall survive the execution and delivery of this Agreement, the other Loan
Documents, the making of any Disbursement and the issuance of the Securities
until the later of (a) (i) all Obligations being repaid in full, and (ii) all of
the Subsequent Disbursement Commitments being no longer available or terminated
and (b) the end of the Reporting Period.

Section 3.3 Representations and Warranties of the Lenders. Each Lender,
severally but not jointly, represents and warrants to the Borrower as of the
Agreement Date that:

(a) Such Lender (i) is acquiring the Loans provided by such Lender and the Notes
(together with the related guaranties set forth in the Security Agreement of the
Guarantors) provided by the applicable Loan Party in connection with such Loan
made by such Lender hereunder and the Warrants related to such Loans made by
such Lender hereunder, (ii) is acquiring the Purchased Shares purchased by such
Lender pursuant to the terms and conditions of the Stock Purchase Agreement and
such Lender’s right to the Royalty pursuant to the terms and conditions of the
Royalty Agreement, and (iii) upon issuance of the Warrant Shares to such Lender,
upon any exercise of, otherwise pursuant to such Lender’s Warrants, will acquire
such Warrant Shares, in each case, for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered under, or exempted from, the
registration requirements of the Securities Act; provided, however, that by
making the representations herein, such Lender does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
assign, transfer or otherwise dispose of any of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act.

(b) Such Lender is an “accredited investor” as that term is defined in Rule
501(a) of Regulation D.

 

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(c) Such Lender understands that the Securities are being offered and sold to it
in reliance on specific exemptions from the registration requirements of the
United States federal and state securities laws and that the Borrower is relying
in part upon the truth and accuracy of, and such Lender’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
such Lender set forth herein in order to determine the availability of such
exemptions.

(d) Such Lender and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Loan Parties and their
Subsidiaries and materials relating to the offer and sale of the Securities that
have been requested by such Lender. Such Lender and its advisors, if any, have
been afforded the opportunity to ask questions of the Loan Parties. Neither such
inquiries nor any other due diligence investigations conducted by such Lender or
its advisors, if any, or its representatives shall modify, amend or otherwise
affect such Lender’s right to rely on the representations and warranties of the
Loan Parties and their Subsidiaries contained in Article 3 and elsewhere in the
Loan Documents. Such Lender can bear the economic risk of a total loss of its
investment in the Securities being offered and has such knowledge and experience
in business and financial matters so as to enable it to understand the risks of
and investment decision with respect to its investment in the Securities.

(e) Such Lender understands that no United States federal or state agency or any
other government or Governmental Authority has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.

ARTICLE 4

CONDITIONS OF DISBURSEMENT

Section 4.1 Conditions to the Initial Disbursement. The obligation of the
Lenders to make the Initial Disbursement shall be subject to the fulfillment and
satisfaction of all of the following conditions:

(a) Agent and the Lenders shall have received executed counterparts of this
Agreement and each other Loan Document set forth on the closing checklist
attached hereto as Exhibit D;

(b) Agent shall have received a duly executed written notice from the Borrower
complying with the requirements of Section 2.2(a);

(c) all actions required to be taken by the Borrower pursuant to Section 2.10
shall have been taken;

(d) (i) the Specified Acquisition Agreement Representations shall be true and
correct but only to the extent that the Borrower or its Affiliates have the
right (taking into account any applicable cure provisions) to terminate the
Borrower’s or its Affiliates’ obligations under the Agreement Date Acquisition
Agreement or otherwise decline to close or consummate the Agreement Date
Acquisition as a result of a breach (or failure to be accurate, true or correct)
of any such representations or warranties; and (ii) the Specified
Representations shall be true and correct in all material respects (unless such
Specified Representations are already subject to materiality or other qualifier,
and in such event, in all respects) as of such date, except to the extent that
such representation or warranty expressly relates to an earlier date (in which
event such representations and warranties shall have been true and correct in
all material respects (without duplication of any materiality or other qualifier
contained therein) as of such earlier date);

 

 

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(e) substantially concurrently with the execution and delivery of the Loan
Documents, the Agreement Date Acquisition shall be consummated in accordance
with the terms of that certain Purchase and Sale Agreement, dated as of November
28, 2017, by and between the Borrower and The Medicines Company, a Delaware
corporation, and the schedules and exhibits thereto, each in the form that was
delivered to Katten Muchin Rosenman LLP on November 28, 2017 at 8:26 p.m. (New
York time), and all conditions therein shall have been satisfied (without giving
effect to any waiver thereof) as of such time, but, in each case, without giving
effect to (i) any amendments, modifications or supplements thereof or
(ii) waivers or consents (including, for the avoidance of doubt, waivers or
consents to deviations of any of the conditions set forth in Section 10.1 or
10.3 of the Purchase and Sale Agreement) thereunder by the Borrower or its
Affiliates (but not, for the avoidance of doubt, the Seller and its Affiliates),
in the case of each of clauses (i) and (ii) above, that are materially adverse
to the interests of Agent or the Lenders and that have not been consented to in
writing (such consent not to be unreasonably withheld) by the Agent and the
Lenders, it being understood that any change in (A) the purchase price of the
Agreement Date Acquisition (other than (1) an increase funded solely by equity
of the existing direct and indirect equity holders of the Borrower or (2) a
decrease in the purchase price of the Agreement Date Acquisition so long as 100%
of such reduction is allocated to reduce (y) first, the Initial Disbursement
based on the Pro Rata Share of the Lenders making the Initial Disbursement and
(z) then, the Subsequent Disbursement Commitments) and (B) the definition of
“Material Adverse Effect”, in each cases, in such Purchase and Sale Agreement
shall be deemed materially adverse to the interests of Agent and the Lenders;

(f) neither the Borrower nor any of its Subsidiaries shall have any
Indebtedness, other than Permitted Indebtedness and all other Indebtedness shall
be paid off (and the Suchard Refinancing shall have occurred) pursuant to payoff
letters reasonably satisfactory to Agent and the Required Lenders and any Liens
relating thereto shall be terminated in a manner reasonably satisfactory to
Agent and the Required Lenders;

(g) all actions necessary (or reasonably requested by the Agent or the Required
Lenders) to establish that Agent (for the benefit of the Secured Parties) will
have perfected first priority security interests and Liens in the Collateral
under the Loan Documents shall have been taken, it being understood and agreed
that to the extent any security interest in any Collateral (other than security
interests that may be perfected by (i) the filing of a financing statement under
the UCC, (ii) the making of federal intellectual property filings with the
United States Patent and Trademark Office and the United States Copyright Office
and (iii) the delivery of certificates, if applicable, evidencing the Stock of
the Loan Parties (other than the Borrower) and any other Subsidiary of the
Borrower) is not or cannot be perfected on the Agreement Date after the
Borrower’s use of commercially reasonable efforts to do so, then the perfection
of such security interests shall not constitute a condition precedent to the
availability of the Initial Disbursement on the Agreement Date, but instead
shall be required to be perfected after the Agreement Date pursuant to
arrangements and timing to be mutually agreed by the Required Lenders and the
Borrower acting reasonably (but not to exceed 60 days after the Agreement Date,
unless extended by the Required Lenders in its sole discretion);

(h) the payment by the Borrower of the fees required to be paid pursuant to
Section 2.9 to the Agent and the Lenders and all other fees required to be paid
on the Agreement Date pursuant to this Agreement and the other Loan Documents
and all costs and expenses required to be paid on the Agreement Date (including
pursuant to Section 6.3) pursuant to this Agreement and the other Loan
Documents, in the case of costs and expenses, to the extent invoiced at least
two (2) Business Days prior to the Agreement Date, shall have been paid (which
amounts, at the sole option of the Lenders, may be offset against the proceeds
of the Initial Disbursement);

(i) Agent and the Lenders shall have received at least five (5) Business Days
prior to the Agreement Date all documentation and other information required by
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA Patriot Act, that has been
reasonably requested by Agent or any Lender at least ten (10) days in advance of
the Agreement Date, including a duly executed IRS Form W-9 (or such other
applicable tax form) of the Borrower;

 

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(j) the conditions set forth in Section 2.2(a) have been satisfied and the terms
set forth in Section 2.2(a) have been completely complied with;

(k) the shareholders of the Borrower shall have approved the issuance of all of
the shares of Common Stock being issued in the Agreement Date Acquisition and to
the Lenders (including all of the shares underlying the Warrants) and any other
Person or entity providing equity financing in connection with the Agreement
Date Acquisition for purposes of satisfying the Principal Market listing
requirement;

(l) the Borrower shall be in compliance with all of the covenants set forth in
Section 3 of the Commitment Letter, in all material respects (unless such
covenants are already subject to materiality, and in such event, in all
respects); and

(m) since the date of the Agreement Date Acquisition Agreement, no change,
effect, development, circumstance, condition or occurrence shall have occurred
which has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect (as defined in the Agreement Date
Acquisition Agreement as in effect on November 28, 2017).

Section 4.2 Conditions to the Subsequent Disbursements. In addition to the
fulfillment and satisfaction of each condition set forth above in Section 4.1,
the obligation of the Lenders to make a Subsequent Disbursement shall be subject
to the fulfillment and satisfaction of all of the following conditions:

(a) Agent shall have received a duly executed written notice from the Borrower
complying with the requirements of Section 2.2(b);

(b) the proceeds of such Subsequent Disbursement shall be directed and requested
for use in accordance with Section 2.1;

(c) no Default or Event of Default shall have occurred or would result from such
Subsequent Disbursement or the use of the proceeds therefrom;

(d) at the time of and after giving effect to such Subsequent Disbursement and
the use of proceeds thereof, each representation and warranty by any Loan Party
or any of its Subsidiaries contained herein or in any other Loan Document shall
be true, correct and complete as of such date and time, except to the extent
that such representation or warranty expressly relates to an earlier date (in
which event such representations and warranties shall have been true, correct
and complete as of such earlier date);

(e) all of the Subsequent Disbursement Conditions have been satisfied;

(f) the Lenders shall have received original Notes aggregating the amount of the
funded Subsequent Disbursement, if requested;

(g) the conditions set forth in Section 2.2(b) have been satisfied and the terms
set forth in Section 2.2(b) have been completely complied with;

 

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(h) the payment by the Borrower of the fees required to be paid pursuant to
Section 2.9 to the Agent and the Lenders on such Disbursement Date and all other
fees required to be paid on such Disbursement Date pursuant to this Agreement
and the other Loan Documents and all costs and expenses required to be paid on
such Disbursement Date (including pursuant to Section 6.3) pursuant to this
Agreement and the other Loan Documents (which amounts, at the sole option of the
Lenders, may be offset against the proceeds of such Subsequent Disbursement);
and

(i) the Agent and the Lenders shall have received a certificate executed by an
Authorized Officer of the Borrower, in form and substance reasonably
satisfactory to the Agent and the Required Lenders, certifying that the
conditions in this Sections 4.2 have been satisfied in all respects.

ARTICLE 5

PARTICULAR COVENANTS AND EVENTS OF DEFAULT

Section 5.1 Affirmative Covenants.

(a) The Loan Parties shall and shall cause their Subsidiaries to (i) preserve
and maintain in full force and effect its organizational existence and good
standing under the Applicable Laws of its jurisdiction of incorporation,
organization or formation, as applicable, and (ii) preserve and maintain all
qualifications to do business in each other jurisdiction not covered by clause
(i) above in which the failure to be so qualified would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

(b) The Loan Parties shall, and shall cause their Subsidiaries to, (i) comply in
all material respects with all Applicable Laws, except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings, and
(ii) maintain in effect and enforce policies and procedures designed to ensure
compliance by the Loan Parties, their Subsidiaries and their respective
directors, officers, employees and agents with Anti-Corruption Laws, Anti-Money
Laundering Laws and applicable Sanctions.

(c) The Loan Parties shall, and shall cause their Subsidiaries to, obtain, make
and keep in full force and effect all licenses, certificates, approvals,
registrations, clearances, Authorizations and permits required to conduct their
businesses, except where the failure to make and keep such licenses,
certificates, approvals, registrations, clearances, authorizations and permits
in full force and effect could not reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect.

(d) Each Loan Party shall, except as otherwise permitted by this Agreement,
maintain, and shall cause each of its Subsidiaries to maintain, and preserve all
its assets and property which is used or useful in its business in good working
order and condition, ordinary wear and tear excepted and shall make all
necessary repairs thereto and renewals and replacements thereof, except where
the failure to do so could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

(e) The Loan Parties shall, and shall cause each of their Subsidiaries to,
maintain with financially sound and reputable insurance companies insurance with
respect to their assets, properties and business, against such hazards and
liabilities, of such types and in such amounts, as is customarily maintained by
companies in the same or similar businesses similarly situated. Each such policy
of insurance shall (i) in the case of each liability policy, name Agent (on
behalf, and for the benefit, of the Secured Parties) as an additional insured
thereunder as its interests may appear and (ii) in the case of each casualty
insurance policy contain a lender’s loss payable clause or endorsement that
names Agent,

 

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(on behalf, and for the benefit, of the Secured Parties), as the lender’s loss
payee thereunder and, to the extent available, provide for at least thirty
(30) days’ prior written notice to Agent of any modification or cancellation of
such policy (or ten (10) days’ prior written notice in the case of the failure
to pay any premiums thereunder). A true and complete listing of such insurance,
including issuers, coverages and deductibles, shall be provided to Agent and the
Lender promptly following Agent’s or any Lender’s request.

(f) Each Loan Party shall, and shall cause each of its Subsidiaries to, pay,
discharge and perform as the same shall become due and payable or required to be
performed all Tax liabilities, assessments and governmental charges or levies
upon it or its property, unless the same are being contested in good faith by
appropriate proceedings diligently prosecuted which stay the enforcement of any
Lien and for which adequate reserves in accordance with GAAP are being
maintained by such Person.

(g) Subject to Section 5.1(r), the Loan Parties shall promptly (and, in any
event, within (y) with respect to clause (A) below, two (2) Business Days and
(z) with respect to clause (B) below, ten (10) days) notify each Secured Party
of the occurrence of (A) any Default or Event of Default and (B) any claims
arising after the Agreement Date (or before the Agreement Date to the extent any
action related thereto arises after the Agreement Date) (other than in
connection with the denial of plan claims in the ordinary course of business),
litigation, arbitration, mediation or administrative or regulatory proceedings
that are instituted or threatened against any Loan Party requesting injunctive
relief or damages in excess of $500,000.

(h) If the Borrower is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act, the Loan Parties will provide to Agent and each
Lender quarterly financial statements for the Borrower and its Subsidiaries
within 45 days after the end of each fiscal quarter of the Borrower, and an
audited annual financial statements within 120 days after the end of each fiscal
year of the Borrower prepared in accordance with GAAP with a report thereon by
the Borrower’s independent certified public accountants, which accountants shall
be reasonably acceptable to Agent and the Required Lenders. Any such report and
any report of the Borrower’s independent certified public accountants on any
consolidated financial statements included in any SEC Document filed during the
Reporting Period (as defined below) shall (i) contain an unqualified opinion
(subject to the exception set forth below in clause (ii) of this sentence),
stating that such consolidated financial statements present fairly in all
material respects the financial position and condition and results of operations
of the Borrower and its Subsidiaries as of the dates and for the periods and
have been prepared in conformity with GAAP applied on a basis consistent with
prior years, and (ii) not include any explanatory paragraph expressing
substantial doubt as to going concern status (other than any such paragraph
(x) included in the Borrower’s annual report on Form 10-K for the year ended
December 31, 2017 or (y) arising from the impending maturity of the Loans or the
Revolving Credit Facility, in each case of this clause (y), solely in the case
of the audit delivered with respect to the fiscal year immediately prior to the
fiscal year during which the applicable maturity is scheduled). From the
Agreement Date until the later of (i) the first date on which no Warrants remain
outstanding, and (ii) the first date on which none of the Secured Parties owns
any Securities (the period ending on such latest date, the “Reporting Period”),
the Borrower and its Subsidiaries shall timely (without giving effect to any
extensions pursuant to Rule 12b-25 of the Exchange Act) file all reports
required to be filed with the SEC pursuant to the Exchange Act, and the Borrower
and its Subsidiaries shall not terminate the registration of the Common Stock
under the Exchange Act or otherwise terminate its status as an issuer required
to file reports under the Exchange Act, even if the securities laws would
otherwise permit any such termination. The Borrower hereby agrees that, during
the Reporting Period, the Borrower shall send to each Secured Party copies of
(i) any notices and other information made available or given to the holders of
the Stock of the Borrower generally, contemporaneously with the Borrower’s
making available or giving such notices and other

 

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information to such holders of Stock and (ii) all other documents, reports,
financial data and other information not available on EDGAR that does not
contain any material non-public information of the Borrower that any Secured
Party may reasonably request. Subject to Section 5.1(r), at the same time as (A)
to the extent the Borrower is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act, the quarterly and annual financial
statements are delivered or otherwise provided to Agent and each Lender pursuant
to the first sentence of this Section 5.1(h) or (B) to the extent the Borrower
is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act,
any Form 10-Q or Form 10- K is filed with the SEC pursuant to the Exchange Act,
in each case, a Compliance Certificate shall be delivered by the Borrower to
Agent (and Agent shall promptly (but, in any event, within two (2) Business Days
after (i) receipt thereof by (A) Agent’s main operations contact or (B) any
other Person designated by Agent to receive notices for (or on behalf of) Agent
pursuant to the notices provisions of the Loan Documents (including Section 6.1
of this Agreement) or (ii) knowledge of receipt of an item from the Borrower by
Agent’s main operations contact or such other Person designated by Agent to
receive notices for (or on behalf of) Agent pursuant to the notices provisions
of the Loan Documents (including Section 6.1 of this Agreement)) deliver to each
Lender); provided that, with respect to clause (B) only, solely to the extent
any earnings report for the same period is publicly reported or is filed with
the SEC prior to the time when any Form 10-Q or Form 10-K containing the
applicable quarterly or annual financial statements is filed with the SEC and to
the extent the earnings set forth in any such earnings report would result in a
financial covenant default under Section 5.1(v), the Compliance Certificate
shall instead be delivered by the Borrower to Agent (and Agent shall promptly
(but, in any event, within two (2) Business Days after (i) receipt thereof by
(A) Agent’s main operations contact or (B) any other Person designated by Agent
to receive notices for (or on behalf of) Agent pursuant to the notices
provisions of the Loan Documents (including Section 6.1 of this Agreement) or
(ii) knowledge of receipt of an item from the Borrower by Agent’s main
operations contact or such other Person designated by Agent to receive notices
for (or on behalf of) Agent pursuant to the notices provisions of the Loan
Documents (including Section 6.1 of this Agreement)) on the same day as such
earnings report is publicly reported or is filed with the SEC. Within 45 days
after the end of each fiscal quarter of the Borrower, the Loan Parties and their
Subsidiaries shall deliver to Agent and the Lenders an updated Perfection
Certificate. Upon the reasonable request of any Secured Party, the Loan Parties
and their Subsidiaries shall promptly deliver to such Secured Party such
additional business, financial, corporate affairs, perfection certificates,
items or documents related to creation, perfection or priority of Agent’s Liens
in the Collateral and other information as any Secured Party may from time to
time reasonably request. On the same day that the same are sent, the Loan
Parties and their Subsidiaries shall deliver to Agent and the Lenders copies of
all financial statements, reports, documents and other information which any
Loan Party or any of its Subsidiaries sends to its holders of Stock.

(i) Each Loan Party shall, and shall cause each of its Subsidiaries to, with
respect to each owned, leased or controlled property, during normal business
hours and upon reasonable advance notice (unless an Event of Default shall have
occurred and be continuing, in which event no notice shall be required and the
Secured Parties and their representatives shall have access at any and all times
during the continuance thereof): (a) provide access to such property to the
Secured Parties and their representatives, as frequently as any Secured Party
determines to be appropriate; and (b) permit the Secured Parties to conduct
field examinations, appraise, inspect, and make extracts and copies (or take
originals if reasonably necessary) from all of such Loan Party’s and its
Subsidiaries’ books and records, and evaluate and conduct appraisals and
evaluations in any manner and through any medium that Agent considers advisable,
in each instance, at the Loan Parties’ sole expense; provided the Loan Parties
shall only be obligated to reimburse each Secured Party for the expenses of one
such appraisal, evaluation and inspection of such Secured Party per calendar
year unless an Event of Default has occurred and is continuing, in which case,
the Loan Parties shall reimburse the Secured Parties for the expenses of all
such appraisals, evaluations and inspections conducted by the Secured Parties
and their representatives.

 

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(j) Each Loan Party shall ensure that all written information, exhibits and
reports furnished to any Secured Party, when taken as a whole, do not and will
not, and that each SEC Document filed during the Reporting Period does not,
contain any untrue statement of a material fact and do not and will not (or does
not, as applicable) omit to state any material fact or any fact necessary to
make the statements contained therein not materially misleading in light of the
circumstances in which made, and will promptly disclose to Agent and the Lenders
and correct any defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgement or recordation thereof.

(k) Each Loan Party shall enter into, and cause each depository, securities
intermediary or commodities intermediary to enter into, Control Agreements with
respect to each deposit, securities, commodity or similar account maintained by
such Person (other than (a) any payroll account so long as such payroll account
is a zero balance account and (b) withholding tax and fiduciary accounts (such
accounts in clauses (a) and (b), the “Excluded Accounts”)) as of and after the
Agreement Date; provided, it is agreed and understood that the Loan Parties
shall have until the date that is sixty (60) days following the Agreement Date
(or such later date as may be agreed to by the Required Lenders in their sole
discretion) (such period, the “Post-Closing Control Agreement Period”) to comply
with the provisions of this Section 5.1(k) with regard to such accounts (other
than Excluded Accounts) of the Loan Parties existing on the Agreement Date.

(l) Promptly (but in any event within ten (10) days of such request) upon
request by Agent or the Required Lenders, the Loan Parties shall (and, subject
to the limitations set forth herein and in the other Loan Documents, shall cause
each of their Subsidiaries to) take such additional actions and execute such
documents as Agent or the Required Lenders may reasonably require from time to
time in order (i) to carry out more effectively the purposes of this Agreement
or any other Loan Document, (ii) to subject to the Liens created by any of the
Loan Documents any of the assets or properties, rights or interests covered by
any of the Loan Documents, (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Loan Documents and the Liens intended
to be created thereby, and (iv) to better assure, grant, preserve, protect and
confirm to the Secured Parties the rights granted or now or hereafter intended
to be granted to the Secured Parties under any Loan Document. Without limiting
the generality of the foregoing, the Loan Parties shall cause each of their
Subsidiaries (other than Excluded Foreign Subsidiaries) promptly after (and in
any event within ten (10) days of) the formation or acquisition thereof, to
guaranty the Obligations and to cause each such Subsidiary to grant to Agent,
for the benefit of the Secured Parties, a security interest in, subject to the
limitations set forth herein and in the Loan Documents, all of such Subsidiary’s
assets and property to secure such guaranty and to take such other actions
reasonably requested by Agent or the Required Lenders with respect to making any
such Subsidiary a Loan Party under the Loan Documents. Furthermore, the Borrower
shall notify Agent (and Agent shall promptly (but, in any event, within two
(2) Business Days after (i) receipt thereof by (A) Agent’s main operations
contact or (B) any other Person designated by Agent to receive notices for (or
on behalf of) Agent pursuant to the notices provisions of the Loan Documents
(including Section 6.1 of this Agreement) or (ii) knowledge of receipt of an
item from the Borrower by Agent’s main operations contact or such other Person
designated by Agent to receive notices for (or on behalf of) Agent pursuant to
the notices provisions of the Loan Documents (including Section 6.1 of this
Agreement)) notify the Lenders) in writing promptly after (and in any event
within five (5) days of) the issuance by or to any Loan Party (other than by the
Borrower) of any Stock and each Loan Party shall pledge, and shall cause each of
its Subsidiaries (other than Excluded Foreign Subsidiaries) to pledge, in each
case, promptly after (and in any event within ten (10) days of) such issuance,
all of the Stock of each of its Subsidiaries (other than Excluded Foreign
Subsidiaries), and sixty-five percent (65%) of the outstanding voting Stock and
one hundred percent (100%) of the outstanding non-voting Stock of each Excluded
Foreign Subsidiary, directly owned by a Loan Party, in each instance, to Agent,
for the benefit of the Secured Parties, to secure the Obligations. The Loan
Parties shall deliver, or cause to be delivered, promptly after (and in any
event within ten (10) days of) such formation or acquisition of such Loan Party
or Subsidiary, to

 

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Agent (and Agent shall promptly (but, in any event, within two (2) Business Days
after (i) receipt thereof by (A) Agent’s main operations contact or (B) any
other Person designated by Agent to receive notices for (or on behalf of) Agent
pursuant to the notices provisions of the Loan Documents (including Section 6.1
of this Agreement) or (ii) knowledge of receipt of an item from the Borrower by
Agent’s main operations contact or such other Person designated by Agent to
receive notices for (or on behalf of) Agent pursuant to the notices provisions
of the Loan Documents (including Section 6.1 of this Agreement)) deliver copies
thereof to the Lenders), appropriate resolutions, secretary certificates,
certified Organizational Documents and, if requested by Agent, legal opinions
relating to the matters described in this Section 5.1(l) (which opinions shall
be in form and substance reasonably acceptable to Agent and the Required Lenders
and, to the extent applicable, substantially similar to the opinions delivered
on the Agreement Date), in each instance with respect to each Loan Party and
each Subsidiary of a Loan Party (other than any Excluded Foreign Subsidiary)
formed or acquired, and each Loan Party or Person (other than a Loan Party)
whose Stock is being pledged, after the Agreement Date. In connection with each
pledge of Stock, on or prior to the date of any such pledge of Stock, the Loan
Parties shall deliver, or cause to be delivered, to Agent (and Agent shall
promptly (but, in any event, within two (2) Business Days after (i) receipt
thereof by (A) Agent’s main operations contact or (B) any other Person
designated by Agent to receive notices for (or on behalf of) Agent pursuant to
the notices provisions of the Loan Documents (including Section 6.1 of this
Agreement) or (ii) knowledge of receipt of an item from the Borrower by Agent’s
main operations contact or such other Person designated by Agent to receive
notices for (or on behalf of) Agent pursuant to the notices provisions of the
Loan Documents (including Section 6.1 of this Agreement)) deliver copies thereof
to the Lenders), irrevocable proxies and Stock powers and/or assignments, as
applicable, duly executed in blank, in each case, in form and substance
reasonably satisfactory to Agent and the Required Lenders.

(m) Each Loan Party shall, and shall cause each of its Subsidiaries to, comply
with, and maintain its Real Estate, whether owned, leased, subleased or
otherwise operated or occupied, in compliance with all applicable Environmental
Laws or as is required by orders and directives of any Governmental Authority
except where the failure to comply could not reasonably be expected to,
individually or in the aggregate, result in a Material Environmental Liability.

(n) Promptly upon any Authorized Officer becoming aware that any of the
following has occurred that could reasonably be expected to result in material
liability to a Loan Party, the Borrower will provide written notice to the
Lenders specifying the nature of such event, what action the Loan Party or any
ERISA Affiliates has taken, is taking or proposes to take with respect thereto
and, when known, if applicable, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto:
(i) any ERISA Event, or (ii) a “prohibited transaction” as defined under
Section 406 of ERISA or Section 4975 of the Code that is not exempt under ERISA
Section 408 or Section 4975 of the Code, under any applicable regulations and
published interpretations thereunder or under any applicable prohibited
transaction, individual or class exemption issued by the Department of Labor,
with respect to any Employee Benefit Plan.

(o) The Borrower agrees to timely file a Form D with respect to the Securities
as required under Regulation D and to provide a copy thereof to each Secured
Party promptly after such filing. The Borrower shall, on or before the Initial
Disbursement Date, take such action as the Borrower shall reasonably determine
is necessary in order to obtain an exemption for, or to qualify the Securities
under applicable securities or “Blue Sky” laws of the states of the United
States, and shall provide evidence of any such action so taken to the Secured
Parties on or prior to the Initial Disbursement Date. The Borrower shall make
all filings and reports relating to the offer and sale of the Securities
required under applicable securities or “Blue Sky” laws of the states of the
United States following the Initial Disbursement Date.

 

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(p) The Borrower shall take all actions necessary to cause the Common Stock to
remain listed on an Eligible Market at all times during the Reporting Period.
The Borrower shall not, and shall cause each of the Subsidiaries not to, take
any action that would be reasonably expected to result in the delisting or
suspension or termination of trading of the Common Stock on the Principal
Market. Notwithstanding the foregoing, nothing contained herein shall prohibit
the Company from effecting a Major Transaction (as defined in the Warrants) in
which all shares of Common Stock outstanding immediately prior to such Major
Transaction are converted into the right to receive consideration consisting of
cash or property other than Common Stock; provided that the Company complies
with its obligations under this Agreement, the Warrants and the other Loan
Documents in connection therewith. The Loan Parties shall pay all fees, costs
and expenses in connection with satisfying its obligations under this
Section 5.1(p).

(q) At or prior to 7:00 a.m. (New York City time) on the third (3rd) Business
Day following the Initial Disbursement Date, the Borrower shall file one or more
Forms 8-K with the SEC describing the terms of the transactions contemplated by
the Loan Documents, including as exhibits to such Form or Forms 8-K this
Agreement (including the schedules and exhibits hereto), the form of Notes, the
form of Warrant, the Stock Purchase Agreement, the Royalty Agreement and the
Registration Rights Agreement and disclosing any other presently material
non-public information (if any) provided or made available to any Lender (or any
Lender’s agents or representative) on or prior to the Agreement Date (such Form
or Forms 8-K, collectively, the “Announcing Form 8-K”). At or prior to 5:30 a.m.
(New York City time) on the third (3rd) Business Day following any other
Disbursement Date, the Borrower shall file a Form 8-K with the SEC describing
the terms of the Disbursement occurring on such Disbursement Date and any other
material transactions occurring in connection therewith. From and after the
filing of the applicable Form 8-K Filing, the Borrower shall have disclosed all
material, non-public information (if any) provided or made available to any
Lender (or any Lender’s agents or representatives) by Borrower or any of its
respective officers, directors, employees, Affiliates or agents in connection
with the transactions contemplated by this Agreement or otherwise on or prior to
the Agreement Date or other Disbursement Date, as applicable.

(r) Each Loan Party shall not, and shall cause each of its Subsidiaries and its
and each of their respective officers, directors, employees. Attorneys,
representatives and agents to not, provide any Secured Party with any material
non-public information regarding the Borrower or any of its Subsidiaries from
and after the filing of the Announcing Form 8-K with the SEC without the express
prior written consent of such Secured Party. Each Loan Party hereby acknowledges
and agrees that no Secured Party (nor any of such Secured Party’s Affiliates)
shall have any duty of trust or confidence with respect to, or duty not to trade
on the basis of, any material non-public information regarding the Borrower or
its securities (i) provided by, or on behalf of, the Borrower, any of its
Subsidiaries, any of their respective Affiliates or any of their respective
officers, directors, employees, attorneys, representatives or agents, in
violation of any of the covenants set forth in this Section or (ii) otherwise
possessed by any Security Party (or any Affiliate of any Secured Party) as a
result of any violation of any of the covenants set forth in this Section 5.1(r)
or any provision of this Agreement or any of the other Loan Documents requiring
the Borrower to publicly disclose information in a press release, filing with
the SEC or otherwise (collectively, the “Disclosure Covenants”). Notwithstanding
anything to the contrary herein, in the event that any Loan Party believes that
a notice or communication to any Secured Party contains material non-public
information relating to any Loan Party, any of its Subsidiaries or Affiliates or
any of their respective property or Stock, the Borrower shall so indicate to the
Secured Parties contemporaneously with delivery of such notice or communication,
and such indication shall provide the Secured Parties the means to refuse to
receive such notice or communication; and in the absence of any such indication,
the holders of the Securities shall be allowed to presume that all matters
relating to such notice or communication do not constitute material, nonpublic
information relating to any Loan Party, any of its Subsidiaries or its
Affiliates or any of their respective property or Stock. Upon receipt or
delivery by any

 

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Loan Party or any of its Subsidiaries of any notice in accordance with the terms
of the Loan Documents, unless the Borrower has in good faith determined that the
matters relating to such notice do not constitute material, nonpublic
information relating to any Loan Party or any of its Subsidiaries or its
Affiliates or their respective property or Stock, the Loan Parties shall within
one Business Day after any such receipt or delivery publicly disclose such
material, nonpublic information. In the event of a breach of any of the
Disclosure Covenants by any Loan Party, any of the Subsidiaries or its
Affiliates, or any of its or their respective officers, directors (or equivalent
persons), employees, attorneys, representatives or agents, in addition to any
other remedies provided in the Loan Documents or otherwise available at law or
in equity, the Secured Parties shall have the right to make a public disclosure
in the form of a press release, public advertisement or otherwise, of the
applicable material nonpublic information regarding the Borrower without the
prior approval by any Loan Party, its Subsidiaries or Affiliates, or any of its
or their respective officers, directors (or equivalent persons), employees,
attorneys, representatives or agents, and no Secured Party shall have any
liability to any Loan Party, any of its Subsidiaries or Affiliates or any of its
or their respective officers, directors (or equivalent persons), employees,
stockholders, attorneys, representatives or agents for any such disclosure.
Notwithstanding the foregoing, to the extent the Borrower reasonably and in good
faith determines that it is necessary to disclose material non-public
information to a Secured Party for purposes relating to the Facility Agreement
(a “Necessary Disclosure”), the Parent shall inform counsel to such Lender
(which shall be Katten Muchin Rosenman LLP (Attn: Mark D. Wood) or such other
counsel as shall have been designated by such Secured Party) of such
determination without disclosing the applicable material non-public information,
and the Borrower and such counsel on behalf of the applicable Secured Party
shall endeavor to agree upon a process for making such Necessary Disclosure to
the applicable Secured Party or its representatives that is mutually acceptable
to such Secured Party and the Borrower (an “Agreed Disclosure Process”).
Thereafter, the Borrower shall be permitted to make such Necessary Disclosure
(only) in accordance with the Agreed Disclosure Process. For the avoidance of
doubt, each of the Parties acknowledges and agrees that no Lender nor any
Affiliate of any Lender shall be deemed to be in possession of any material
non-public information provided to Agent unless and until Agent actually
provides such information to such Lender or Affiliate thereof (as applicable).

(s) The Borrower acknowledges and agrees that the Securities may be pledged by a
holder thereof in connection with a bona fide margin agreement or other loan,
financing or Indebtedness secured by the Securities. The pledge of Securities
shall not be deemed to be a transfer, sale or assignment of the Securities under
the Loan Documents, and no such holder effecting any such pledge of Securities
shall be required to provide any Loan Party or any of its Subsidiaries with any
notice thereof or otherwise make any delivery to any Loan Party pursuant to any
Loan Document. The Borrower hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a holder of
Securities.

(t) Without limiting the generality of the foregoing, each Loan Party and its
Subsidiaries shall comply in all material respects with all Public Health Laws
and their implementation by any applicable Governmental Authority and all lawful
requests of any Governmental Authority applicable to its Products. All Products
developed, manufactured, tested, distributed or marketed by or on behalf of any
Loan Party or any of its Subsidiaries that are subject to the jurisdiction of
the FDA or comparable Governmental Authority shall be developed, tested,
manufactured, distributed and marketed in material compliance with the Public
Health Laws and each other Applicable Law, including product approval or
premarket notification, good manufacturing practices, labeling, advertising,
record-keeping, and adverse event reporting, and shall be tested, investigated,
distributed, marketed, and sold in material compliance with Public Health Laws
and all other Applicable Laws.

 

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(u) The Loan Parties shall promptly (and, in any event, within two Business
Days) (i) notify each Secured Party of the occurrence of any breaches, defaults
or events of default under, and any amendments, restatements, supplements,
changes, consents, waivers, forbearances, joinders or other modifications to the
Agreement Date Acquisition Documents or the Revolving Credit Facility Documents
or the entering into after the Agreement Date of any Agreement Date Acquisition
Documents or Revolving Credit Facility Documents and provide copies of any
documentation related to the foregoing and (ii) deliver true, correct and
complete copies of any material notices, documents, instruments, agreements or
other material written information provided or received pursuant to, or in
connection with, the Revolving Credit Facility (including those delivered to any
Loan Party or any of its Affiliates by any lender (or any agent of any lender)
under the Revolving Credit Facility).

(v) Financial Covenants.

(i) Minimum Cash Balance. The Loan Parties covenant and agree that the Borrower
and its Subsidiaries shall, at all times, maintain, on a consolidated basis, a
minimum aggregate amount of unrestricted cash in deposit accounts covered by a
Control Agreement in favor of Agent (for the benefit of the Secured Parties)
(and, solely with respect to unrestricted cash in an amount not to exceed
$5,000,000, deposit accounts held by Foreign Subsidiaries that are not subject
to Liens of any Person other than Liens of the type set forth in clause (a) or
clause (f) of the definition of “Permitted Liens”) equal to no less than
$25,000,000; provided that the Control Agreement requirement shall not be
applicable until after the date immediately after the Post-Closing Control
Agreement Period.

(ii) Minimum Net Sales. The Loan Parties shall maintain LTM Net Sales of at
least (A) $45,000,000 for the fiscal year ending December 31, 2018, (B)
$75,000,000 for the fiscal year ending December 31, 2019 and (C) $100,000,000
for the fiscal year ending December 31, 2020 and each fiscal year ending
thereafter.

(w) Each Loan Party shall, and shall cause each of its Subsidiaries to (as
applicable), execute and deliver the documents and complete the tasks and other
actions set forth on Schedule 5.1(w), in each case, within the time limits
specified therein (or such longer period agreed to by the Required Lenders in
their sole discretion).

(x) On or prior to the date that is the earlier to occur of (i) forty-five
(45) days after the Agreement Date (or such later date agreed to by the Required
Lenders in their sole discretion) to the extent any such Subject Foreign
Subsidiary has not been dissolved prior to such date and (ii) any day that any
such Subject Foreign Subsidiary has (A) more than $50,000 in net income, revenue
or operations for the most recent twelve month period for which financial
statements have been provided or filed (or are required to be provided or filed)
pursuant to Section 5.1(h) (or that are otherwise available prior to the
Agreement Date), (B) assets or property with an aggregate fair market value
(when taken together) in excess of $50,000 or (C) assets of property that are
material to the operation of the business (or the business) of the Loan Parties,
each Loan Party shall deliver the original Stock certificates (and corresponding
Stock powers) in form and substance reasonably satisfactory to Agent and the
Required Lenders representing 65% of the outstanding Stock of such Subject
Foreign Subsidiary to Agent (for the benefit of the Secured Parties).

Section 5.2 Negative Covenants.

(a) No Loan Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, merge with, consolidate with or into, dissolve or
liquidate into or convey, transfer, lease 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 or in favor of any Person,
except (1) a Subsidiary that is not a Loan Party may merge into any Loan Party
or any Subsidiary of a Loan Party (provided that, to the extent such Subsidiary
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the Secured Parties), then any Person it merges with must also have its equity
pledged to Agent (for the benefit of the Secured Parties) by at least the same
percentage), (2) a Subsidiary that is a Loan Party may merge into any other Loan
Party (provided that, (y) to the extent such Subsidiary being merged has its
equity pledged to Agent (for the benefit of the Secured Parties), then any
Person it merges with must also have its equity pledged to Agent (for the
benefit of the Secured Parties) by at least the same percentage and (z) to the
extent the Borrower is part of such transaction, the Borrower must be the
surviving Person), (3) any Subsidiary of the Borrower (other than, for the
avoidance of doubt, the Borrower) may liquidate or dissolve if (i) the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and it is not materially disadvantageous to the
Secured Parties and (ii) to the extent such Subsidiary is a Guarantor, any such
assets or business held by such subject Subsidiary shall be transferred to, or
otherwise owned or conducted by, a Loan Party after giving effect to such
liquidation or dissolution, (4) Permitted Acquisitions (provided that, to the
extent any such transaction involves (y) a Loan Party, the Loan Party is the
surviving Person or (z) the Borrower, the Borrower is the surviving Person) and
(5) the Agreement Date Acquisition and the other Transactions. No Loan Party
shall establish or form any Subsidiary, unless such Subsidiary complies with
Section 5.1(l) and such Subsidiary executes and/or delivers all other documents,
agreements and instruments reasonably requested by Agent or the Required Lenders
to perfect a Lien in favor of Agent (for the benefit of the Secured Parties) on
such Subsidiary’s assets and to make such Subsidiary a Guarantor under the Loan
Documents.

(b) No Loan Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, (i) enter into any partnership, joint venture,
syndicate, pool, profit-sharing or royalty agreement (other than the Agreement
Date Acquisition Agreement, as in effect on the Agreement Date) or other
combination, or engage in any transaction with any holder of Stock of the
Borrower, any Affiliate of the Borrower or any equity holder of such Affiliate,
whereby its income or profits are, or might be, shared with another Person other
than a wholly owned Subsidiary, (ii) enter into any management contract or
similar arrangement whereby all or a substantial part of its business is managed
by another Person, or (iii) make any Restricted Payments, other than when no
Default or Event of Default has occurred and is continuing, the repurchase of
the Borrower’s Stock from current or former officers, employees or directors of
the Borrower and its Subsidiaries (or their permitted transferees or estates)
upon their death, disability or termination of employment in an aggregate amount
not to exceed $250,000 in any fiscal year of the Borrower.

(c) No Loan Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, (i) make, create, incur, assume or suffer to exist any
Lien upon or with respect to any of its assets or property, except Permitted
Liens, or (ii) Dispose of (whether in one or a series of transactions) any
assets or property (including the Stock of any Subsidiary of any Loan Party,
whether in a public or private offering or otherwise, and accounts and notes
receivable, with or without recourse), except Permitted Dispositions.

(d) No Loan Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, permit to exist or be
liable with respect to any Indebtedness, other than Permitted Indebtedness.

(e) No Loan Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, (i) purchase or acquire any Stock, or any obligations or
other securities of, or any interest in, any Person, including the establishment
or creation of a Subsidiary, or (ii) make any Acquisitions, or any other
acquisition of any of the assets of another Person, or of any business or
division of any Person, including by way of merger, consolidation, other
combination or otherwise, or (iii) make, purchase or acquire any advance, loan,
extension of credit (other than trade payables in the ordinary course of
business) or capital contribution to or any other investment in, any Person
including the Borrower, any Affiliate of the Borrower or any Subsidiary of the
Borrower (the items described in clauses (i), (ii) and (iii) are referred to as
“Investments”), except for Permitted Investments.

 

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(f) No Loan Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, issue, sell or otherwise transfer or provide any
interest in, any Stock of any Subsidiary of the Borrower.

(g) No Loan Party shall, and no Loan Party shall suffer or permit any of its
Subsidiaries to, directly or indirectly, (w) enter into any transaction with any
Affiliate of a Loan Party or of any Subsidiary of a Loan Party (other than, in
each case, transactions between or among Loan Parties; provided that, if the
Borrower is a party to such transaction, such transaction shall be on an arm’s
length basis or the terms of such transaction shall be more favorable to the
Borrower than to such other Loan Party party to such transaction) or any
officer, employee or director (or similar official or governing person) of any
of the foregoing, (x) pay any management, consulting or similar fees to any of
the foregoing, (y) pay or reimburse any of the foregoing for any costs, expenses
and similar items or (z) pay any indemnification payments to any such Person),
except (1) with respect to transactions between or among the Borrower and its
Subsidiaries as expressly permitted by this Agreement, (2) in the ordinary
course of business and pursuant to the reasonable requirements of the business
of such Loan Party or such Subsidiary upon fair and reasonable terms no less
favorable to such Loan Party or such Subsidiary than would be obtained in a
comparable arm’s length transaction with a Person not an Affiliate of the
Borrower or such Subsidiary and which are disclosed in advance in writing to
Agent (and Agent shall promptly (but, in any event, within two (2) Business Days
after (i) receipt thereof by (A) Agent’s main operations contact or (B) any
other Person designated by Agent to receive notices for (or on behalf of) Agent
pursuant to the notices provisions of the Loan Documents (including Section 6.1
of this Agreement) or (ii) knowledge of receipt of an item from the Borrower by
Agent’s main operations contact or such other Person designated by Agent to
receive notices for (or on behalf of) Agent pursuant to the notices provisions
of the Loan Documents (including Section 6.1 of this Agreement)) disclose such
transaction to the Lenders); provided, further, that in no event shall a Loan
Party or any Subsidiary of a Loan Party perform or provide any management,
consulting, administrative or similar services to or for any Person other than
another Loan Party, a Subsidiary of a Loan Party or a customer who is not an
Affiliate in the ordinary course of business, (3) payment of directors’ fees and
reimbursement of actual out-of-pocket expenses incurred in connection with
attending board of director meetings not to exceed in the aggregate, with
respect to all such items, $600,000 in any fiscal year of the Borrower, and (4)
customary and reasonable compensation arrangements for officers and other
employees of the Borrower and its Subsidiaries entered into in the ordinary
course of business.

(h) No ERISA Affiliate shall cause or suffer to exist, directly or indirectly,
(i) any event that could reasonably be expected to result in the imposition of a
Lien on any asset of a Loan Party or a Subsidiary of a Loan Party with respect
to any Title IV Plan or Multiemployer Plan, or (ii) any other ERISA Event, which
other ERISA Event could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

(i) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, directly or indirectly, engage in any line of business substantially
different from those lines of business carried on by it on the Agreement Date
and any business reasonably complementary or ancillary thereto.

(j) Except as expressly permitted under Section 5.2(a), no Loan Party shall, and
no Loan Party shall permit any of its Subsidiaries to, amend any of its
Organizational Documents, any Agreement Date Acquisition Documents or any
agreements or documents evidencing or contemplating any Permitted Acquisition in
any respect materially adverse to any Secured Party.

 

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(k) No Loan Party shall, and no Loan Party shall suffer or permit any of its
Subsidiaries to, (i) make any significant change in accounting treatment or
reporting practices, except as required by GAAP, (ii) change the fiscal year or
method for determining the fiscal quarters of any Loan Party or of any
Subsidiary of any Loan Party, (iii) change its name as it appears in official
filings in its jurisdiction of organization or formation, (iv) change its
jurisdiction of organization or formation, (v) change its entity identity,
(vi) change its organizational identification number (if any), or (vii) change
the address of its chief executive office or principal place of business, in the
case of clauses (iii), (iv), (v), (vi) and (vii), without at least ten
(10) days’ prior written notice to Agent (or such shorter period as may be
agreed by the Required Lenders in their sole discretion) (and Agent shall
promptly (but, in any event, within two (2) Business Days after (i) receipt
thereof by (A) Agent’s main operations contact or (B) any other Person
designated by Agent to receive notices for (or on behalf of) Agent pursuant to
the notices provisions of the Loan Documents (including Section 6.1 of this
Agreement) or (ii) knowledge of receipt of an item from the Borrower by Agent’s
main operations contact or such other Person designated by Agent to receive
notices for (or on behalf of) Agent pursuant to the notices provisions of the
Loan Documents (including Section 6.1 of this Agreement)) provide such notice to
the Lenders).

(l) No Loan Party shall, nor shall it permit any of its Affiliates to, directly
or indirectly, purchase, redeem or defease earlier than scheduled or prepay any
principal of, premium, if any, interest or other amount payable in respect of
any Indebtedness prior to its scheduled maturity, other than (i) the
Obligations, and (ii) Indebtedness secured by a Permitted Lien if the sole asset
securing such Indebtedness has been sold or otherwise disposed of as a Permitted
Disposition.

(m) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual restriction or encumbrance of any kind on the
ability of any Loan Party or Subsidiary to pay dividends or make any other
distribution on any of such Loan Party’s or Subsidiary’s Stock or to pay fees,
including management fees, or make other payments and distributions to the
Borrower or any other Loan Party, except for those in the Loan Documents. No
Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to,
directly or indirectly, enter into, assume or become subject to any contractual
obligation prohibiting or otherwise restricting the existence of any Lien upon
any of its assets in favor of Agent or any Secured Party, whether now owned or
hereafter acquired, or prohibit or otherwise restrict the Disposition of any
assets of any Loan Party or any of its Subsidiaries, except, in each case,
(i) those in the Loan Documents, (ii) in connection with any document or
instrument governing Liens permitted pursuant to clauses (k) and (l) of the
definition of “Permitted Liens;” provided that any such restriction contained
therein relates only to the asset or assets subject to such permitted Liens, and
(iii) with respect to Dispositions only (and not Liens), the Revolving Credit
Facility Documents.

(n) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, directly or indirectly, fail to comply with the laws, regulations and
executive orders referred to in Section 3.1(jj). No Loan Party or Subsidiary of
a Loan Party, nor, to the knowledge of any Loan Party or any of its
Subsidiaries, any director, officer, agent, employee or other Person acting on
behalf of any Loan Party or any such Subsidiary, will request or use the
proceeds of any Loan, directly or indirectly, (i) for any payments to any
Person, including any government official or employee, political party, official
of a political party, candidate for political office or anyone else acting in an
official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, or otherwise take any action, directly or indirectly, that
would result in a violation of any Anti-Corruption Laws, (ii) for the purpose of
funding, financing or facilitating any activities, business or transaction of or
with any Person on the SDN List or a government of a Sanctioned Country, to the
extent such activities, business or transaction would be prohibited by Sanctions
if conducted by a corporation incorporated in the United States or in a European
Union member state, or (iii) in any manner that would result in the violation of
any Sanctions applicable to any party hereto. Furthermore, the Loan Parties will
not, directly or indirectly, use the proceeds of the

 

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transaction, or lend, contribute or otherwise make available such proceeds to
any Subsidiary, Affiliate, joint venture partner or other Person, to fund any
activities of or business with any Person, or in any country or territory, that,
at the time of such funding, is the subject of Sanctions, or in any other manner
that will result in a violation by any Person participating in the transaction
of any Sanctions.

(o) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, directly or indirectly, engage in a sale leaseback, synthetic lease or
similar transaction involving any of its assets.

(p) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, directly or indirectly, cause or suffer to exist any Release of any
Hazardous Material at, to or from any Real Estate that would violate or form the
basis of Liability under any Environmental Law, other than such violations or
liabilities that could not reasonably be expected, individually or in the
aggregate, to result in Material Environmental Liabilities.

(q) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, be an “investment company” or a company “controlled” by an “investment
company,” as such terms are defined in the Investment Company Act, or to
otherwise be registered or required to be registered under, or be subject to the
restrictions imposed by the Investment Company Act.

(r) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, directly or indirectly, (i) cause or suffer to exist the initiation by the
FDA or any other Governmental Authority of any enforcement action against any
Loan Party or any of its Subsidiaries, or any suppliers that causes such Loan
Party or Subsidiary to recall, withdraw, remove or discontinue marketing any of
its Products; (ii) cause or suffer to exist the issuance by the FDA or any other
Governmental Authority of a warning letter to any Loan Party or any of its
Subsidiaries with respect to any Regulatory Matter which could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
(iii) conduct a mandated or voluntary recall which could reasonably be expected
to result in aggregate liability and expense to the Loan Parties and their
Subsidiaries of $250,000 or more or that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; or
(iv) enter into a settlement agreement with the FDA or any other Governmental
Authority that results in aggregate liability as to any single or related series
of transactions, incidents or conditions, of $250,000 or more, or that could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

(s) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, directly or indirectly, allow any Subsidiary of any Loan Party that is not a
Loan Party (including Rib-X Therapeutics Limited) to have (a) annual revenues or
net income in excess of $100,000, (b) or assets or property (all taken together)
with an aggregate fair market value in excess of $100,000 or (c) assets or
property that are material to the operation of the business (or the business) of
the Loan Parties.

(t) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, (A) make any payment, or take any action, with respect to the Indebtedness
under the Revolving Credit Facility that is in violation or breach of the
Revolving Credit Facility Intercreditor Agreement; (B) make any amendment,
restatement, supplement or modification of any Revolving Credit Facility
Documents in violation or breach of the Revolving Credit Facility Intercreditor
Agreement; or (C) join any Subsidiary or any Affiliate of any Loan Party as a
borrower, guarantor or obligor, or have such Person pledge or grant a Lien on
any of its property or assets, under the Revolving Credit Facility Documents,
unless, in each case, the same Person becomes a Loan Party in the same capacity
(and/or pledges and grants Liens on the same property or assets (and with no
Person having priority in between the Liens granted under the Revolving Credit
Facility Documents and the Liens granted under the Loan Documents in connection
with this Section 5.2(s))) under the Loan Documents and such Person executes and
delivers such agreements, instruments and documents reasonably requested by
Agent or the Required Lenders to effectuate any of the foregoing.

 

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(u) Notwithstanding anything to the contrary in this Agreement or in any other
Loan Documents, no Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to, create, incur or suffer to exist any Indebtedness which is
subordinated or junior (either in respect of Lien priority or in right of
payment or any combination thereof) to the Indebtedness under the Revolving
Credit Facility unless such Indebtedness is expressly subordinated or junior to
the Obligations (both in terms of Lien priority and in right of payment) on
terms and conditions reasonably acceptable to Agent and the Required Lenders.

Section 5.3 Major Transaction. The Loan Parties and their Subsidiaries shall
give Agent and the Lenders written notice of a transaction described in clause
(A), (B), (C) or (D) of the definition of “Major Transaction” (as defined in the
Warrants) at least fifteen (15) days prior to the consummation thereof but in
any event not later than two (2) Business Days following the first public
announcement thereof. The Lenders, within five (5) days after the receipt of
such notice, in the exercise of their sole discretion, may deliver a notice to
the Borrower (the “Put Notice”) that the Final Payment shall be due and payable
and all remaining Subsequent Disbursement Commitments shall be automatically
terminated upon the consummation of such Major Transaction, with no further
action taken by any Person as of or after the date of such Put Notice. If the
Lenders deliver a Put Notice, then simultaneously with consummation of such
Major Transaction, the Borrower shall make (or cause to be made) the Final
Payment to the Lenders and all remaining Subsequent Disbursement Commitments
shall be immediately and automatically terminated as of the date of such Put
Notice. In such case, the Loan Parties shall make arrangements satisfactory to
the Lenders, as determined by the Lenders in their sole discretion, that the
Final Payment will be paid in full to the Lenders (and all remaining Subsequent
Disbursement Commitments shall immediately and automatically terminate), in each
case, concurrently with the consummation of such Major Transaction (which
arrangements may include obtaining a written agreement from the acquiring
Person, as applicable, that payment of the Final Payment shall be made to the
Lenders upon the consummation of such Major Transaction). The Loan Parties
hereby acknowledge and agree that the Secured Parties shall have the right to
apply for an injunction in any state or federal courts sitting in the City of
New York to prevent the consummation of such Major Transaction unless and until
such arrangements satisfactory to the Lenders have been made. The Loan Parties
shall not, and shall not permit any of their Subsidiaries to, consummate any
Major Transaction without complying in all respects with the provisions of this
Section 5.3.

Section 5.4 General Acceleration Provision upon Events of Default. If one or
more of the events specified in this Section 5.4 shall have happened or occurred
and be continuing beyond any applicable cure period expressly provided in this
Section 5.4 (each, an “Event of Default”), the Required Lenders or Agent may, or
Agent (upon written election by the Required Lenders) shall, by written notice
to the Borrower (subject to Section 5.5(a), which, for the avoidance of doubt,
shall not require any such notice and shall occur automatically), declare the
principal of, and accrued and unpaid interest on, all of the Loans and other
Obligations or any part of any of them (together with any other amounts accrued
or payable under the Loan Documents) to be, and the same shall thereupon become,
immediately due and payable and shall immediately terminate all of the remaining
Subsequent Disbursement Commitments, in each case, without any further notice
and without any presentment, demand or protest of any kind, all of which are
hereby expressly waived by the Borrower and the other Loan Parties, appoint a
receiver for the Loan Parties and their Subsidiaries, and take any further
action available at law or in equity or that are provided in the Loan Documents,
including the sale or transfer of the Loan and other Obligations and all other
rights acquired in connection with the Loan or the other Obligations or under
the Loan Documents:

 

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(a) The Borrower or any other Loan Party shall have failed (i) to pay when and
as required to be paid herein or in any other Loan Document, any amount of
principal of any Loan, including after maturity of the Loans, or (ii) to pay
within three (3) Business Days after the same shall become due, interest on any
Loan, any fee or any other amount or Obligation payable hereunder or pursuant to
any other Loan Document.

(b) Any Loan Party shall have failed to comply with or observe (i) Section 2.1,
Section 5.1(a), 5.1(b)(ii), 5.1(e), 5.1(f), 5.1(g), 5.1(h), 5.1(i), 5.1(k),
5.1(l), 5.1(o), 5.1(p), 5.1(q), 5.1(r), 5.1(s), 5.1(t), 5.1(u), 5.1(v), 5.1(w)
or 5.1(x), Section 5.2 or Section 5.3 of this Agreement or Section 5 of the
Security Agreement, or (ii) any covenant contained in any Loan Document (other
than the covenants described in Section 5.4(a) or Section 5.4(b)(i) above), and
such failure, with respect to this Section 5.4(b)(ii) only, shall not have been
cured within thirty (30) days after the earlier to occur of (y) the date upon
which any officer of any Loan Party or any of its Subsidiaries becomes aware of
such failure and (z) the date upon which written notice thereof is given to any
Loan Party or any of its Subsidiaries by any Secured Party; provided no such
cure period in this Section 5.4(b)(ii) shall be provided or apply with respect
to any provision or covenant that by its inherent nature cannot be cured upon
being violated or breached.

(c) Any representation or warranty made by any Loan Party in any Loan Document
shall have been incorrect, false or misleading in any material respect (except
to the extent that such representation or warranty is qualified by reference to
materiality or Material Adverse Effect, to which extent it shall have been
incorrect, false or misleading in any respect) as of the date it was made.

(d) (i) Any Loan Party or any of its Subsidiaries shall generally be unable to
pay its debts as such debts become due, or shall admit in writing its inability
to pay its debts as they come due or shall make a general assignment for the
benefit of creditors; (ii) any Loan Party or any of its Subsidiaries shall
declare a moratorium on the payment of its debts; (iii) the commencement by any
Loan Party or any of its Subsidiaries of proceedings to be adjudicated bankrupt
or insolvent, or the consent by it to the commencement of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization, intervention or other similar relief under
any Applicable Law, or the consent by it to the filing of any such petition or
to the appointment of an intervenor, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of all or substantially all of its
assets; (iv) the commencement against any Loan Party or any of its Subsidiaries
of a proceeding in any court of competent jurisdiction under any bankruptcy or
other Applicable Law (as now or hereafter in effect) seeking its liquidation,
winding up, dissolution, reorganization, arrangement or adjustment, or the
appointment of an intervenor, receiver, liquidator, assignee, trustee,
sequestrator or other similar official, and any such proceeding shall continue
undismissed, or any order, judgment or decree approving or ordering any of the
foregoing shall continue unstayed or otherwise in effect, for a period of sixty
(60) days; (v) the making by any Loan Party or any of its Subsidiaries of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debt generally as they become due; or (vi) any other
event shall have occurred which under any Applicable Law would have an effect
analogous to any of those events listed above in this subsection.

(e) One or more judgments, orders or decrees or settlements shall be rendered
against any Loan Party or any Subsidiary of a Loan Party that exceeds by more
than $250,000 any insurance coverage applicable thereto (to the extent the
relevant insurer has been notified of such claim and has not denied coverage
therefor) or one or more non-monetary judgments, orders or decrees or
settlements shall be rendered against any Loan Party or any Subsidiary of a Loan
Party that would reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect, and in either case (i) enforcement
proceedings shall have been commenced by any creditor upon any such judgment,
order or decree or (ii) such judgment, order or decree shall not have been
vacated or discharged within ten (10) days of the entry thereof or there shall
not be in effect (by reason of a pending appeal or otherwise) any stay of
enforcement thereof.

 

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(f) Any authorization of a Governmental Authority necessary for the execution,
delivery or performance of any Loan Document or for the validity or
enforceability of any of the Obligations under any Loan Document is not given,
is withdrawn or ceases to remain in full force or effect.

(g) The validity of any Loan Document shall be contested by any Loan Party or
any of its Subsidiaries, or any Applicable Law shall purport to render any
material provision of any Loan Document invalid or unenforceable or shall
purport to prevent or materially delay the performance or observance by any Loan
Party or any of its Subsidiaries of the Obligations.

(h) Any Loan Party or any Subsidiary of any Loan Party (i) fails to make any
payment in respect of the Revolving Credit Facility or any Indebtedness (other
than the Obligations) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $250,000
(provided that no such threshold shall apply with respect to the Revolving
Credit Facility) when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the documents relating
thereto on the date of such failure; or (ii) fails to perform or observe any
other condition or covenant, or any other event shall occur or condition exist,
under any agreement or instrument relating to any such Indebtedness, if the
effect of such failure, event or condition is to cause, or to permit the holder
or holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be
due and payable (or otherwise required immediately to be prepaid, redeemed,
purchased or defeased) prior to its stated maturity (without regard to any
subordination terms with respect thereto) or cash collateral in respect thereof
to be demanded.

(i) Any material provision of any Loan Document shall for any reason cease to be
valid and binding on or enforceable against any Loan Party or any Subsidiary of
any Loan Party party thereto or any Loan Party or any Subsidiary of any Loan
Party shall so state in writing or bring an action to limit its obligations or
liabilities thereunder; any Loan Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest in the
Collateral (to the extent that such perfection or priority is required hereby)
purported to be covered thereby or such security interest shall for any reason
cease to be a perfected and first priority security interest; or any of the
Obligations shall cease to be secured by all of the Collateral.

(j) (i) The occurrence of any ERISA Event that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect or (ii) the
imposition of a Lien on any asset of a Loan Party or a Subsidiary of a Loan
Party with respect to any Title IV Plan or Multiemployer Plan.

(k) The occurrence of any Change of Control.

(l) Any provisions of the Revolving Credit Facility Intercreditor Agreement
shall for any reason be revoked or invalidated, or otherwise cease to be in full
force and effect, other than in accordance with the terms thereof, or any Person
shall contest in any manner the validity or enforceability thereof or deny that
it has any further liability or obligation thereunder.

 

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Section 5.5 Additional Remedies.

(a) Automatic Acceleration on Dissolution or Bankruptcy. Notwithstanding any
other provisions of this Agreement, if an Event of Default under Section 5.4(d)
shall occur, the principal of the Loans (together with any interest, other
amounts and Obligations accrued or payable under this Agreement or the other
Loan Documents (including any Prepayment Fees)) shall thereupon become
immediately and automatically due and payable and any remaining Subsequent
Disbursement Commitments shall be immediately and automatically terminated, in
each case, without any presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived by the Borrower and the other Loan Parties.

(b) Power of Attorney. Notwithstanding anything to the contrary in this
Agreement and the other Loan Documents, each Loan Party hereby irrevocably and
unconditionally constitutes and appoints the Secured Parties and any of the
Secured Parties’ Affiliates, attorneys, representatives or agents, with full
power of substitution, as such Loan Party’s true and lawful attorney-in-fact
with full irrevocable and unconditional power and authority in the place and
stead of such Loan Party and in the name of such Loan Party or in its own name,
for the purpose of carrying out the terms of this Agreement, the Warrants, and
the other Loan Documents, to take any appropriate steps or actions and to
execute and deliver (and perform under on such Loan Party’s behalf) any
agreement, document or instrument that may be necessary or desirable to
accomplish the purposes and/or effectuate the items and actions set forth in
this Agreement, the Warrants, and the other Loan Documents, including (i) any
actions that any such Loan Party fails to take that are required under such
documents, agreements or instruments and (ii) during the existence of any Event
of Default, to deliver the original shares of Common Stock to be issued under
any Warrants to the applicable holder thereof upon such holder exercising its
rights pursuant to the terms of such Warrants.

Section 5.6 Recovery of Amounts Due. If any Obligation or other amount payable
hereunder or under any of the other Loan Documents is not paid as and when due,
the Borrower and the other Loan Parties hereby authorize Agent and the Lenders
to proceed, to the fullest extent permitted by Applicable Law, without prior
notice, by right of set-off, banker’s lien or counterclaim, against any moneys
or other assets of the Borrower or any other Loan Party to the full extent of
all Obligations or other amounts payable to Agent and/or the Lenders.

Section 5.7 Credit Bidding. The Loan Parties and the Lenders hereby irrevocably
authorize Agent, based upon the written instruction of the Required Lenders, to
(a) credit bid and in such manner purchase (either directly or through one or
more acquisition vehicles) all or any portion of the Collateral at any sale
thereof conducted under the provisions of the Bankruptcy Code, including under
Section 363 of the Bankruptcy Code or any similar laws in any other
jurisdictions to which a Loan Party is subject, or (b) credit bid and in such
manner purchase (either directly or through one or more acquisition vehicles)
all or any portion of the Collateral at any other sale or foreclosure conducted
by (or with the consent or at the direction of) Agent (whether by judicial
action or otherwise) in accordance with Applicable Law. In connection with any
such credit bid and purchase, the Obligations owed to the Lenders shall be
entitled to be, and shall be, credit bid on a ratable basis (with Obligations
with respect to contingent or unliquidated claims being estimated for such
purpose if the fixing or liquidation thereof would not unduly delay the ability
of Agent to credit bid and purchase at such sale or other disposition of the
Collateral and, if such claims cannot be estimated without unduly delaying the
ability of Agent to credit bid, then such claims shall be disregarded, not
credit bid, and not entitled to any interest in the asset or assets purchased by
means of such credit bid) and the Lenders whose Obligations are credit bid shall
be entitled to receive interests (ratably based upon the proportion of their
Obligations credit bid in relation to the aggregate amount of Obligations so
credit bid) in the asset or assets so purchased (or in the Stock of the
acquisition vehicle or vehicles that are used to consummate such purchase).
Except as provided above and otherwise expressly provided for herein or in the
other Loan Documents, Agent will not execute nor deliver a release of any Lien
on any Collateral. Upon request by Agent at any time, the Lenders will confirm
in

 

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writing Agent’s authority to release any such Liens on particular types or items
of Collateral pursuant to, and in accordance with, this Section 5.7. Each
Secured Party whose Obligations are credit bid under this Section 5.7 shall be
entitled to receive interests in the Collateral or any other asset acquired in
connection with such credit bid (or in the Stock of the acquisition vehicle or
vehicles that are used to consummate such acquisition) on a ratable basis in
accordance with the percentage obtained by dividing (y) the amount of the
Obligations of such Secured Party that were credit bid in such credit bid, by
(z) the aggregate amount of all Obligations that were credit bid in such credit
bid.

ARTICLE 6

MISCELLANEOUS

Section 6.1 Notices. Any notices or other information (including an financial
information) required or permitted to be given under the terms hereof shall be
sent by certified or registered mail (return receipt requested) or delivered
personally or by courier (including a recognized overnight delivery service) or
by facsimile or by electronic mail and shall be effective five (5) days after
being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, or when received by electronic mail in each
case addressed to a party as follows (or such other address, facsimile or
electronic mail address provided by such party to such other parties pursuant to
the below (or such later address, facsimile or electronic mail address provided
in accordance herewith):

If to the Borrower or any other Loan Party:

Melinta Therapeutics, Inc.

300 George Street

Suite 301

New Haven, Connecticut 06511

E-mail: pestrem@melinta.com

Attn: Paul Estrem

With a copy to (which shall not be deemed to constitute notice):

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019-6099

Facsimile No.: 212-728-9507

E-mail: jgoldfarb@willkie.com

Attn: Jeffrey M. Goldfarb

If to Agent:

Cortland Capital Market Services LLC

225 W. Washington St., 9th Floor

Chicago, IL, 60606

Facsimile: (312) 376-0751

E-mail: legal@cortlandglobal.com and ryan.morick@cortlandglobal.com

Attn: Legal Department and Ryan Morick

 

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With a copy to (which shall not be deemed to constitute notice):

Holland & Knight

131 South Dearborn Street, 30th Floor

Chicago, IL 60603

Facsimile: (312) 578-6666

E-mail: Joshua.Spencer@hklaw.com

Attn: Joshua M. Spencer, Esq.

and

Katten Muchin Rosenman LLP

2029 Century Park East, Suite 2600

Los Angeles, CA 90067-3012

Facsimile: (310) 788-4471

E-mail: kristopher.ring@kattenlaw.com and mark.wood@kattenlaw.com

Attn: Kristopher J. Ring, Esq.

Attn: Mark D. Wood, Esq.

If to any Lender, the information for notices included on Schedule 2.4 or
pursuant to any assignment agreement assigning any Obligations to any new
Lender.

Section 6.2 Waiver of Notice. Whenever any notice is required to be given to the
Lenders or the Borrower under any of the Loan Documents, a waiver thereof in
writing signed by the Person or Persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.

Section 6.3 Cost and Expense Reimbursement. The Loan Parties agree to pay on or
prior to the Agreement Date and, within ten (10) Business Days after delivery of
an invoice therefor, after the Agreement Date, (a) all costs and expenses of
Agent and the Lenders of negotiation, preparation, execution, delivery, filing
and administration of the Loan Documents and any consents, amendments, waivers
or other modifications thereto, (b) all fees, costs and expenses of legal
counsel to Agent and the Lenders in connection with the negotiation,
preparation, execution and administration of the Loan Documents and any
consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by the Borrower or any other Loan Party related
thereto; provided that the maximum amount of such legal costs incurred solely
with respect to the negotiation, preparation and execution of the Loan Documents
prior to the Agreement Date (but, for the avoidance of doubt, not on or after
the Agreement Date) by the Agent and the Lenders that is required to be paid by
the Borrower is $500,000, (c) all fees, costs and expenses of creating and
perfecting Liens in favor of Agent (on behalf of the Secured Parties) pursuant
to any Loan Document, including filing and recording fees, expenses and Taxes,
search fees, title insurance premiums, and fees, costs, expenses and
disbursements of counsel to Agent and the Lenders and of counsel providing any
opinions that Agent or the Lenders may request in respect of any Loan Documents
or the Liens created pursuant to the Loan Documents, (d) all costs and expenses
incurred by Agent or any Lender in connection with the custody or preservation
of any of the Collateral, (e) all costs and expenses, including fees, costs and
expenses of legal counsel to Agent and the Lenders and fees, costs and expenses
of accountants, advisors and consultants, incurred by Agent, any Lender and its
counsel relating to efforts to protect, evaluate, assess or dispose of any of
the Collateral, (f) all costs and expenses, including fees, costs and expenses
of legal counsel to Agent and the Lenders and all fees, costs and expenses of
accountants, advisors and consultants and costs of settlement, incurred by the
Agent and Lenders in enforcing any of the Loan Documents or any Obligations of,
or in collecting any payments due from, any Loan Party hereunder or under the
other Loan Documents (including in connection with the sale of, collection from,
or other realization upon any of the Collateral or the enforcement of the Loan
Documents) or in connection with any refinancing or restructuring of the credit

 

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arrangements provided under this Agreement in the nature of a “work-out” or
pursuant to any proceeding or event of the type set forth in Section 5.4(d), (g)
the cost of purchasing insurance that the Loan Parties fail to obtain as
required by the Loan Documents, (h) all fees, costs and expenses (including
costs and expenses of counsel) of any Secured Party incurred after the
occurrence or during the continuance of an Event of Default and (i) all amounts
that any Lender may be required to reimburse any Agent Indemnitee for pursuant
to Section 6.15(i) or Section 6.15(j), including any fees, costs and expenses
(and attorneys’ fees) incurred by such Secured Parties in connection therewith.
Without limiting any of the foregoing provisions of this Section 6.3, any action
taken by any Loan Party under or with respect to any Loan Document, even if
required under any Loan Document or at the request of the Agent or any other
Secured Party, shall be at the sole expense of such Loan Party, and neither
Agent nor any other Secured Party shall be required under any Loan Document to
reimburse any Loan Party or any Subsidiary of any Loan Party therefor. The
obligations and provision contained in this Section 6.3 shall survive the
termination of this Agreement and the repayment of the Obligations.

Section 6.4 Governing Law; Venue; Jurisdiction; Service of Process; Waiver of
Jury Trial. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement and, unless otherwise expressly stated therein,
the other Loan Documents shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in such State. Each Party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and, unless otherwise expressly stated therein,
the other Loan Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each Party hereby irrevocably submits to the exclusive
jurisdiction of the Commercial Division, New York State Supreme Court and the
federal courts, in each case, sitting in the City of New York, borough of
Manhattan (and, in each case, the applicable state and federal appeals courts
sitting in the City of New York or, if not available or applicable, the State of
New York), for the adjudication of any dispute hereunder or under the other Loan
Documents or in connection herewith or with the other Loan Documents or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, or that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding; provided that nothing in this Agreement or in any other Loan
Document shall limit the right of any Secured Party to commence any suit, action
or proceeding in federal, state or other court of any other jurisdiction to the
extent such Secured Party determines that such suit, action or proceeding is
necessary or appropriate to exercise its rights or remedies under this Agreement
or any of the other Loan Documents. Each Party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such Party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law. THE PARTIES HERETO, TO
THE EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED
HEREBY AND THEREBY. THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING
WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE. EACH PARTY HERETO (A) CERTIFIES
THAT NO OTHER PARTY AND NO AGENT, REPRESENTATIVE OR OTHER PERSON AFFILIATED WITH
OR RELATED TO ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THE LOAN DOCUMENTS, AS APPLICABLE, BY THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 6.4.

 

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Section 6.5 Successors and Assigns. This Agreement shall bind and inure to the
respective successors and permitted assigns of the Parties, except that no Loan
Party may assign or otherwise transfer all or any part of their rights or
obligations (including the Obligations) under the Loan Documents without the
prior written consent of all of the Lenders, and any prohibited assignment by
the Loan Parties shall be absolutely void ab initio. Any Lender may assign or
transfer its rights or Obligations (including any Subsequent Disbursement
Commitments) under the Loan Documents in accordance with this Section 6.5. Each
assignment or transfer shall be subject only to the following conditions:
(i) the parties to each assignment or transfer shall execute and deliver to the
Agent an Assignment and Assumption, (ii) the Lender (whether the assignor or
assignee) shall pay an assignment or transfer fee in the amount of $3,500 to
Agent, unless and to the extent the Agent, in its sole discretion, shall
expressly waive such fee in writing; provided that if an assignment or transfer
by a Lender is made to an Affiliate or related fund of such assigning Lender,
then no assignment or transfer fee shall be due in connection with such
assignment or transfer, and (iii) the assignee or transferee shall provide all
documentation and other information reasonably determined by the Agent to be
required by applicable regulatory authorities required under applicable “know
your customer” and anti-money laundering rules and regulations, including the
USA Patriot Act.

Within one (1) Business Day of its receipt of a duly completed Assignment and
Assumption executed by such Lender and an assignee or transferee, the assignment
or transfer fee, if any, and any “know your customer” information reasonably
requested by the Agent, the Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register by the Agent; provided that any such assignment shall be effective
regardless of it is recorded in the Register by the Agent if Agent does not
timely record such assignment in the Register in accordance and compliance with
the immediately preceding sentence. Once the assignment or transfer has been
recorded in the Register, the assignee or transferee shall (to the extent of the
interests assigned or transferred to such assignee or transferee) have all the
rights and obligations of, and shall be deemed, a Lender with respect to such
Loan or Subsequent Commitment (as applicable) hereunder or under the other Loan
Documents. Notwithstanding anything to the contrary in any Loan Document, no
Lender shall assign or transfer, or provide any participation in, any of the
Loans, other Obligations or Subsequent Disbursement Commitments to any of the
Loan Parties.

In addition to the other rights provided in this Section 6.5, each Secured Party
may grant a security interest in, or otherwise assign as collateral, any of its
rights under the Loan Documents, whether now owned or hereafter acquired
(including rights to payments of principal or interest on the Loans), to any
holder of, or trustee for the benefit of the holders of, such Secured Party’s
Indebtedness or equity securities.

Section 6.6 Entire Agreement; Amendments.

(a) The Loan Documents contain the entire understanding of the Parties with
respect to the matters covered thereby and supersede any and all other written
and oral communications, negotiations, commitments and writings with respect
thereto (other than those provisions of the Commitment Letter that expressly
survive the termination of the Commitment Letter and the execution and delivery
of this Agreement). Notwithstanding the foregoing or anything else to the
contrary (including in the Commitment Letter), the “Confidentiality” and “Other
Services” sections of the Commitment Letter are superseded by the provision of
this Agreement.

 

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(b) Subject to the provisions of Section 6.6(c), no amendment, restatement,
modification, supplement, change, termination or waiver of any provision of this
Agreement or the other Loan Documents (other than the Warrants, the Stock
Purchase Agreement, the Royalty Agreement, the Registration Rights Agreement,
any Control Agreement or any similar agreement or any landlord agreement or
bailee or mortgagee waiver, each of which may be amended, changed or waived in
accordance with the terms thereof), and no consent to any departure by any Loan
Party therefrom, shall in any event be effective without the written concurrence
of the Borrower and the Required Lenders (and with a copy to the Agent);
provided that no such amendment, restatement, modification, change, termination,
waiver or consent shall, without the consent of each Lender with Obligations
directly and adversely affected thereby, do any of the following: (i) reduce any
Loan; (ii) postpone the Maturity Date or other scheduled final maturity date of
any Loan, or postpone the date or reduce the amount of any scheduled payment
(but not mandatory prepayment) of principal of any Loan; (iii) postpone the date
on which any interest, premium or any fees are payable (other than default
interest charged pursuant to Section 2.8(b)); (iv) decrease the interest rate
borne by any Loan (other than any waiver of any increase in the interest rate
applicable to any of the Loans pursuant to Section 2.8(b)) or the amount of any
premium or fees payable hereunder; (v) amend this Section 6.6 or any provision
of this Agreement or any other Loan Documents providing for consent or other
action by all Lenders; (vi) amend, modify, change or waive the provisions
contained in (A) Section 6.5 in a manner that would further restrict the rights
of any Lender to assign all or any portion of its rights and obligations under
this Agreement or (B) Section 6.6(d); (vii) change in any manner any provision
of this Agreement that by its terms, expressly requires the approval or consent
of all Lenders; (viii) release or subordinate any Lien granted in favor of Agent
with respect to all or substantially all of the Collateral or release all or
substantially all of the value of the guarantees of the Obligations provided by
the Guarantors, in each case, other than in accordance with the terms of the
Loan Documents; or (ix) (A) change or have the effect of changing the priority
or pro rata treatment of any payments (including voluntary and mandatory
prepayments), Liens or proceeds of Collateral (including as a result in whole or
in part of allowing the issuance or incurrence, pursuant to this Agreement, the
other Loan Documents or otherwise, of new loans or other Indebtedness having any
priority over any of the Obligations in respect of payments, Liens, Collateral
or proceeds of Collateral, in exchange for any Obligations or otherwise), or
(B) advance the date fixed for, or increase, any scheduled installment of
principal due to any of the Lenders under any Loan Document;

it being agreed that all Lenders shall be deemed to be directly and adversely
affected by an amendment, waiver or supplement described in the preceding
clauses (vi), (viii) or (ix) of this Section 6.6(b).

(c) No amendment, restatement, supplement, modification, change, termination,
waiver or consent of any provision of any Loan Document shall, unless in writing
and signed by Agent,

(A) amend, restate, supplemented, modify, change, terminate or waive (or consent
to any diversion from) any provision of this Section 6.6(c) or of any other
provision of this Agreement or any other Loan Document which, by its terms,
expressly requires the approval or concurrence of Agent, (B) reduce the amount
or postpone the due date of or waives any fees, expenses and/or indemnities
payable to Agent hereunder or under the other Loan Documents or (C) or otherwise
affect the rights, benefits, liabilities or duties of Agent under this Agreement
or any other Loan Document. Notwithstanding anything to the contrary in
Section 6.6(b), Agent and the Borrower may amend or modify this Agreement and
any other Loan Document to (i) cure any ambiguity, omission, defect or
inconsistency therein, and (ii) grant a new Lien to Agent, for the benefit of
the Secured Parties, extend an existing Lien over additional property for the
benefit of the Secured Parties or join additional Persons as Loan Parties.

(d) No consideration shall be offered or paid (in any form, whether cash, Stock,
other property or otherwise) to any Loan Party to amend, restate, supplement,
modify or change or consent to a waiver of (or a diversion from) any provision
of any of the Loan Documents unless the same

 

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consideration also is offered to all of the Lenders under the Loan Documents.
For clarification purposes, this provision constitutes a separate right granted
to each Lender and is not intended for the Borrower or any other Loan Party to
treat the Lenders as a class and shall not be construed in any way as the
Lenders acting in concert or otherwise as a group with respect to the purchase,
disposition or voting of securities or Stock or otherwise.

Section 6.7 Severability. If any provision of this Agreement or any of the other
Loan Documents shall be invalid, illegal or unenforceable in any respect under
any law, the validity, legality and enforceability of the remaining provisions
hereof or thereof shall not in any way be affected or impaired thereby. The
Parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provision.

Section 6.8 Counterparts. This Agreement may be executed in several
counterparts, and by each Party on separate counterparts, each of which and any
photocopies, facsimile copies and other electronic methods of transmission
thereof shall be deemed an original, but all of which together shall constitute
one and the same agreement.

Section 6.9 Survival.

(a) In addition to Section 3.2, this Agreement and all agreements,
representations and warranties and covenants made in the Loan Documents, and in
any document, certificate or statement delivered pursuant thereto or in
connection therewith shall be considered to have been relied upon by the other
Parties and shall survive the execution and delivery of this Agreement and the
other Loan Documents and the making of the Loan (including any Subsequent
Disbursement) hereunder or thereunder regardless of any investigation made by
any such other Party or on its behalf, and shall continue in force until the
later of (i)(A) all Obligations and other amounts payable under the Loan
Documents shall have been fully paid in accordance with the provisions hereof
and thereof and (B) any Subsequent Disbursement Commitments have terminated and
(ii) the end of the Reporting Period. Agent and the Lenders shall not be deemed
to have waived, by reason of making the Loan (including any Subsequent
Disbursement), any Event of Default that may arise by reason of such
representation or warranty proving to have been false or misleading,
notwithstanding that Agent or the Lenders may have had notice or knowledge of
any such Event of Default or may have had notice or knowledge that such
representation or warranty was false or misleading at the time the Disbursement
was made.

(b) All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in connection
herewith or therewith shall survive (and shall continue to be made in accordance
with the terms hereof and thereof after) the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by
the Secured Parties, regardless of any investigation made by the Secured Parties
or on their behalf and notwithstanding that the Secured Parties may have had
notice or knowledge of any Default or Event of Default at the time of any Loan,
and shall continue in full force and effect (and shall continue to be made in
accordance with the terms of the applicable Loan Documents) as long as any Loan
or any other Obligation hereunder or under the other Loan Documents shall remain
unpaid or unsatisfied.

(c) Notwithstanding anything to the contrary in the Loan Documents, the
obligations of the Loan Parties under Sections 1.4, 2.5 and 5.1(r) and any
provisions that concern or are related to the Reporting Period and the
obligations of the Loan Parties and the Lenders under this Article 6 shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loan and the other
Obligations, the termination of the Subsequent Disbursement Commitments, the
expiration, extinguishment or termination of the Warrants or the termination of
this Agreement or any of the other Loan Documents or any provision hereof or
thereof.

 

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(d) For the avoidance of doubt and notwithstanding anything to the contrary in
any Loan Documents, (a) all of the provisions (including the making of the
representations and warranties) herein or in any other Loan Document that relate
to the Purchased Shares, the Interest Payment Shares, the Warrants, the Warrant
Shares the Royalty or any securities Laws shall survive the payment in full of
the Loans and any other Obligations until such time that the Warrants are fully
and completely paid, performed, extinguished and terminated in accordance with
their terms and the Reporting Period has ended, (b) all representations and
warranties with respect to the Warrants, the Warrant Shares, the Registration
Rights Agreement and the Royalty Agreement shall continue to, and at all times,
be made until (i) with respect to the Warrants and the Warrant Shares, such
Warrants are fully and completely paid, performed, extinguished and terminated
in accordance with their terms, (ii) with respect to the Registration Rights
Agreement, the Registration Rights Agreement is fully and completely terminated
in accordance with its terms, (iii) with respect to the Royalty Agreement, the
Royalty Agreement is fully and completely terminated in accordance with its
terms, and (c) all Liens granted on the Collateral under any Loan Document shall
remain in effect and continue to secure any obligations (including the
Obligations) under the Warrants, the Registration Rights Agreement and the
Royalty Agreement until all of the Warrants and the Royalty Agreement (and the
obligations (including the Obligations) under the Warrants, the Registration
Rights Agreement and the Royalty Agreement) have been fully and completely paid,
performed, extinguished and terminated, including, in each case, after all of
the Loans and any other Obligations have been paid in full.

Section 6.10 No Waiver. Neither the failure of, nor any delay on the part of,
any Party in exercising any right, power or privilege hereunder, or under any
agreement, document or instrument mentioned herein or under any other Loan
Document, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder, under any other Loan
Document or under any other agreement, document or instrument mentioned herein,
preclude other or further exercise thereof or the exercise of any other right,
power or privilege; nor shall any waiver of any right, power, privilege or
default hereunder, under any other Loan Document or under any agreement,
document or instrument mentioned herein, constitute a waiver of any other right,
power, privilege or default or constitute a waiver of any default of the same or
of any other term or provision. No course of dealing and no delay in exercising,
or omission to exercise, any right, power or remedy accruing to Agent or the
Lenders upon any breach, Default or Event of Default under this Agreement, any
other Loan Document or any other agreement shall impair any such right, power or
remedy or be construed to be a waiver thereof or an acquiescence therein; nor
shall the action of Agent or the Lenders in respect of any such breach, Default
or Event of Default or any acquiescence by it therein, affect or impair any
right, power or remedy of Agent or the Lenders in respect of any other breach,
Default or any Event of Default. All rights and remedies herein or in the other
Loan Documents provided are cumulative and not exclusive of any rights or
remedies otherwise provided by (or available at) law or in equity.

Section 6.11 Indemnity.

(a) The Loan Parties shall, at all times, jointly and severally indemnify and
hold harmless (the “Indemnity”) Agent, each Lender, each other Secured Party and
each of their respective directors, partners, members, managers, officers,
employees, agents, counsel and advisors (each, an “Indemnified Person”) in
connection with any losses, claims (including the reasonable attorneys’ fees
incurred in defending against such claims), damages, liabilities, penalties or
other expenses arising out of, or relating to, the Loan Documents, the extension
of credit hereunder or the Loan or the other Obligations, the providing of the
Subsequent Disbursement Commitments or the use or intended use of the Loan or
the other Obligations, which an Indemnified Person may incur or to which an
Indemnified Person may

 

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become subject (including (x) any amounts that any Lender may be required to
indemnify any Agent Indemnitee for pursuant to Section 6.15(h), (y) any amounts
that any Lender may be required to reimburse Agent for pursuant to
Section 6.15(i) and (z) any fees, costs and expenses (and attorneys’ fees)
incurred by any Secured Party in connection therewith), but excluding Excluded
Taxes (each, a “Loss”). The Indemnity shall not be available to any Indemnified
Person to the extent that a court or arbitral tribunal of competent jurisdiction
issues a final and non-appealable judgment that such Loss resulted from the
gross negligence or willful misconduct of such Indemnified Person. The Indemnity
is independent of and in addition to any other agreement of any Party under any
Loan Document to pay any amount to the Secured Parties, and any exclusion of any
obligation to pay any amount under this Section 6.11(a) shall not affect the
requirement to pay such amount under any other section hereof or under any other
agreement. For the avoidance of doubt, this Section 6.11 shall not apply to
Indemnified Taxes.

(b) An Indemnified Person shall have the right to retain its own legal counsel
with the fees, costs and expenses of such legal counsel and of such Indemnified
Person to be paid by the Loan Parties. The indemnification required by this
Section 6.11 shall be made and paid by the Loan Parties within ten (10) Business
Days of written demand by such Indemnified Person.

(c) No settlement of any Loss shall be entered into by any Loan Party without
the written consent of the applicable Indemnified Person.

(d) No Loan Party shall, nor shall it permit any of its Subsidiaries, assert,
and each Loan Party on behalf of itself and its Subsidiaries, hereby waives, any
claim, loss or amount against any Indemnified Person with respect to any
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement or the other Loan Documents or any undertaking or transaction
contemplated hereby or thereby. No Indemnified Person shall be liable for any
damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with the Loan Documents or
the transactions contemplated hereby or thereby.

The indemnification obligations contained in this Section 6.11 shall survive the
termination of this Agreement and repayment of the Obligations.

Section 6.12 No Usury. The Loan Documents are hereby expressly limited so that
in no contingency or event whatsoever, whether by reason of acceleration or
otherwise, shall the amount paid or agreed to be paid to Agent or the Lenders
for the Loan or the other Obligations exceed the maximum amount permissible
under Applicable Law. If from any circumstance whatsoever fulfillment of any
provision hereof or any other Loan Document, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstance Agent
or the Lenders shall ever receive anything which might be deemed interest under
Applicable Law, that would exceed the highest lawful rate, such amount that
would be deemed excessive interest shall be applied to the reduction of the
principal amount owing on account of the Loan or the other Obligations, or if
such deemed excessive interest exceeds the unpaid balance of principal of the
Loan or the other Obligations, such deemed excess shall be refunded to the
Borrower. All sums paid or agreed to be paid to the Lenders for the Loan or the
other Obligations shall, to the extent permitted by Applicable Law, be deemed to
be amortized, prorated, allocated and spread throughout the full term of the
Loan and the other Obligations until payment in full so that the deemed rate of
interest on account of the Loan and the other Obligations is uniform throughout
the term thereof. The terms and provisions of this Section shall control and
supersede every other provision of this Agreement, the Notes and the other Loan
Documents.

 

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Section 6.13 Specific Performance. The Loan Parties agree that irreparable
damage, for which monetary relief, even if available, would not be an adequate
remedy, would occur in the event that any provision of the Loan Documents is not
performed in accordance with its specific terms or is otherwise breached,
including if the Loan Parties hereto fail to take any action required of them
hereunder or thereunder to consummate the transactions contemplated by the Loan
Documents. In light of the foregoing, the Loan Parties hereby agree that (a) the
Secured Parties shall be entitled to an injunction or injunctions, specific
performance or other equitable relief to prevent breaches of the Loan Documents
and to enforce specifically the terms and provisions hereof and thereof in the
courts described in Section 6.4 without proof of damages or otherwise and
(b) the right of specific performance and other equitable relief is an integral
part of the transactions contemplated by the Loan Documents and without that
right, the Secured Parties would not have entered into the Loan Documents or
have provided Loans or Disbursements hereunder or under the other Loan Documents
or the Subsequent Disbursement Commitments hereunder and under the other Loan
Documents. The Loan Parties hereby agree not to assert (or have any of their
Subsidiaries or their attorneys, agents or representatives assert or any other
Person on their behalf to assert) that a remedy of specific performance or other
equitable relief is unenforceable, invalid, contrary to Applicable Law or
inequitable for any reason, and not to assert that a remedy of monetary damages
would provide an adequate remedy or that the parties otherwise have an adequate
remedy at law. The Loan Parties hereby acknowledge and agree that any Secured
Party seeking an injunction or injunctions to prevent breaches of, or defaults
under, the Loan Documents, to prevent any Default or Event of Default and to
enforce specifically the terms and provisions of the Loan Documents in
accordance with this Section 6.13 shall not be required to provide any bond or
other security in connection with any such injunction or other order or
proceeding. The remedies available to the Secured Parties pursuant to this
Section 6.13 shall be in addition to any other remedy which may be available
under the Loan Documents, at law, in equity or otherwise.

Section 6.14 Further Assurances. From time to time, the Loan Parties shall
perform any and all acts and execute and deliver to Agent and the Lenders such
additional documents, agreements and instruments as may be necessary or as
requested by Agent or any of the Lenders to carry out the purposes of any Loan
Document or any or to preserve and protect Agent’s or the Lenders’ rights as
contemplated therein.

Section 6.15 Agent.

(a) Each Lender hereby irrevocably appoints Cortland (together with any
successor Agent appointed by the Required Lenders) as Agent hereunder and under
the other Loan Documents and authorizes Agent to (i) execute and deliver the
Loan Documents and accept delivery thereof on its behalf from any Loan Party,
(ii) take such other actions on its behalf and to exercise all rights, powers
and remedies and perform the duties as are expressly delegated to Agent under
the Loan Documents and (iii) exercise such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, Agent shall not have any duty or
responsibility except those expressly set forth herein, nor shall Agent have or
be deemed to have any fiduciary relationship with any Lender or participant, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent. Without limiting the generality of the foregoing
sentence, the use of the term “agent” herein and in other Loan Documents with
reference to Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any Applicable Law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.

 

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(b) Agent may execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys in fact and shall be
entitled to advice of counsel and other consultants or experts concerning all
matters pertaining to such duties.

(c) None of Agent nor any of its directors, officers, employees, attorneys,
advisors, representatives or agents shall (i) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the Transactions or the transactions contemplated
hereby or thereby (except to the extent resulting from its own gross negligence,
willful misconduct, or material breach of any Loan Document in connection with
its duties, liabilities, responsibilities and obligations expressly set forth
herein or in the other Loan Documents as determined by a court of competent
jurisdiction in a final and non-appealable judgment), or (ii) be responsible in
any manner to any Lender or participant for any recital, statement,
representation or warranty made by any Loan Party or Affiliate of any Loan
Party, or any officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document, or for any failure of any Loan Party or
any other party to any Loan Document to perform its obligations (including the
Obligations) hereunder or thereunder. Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of any Loan Party
or any Loan Party’s Subsidiaries or Affiliates.

(d) Agent shall be entitled to rely, and shall be fully protected in relying,
upon any writing, communication, signature, resolution, representation, notice,
consent, certificate, electronic mail message, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to any Loan Party), independent accountants and
other experts selected by Agent. Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate and, if it so requests, confirmation from the Lenders of
their obligation to indemnify Agent against any and all liabilities and expenses
(including any fees and expenses of counsel to Agent) which may be incurred by
it by reason of taking or continuing to take any such action. Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon each Lender.

(e) Agent shall not be deemed to have knowledge or notice of the occurrence of
any Event of Default or Default, unless Agent shall have received written notice
from a Lender or any Loan Party referring to this Agreement and the other Loan
Documents, describing such Event of Default or Default. Agent shall take such
action with respect to such Event of Default or Default as may be requested by
the Required Lenders; provided that unless and until the Agent has received any
such request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default or
Default as it shall deem advisable or in the best interest of itself and the
Lenders.

(f) Each Lender acknowledges that Agent has not made any representation or
warranty to it, and that no act by Agent hereafter taken, including any consent
and acceptance of any assignment or review of the affairs of the Loan Parties or
any of their Subsidiaries, shall be deemed to constitute any representation or
warranty by Agent to any Lender as to any matter, including whether Agent has
disclosed material information in its possession. Each Lender represents to
Agent that it has, independently and without reliance upon Agent and based on
such documents and information as it has

 

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deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and the other Loan Parties, and made its own
decision to enter into this Agreement and the other Loan Documents and to extend
credit to Borrower hereunder and under the other Loan Documents. Each Lender
also represents that it will, independently and without reliance upon Agent and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary or appropriate to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of Borrower and the other Loan Parties. Subject
to Section 6.15(h), Agent shall promptly (but, in any event, within two
(2) Business Days after (i) receipt thereof by (A) Agent’s main operations
contact or (B) any other Person designated by Agent to receive notices for (or
on behalf of) Agent pursuant to the notices provisions of the Loan Documents
(including Section 6.1 of this Agreement) or (ii) knowledge of receipt of an
item from the Borrower by Agent’s main operations contact or such other Person
designated by Agent to receive notices for (or on behalf of) Agent pursuant to
the notices provisions of the Loan Documents (including Section 6.1 of this
Agreement)) deliver and provide to each Lender any notices, reports, documents,
instruments, agreements and other information of any Loan Party or any of its
Affiliates or that Agent may receive from any Loan Party or any of its
Affiliates which may come into the possession of Agent (or which Agent receives)
in connection with the Loan Documents or the transactions contemplated by the
Loan Documents.

(g) The Person serving as Agent may resign as Agent upon 30 days’ notice to the
Lenders and the Required Lenders have the right, at their sole election, to
remove the Person serving as Agent upon 10 days’ notice to Agent (or immediately
upon any material breach of Agent of its obligations under the Loan Documents).
If the Person serving as Agent resigns under this Agreement or the Required
Lenders remove the Person serving as Agent, the Required Lenders shall appoint
from among the Lenders a Person to serve as successor Agent for such successor
Agent, the Lenders and the other Secured Parties. If no Person is appointed to
serve as successor Agent prior to the effective date of the resignation or
removal of Agent, Agent may appoint, after consulting with the Lenders, a Person
to serve as successor Agent from among the Lenders. Upon the acceptance by a
Person of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers and duties of the retiring or removed
Agent and the term “Agent” shall mean such successor Agent, and the retiring
Agent’s appointment, powers and duties as Agent shall be immediately and
automatically terminated at such time. After any Person’s resignation or removal
hereunder as Agent, the provisions of this Section 6.15 shall inure to its
benefit (in its capacity as Agent) as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the other Loan
Documents. If no Person has accepted appointment as Agent by the date which is
30 days following a Person’s notice of its resignation as Agent (or at the time
of removal of a Person as Agent), the Person who resigned or was removed as
Agent shall nevertheless thereupon (and at such time) no longer be Agent and the
Lenders shall perform all of the duties of Agent hereunder until such time, if
any, as the Required Lenders appoint a Person to serve as successor Agent as
provided for above.

(h) Notwithstanding anything to the contrary in this Agreement or in any other
Loan Document (including any provision in the Loan Documents that require Agent
to deliver, send, disclose or otherwise provide any agreements, instruments,
documents, copies or information to any Lender or any other Secured Party),
Agent covenants and agrees that, if and to the extent specifically requested or
directed in writing by a Lender, Agent (and any other Person on behalf of Agent)
shall not deliver, send, disclose or otherwise provide such Lender or any of its
Affiliates any agreements, documents or other information (or specific types of
categories thereof) containing or constituting (or that may contain or
constitute) material non-public information regarding the Borrower or its
Subsidiaries that is received by (or otherwise available to) Agent (or any other
Person on behalf of Agent), as set forth in such written request or direction.

 

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(i) Each Lender severally (but not jointly) agrees to indemnify, defend and hold
harmless the Agent, its affiliates and their respective officers, partners,
directors, trustees, employees and agents (each a “Agent Indemnitee”), to the
extent that such Agent Indemnitee shall not have been reimbursed by Borrower
within sixty (60) days after written demand to Borrower therefor, provided that
such Agent Indemnitee has used commercially reasonable efforts to obtain such
payment from the Borrower during such sixty-day period, for and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, reasonable and documented out-of-pocket costs, reasonable and documented
out-of-pocket expenses (including reasonable and documented outside counsel fees
and disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against such Agent Indemnitee in
exercising its powers, rights and remedies or performing its duties hereunder or
under the Loan Documents or otherwise in its capacity as such Agent Indemnitee
in any way relating to or arising out of this Agreement or the Loan Documents;
provided, that such indemnity shall not, as to any Agent Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and non-appealable judgment to have resulted from the gross negligence or
willful misconduct of, or material breach of, any Loan Document by any Agent
Indemnitee.

(j) Without duplication of Section 6.15(i), each Lender severally (but not
jointly) agrees to reimburse each Agent Indemnitee (to the extent that such
Agent Indemnitee shall not have been reimbursed by Borrower within sixty
(60) days after written demand by Borrower therefor) promptly upon demand for
any reasonable and documented out-of-pocket costs and expenses (including,
without limitation, reasonable and documented out-of-pocket fees, charges, and
disbursements of financial, outside legal counsel and other advisors and any
taxes or insurance paid in the name of, or on behalf of the Borrower) incurred
by such Agent Indemnitee in connection with the preparation, execution,
delivery, administration, modification, amendment, consent, waiver or
enforcement, or preservation of any rights under this Agreement or any other
Loan Document in each case, only to the extent such Agent Indemnitee has been
specifically directed by the Required Lenders in writing to take such action.
The indemnification and reimbursement obligations contained in Section 6.15(i)
and Section 6.15(j) shall survive the termination of this Agreement and the
repayment of the Obligations.

Section 6.16 USA Patriot Act. Each Lender that is subject to the USA Patriot Act
(and Agent (for itself and not on behalf of any Lender)) hereby notifies the
Loan Parties that pursuant to the requirements of the USA Patriot Act, it is
required to obtain, verify and record information that identifies each Loan
Party, which information includes the name and address of each Loan Party and
other information that will allow such Lender or Agent to identify each Loan
Party in accordance with the USA Patriot Act.

Section 6.17 Placement Agent. The Borrower and the other Loan Parties shall be
solely responsible for the payment of any fees, costs, expenses and commissions
of any placement agent, broker or financial adviser relating to or arising out
of the transactions contemplated by the Loan Documents. The Borrower and the
other Loan Parties shall pay, and hold each of the Secured Parties harmless
against, any liability, loss or expense (including attorneys’ fees, costs and
expenses) arising in connection with any claim for any such payment.

Section 6.18 Independent Nature of Secured Parties. The obligations of each
Secured Party under the Loan Documents are several and not joint with the
obligations of any other Secured Party, and no Secured Party shall be
responsible in any way for the performance of the obligations of any other
Secured Party under the Loan Documents. Each Secured Party shall be responsible
only for its own

 

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representations, warranties, agreements and covenants under the Loan Documents.
The decision of each Lender to acquire the Securities pursuant to the Loan
Documents has been made by such Lender independently of any other Secured Party
and independently of any information, materials, statements or opinions as to
the business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Borrower or
any of its Subsidiaries which may have been made or given by any other Secured
Party or by any agent, attorney, advisor, representative or employee of any
other Secured Party, and no Secured Party or any of its agents, attorneys,
advisors, representatives or employees shall have any liability to any other
Secured Party (or any other Person) relating to or arising from any such
information, materials, statements or opinions. Nothing contained in the Loan
Documents, and no action taken by any Secured Party pursuant hereto or thereto
(including a Lender’s acquisition of Obligations, Notes, Purchased Shares,
Interest Payment Shares, Warrants or Warrant Shares at the same time as any
other Secured Party), shall be deemed to constitute the Secured Parties as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Secured Parties are in any way acting in concert
or as a group with respect to such Obligations or the transactions contemplated
by any of the Loan Documents. Each Secured Party shall be entitled to
independently protect and enforce its rights, including the rights arising out
of the Loan Documents, and it shall not be necessary for any other Secured Party
to be joined as an additional party in any proceeding for such purpose.

Section 6.19 Joint and Several. The obligations of the Loan Parties hereunder
and under the other Loan Documents are joint and several. Without limiting the
generality of the foregoing, reference is hereby made to Section 2 of the
Security Agreement, to which the obligations of the Loan Parties are subject.

Section 6.20 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Loan Parties and the Secured
Parties party hereto and the Indemnified Persons, and their successors and
permitted assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents. No Secured
Party shall have any obligation to any Person not a party to this Agreement or
the other Loan Documents.

Section 6.21 Binding Effect. This Agreement shall become effective when it shall
have been executed by each of the Loan Parties party hereto, each Lender party
hereto and Agent and such executed counterparts have been delivered to Agent and
the Lenders pursuant to the terms of this Agreement. Thereafter, it shall be
binding upon and inure to the benefit of, but only to the benefit of each Loan
Party party hereto and each Secured Party party thereto and, in each case, their
respective successors and permitted assigns and, for the purposes of
Section 6.11, shall inure to the benefit of the Indemnified Persons.

Section 6.22 Marshaling; Payments Set Aside. No Secured Party shall be under any
obligation to marshal any property in favor of any Loan Party or any other
Person or against or in payment of any Obligation. To the extent that any
Secured Party receives a payment from the Borrower, from any other Loan Party,
from the proceeds of the Collateral, from the exercise of its rights of setoff,
any enforcement action or otherwise, and such payment is subsequently, in whole
or in part, invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not occurred.

 

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Section 6.23 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of any Secured Party, any right, remedy, power or
privilege under any Loan Document, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. No course of dealing between any Loan
Party, any Affiliate of any Loan Party or any Secured Party shall be effective
to amend, modify or discharge any provision of any of the Loan Documents.

Section 6.24 Right of Setoff. Each Secured Party and each of its Affiliates is
hereby authorized, without notice or demand (each of which is hereby waived by
each Loan Party), at any time and from time to time during the continuance of
any Event of Default and to the fullest extent permitted by Applicable Law, to
set off and apply any and all deposits (whether general or special, time or
demand, provisional or final) at any time held and other Indebtedness, claims or
other obligations at any time owing by any Secured Party or any of its
Affiliates to or for the credit or the account of the Borrower or any other Loan
Party against any Obligation of any Loan Party now or hereafter existing,
whether or not any demand was made under any Loan Document with respect to such
Obligation and even though such Obligation may be unmatured. No Lender shall
exercise any such right of setoff without the prior consent of the Required
Lenders. Each Secured Party agrees promptly to notify Agent (and Agent shall
promptly (but, in any event, within two (2) Business Days after (i) receipt
thereof by (A) Agent’s main operations contact or (B) any other Person
designated by Agent to receive notices for (or on behalf of) Agent pursuant to
the notices provisions of the Loan Documents (including Section 6.1 of this
Agreement) or (ii) knowledge of receipt of an item from the Borrower by Agent’s
main operations contact or such other Person designated by Agent to receive
notices for (or on behalf of) Agent pursuant to the notices provisions of the
Loan Documents (including Section 6.1 of this Agreement)) notify the other
Lenders) after any such setoff and application made by such Secured Party or its
Affiliates; provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights under this
Section 6.24 are in addition to any other rights and remedies (including other
rights of setoff) that any Secured Party or any of its Affiliates may have.

Section 6.25 Sharing of Payments, Etc. If any Lender, directly or through any of
its Affiliates, obtains any payment of any Obligation of any Loan Party (whether
voluntary, involuntary or through the exercise of any right of setoff or the
receipt of any Collateral or “proceeds” (as defined under the applicable UCC) of
Collateral) (and other than pursuant to Section 6.5) and such payment exceeds
the amount such Lender would have been entitled to receive if all payments had
gone to, and been distributed in accordance with the provisions of the Loan
Documents, such Lender shall purchase for cash from other Lenders such
participations in their Obligations as necessary for such Lender to share such
excess payment with such Lenders to ensure such payment is applied as though it
had been applied in accordance with this Agreement; provided, however, that
(i) if such payment is rescinded or otherwise recovered from such Lender in
whole or in part, such purchase shall be rescinded and the purchase price
therefor shall be returned to such Lender without interest and (ii) such Lender
shall, to the fullest extent permitted by Applicable Law, be able to exercise
all its rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of the
applicable Loan Party in the amount of such participation.

Section 6.26 Other Services.

(a) Nothing contained in this Agreement shall limit or preclude any Secured
Party or any of its Affiliates from carrying on any business with, providing
banking or other financial or equity services to, or from participating in any
capacity, including as an equity investor, in any Person whatsoever, including,
without limitation, any competitor, supplier or customer of the Borrower,
Agreement Date Acquisition Sellers or any of their respective Affiliates, or any
other Person that may have interests different than or adverse to such Person.
Each Loan Party (i) acknowledges and consents to any Secured Party or any of its
Affiliates providing any “Seller Bridge Financing” (as defined in the

 

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Commitment Letter) or any other loans or commitments to the Agreement Date
Acquisition Sellers or any of their Affiliates and (ii) acknowledges and agrees
that the providing thereof does not constitute a breach of the Loan Documents.
Each Loan Party agrees that no Secured Party or any of its Affiliates have any
obligation to inform any Loan Party of any such “Seller Bridge Financing” or any
other loans or commitments provided to the Agreement Date Acquisition Sellers or
any of their Affiliates from time to time..

(b) In connection with all aspects of the Transactions, each Loan Party
acknowledges and agrees that: (i) the Loans, Obligations, Subsequent
Disbursement Commitments and any related services contemplated in the Loan
Documents constitute an arm’s-length commercial transaction between the Loan
Parties, on the one hand, and the Secured Parties, on the other hand, and each
Loan Party is capable of evaluating and understanding and understand and accept
the terms, risks and conditions of the Transactions, (ii) in connection with the
process leading to the Transactions, the Secured Parties are and have been
acting solely as a principal and not as a financial advisor, agent or fiduciary,
for any Loan Party or any of the Loan Parties’ management, Affiliates, Stock
holders, directors, officers, employees, creditors or any other Person,
(iii) none of the Secured Parties nor any of their Affiliates has assumed or
will assume an advisory, agency or fiduciary responsibility in any Loan Party or
any of the Loan Parties’ Affiliates’ favor with respect to any of the
Transactions or the process leading thereto (irrespective of whether any Secured
Party or any of the Secured Parties’ Affiliates have advised or are currently
advising any Loan Party or any of the Loan Parties’ Affiliates on other matters)
and none of the Secured Parties or their Affiliates have any obligation to any
Loan Party or any of the Loan Parties’ Affiliates with respect to the
Transactions, (iv) the Secured Parties and their Affiliates may be engaged in a
broad range of transactions that involve interests that differ from the Loan
Parties and their Affiliates and none of the Secured Parties or any of their
Affiliates shall have any obligation to disclose any of such interests, and (v)
none of the Secured Parties or any of their Affiliates have provided any legal,
accounting, regulatory or tax advice with respect to any of the Transactions and
the Loan Parties have consulted their own legal, accounting, regulatory and tax
advisors to the extent the Loan Parties have deemed appropriate. Each Loan Party
waives and releases, to the fullest extent permitted by law, any claims that it
may have against any Secured Party and their respective Affiliates with respect
to any breach of fiduciary duty or alleged breach of fiduciary duty as a
consequence of the Loan Documents.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the first day written above.

BORROWER:

MELINTA THERAPEUTICS, INC.,

a Delaware corporation

 

By:  

/s/ Paul Estrem

Name: Paul Estrem Title: Chief Financial Officer

OTHER LOAN PARTIES:

MELINTA SUBSIDIARY CORP.,

a Delaware corporation

By:  

/s/ Paul Estrem

Name: Paul Estrem Title: Chief Financial Officer

CEMPRA PHARMACEUTICALS, INC.,

a Delaware corporation

By:  

/s/ Paul Estrem

Name: Paul Estrem Title: Chief Financial Officer

CEM-102 PHARMACEUTICALS, INC.,

a Delaware corporation

By:  

/s/ Paul Estrem

Name: Paul Estrem Title: Chief Financial Officer

REMPEX PHARMACEUTICALS, INC.,

a Delaware corporation

By:  

/s/ Paul Estrem

Name: Paul Estrem Title: Chief Financial Officer

Facility Agreement

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

TARGANTA THERAPEUTICS CORPORATION,

a Delaware corporation

By:  

/s/ Paul Estrem

Name: Paul Estrem Title: Chief Financial Officer

Facility Agreement

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

LENDERS: DEERFIELD PRIVATE DESIGN FUND IV, L.P.

By: Deerfield Mgmt IV, L.P., General Partner By: J.E. Flynn Capital IV, LLC,
General Partner

By:  

/s/ David J. Clark

Name: David J. Clark Title: Authorized Signatory

DEERFIELD PRIVATE DESIGN FUND III, L.P. By: Deerfield Mgmt III, L.P., General
Partner By: J.E. Flynn Capital III, LLC, General Partner

By:  

/s/ David J. Clark

Name: David J. Clark Title: Authorized Signatory DEERFIELD SPECIAL SITUATIONS
FUND, L.P. By: Deerfield Mgmt, L.P., General Partner By: J.E. Flynn Capital,
LLC, General Partner

By:  

/s/ David J. Clark

Name: David J. Clark Title: Authorized Signatory

Facility Agreement

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

AGENT:

CORTLAND CAPITAL MARKET SERVICES LLC

 

By:  

/s/ Emily Ergang Pappas

Name:   Emily Ergang Pappas Title:   Associate Counsel

Facility Agreement

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

ANNEX A

INITIAL DISBURSEMENT AMOUNT, SUBSEQUENT DISBURSEMENT COMMITMENT AND WARRANTS

 

Lender

   Initial
Disbursement
Amount      % of Total
Initial
Disbursement
Amount     Subsequent
Disbursement
Commitment      % of Total
Subsequent
Disbursement
Commitment     % of
Total
Warrants  

Deerfield Private Design Fund IV, L.P.

   $ 101,594,69.31        68.75 %    $ 34,375,000        68.75 %      68.75 % 

Deerfield Private Design Fund III, L.P.

   $ 30,781,340.66        20.83 %    $ 10,416,667        20.83 %      20.83 % 

Deerfield Special Situations Fund, L.P.

   $ 15,398,059.03        10.42 %    $ 5,208,333        10.42 %      10.42 %    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ 147,774,079.00        100 %    $ 50,000,000        100 %      100 %    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

Annex A-1

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

EXHIBIT A-1

FORM OF LOAN NOTE

[To follow]

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

EXHIBIT A-1

TO

FACILITY AGREEMENT

FORM OF LOAN NOTE

THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR FEDERAL
INCOME TAX PURPOSES. PLEASE REFER TO SECTIONS 2.7 AND 2.9 OF THE FACILITY
AGREEMENT FOR ADDITIONAL INFORMATION.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 IN THE UNITED
STATES OF AMERICA, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES
LAW. THE NOTE MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, INCLUDING PURSUANT TO RULE
144 OR RULE 144A UNDER THE SECURITIES ACT OR PURSUANT TO A PRIVATE SALE EFFECTED
UNDER SECTION 4(a)(7) OF THE SECURITIES ACT OR APPLICABLE FORMAL OR INFORMAL
UNITED STATES OF AMERICA SECURITIES EXCHANGE COMMISSION INTERPRETATION OR
GUIDANCE, SUCH AS A SO-CALLED “4[(a)](1) AND A HALF SALE.” NOTWITHSTANDING THE
FOREGOING, THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

NOTE

Lender: _____________________

Principal Amount: $_______    ___________, 20__

FOR VALUE RECEIVED, the undersigned, Melinta Therapeutics, Inc., a Delaware
corporation

(the “Borrower”), hereby unconditionally promises to pay to the Lender set forth
above (the “Lender”) the

Principal Amount set forth above, or, if less, the aggregate unpaid principal
amount of the Loan (as defined in the Facility Agreement referred to below) of
the Lender to the Borrower, payable at such times and in such amounts as are
specified in the Facility Agreement.

The Borrower promises to pay interest on the outstanding principal amount of the
Loan, any overdue interest and all other Obligations (as defined in the Facility
Agreement referred to below) from and after the Agreement Date until such
outstanding principal amount of the Loan, any overdue interest and all other
Obligations are paid in full, payable at such times and at such interest rates
as are specified in the Facility Agreement. The Borrower promises to pay any
Exit Fee, Prepayment Fee or any other fee that is due on the Loan or the other
Obligations in accordance with the Facility Agreement. Demand, diligence,
presentment, protest and notice of non-payment and protest are hereby waived by
the Borrower.

Principal and interest (and any Exit Fee or Prepayment Fee) are payable in cash
in Dollars to the Lender in the manner set forth in the Facility Agreement.

This Loan Note (this “Note”) is one of the “Notes” referred to in, and is
entitled to the benefits of, the Facility Agreement, dated as of January 5, 2018
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the “Facility Agreement”), by and among the Borrower, the other
Loan Parties party thereto, the Lenders party thereto and Cortland Capital
Market Services LLC, as agent for itself and the other Secured Parties (in such
capacity, together with its successors and assigns, the “Agent”, and the other
Loan Documents. Capitalized terms used herein without definition are used as
defined in the Facility Agreement.

 

EX. A - 1

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The Facility Agreement, among other things, (a) provides for the making of a
Loan by the Lender to the Borrower in an aggregate amount not to exceed at any
time outstanding the Principal Amount set forth above, the indebtedness of the
Borrower resulting from such Loan being evidenced by this Note and (b) contains
provisions for acceleration of the maturity of the unpaid principal amount of
this Note (and all other Obligations (including the Obligations) evidenced
hereby) upon the happening of certain stated events and also for prepayments
pursuant to Sections 2.3 and 5.3 of the Facility Agreement on account of the
principal hereof prior to the maturity hereof upon the terms and conditions
specified therein.

This Note is a Loan Document, is entitled to the benefits of the Loan Documents
and is subject to certain provisions of the Facility Agreement, including
Sections 1.2 (Interpretation) and 6.4 (Governing Law; Venue; Jurisdiction;
Service of Process; Waiver of Jury Trial) of the Facility Agreement.

This Note is assignable or transferable by Lender in accordance with Section 6.5
of the Facility Agreement. This Note is not assignable or transferable by the
Borrower without the written consent of the Lender and the Agent and any such
prohibited assignment or transfer is absolutely void ab initio.

Subject to the terms of the Facility Agreement, all payments will be free and
clear of, and without deduction or withholding for, any present or future taxes.
The Borrower shall pay all and any costs (administrative or otherwise) imposed
by the Borrower’s banks, clearing houses, or any other financial institution, in
connection with making any payments hereunder.

The Borrower shall pay all costs and expenses (including attorney’s fees) of the
Lender incurred in connection with this Note and also as provided in Section 6.3
of the Facility Agreement.

Other than those notices required to be provided by the Lender to the Borrower
under the terms of the Facility Agreement, the Borrower and every endorser of
this Note, or the obligations represented hereby, expressly waives presentment,
protest, demand, notice of dishonor or default, and notice of any kind with
respect to this Note, the Facility Agreement and the other Loan Documents or the
performance of the obligations (and the other Obligations) under this Note, the
Facility Agreement and/or the other Loan Documents. No renewal or extension of
this Note, the Facility Agreement or the other Loan Documents (or the
Obligations), no delay in the enforcement of payment of this Note, the Facility
Agreement or the other Loan Documents (or the Obligations), and no delay or
omission in exercising any right, remedy or power under this Note, the Facility
Agreement or the other Loan Documents or under Applicable Law shall affect the
liability of the Borrower or any endorser of this Note.

No delay or omission by the Lender in exercising any power or right hereunder
shall impair such right or power or be construed to be a waiver of any default,
nor shall any single or partial exercise of any power or right hereunder
preclude the full exercise thereof or the exercise of any other power or right.
The provisions of this Note may be waived or amended, restated, supplemented or
otherwise modified only in a writing signed by the Borrower and the Lender.

This Note shall be governed by, and be construed and enforced in accordance
with, the laws of the State of New York applicable to contracts made and to be
performed in such State. The other provisions of Section 6.4 of the Facility
Agreement shall apply hereto mutatis mutandis.

[signature page follows]

 

EX. A - 2

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IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer as of the day and year set forth above.

 

MELINTA THERAPEUTICS, INC.,

a Delaware corporation

By:  

 

Name:   Title:  

 

EX. A - 3

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EXHIBIT A-2

FORM OF SUBSEQUENT DISBURSEMENT NOTE

[To follow]

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EXHIBIT A-2

TO

FACILITY AGREEMENT

FORM OF SUBSEQUENT DISBURSEMENT NOTE

THIS SUBSEQUENT DISBURSEMENT NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 IN THE UNITED STATES OF AMERICA, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAW. THIS SUBSEQUENT DISBURSEMENT NOTE MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT, INCLUDING PURSUANT TO RULE 144 OR RULE 144A UNDER THE
SECURITIES ACT OR PURSUANT TO A PRIVATE SALE EFFECTED UNDER SECTION 4(a)(7) OF
THE SECURITIES ACT OR APPLICABLE FORMAL OR INFORMAL UNITED STATES OF AMERICA
SECURITIES EXCHANGE COMMISSION INTERPRETATION OR GUIDANCE, SUCH AS A SO-CALLED
“4[(a)](1) AND A HALF SALE.” NOTWITHSTANDING THE FOREGOING, THIS SUBSEQUENT
DISBURSEMENT NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

SUBSEQUENT DISBURSEMENT NOTE

 

$__________    __________, 20[__]

FOR VALUE RECEIVED, Melinta Therapeutics, Inc., a Delaware corporation (the
“Borrower”), hereby unconditionally promises to pay to [____________________]
(together with its successors and assigns, the “Holder”) at the times, in the
amounts and at the address (or pursuant to the wire instructions) set forth in
the Facility Agreement dated as of January [__], 2018 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
“Facility Agreement”), by and among the Borrower, the other “Loan Parties” from
time to time party thereto, the “Lenders” from time to time party thereto, and
Cortland Capital Market Services LLC, as agent (in such capacity, together with
its successors and assigns in such capacity, the “Agent”), the lesser of (i) the
principal amount of ____________________ ($__________) and (ii) the aggregate
outstanding principal amount of the Subsequent Disbursements made by the Holder
to the Borrower according to the terms of the Facility Agreement, as
conclusively evidenced (absent manifest error) by the written endorsement with
respect thereto by any officer of the Holder on Schedule I attached hereto;
provided that the failure to include any such aggregate outstanding principal
amount of any Subsequent Disbursement on Schedule I shall not affect the
liability or obligations of the Borrower to pay any principal amounts of the
Subsequent Disbursements made or funded by the Holder (or any predecessor of the
Holder that were assigned or transferred to the Holder) to the Holder.
Notwithstanding the foregoing, if the aggregate outstanding principal amount of
the Subsequent Disbursements made by the Holder to the Borrower is actually more
than the amount set forth on Schedule I attached hereto, such actual amount
shall control and instead be the amount that applies pursuant to clause (ii) in
the immediately preceding sentence. Capitalized terms used herein but not
otherwise defined herein shall have the meanings assigned to such terms in the
Facility Agreement.

The Borrower further promises to pay interest at such address (or pursuant to
such wire instructions), in U.S. dollars, from (and including) the date hereof
on the outstanding principal amount owing hereunder from time to time, at the
applicable rate per annum set forth in the Facility Agreement. Interest on the
outstanding principal amounts evidenced by this Subsequent Disbursement Note
shall be

 

-1-

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paid at the times and calculated pursuant to the terms set forth in the Facility
Agreement. This Subsequent Disbursement Note is a “Subsequent Disbursement Note”
and a “Note” referred to in the Facility Agreement, and is subject to the terms
and conditions set forth therein, which terms and conditions are incorporated
herein by reference. This Subsequent Disbursement Note evidences all

Subsequent Disbursements made by the Holder under the Facility Agreement and the
Holder’s interest in the Subsequent Disbursements.

All payments of principal and interest shall be made in U.S. dollars in
immediately available funds as specified in the Facility Agreement. Amounts
remaining unpaid on this Subsequent Disbursement Note may be prepaid as provided
in the Facility Agreement, without premium or penalty. Amounts that are paid,
repaid or prepaid hereunder shall not be reborrowed.

Upon the occurrence and during the continuance of any Event of Default, all
amounts then remaining unpaid on this Subsequent Disbursement Note may become,
or may be declared to be, immediately due and payable (and will immediately and
automatically become due and payable in connection with any Event of Default of
the type set forth in Section 5.4(d) of the Facility Agreement) and any unfunded
Subsequent Disbursement Commitments may be immediately terminated (and will
immediately and automatically be terminated in connection with any Event of
Default of the type set forth in Section 5.4(d) of the Facility Agreement), each
as specified in Sections 5.4 and 5.5 of the Facility Agreement.

The Borrower hereby irrevocably and unconditionally waives presentment, demand,
notice, protest and all other demands and notices in connection with the
execution, delivery, acceptance, performance, default or enforcement of this
Subsequent Disbursement Note.

This Subsequent Disbursement Note is secured by Liens on and security interests
in certain property and assets of the Borrower and the other Loan Parties that
have been granted to the Agent, for the benefit of the Secured Parties, pursuant
to the Loan Documents. Reference is hereby made to the other Loan Documents for
a description of the Collateral securing the obligations evidenced by this
Subsequent Disbursement Note, the terms and conditions upon which such Liens and
security interests were granted and the rights of the Holder of this Subsequent
Disbursement Note in respect thereof.

THIS SUBSEQUENT DISBURSEMENT NOTE AND THE RIGHTS AND OBLIGATIONS OF THE BORROWER
AND THE HOLDER UNDER THIS SUBSEQUENT DISBURSEMENT NOTE SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE.

The following provisions of the Facility Agreement apply to this Subsequent
Disbursement Note as if they were expressly incorporated in this Subsequent
Disbursement Note with any necessary modifications: Sections 1.2, 1.3, 1.4, 2.5,
6.1 to 6.14 and 6.19 to 6.26 of the Facility Agreement.

[remainder of page intentionally left blank]

 

-2-

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IN WITNESS WHEREOF, the Borrower has caused this Subsequent Disbursement Note to
be duly executed and delivered on the date first set forth above by a duly
authorized representative of the Borrower.

 

MELINTA THERAPEUTICS, INC.,

a Delaware corporation,

as the Borrower

By:  

 

Name:   Title:  

[SIGNATURE PAGE TO DELAYED DISBURSEMENT NOTE [(_______________)]]

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SCHEDULE I

BORROWINGS AND PAYMENTS

 

PRINCIPAL AMOUNT

  

DATE OF

SUBSEQUENT
DISBURSEMENT

  

AMOUNT OF

REPAYMENT/

PREPAYMENT

  

DATE OF REPAYMENT/
PREPAYMENT

  

NOTATION MADE BY

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

EXHIBIT 2.7

SHARE PAYMENT PROVISIONS

If the Borrower elects, in lieu of paying in cash any interest due and payable
under Section 2.7 of the Facility Agreement to which this Exhibit is attached
(the “Agreement”), to satisfy any such amounts due through the issuance of
Freely Tradeable Shares (as defined below), pursuant to Section 2.7 of the
Agreement, the following terms shall apply:

1. Defined Terms. Capitalized terms used in this Exhibit 2.7 and not otherwise
defined herein shall have the meanings set forth in the Agreement. For purposes
of this Exhibit, the following terms shall have the following meanings:

“Applicable Trading Period” has the meaning set forth in Section 4 of this
Exhibit.

“Bloomberg” means Bloomberg Financial Markets or an equivalent, reliable
reporting service mutually acceptable to and designated by the Borrower and the
Required Lenders.

“Credit Amount” has the meaning set forth in Section 4 of this Exhibit.

“Daily Issuance Shares” has the meaning set forth in Section 4 of this Exhibit.

“Delisting Event” means any of the following: (i) the Common Stock is not listed
on an Eligible

Market, (ii) trading in the Common Stock on the Principal Market is suspended,
or (iii) the Borrower is not in compliance with any rule or regulation
applicable to the trading or listing of the Common Stock on the Principal
Market.

“Failure Amount” has the meaning set forth in Section 8 of this Exhibit.

“Floor Price” has the meaning set forth in Section 3 of this Exhibit.

“Freely Tradeable Shares” means any shares of Common Stock which, at the time of
issuance thereof, (i) are duly authorized, validly issued, fully paid and
non-assessable; (ii) are eligible for resale by the Lenders without limitation
or restriction, including any volume limitations, under state or Federal
securities laws pursuant to Rule 144 under the Securities Act or an effective
Registration Statement; and (iii) do not bear, and are not subject to, any
restrictive legend, stop transfer or similar restriction.

“Issuance Period” means, with respect to a Share Issuance Notice, the period
commencing on the Trading Day specified in the Share Issuance Notice (which
shall be no earlier than the tenth (10th) Trading Day after the date of delivery
thereof and shall be subject to confirmation of receipt thereof by the Lenders)
and ending at the completion of ten (10) consecutive Trading Days (including
such initial Trading Day) thereafter; provided, that the Issuance Period shall
be subject to termination in accordance with Section 5 and Section 7 of this
Exhibit, provided, further, that in the event of the occurrence of a Share
Delivery Failure during any Issuance Period, such Issuance Period shall
terminate at the completion of the date on which such Share Delivery Failure has
occurred; and provided, further, that the Issuance Period shall be deemed to
have ended at such time during an Issuance Period as Partial Reference Date
Shares are issuable in accordance with Section 4 of this Exhibit.
Notwithstanding anything herein to the contrary, in no event shall any Issuance
Period extend (and, to be valid, no Share Issuance Notice shall specify an
Issuance Period that extends) beyond the date that is three (3) Trading Days
prior to (i) the Interest Payment Date on which the interest being satisfied by
the issuance of Freely Tradeable Shares during such Issuance Period is due or
(ii) the Maturity Date.

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

“Major Transaction” shall have the meaning given to such term in the Warrants.

“Major Transaction/Organic Change Notice” shall have the meaning given to such
term in the Warrants.

“Market Capitalization” means, as of any date of determination, the product of
(x) the number of issued and outstanding shares of Common Stock as of such date
(exclusive of any shares of Common Stock issuable directly or indirectly upon
the exercise of Options or conversion of any Convertible Securities), multiplied
by (y) the closing price per share of Common Stock as of the preceding Trading
Day on the Principal Market, as reported by, or based upon data reported by,
Bloomberg.

“Reference Date” has the meaning set forth in Section 4 of this Exhibit.

“Registrable Securities” has the meaning given to such term in the Registration
Rights Agreement.

“Registration Statement” has the meaning given to such term in the Registration
Rights Agreement.

“Share Delivery Failure” has the meaning set forth in Section 8 of this Exhibit.

“Share Issuance Amount” has the meaning set forth in Section 3 of this Exhibit.

“Share Issuance Closing Date” has the meaning set forth in Section 4 of this
Exhibit.

“Share Issuance Notice” has the meaning set forth in Section 3 of this Exhibit.

“Stock Event” shall have the meaning given to such term in the Warrants.

“Trading Day” means any day on which the Common Stock is traded for at least six
hours on the Principal Market.

“Volume Weighted Average Price” means, with respect to any security as of any
date of determination or during any period of determination, the volume weighted
average sale price on the Principal Market as reported by, or based upon data
reported by, Bloomberg. If the Volume Weighted Average Price cannot be
calculated for such security on such date in the manner provided above, the
volume weighted average price shall be the fair market value as mutually
determined by the Borrower and the Required Lenders.    

“Withholding Date” means the first date on which the Borrower withholds or
determines that it is required to withhold any Taxes as a result of the
provisions of this Exhibit or the issuance of any shares of Common Stock, or
consummation of any transactions, as contemplated hereby.    

2. General. Subject to the terms and conditions of this Exhibit, the Borrower’s
valid exercise of its share issuance rights under this Exhibit and subsequent
fulfillment of its obligations hereunder (including delivery of all of the
requisite Daily Issuance Shares and payment of the Share Issuance Amount, if
any) shall be deemed to satisfy its obligation to pay interest on the applicable
Interest Payment Date for which such share issuance right is being exercised.

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

3. Exercise of Share Issuance Rights. On any date that is not more than
forty-five (45) days prior to any Interest Payment Date, the Borrower may
deliver to each of the Lenders notice by electronic mail or facsimile (a “Share
Issuance Notice”) of its intention to issue Freely Tradeable Shares pursuant to
the provisions of this Exhibit in order to satisfy interest due on such Interest
Payment Date under Section 2.7 of the Agreement by delivering such Freely
Tradeable Shares to the Lenders; provided, however, that the Borrower may not
deliver a Share Issuance Notice (a) during the occurrence of a Delisting Event,
(b) at any time following such time as the Borrower has delivered (or is
obligated to deliver) a Major Transaction/Organic Change Notice in respect of a
Major Transaction, (c) at any time following the occurrence, and during the
continuance, of an Event of Default or a Default, (d) from and after a
Withholding Date, (e) if, as of the close of trading on the immediately
preceding Trading Day, the Market Capitalization is less than $200,000,000, (g)
unless all material information regarding the Borrower (including any material
information that may be included in, or reflected by, the Share Issuance Notice)
has been publicly disclosed in a report filed pursuant to the Exchange Act or
has been otherwise publicly disclosed in a manner calculated to reach the
securities marketplace through one of the Borrower’s recognized channels of
distribution, (h) unless (X) the Registration Statement is effective and
available for the sale of at least all of the Registrable Securities and, after
giving effect to the resale of all shares of Common Stock issued pursuant to
such Share Issuance Notice (and assuming such shares are sold pursuant to the
Registration Statement and that the Volume Weighted Average Price for each
Trading Day during each applicable Issuance Period will equal the Floor Price),
the Registration Statement shall continue to register a sufficient number of
Registrable Securities to cover the resale of all of the Purchased Shares and
all of the Warrant Shares issuable upon exercise of the Warrants, or (Y) all
shares of Common Stock issuable pursuant to such Share Issuance Notice are
eligible for resale by the Lenders without limitation or restriction, including
any volume limitations, under state or Federal securities laws pursuant to Rule
144 under the Securities Act, (i) unless the Borrower is in compliance with the
“current public information” requirement of Rule 144(c) under the Securities
Act, (j) if the transfer agent for the Common Stock is not participating in
DTC’s Fast Automated Securities Transfer Program, or (k) if any Lender, after
consultation with counsel of its choosing, advises the Borrower that the receipt
or resale of Common Stock issued or issuable hereunder would result in such
Lender being deemed an “underwriter” within the meaning of Section 2(11) under
the Securities Act (collectively, the “Share Issuance Conditions”). Subject to
such provisions, a Share Issuance Notice shall be irrevocable, shall specify
(I) a floor price (the “Floor Price”) that is no less than $10.00 (subject to
adjustment for any Stock Event occurring after the Agreement Date), (II) the
aggregate Interest Amount subject to such Share Issuance Notice, in each case,
broken out by the amount due each Lender (such amount, a “Share Issuance
Amount”), (III) the Interest Payment Date to which such Share Issuance Notice
applies, and (IV) the Issuance Period. If the Lenders do not confirm receipt of
the Share Issuance Notice within three (3) Trading Days of the delivery thereof,
the Borrower shall thereafter use its reasonable best efforts to confirm (by
email, telephonically or otherwise) such receipt, and in no event shall the
Issuance Period commence unless and until the Lenders have confirmed such
receipt.

4. Share Issuance. Subject to Section 5 of this Exhibit, for each Trading Day
during the applicable Issuance Period (each, a “Reference Date”), the Borrower
shall issue to each Lender such Lender’s Pro Rata Share of an aggregate number
of Freely Tradeable Shares (rounded to the nearest whole share, with 0.5 being
rounded up) equal to the product of (x) the number of shares of Common Stock
traded at or above the Floor Price (on all exchanges and quotation systems on
which shares of Common Stock are cited as having been traded, per the Bloomberg
AQR function) on such Reference Date between 9:35 a.m., New York City time, and
3:55 p.m., New York City time (the “Applicable Trading Period”), multiplied by
(y) 0.19 (the “Daily Issuance Shares”); provided, that, at such time on any
Reference Date as the value (as determined in accordance with this Section 4) of
all shares issuable in respect of such Reference Date (up to such time on such
Reference Date) (the “Partial Reference Date Shares”), together with the value
of all shares issued or issuable hereunder in respect of prior Reference Dates
during such Issuance Period, are sufficient to satisfy the entire Share Issuance
Amount, then the Daily Issuance Shares shall be equal to the Partial Reference
Date Shares, and such Issuance Period and the Applicable Trading Period shall
thereafter be deemed terminated for all purposes hereunder. By no

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

later than 12:00 noon, New York City time, on the second Trading Day following
each Reference Date (each, a “Share Issuance Closing Date”), the Borrower shall
deliver to each Lender its Pro Rata Share of the applicable Daily Issuance
Shares by causing the transfer agent for the Common Stock to electronically
transmit such Daily Issuance Shares to such Lender by crediting to the account
of such Lender’s prime broker (as specified by such Lender no later than one
Trading Day prior to the applicable Share Issuance Closing Date) with DTC
through its Deposit/Withdrawal at Custodian (DWAC) system its Pro Rata Share of
such Daily Issuance Shares determined pursuant to Section 6 of this Exhibit.
Within two hours following the close of regular trading hours on each Reference
Date for which Daily Issuance Shares are issuable hereunder, the Lenders shall
deliver a notice (a “Daily Share Notice”) to the Borrower setting forth the
number of Daily Issuance Shares and the portion of the Share Issuance Amount to
be satisfied on the Share Issuance Closing Date related to such Reference Date,
together with appropriate calculations of such amount. Concurrently with the
valid delivery of the related Daily Issuance Shares on each Share Issuance
Closing Date, an amount (the “Credit Amount”) equal to the product of (x) the
number of shares of Common Stock issued and delivered to a Lender on such date
multiplied by (y) 97% of the Volume Weighted Average Price for shares of Common
Stock that trade at or above the Floor Price during the Applicable Trading
Period (on all exchanges and quotation systems on which shares of Common Stock
are cited as having been traded, per the Bloomberg AQR function) on the
applicable Reference Date shall be applied to such Lender’s Pro Rata Share of
the Share Issuance Amount on such Share Issuance Closing Date. If, as of the
second (2nd) Trading Day after the end of any Issuance Period, the Share
Issuance Amount in respect of any Lender exceeds the sum of the applicable
Credit Amounts in respect of such Lender (including as a result of Section 5 of
this Exhibit), the Borrower shall pay such difference to such Lender in cash on
the first Business Day following the end of the Issuance Period (which first
(1st) Business Day, for the avoidance of doubt, shall be no later than the
Interest Payment Date to which the Issuance Period relates).

All shares of Common Stock issued and delivered pursuant to this Section 4 shall
be Freely Tradeable Shares (and for the avoidance of doubt, only Freely
Tradeable Shares shall be deemed to constitute Daily Issuance Shares and be
applied to any Share Issuance Amount). In connection with the issuance and
delivery of any shares of Common Stock to the Lenders pursuant to this
Section 4, the Borrower shall deliver to the Lenders, by no later than the first
Share Issuance Closing Date for the related Issuance Period, an opinion of
counsel reasonably satisfactory to the Lenders, substantially in the form
attached as Annex 1 to this Exhibit, relating to all shares of Common Stock to
be issued and delivered to the Lenders (as Freely Tradeable Shares) during such
Issuance Period.

5. Limitations on Share Issuances.

(a) Notwithstanding anything herein to the contrary, the Borrower shall not
issue to any Lender, and no Lender may acquire, a number of shares of Common
Stock hereunder to the extent that, upon such issuance, the number of shares of
Common Stock then beneficially owned by such Lender and its Affiliates and any
other persons or entities whose beneficial ownership of Common Stock would be
aggregated with such Lender’s for purposes of Section 13(d) of the Exchange Act
(including shares held by any “group” of which the Lender is a member, but
excluding shares beneficially owned by virtue of the ownership of securities or
rights to acquire securities (including the Warrants) that have limitations on
the right to convert, exercise or acquire similar to the limitation set forth
herein), would exceed 9.985% of the total number of shares of Common Stock then
issued and outstanding (the “9.985% Cap”). For purposes hereof, “group” has the
meaning set forth in Section 13(d) of the Exchange Act and applicable
regulations of the SEC, and the percentage held by each Lender shall be
determined in a manner consistent with the provisions of Section 13(d) of the
Exchange Act. All Share Issuance Notices shall set forth the number of shares of
Common Stock then outstanding. Upon written request of any Lender at any time,
the Borrower shall, within one (1) Business Day, confirm orally and in writing
to such Lender the number of shares of Common Stock then outstanding. At any
time following delivery of

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

a Share Issuance Notice and ending on the last day of the Issuance Period, each
Lender shall have the right to deliver notice to the Borrower (and shall be
entitled to include such notice in any Daily Share Notice) (a “Cap Notice”)
stating the maximum number of shares of Common Stock that may be issued to such
Lender without exceeding the maximum number of shares that such Lender may
receive under the 9.985% Cap (the “Maximum Share Amount”), which shall be
conclusive and binding upon the Borrower and such Lender. In no event shall the
number of shares issued to a Lender pursuant to any Share Issuance Notice exceed
the Maximum Share Amount specified in such Lender’s Cap Notice, and the Issuance
Period and the Applicable Trading Period shall be deemed terminated with respect
to such Lender at such time as such Lender has been issued the Maximum Share
Amount specified in such

Lender’s Cap Notice.

6. Allocation Among Lenders. Subject to Section 5 of this Exhibit, all shares of
Common Stock issuable to the Lenders pursuant to this Exhibit, all Credit
Amounts and all Failure Amounts shall be allocated pro rata among the Lenders
based on each Lender’s Pro Rata Share, in each case unless the Lenders notify
the Borrower in writing of any different allocation ratio.

7. Termination of Issuance Period. If any of the Share Issuance Conditions is
not satisfied at any time following the delivery of a Share Issuance Notice and
prior to the expiration (or other termination) of the Issuance Period to which
the Share Issuance Notice relates, the Borrower shall immediately notify each of
the Lenders of such failure and the Issuance Period shall terminate at the
completion of the date on which such failure has occurred (or, if the Issuance
Period has not yet commenced, it shall not commence). Notwithstanding any
termination of the Issuance Period pursuant to this Section 7 or otherwise, the
Borrower shall be obligated to deliver Daily Issuance Shares with respect to any
Reference Date that is on or prior to the date of such termination, as set forth
in any Daily Share Notice. For the avoidance of doubt, the Borrower acknowledges
that a Share Issuance Closing Date may occur after the termination or expiration
of the applicable Issuance Period.

8. Failure to Deliver Share Issuance Shares. If the Borrower fails on any Share
Issuance Closing Date to cause the delivery of the Daily Issuance Shares
required to be delivered on that date, and such failure is not cured within one
(1) Trading Day following such Share Issuance Closing Date (a “Share Delivery
Failure”), the Share Issuance Amount in respect to such Share Issuance Closing
Date and related Issuance Period shall not be reduced in respect of such Daily
Issuance Shares until such shares are actually issued and delivered, and in
addition to all other rights and remedies of the Lenders and the Lenders under
this Exhibit, the Agreement and the other Loan Documents, (a) the Borrower shall
promptly pay to each of the Lenders, for each day that such Share Delivery
Failure occurs or continues, an amount equal to five percent (5%) of the amount
that would have constituted such Lender’s Credit Amount on such day had such
failure not occurred (the “Failure Amount”); and (b) if any Lender is required
by its broker to purchase (in an open market transaction or otherwise) or any
Lender or such Lender’s brokerage firm otherwise purchases shares of Common
Stock to deliver in satisfaction of a sale by such Lender of the Daily Issuance
Shares which such Lender was entitled to receive on such Share Issuance Closing
Date (a “Buy-In”), then the Borrower shall (1) pay in cash to such Lender the
amount by which (X) such Lender’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (Y) the
amount obtained by multiplying (I) the number of Daily Issuance Shares that the
Borrower was required to deliver to such Lender on such Share Issuance Closing
Date, times (B) the price at which the sell order giving rise to such purchase
obligation was executed.

9. Borrower Reporting. The Borrower shall file with the SEC a Current Report on
Form 8-K disclosing its delivery of a Share Issuance Notice, no later than 8:35
a.m., New York City time, on the first Reference Date in each Issuance Period.

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

Annex 1 to Exhibit 2.7 - Payment Share Provisions

[Date]

[Transfer Agent Name and Address]

Attention: [            ]

Re: Melinta Therapeutics, Inc. (the “Borrower”)

Ladies and Gentlemen:

Pursuant to Section 3 of Exhibit 2.7 (the “Exhibit”) of that certain Facility
Agreement (the “Facility Agreement”), dated as of January 5, 2018, between the
Borrower and the Lenders party thereto from time to time (each an “Lender” and
collectively, the “Lenders”), the Borrower has delivered to the Lenders a Share
Issuance Notice (as defined in the Exhibit), dated as of [•], pursuant to which
the Borrower has elected to satisfy certain payment obligations under the
Facility Agreement by issuing shares of Common Stock to the Lenders. Capitalized
terms used but not defined herein shall have the meanings set forth in the
Facility Agreement or the Exhibit, as applicable.

We are counsel for the Borrower and have been requested to furnish to you an
opinion with respect to all of the shares of Common Stock of the Borrower that
will be issued to the Lenders in connection the abovementioned Share Issuance
Notice (the “Shares”).

As a basis for this opinion, we have received and reviewed (1) the Facility
Agreement, including the Exhibit, (2) the Share Issuance Notice, (3) an
officer’s certificate from the Borrower and (4) such other documents as we have
deemed relevant or necessary.

On the basis of the foregoing and assuming the accuracy of the aforementioned
representations of each Lender, it is our opinion that the Shares may be resold
by each Lender without restriction under the Securities Act of 1933, as amended,
and, accordingly, the Shares may be issued without any restrictive legend to
each Lender or its designee in accordance with each such Lender’s instructions
with respect to Shares delivered to such Lender.

Any questions concerning the foregoing opinion should be communicated to [•] of
this firm.

Very truly yours,

[•]

 

 

[•],[•}

cc: [Lenders]